Pennsylvania Department of Public Welfare, DAB No. 563 (1984)

GAB Decision 563
Docket Nos. 84-38, 84-72, 84-81

August 27, 1984

Pennsylvania Department of Public Welfare;
Garretl, Donald; Settle, Norval Teitz, Alexander


The Pennsylvania Department of Public Welfare (State; DPW) appealed
disallowances totalling $8,013,206 by the Office of Human Development
Services (Agency) of federal financial participation (FFP) in costs
claimed under the program of Aid to Families with Dependent Children--
Foster Care (AFDC-FC).The claims were filed in reports for the quarters
which ended December 30, 1981 through September 30, 1983 and were for
expenditures during the period October 1979 through September 1982.

The two issues now before the Board in these appeals are: (1)
whether the State is entitled to FFP for claims on behalf of children
under the care and placement of State county probation departments
rather than the State Department of Public Welfare; and (2) whether the
State is entitled to FFP for claims on behalf of children in public
status facilities.

1. We find that the State made foster care payments for children
under the care and placement of county probation departments in
accordance with agreements between the county governments and the
Department of Public Welfare executed in accordance with its
Agency-approved State plan. The State demonstrated that the probation
departments were bound by the required assurances and the Agency did not
show that the assurances were not met. The State is entitled to FFP on
this issue.

2. We find that in order to be entitled to FFP the State had to show
that the children were either in foster care homes or in non-profit
private care institutions. It did no do this and thus is not entitled
to FFP on this issue.

The appended chart details how these two findings impact the amounts
disallowed.

(2) Background

The two issues considered here were originally raised in two appeals,
Docket Nos. 82-197 and 82-225. The State originally filed separate but
similar briefs in the two appeals; thereafter the parties briefed the
cases jointly. In these appeals, and in the several others which were
later consolidated, only the two discrete issues listed above are before
the Board for decision at the present time. /1/


Extensive briefing and an Order to Show Cause by the Board, to which
the parties responded, followed in these two cases. Eventually these
two appeals, and two later ones with the same issues (83-57 and 83-77),
were dismissed without prejudice because the parties were actively
discussing resolution or narrowing of the disputes. (See Notice of Case
Closing dated August 31, 1983) The dismissals were without prejudice to
the State's right to refile if any case or part of a case was not
otherwise resolved. The State could also refile if it did not receive a
response to the proposal for disposition pending before the Agency
within 60 days from the Notice of Case Closing.

Two later cases involving the same issues but different periods of
time (83-195 and 83-218) were also dismissed without prejudice. (See
Notice of Case Closing, November 17, 1983) These six cases (82-197,
82-225, 83-57, 83-77, 83-195, and 83-218), all dismissed without
prejudice, came back before the Board when the State refiled its appeals
in these cases by letter of April 18, 1984. The Board in its
Acknowledgment of Notice of Appeal on April 27, 1984 placed all six
cases together under a new docket number (84-72). This case was
combined with two 1984 appeals which had come in after the dismissal
without prejudice. These two cases, 84-38 and 84-81, have been joined
with 84-72. There are therefore three numbered cases before the Board
considered jointly, which are covered by this decision, and actually
include eight separate appeals. The parties relied in all cases on
their briefs in 82-197 and 82-225, except that the State filed an
additional response in 84-72 to the Order to Show Cause.

This decision is based on the entire record, including all
submissions of the parties, the Order to Show Cause and the (3)
responses of the parties thereto, and the summaries of telephone
conferences.

Analysis

I. CLAIMS FOR CHILDREN UNDER CARE AND PLACEMENT OF COUNTY PROBATION
DEPARTMENTS.

The Agency disallowed $6,468,135 FFP for claims on behalf of children
under the care and placement of county probation departments. The
relevant federal regulation, 45 CFR 233.110 (a)(1)(iii), provides that a
state plan under Title IV-A of the Act must provide for foster care aid
to eligible children:

Whose placement and care are the responsibility of the State agency
administering or supervising the administration of the AFDC plan, or, if
the State so elects, are the responsibility of any other public agency,
or type or types of public agencies specified in the plan, with whom the
State agency has a currently effective agreement that provides for
development of a plan satisfactory to the State agency for AFDC-FC
children in accordance with paragraph (a)(2) of this section and that
contains other provisions necessary to achieve the objectives of the
State's AFDC plan.

