GAB Decision 483
Docket No. 83-85
November 30, 1983
Maryland Department of Human Resources;
Ford, Cecilia; Settle, Norval Teitz, Alexander
The Maryland Department of Social Services (State) appealed from the
decision of the Director, Office of Child Support Enforcement (Agency,
OCSE) regarding a $2,344 disallowance taken by the regional office. The
Director's letter stated that although the costs claimed were allowable,
payment was barred by congressional funding restrictions applicable to
prior year claims for federal financial participation. The Board ruled
earlier in this case that we had jurisdiction to hear this matter. For
the reasons discussed below, we reverse the Director's decision.
Background
An audit was made of the costs claimed by the State of Maryland for
administering Title IV-D of the Social Security Act for the period
October 1, 1977 through September 30, 1978. The audit described some
claims for cooperative agreement costs as containing clerical errors
that both overstated and understated costs. After considering
documentation submitted by the State in response to the audit
recommendation related to these costs, the Agency's Regional
Representative, by letter dated January 9, 1981, informed the State that
"(the) net overstatement of errors (contained in specific cost items of
cooperative agreements) amounted to $18,267. The Federal Financial
Participation of this amount was $13,700. As the result of additional
information provided this has been reduced to a $2,344 credit to the
State." State Appeal File, Tab No. 1. The State apparently made an
increasing adjustment for this credit on its quarterly statement of
expenditures filed May 18, 1982. On July 21, 1982, another Regional
Representative informed the State that "$2,344 in FFP . . . is being
disallowed . . .", and stated that the "expenditures are being
disallowed since they were not claimed within the two year time limit
for claiming such expenditures per 45 CFR 95.10." The Regional
Representative advised the State of its appeal rights, and the State
appealed the disallowance to the Director, Office of Child Support
Enforcement. State Appeal File, Tab No. 3.
(2) In his decision, the Director reversed the Regional Office's
disallowance, stating that the former Regional Representative's notation
concerning the $2,344 credit:
. . . can be construed as a correction to the audit recommendation.
Although the State claim for this amount was not filed until May 18,
1982, Federal regulations at 45 CFR 95.19(b) permit exceptions to the
expenditure claiming time limits when such claim results from an audit
exception.
However, the Director further stated that payment of the claim was
precluded by the fiscal year 1982 and 1983 appropriation statutes,
Public Laws 97-92 and 97-276, because "Congress subsequently added an
additional restriction prohibiting the use of any funds to reimburse
States for expenditures made prior to October 1, 1978, unless claims are
filed within one year of the fiscal year in which the expenditure
occurred." State Appeal File, Tab No. 4.
The parties' arguments
The State argued that the claim was included in the audit report but
the auditors recommended a disallowance. Subsequently, the disallowed
amount was reversed and a credit recommended. Additionally, the State
noted that the claim was resubmitted in May 1982 only because it had not
been paid. In the alternative, the State argued that if there was a
delay in filing the claim, it was the fault of the Agency. Further, the
State argued that 45 CFR 95.19(b) (1982) exempts any claim resulting
from an audit exception from the generally applicable time restrictions,
and the time did not toll until the Agency rendered its undated
decision.
The Agency took the position that the State did not file a claim for
the credit until May 18, 1982. The Agency argued that 45 CFR 301.15(
a)(3) required Title IV-D state agencies to submit quarterly forms to
OCSE in order to report expenditures and file claims; and, therefore, a
mere notation by the Regional Representative that a credit be given the
State did not constitute a claim. The Agency argued that limitations
found in the appropriations measures, Pub. L. 97-92, section
101(a)(1)-(3) for fiscal year 1982 and Pub. L. 97-276, section 136 for
fiscal year 1983, prohibited payment of claims filed outside the
applicable time limits, without exception. Further, the Agency argued
that prior to the promulgation of the 1982 and 1983 appropriations, it
promulgated final regulations on January 15, 1981, which established a
deadline of May 15, 1981 for the filing of State claims incurred prior
to October 1, 1979. The Agency noted that the State had (3) over four
months, after it was notified by the Regional Representative, to file
for the recommended credit adjustment.
Discussion
As noted above, the State argued that the audit report showed that
the claim for the costs involved here had been filed within the audit
period, October 1, 1977 - Septemer 30, 1978. The audit report does
indicate that the State had filed claims prior to the audit for specific
cost items related to cooperative agreements and incurred within the
audit period. Since the auditors had recommended disallowance of some
of these cost items on the basis that the amounts had been overstated or
understated due to State errors (and that there was a net overpayment to
the State), Audit Report, p. 9, the credit identified as due to the
State based on documentation submitted in response to this audit finding
is necessarily related to a net understatement of these costs. In other
words, the credit was merely an adjustment to the total amount of FFP
allowable for specific cost items for which the State had previously
claimed FFP. Therefore, there is a basis on which to conclude that the
$2,344 "credit" was for costs which were included in the State's
previous claims, examined in the audit report.
In its brief, the Agency did not respond directly to the State's
argument that these costs had been claimed prior even to the audit
report, so we know of no reason why we should not accept the State's
position. Moreover, our conclusion that this is a reasonable position
is supported by the Regional Representative's letter informing the State
of the credit. That letter also informed the State that the Agency was
adopting the audit recommendations that questioned two other types of
costs: $39,249 in FFP claimed for non-IV-D unit employees and $143,600
for incorrectly claimed indirect costs for the IV-D program. However,
the Regional Representative did not advise the State to reimburse the
full federal funding of $182,849 for these disallowed costs but instead
told the State to reimburse only $180,505. This amount is $182,849
minus the $2,344 credit. The fact that the Regional Representative did
not tell the State to submit a new claim for the credit implies that the
Regional Representative considered the credit amount to have already
been claimed.
We agree with the Agency's position that a mere notation by the
Regional Representative did not constitute a claim; however, in light
of the audit report, we think that it is reasonable to conclude that a
claim was previously filed by the State. We do not take issue with the
Agency's interpretation of 45 CFR (4) 301.15(a)(3) which requires the
submission of quarterly forms to OCSE to report expenditures and file
claims. However, we do take issue with the Agency's position that the
State had not done this in regard to this credit. The Agency did not
argue that the State's claims, generally, were not submitted on the
required quarterly forms, only that this credit was not part of the
submission. Contrary to the Agency's position, we think that the
communication from the Regional Representative related to costs
previously claimed and audited in the audit report, and what is involved
here is merely an adjustment to a previous claim. Thus, the Agency
incorrectly concluded that the claim was not submitted until May 18,
1982.
Conclusion
Based on the above analysis, we conclude that the State previously
claimed for the costs involved here, and the Agency has not shown that
the State is precluded from receiving this $2,344 by the limitations
found in the 1982 and 1983 fiscal years appropriations statutes.
NOVEMBER 14, 1984