DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Kentucky Cabinet for Human Resources
Docket Nos. 87-91 87-111 87-147 87-205
Decision No. 931
DATE: January 8, 1988
DECISION
The Kentucky Cabinet for Human Resources (State, Kentucky) appealed
a
determination by the Office of Child Support Enforcement (Agency)
to
disallow costs totaling $57,348 in federal financial participation
(FFP)
claimed under the Child Support Enforcement Program, Title IV-D of
the
Social Security Act (Act). 1/ The disputed costs represented the
costs
of court-appointed guardians ad litem for minor defendants in
child
support enforcement cases.
As discussed below, we uphold the Agency's disallowance in full.
Applicable Authority
Each state that participates in the Title IV-D program is required
by
section 454(4)(A) of the Act to take action to establish the
paternity
of children born out of wedlock. The Act's implementing
regulations are
found at 45 C.F.R. Part 304 (1986). Specifically,
section 304.20
provides, in part:
(a)
Federal financial participation at the
applicable
matching rate is available for: (1) Necessary
expenditures
under the State title IV-D plan for the
support
enforcement services and activities specified in
this
section ...
The Cost Principles for State and Local Governments, Office of
Management
and Budget (OMB) Circular A-87, Attachment A, Section C.1.a,
made applicable
here by 45 C.F.R. 74.171, provide that allowable costs
must be --
necessary
and reasonable for proper and
efficient
administration of the grant programs, be allocable
thereto
under these principles, and except as specifically
provided
herein, not be a general expense required to carry out
the
overall responsibilities of state or local . .
.
governments.
Discussion
An integral part of the administration of the State's Title IV-D
program
is the filing of civil court actions for adjudication of
paternity.
Rule 17.03 of the Kentucky Rules of Civil Procedure provides that
the
court shall appoint a guardian ad litem for an infant not
otherwise
represented in an action or shall make such other order as it
deems
proper for the protection of the infant. 2/ It is uncontested in
this
case that reasonable costs of counsel for mothers, regardless of
their
age, and their dependent children (on whose behalf litigation
is
instituted) are allowable costs of the Title IV-D program. In
some
instances, the putative fathers (the defendants) are below the age
of
majority (minors) and, for legal purposes, are considered infants
who
require the appointment of guardians ad litem. In 1985, the
Agency
learned that the State's claims for FFP had included the costs
of
guardians ad litem who were appointed to represent these minor
putative
fathers in child support cases under the Title IV-D program in
cases
where the federal government would share in any funds collected. 3/
In disallowing these costs, the Agency concluded that, while
appointments
of guardians ad litem are required by state law, guardians
ad litem are
neither dependent upon nor confined to the Title IV-D
program. The
Agency maintained that under Kentucky law, guardians ad
litem appointed to
represent minor defendants function in all salient
respects as defense
attorneys, indistinguishable from appointed defense
counsel in all other
types of cases. The Agency concluded that, since
guardians must be
appointed in all cases brought by the State or any
other plaintiff against
unmarried infants or persons of unsound mind,
costs incurred as a result of
such actions are a general expense of
state government, so that charging them
to the Title IV-D program
violated the cost principles found in OMB Circular
A-87, Attachment A.
The Agency also argued that it has had a long- standing
position that
the cost of providing an "attorney" to represent indigent
defendants in
child support actions is not a reasonable and necessary cost
of
establishing paternity and enforcing child support obligations.
Agency
brief, p. 4.
The State made several arguments to support its position that it
is
entitled to claim FFP for costs of guardians ad litem for minor
putative
fathers, the main focus of which centered on the role of the
guardian ad
litem in general. The State argued that in Kentucky, as in
other state
and federal actions involving minors, the burden of protecting a
minor's
interest is assumed by the court through appointment of a guardian
to
inform the minor of legal matters or of the legal consequences of
a
certain course of action. The State maintained that it must
appoint
guardians ad litem to defend actions against minors, and that
judgments
against those for whom guardians are required may not be obtained
until
either a defense is made or a report filed. However, the State
also
argued that the guardian ad litem does not only defend a putative
father
but serves a hybrid role, advising one or more parties as well as
the
court. The State argued that, while a guardian ad litem may sue
in
behalf of the minor or defend the minor, every step of the court
action
is undertaken under the aegis of the court. State brief, p.
