DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Missouri Department of Social Services
Docket No. 85-209
Decision No. 844
DATE: March 2, 1987
DECISION
The Missouri Department of Social Services (DOSS, State) appealed the decision
of the Regional
Director, Region VII (Agency), of the Department of Health and Human Services
affirming the
disapproval by the Region VII Division of Cost Allocation (DCA) of the State's
proposed amendment to
its cost allocation plan (CAP) for services under Title IV-E of the Social Security
Act (Act). The central
issue raised by this appeal is whether the State can amend its CAP so as to
claim certain activities
performed by DOSS as administrative costs under the IV-E program. The
Regional Director had found
that an amendment authorizing reimbursement of these activities could not be
approved because the
activities were outside the scope of the IV-E program. In a related finding,
the Regional Director
concluded that definitions for time study codes used in the proposed amendment
were inconsistent with
Agency regulations.
For the reasons described below, we find that the disputed activities themselves,
if properly defined by the
State in its plan, are reimbursable under the IV-E program as administrative
costs. The activities are
proper and necessary administrative activities under the statute and regulations
and indeed are specifically
identified without qualification under the regulations as reimbursable administrative
costs. We also find,
however, that the Agency may require changes in the definitions for time study
codes in the State's
proposed amendment to ensure that the codes are consistent with the regulations
and to ensure that they
are as specific as necessary for correct implementation in the field.
In the course of this appeal the Board received submissions in support of the
State's position from the
Arkansas Department of Human Services, the Maryland Department of Human Resources
and the West
Virginia Department of Human Services. These state agencies (Intervenors)
alleged that they had either
submitted or were in the process of submitting CAP amendments similar in
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whole or in part to those at issue here. The Board determined that these
state agencies had a "clearly
identifiable and substantial interest in the outcome of the dispute" and admitted
their submissions into the
record as intervenors in accord with 45 CFR 16.16(b). The Board gave the
Agency the opportunity to
respond to these submissions.
Statutory Background of the IV-E Program
The Child Welfare Services program has been a part of the Act since the Act's
inception in 1935. In 1968
Congress transferred this program to Title IV-B of the Act (sections 420-425
of the Act). Historically,
Title IV-B has provided federal grants to states to establish, extend, and strengthen
child welfare services.
The services are available to all qualified children, including the handicapped,
homeless, neglected, and
dependent.
The Adoption Assistance and Child Welfare Act of 1980, Pub. L. 96-272,
was enacted on June 17, 1980.
In addition to amending Title IV-B, this legislation established a new program,
the Title IV-E program,
Federal Payments for Foster Care and Adoption Assistance. The foster care
component of the aid to
families with dependent children (AFDC) program, which had been an integral
part of the AFDC
program under Title IV-A of the Act, was transferred to the new Title IV-E,
effective October 1, 1982.
Title IV-E (42 U.S.C. sections 670-676, sections 470-476 of the Act) had as
its impetus the belief that the
public child welfare system responsible for serving dependent and neglected
children had become a
holding system for children living away from their parents. Congress intended
Title IV-E "to lessen the
emphasis on foster care placement and to encourage greater efforts to find permanent
homes for children
either by making it possible for them to return to their own families or by
placing them in adoptive
homes." S. Rep. No. 336, 96th Cong., lst Sess. 1 (1979), reprinted in 1980 U.S.
CODE CONG. & AD.
NEWS 1448, 1450.
Title IV-E enables each state to provide, in appropriate cases, foster care
and adoption assistance for
children who otherwise would be eligible for assistance under a state's approved
Title IV-A plan (42
U.S.C. section 601 et seq.) or, in the case of adoption assistance, would be
eligible for benefits under the
Supplemental Security Income program of Title XVI (42 U.S.C. section 1381 et
seq.). In order to carry
out the provisions of Title IV-E, appropriations made available for that program
are to be used
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for making payments to those states which have submitted, and had approved by
the DHHS Secretary,
state plans under Title IV-E. 42 U.S.C. section 671. Congress identified
three separate categories of
expenditures for which states are entitled to FFP under payment formulas set
forth in 42 U.S.C. section
674: foster care maintenance payments for children in foster care homes
or child care institutions (42
U.S.C. section 672); adoption assistance payments (42 U.S.C. section 673); and
payments "found
necessary by the Secretary for the proper and efficient administration of the
State plan . . ." 42 U.S.C.
section 674(a). The last category, expenditures for plan administration,
is subdivided to cover the cost of
training state personnel to administer the IV-E program and all other administrative
expenditures. 42
U.S.C. section 674(a)(3). 1/
The Agency's regulations implementing Title IV-E are codified at 45 CFR Part
1356 (1983).
