GAB Decision 379
January 27, 1983 Wisconsin Department of Health and Social Services;
Docket No. 82-80-WI-HD Ford, Cecilia; Teitz, Alexander Settle, Norval
The Wisconsin Department of Health and Social Services (Wisconsin)
appealed a decision by the Office of Human Development Services (Agency)
disallowing a claim for federal financial participation (FFP) made by
Wisconsin under Title XX of the Social Security Act. The Agency
disallowed $1,300,146 for the period October 1, 1976 through March 31,
1979, and Wisconsin appealed $1,276,132 of the disallowance. The Agency
based the disallowance on Wisconsin's alleged failure to comply with the
revised regulatory guidelines for Title XX training programs, 45 CFR
Part 228, Subpart H, which became effective January 31, 1977.
For the reasons discussed below, we uphold the disallowance with
regard to the claims for travel and per diem costs ($70,565), and staff
development salaries ($12,707); however, we reverse the disallowance of
the training grant costs ($1,192,860).
Background
Title XX provided FFP to the states for expenditures incurred under
state programs providing, to low income individuals and families,
services directed toward the various social welfare goals enumerated in
Title XX, Section 2001.
Each state receiving Title XX funding was required, prior to the
beginning of its services program year, to publish a comprehensive
annual services program (CASP) plan which set out, among other things,
program objectives, services to be provided, and individuals to be
served. 45 CFR 228.20 et seq. Under Title XX, if a state met all the
requirements of 45 CFR Part 228, Subpart H, FFP was also available for
personnel training and retraining that was directly related to the
services program. The training could include in-service training, and
short- and long-term training at educational institutions. 45 CFR
228.80. /1/
(2) Wisconsin entered into agreements with the University of
Wisconsin at Milwaukee (University) for grants under which the
University would provide training related to Title XX. Wisconsin
incurred various costs, in connection with its training program, which
it claimed as Title XX training costs. The disallowance concerned three
areas of Wisconsin's Title XX training program. The Agency found tht
the training grants to the University violated 45 CFR 228.82(a)(4)
(1977) because the grants failed to specify objectives in terms of how
the educational programs offered by the University were related to the
Title XX services program and how the programs were designed to meet
Wisconsin's Title XX manpower needs. The Agency also disallowed travel
and per diem costs claimed by Wisconsin as costs of part-time training
for the period October 1, 1977 through March 1, 1979, and portions of
five staff development salaries claimed by Wisconsin for calendar year
1978. Wisconsin requested, and was granted, a hearing with regard to
the training grants issue. Wisconsin relied on its briefing and
evidentiary submissions with regard to the other issues.
I. Training Grants
In May 1976, the University submitted to Wisconsin proposals for
eight Title XX training projects. In December 1976, Wisconsin and the
University entered into eight training agreements incorporating those
proposals. Each agreement ran from Cotober 1, 1976 to August 31, 1977.
In August 1977, the University and Wisconsin entered into four new
agrements, each for a one-year period, which incorporated seven of the
original eight training agreements. /2/ The Agency disallowed $1,192,860
in FFP claimed by Wisconsin for these projects based upon its finding
that the training programs did not meet the regulatory standards for
Title XX training set forth at 45 CFR 228.82(a)(4) (1977).
The Agency stated that because Wisconsin failed to perform manpower
needs assessments, the training grants could not have been designed to
meet Wisconsin's manpower needs. Additionally, the Agency found that
the grants did not contain specific objectives which demonstrated how
the educational program was related to the Title XX services program.
(Notice of Disallowance, April 9, 1982) Both in its brief and through
testimony presented at the hearing, the Agency amplified these
conclusions, citing several reasons which it claimed further
substantiated its decision to disallow FFP.
Wisconsin maintained that its training programs complied with the
applicable regulation. Wisconsin argued that, although the Agency had
never provided any written guidance as to how the regulation should be
interpreted, the Agency was attempting to apply very specific standards
(3) not mandated by the regulation. (Wisconsin's Reply Brief, pp. 2-3)
Wisconsin also argued that the Agency could not base a disallowance upon
a regulation which was not in effect at the time the training grants
began. The provision at 45 CFR 228.82(a)(4) became effective on January
31, 1977, while the training grants began October 1, 1976.
A. Applicable Regulations
The 1977 version of 45 CFR 228.82(a) provided, in pertinent part:
(a) FFP is available in payments for training furnished under grants
to educational institutions, if all conditions specified in this section
are met:
(1) Grants are made: (i) For the purpose of developing, expanding,
or improving training for employees of the State agency . . . or persons
preparing for employment with the State agency; (ii) For an educational
program . . . that is directly related to the title XX program and
provision of services; . . . .