4. The
State therefore maintained that it should be permitted to charge
these
costs to the Title IV-D program.
We conclude that the costs at issue in this case were not necessary
and
reasonable for the administration of the Title IV-D program and
that
they are properly categorized as general expenses of state
government.
Therefore, we find that the State is not entitled to claim FFP
for the
costs under the Title IV-D program.
The focus of the State's argument--that the guardian costs are
allowable
because the costs are required by law--is misplaced. Whether
guardians
ad litem are required by state law has never been an issue and,
indeed,
the Agency has not argued that the State has no obligation to
provide
the guardians ad litem. Rather, the Agency's position is that the
costs
of these guardians are not necessary and reasonable for the Title
IV-D
program and, therefore, could not be properly claimed under the
program.
That is the Agency's applicable standard, which the State has
never
addressed, other than to argue in a conclusory fashion that these
costs
are necessary.
FFP is available in "services and activities . . . pursuant to
the
approved IV-D State plan which are determined by the Secretary to
be
necessary expenditures properly attributable to the child
support
enforcement program." 45 C.F.R. 304.20(b) (emphasis
added). As the
State pointed out, FFP is available for the costs of
establishing
paternity and establishing and enforcing support
obligations. 45 C.F.R.
304.20(b)(2) and (3). In this regard, the
specific activities enumerated
in the regulations for which FFP is available
do not include costs
associated with guardians ad litem or any analogous
defendant- related
activities. See 45 C.F.R. 304.21. Moreover,
the State pointed to no
Agency policy concerning activities determined
necessary for the IV-D
program which would include these costs. Indeed, the
Agency referenced a
long-standing policy against the payment of FFP in such
costs, which the
State did not dispute. The State argued, in essence, that
these costs
ought to be regarded as necessary since the guardians must be
provided.
However, there is no authority in this record supporting a
conclusion
that all costs somehow connected with IV-D activities must be
deemed
necessary expenditures. See 45 C.F.R. 304.21 and 304.23 which
list
other costs not eligible for FFP. 4/ In implementing the IV-D
program,
the Secretary may, in his discretion, determine those costs for
which
FFP is available. The State has provided no basis here for us
to
conclude that the Secretary's exercise of discretion is
unreasonable.
We conclude that the Secretary may properly determine that the
costs
associated with the obligation of the court to provide guardians
to
protect the interests of minor indigent defendants are not
sufficiently
connected to the purposes and activities of the federal program
to be
necessary expenditures.
Also, a "necessary and reasonable" standard has historically been
applied,
through the cost principles, to costs claimed under a variety
of grant
programs; grantees have had notice of the standard for
sometime. See
Texas Dept. of Human Resources and Harris County, Texas,
DGAB No. 473 (1983),
p. 4 at n. 3. This standard must be considered in
light of the
Secretary's discretion here to determine those costs
necessary for the IV-D
program. In State of Oregon Mass Transit
Assessment, DGAB No. 402,
Supplementary Decision (1983), at page 9, the
Board stated:
[T]he principles at issue here were
designed to cover a broad
range of costs
under widely differing grant programs. The
terms
are specific enough to set common
sense limits on what is
allowable.
It would be virtually impossible to provide
detailed
guidelines as to what is
"necessary and reasonable" for every
aspect of the programs affected.
The State provided no evidence to show how the guardian ad litem costs
at
issue here would be necessary and reasonable for the Title IV-D
program or
how those costs are related to the operation of the State
plan.
