GAB Decision 454
Docket Nos. 83-13, 83-67
July 29, 1983
Iowa Department of Social Services;
Settle, Norval; Teitz, Alexander Garrett, Donald
The Iowa Department of Social Services (State) appealed disallowances
totaling $209,912 in federal financial participation (FFP), claimed
under Title IV-A of the Social Security Act (Act), for the costs of
employees administering the State's Individual Education Training Plan
(IETP) program. /1/
The Social Security Administration (Agency) said that the costs were
connected with the provision of social services which may be funded
under Title XX of the Act, but not under Title IV-A.
For the reasons stated below, we find that some of the activities for
which the State claimed FFP can be funded under Title IV-A. We
therefore remand this case to allow the State to identify the amount of
the costs chargeable to Title IV-A, based on guidelines provided below.
I. The relationship between Title IV-A and Title XX.
Prior to 1975, Title IV-A provided federal matching funds for social
services as well as financial assistance to families with dependent
children. When Congress enacted Title XX in 1975, it consolidated under
this new public assistance title the provision of social services
previously funded under Titles IV-A and VI. FFP for the costs of most
(2) social services under Title XX is at a rate of 75 percent. Federal
matching for Title XX social services costs is capped at an amount set
by Congress each year; states are not reimbursed for expenses in excess
of that limit.
Title IV-A remained as an income maintenance program providing funds
for state aid to needy families with children. In addition to the
standard cash payments under Title IV-A, AFDC recipients may receive
payments based on a "special need." 45 CFR 233.20(a)(2)(v). Special
needs are defined as those needs that are "essential for some persons,
but not for all, and that must therefore be determined on an individual
basis." Regional Office Directive OFA-ROD-80-3, March 27, 1980.
Agency's Brief, Exhibit 1. The federal match for Title IV-A is 50
percent; there is no cap on federal funding under Title IV-A.
II. The statute and regulations involved.
The Act and implementing regulations specify how claims for income
maintenance (IV-A) and social services (XX) programs should be
separated. The regulation at 45 CFR 232.30(a) (1979) provides that:
Cost of staff who perform both service and income maintenance
functions must be allocated as a basis for claiming Federal financial
participation (FFP) under the appropriate titles of the Act and at the
rates prescribed under such titles.
The regulation then defines activities which can be claimed under
Title IV-A:
For purposes of this section, income maintenance functions means all
activities related to maintenance, i.e., determination of initial and
continuing eligibility for financial and medical assistance, . . .
maintaining the case in payment or certification status; and performing
other related activities required in the administration of the income
maintenance program.
(3) Section 403(a)(3)(C) of the Act, which provides funding for
administrative costs, limits the activities which may be charged to
Title IV-A. It states:
no payment (as a Title IV-A expenditure) shall be made with respect
to amounts expended in connection with the provision of any service
described in section 2002(a)(1) of this Act, other than services the
provision of which is required by section 402(a)(19) to be included in
the plan of the State. . . .
Section 2002(a)(1) of the Act defines Title XX social services as
follows:
services . . . include, but are not limited to, child care services,
protective services for children and adults, services for children and
adults in foster care, services related to the management and
maintenance of the home, day care services for adults, transportation
services, family planning services, training and related services,
employment services, information, referral, and counselling services, .
. .
III. Description of State's IETP program.
The State's IETP program provides financial assistance to recipients
of Aid to Families with Dependent Children (AFDC-Title IV-A) who are not
enrolled in a similar type of training under the State's Work Incentive
Program. The program provides vocational classroom and job placement
opportunities to qualified AFDC recipients. The State's IETP Employees'
Manual (Manual) states that the primary program objectives are to enable
the AFDC recipient to become self-supporting, to experience
accomplishment through positive job experience and economic self
sufficiency, and to offer a solution to the spiraling growth of public
assistance programs. Manual, IX-G-1. The State said further that "the
underlying purpose of IETP is to enable participants to secure and
retain employment, thereby reducing or eliminating the need for their
maintenance grant." State's Brief, p. 6.
(4) The IETP program was originally funded entirely under Title IV-A.
It was transferred to Title XX funding in 1975, when Title XX became the
successor to Title IV-A funding for services. The IETP program was then
transferred to Title IV-A as "special need" funding in 1980. Program
expenditures for transportation, child care, and educational costs were
included as special need costs under IV-A. The State also transferred
the costs of administering IETP to Title IV-A at that time. The Agency
challenges the transfer of the administrative costs only.
