Maryland Dept. of Human Resources, DAB No. 1020 (1989)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: Maryland Dept. DATE: February 21, 1989 of Human
Resources Docket Nos. 87-141 88-66 Decision No. 1020

DECISION

The Maryland Department of Human Resources (appellant, State) appealed a
determination by Region III of the Department of Health and Human
Services (respondent, Agency) denying the State's request for
retroactive approval of an amendment to its cost allocation plan (CAP).
The amendment provided for a new methodology for allocating the cost of
social workers' activities to title IV-E of the Social Security Act
(Act). Although appellant requested approval retroactive to October 1,
1983, the amendment, which was submitted in December 1985, was approved
only for the period beginning October 1, 1985. Respondent took the
position that the criteria for retroactive application of a CAP set out
at 45 C.F.R. 95.515 were not met. Respondent also found that
appellant's attempt to apply the new methodology to prior quarters was
not statistically sound. This appeal, docketed by the Board as No.
87-141, was consolidated with Docket No. 88-66, an appeal from a
determination by the Administration for Children, Youth and Families
disallowing $4,896,479 claimed under title IV-E for the period for which
retroactive approval of the amended CAP was denied. The disallowance
was taken on the ground that the costs were not claimed pursuant to an
approved CAP.

For the reasons discussed below, we conclude that retroactive
application of the plan amendment was not permissible under 45 C.F.R.
95.515, and that in any event the application of the methodology in the
plan amendment to allocate title IV-E costs for prior quarters was
unreasonable under the circumstances present here. Accordingly, we
uphold the denial of retroactive approval of the CAP amendment for the
period October 1, 1983 through September 30, 1985. This holding
requires that we also uphold the disallowance of additional title IV-E
costs claimed for that period since they were not claimed pursuant to an
approved CAP. Background--Allocation of Costs Under Title IV-E

Title IV-E of the Act provides funding for foster care maintenance
payments and adoption assistance payments for children who would have
been eligible for AFDC payments under title IV-A of the Act but for
their removal from their homes. Under section 474(a), states are
entitled to federal financial participation in foster care maintenance
payments, adoption assistance payments and expenditures "found necessary
by the Secretary for the proper and efficient administration of the
State plan . . ." including the cost of training state personnel to
administer the IV-E program and all other administrative expenditures.
The disallowed costs in question here consisted of social workers'
salaries and wages and training costs. To determine these costs,
appellant used a cost allocation plan (CAP), since the State-employed
social workers who administered the title IV-E program also performed
activities related to other programs under the Act. Where, as here,
there are commonly incurred administrative expenditures that are
attributable to various programs, a state is required to submit, to the
Director of the Division of Cost Allocation in the appropriate regional
office of the Department, a CAP which describes "the procedures that the
State agency will use in identifying, measuring, and allocating all
State agency costs incurred in support of all programs administered or
supervised by the State agency." 45 C.F.R. 95.505 (1982). This CAP,
along with a state's underlying state plan (here, the title IV-E plan),
becomes the basis on which the Secretary awards grants to the state.

A state is required to promptly amend its CAP if any events occur which
affect the validity of the approved cost allocation procedures. 45
C.F.R. 95.509(a) (1982). Section 95.515 provides that generally, the
effective date of a CAP amendment is the first day of the
calendar quarter following the date of the event that required the
amendment. It further provides, however, that--

. . . the effective date of the amendment may be earlier or later
under the following conditions:

(a) An earlier date is needed to avoid a significant inequity
to either the State or the Federal Government.

(b) The information provided by the State which was used to
approve a previous plan or plan amendment is later found to be
materially incomplete or inaccurate, or the previously approved
plan is later found to violate a federal statute or regulation.
In either situation, the effective date of any required
modification to the plan will be the same as the effective date
of the plan or plan amendment that contained the defect. . . .

If the Director of the Division of Cost Allocation (DCA) for the region
in which the State is located disapproves a state's CAP or an amendment
thereto, the state is entitled to reconsideration by the Regional
Director or his delegate. Upon exhaustion of these procedures, the
state is entitled to review by this Board. 45 C.F.R. Part 75. Here,
appellant's request for retroactive application of its CAP amendment was
disapproved by both the Director of DCA and, upon reconsideration, by
the delegate of the Regional Director. The State appealed this
determination pursuant to Part 75; it also appealed the disallowance of
title IV-E funds pursuant to 45 C.F.R. Part 16.