(4) Each grant specifies objectives in terms of how the educational
program is related to the title XX services program and how it is
designed to meet the State agency's manpower needs.
The 1976 version of 228.82 contained essentially the same language as
(a)(1) but did not contain subsection (a)(4).
Although the parties did not agree about whether the 1977 regulation
should be applied to the agreements effective October 1, 1976, it is not
necessary for us to reach the issue given our conclusion that, even
under the 1977 regulation, the Agency has not provided a substantial
basis for the disallowance.
B. Agency Implementation of the Rgulation
The Agency did not provide any written clarification of the 1977
regulation before or during the grant years in question. (Transcript,
(Tr.) pp. 27-28, 132-133) However, the 1977 preamble to the revised
Title XX regulations sheds some light on the opolicy considerations
underlying those regulations. The preamble enunciated the Department's
desire ". . . to enhance the ability of the States to focus on the
delivery of services to eligible persons and to avoid undue
administrative costs." (42 Fed. Reg. 5842, January 31, 1977) With regard
to the Subpart H training regulations, the Department made the following
policy statement:
(4) The Department believes the working relationship with the States
can be enhanced by avoiding mandated requirements whenever possible and
by working on a joint basis with states for program improvement. (id.
at 5847)
Even before the Agency revised part 228, it had not specified
particular requirements about what had to be included in the training
plan. (Title XX Program Regulation Guide, October 1, 1975 draft, at
2803) Further, in the 1977 revision of 45 CFR Part 228, the Agency
deleted the requirement, set out in 45 CFR 228.80(b) (1976), that prior
to the beginning of a state's program year, the state agency file with
the Agency its Part 228 training plan for that year. Thus, Agency
policy, as evidenced by its written guides and 1977 regulatory revision,
was to avoid specific requirements and strict Agency supervision, and to
provide the states with considerable discretion to develop a training
program responsive to the needs of their own Title XX communities.
In April 1977, well after the beginning of the training grants,
representatives from Wisconsin and the Gency met to discuss Wisconsin's
Title XX training program. Testimony regarding that meeting revealed
that a philosophical difference existed as to the parties'
interpretation of 45 CFR 228.82. Wisconsin's representative took the
position that, if Wisconsin established a training program with built-in
objectives for potential participants in that program, it would be in
compliance with the regulation. (Tr., pp. 25-27) The Agency
representative, who reviewed Wisconsin's program, had mor specific ideas
on how the regulation should be implemented, which will be discussed in
our analysis below.
C. The Parties' Arguments
The Agency argued that the training provided by the University was
not directed toward the provision of Title XX services within Wisconsin,
and that the training offered was merely part of the University's
regular graduate and undergraduate curriculum. /3/ (Respondent's Brief,
pp. 12-13)
(5) The Agency alleged that Wisconsin failed to perform manpower
needs assessments in a manner which would insure that the training
programs benefitted Wisconsin's delivery of Title XX services. The
Agency concluded that needs assessments conducted by Wisconsin in 1974
and 1975 were both qualitatively inadequate and performed too early to
benefit the training programs. Further, the Agency noted that a needs
assessment performed in 1978 was useless to any determination of how the
1976 and 1977 training programs could benefit the delivery of Title XX
services. The Agency also determined that the training grants were
deficient because they failed to provide assurances that the training
was designed to meet the needs of the agency and provider personnel in
regard to their Title XX services, and because they failed to specify
objectives for meeting the needs of Title XX. (Respondent's Brief, pp.
