Kentucky Cabinet for Human Resources, DAB No. 1130 (1990)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: Kentucky Cabinet for

DATE: February 5, 1990
Human Resources Docket Nos. 89-178 and 89-258 Decision No. 1130

DECISION

The Kentucky Cabinet for Human Resources (State or Cabinet) appealed
decisions by the Office of Child Support Enforcement (OCSE) disallowing
$51,947 and $45,137 in federal financial participation (FFP) claimed by
the State under Title IV-D of the Social Security Act (Act). The
disallowances concerned expenses for the Kentucky Child Support
Enforcement Commission (Commission) for the period of April through
December, 1988, and for the quarter ending September 30, 1989. OCSE
determined that these expenses were not eligible for FFP because the
Commission was not within control of the Cabinet; because the functions
performed by the Commission were either duplicative of those of the
Cabinet or could not be delegated by the Cabinet; and because Congress
had expressed an intent not to provide federal funds for such
commissions.

For the reasons explained below, we uphold OCSE's disallowances of these
expenses. Our decision is based on the parties' briefs and accompanying
documentation and on the presentations of the parties in an informal
conference held on January 8, 1990.

I. Background

A. Title IV-D

The Child Support Enforcement Program of Title IV-D was established to
enforce child support obligations owed by absent parents to their
children. Basic program functions include locating absent parents,
determining paternity, establishing the amount of child support
obligation, and collecting support payments. See Section 451 of the
Act.

In order to receive Title IV-D funds, a state must operate its IV-D
program in accordance with a federally approved state plan and
applicable federal regulations. The state must designate a single
separate organizational unit to administer the IV-D plan (known as the
"IV-D agency"). 45 C.F.R. 302.12(a). The IV-D agency may delegate
certain IV-D functions to other State or local agencies and may enter
into cooperative agreements with appropriate contractors to assist the
IV-D agency in administering the plan. 45 C.F.R. 302.12(a)(2) and (3).

B. Kentucky House Bill 586

In 1988, the Kentucky Legislature established the Kentucky Child Support
Enforcement Commission. House Bill 586, Acts of the General Assembly of
1988, codified at Ky. Rev. Stat. 15.290, Ky. Ex. II. The nine member
Commission is located within the Kentucky Department of Law and is
composed of representatives of the Attorney General, the Cabinet, the
Cabinet's Division of Child Support Enforcement, the Administrative
Office of the Courts, the County Attorneys' Association, urban county
governments, and the citizenry at large. The Commission's
responsibilities are set forth in the statute and in the Program
Administration Contract (Contract) between the Cabinet and the Office of
the Attorney General. Ky. Exs. II and III. The Contract provides that
the Cabinet shall bear the expenses for the Commission even if it does
not receive IV-D FFP for such expenses. Ky. Ex. III, p. 6.

The statute sets forth, and the Contract reiterates, the following
responsibilities for the Commission:

(a) Advise the governor on any issue related to the child
support program;

(b) Advise the cabinet for human resources on any issue
related to the child support program;

(c) Advise the department of law on any issue related to the
child support program;

(d) Advise the administrative office of the courts on any
issue related to the child support program;

(e) Provide a regular forum for all parties involved in the
child support program to address any aspect of the
administrative or judicial process;

(f) Develop and prepare reports and recommendations related
to administrative procedures, prosecution, judicial
procedures, state or federal legislation; or any other
matters which might improve program effectiveness and
efficiency; and

(g) Initiate recommendations to facilitate interaction
between local officials and the cabinet.

Beginning in August 1989, the Commission was also required to issue
annual reports concerning performance of all aspects of the child
support program and recommendations for improvements.

According to the State, the Commission's primary purpose is as a conduit
of opinion for the diverse entities who have an interest in the child
support collection system: the county attorneys, the judiciary, the
Attorney General's Office, the IV-D agency, local governments, and the
public. Transcript of January 8, 1990 conference (Tr.), pp. 15-16. It
provides an "unbiased" forum for these groups, whose interests may
differ, to discuss problems and work towards a more effective child
support collection system for Kentucky. Tr., pp. 14-16; pp. 24- 25.