Maryland's Cost Allocation Methodology

The foster care and adoption assistance program became a statutorily
distinct program under title IV-E with the enactment of Public Law
96-272 in June 1980. Prior to that time, it was a component of the Aid
to Families with Dependent Children (AFDC) program under title IV-A of
the Act. Public Law 96-272 also made changes intended to help prevent
inappropriate placements or long-term stays in foster care.

The State submitted a CAP providing for the allocation of costs to title
IV-E at the inception of the title IV-E program. The CAP allocated the
costs of social workers' activities based on a time study referred to as
the Random Moment Study (RMS). The RMS allocated a social worker's time
to nineteen separate activities. Only one of those activities was
directly related to title IV-E: "Determining/Redetermining eligibility
for Title IV-E Subsidy (federal funds)." The State began to revise its
cost allocation methodology after a December 1984 consultant's report
indicated that use of the RMS was resulting in the loss of a significant
amount of title IV-E funds to which the State was entitled. The CAP
amendment, submitted a full year later, provided for a new time study,
the Social Services Time Study (SSTS), which measured several title IV-E
activities.

The SSTS called for a sample of 2,800 observations over a five-week
period (consisting of 24 work days) during a quarter. The observations
were to be taken at random moments between 8:30 a.m. and 4:30 p.m., at
which time the activity in which the social worker was engaged would be
recorded by the observer. The activities were to be classified into one
of nine codes, four of which related to reimbursable title IV-E
activities. CAP amendment, pages B-32K and B-32A, at appellant's appeal
file, Ex. A.

Both the RMS and the SSTS were designed to use the results of
observations in a given quarter to determine the State's title IV-E
claim for the same quarter. Thus, appellant previously filed claims
under title IV-E using current RMS results for each quarter from October
1, 1983 through September 30, 1985, and, with one exception, has filed
claims beginning with the quarter ended December 31, 1985 using current
SSTS results for each quarter. In the cases before us, however,
appellant sought to retroactively increase the amount claimed under
title IV-E for the eight quarters ended September 30, 1985 by applying
the results of the SSTS for the quarter ended December 31, 1985
("quarter nine") to each of the prior eight quarters. In order to
calculate the retroactive claim for foster care administration for each
of the prior eight quarters, the percentage of children eligible for
title IV-E (of all children in foster care) was multiplied by the
percentage of social workers' time devoted in quarter nine to the SSTS
codes "Child Welfare Service Administration--Custody" and "Child Welfare
Placement and Judicial Determinations." This figure, when added to the
percentage of social workers' time devoted in quarter nine to the SSTS
code "Child Welfare--Title IV-E Eligibility Determination," yielded the
percentage of social workers' time allocable to title IV-E eligible
children. Affidavit of William B. Fairley dated August 12, 1988, p. 5.
This "IV-E percentage" was then multiplied by total local social
services costs for the quarter in question to determine title IV-E
administrative costs, of which 50% were eligible for federal financial
participation. A separate calculation, not specifically described in
the record, utilized the SSTS to ascertain the amount of training costs
allocable to title IV-E (matchable at a 75% rate). Transcript of
October 18, 1988 informal conference, pp. 258-259. Whether the State Was
Entitled To Retroactive Application of the CAP Amendment Under 45 C.F.R.
95.515

The Agency took the position that, once a state had an approved CAP, it
could not retroactively amend that document "except perhaps in the most
extraordinary circumstances. . . ." Respondent's brief dated December
21, 1987, p. 9. In the Agency's view, the regulation described two
situations in which the Agency could, in its discretion, permit
retroactive application of a CAP amendment. However, according to the
Agency, the regulation did not require it to approve a CAP amendment
retroactively in every such situation. The Agency argued that, in any
event, retroactive amendment of the State's CAP was not permitted here
because neither of the situations in section 95.515 existed.
Specifically, the Agency argued that retroactive amendment of the CAP
would not avoid an inequity to the State because it had not been
established that the CAP amendment provided for accurate measurement of
title IV-E costs not previously claimed by the State. The Agency
contended that the amount claimed under the CAP amendment might in fact
exceed the amount to which the State was really entitled for quarters
one through eight. Even assuming the accuracy of the retroactive claim
made under the CAP amendment, respondent argued that there was no
inequity in denying retroactive amendment of the CAP because the amount
of additional funds claimed under the CAP amendment was relatively
insignificant compared to the amount claimed by the State for social
services. Furthermore, the Agency asserted that the time study on which
the original CAP was based was not "later found to be materially
incomplete or inaccurate," because the State knew from the start that
the RMS measured only one title IV-E activity and was inadequate to
measure other activities which the State knew could be funded under
title IV-E.

