GAB Decision 243
December 31, 1981 Colorado Department of Social Services; Docket No.
80-39-CO-HD, 80-70-CO-HD, 80-118-CO-HD Garrett, Donald; Settle, Norval
Ford, Cecilia
The Colorado Department of Social Services (State) appealed parts of
three disallowances by the Office of Human Development Services (Agency)
of costs claimed for training activities under Title XX of the Social
Security Act. The items appealed are identified and discussed
separately below. This decision upholding the disallowances in part and
reversing them in part is based on the written record, including a
written confirmation of the telephone conferences held by the Board with
the parties.
State Agency Staff Development Personnel Costs Distributed to the
Common Supportive Cost Center
The issue here is whether costs claimed under Title XX for State
agency staff development personnel pursuant to the State's cost
allocation plan are allowable. The plan establishes three cost centers
to which staff development personnel costs are distributed: Social
Services, Assistance Payments/Medical, and Common Supportive. The
amount in each cost center is then allocated to various programs, (Title
XX, IV-A, IV-B, XIX, etc.), and provides the basis on which Federal
financial participation is claimed. The amount in the Common Supportive
cost center was allocated to the various programs on the basis of an
estimate derived from a random sample of the actual hours spent on
training for each program during a three-day period by staff development
personnel in each county. The Agency disallowed staff development
personnel costs in the Common Supportive cost center which were
allocated to Title XX.
The Agency did not dispute that the costs were claimed in accordance
with the State's cost allocation plan (except as noted below). It
argued, however, that the applicable regulation does not permit staff
development personnel costs to be claimed based on an estimate of hours.
(2) The regulation on which the Agency relied, 45 CFR 228.84(b),
provides that costs matchable as training expenditures include --
State agency staff development personnel. For State agency staff
development personnel (including support staff), assigned full time to
training functions with respect to State agency or provider agency
staff: salaries, fringe benefits, travel and per diem. (Costs of staff
spending less than full time on training for the title XX program . . .
must be allocated according to the time actually spent on such
training.) (Emphasis added.)
We do not view the phrase "time actually spent" as precluding the
type of estimate used by the State in this instance, however. Estimates
based on random samples are commonly used by the Department of Health
and Human Services to determine amounts improperly charged to Federal
funds. See, University of California - General Purpose Equipment, DGAB
Decision No. 118, September 30, 1980. Such estimates are deemed
sufficiently precise despite the fact that a single sample estimate may
not be exactly equal to the true value that would be derived from a
complete enumeration of all the items in the universe sampled. B.J.
Mandel, Statistics for Management, p. 239 (4th ed. 1977). Thus, in our
view, as long as the data used in the sample consisted of time actually
spent on training, the State's estimate derived from statistical
sampling of total time spent on training is an acceptable basis for
claiming Federal financial participation under 45 CFR 228.84(b). There
was no dispute about whether the sampling techniques employed by the
State were proper.
The Agency did argue that the State's cost allocation plan
specifically prohibits the State from claiming costs under the plan
which are not allowable under the statute or regulations applicable to a
particular program. Since we conclude that the costs are allowable
under 45 CFR 228.84(b), however, we need not address this contention.
The Agency also questioned the State's claim on two other bases: (1)
that non-Title XX costs may have been included in the claim; and (2)
that there may have been dual claiming of the costs both as Title XX
training costs and as non-training costs under Title XX. The Agency did
not explain on what basis it believed these situations might have
existed, however. In the absence of any such explanation, we are unable
to assess the validity of the Agency's objections. Accordingly, the
appeal regarding this item is sustained.
(3) Arapahoe County Extension Office
The issue here is whether the entity which furnished training was a
State agency under 45 CFR 228.84(b) or an outside expert under 45 CFR
228.84(c). The Agency conceded that the costs in dispute, with the
possible exception of one line item, would be allowable if Section
228.84(b) were applicable, but maintained that Section 228.84(c), which
allows none of the costs, is the applicable provision. The State did
not dispute that none of the costs would be allowable if Section
228.84(c) were the applicable provision.
Both parties agree that the training in question was furnished by the
Arapahoe County Extension Office. (Application for Review, Docket No.
80-39-CO-HD, p. 2; Agency's Response to Appeals, dated June 26, 1980,
p. 6.) The State asserted, however, that the formal contractor was the
Arapahoe County Board of Commissioners and that the status of the Board
of Commissioners should determine whether Section 228.84(b) or Section
228.84(c) is applicable. The State further asserted, and the Agency
agreed, that the Arapahoe County Board of Commissioners was a part of
the "State agency" under 45 CFR 228.1, which defines the term to include
"local agencies administering the (State's social services) program
under the supervision of the State agency." (Confirmation of Telephone
Conferences, dated November 27, 1981, p. 2.)
