GAB Decision 554
Docket No. 84-28
July 23, 1984
Wyoming Department of Health and Social Services;
Ballard, Judith; Teitz, Alexander Settle, Norval
The Wyoming Department of Health and Social Services (State) appealed
a determination by the Office of Human Development Services (Agency)
that the State was ineligible for fiscal year 1982 funds under section
427(a) of title IV-B of the Social Security Act (Act). That section
provides that a state may receive additional funds for child welfare
services, beyond the amount available to each state under section 420 of
the Act, * if the state meets certain requirements for the protection of
children in foster care.
The Agency evaluated states' compliance with section 427(a) on two
levels. First, the Agency determined whether a state had established
policies or procedures for implementing the requirements of the Act.
Second, the Agency reviewed a sample of case records to determine
whether these policies or procedures were operational. If a state
failed to establish a requirement as a matter of policy, or, in fiscal
year 1982, a state did not comply with the applicable requirements in at
least 80% of the cases sampled, the Agency required the return of the
section 427(a) funds.
The Agency initially approved the State's written request for
additional funds based on a written certification by the State that it
met the requirements of section 427(a). However, following a review
conducted to validate the State's self-certification, the Agency advised
the State (2) that it was ineligible for fiscal year 1982 funds since it
failed to comply with the Act in at least 80% of the cases sampled.
Specifically, the Agency found that the State had not conducted timely
periodic reviews in the required percentage of cases. The Agency
therefore required the return of $154,678 expended by the State pursuant
to title IV-B of the Act.
For the reasons discussed below, we sustain the Agency's
determination that the State was ineligible for the section 427 funds
awarded for fiscal year 1982.
Applicable Law
As one of the conditions for the receipt of additional child welfare
funds, section 427(a)(2)(B) requires that a state have implemented and
be operating to the satisfaction of the Secretary--
A case review system (as defined in section 475(5)) for each child
receiving foster care under the supervision of the State. . . .
Section 475(5) provides that--
(5) The term "case review system" means a procedure for assuring
that--
(A) each child has a case plan designed to achieve placement in the
least restrictive (most family like) setting available and in close
proximity to the parents' home, consistent with the best interest and
special needs of the child,
(B) the status of each child is reviewed periodically but no less
frequently than once every six months by either a court or by
administrative review (as defined in paragraph (6)) in order to
determine the continuing necessity for and appropriateness of the
placement, the extent of compliance with the case plan, and the extent
of progress which has been made toward alleviating or mitigating the
causes necessitating placement in foster care, and to project a likely
date by which the child may be returned to the home or placed for
adoption or legal guardianship, and
(3) (C) with respect to each such child, procedural safeguards will
be applied, among other things, to assure each child in foster care
under the supervision of the State of a dispositional hearing to be
held, in a family or juvenile court or another court (including a tribal
court) of competent jurisdiction, or by an administrative body appointed
or approved by the court, no later than eighteen months after the
original placement (and periodically thereafter during the continuation
of foster care), which hearing shall determine the future status of the
child (including, but not limited to, whether the child should be
returned to the parent, should be continued in foster care for a
specified period, should be placed for adoption, or should (because of
the child's special needs or circumstances) be continued in foster care
on a permanent or long-term basis); and procedural safeguards shall
also be applied with respect to parental rights pertaining to the
removal of the child from the home of his parents, to a change in the
child's placement, and to any determination affecting visitation
privileges of parents.
Agency's Findings
The State was found fully eligible for section 427 funding for fiscal
year 1981, the first year for which funding was available. For fiscal
year 1982, although the Agency determined that the State had maintained
appropriate policies and procedures for implementing the section 427
requirements, the Agency found that in 25 of 85 cases sampled, the State
failed to conduct periodic reviews within six months as required by
section 475(5)(B) of the Act. Since this constituted compliance in only
70.6% of the cases sampled, the Agency found the State ineligible for
the section 427 funds available for that fiscal year. The State
disputed this finding on several grounds, discussed separately below.
Notice to State of Applicable Requirements
The State asserted on appeal that the Agency had failed to publish
regulations establishing criteria for the case review system, of which
the periodic review requirement is (4) a part. Specifically, the State
argued that there was "no official clarification of Section 427
requirements for the 'six month' review." (State's brief dated April 16,
1984, Attachment #1, pp. 2-3) The Agency responded that the fact that
the periodic review requirement was not specifically mentioned in
regulations implementing section 427 was irrelevant since the statute
itself requires that cases be reviewed "no less frequently than once
every six months." (Agency's brief dated June 4, 1984, pp. 10-11)
We agree with the Agency that the lack of any regulations regarding
the periodic review requirement was not prejudicial to the State in the
instant case. The Agency found that 25 cases did not have timely
periodic reviews. The State conceded that the reviews were not timely.