The State took the position that retroactive amendment of its CAP was
plainly authorized by section 95.515 because the State met both criteria
described therein. It asserted that denying retroactive amendment would
be inequitable since the effect was to deny it a substantial amount of
money to which it was entitled under title IV-E, based on a comparison
of the retroactive claim to total foster care administration costs and
also considering the amount of the retroactive claim standing alone.
Furthermore, the State argued that it was not until November 1985, when
it first used the SSTS to measure time spent on title IV-E activities,
that it found that the RMS was materially incomplete and inaccurate.
The State also noted that its retroactive claim for title IV-E costs was
timely filed under section 1132 of the Act (Public Law 96-272, section
306(c)), which gives states two years within which to identify and file
claims for FFP. In the State's view, the Agency's interpretation of
section 95.515 was unreasonable because it conflicted with this statute.

We conclude that the Agency properly disapproved retroactive amendment
of the State's CAP here since the State did not meet either criteria in
45 C.F.R. 95.515. Even assuming that inequity is properly measured by a
dollars and cents standard, we agree with the Agency that it is not
clear that disapproval of the State's CAP amendment deprives the State
of $4.8 million to which it was otherwise entitled. As explained later
in this decision, the State's retroactive application of the SSTS did
not produce a claim for quarters one through eight which can be said
with reasonable certainty to represent the amount which the State could
have claimed had it originally used this methodology in those quarters.
It is possible that rather than merely compensating for its earlier
underclaim, the State was now overclaiming title IV-E funds. Thus,
although it was presumably the State's intent to correct an inequity to
itself, the result may have been to create an inequity to the Agency.
Accordingly, retroactive application of the CAP amendment is not
permitted under the first criterion.

Even if the methodology used by the State to produce its claim for
quarters one through eight had been proven accurate, a more fundamental
consideration requires a finding that the first criterion was not met.
Title IV-E makes funding available for certain activities conducted by a
state pursuant to a state plan, which includes for purposes of this case
the CAP. The methodology used to identify title IV-E costs is developed
by the state, subject to the Agency's approval. That the State here
developed a methodology which may not have permitted it to claim the
full amount of funding available under title IV-E is not a basis for a
finding of inequity to the State since the choice of a methodology was
within the State's discretion. (Indeed, another consideration in
determining where the equities lie is the fact, discussed in detail
later, that the State adopted a methodology which recognized only one
title IV-E activity in the face of Agency regulations which adequately
identified other title IV-E activities.)

We further find that the State did not meet the second criterion in
section 95.515 for applying an earlier effective date to a CAP
amendment: that it "later found" the information on which its original
CAP was based to be incomplete or inaccurate. (As noted earlier, the
Agency took the position that if either criterion were met, it could
permit an earlier effective date.) The State acknowledged that it knew
that the RMS measured the time spent on only one title IV-E
activity--eligibility determinations and redeterminations--out of
several title IV-E activities. The State nevertheless contended that it
did not realize that the RMS was inaccurate until it discovered in
November 1985 that the SSTS captured significantly more title IV-E
costs. That the State did not realize the extent to which it had
underclaimed title IV-E costs does not mean that it did not know that
the RMS could not measure all costs at the time it submitted its
original CAP, however. A time study which recognized only eligibility
determinations as a title IV-E activity was on its face a crude
methodology for allocating costs to title IV-E since the title IV-E
program clearly involved a number of other activities. Accordingly, as
the choice of a methodology for capturing title IV-E administrative
costs lay with the State (subject to the Agency's approval), the State
took the risk that the lack of precision inherent in measuring only one
of a number of administrative tasks would result in a substantial
underclaim.