7-9)
The sole Agency witness at the hearing testified that he thought the
training grants should reflect short-term, rather than long-term,
educational interests because he was aware of an earlier decision by
Wisconsin that it did not need long-term training. (Tr., p. 109) Thus,
he thought that the grants should contain a description of short-term
training tasks and objectives, and the manner in which Wisconsin would
accomplish those objectives in terms of short-term requirements. The
representative found that the grants intermingled both long- and
short-term interests, and testified that this commingling of interests
made it difficult for him to identify the classes of personnel who would
be selected to enroll in the programs, and what costs would be
associated with each program. (Tr., pp. 108-112)
Wisconsin admitted that the grants "probably did not" specify per
se,
that the educational program was designed to meet particular manpower
needs, but that examination of the grants would show that they reflected
Wisconsin's needs. (Tr., pp. 68-69) Wisconsin noted that the regulation
did not require manpower needs assessments to be made, nor did the
Agency provide guidance about the nature of such assessments, including
how and when they must be made. (Reply Brief, p. 3) Nevertheless,
Wisconsin indicated that, in addition to the needs assessments conducted
in 1974 and 1975, it conducted manpower needs assessments just prior to
the first year of the training program. Wisconsin based these
assessments on information gathered from surveys related to previous
grants (1975-1976) awarded to the University, and upon a review of
Wisconsin's CASP. Wisconsin (6) stated that it compared its CASP
standards with the grant proposals to insure that the training programs
would relate to its Title XX program. Wisconsin further argued that the
grants were designed to meet its manpower needs because the grants
incorporated Title XX objectives outlined in the CASP. Wisconsin
indicated that it had had extensive communications with the University
to insure that any person completing the training program would be
better able to deliver Title XX services. (Tr., pp. 30-32) Wisconsin
also pointed out that, prior to the second grant year, it reexamined the
trainin programs and made adjustments in the programs which it believed
were necessary to insure that the training was meeting its manpower
needs. Wisconsin noted that during the course of this training program
it had, itself, disallowed costs totalling $343,921 claimed by the
University for some of the projects which Wisconsin did not think met
its Title XX needs. (Tr., p. 34; Reply Brief, pp. 7-8) Wisconsin
offered these actions as proof that it provided ongoing review of the
training, thereby ensuring that its manpower needs were being met.
Wisconsin argued that the grant proposals (Wisconsin's Attachments
11-18) demonstrated that each grant contained objectives in terms of how
the educational program was related to the Titel XX services program.
(Reply Brief, pp. 8-9) Although the Agency questioned, in conclusory
fashion, the sufficiency of the relationship of the training program
objectives to the CASP, it did not provide specific instances or offer
specific reasons that would support its allegations of insufficiency.
(Tr., pp. 60-67) The Agency was given the opportunity to submit a
post-hearing brief on this issue, but elected not to respond.
D. Analysis
Wisconsin drew up its program in 1976, under a regulation which
provided only that grants be made for educational programs directly
related to the Title XX program. The Agency then based its disallowance
upon the 1977 regulation, which was more specific than its predecessor,
but still quite broad. The Agency used the standards articulated by a
regional program representative as part of the basis for the
disallowance. Testimony at the hearing highlighted the absence of
regulatory or other written guidelines which would support this
representative's view of what was required of Wisconsin. (Tr., pp.
25-28, 132-133) Furthermore, the Agency had consistently articulated a
policy of allowing the states discretion and independence in
implementing their training programs. The Agency's representative
outlined his expectations, but his requirements have never been set out
in written guidelines, nor is there any evidence that the Agency ever
adopted his opinion as official policy. There is no evidence that
Wisconsin knew that the Agency would consider the ideas put forth by the
representative as mandatory requirements.
(7) Based upon the evidence, the only apparent guidance available to
Wisconsin regarding implementation was provided in the one meeting
between the representatives of the Agency and Wisconsin, held in the
spring of 1977. The policy outlined in the preamble suggested
cooperation between the states and the Agency and offered program
flexibility. It stated that the Agency would avoid mandated
requirements whenever possible. Wisconsin had no reason to believe that
it must follow the Agency representative's advice, and, in fact, had
good reason to believe that it had discretion about the design of its
program and its grants. Given the general nature of the regulation and
the relative discretion given to the states by Agency policy, we think
it was unreasonable for the Agency to hold Wisconsin to specific
standards which wre neither definitively described in the regulations,
nor clearly otherwise official guidelines.
With regard to the Agency's allegations that Wisconsin failed to meet
the letter of the regulation, the Agency has not provided sufficient
evidence to support its allegations, although the Board offered ample
opportunity. Nor has the Agency shown that Wisconsin failed to exercise
reasonable care in overseeing the grants. Therefore, we conclude that
the Agency had no substantial basis for the disallowance of training
project costs.
II. Travel and Per Diem Costs
From October 1, 1977 through March 1, 1979, Wisconsin claimed $70,565
in FFP for travel and per diem costs incurred by employees receiving
part-time training of less than one week in duration.
The regulation governing the activities and costs matchable as
training expenditures was found at 45 CFR 228.84 (1977). In part, that
regulation provided:
Costs matchable as training expenditures include:
(a) State agency employees. (1) For State agency employees in
full-time training programs of eight consecutive weeks or longer . . .;
salaries . . ., or stipends, dependency allowances, travel, and
education costs (that is, tuition, books and supplies);
(2) For State agency employees in full-time training programs of less
than eight consecutive work weeks: per diem, travel and educational
costs;
(3) For State agency employees in part-time training programs (part
of work week, evenings, mornings): Education costs.