The Cost Allocation Plan Process
A state participating in the various categorical programs under the Act, including
Title IV-E, is required
to make determinations as to the amount of commonly incurred expenditures, such
as staff time, that are
attributable to each program the state administers. A state is required
to submit a plan for cost allocation
to the Director, DCA, in the appropriate DHHS regional office. 45 CFR
95.507(a). This cost allocation
plan is defined as "a narrative description of the procedures that the State
agency will use in identifying,
measuring, and allocating all State agency costs incurred in support of all
programs administered by the
State agency." 45 CFR 95.505. The CAP must contain sufficient information
to permit the DCA Director
to make an informed judgment on the correctness and fairness of the state's
procedures for identifying,
measuring, and allocating all costs to each of the programs administered by
the state agency. 45 CFR
95.507(a)(4).
1/ For foster care maintenance assistance payments and adoption assistance
payments, each state
with an approved plan is entitled to a payment equal to the federal medical
assistance percentage (as
defined in 42 U.S.C. section 1396d(b)) of the amounts expended by the state.
For staff training, 75% of a
state's costs are reimbursed. For any remaining administrative expenditures,
50% of the costs are
reimbursed.
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Amendments to a CAP may be submitted to DCA (45 CFR 95.509), and, if DCA disapproves
the
amendment, a state may seek reconsideration of the DCA decision by the DHHS
Regional Director. 45
CFR Part 75. A Regional Director's negative determination may be appealed
to the Board. 45 CFR
75.6(c).
Factual Background
Pursuant to 42 U.S.C. section 671, the State had an approved plan for the provision
of Title IV-E services.
On September 25, 1984, the State submitted to the Region VII DCA an amendment
to its CAP then in
effect. State Appeal File, Ex. A. The proposed CAP amendment took
the form of a series of "time study
codes" describing various administrative activities performed by Children's
Services field workers of the
Missouri Division of Family Services (DFS). Under the proposed amendment,
the Children's Services
workers would record the time spent on activities described by each code during
a designated sampling
period. These records would then become the basis for the State's allocation
of costs among various
programs. Code 3 of the proposed amendment concerned the provision of
social services which would not
be charged to Title IV-E. Code 4, entitled "Child Welfare Service Administration,"
listed examples of
administrative costs which would be allocated to Title IV-E.
On May 29, 1985, the Director, DCA, rejected the proposed amendment and found
that the definitions
used for the time study codes charged to the IV-E program included unallowable
social services which
should be allocated to either the Title IV-B or Title XX (Social Services) programs.
State Appeal File,
Ex. B. On September 9, 1985, the Agency's Regional Director affirmed DCA's
decision.
While the original CAP amendment was being reviewed by the Regional Director,
the State submitted a
revised CAP amendment to DCA. T!:e DCA Director, on September 23, 1985,
approved a version of the
State's CAP with revised time study codes. The plan was given the same
effective date as the effective
date of the original amendment (July 1, 1984). The State, however, maintained,
with its appeal to the
Board, that the original CAP amendment should have been approved
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Issues in Dispute
The issues raised by
the State in its appeal brief are as follows: 2/
--
whether administrative costs, such as those for plan development, judicial
determinations and
referrals, are allowable under Title IV-E if incurred for
candidates for
IV-E cash benefits who do not become recipients;
2/ In addition to its substantive arguments, the State contended that
it was legally entitled to
approval of its CAP amendment on procedural
grounds. The State alleged that the Director, DCA, had
failed to
comply with the mandates of 45 CFR 95.511 (1983) and that, accordingly, the
Director was
estopped and prohibited from disapproving the CAP
amendment. The State alleged that it had submitted
the CAP amendment
on September 25, 1984, and the DCA did not respond until December 20, 1984
when DCA indicated that the State's information concerning the amendment was
"incomplete." The
Agency disputed the State's interpretation of 45 CFR
95.511(a) and denied that the absence of the written
notification
constitutes approval of an amendment.
In addition to employing the
Board's procedures to reverse the Agency's decision, the State sought a
preliminary and permanent injunction in a United States district court
requiring DHHS to take the
necessary administrative action to release funds
claimed by the State for fiscal years 1983, 1984, and 1985
pending the
outcome of its appeal before the Board. The District Court ruled that
DCA's failure to
respond in writing within 60 days did not constitute
"deemed approval" of the proposed plan amendment,
and further refused to
adopt the State's suggestion that section 95.511 could be interpreted as
providing for
such a "deemed approval." State of Missouri v. Bowen,
No. 85-4592-CV-C-5 (W.D. Mo. April 1, 1986).
In an Order to
Develop the Record, the Board suggested to the parties that it would appear to
be bound by
the court's ruling on the applicability of section 95.511.
The State responded that it was appealing the
district court's decision to
the U.S. Court of Appeals for the Eighth Circuit and requested that the Board
continue its deliberations on this point in the possibility that a Board
decision in the State's favor would
render moot the need for further
appellate proceedings.
As a United States district court has ruled
on this specific procedural point and the State did not provide
any reasons
why the court's ruling was wrong or why it should not be binding, we reject the
State's
procedural argument.
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-- whether the costs associated with negative
determinations of IV-E eligibility qualify for FFP under
Title IV-E; and
-- whether definitions in the State's time study code
for unallowable social services and allowable
administrative activities are
impermissible.
In the course of this appeal the Agency raised the
additional issue of whether the administrative costs
resulting from the
State's amendment, if accepted, would be unreasonable per se within the context
and
intent of the IV-E program.