The State also contended that it was unable to develop a better time
study at an earlier date because title IV-E was a new program and the
State lacked guidance on what costs would be reimbursable. Title IV-E
expanded the types of foster care costs that were eligible for
reimbursement, and the State argued that it "did not have a mechanism
for identifying the newly eligible costs." The State also argued that
there was "great confusion" within the Agency and among the states
regarding the costs that were eligible for reimbursement. State's brief
dated February 19, 1988, pp. 8-9. The State noted in this respect that
program regulations implementing title IV-E were proposed and then
withdrawn and were ultimately not issued until May 1983, three years
after enactment of title IV-E. The State asserted that confusion about
allowable costs continued even after the program regulations were
issued, noting that a policy announcement concerning allowable foster
care administrative costs was issued in November 1985, only to be
replaced in October 1987. The State also cited an October 1987 report
of the HHS Inspector General which stated that "[b]oth the States and
the OHDS regional offices continue to have questions about exactly what
administrative costs are eligible for reimbursement." State's
supplemental appeal file, Ex. S.

The Agency responded that allowable title IV-E activities were outlined
in the title IV-E fiscal (as opposed to program) regulations issued in
proposed form in December 1980, and that the State had a year to obtain
clarification of these regulations (issued without any change in July
1982) before it submitted its original CAP. The Agency asserted that
the State thus "knew or should have know[n] when submitting its original
cost allocation plan that it specifically measured only one out of
several Title IV-E activities that could be measured. The subsequent
Policy Announcements do not alter this simple fact." Respondent's brief
dated May 16, 1988, p. 4.

We find that the State could have identified title IV-E activities in
addition to the one identified by the RMS prior to October 1, 1983, the
proposed effective date for its CAP amendment. By the same token, it
could have known by that date that its RMS methodology was inadequate to
measure all its reimbursable activities. Section 1356.60(c) of 45
C.F.R., captioned "Fiscal requirements (title IV-E)" was issued as a
final regulation on July 15, 1982, and provided in part as follows:

Federal financial participation is available at the rate of fifty
percent (50%) for administrative expenditures necessary for the
proper and efficient administration of the title IV-E State plan.
The State's cost allocation plan shall identify which costs are
allocated and claimed under this program.

(1) The determination and redetermination of eligibility, fair
hearings and appeals, rate setting and other costs directly
related only to the administration of the foster care program
under this part are deemed allowable administrative costs under
this paragraph. . . . (2) The following are examples of
allowable administrative costs necessary for the administration
of the foster care program:

(i) Referral to services; (ii) Preparation of and
participation in judicial determinations; (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.

The SSTS covered all of the title IV-E activities listed above as well
as some additional activities. There is no evidence that the State
included the additional activities in the SSTS based on any subsequent
clarification issued by the Agency. Thus, this undermines the State's
contention that it could not have provided for the allocation of the
cost of the activities covered by the SSTS prior to October 1, 1983.

The State also asserted that the development of the SSTS was a complex
process, involving sophisticated analysis and extensive work with local
social workers, which required a year-long intensive effort. However,
assuming that this level of effort was in fact required, the State still
had time to develop this methodology by October 1, 1983 because the
final regulation identifying most of the activities included in the SSTS
was issued more than a year before that date.

Accordingly, we conclude that retroactive application of the CAP
amendment to October 1, 1983 was not permissible since the State did not
satisfy either criteria in 45 C.F.R. 95.515.

The State argued, however, that an interpretation of section 95.515
which denied retroactive application of its CAP amendment conflicted
with section 1132 of the Act. Section 1132 provides that "any claim by
a State for payment with respect to an expenditure made during any
calendar quarter by the State" under title IV-E "shall be filed . . .
within the two-year period which begins on the first day of the calendar
quarter immediately following such calendar quarter. . . ." Here, the
State's title IV-E claim based on the SSTS was filed within this
two-year period. The State argued that the disapproval of the SSTS thus
"frustrates the clear purpose of the statute that States have two years
within which to identify and file claims for FFP." Appellant's brief
dated October 1, 1987, p. 10.

We see no basis for the State's view that section 1132 creates a
positive entitlement to any costs claimed within a two-year period. As
the Board has previously noted, this provision was intended to limit
retroactive claims by the states in order to facilitate HHS's
budget-planning process. See New York State Dept. of Social Services,
DAB No. 521 (1984), p. 8. There is no evidence that Congress intended
this provision to legitimize an otherwise improper claim filed within a
two-year period. Consistent with the underlying purpose, section 1132
is instead neutral--it operates simply to bar claims not submitted
within a two-year period. Accordingly, the fact that the State's claims
were timely filed does not require payment of the claims if they were
unallowable as inconsistent with the State's CAP.