Paragraph (a)(2) of section 45 CFR 223.110, referred to above,
requires that the state plan provide for development of a plan for each
eligible child, so that the child will: (1) be placed in a foster
family home or a child care institution in accordance with his needs;
(2) the child's need for and the appropriateness of his care and
services will be reviewed at least every 6 months; and (3) services
will be provided to improve the conditions in the home from which he was
removed or place him in the home of another relative.

The Pennsylvania State plan provided that payments for foster care
were made to: "Other agencies, as listed below, with which there are
agreements to provide foster care." Under this pre-print provision there
appears the following: "County Child Welfare Agencies." (Section 2.5E,
page 2, Exhibit 2 attached to Agency's Brief)

In addition, the State plan provides at page 3 under "Approval
authority(ies) specified":

The Department of Public Welfare is responsible for supervising
foster homes, including institutions, supervising child welfare services
administered by (4) County authorities; and reviewing the service
program of the County Child Welfare Agencies for approval for grants
under the Department's Grant Payment Program.

The parties agreed upon the following facts:

a. Under Pennsylvania State law the counties are responsible for
child welfare under supervision of DPW.

b. DPW enters into agreements with the county governments to provide
foster care. (See Form Agreement, Exhibit C to State's Brief)

c. There is no such entity as a "County Child Welfare Agency" in
Pennsylvania, although the State Plan refers to County Child Welfare
Agencies.

(Summary of Teleconference dated April 22, 1983, p. 2)

In addition, it was not disputed that the foster children were under
the care and placment of county probation departments, and not under
DPW. This was the basis of the disallowance on this issue. (Letter,
Pearis to O'Bannon, September 16, 1982, p. 2)

In its brief the Agency argued that the foster care costs of county
probation departments are not allowable as AFDC-FC claims for two
reasons: (1) county probation departments providing foster care are not
designated by the State AFDC Plan as AFDC providers; and (2) the county
probation departments do not operate under agreements with either the
single State agency (DPW) or the county child welfare agencies to
provide such aid. (Agency Brief, p. 5)

In its response to the Board's Order to Show Cause, the Agency
expounded on these arguments in its brief. The Agency stressed that the
delegation in the State plan lacked the specificity required by 45 CFR
233.110(a)(1)(iii), that a delegated public agency must be specified in
the State plan. (Response to Order to Show Cause, p. 2) The Agency
contended that a reference to the entire county government, including
the probation department, as a "public child welfare agency" would not
meet the regulatory requirement. The Agency's position was that there
must be at least a specific designation of the actual county
subdivisions that are performing as delegate agencies.

The Agency further argued in its response to the Order to Show Cause
that it was not clear that the agreements between DPW and the counties
encompassed children "under the care and placement of county probation
departments" when they spoke of children referred to "the county child
welfare agency." (Id., p. 4)

(5) The Agency did not dispute that the agreements between DPW and
the counties contained the appropriate requirements to be carried out
for the benefit of foster children. In the Agency's response to the
Order to Show Cause it admits that this form agreement "appears to
contain such assurances" as are required under Sec. 233.110(a)(1)(iii)
"that the delegate agency, with respect to each child within its care,
is complying with the requirements of 45 CFR Sec. 223.110(a)(2)." (Id.)

The dispute between the parties on this issue is then not a question
of proper agreements. Nor is it a question whether the delegate agency
is properly carrying out the regulatory requirements for foster
children. The latter question is still open; it was never reached
because the dispute between the parties hinged on just what county
department was properly designated in the State plan.

The difficulty seems to be more with nomenclature than with function.
The regulation clearly does not require that the Department of Public
Welfare itself carry out the care and placement of the children. This
Department, as the single State agency, retained the overall
responsibility for supervision and review, under the State plan, but
delegated immediate care and placement duties, as is provided for in the
regulations. The Agency's argument is that, while the State plan refers
to the delegate agencies as "County Child Welfare Agencies," there were
no agencies by that name. In some, but not all counties, there were
County Children and Youth Agencies. /2/ The parties agreed that the
actual functions of care, placement, and supervision of these children
were generally under county probation departments. If DPW entered into
satisfactory agreements with the various counties, requiring the
counties to do whatever was provided for under federal regulations for
the children, and the counties gave satisfactory assurances that the
regulatory requirements would be met, it does not matter what county
department or sub-agency (6) actually carried out the requirements. The
reference in the State plan to county child welfare agencies is
sufficiently broad to cover the county department that actually
performed the function.