I. Whether
administrative activities, such as those for plan development, court
participation and
referrals, are reimbursable under Title IV-E if undertaken
for program candidates who never become
recipients.
The
State's proposed CAP amendment sought to allocate to Title IV-E administrative
costs incurred prior
to the actual placement of a child in foster care,
regardless of whether the child ultimately becomes a
recipient of IV-E cash
benefits, and costs incurred after a foster care placement has been terminated.
3/
The specific administrative activities at issue are: development of
the case plan, preparation for and
participation in judicial determinations,
and referral to services. The Regional Director rejected the
State's
proposal, holding that the only administrative costs reimbursable under Title
IV-E are those which
relate to children who go on to become recipients of
benefits as specified in 42 U.S.C. section 672. This
section provides
that a state shall make foster care maintenance payments for a child who has
been
removed from a home of a relative either as the result of a voluntary
placement agreement or a judicial
determination. According to the
Agency, if a child is a program candidate and does not ever
3/ The State reasoned that a child who has been in foster
care can be just as much a candidate for
foster care placement as a child
who has not been in placement
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become a recipient of cash benefits, no
administrative expenditures incurred for that individual should be
reimbursable. 4/
The State maintained that the Agency's focus
on section 672 eligibility and the child's removal from his
home confuses
the standard for FFP in foster care maintenance payments with the standard for
FFP in
administrative costs under the IV-E
program. The
State argued that the program established three
distinct categories of
expenditures which qualify for FFP: foster care maintenance payments,
adoption
assistance payments, and payments necessary for the proper
administration of the IV-E state plan. The
State insisted that the
issue raised by its CAP amendment was whether the specific activities were
allowable administrative costs -- whether they were necessary for the
proper and efficient administration
of the state plan
-- regardless of
whether they were provided to candidates who became recipients.
The State explained that there are administrative steps required
by the program which must be taken
before a child can be removed from his
home and placed in foster care and thus become eligible for
benefits.
The State is first required by its State plan to take reasonable efforts to
prevent or eliminate the
need for removal of the child from his home or to
make it possible for the child to return home. 42 U.S.C.
section
671(a)(15). If these efforts fail, the State is then required to develop a
case plan and a case review
system. 42 U.S.C. section
671(a)(16). As a necessary step in removing a child from the home, the
State
may have to prepare for and participate in a judicial
proceeding. The State asserted that the Agency has
4/ Although the Agency included in its appeal file (Ex. 13)
a policy announcement (PA-ACYF-85-01,
effective November 18, 1985) in
support of its position, it did not rely at all on the announcement in its
arguments before the Board. In any event, the policy announcement
could not be binding on the State for
the first two years covered by the
proposed plan amendment (the years beginning July 1984 and July
1985), since
it was not issued until November 18, 1985. Moreover, to the extent the
policy announcement
conflicts with the applicable statute and regulations
for any subsequent period, the Board must give
precedence to the statute and
regulations. As we discuss below, the State's position is fully supported
by
both the statute and the regulations.
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authorized reimbursement for administrative activities to
carry out these steps by the issuance of 45 CFR
1356.60(c)(2), where such
activities as referral to services, preparation for and participation in
judicial
determinations, and development of case plan are listed as
allowable IV-E administrative costs.
We find that the disputed
activities are in fact required by the program and are specifically identified
by
the regulation as allowable with absolutely no indication of the
restriction the Agency here seeks to
impose. Indeed, several other
examples of allowable administrative activities listed in the regulation are
not directly tied to individual cash recipients under the program (e.g.,
licensing of foster homes and rate
setting). More importantly,
however, the program statute and regulations consistently recognize that the
activities in question would be proper administrative costs for program
candidates.
As the State argued, these activities are
administrative steps taken by the State under its program to bring
about
foster care placement and hence eligibility for cash benefits.
Consequently, where the State
performs one of these activities in
anticipation of qualifying an otherwise eligible child for foster care
benefits, the State should receive reimbursement for the activities as a
necessary administrative cost. The
program required the State to take
the actions irrespective of whether the child subsequently is determined
eligible for IV-E benefits or not.
The Agency has agreed to
reimburse identical activities provided prior to removal from the home for those
children who ultimately become eligible. The State, however, provides
the activities in question not
knowing whether a child will be removed and
should not lose reimbursement simply because a child is not
removed.
(The reason a child is not removed, for example, may be that the case plan led
to a
reassessment of the child's home situation or a court refused to remove
a child from its home in spite of
the State's efforts in judicial
proceedings.) The State's CAP would allocate these costs to IV-E only for
children who are candidates for foster care benefits and who would be
recipients but for the completion of
these administrative steps and the
eligibility determination itself. The Agency loses sight of the fact that,
in order to ensure that every eligible individual becomes a recipient, the
State will have to engage in
activities for candidates who will never become
recipients. These activities are just as much necessary
activities for
the program as those provided for children who do become program recipients.