The State's position that Section 228.84(b) applies by virtue of the
fact that the Board of Commissioners is a "State agency" is not
persuasive. Since the training was actually provided by the Arapahoe
County Extension Office, the Extension Office itself must have been a
"State agency" within the meaning of Section 228.1 in order for the
costs to be properly claimed as "State agency training activities"
under
Section 228.84(b). The Extension Office could be considered a "State
agency" only if it were shown to be a part of the Board of Commissioners
or if it independently fit the definition of a "State agency." The
State
did not argue that the Extension Office was a local agency administering
the Title XX program under the supervision of the State agency and that
the Extension Office thus independently qualified as a "State agency."
In response to the Board's inquiry regarding the relationship of the
Extension Office to the Board of Commissioners, the State cited a
Colorado statute providing that "two or more counties may join in
financing agricultural extension service furnished counties by the
university," with the cost of such work to be determined "by negotiation
between the state board of agriculture and the board of county
commissioners of each such county." 1973 C.R.S. 23-30-113. It is not
clear how this provision applies in the instant case since it does not
refer specifically to county extension offices. The State also
furnished (4) a copy of a document captioned "Donation Contract,"
effective from January 1, 1978 through June 30, 1978 (the period in
question here), which states in part that "Arapahoe County Board of
Commissioners (Arapahoe County Extension Office) has agreed to provide
education and training for persons who are providing services to Title
XX services recipients." The contract does not define the nature of the
relationship between the Board of Commissioners and the Extension
Office, however. Thus, there is no basis for a determination that the
Extension Office qualifies as a "State agency" by virtue of its
relationship with the Board of Commissioners.
Since the State has not shown that the Extension Office which
actually provided the training was a "State agency," we conclude that
Section 228.84(b) was not applicable and that the disallowance was
properly taken since none of the costs are allowable under Section
228.84(c). In view of this conclusion, we need not address the Agency's
contention that, regardless of the status of the Extension Office, the
costs were not allowable since there was no purchase of service contract
between the Board of Commissioners and the Extension Office.
JFK Outreach Program
The issue here is whether the entity which furnished training was an
outside expert under 45 CFR 228.84(c), a provider agency under 45 CFR
228.84(f) and (g)(2), or an educational institution under 45 CFR 228.82.
All, some, or none of the administrative costs claimed by the State may
be allowable, depending upon which section of the regulation applies.
The State contended that Section 228.82 applied since the JFK
Outreach Program was part of the University of Colorado Medical Center,
an educational institution. All of the administrative costs claimed
would be allowable under this section. In response to the Board's
observation that the contract between the University of Colorado Medical
Center - JFK Outreach Program and the Adams County Department of Social
Services for the provision of training did not appear to conform to the
specific requirements of Section 228.82, the State conceded that fact.
The State argued, however, that the costs in question should be allowed
since necessary training services were provided and since the State was
unaware that the contract did not meet regulatory standards. Such
collateral arguments cannot prevail where the clear terms of the
regulation are not met, however. Cf. Wisconsin Department of Health and
Human Services, Decision No. 116, August 14, 1980, at p. 6; and New
Jersey Department of Human Services, Decision No. 120, September 30,
1980, at p. 3. Thus, although the JFK Outreach Program may have been an
educational institution, its training costs are not reimbursable under
Section 228.82.
(5) The Agency maintained, on the other hand, that Sections 228.84(
f) and (g)(2) applied since the JFK Outreach Program was a provider
agency. None of the administrative costs claimed would be allowable
under these provisions. The basis for the Agency's position is not
clear. This Board has previously held that the term "provider agency"
or "provider" refers to an entity whose primary function is to furnish
Title XX services. South Dakota Department of Social Services, Decision
No. 180, May 29, 1981, at p. 5. Although, under the regulations
implementing Title XX, reimbursement is available for the cost of
training furnished by a provider agency to its own staff or to state
agency staff, there is no basis for treating as a provider an entity
which furnishes exclusively training. Since the State has asserted
without contradiction that the JFK Outreach Program furnished only
training, it cannot properly be considered a provider agency.