This, in essence, is the heart of the problem: the Agency feels the
State plan provision requires the participation of some particular
county agency, when in fact the requirement, and the circumstances
surrounding it, require the conclusion that the provision is not nearly
so precise as the Agency would have it. It simply is more ambiguous on
its face then the Agency appears willing to acknowledge. By any
reasonable interpretion, a county probation department can be a "county
child welfare agency" in the facts of this case. We emphasize that our
determination here does not reach the isssue of whether, in fact, the
county probation department was actually performing as it should in that
role; whether it did is, of course, an entirely different question and
nothing precludes the Agency from ascertaining that. But we believe
that the Agency may not disallow the State's claim for FFP merely
because the functions of the foster care program were carried out by
county probation departments.

The Agency in its brief also notes that the legislative history of
the new AFDC-FC provisions under Pub. L. 96-272 (Adoption Assistance and
Child Welfare Act of 1980) broadened federal funding to allow payments
for children in certain public as well as private facilities, "but
explicitly proscribes federal matching for care delivered in a facility
operated primarily for the detention of children determined to be
delinquent." (Agency Brief, p. 5, citing Senate Report No. 96-336,
reprinted at 1980 U.S. Code Cong. & Admin. News, Vol. 3, p. 1452)

The Agency is correct in what Pub. L. 96-272 provided. This statute
amended the Social Security Act by adding a new section 472(c) to
provide FFP for foster care payments for children in public child care
institutions of not more than 25 children. However, it added a proviso
that the term "child care institution" should not include "detention
facilities, forestry camps, training schools, or any other facility
operated primarily for the detention of children who are determined to
be delinquent."

All this has nothing to do with the ground of disallowance being
considered here. This ground is that FFP claimed was not allowable "as
it represents claims on behalf of children under the care and placement
of county probation departments rather than Department of Public
Welfare." It may well have to do with what is a "public child care
institution," discussed below. The issue here is who is responsible for
the care and placement of the children, not (7) in what kind of facility
or institution they had been placed. /3/ The various counties are
responsible for the care and placement of the children, and they carried
out this function through their probation departments.


II. CLAIMS FOR CHILDREN IN "PUBLIC STATUS FACILITIES."

The Agency disallowed $1,175,698 FFP claimed on behalf of children in
public status facilities, citing 45 CFR 233.110(b)(2). The pertinent
part of this regulation reads as follows:

Federal financial participation is available in AFDC-FC payments made
to an individual providing care in a foster family home, to a private
non-profit child care institution, or to a co-operating public or
nonprofit private child placement or child-care agency.

In addition, the same regulation requires the State plan to:

(a)(4) Specify:

(i) In what types of child care institutions (private non-profit, or
public, or both), in addition to foster family homes, placement will be
made;

In the preprint State plan the State checked, under "Institutional
Placement is made," the following: "In private, non-profit child care
institutions." (State plan, section 2.5D)

Here again the parties' arguments developed into a war of
nomenclature. The State in its first brief claimed that the principal
defect in the Agency's case was that it failed to define a "public
status" facility. (State Brief, p. 3)

The Agency in its brief equated "public status facilities" with
"public institutions." The Agency pointed out that 45 CFR 233.110(a)(5)
stated in part that:

(8) (provision) must be made for both foster family care and
institutional care in accordance with the individual child's needs;
public institutions may be used, without Federal financial
participation, to discharge the institutional obligation. . . .

The agency also referred to other sections of the regulations
pertaining to other titles of the Social Security Act for a definition
of "public institution." It cited the definition in 45 CFR 233.60(b)(
3):

"Public institution" means an institution that is the responsibility
of a governmental unit or over which a governmental unit exercises
administrative control.

In its response brief the State agreed with the Agency that the
definition of "public institution" in this regulation was "equally
applicable" here (p. 1), and, in fact, set out the same definition. (p.
2) The State also admitted that the children for whom FFP was claimed
were in public institutions. /4/ The State argued that there was an
exception in the regulation which included the definition of public
institutions.


The children is public institutions on whose behalf the State has
submitted claims for FFP fall within the . . . exception.

(State's response brief, p. 2)

The exception referred to by the State is the definition of an
"inmate" of a public institution. The regulation provides that an
individual who lives in a public institution is an inmate thereof. 45
CFR 233.60(b)(4). However, there is an exception in the regulation. A
person is not considered an inmate when:

(ii) He is in a public institution for a temporary emergent period
pending other arrangements appropriate to his needs.