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The Agency would here require that the State allocate all of
the disputed activities, such as referrals and
case plan development, to
some other federal program, such as those authorized by Titles IV-B or XX.
Yet the Agency nowhere explains precisely what relationship these costs
would have to another program
and why allocation to the other program should
be mandatory in the absence of statutory or regulatory
authority to that
effect. We see no reason why the State must be forced to allocate the
costs elsewhere
when they are specifically undertaken to fulfill IV-E
requirements. 5/
The Agency specifically singles out case
development activities as not deserving reimbursement because,
according to
the Agency, the statute authorizes reimbursement for those services only for
children
receiving foster care maintenance payments. The provision at
issue (42 USC section 671(a)(16)),
however, does not specifically concern
reimbursement but rather requires that an approved state plan
provide for
the development of a case plan (as defined in section 675(a)) for each child
receiving
payments.
5/ The regulatory history provides further support to the
State's position that it may claim these activities
under Title IV-E.
In the preamble to the proposed provision which eventually became 45 CFR
1356.60,
the Agency stated:
The costs
of conducting the activities essential to fulfilling the plan requirements under
Sections 471 of
the Act [45 CFR 1356.80] are considered as necessary for the
proper and efficient administration of the
State plan under Title IV-E,
except for the nonrecurring costs of adoption and the cost of complying with
the reporting requirements which are deemed to be child welfare services
costs and may not be reimbursed
under this part. Furthermore, the
costs of direct services to children, parents or foster parents to
ameliorate personal problems and which go beyond the activities specified in
the regulation are to be
funded from other programs. The regulation
delineates such social service costs from those required to
carry out the
provisions under Title IV-E. Apart from these exceptions it is recognized
that the activities
prescribed in the law and the protections provided under
Section 427 [Title IV-B, 42 U.S.C. section 627]
may overlap. The
regulation, therefore, provides flexibility to the States to choose which
programs to
charge these costs and the method used for charging and claiming
costs.
45 Fed. Reg. 86817, 86826
(December 31, 1980) (emphasis added).
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The statute, in defining "case plan," clearly envisions
that a state may begin to prepare a plan for program
candidates prior to
their actual placement in foster care, and the Agency did not argue
otherwise. Indeed,
as already mentioned, the Agency reimburses for
case plans prepared prior to removal if the child
ultimately becomes
eligible for benefits. The preparation of case plans prior to placement,
moreover,
appears to be fully consistent with the purpose of the
statute. It means that the case plan is prepared at a
time when
options may still exist as to placement and is not merely a justification on
paper of what
already has occurred. The legislative history strongly
suggests that the case plan requirement was to be
more than a mere paper
requirement. S. Rep. No. 336, 96th Cong., lst Sess. 1 (1979), reprinted in
1980
U.S. CODE CONG. & AD. NEWS 1448. Thus, as long as a
state is acting within the discretion afforded
by statute, regulation, its
own state plan, and Agency policy guidance by preparing case plans in advance
of the removal of the child from the home, we find that the State is
performing an activity necessary for
the proper administration of the
program even if the child ultimately does not become a benefit recipient.
6/
The program provisions authorizing "referral" activities provide a
similar case in point. Referrals support
the program goal of taking
reasonable efforts --
(A) prior to the
placement of a child in foster care, to prevent or eliminate the need for
removal of the
child from his home, and (B) to make it possible for the
child to return to his home. . . . (42 U.S.C. section
671(a)(15))
Obviously to achieve this statutory goal the State would have to
engage in referral activities for program
candidates, as well as
recipients. Moreover, if the referrals are successful, as would be hoped,
the child
never becomes a program recipient. Since the regulation
clearly authorizes reimbursement for referrals
and since referrals so
clearly further a program
6/ If in preparing the case plan, the State decides that the child
is no longer a candidate for foster care
cash benefits, any subsequent case
plan activities would not be chargeable to Title IV-E.
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goal affecting only program candidates, we see no reason
why the State's efforts for such individuals
would not be reimbursable under
the program. The Agency, of course, can limit reimbursement to only
those individuals the State reasonably views as candidates and to only those
referrals specifically designed
to further the statutory goal of section
671(a)(16). 7/
As a final point showing the unreasonableness of
the Agency's position, we agree with the Intervenors that
the result of
adopting the Agency's position would be to deny FFP where the purpose of the
IV-E program
-- to keep children out of foster care where possible -- was
achieved. As noted above, one of Congress'
concerns was the
warehousing of children away from their natural homes with little hope of
permanent
placement. Thus, for example, section 671(a)(15) calls for
reasonable efforts to prevent the removal of a
child from his natural
home. Yet the Agency's interpretation would have the opposite effect to
that
intended by Congress. Under the Agency's position, a state could
be deterred from taking preventive
efforts such as referrals since it would
have no assurance of receiving IV-E reimbursement if it did, since
no
reimbursement would be received for referrals that prevented removal of the
child. On the other hand,
a state which incurred administrative costs
prior to the removal stage would have the incentive, if it
wished to claim
FFP for its administrative activities, to pursue removal of a child from his
home even if
other options to removal were available. Certainly this
would not seem to have been Congress' intention
when it enacted the Adoption
Assistance and Child Welfare Act.