Whether the Methodology Used to Determine Allowable Title IV-E Costs for
Quarters One Through Eight Was Reasonable

Even if the State had met one or both criteria in 45 C.F.R. 95.515 for
retroactive amendment of its CAP, we find that the Agency properly
denied the State's request for retroactive amendment on the ground that
it was not reasonable to apply the SSTS data for quarter nine to
allocate costs to title IV-E for quarters one through eight. We note at
the outset that we do not agree with the Agency that data from one time
period may never be used as the basis for claiming costs for a prior
time period. In Ohio Dept. of Human Services, DAB No. 900 (1987), the
Agency took this position in rejecting Ohio's proposal for the
retroactive application of a random moment study methodology to
determine allowable title IV-E institutional maintenance costs. The
Board observed that "[w]hile sampling in its purest form envisions
samples from the same period in question, common sense would dictate
that samples from another period may be used if it can be established
that no substantial change has occurred so as to invalidate the
procedure." Ohio, p. 11. While the Board found that Ohio had not
provided sufficient evidence that the program in question "had remained
so constant that there are no significant differences between the data
for the audit period and data for the subsequent period," the Board
clearly accepted in principle the appropriateness--given the proper
conditions--of using time study data from one period to determine time
allocated to a program in a prior period. The Board reaffirmed this
principle in Washington State Dept. of Social and Health Services, DAB
No. 924 (1987), although there too it found that the state had not
proven that its Medicaid program had remained so constant that there
were no significant differences between the data for the sampled period
and the earlier period to which the state sought to apply the data.

In support of its position here, the Agency cited a statement in William
Cochran's Sampling Techniques, 3rd edition, 1977 (John Wiley), that
"[t]he population to be sampled (the sampled population) should coincide
with the population about which information is wanted (the target
population)." Cochran p. 5, cited at Transcript, p. 189. As the State
pointed out, however, Cochran also states that "[a]ny supplementary
information that can be gathered about the nature of the differences
between sampled and target population may be helpful." Id., cited at
Transcript, p. 192. Thus, it appears that Cochran does not preclude the
use of a sampled population which is different from the target
population, but merely indicates that this is a technique which must be
used cautiously. This advice is entirely consistent with the Board's
approach in Ohio, Washington State, and in this case.

The State contended that it met its burden of showing that there were no
significant differences between the sampled period--quarter nine--and
the earlier period--quarters one through eight--to which it sought to
apply the data. In the State's view, the critical question was whether
there was "an upward trend over Quarters 1-9 in the real percentage of
time that workers spent on IV-E allowable activities . . . [in which
case] the SSTS estimate for Quarter nine would over-estimate real
percentages of time spent in Quarters 1-8." Affidavit of William B.
Fairley dated July 12, 1988, p. 17. The State contended, relying
primarily on RMS data for quarters one through eight, that this did not
occur. According to the State, the RMS data was relevant to the
question of trend in these activities because title IV-E activities were
spread throughout many of the RMS categories (although only one RMS
category directly measured a title IV-E activity.) Looking at the
percentage of social workers' time spent on each of 12 major RMS codes,
the State found that the percentages varied from quarter to quarter but
did not trend upward. The State also broke down the largest code,
direct service provision, into 14 sub-codes and found no upward trend in
the percentage of time devoted to any of the sub-codes. Id., pp. 20-23.
The State contended that it could be inferred from the lack of upward
trend in the RMS data that there would have been no upward trend in the
SSTS figures had the SSTS originally been used in quarters one through
eight, since both time studies measured social workers' routine
activities, although "slicing" them in a different way. There was, of
course, no RMS data for quarter nine. However, the State argued that
since there was no upward trend in the data over the eight quarters,
there was no reason to expect any increase from quarter eight to quarter
nine. The State asserted that if there was no increase, the quarter
nine SSTS data could be applied to quarters one through eight without
any risk of overclaiming title IV-E costs.

We are not persuaded that there would have been no increase in the
percentage of time allocated to the title IV-E activities measured by
the SSTS from quarter eight to quarter nine. Since the percentage of
time allocated to any one of the RMS codes and sub-codes generally
varied from quarter to quarter, in some cases going up and in some cases
going down, it is likely that there was some variability between
quarters eight and nine as well. Indeed, one of the State's statistical
consultants, Dr. Fairley, while stating that there was "a very good
basis for inferring . . . that there was "no general reason to expect .
. . [the SSTS] to increase in quarter nine," also acknowledged that it
may have gone up or down. Transcript, pp. 63-64. Indeed, he provided
no basis for his conclusion that it was more likely that the SSTS data
remained level or went down rather than that it went up. Accordingly,
we find that the State's methodology was critically flawed in this
respect.