(8) Policy Interpretation Question (PIQ) 77-88, issued September 14,
1977, clarified the Agency position that part-time training was training
of less than five days in length. Wisconsin conceded that its county
departments of social services may have claimed travel and per diem
expenses for employees attending Title XX training events of less than
five days in length. (Wisconsin's Brief, p. 8; State Agency Response
to the Audit Report, p. 8, Respondent's Attachment 14) However,
Wisconsin argued that 45 CFR 228.84 was unclear, and that, prior to the
issuance of PIQ 77-88, Wisconsin was confused about the definition of
part-time training. Wisconsin maintained that it attempted to comply
with 45 CFR 228.84 in good faith and that once the PIQ was issued,
Wisconsin complied with the regulation. /4/
The regulation at 45 CFR 228.84(a)(1) clearly specified the items
which constituted education costs, i.e., tuition, books, and supplies.
The regulation at (a)(3) just as clearly indicated that only education
costs were matchable as training expenditures for State agency employees
in part-time training programs. In a previous decision the Board
concluded that PIQ 77-88 clearly articulated the Agency interpretation
of part-time training. The Board also recognized the Agency policy not
to hold a state to the Agency's interpretation of part-time training
until the state received actual notice of the interpretation. Colorado
Department of Social Services Decision No. 200, p. 3., July 31, 1981;
and cases cited therein. Therefore, the only basis upon which Wisconsin
can request that this disallowance be reversed is that until it received
notice, it did not know that the training for which travel and per diem
costs were claimed was only part-time training and, therefore, that the
costs were unallowable.
The period covered by this disallowance ran from October 1, 1977
through March 1, 1979. PIQ 77-88 was issued September 14, 1977. The
evidence presented indicated that a copy of the PIQ was mailed to
Wisconsin in mid-October 1977.(Respondent's Attachment 8) Wisconsin
indicated that it did receive the notice. Therefore, although Wisconsin
did not state when it received the notice, we can infer that the period
during which the State had no notice could have been no more than about
a month.
Wisconsin did not demonstrate that it incurred any of the travel and
per diem costs during the period before it received actual notice (9) of
the Agency interpretation of part-time training. Therefore, we conclude
that the travel and per diem costs were properly disallowed, as being
unallowable under the regulation and PIQ.
III. Staff Development Salaries
The Agency disallowed $36,721 in FFP claimed by Wisconsin for staff
development personnel salaries during calendar year 1978. Wisconsin
appealed $12,707 of that amount. The appealed amount represents
portions of five person's salaries charged to the Title XX training
program for calendar year 1978.
The Agency disallowed the $12,707 on the basis of findings contained
in an Audit Report prepared by the Office of Inspector General.
(Respondent's Attachment 14) The auditors indicated that salary charges
made for calendar year 1978 showed that ". . . all 34 State Agency
Central and Regional Office personnel expended 100 per cent of their
time on Title XX training." (Audit Report, p. 19) However, the auditors
reviewed employee Position Descriptions and sent questionnaires to 18
employees which disclosed that ". . . at least 5 of the employees
devoted some of their time to non-Title XX training activities and
day-to-day supervision of staff for which FFP is not available." (Id.)
The Agency disallowed the federal share of that percentage of the
salaries of the five employees during 1978 which was equivalent to the
percentage of time they spent on non-Title XX training activities and
day-to-day supervision.
The regulation at 45 CFR 228.84(b) (1977) indicated that costs
matchable as training expenditures included:
. . . 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, including costs of other State agency staff under
the supervision of the State agency Director of Staff Development, must
be allocated according to the time actually spent on such training.)
Further, 45 CFR 228.85(c) provided that FFP was not available under
Title XX training for:
Salaries of suprvisors (day-to-day supervision of staff is not a
training activity).
(10) Wisconsin argued that the disallowance was improper because the
five staff positions were not supervisory. Wisconsin argued that, under
its civil service system, only certain personnel classifications are
authorized as supervisory positions. Wisconsin pointed out that a
Supervisory Analysis Form must be attached to each supervisor's Position
Description. Wisconsin noted that none of the employees in question had
this form attached to their Position Descriptions. Therefore, Wisconsin
argued, they were without authority to engage in supervisory activities.
Wisconsin also argued that the Agency used an improper and invalid
methodology to calculate the amount of staff development salaries
charged to Title XX training. Wisconsin accused the auditors of
projecting the alleged overcharge to Title XX back through 1975 and
forward to include 1979. Wisconsin contended that this was an invalid
methodology for calculating the disallowance and that the Agency had
admitted as much in the disallowance letter.