On the basis of the foregoing,
we find that, under the statute and existing regulations, the State should be
able to receive reimbursement for the disputed administrative activities.
II. Whether costs associated with negative determinations
of
IV-E eligibility are reimbursable under Title IV-E.
The State's
proposed CAP amendment sought to allocate to Title IV-E the costs of making all
eligibility
determinations, both positive and negative, for the IV-E
program.
7/ Furthermore, as we emphasize in part III of this decision, the
State is limited specifically to the referral
service per se and may not
claim counseling services under the aegis of a referral.
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The Agency rejected this proposal, holding that costs
associated with the determination of IV-E eligibility
must be allocated to
Title IV-B and Title XX on the basis of the percentage of Title IV-E to non-IV-E
children in the State's custody. As with the question of pre-placement
administrative costs, the Agency
contended that only administrative costs
related to children eligible under 42 U.S.C. section 672 are
allowable IV-E
administrative costs. The Agency claimed that it was longstanding policy
for the IV-E
program not to allow reimbursement for negative eligibility
determinations, with reimbursement for those
eligibility determinations for
children provided foster care under a program other than IV-E charged to
that program.
The State argued that the determination of
eligibility, be it positive or negative, is an administrative cost
"necessary . . . for the proper and efficient administration of the State
plan." The State argued that the
Agency by regulation has explicitly
authorized eligibility determination as an allowable administrative
cost:
The determination and redetermination of
eligibility, fair hearings and appeals, rate setting and other
costs
directly related only to the administration of foster care program under this
part are deemed
allowable administrative costs under this paragraph.
They may not be claimed under any other section or
Federal program.
45 CFR 1356.60(c)(l)
The State emphasized that
the IV-E program is an entitlement program, and as such, the determination of
who is and who is not eligible is an indispensable part of the foster care
program. The State asserted that
the Agency routinely reimburses all
eligibility determinations in such programs as AFDC and the
Medicaid
program. The State pointed out that the Agency had the opportunity to
explicitly list negative
eligibility determinations as unallowable IV-E
costs in 45 CFR 1356.60 as it did other costs, but failed to
do so.
Finally, the State questioned the logic of the Agency's interpretation of the
statute and regulations.
The State reasoned:
If only "affirmative" eligibility
determinations received FFP, there would be a great incentive on the
part of
the states in borderline situations to make "positive" determinations, or to not
be as diligent in
ascertaining the
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information needed to make
"negative" determinations, since only in "positive" eligibility cases under
DCA's interpretation would the states receive FFP for their eligibility
determination expenses.
Appellant's Brief, p. 15.
As with pre- and post-placement services, we find that the costs
of making eligibility determinations are
administrative expenditures
necessary for the proper and efficient administration of the IV-E program,
regardless of the outcome of the determination process. We note that
45 CFR 1356.60(c)(l) specifically
authorizes as allowable administrative
costs "the determination and redetermination of eligibility." We are
persuaded that this entails negative determinations as well.
As an entitlement program, IV-E requires the State to make
eligibility determinations. While the parties
have disputed the
complexity of the Title IV-E eligibility determination process -- the Agency
contending
that it is generally a simple process, while the State and the
Intervenors insisting that it is a complex
endeavor requiring many tasks by
caseworkers -- it is undisputed that administrative costs are involved.
Other entitlement programs, such as Medicaid, reimburse negative as well as
positive eligibility
determinations. The applicable Medicaid
regulation in this regard, 42 CFR 435.1001(a), is essentially the
same as 45
CFR 1356.60(c)(l):
FFP is available in
the necessary administrative costs the State incurs in determining and
redetermining Medicaid eligibility . . .
(emphasis added)
Similarly, all determinations for the AFDC program are
reimbursed. We see no reason why Title IV-E
determinations should be
treated any differently.
We also find that, if reimbursement for
determinations for eligibility that turned up negative were
unallowable,
states might have an incentive to make more positive determinations. The
corresponding
amount of costs that would necessarily follow could overshadow
the costs associated with a negative
determination of eligibility.
We also note that in 45 CFR 1356.60(c)(3) and (4) the Agency
specifically excluded certain activities
from being reimbursed
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as allowable administrative costs. The absence of any
mention of negative determinations of eligibility in
these subsections
supports our conclusion that all determinations of eligibility fall within the
scope of 45
CFR 1356.60(c)(l), and are, accordingly, reimbursable under the
IV-E program.
Finally, we do not find it reasonable to allocate
negative eligibility determinations to another program
since there has been
no demonstration that the finding of non-eligibility for Title IV-E is the same
process
as the finding of eligibility for the other program.
Accordingly, on the basis of the foregoing, we conclude that,
under the Agency's existing regulatory
scheme, the State should be permitted
to claim for negative as well as positive eligibility determinations.
III. Whether the State's proposed time study codes comply
with Title IV-E and the applicable regulations.