Administration of the Program.
The task of administering the IETP program and establishing
eligibility is performed by State social workers. The duties of the
social worker are described in the Manual at Chapter IX-G.
The social worker compiles information and prepares the training plan
form which is the basis for the special need allowance. In preparing
the plan, the social worker makes a complete social and vocational
assessment of the applicant and provides counselling that will enable
the applicant to decide on an employment goal.
The social worker also determines eligibility for training,
determines the amount of IETP allowance, and the type and length of
training, verifies the financial and marital status of applicants,
reviews training plans, varifies outside funding sources available to
recipients, monitors and evaluates client academic requirements,
monitors and evaluates grounds for denial or early termination of IETP,
and otherwise monitors expenses and activities of the IETP recipient.
The social worker determines whether the applicant possesses the
necessary abilities to fulfill training or employment requirements
associated with the employment goal. The social worker makes these
determination through discussions with the applicant and by using
outside job counselling services. The social worker also assists
applicants in making child care arrangements. The worker insures that
the training necessary to attain the goal is available within the
community, and that training related opportunities are available within
the community unless the applicant is willing to relocate.
(5) Once the social worker develops a training plan, and the plan is
approved by the State's District Office IETP Specialist, an income
maintenance worker enters the information into a computer input
document, and the AFDC grant is adjusted to reflect the special need.
/2/
The primary issue in this case is whether the social worker's
activities described above can be funded under Title IV-A, or whether
they are social service activities which may only be charged to Title
XX.
IV. Whether the activities of IETP workers are income maintenance
functions properly chargeable to Title IV-A.
The State's Arguments.
The State argued that the social workers performed income maintenance
functions as defined by regulations at 45 CFR 232.30 because their
activities related to determining eligibility and continued eligibility,
and monitoring changes in status which would affect the amount of
assistance paid to recipients.
The State asserted that the Agency incorrectly assumed the disputed
costs were for social services simply because social workers
administered the program. The State said that social workers determined
eligibility for special need funding under IV-A because they had
administered the program when it was funded under Title XX, and had
developed an expertise in determining client eligibility.
The State argued that there is a distinct difference between
determining whether services are available and provided so that the
eligibility based upon those services may be continued, and the 2002(a)
description of the actual provision of the services. The State claimed
that through its Social Service Time Study, it was separated social
worker functions so as to charge Title IV-A only with the functions
related to income maintenance. State's Supplemental Brief, p. 9.
(6) The State explained that some of the activities which may appear
to be social service functions were in fact income maintenance
activities. As examples, the State said that it assisted applicants in
arranging for suitable child care so that continued eligibility may be
maintained, and that even the vocational counselling was eligibility
related because to be accepted in the program, applicants were required
to have "attainable goals," for which training and employment
possibilities existed in the community.
The State also said that when the social worker makes a total
appraisal of an applicant, it is part of the eligibility determination
because, to determine eligibility, the social worker must determine
whether the applicant has the qualities necessary for participation in
the program.
In further support of its position the State compared social workers
in this program to the workers administering the State's community work
experience program, for which the State receives Title IV-A funding.
The State argued that the workers in both programs perform similar
functions (the only difference being that IETP is geared to the
classroom, and the other to on-site training), and therefore, both
should be funded under IV-A.
The Agency's arguments.
The Agency argued that IETP is a social service program, and that
Section 403(a)(3)(C) bars payment of IV-A administrative costs for
amounts expended in connection with the provision of social services.
The Agency asserted that:
IETP services provided by the social services staff, including
determination of eligibility for training, development of training plans
and provision of on-going social and other supportive services do not
meet the definition of income maintenance functions. Rather, they are
direct and related services covered under sections 402(a)(19)(G) and
2002(a)(1) of the Act and accordingly, must be funded under those
authorities.
The Agency maintained that IETP is a social service program because
it provides self-support services, vocational training and job placement
-- activities which are listed (7) under section 2002(a) as social
services. The Agency cited the Manual as evidence that IETP is a social
service program. The Manual provides at IX-G-1 that IETP "was
established as a result of the 1967 service amendments to the Social
Security Act . . . making it imperative that the (State) develop and
provide self support services to public assistance recipients." The
Agency contended that Iowa's Comprehensive Annual Services Program Plans
for FY 1979 and FY 1982 also acknowledge the IETP program has social
service objectives.