The State argued that guardians ad litem are not defense attorneys,
but
rather have a hybrid role which furthers the IV-D activities. We
find,
however, that, although they may provide other services to the
court,
their primary purpose is to provide legal defense, an activity for
which
FFP is not available. 5/
The Board reached a similar conclusion in Pennsylvania Dept. of
Public
Welfare, DGAB No. 398 (1983), which was upheld in court. Pennsylvania
v.
Heckler, 730 F. 2d 923 (3rd Cir. 1984). In Pennsylvania, the
Board
found that costs that incidentally benefited a federal program were
not
necessarily allowable as "necessary and reasonable" to that
federal
program. In that case, the Pennsylvania Department of Public
Welfare
(DPW) had entered into a cooperative agreement with the
Philadelphia
District Attorney (D.A.) for the reimbursement of prosecution
costs
associated with welfare fraud cases referred to the D.A. by
DPW.
Because of Philadelphia's large size and attendant large volume
of
criminal cases, welfare fraud cases did not rank high on the scale
of
priorities for prosecution in the D.A.'s office. One of DPW's
arguments,
pertinent to the issue in this case, was that, absent the
agreement,
certain expenses would not have been incurred by the D.A.
According to
DPW, the costs of the agreement were not "required to carry out
the
overall responsibilities" of Philadelphia and were, therefore,
not
general government expenses. In disallowing DPW's claim for FFP
for
these costs, the Agency argued that, while DPW's argument may be
true
that the D.A. absent the agreement would not have incurred
certain
expenses, welfare fraud prosecution was still a part of the
overall
responsibility of the D.A. and Pennsylvania. A close analogy can
be
drawn between the situation in Pennsylvania and the case at
issue.
Here, the State is obligated by law to provide guardians for minors
in
all cases, just as in Pennsylvania the D.A. was obligated generally
to
prosecute welfare fraud cases even absent the cooperative agreement.
In
both cases, the underlying obligations would continue to exist
absent
any federal program requirement, and as such are a general expense
of
the state or local government.
Conclusion
Based on the foregoing, we uphold the Agency's disallowance of $57,348.
________________________________
Cecilia
Sparks Ford
________________________________
Alexander
G. Teitz
________________________________ Norval
D.
(John) Settle Presiding Board Member
1. Four separate disallowances are involved in
this decision. At the
request of the parties, the Board consolidated these
cases for purposes
of briefing and decision because the cases involved the
same issue. The
total amount is $57,348: $49,531 for expenditures
incurred by the State
between July 1978 and December 1986 in Board Docket No.
87-91; $4,018
for the quarter ending March 31, 1987 in Board Docket No.
87-111; $2,570
for the quarter ending June 30, 1987 in Board Docket No.
87-147; and
$1,229 for the quarter ending September 30, 1987 in Board Docket
No.
87-205.
2. The State also argued that its rule on guardians
ad litem was the
same as in the federal rules. See Rule 17(c) of the
Federal Rules of
Civil Procedure. Since the costs involved here are
costs in State court
actions, however, the federal rule has no direct
relevance.
3. By telephone conference call on November 13, 1987,
both parties
agreed that the disallowances concerned only the costs of
guardians ad
litem for minor putative fathers who were defendants in
paternity cases.
The costs for guardians ad litem generally are not at
issue.
4. Given the inherent difficulty in identifying every
possible cost
a state may claim, those activities actually identified cannot
be
regarded as an exhaustive listing. Activities actually enumerated by
the
Secretary will then guide a determination as to whether or not FFP
is
available.
5. Indeed, the generally accepted purpose of a
guardian ad litem is
to provide legal counsel. Black's Law Dictionary,
5th ed., 1979, at
page 635, provides that a guardian ad litem is "a special
guardian
appointed by the court to prosecute or defend, on behalf of an
infant or
incompetent, a suit to which he is a party, and such guardian
is
considered an officer of the court to represent the interests of
the
infant or incompetent in the litigation."
(emphasis