II. Arguments Submitted By Kentucky

Kentucky argued that, while the Commission had no contractual or
statutory responsibility for administration or management of the IV-D
program, its activities as a conduit of opinion and dispute resolution
forum benefited Kentucky's IV-D program. Appellant's Brief, pp. 3-4.
Kentucky contended that there was sufficient connection to the IV-D
agency by virtue of Cabinet personnel holding two of the nine Commission
seats to warrant IV-D funding (Id., p. 4; Appellant's Response to Brief
for Appellee, p. 1), and that the majority of its functions did not
duplicate those of the IV-D agency. Id., pp. 1-2.

III. Discussion

We find that OCSE's decision to deny funding for the expenses of this
Commission was correct. We base our decision on the following reasons:

o The Kentucky IV-D agency has no control over the activities of
the Commission and therefore no ability to supervise its
performance, as required by 45 C.F.R. 302.12(a)(2) and 301.1.

o Assuming the IV-D agency retained appropriate supervisory
control over the Commission, the Kentucky state plan fails to
describe the delegation of IV-D functions by the IV-D agency, as
required by 45 C.F.R. 302.12(b).

o As conceded by the State, at least 40 percent of the functions
performed by the Commission are duplicative of those performed by
the IV-D agency. Duplicative expenditures are not "necessary"
expenditures and do not qualify for FFP.

o Congress has expressed an intent not to fund commissions of
this type with IV-D funding.

Each of these reasons is discussed more fully below.

A. The Kentucky IV-D agency has no control over the activities of
the Commission and therefore no ability to supervise its
performance, as required by 45 C.F.R. 302.12(a)(2) and 301.1.

Section 454(3) of the Act and 45 C.F.R. 302.12(a) require that a IV-D
program be administered pursuant to an approved state plan which
designates a single and separate organizational unit to administer the
IV-D plan. This agency is referred to as the "IV-D agency". In
Kentucky, the state plan names the Cabinet of Human Resources as the
single IV-D agency.

While every facet of the state's IV-D program does not have to be
directly administered by the IV-D agency, the IV-D agency is responsible
for supervising any IV-D functions that it chooses to delegate to ensure
that they are performed "properly, efficiently, and effectively." 45
C.F.R. 302.12(a)(2) and 301.1. If the IV-D agency delegates any IV-D
functions, it remains responsible for "securing compliance with the
requirements of the State plan . . . ." 45 C.F.R. 302.12(a)(3).

For the following reasons, we find that the IV-D agency has no power to
supervise the Commission's operation:

o The Commission's membership and duties have been defined by the
legislature, and the IV-D agency has no ability to review the
performance of these duties. For example, a significant portion
of the Commission's duties includes "advising" other governmental
entities such as the governor, the courts, and the legislature on
appropriate child support policy and legislation. This advice is
the product of diverse elements of the child support system and
not the product of the IV-D agency.

o It was apparent from the testimony of the State's witness that
the Commission's independence from the IV-D agency is an important
factor in giving it credibility with the various participants in
the Kentucky child support system and in its success. Tr., pp.
13-14; pp. 24-25. Thus, the Commission was designed to be
independent of the IV-D agency and beyond its supervision.

o Representatives from the Cabinet and Division hold only two of
the nine seats on the Commission and the chairmanship belongs to
the Office of the Attorney General.

o The minutes of the Commission meetings demonstrate that the
representatives from the Cabinet and the Division participate as
single members and have no review or veto power of the
Commission's agenda or reports. Ky. Ex. V, VI.

o The contract between the Cabinet and the Office of the Attorney
General contains fiscal controls but they go to accounting
standards and not review of the substantive work of the
Commission. Ky. Ex. III, pp. 2-4. 1/

A review of the minutes and 1989 report of the Commission provides
examples of its independence from the IV-D agency. The Commission has
spent a portion of its time discussing such substantive matters as
adoption of minimum child support guidelines, implementation of the
guidelines, performance standards for county attorneys, and
reimbursement mechanisms for county attorneys. While there is no
evidence that the Commission and the IV-D agency have come to contrary
conclusions on these matters, it is entirely possible that they will.
Pursuant to its statutory charge to "advise" the governor, the Attorney
General, and the courts and to recommend legislation, the Commission is
mandated to advance its independent view of appropriate child support
policy.