(Letter from Director, Wyoming Department of Health and Social Services,
to Acting Administrator, Administration for Children, Youth and
Families, Office of Human Development Services, dated September 23,
1983, p. 3) The State did not allege that there was any ambiguity as to
how the periodic review requirement should have been applied in any of
the 25 cases. Since the statutory provision on which the Agency relied
is clear, the Agency was not required to repeat or amplify the
requirement in regulations or elsewhere in order to enforce it. (See
New York Department of Social Services, Decision No. 274, March 31,
1982, p. 5)
Compliance with the Paperwork Reduction Act of 1980
The State also asserted that there was "no indication that the form
used in the (case record) review received OMB clearance," and argued
that such clearance was required by the Paperwork Reduction Act of 1980
and the implementing regulations at 5 CFR Part 1320. The State argued
that if it had not acceded to the case record review using the allegedly
invalid form, another method more favorable to the State might have been
used to validate its compliance with section 427. (State's brief dated
April 16, 1984, Attachment #2; State's reply brief dated June 19, 1984,
Attachment #2) The Agency responded that its finding that the State did
not meet the statutory requirements applicable to it "was not dependent
on the forms that were used to reflect that non-compliance." (Agency's
brief dated June 4, 1984, p. 11)
Although the specific forms in question are not identified by the
parties, it appears that the parties intended to refer to a "Report on
State Eligibility" to be filled out by (5) Agency staff following the
review conducted to validate compliance with section 427. An
uncompleted copy of this report is included as part of Agency program
instruction PI-82-06, dated June 3, 1982. (Agency Exhibit 1) The report
is essentially a checklist of section 427 requirements, with space to
indicate whether the various requirements were met, as well as for
recommendations. The report also provides for recording data such as
the number of case records surveyed, the number of cases in which
safeguards were met, etc.
We do not agree that this form was subject to the requirements of the
Paperwork Reduction Act. The regulations implementing that statute
provide that "(a)n agency shall not engage in a collection of
information without obtaining Office of Management and Budget (OMB)
approval of the collection of information. . . ." 45 CFR 1320.4(a).
However, section 1320.7(k) provides that the term "information" does
not
generally include "(f)acts or opinions obtained through direct
observation by an employee or agent of the sponsoring agency. . . ."
Since the "Report on State Eligibility" reflects facts and opinions
obtained by Agency personnel through their own review of State policies,
procedures and case records, it appears to fall outside the scope of the
Paperwork Reduction Act. (Although the regulations were not effective
until May 2, 1983, (5 CFR 1320.2), we use them as a basis for our
discussion here since they are cited in the State's brief.)
Universe Sampled in Case Record Review
States were instructed to make available to federal reviewers all
case records involving children who entered foster care prior to April
1, 1982 and who were still in foster care as of September 30, 1982.
Thus, all cases selected for review involved children in foster care for
at least six months during fiscal year 1982 who remained in foster care
through the end of the fiscal year. The State challenged the Agency's
finding of ineligibility on the ground that the universe sampled should
have included the Sate's entire foster care caseload subject to section
427. (State's brief dated April 16, 1984, Attachment #2) The State
argued that "(by) narrowing the base from which the sample was drawn to
those cases that remained in care longer than six (6) months the Agency
has failed to test the full requirements under the law." (State's reply
brief dated June 19, 1984, Attachment #3) The Agency responded that
"(limiting) the review to the cases of children in foster (6) care more
than six months clearly is reasonably related to insuring that the
six-month review requirement of section 427 has been met in the cases
where it is applicable." (Agency's brief dated June 4, 1984, p. 11)
The State's argument that the universe sampled should have consisted
of the State's entire foster care caseload has no merit. This Board has
held that the language of the Act requiring that states be operating "to
the satisfaction of the Secretary" a case review system "for each
child
in foster care" gives the Agency reasonable discretion in choosing the
cases to be reviewed. Arkansas Department of Human Services Decision
No. 553, July 16, 1984, p. 10. The Board further stated in that
decision that since the Agency could have required compliance with the
applicable safeguards in 100% of a state's foster care caseload, with
some leeway for minor violations, there was no reason why the Agency
should have been required to draw a sample from the entire caseload.