The Agency responded that the disallowance was based on the fact that
the employees' time was spent in non-Title XX training activities,
rather than solely on a determination that the five employees were
engaged in day-to-day supervisory activities. The Agency has provided
signed statements by each of the five employees (Respondent's Attachment
13) in which four of the employees indicated that for varying times
during 1978 they spent time in non-Title XX training activities while
the remaining employee admitted to spending more than 40% of his time in
supervision, which is not a training activity under 45 CFR 228.85(c).
Further, the Agency argued that this individual's Position Description
indicated a supervisory status in spite of the fact that the document
did not have a Supervisory Analysis Form attached to it.
The signed statements from the employees lend clear support to the
Agency's position. Wisconsin offered to supply the individual Position
Descriptions for these employees, to show the absence of Supervisory
Analysis Forms.However, since in four out of five cases the employees
actually spent time in non-Title XX activities, submission of the
Position Descriptions would not affect the resolution of this issue.
Section 228.84(b) required allocation of costs according to the time
"actually spent on training." Wisconsin has not shown that 100% of
the
four employees' time was spent on Title XX training.
Regarding the one individual who purportedly spent a good deal of
time in supervision, the Agency indicated that his position description
demonstrated supervisory capacity. Aside from the assertions contained
in its brief, Wisconsin has presented no evidence to the Board refuting
the Agency's assertion or the employee's statement that he spent 42% of
his time supervising. Even if a Supervisory Analysis Form was not
attached to the individual's position description, the question here is
not whether the individual had the authority to engage in supervisory
(11) activities, but whether he in fact did so. Furthermore, the Agency
did not disallow his entire salary, but only that equivalent to the 42%
of his time spent in supervision.
As noted above, Wisconsin contended that the Agency used an invalid
methodology in arriving at this disallowance. Wisconsin alleged that
the Agency had made a determination as to potential salary overcharges
for 1978 and projected the actual disallowance over the period October
1975 through March 1979. (Wisconsin's Brief, p. 10) The Agency denied
that the disallowance was attributable to any time period other than
1978.
The auditors specifically calculated the overcharge for 1978 to be
$12,707. The auditors also projected those 1978 salary overcharges to
the periods October 1975 through December 1977 and January 1979 through
March 1979. (Audit Report, pp. 19-20) However, the Agency accepted
Wisconsin's argument regarding the projected overcharge and withdrew the
disallowance for all periods except calander year 1978. Wisconsin
provided no evidence to refute the disallowance for that year.
Based upon the evidence before the Board and the clear language of
the regulations, we conclude that Wisconsin's actions with regard to
these staff development personnel salaries for the year 1978 were in
violation of the controlling regulations found at 45 CFR 228.84(b) and
45 CFR 228.85(c).Therefore, we find that this disallowance was properly
taken.
Conclusion
For the reasons discussed above, we reverse the disallowance of
$1,192,860 claimed by Wisconsin for its training grant program. We
uphold the disallowances of $70,565 claimed for travel and per diem
costs and the $12,707 in staff development salaries. /1/ The draft
Title XX Program Regulation Guide, October 1, 1975, defined
long-term training as full-time training of eight consecutive weeks or
longer, and short-term training as any programs of shorter duration. At
p. 2802. /2/ One of the original eight agreements was cancelled
by mutual consent. /3/ In support of its position, the Agency
alleged that fourteen of the 62 courses offered under the training
programs during 1976-1977 contained no Title XX trainees and that
thirteen other courses contained only one trainee each. Wisconsin
disputed the Agency's figures and the Agency did not develop that point
further. We note that 45 CFR 228.82(b) (1976) required that each
"program of classroom instruction" funded under a Titel XX training
grant "shall contain students" from one or more enumerated groups
of
persons eligible for Title XX training. That requirement was deleted
when the Agency revised the regultion and the new (a)(4) was
substituted. The Agency stated that the reason for the deletion and
substitution was to provide an alternative for an "administratively
infeasible requirement." 41 Fed. Reg. 36158, August 26, 1976.
/4/ In a January 1978 letter to the Secretary of the Department of
Health and Human Services (Respondent's Attachment 11), Wisconsin
acknowledged that only education costs are available for part-time
training. In that letter Wisconsin noted the hardship it believed that
it would face because the regulation did not allow travel and per diem
costs for part-time training. However, Wisconsin did not offer
alternative interpretations of the regulation.
OCTOBER 22, 1983