Another example involves the Commission's efforts to engage in public
education. As one of its accomplishments for 1989, the Commission
points to a curriculum which has been developed on child support issues
and incorporated in the Department of Education's Family Life Education
Curriculum. Ky. Ex. V, pp. 10, pp. 115-117. However, 45 C.F.R.
304.23(d) provides expressly that Title IV-D FFP is not available for
"education and training programs and educational services except direct
costs of short term training provided to IV-D agency staff or pursuant
to 304.21 [courts and law enforcement officials]." Again, while such
efforts may well improve the child support system, they are not made
under the supervision of the IV-D agency pursuant to the IV-D state plan
and, in this case, arguably contravene the IV-D regulations for federal
funding.

The Kentucky legislature sought to address the single state agency
requirement by including language in HB 586 that "[n]othing in this
section shall be construed as modifying the designation of the single
state agency as required under the Federal Title IV-D plan." Ky. Ex.
II, HB 586, Section 18(6). However, such language, in the face of the
design and operation of the Commission, cannot save the Commission from
a finding that it is independent from the single state agency.

In summary, the Commission was designed to be and is independent from
the IV-D agency. The IV-D agency has no ability to supervise its work
product or ensure that what it does is pursuant to the state plan.
Consequently, the Commission is operating beyond the authority of the
IV-D agency, and, although its work may benefit child support collection
efforts in Kentucky, it is not entitled to federal funding for its
expenses.

B. Assuming the IV-D agency retained appropriate supervisory
control over the Commission, the Kentucky state plan fails to
describe the delegation of IV-D functions by the IV-D agency, as
required by 45 C.F.R. 302.12(b).

While the IV-D regulations contemplate that some IV-D functions will be
performed outside the designated single state agency, 45 C.F.R.
302.12(b) requires as follows:

If any of the IV-D program functions are to be performed outside
of the IV-D agency then these functions shall be listed [in the
state plan] with the name of the organization responsible for
performing them.

The State admitted that the role of the Commission is not reflected in
Kentucky's state plan. Tr., p. 16.

The regulatory provision at 45 C.F.R. 304.20(b) limits FFP to activities
made pursuant an approved IV-D state plan which are determined by the
Secretary to be necessary expenditures properly attributable to the
program. See also Section 455(a)(1)(A) of the Act. Therefore, assuming
that the Commission's work is appropriately supervised, this delegation
must still be reflected in the state plan in order to be eligible for
federal funding.

Kentucky tried to argue that the Commission's work need not be reflected
in the state plan because the Commission has no contractual or statutory
responsibility for administration or management of the IV-D program
(Appellant's Brief, p. 3); that it was merely advisory in nature (Tr.,
pp. 16-17); that it had no substantive role (Tr., p. 17; p. 35); that
the IV-D agency performed IV-D activities while the Commission only
addressed IV-D activities. Tr., p. 29. However, this line of argument
actually hurts the State since it would establish that the Commission,
even if appropriately supervised, is not performing IV-D functions.
Unless it is performing IV-D functions, it is obviously not entitled to
IV-D funds. 2/

C. As conceded by the State, at least 40 percent of the functions
performed by the Commission are duplicative of those performed by
the IV-D agency. Duplicative expenditures are not "necessary"
expenditures and do not qualify for FFP.