Accordingly, the Agency's determination of ineligibility may not be
reversed on this basis.
A related argument advanced by the State was that the sampling method
was inequitable for a state such as Wyoming with an extremely small
caseload. The State noted that a state with a large caseload could have
more cases in error than Wyoming's entire caseload and still be found in
compliance with the Act. The State contended that "(because) Wyoming's
caseloads are so small, the mix of cases by age of child, type of
placement, and size of local agency must be taken into consideration. .
. ." (State's brief dated April 16, 1984, Attachment #2)
As the Agency noted, however, this argument overlooks the fact that
eligibility for section 427 funding was determined not by the total
number of non-complying cases in the sample, but rather by the
percentage of non-complying cases. (Agency's brief dated June 3, 1984,
p. 12) We thus fail to see how the sampling procedure was unfair to
states with smaller caseloads. Furthermore, the State advanced no
reason why consideration of factors such as mix of cases by age of child
would result in more equitable treatment of such states. Certainly the
statute makes no distinction among cases on the basis of that factor or
the others cited by the State.
Fiscal Sanction Available to Agency
The State also argued that the Agency improperly required it to
return all funds expended pursuant to section 427. In support of its
position, the State cited OHDS/ACYF Policy (7) Announcement (PA) 84-2,
March 7, 1984 (Agency Exhibit 5), which it asserted indicates that only
part, and not all, of the State's section 427 allotment should have been
recouped. (State's brief dated April 16, 1984, Attachment #3) PA-82-4
states, in pertinent part, that "(i)t is now and has always been the
policy of the Department to use valid statistical sampling methods,
including extrapolation from a sample to a universe, to determine the
amount of expenditures eligible for Federal financial participation in
all Departmental programs, including Title IV-E and Title IV-B
programs." The Agency responded that PA-82-4 "was clearly intended
to
address only those circumstances where extrapolation from (sic) a
universe was the basis for the disallowance," and noted that this was
not the case here. (Agency's brief dated June 3, 1984, p. 14)
We agree with the Agency that PA-82-4 is inapposite here. That
document indicates that where the Agency samples payments made by a
state pursuant to title IV-E or IV-B to determine whether such payments
are eligible for federal financial participation, the Agency will
project the dollar amount of ineligible payments in the sample to the
universe of all payments to calculate the amount of a state's claim
which should be disallowed. The instant case does not involve a claim
for federal financial participation in a state's eligible expenditures,
however. Under section 427(a), a fixed amount of funding is available
to each state which satisfies the conditions set forth in that section.
As part of its process of determining whether a state satisfied these
conditions, the Agency sampled case records. If a state satisfied the
conditions in a certain percentage of the cases sampled, the Agency
deemed the State to have complied with the applicable conditions.
However, the sample was used only as a tool to verify compliance with
the conditions on which eligibility for the fixed amount of funding was
predicated. Thus, the fact that the Agency's policy is to project the
amount of ineligible payments in a sample to determine what part of a
state's claim for federal financial participation is unallowable does
not provide any authority for the Agency to "pro-rate" a state's section
427 funds according to the degree of compliance as shown by the case
records survey.
The State also argued that a "full disallowance" of all section
427
funds was not consistent with section 471(b) of the Act. That section
provides that--
in any case in which the Secretary finds, after reasonable notice and
opportunity for a hearing, that a State plan under title IV-E which has
been approved by (8) the Secretary no longer complies with the
provisions of subsection (a), or that in the administration of the plan
there is a substantial failure to comply with the provisions of the
plan, the Secretary shall notify the State that further payments will
not be made to the State under this part, or that such payments will be
made to the State but reduced by an amount which the Secretary
determines appropriate, until the Secretary is satisfied that there is
no longer any such failure to comply. . . .
Subsection (a) of section 471, referred to in the paragraph quoted
above, requires, among other things, that a state plan for foster care
and adoption assistance under title IV-E must provide "for the
development of a case plan . . . for each child receiving foster care
maintenance payments under the State plan and . . . for a case review
system which meets the requirements described in section 475(5)(B) with
respect to each such child." Thus, both section 471 and section 427(a)
incorporate the case review requirement at section 475(5)(B) of the Act.
The State contended that its failure to fully comply with the case
review requirement in all cases sampled would not call for the
suspension of all payments under section 471(b), since it involved only
a "detailed administrative procedure," and argued that therefore the
Agency could not "disallow" all section 427 funds based on the same
failing by the State. (State's reply brief dated June 19, 1984,
Attachment #3, p. 1)
In our view, however, the State makes too much of the relationship
between section 471 and section 427(a). Section 471(b) by its terms is
limited in its application to "payments . . . under this part," that
is,
payments for foster care and maintenance assistance under title IV-E.