We find, however, that training costs may have been reimbursable uner
Section 228.84(c), since the JFK Outreach Program was an expert "outside
the State agency engaged to develop or conduct special (training)
programs . . . ." The fact that the JFK Outreach Program may have been
an educational institution would not preclude it from being considered
an outside expert. The Agency argued, however, that the JFK Outreach
Program was not an outside expert because it provided an entire training
program rather than training which merely supplemented State agency
training. In support of this argument, it cited an Agency issuance
identified as PIQ 77-31, dated April 1, 1977, and an August 25, 1977
Addendum to PIQ 77-31. (We do not address the question whether the
State had adequate and timely notice of these issuances in view of the
conclusion reached below.) PIQ 77-31 states, in pertinent part, that
"(experts), for purposes of . . . Title XX . . . are . . . hired from
outside the agency to supplement the regular training staff in special
programs." The Addendum states, in pertinent part, that "(the) States
are not precluded from hiring 'experts' to supplement their regular
training staffs where particular expertise is needed." This definition
of "expert" does not necessarily exclude the JFK Outreach Program,
however, since the Agency has not shown that training furnished by the
JFK Outreach Program took the place of all training by State agency
staff development personnel. Moreover, the Addendum to PIQ 77-31
specifically states that experts may be employed "either as individual
consultants or from a firm . . .," so that it is clear that training
furnished by an organization ("firm") such as the JFK Outreach Program
can supplement State agency training within the meaning of the PIQ.
Thus, these Agency guidelines do not alter our conclusion that the JFK
Outreach Program was an outside expert within the meaning of Secton
228.84(c).
(6) Although the parties were asked by the Board to identify those
costs claimed which would be allowable if Section 228.84(c) were
applied, they failed to do so. They should therefore consult with each
other upon receipt of this decision to determine what, if any, costs are
allowable under Section 228.84(c). The State may appeal to the Board if
the matter is not resolved to its satisfaction.
We note that the Agency argued that even if the costs were otherwise
allowable, the State might be precluded by 45 CFR 228.53(b) from
claiming Federal financial participation if it used Federal funds from
sources other than Title XX to cover the costs incurred by the JFK
Outreach Center. Section 228.53(b) provides that" . . . public funds
used by the State or local agency for its services programs may not be
used as the State's share in claiming FFP where such funds are: (1)
Federal funds not authorized by Federal law to be used to match other
Federal funds . . . ." The Agency stated that its concern was prompted
by a reference, in the contract for the provision of training, to
"donated funds" to be used to purchase the training. The State
asserted, however, that although it could not determine whether the
donated funds were Federal or non-Federal, it had not claimed FFP in the
amount of the donated funds. The Agency conceded that if that were the
case, there was no violation of Section 228.53(b), but questioned how
the State would know that no FFP was claimed on this basis if it was
unable to determine the source of the donated funds. No reason appears
why the State would need to know the source of the funds in order to
determine whether FFP had been claimed, however. Since the Agency did
not question the State's assertion on any other ground, we conclude that
there was no violation of Section 228.53(b).
Human Development and Research Center
The issue here is whether the Human Development and Research Center
is an outside expert under 45 CFR 228.84(c) or a provider agency under
45 CFR 228.84(g)(1) and (2), and whether any of the administrative costs
claimed are allowable under the applicable provision. The notice of
disallowance in Docket No. 80-70-CO-HD stated that "(the) Human
Development and Research Center is a provider of services under a
purchase of service contract and also provides Title XX training under a
training contract . . . ." As indicated in the discussion of the JFK
Outreach Center, an entity other than a state agency whose primary
function is to provide Title XX services is a provider agency and not an
outside expert. Although the State described the Human Development and
Research Center as "a consulting organization that provides services
with respect to the management of social services programs," it did not
deny that the Center provided Title XX services as well as training. We
thus conclude that Section 228.84(g)(1) and (2) apply. The Agency took
(7) the position that no administrative costs are allowable under these
provisions. It seems possible, however, that some of the expenditures
in question might represent the "cost of teaching supplies and purchase
or development of teaching materials and equipment" which are allowable
under Section 228.84(g)(2). Accordingly, the parties are directed to
consult with each other upon receipt of this decision in order to
determine whether any of the costs in question are so allowable. The
State may appeal to this Board if the matter is not resolved to its
satisfaction.
Colorado Department of Institutions "TRACY Project" and Larimer
County Mental Health Center
During the course of proceedings before the Board, the Agency
withdrew the disallowance under this heading except with respect to
Federal financial participation claimed for operating expenses and
capital outlay. (Response to Appeals, dated June 26, 1980, pp. 4-5.)
The State argued that the remaining costs were incurred for the
"purchase or development of teaching materials or equipment" under
45
CFR 228.84(g)(2). The audit workpapers do not specifically identify any
of the costs claimed as teaching materials and equipment, however, and
the State was unable to provide documentation further describing the
costs. (Response to Order to Develop Record, dated October 23, 1981, p.
2.) Accordingly, the remaining disallowance is sustained.
County Contractual Training
The disallowance was taken on the ground that the State was unable to
produce any supporting documentation for the costs claimed, and thus
failed to comply with 45 CFR 228.17, requiring the maintenance of
records necessary for the proper and efficient operation of the State's
Title XX program. The State conceded during the course of proceedings
before the Board that it was responsible for producing such
documentation and that it could not do so. (Response to Order to
Develop Record, dated October 23, 1981, p. 2.) Accordingly, the
disallowance is sustained.