The State also asserted that the RMS data should be considered together
with other evidence that quarter nine was comparable to the earlier
quarters. The State provided data on the program variables "caseload"
and "staff time" which it asserted showed that there was no substantial
change over the nine quarters. However, Dr. Fairley admitted that the
State had not established any clear relationship between the program
variables and how its social workers spent their time. To do so, he
stated, would be "a gargantuan task . . ., a social science research
project which no one has ever done. . . ." Transcript, p. 68. He
contrasted the program variable data with the RMS data, which he stated
measures actual time "[a]nd so . . . is the most directly relevant data
to examine. . . ." Id., p. 67. What Dr. Fairley was saying, in effect,
was that even if the State established that the number of social workers
and their caseload remained stable over the nine quarters, this does not
necessarily show that the social workers allocated their time in a
consistent manner over this time period. Thus, we see no reason to
consider the program variable data.

In addition, the State provided an affidavit from a State program
official stating, based on his "first-hand knowledge of program
operations," that he was "unaware of any activities undertaken by staff
which would have increased allowable administrative services charged to
Title IV-E" during the period in question. Affidavit of Frank Blanton,
undated, p. 2. In addition, the State submitted the affidavit of
another statistical consultant retained by it stating that he would
weigh Mr. Blanton's affidavit heavily since "[i]n my experience program
or service focus changes directed by management are the major
determinants of worker time allocation changes." Affidavit of Robert E.
Sherman, undated, p. 10. Dr. Sherman's statement is unsupported,
however, and contradicts the opinion of Dr. Fairley that the
relationship between program variables and time spent by social workers
on title IV-E activities has never been established. Thus, we do not
find Mr. Blanton's statement to further the State's case. (We note,
moreover, that the Agency submitted evidence to rebut Mr. Blanton's
opinion that no significant program changes occurred during the period
in question, including the State's Child Welfare Services Plan for the
period October 1, 1985 through September 30, 1987, which states that
"over the past five years, foster care has experienced drastic and
dramatic changes in terms of the client population being serviced, the
methods of intervention, and the system of delivering the services."
Agency Conference Exhibit 2, p. 29. The State did not deny the
authenticity of this document.)

The State also asserted, however, that notwithstanding any flaws in the
methodology used to calculate the additional title IV-E costs for
quarters one through eight, the disallowance was not warranted since the
State had provided "a reasonable way to settle the underclaim of" title
IV-E costs and the Agency had not proposed any alternative methodology.
Transcript, p. 144. In fact, Dr. Gershenson, the statistician employed
by the Agency, stated that the State's methodology "has a great deal of
merit," and that he could not think of another methodology that would
improve upon it. Transcript, p. 71. However, the fact that the claim
represents the State's best estimate of its title IV-E costs does not
make it acceptable. We see no reason why the Agency should be compelled
to accept a claim based on a methodology which is clearly flawed where
there is an agreed-upon methodology already in place. The RMS, although
it may have identified less than the full amount of costs allocable to
title IV-E, was nevertheless submitted by the State and approved by the
Agency as an equitable method for allocating costs. It would make a
mockery of the process for CAP approval if the State could discard the
methodology in an approved CAP on the basis of certain shortcomings in
favor of a new methodology which was also flawed. The State also
emphasized that it used actual data for all elements of its claim
calculation except for the percentage of time spent on title IV-E, and
that the figure used for percentage of title IV-E eligible children was
lower than the actual data would support. (See note 4 above.)
Notwithstanding the use of actual data for two of the three elements of
the claim calculation, however, the fact remains that even a small error
in the third element, the percentage of time spent on title IV-E, would
significantly change the amount of the claim. Furthermore, the State
provided no evidence that the conservative figure used for percentage of
title IV-E eligible children would offset any inaccuracy in the
percentage of time spent on title IV-E.

Conclusion

For the reasons discussed above, we sustain both the disapproval of the
CAP amendment retroactive to the period October 1, 1983 through August
31, 1985 and the related disallowance of title IV-E administrative
costs.


________________________________ Donald F. Garrett


________________________________ Norval D. (John) Settle


________________________________ Cecilia Sparks Ford Presiding
Board