The Agency rejected the State's claim that the social workers
performed activities related to eligibility determinations. The Agency
maintained that eligibility requirements are set forth in the Manual at
IV-G-1 in a section entitled "Clients Eligible for IETP Services,"
and
that the basic eligibility requirement listed for participation in IETP
is that a person be an AFDC recipient and 16 years of age, or older.
The Agency admitted that the State's claim for FFP may include costs
for activities which are allowable under IV-A, such as "obtaining the
costs of the actual expenditures or obtaining documentation of these
costs." The Agency said, however, that the State has not separately
identified those types of costs.
The Agency said that the State claimed the disputed costs under Title
IV-A simply to avoid the Title XX cap on federal funds for social
services.
The Board's Analysis: The costs should be allocated between Titles IV
and XX.
Although the parties essentially argued that the disputed costs must
be charged in their entirety either to Title IV-A or to Title XX, as
explained below, we find that the costs for the social workers'
activities can be divided between the two programs. Thus, we do not
uphold the disallowance because it was overbroad and included costs for
activities which may be funded under Title IV-A. The State however,
still has an affirmative obligation to separate out and substantiate
costs that are allowable under Title IV-A, based on the guidelines set
out below.
(8) This decision is consistent with the regulation at 45 CFR 232.30
which recognizes that some staff will perform both income maintenance
and social services functions, and directs that the costs be allocated
to the appropriate program.
Because payments to IETP program recipients are funded as special
needs under Title IV-A, the costs of activities directly related to
payment of the allowance can be funded as income maintenance costs under
Title IV-A. Therefore, the costs of determining whether an applicant
meets the requirements for a special need allowance, the amount of the
allowance to be paid, the nature and duration of the payments, and other
activities necessary to making the payments, are allowable. Even the
Agency admitted that certain activities may be allowable "as purely
Title IV-A administrative activities, e.g., obtaining the costs of the
actual expenditures or obtaining documentation of these costs."
Respondent's Answers to Board Questions, p. 8.
Examples of social work duties, described in the State's Brief at
pages 8-11 and in the Manual, which fall within the regulation's
definition of income maintenance functions are that the worker:
determines eligibility for, the amount of the allowance (after
verifying outside funding sources), the period of time to be covered by
the allowance, and the frequency of payment. IV-B(2)22, IX-G-17.
completes a financial agreement form and a "payment for training
expenses" authorization form. IV-B(2)-23, IX-G-17.
is responsible for denying or terminating an IETP or modifying the
allowance (for reasons set out in the Manual). IX-G-10.
determines the type and length of training to determine if the
training will be completed within the requisite time, if the training
will be at the type of institution that is allowed under the program, if
the applicant has the requisite academic standing for the training
requested, and, if the requested training is out-of-state, whether
comparable in-state training is available. IX-G-2.
(9) verifies educational costs incurred, monitors and evaluates the
submission of claims for travel related expenses, monitors and evaluates
receipts, allegations of overpayment, and use of allowances. IX-G-7,
IX-G-12-13, IX-G-17-18.
informs applicant of decision on eligibility and informs applicant of
appeal rights. IX-G-15, IX-G-16.
monitors client academic requirements that are requisite to continued
eligibility. IX-G-8.
The activities of the social worker may be funded as income
maintenance costs only to the extent that they involve a determination
(and necessarily, gathering information needed to make a determination)
that the applicant meets specific criteria which are set out in the
Manual as prerequisites for receiving a special need allowance.
To the extent that the social worker's activities shift from the
eligibility determination process and are directed toward the
counselling and plan development process, the activities may not be
funded under Title IV-A.
Even though the IETP program costs are funded as a special need, the
program provides social services as well as financial assistance. The
State's own description of the program admits that it was established to
"provide self support services to public assistance recipients." Manual,
IX-G-1. The Manual also lists program goals which are similar to the
social service goals listed in Section 2002(a) of Title XX of the Act.