In the
CAP amendment the State established the following time study codes for its
caseworkers to record
time spent on services unallowable as costs under
Title IV-E (Code 3) and on administrative activities
allowable as costs
under Title IV-E (Code 4):
CODE 3 - CHILD WELFARE
THERAPEUTIC COUNSELING
This code should
be employed when the worker is directly counseling or providing treatment to a
child
at risk, the child's family, or to the child's alternative care
provider which is aimed at ameliorating or
remedying personal problems,
behavior or home conditions.
CODE 4 - CHILD WELFARE SERVICE
ADMINISTRATION
This code should be used
when the CHILD WELFARE activity does not fit into the three preceding
definitions. All the following are examples of CHILD WELFARE SERVICE
ADMINISTRATION:
o Referral to services;
o Preparation for and
participating in judicial
determinations;
o Placement of the child;
o Development of the
case plan;
o Case and administrative reviews;
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o
Case management and supervision;
o Recruitment, study, and
approval of foster,
adoptive,
and other alternative care facilities; o Case staffings and
conferences;
o Permanency planning conferences;
o Investigation, evaluation, and assessment of
the child
and family's condition;
o Child welfare public information
and outreach
including
contracts with the media, special interest groups, potential
volunteers, and caretakers;
o Communication with
natural parents or alternative
care
providers on the status of the child, the case plan, goals for the
child and the family, and
administrative procedures of the
agency;
o Crisis
intervention activity;
o All planning, assessments, and
paperwork which
contribute to the above activities;
o Travel associated
with any child welfare activity;
The Agency faulted Code 3 as
being under-inclusive and Code 4 as over-inclusive. Specifically, the
Agency argued that under Code 3 only direct counseling or treatment were
considered unallowable costs
under Title IV-E instead of all social
services, while Code 4 contained activities that should be considered
social
services reimbursable under either Title IV-B or Title XX, but not under Title
IV-E.
The State questioned why its Code 3 should be rejected when
it essentially repeats the wording of 45 CFR
1356.60(c)(3). This
regulation provides:
Allowable
administrative costs do not include the costs of social services provided to the
child, the
child's family or foster family which provide counseling or
treatment to ameliorate or remedy personal
problems, behaviors or home
conditions.
The State argued that the focus of this regulatory
prohibition barring IV-E reimbursement is not on the
broad category of
"social services," but only on those social services "which provide counseling
or
treatment," a prohibition repeated in its Code 3.
The
Agency responded that Code 3, by merely echoing the broad based prohibition of
45 CFR
1356.60(c)(3), would leave the determination of how certain
questionable services should be
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coded to the unfettered discretion of a social service
worker. The Agency emphasized that administrative
costs are intended
to be technical, managerial-type costs, not to encompass social services and
treatment.
The Agency alleged that the State had failed to provide
examples of what type of activities would fall
under Code 3, thereby leaving
open the possibility that a myriad of other social services could be charged
to IV-E which had previously been allocated to the Title IV-B or Title XX
programs. The Agency added
that the State's limited interpretation of
the prohibition of social services in Code 3 is exacerbated by the
over-inclusive provisions of Code 4, wherein such listed activities as
crisis intervention and
communication with natural parents or alternative
care providers are unmistakably social services
appropriately charged to the
Title IV-B and Title XX programs only.
In response to a Board
inquiry as to what specific types of activities would fall within the ambits of
Code 3
or Code 4, the State replied that, in keeping with the provisions of
45 CFR 1356.65(c)(3), Code 3 would
include only those counseling or
treatment activities which "ameliorate or remedy personal problems,
behaviors, or home conditions." These would include counseling:
o to prepare a child for adoption;
o to prepare the child and/or his biological family for
the child's return home from foster
care;
o to the child and/or biological parents regarding
termination of parental rights;
o regarding the child's adjustment to school,
community, and foster home;
o with the foster child, biological
parents, or foster
parents --
individually or in groups -- to alleviate personal or behavioral
problems; and
o with biological parents to remedy home conditions,
such as abuse or neglect, which are
injurious to the child.
The State declared that the
activities listed under Code 4 are self-explanatory and fall with the range of
activities eligible for Title IV-E reimbursement listed at 45 CFR
1356.60(c)(2). That regulation gives a
list of examples of IV-E
reimbursable activities:
(i) Referral to
services;
(ii) Preparation for participation in
judicial
determinations;
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(iii) Placement of the child;
(iv) Development of the case plan;
(v) Case reviews;
(vi) Case management and supervision;
(vii) Recruitment and licensing of foster homes and
institutions;
(viii) Rate setting; and
(ix) A proportionate share of related
agency overhead.
In describing these activities the
State stressed that a Division of Family Services caseworker does not
typically provide counseling or treatment activities; rather, the caseworker
is primarily a case manager.