If there had been a valid delegation of IV-D functions, questions would
still arise as to whether the Commission's functions are duplicative of
the functions being performed directly by the IV-D agency. If functions
are duplicative, the expenditures associated with performing those
functions are not considered "necessary" and do not qualify for FFP. 45
C.F.R. 304.20(a)(1); OMB Circular A-87, Attachment A, C.1.a. (made
applicable by 45 C.F.R. 74.171).

In his letter of February 23, 1989, Commissioner Mike Robinson conceded
that 40 percent of the Commission's work appeared to be duplicative of
the IV-D agency's work. Ky. Ex. IV. 3/

OCSE took the position that the Commission's remaining functions also
were duplicative of the IV-D agency's functions. 4/ For example, the
State represented that the Commission's primary function was as a
conduit of opinion to the IV-D agency and as a forum to resolve issues
or disputes which may arise among the various interested parties in the
child support system. Tr., p. 15; p. 17; Appellant's Response to Brief
for Appellee, pp. 1-2. On cross examination, OCSE sought to show that
(1) the IV-D agency has its own personnel for discussing problems with
county attorneys and the other participants in the child support
enforcement system (Tr., pp. 24-25; p. 34); and (2) that the IV-D agency
also convenes interested parties to discuss child support issues. Tr.,
p. 34. Kentucky maintained that, because of the stature of its
membership and its unbiased nature, the Commission was in a better
position to do these things and that its work, while supplemental, was
necessary and not duplicative. Tr., pp. 13-14; pp. 24-25; Appellant's
Response, pp. 1-2.

As Kentucky admits, there is some duplication between the functions of
the Commission and the IV-D agency. However, the extent of that
duplication and the necessity for alternative strategies in
administering a child support program are not clear from the record.
Because the previously discussed grounds exist for denying FFP, we find
that it is unnecessary to decide the extent to which portions of the
Commission's functions, beyond the Judiciary and Performance Standards
Subcommittees, are duplicative of the IV-D agency's functions.
Therefore, we find that 40 percent of the Commission's expenses are not
allowable as duplicative, but we make no finding as to whether the
remaining 60 percent are duplicative.

D. Congress has expressed an intent not to fund commissions
similar to this Commission with Title IV-D funds.

In 1984 Congress enacted a set of amendments to Title IV- D. Child
Support Enforcement Amendments of 1984, Pub. L. 98-378. Section 15
required each state to establish a State Commission of Child Support.
OCSE Ex. 3. The function of these commissions was "to examine,
investigate, and study the operation of the State's child support
system" and to submit their findings and recommendations to the Governor
in a report by October 1, 1985. The participants in the commissions
were to be representatives of the various entities interested in the
child support system. After submission of their reports, the
commissions were no longer required by federal law. The amendments also
provided that "none of the costs incurred in the establishment and
operation of a State commission . . . shall be considered as
expenditures qualifying for Federal financial payments . . . or be
otherwise payable or reimbursable by the United States or any agency
thereof." Id., Section 15(e).

OCSE argued that this section, which lapsed in 1985, demonstrated that
Congress did not intend Title IV-D to fund these types of commissions.
Kentucky pointed out that this statute had lapsed and argued that it was
therefore not applicable. Appellant's Brief, p. 5.

We find OCSE's position persuasive. While the Commission may be playing
an important role in improving Kentucky's child support system, it is
very similar in composition and mission to those which Congress mandated
but chose not to fund in 1985. If Congress found Title IV-D funding to
be inappropriate when it was mandating such commissions, it seems
reasonable to conclude that Congress would find Title IV-D funding
inappropriate where a state chooses to voluntarily establish an ongoing
commission.


IV. Commission Disallowances Which Kentucky Did Not Appeal

At the time of the informal conference, counsel for Kentucky represented
that OCSE had disallowed Commission expenses beyond the expenses subject
to this appeal. Tr., pp. 8-9. Counsel for OCSE confirmed that on May
18, 1989 OCSE issued a disallowance in the amount of $22,471 for the
quarter ending March 31, 1989, and on August 11, 1989 OCSE issued a
disallowance in the amount of $23,357 for the quarter ending June 30,
1989. Tr., pp. 18-19.