The State then went on to contend that all the children for whom FFP
had been claimed were not "inmates" because they were being detained
"for temporary periods of time pending appropriate orders of disposition
by the Juvenile Court" in "public detention centers and shelter care
facilities." (State's response brief, p. 2)

(9) The flaw in this argument is that the foster care requirements
for FFP have nothing to do with "inmates of public institutions." The
State admits that the children were in "public institutions." Therefore
FFP was not allowable for them. We need look only at the requirements
for FFP in 45 CFR 233.110(b). In (b)(1), FFP is available for children
"who are placed in a foster family home, or nonprofit private child-care
institution." In (b)(2), FFP is available for payments made to:

(an) individual providing care in a foster family home, to a private
non-profit child care institution, or to a cooperating public or
nonprofit private child placement or child-care agency.

By the State's own admissions the children in question were not in a
"foster family home," a "private non-profit child care institution" or a
"co-operating public or non-profit child placement or child-care
agency." Since they come under none of these requirements, it is
completely irrelevant whether the children were or were not "inmates" of
a "public institution." They were in a "public institution," whatever
the duration or nature of their stay. They could therefore not possibly
be in "private non-profit child care institutions" as listed in the
State plan and in the regulations. /5/


The State made one other argument on this issue in its opening brief.
This was that a "public status" facility does not include child care
institutions such as nonprofit private child care institutions or public
child care institutions that accommodate no more than 25 children.
(State brief, p. 3) The State cited Pub. L. 96-272 in support of this
contention.

In its brief, the Agency acknowledged that Pub. L. 96-272 had amended
section 408 of the Act "to broaden the availability of federal funds to
include the costs of children in public institutions which accommodate
no more than twenty-five children." (Agency Brief, p. 3) This provision
applied only to expenditures made on or after the enactment of the
statute on June 17, 1980.

(10) The statute does not apply here because Pennsylvania's State
plan under Title IV-A was not changed to follow the statutory change.
The State plan, under "D. Institutional placement is made:" has checked
"In private, non-profit child care institutions," rather than "In public
child care institutions." There is nothing in this case to show that the
State ever tried to amend its plan to change "In private, non-profit
child care institutions" to "In public child care institutions."

The regulation requires that the State plan must specify: "In what
types of child care institutions (private non-profit, or public, or
both) . . . placement will be made." 45 CFR 233.110(a)(4)(i). In
addition, Program Instruction ACYF-PI-81-6 dated June 10, 1981, sent to
all appropriate state agencies, set out the method of implementation of
Pub. L. 96-272. This stated clearly:

If a State operating under Title IV-A wishes to claim federal
financial participation (FFP) in expenditures made for children placed
in foster care under a voluntary agreement or in public institutions of
25 children or less, it must submit an amendment to its Title IV-A State
plan. If a State chooses not to claim the additional FFP, it need not
amend its Title IV-A State plan.

In addition, the preprint form attached specifically provided, under
section 2.5F, "Foster care payments are made to," a space for checking
"Public child care institutions with 25 children or less." /6/


The State therefore had ample opportunity to act, if in fact the
children involved here were in public institutions of not more than 25
children. In the absence of any amendment of the State plan, the State
cannot get FFP for the children in public institutions.

III. OTHER ISSUES.

In some of the appeals there were other grounds for disallowance,
each with a separate amount involved, in addition to the two (11)
discrete issues dealt with above. These were lack of documentation;
duplicate documentation for the same amount of FFP claimed; and a part
of the claim for administrative expenditures.

The parties agreed that the Board should dismiss without prejudice
the appeals from the disallowances for lack of documentation and
duplicate documentation. (See Summary of Teleconference and Proposed
Disposition, July 12, 1984) However, by letter dated August 17, 1984,
the State withdrew its appeal from the disallowance for duplicated
documentation.

The State submitted no separate defense to the disallowance of part
of its claim for administrative expenditures. In its opening brief the
State maintained that so far as it claimed substantive defenses to the
disallowances for maintenance expenditures, the same arguments should
apply to the disallowance of administrative expenditures. In addition,
the State questioned the methodology used by the Agency in arriving at
the amount of the disallowance for administrative expenditures.

This methodology was explained by the Agency during the proceedings
before the Board. The Agency stated that it used a pro rata basis for
determining the amount of administrative expenditures disallowed. The
State claimed a total amount of $3,009,374 for maintenance assistance in
Docket No. 82-197; the Agency disallowed $949,551 of this claim, or
31.5 percent.The Agency therefore disallowed 31.5 percent of the
$234,390 claimed by the State for administrative expenditures, or
$73,959.