The State explained that the majority of
the counseling and treatment services listed under Code 3 are
provided by
outside contract specialists. If a caseworker were to engage in such
activities, the
caseworker's time would be listed as Code 3. If,
however, the caseworker refers a child or a child's parents
to services
provided by an outside, contract provider, the caseworker's action would be a
Code 4 allowable
administrative cost for referral to services as provided
for in 45 CFR 1536.60(c)(2)(i). The State
emphasized that Code 4 is
used only when an activity does not fit into the definitions of the three
preceding codes. The State further noted that the alternate cost
allocation plan amendment (Therien
Affidavit, Ex. III), submitted after the
original amendment was rejected, was approved by the Agency and
contained
most of the Code 4 activities.
Regulations require that a CAP must
contain "sufficient information in such detail" to allow the DCA
Director to
make an informed judgment on the correctness and fairness of a state's
procedures for
allocating costs. 45 CFR 95.507(a)(4). While the
State's proposed Code 3 closely follows 45 CFR
1356.60(c)(3), we do not
consider it unreasonable that the DCA Director demanded more detail from the
State. Section 1356.60(c)(2) provides examples of what activities are
reimbursable under Title IV-E. It is
not an all-inclusive list, but
states are still limited to activities closely related to the activities listed
and are
not permitted to develop entirely new categories of
activities. Moreover, the codes for reimbursable
activities must be
fully consistent with the provisions proscribing reimbursement for counseling at
section
1356.60(c)(3).
As noted above, the State provided the
Board with a list of counseling activities that it felt were
encompassed by
its Code 3. This list closely parallels the revised Code 3 that
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appears in the amended CAP ultimately accepted. See
Therien Affidavit, Ex. III. The State apparently
thus takes the view
that a more detailed listing of unreimbursable counseling activities is
possible.
The revised Code 4 incorporates the examples of
administrative costs listed at 45 CFR 1356.60(c)(2). The
State's
original Code 4 contained many of these same or related activities, but also
included costs which,
in our opinion, give the appearance of creating new
categories of activities unrelated to the underlying
regulation. For
example, crisis intervention could be subject to misinterpretation as including
proscribed
counseling services, in that it suggests counseling.
We find, therefore, that the Agency may properly require the State
to use time study codes identical to
those adopted by the parties in the
revised CAP.
Both parties have cited the preamble to 45 CFR
1356.60(c) to support their positions, the Agency arguing
that the
regulation prohibits all social services costs, the State arguing that the costs
of only counseling or
treatment are barred. In responding to
commenters who opposed the prohibition on reimbursement of
administrative
costs for social services, the Agency said in the preamble:
We agree that treatment-oriented
services, such as helping families be reunited or finding new
permanent
homes for children, are vital to the goals of Pub. L. 96-272.
However, concurrently with the
enactment of title IV-E, Congress enacted a
revised title IV-B (Child Welfare Services Program) which
provides for the
delivery of these social services. In addition, title XX of the Act, now
the Social Services
Block Grant, provides funds to States for
services. Because other sources of Federal funds are available
for the
provision of these services, the [Agency] has prohibited reimbursement from
title IV-E funds for
treatment-oriented services as inconsistent with the
statutory concept of maintenance expenditures. Funds
for those
purposes are the major focus of the service programs. Therefore, the final
regulation continues
the NPRM requirement by prohibiting FFP under title
IV-E for treatment-oriented services.
47
Fed. Reg. 30922, 30923 (July 15, 1982) (emphasis added by the State).
- 19 -
Contrary to the State's argument, the preamble emphasizes
that treatment-oriented services are not to
receive IV-E funding. The
DCA Director's insistence on greater details from the State is in no way
inconsistent with the preamble. The revised Code 3, acceptable to DCA,
does not conflict with the
preamble; it merely provides more specificity as
to the types of counseling activities not reimbursable
under Title IV-E.
Nor are we compelled to find for the State because another
region's DCA Director has apparently
approved a CAP amendment similar to the
State's proposed Code 3. The Intervenors supplied evidence
that a
different region had approved the time study code of one state, Louisiana, which
reads:
THERAPEUTIC COUNSELING:
Counseling or treatment provided to the child, the child's family or
foster
family aimed at ameliorating or remedying personal problems, behavior or home
conditions.
The Agency admitted that it "has apparently approved a
similar vague time study code for the State of
Louisiana."
Agency's Response to Amicus Brief, p. 8. The Agency added, however,
that it is presently
considering action to require Louisiana to modify its
time study code.
In approving CAPs, a regional DCA Director is not
required by the regulations to be bound by another
region's actions.
Furthermore, as noted above, we do not consider this an inconsistency, but
rather a
request for greater specificity, as permitted by the regulations.
In summary, we therefore find that the DCA Director was within his
regulatory authority when he rejected
the State's proposed Code 3 and Code
4.
IV. Whether acceptance of the State's CAP amendment would
result in unreasonable costs being allocated
to the IV-E program.
In the course of this appeal the Agency raised an additional
ground for the rejection of the State's
amendment: if approved, the
amendment would result in administrative costs that would be unreasonable
within the context of the IV-E program. The Agency alleged that one
effect of the amendment would be
an increase in the State's IV-E claims for
administrative expenditures from fiscal year (FY) 1984,
$153,599, to FY
1985, $7,606,716. Agency's Brief, p. 6. Total claims for the
- 20 -
IV-E program would increase, according to the Agency, from
the FY 1984 level of $2,288,814 to
$12,780,904 for FY 1985. Id.