Counsel for Kentucky then requested that those disallowances be
considered as part of this case even though the State had not filed a
timely appeal pursuant to 45 C.F.R. 16.3. Tr., pp. 47-48. Counsel for
OCSE objected. Tr., p. 18. The Presiding Board Member informed
Kentucky counsel that he had five days in which to submit any good cause
arguments to justify the State's failure to take timely appeals on these
disallowances. Tr., p. 48. The State did not submit anything in
response.

tThe regulatory provision at 45 C.F.R. 16.3(b) requires that an
appellant submit a notice of appeal to the Board within 30 days of
receipt of the final decision it is seeking to appeal. The Board may
extend its deadlines if a party can give good reason for failure to
comply with a deadline. 45 C.F.R. 16.15(a). However, the Board's
Procedures Manual indicates that the Board is rigorous in policing the
30 day requirement as applied to notices of appeal. Practice Manual, p.
2.

In this instance, the State sought leave to file appeals which were over
6 months and 3 months late. The State offered no reason for its failure
to take timely appeals. Further, the State was obviously aware that the
Commission's expenses were at issue since this case concerns
disallowances for quarters prior to and subsequent to the disallowances
it now seeks to appeal. Therefore, we find that the State's request to
appeal the disallowances of May 18, 1989 and August 11, 1989 is untimely
and its request is denied. 5/

V. Conclusion

For the foregoing reasons, we uphold OCSE's disallowance of the expenses
of the Kentucky Child Support Enforcement Commission for the time
periods of April through December 1988 and July through September 1989.


__________________________ Alexander G.
Teitz


__________________________ Norval D.
(John) Settle Chair


_________________________ Donald F.
Garrett Presiding Board Member

1. Commissioner Mike Robinson did testify that the IV-D agency could
deny reimbursement to the Commission if it participated in activities
that were unrelated to the Child Support Enforcement program. Tr., pp.
26-27; p. 32. However, given that the IV-D agency is mandated by HB
586 to fund this Commission, we find that the power Commissioner
Robinson describes would arise only if the Commission chose to engage in
activities that were wholly unrelated to the child support program.
This power does not constitute the ability to supervise the work product
or the direction of the Commission as long as it stays within the area
of child support issues.

2. Indeed, the State's concessions raise the issue of whether the
Commission's activities in any event could qualify as authorized IV-D
activities. Such an issue is also raised by the fact that the
activities here are performed by an entity whose perspective and agenda
are different from the entity designated by the state plan to administer
the IV-D program.

3. Commissioner Robinson identified the cost of the staff support for
the Judiciary Subcommittee and the Performance Standards Subcommittee as
duplicative. The mission statements for these committees are set out in
the Commission's Annual Report 1988-1989 and read: "The Judiciary
Subcommittee of the Child Support Enforcement Commission is responsible
for encouraging active involvement of the judiciary in the child support
enforcement program." Ky. Ex. V., p. 14. "The Performance Standards
Subcommittee is responsible for assisting the Division of Child Support
Enforcement with the language of the 1990 contracts and grant documents
to include mandated performance standards for all providers of the child
support enforcement program." Id., p.15

4. OCSE argued further that a portion of the Commission's functions
violated 45 C.F.R. 303.20(d), which forbids delegation by the IV-D
agency of its duty for "formal evaluation of the quality, efficiency,
effectiveness, and scope of services provided under the plan." Kentucky
responded that since the Commission's role was only advisory and the
IV-D agency retained the right to accept or reject the Commission's
recommendations, it had not delegated its duty of evaluation. Tr., pp.
30-31. Since this case has been resolved on other grounds, we do not
reach the issue of whether Kentucky also tried to delegate non-delegable
functions.

5. The regulatory provision at 45 C.F.R. 16.7(b) provides that Chair
shall determine if the appeal meets the conditions in 45 C.F.R. 16.3.
That decision is being made here by Mr. Settle, as a member of this