The State admitted that its claim for administrative expenditures was
based on a calculation of a pro rata percentage of its expenditures for
maintenance expenditures. Therefore, it did not dispute the Aency's pro
rata calculation of the disallowance for administrative expenditures.
(See Summary of Teleconference (July 10, 1984) and Proposed Disposition,
dated July 12, 1984, p. 1, P2; also Summation of Teleconference (April
18, 1983) dated April 22, 1983, p. 3, P6)

Since the State offered no additional substantive arguments opposing
the disallowance for administrative expenditures, and agreed with the
Agency's methodology, we uphold the pro rata portion of the
administrative expenditures disallowed, based on the amount of the
disallowance of maintenance assistance we have upheld.

In addition, the State specifically withdrew its appeal from the
disallowance of $6,129 in Docket No. 82-225 for certain claims for the
period October 1 through December 31, 1981. (See Summary of
Teleconference, p. 1, P1, and Summation of Teleconference, p. 3, P5)

(12) CONCLUSION

The Board reverses those disallowances which were based on the ground
that the children were under the care and placement of county probation
departments rather than the State Department of Public Welfare. This
reversal does not, however, preclude the Agency from investigating
whether the county probation departments were, in fact, exercising a
child welfare function in accordance with 45 CFR 233.110( a)(2), and
disallowing accordingly if there was noncompliance. Similarly, the
Agency is not precluded from disallowing on other appropriate grounds.
(See Agency's Response to Order to Show Cause, p. 5)

The Board upholds those disallowances based on the ground that the
children on behalf of whom FFP was claimed were in public or "public
status" institutions.

The Board upholds the disallowance for administrative expenditures
based on a pro rata share of the maintenance expenditures disallowed and
upheld in this decision. We leave the computation to the parties.

As noted above, the claim for $6,129 in 82-225 was withdrawn with
prejudice. Also, the appeal from the disallowance of $78,571 in 82-197
for duplicate documentation was withdrawn with prejudice. The appeals
from disallowances based solely on the remaining ground, i.e., lack of
documentation - excess maintenance payments, are dismissed without
prejudice. (See Summary of Teleconference and Proposed Disposition,
July 12, 1984, p. 2)

The Board has attempted to chart the various disallowances on the
attached sheet. If the parties have any questions about the listing or
the computations, they should attempt to resolve the disputes between
themselves before returning to the Board. /1/ Other issues in the
cases, namely, lack of documentation and duplicate documentation
under maintenance expenditures, and administrative expenditures, have
either been resolved or the parties are attempting to work them out.
The appended chart shows the amount involved on each issue for each time
period in the several appeals. /2/ The Agency on May 6, 1983 submitted
a copy of DPW Income Maintenance Bulletin Number 287-80-21 and,
in its forwarding letter, claimed that the children were there stated to
be under the care and placement of the County Children and Youth Agency,
and not the County Probation Departments. The bulletin does say that
benefits should be applied for under the AFDC-FC program for children in
placement "whose care is the responsibility of the County Children and
Youth Agency." We believe that it is immaterial if the actual care was
under another county department, such as the probation department, as
long as the responsibility was that of the counties with whom DPW had
agreements giving appropriate assurances. /3/ We find below on
the second issue that the children for whom FFP was claimed were not in
private child care institutions. We considered that even after the
effective date of Pub. L. 96-272 the State could not receive FFP for
children in public institutions of 25 children or less, because the
State plan was not so amended. It therefore made no difference whether
the public institutions where the children were placed were primarily
for delinquent children; FFP was not allowable for the children in
these institutions entirely apart from this proviso. /4/
"Physically, they were located in the public institution." State's brief
in response to Order to Show Cause, p. 2. /5/ Similarly, the
"public status" facility dispute is not an issue here. In its brief in
response to the Order to Show Cause, the State admits it "cannot
demonstrate that these children were in foster care homes or private
institutions because the State has admitted that the children were in
public status facilities." (p. 1) The regulation requires that the
children be in foster care homes or private institutions to claim FFP
for them; if they were not there, then it does not matter what type of
public institution the children were in. /6/ In its brief in
response to the Order to Show Cause, the State claims that the State
plan prior to the Program Instruction was a preprint which gave the
choices only of private or public institutions. There is no reason why
the State could not have checked "public child care institutions" and
qualified it with "of no more than twenty-five children," or referred to
the statute.

JANUARY 08, 1985