The Agency contended that this manifold increase in IV-E claims was not
accompanied by any corresponding increase (only 9 percent) in the number of
children served by the
State's IV-E program. The Agency concluded that
the amendment's increase in administrative costs was
clearly unreasonable
given the virtually nonexistent increase in the scope of the State's IV-E
program. As
further proof of the unreasonableness of the amendment,
the Agency compared the amendment's proposed
IV-E costs to IV-E costs in
other states in the region and deemed the State's costs extravagant.
The Agency theorized that the purpose of the amendment was to
shift to Title IV-E costs more
appropriately allocable to either Title IV-B,
Title XX, or the State's own child welfare programs because
IV-E has no
funding ceiling, while Titles IV-B and XX have funding caps. 8/ The Agency
termed the
amendment "a thinly veiled attempt to bleed the Title IV-E
program for money that should more
appropriately be supplied from other
sources, namely state appropriation." Agency's Response to Board
Order, pp. 14-15. As a final example of the unreasonableness of the
effect of the amendment, the Agency
stated that, while costs previously paid
under Title IV-B and XX would be shifted to Title IV-E, the State's
claims
under Titles IV-B and XX would not correspondingly decrease, but would rather
retain their
previous levels.
The State vehemently denied the
Agency's allegations concerning the reasonableness of the administrative
costs under the amendment. The State declared that its previous CAP
severely underclaimed IV-E
administrative costs because it contained no time
study codes to determine and allocate the administrative
costs of Children's
Services caseworkers. The State explained that it had previously claimed
IV-E
reimbursement under the optional hypothetical ceilings set forth at 42
U.S.C. section 674(c) because it
never had sufficient data to determine
whether it was fully reporting all of the costs attributable to the IV-
E
program; instead, it had reported only sufficient foster care claims to qualify
DFS to receive grant
awards up to the
8/ For the IV-B program, states receive funds pursuant to an
allotment set forth at 42 U.S.C. section 621.
For the Title XX
program, the allotment formula is set forth at 42 U.S.C. section 1397b.
- 21 -
hypothetical ceiling. Therien Affidavit, paragraph
5. The State maintained that the anticipated IV-E
costs would not be
unreasonable because they would not represent new or increased costs; rather,
the State
would be allocating and reporting these costs differently,
charging Title IV-E with its true costs, and no
longer using Title IV-B and
Title XX funds to pay for IV-E activities. Id., paragraph 6.
The State noted that neither DCA nor the Regional Director had
cited the unreasonableness of potential
costs as a basis for disapproval of
the amendment. The State further argued that there is no evidence that
indicates that it has actually increased the administrative costs generated
by the IV-E program; the State
has merely changed its methodology for
claiming those costs. The State disputed the Agency's contention
that
the State's IV-E administrative costs would be disproportionate to IV-E costs
claimed by other states
nationally, supplying tables and graphs to support
this claim. Reply Brief, p. 36; Therien Affidavit, Ex. I.
As for
the regional comparison made by the Agency, the State contended that it is
impossible for the
Agency to make an accurate comparison when those other
states are still operating their IV-E programs
under the hypothetical
reimbursement ceiling set forth in 42 U.S.C. section 674(c).
As
this case developed, the Agency conceded a significant portion of any possible
increase by agreeing
that preplacements costs for candidates who ultimately
are determined IV-E eligible are reimbursable
under IV-E. Agency's
Brief, pp. 25-26. There has been no demonstration, then, of what part of
the
original alleged increase represents activities still disputed.
Also, we agree with the Agency that the
language of the time study codes
should be modified and that may affect the total amount ultimately
claimed. Regardless of the amount of claim increases resulting from
the amendment, we find the
increases would be reasonable since they
represent proper and necessary administrative activities in the
IV-E
program.
As we stated previously in this decision, the costs for
pre-placement and negative eligibility
determinations are authorized by
statute and regulations as IV-E reimbursable costs. If the activities are
thus authorized, the mere fact that the claimed costs may increase from one
fiscal year to the next through
use of a different claiming methodology
implemented by a plan amendment should not be used as a
- 22 -
ground for disapproving the amendment if the amendment is
otherwise permissible. Nor do we find the
Agency's conclusions drawn
from a comparison of the State's IV-E administrative costs to those of other
states valid. As long as the costs are authorized under the Act, a
state should be entitled to receive
reimbursement, regardless of whether
neighboring states fail to claim similar activities or structure their
IV-E
programs in a fashion that results in lower claims against the federal
government.
Conclusion
For the reasons discussed
above, we reverse the Regional Director's finding that the State may not claim
in its CAP certain administrative costs under Title IV-E and current
regulations implementing Title IV-E.
We also find, however, that the
DCA Director's rejection of the definitions in the original time study codes
was permissible under the regulations.
________________________________
Judith
A. Ballard
________________________________
Norval
D. (John) Settle
________________________________
Donald F. Garrett
Presiding Board Member