Section 427(a) makes available additional funds for child welfare
services under title IV-B. The fact that the same case review system is
required under both titles IV-E and IV-B does not necessarily mean that
a state's failure to fully comply with the requirements for a case
review system should affect funding under these two titles in the same
way. The funds are appropriated for different purposes and the
appropriation in each case is subject to its own constraints. Section
427(a) provides that "a State shall not be eligible for payment . . .
unless such State" has implemented and is operating to the satisfaction
of the Secretary a case review system. This clearly authorizes the (9)
Agency to withhold section 427 funds or, to void the grant of such
funds, if it determines that the State has not complied with the
applicable requirements. (See Ohio Department of Public Welfare,
Decision No. 472, October 31, 1983, pp. 6-7) Thus, even assuming that a
suspension of all title IV-E funds pursuant to section 471(b) would not
be warranted, there is no basis for using this section to limit the
Agency's authority to recoup funds under section 427(a).
Conditional Compliance
The State also argued on appeal that pursuant to PI-82-06, it should
have been found to be in conditional compliance with section 427,
quoting the following language from Agency program instruction PI-82-06:
. . . a minimum of 66% or 80% of sample cases must be found
acceptable for the state to obtain conditional compliance or substantial
compliance, respectively.
Conditional compliance (66% to 79%) allows the State FFP under
Section 427 for the year under review and provides an additional year
for the state to meet the 80% (substantial compliance) level.
(PI-82-06, p.11)
The State argued that since 70.6% of the cases sampled were found to
be complying in fiscal year 1982, the State should have been found
eligible for section 427 funding in that year and been given an
additional year beyond fiscal year 1982 to meet the 80% level. (State's
brief dated April 16, 1984, Attachment #4)
As the Agency pointed out however, the State failed to note further
language in PI-82-06 stating that conditional compliance "is only
possible for the initial year in which the state certifies that it is
meeting the protections of Sec. 427." (PI-82-06, Attachment E, p. 1)
Thus, the program instruction clearly gave the states this additional
leeway only during the start-up year of the program. The State was
found to be in substantial compliance during its fiscal year 1981
start-up year. (Agency's brief dated June 4, 1984, p. 15) Accordingly,
there was no basis for permitting it to fall below the 80% level in the
following fiscal year.
Substantial Compliance
Finally, the State argued that it substantially complied with the
requirements of section 427 since statistics indicated that it performed
well in relation to other states in (10) meeting the underlying
objectives of section 427. Specifically, the State asserted that it was
fifth among all states in the percentage by which it reduced the number
of children in foster care, and ninth among all states for the lowest
percentage of children in foster care for 24 months or more.
In addition, the State noted that the fiscal year 1982 review found
that the State had established appropriate procedures for the five major
safeguards required by section 427, and that the State met the
requirements for a case plan and 17 other elements of section 427 in the
case record review. (State's reply brief dated June 19, 1984,
Attachment #4)
In our view, however, the facts noted by the State do not render
insubstantial a conceded violation of the requirement for timely
periodic reviews. This Board has previously stated that it sees
"nothing" in section 427 "that gives the Agency discretion to
excuse the
violation of a significant statutory requirement. . . . At most, the
language of section 427 gives the Agency discretion to waive minor
violations." (Vermont Department of Social and Rehabilitation Services,
Decision No. 546, June 27, 1984, p. 10) The State's performance with
respect to other requirements of section 427 and in relation to other
states does not lessen the significance of the statutory requirement at
issue here, which is an integral part of the system of safeguards for
foster care children. That the State may have furthered the underlying
goals of the statute by moving children out of foster care quickly is
not relevant here since Congress chose to measure compliance with its
goals in another way.
Conclusion
For the foregoing reasons, we find that the State failed to comply
with the requirement for timely periodic reviews in fiscal year 1982 as
required by section 475(5)(B) of the Act. Accordingly, we sustain the
Agency's determination that the State was ineligible for the $154,678
available pursuant to section 427 for that year. * The additional funds
are a proportional share of the amount appropriated for title IV-B which
exceeds $141,000,000, in this case, $30,010. The amount in dispute in
this case also includes $124,668 of title IV-E funds transferred to
title IV-B and subject to the requirements of section 427 under section
474(c) of title IV-E.
NOVEMBER 14, 1984