Travel Costs for Training of Less Than Five Days
Both parties agreed that, consistent with Colorado Department of
Social Services, Decision No. 200, July 31, 1981, the appeal should be
granted with respect to those costs incurred during the quarters ended
September 30, 1978, December 31, 1978 and March 31, 1979, and that the
disallowance should be sustained with respect to those costs incurred
during the quarter ended June 30, 1979. (State's Response to Order to
Develop Record, dated October 23, 1981, p. 3; Agency's Response to
Order to Develop Record, dated October 21, 1981, p. 9.)
(8) County Operating Costs - Membership Dues
During the course of proceedings before the Board, the Agency
withdrew the disallowance except with respect to the cost of an
individual membership in and a conference registration fee paid to the
American Public Welfare Association. (Response to Appeals, dated June
26, 1980, p. 12.) The State subsequently withdrew its appeal of the
disallowance of the conference registration fee. (Response to Order to
Develop Record, dated October 21, 1981, p. 3.) It maintained, however,
that the cost of the individual membership was allowable under 45 CFR
228.84(a)(3), since "(membership) in the APWA entitled persons to
materials which could constitute part-time training . . . ." (Response
to Order to Develop Record, dated October 23, 1981, p. 2.) Section
228.84(a)(3) provides for Federal financial participation in the
education costs of State agency employees in part-time training
programs. Although membership in a professional association such as the
APWA may be of educational value, the cost of membership does not
thereby become an education cost within the meaning of the regulation.
The governing regulation is instead 45 CFR Part 74, Appendix C, Part II,
Section B.19(a)(2), which states that "(the) cost of membership in . .
.
professional organization is allowable provided . . . (2) the
expenditure is for agency membership . . . ." Since the membership in
question here was an individual one, we conclude that the disallowance
of the membership cost was proper.
County Operating Costs - Other Costs
The State appealed the disallowance of payments in the amount of
$44,310.02 made under a contract for automatic data processing services
in Jefferson County, claiming that they were allowable as State agency
training activities under 45 CFR 228.84(c). None of the costs listed on
the invoices submitted for such services clearly correspond to costs
allowable under Section 228.84(c), however. The State conceded that it
could not supply documentation further identifying the costs.
(Confirmation of Telephone Conferences, dated November 27, 1981, p. 4.)
Accordingly, we sustain the disallowance.
Training Non-Eligible Trainees
During the course of proceedings before the Board, the State conceded
that the disallowances should be sustained. (Response to Order to
Develop Record, dated October 23, 1981, p. 3.)
Unallowable Stipend Payments
The Agency disallowed Federal financial participation claimed for
full-time training of three county employees on the ground that the (9)
county did not comply with 45 CFR 228.83(a)(1). This regulation
requires that such trainees "have a legally binding commitment to
continue to work in the State or provider agency for a period of time at
least equal to the period for which financial assistance (in the form of
paid training) is granted." The State was unable to document any such
commitments for the three individuals or to show that the period of time
actually worked at least equalled the time for which assistance was
granted. (Response to Order to Develop Record, dated October 23, 1981,
p. 3.) Accordingly, we sustain the disallowance.
Outside Experts - Western Federation for Human Services
During the course of proceedings before the Board, the State withdrew
its appeal of the disallowance for this item. (Confirmation of
Telephone Conferences, dated November 27, 1981, p. 5.)
Conclusion
For the reasons specified above, the appeals are granted in part and
denied in part. The disposition of the various items is summarized
below. The numbered "findings" in the notifications of disallowance
which correspond to the descriptions below of the items appealed are
shown in the Board's August 31, 1981 Order to Develop Record.
Common Supportive Costs -- disallowed
Arapahoe County Extension Office -- disallowed
JFK Outreach Program -- returned to the parties for further
consideration of the effect of the applicable regulation
Human Development and Research Center -- returned to the parties for
further consideration of the effect of the applicable regulation
Colorado Department of Institutions "TRACY Project" and Larimer
County Mental Health Center -- disallowed
County Contractual Training -- disallowed
Travel Costs for Training of Less Than Five Days -- disallowed only
for quarter ended June 30, 1979, allowed for other quarters
County Operating Costs -- Membership Dues -- allowed except for
individual membership in APWA and conference registration fee
County Operating Costs -- Other Costs - disallowed
(10) Training Non-Eligible Trainees s- disallowed
Unallowable Stipend Payments - disallowed
Outside Experts -- Western Federation for Human Services --
disallowed
OCTOBER 22, 1983