Furthermore, the program operated as a social service program for many
years prior to its shift in 1980 to Title IV-A. The State admitted that
the nature of the program or the type of services provided were not
changed when the source of funding was changed. The State said that
"the change from Title XX to Title IV-A special need funding did not
change the work with and the relationship by and between the worker who
is the subject of this dispute and the individual client." State's
Supplemental Brief, p. 3. The IETP social worker does not just accept
an application, make a determination and then send the applicants on
their way. The social worker "assumes total responsibility for
development of all areas of the plan, including social assessment
training/employability planning and job placement." Manual IX-G-4.
These (10) types of activities are social services as defined by Title
XX of the Act. Since the State claimed all costs of administering the
IETP program to Title IV-A, we find that the State's claim necessarily
included unallowable costs for activities connected with the provision
of social services.
Examples of activities, described in the State's Brief at pages 8-11
and in the Manual, which are clearly connected with the provision of
social services are that the social worker /3:/:
provides counselling that will enable the client to decide on
employment goal. IX-G-5.
assists applicants to arrange suitable child care. IX-G-6.
provides supportive social worker services while the training plan is
active, and for providing social services after the termination of the
training plan in order to assist the client in making the transition
from education and training to employment. IX-G-11.
assists the client in locating employment. IX-G-13.
There are no IETP eligibility requirements related to child care
services. The child care may make it easier for the parent to attend
the educational programs, but is not a factor of eligibility. The other
social worker activities described above are designed to help a
recipient qualify for the program or to insure that the recipient
benefits from the program; the activities have no direct bearing on
whether an applicant will receive a special need allowance, and
therefore are not income maintenance functions as defined in the
regulation.
Previous Board decisions support our finding here. In Joint
Consideration: Reimbursement of Foster Care Services, Decision No.
337, June 30, 1982, the Board considered whether Section 403(a)(3)
precluded payment under Title IV-A for foster care placement and plan of
care activities (11) provided by the states. The Board found that
Section 403(a)(3) prohibited FFP under Title IV-A for those activities
because the activities qualified for social services covered under Title
XX, but noted that even the Agency conceded that costs which were
"purely" Title IV-A administrative activities, such as determining
initial and continuing eligibility, rate setting, and maintaining the
case in payment status, could be paid under Title IV-A.
Social worker activities which have social service functions are
prohibited even if they have some tangential income maintenance purpose
as well. For example, when a social worker provides vocational
counselling to enable the client to elect an employment goal for which
training and jobs are available in the community, the worker performs a
social service. The worker is also arguably performing an income
maintenance activity because the worker must determine whether the
applicant has an attainable (fundable) goal. The State may not charge
costs for these activities to Title IV-A based on the limitation in
Section 403(a)(3)(C) of the Act. Whereas Section 2002(a)(8) of Title XX
provides that costs which are allowable under both IV-A or XX may be
charged to Title XX (as long as the costs are not claimed twice), there
is no such flexibility under Title IV-A. If an administrative cost is
chargeable to Title XX as a social service cost, Section 403(a)(3)(C) is
clear that it cannot be charged to Title IV-A. For an extensive
discussion of this issue, see, Board Decision No. 337, pp. 8-13.
We do not accept the Agency's argument that the only eligibility
requirements for IETP are that an applicant be an AFDC recipient and 16
years of age, or older. The Agency's Regional Office Directive
identifies special needs as "needs that are essential for some persons,
but not for all, and that must therefore be determined on an individual
basis." Agency's Response to Board Questions, Exhibit 1. The State must
therefore make individual determinations of eligibility for a special
need allowance. Although the Manual lists just AFDC status and the age
limits under "Eligibility," the Manual also specifically identifies
other criteria which are conditions of receiving and retaining a special
need allowance. For example, the applicant must have applied for all
other available sources of funding first, the requested allowance must
be for expenses allowable under the program, the applicant must meet
requirements concerning the type of educational institution (12) and the
duration of the training, and the applicant must maintain certain
academic requirements in order to continue to receive funding.
We also reject the State's argument that it should receive IV-A
funding for the IETP social workers' activities because the State
receives IV-A funding for workers administering the community work
experience program. Even if we were to conclude that the workers
performed analogous functions, the Act's limitations on IV-A funding for
social services specifically excepts the community work experience
program from the prohibition. When Congress created the community work
experience program in Section 2307 of Pub. L. 97-35, Section 403(a)(3)(
C) of the Act was amended to allow Title IV-A funding for that program.
Section 403(a)(3)(C), as amended, provides:
no payment shall be made with respect to amounts expended in
connection with the provision of any service described in section 2002(
a) of this Act, other than . . . a service provided in connection with a
community work experience program. . . . (emphasis added)
V. Whether the costs were claimed in accordance with the State's IV-A
Plan.
The State's Arguments.
The State also argued that, even if the activities of the social
workers do not meet the definition of income maintenance functions, the
costs should be allowed because they were charged pursuant to a duly
approved State Plan. The State maintained that denial of FFP should be
prospective only, because the Agency gave verbal approval for funding
IETP staff under IV-A, the approved Plan included provision for IETP
workers to be funded under Title IV-A, and the Agency paid the quarterly
grants for the periods at issue. /4/
(13) The Agency's arguments.
The Agency agreed that the State's IV-A Plan provided for payment of
IETP expenses when they were approved by the IETP worker. The Agency
insisted, however, that approval for charging IETP expenses did not
include approval for payment of social worker functions leading up to
the IETP expense. The Agency said that it was not aware that the State
had shifted IETP administrative costs to IV-A until a June 1981 meeting
with State employees. The Agency said that upon learning of the shift,
it conveyed its concerns to the State in a letter dated July 10, 1981.
Agency's Brief, Exhibit 2. The Agency argued further that the State had
not shown that the Agency should, on equitable grounds, be barred from
taking these disallowances, and cited in support, State of New Jersey v.
Department of Health and Human Services, 670 F.2d 1284 (3rd Cir. 1982).
The Board's Analysis: No provision in the State's IV-A Plan prohibits
the disallowance of the disputed costs.
We are not persuaded by the State's claim that the social services
costs should be allowed as a charge to Title IV-A because the costs were
claimed in accordance with the State's approved Plan.
The State Plan material in the record makes no reference to charging
the IETP administrative costs to Title IV-A. Agency's Exhibit 6. The
only reference to the IETP workers in the State Plan is in the context
of when the IETP program costs can be charged to Title IV-A. The Plan
material indicates that payment of the special need allowance will be
made for IETP expenses when approved by the IETP worker, and in the
amount designated by the worker. There is no further reference which
would indicate approval for charging the administrative costs of IETP to
IV-A.
Although the State asserted in an affidavit that unnamed regional
officials gave verbal approval for charging administrative costs to
Title IV-A, there is no substantiation of this information in the
record. In an exchange of correspondence between the State and the
Agency prior to this appeal, the State provided reasons to support its
claim for the disputed costs, but did not mention any verbal approval.
See, Agency's Brief, Exhibits 2-4, State Exhibits 1-7.
(14) In summary, while the State is, in effect, making an estoppel
argument, we find that the State's claim is not supported by the record
in this case. Having made this determination, it is not necessary for
us to consider whether the State has a legal basis to successfully
assert estoppel.
VI. Conclusion
For the reasons stated above, we find that certain activities
performed by the social workers administering the IETP program were
income maintenance activities for which funding is available under Title
IV-A. We therefore remand this case to allow the State 30 days from
when it receives this decision (and any additional time which the Agency
allows) in order to separate out and fully substantiate income
maintenance costs based on the guidelines set out above. If the Agency
does not agree with the revised claim submitted by the State it must
give its reasons in writing. The State will then have 10 days from
receipt of that decision to return to the Board. If the parties
request, the Board will provide a mediator to assist in the
implementation of this decision. /1/ These appeals are considered
jointly, with the consent of the parties, because they involve
identical issues. Docket No. 83-13 involves $109,458 for the period
June 1, 1980 to September 30, 1981. Docket No. 83-67 involves $100,454
for the period October 1, 1981 to December 31, 1982. /2/ IETP
allowances are paid directly to the AFDC recipient. Ongoing IETP
payments such as transportation, and in some instances child care, are
received as part of the monthly AFDC warrant. One-time-only "specials,"
such as allowances for books, uniforms, etc., are paid by a special
warrant. /13/ This list and the list on pages 8-9 are not all
inclusive but are provided to guide the parties in making their
determinations on remand. /4/ The State submitted an affidavit
from the Chief, Bureau of Financial Assistance, Iowa Department of
Social Services, which said that Agency regional officials instructed
the State to "transfer IETP workers' time to IV-A since the work to be
performed was an administrative expense of the IV-A program." State's
Exhibit 1.
NOVEMBER 14, 1984