New Jersey Department of Human Services, DAB No. 1306 (1992)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

SUBJECT:  New Jersey Department  of Human  Services

DATE: February 25, 1992
Docket Nos. 90-226, 90-248 and 91-15
Decision No. 1306

DECISION

The New Jersey Department of Human Services (New Jersey, DHS) appealed a
decision by the Regional Director, Region II, Department of Health and
Human Services.  The Regional Director had affirmed the initial
disallowance  determination for the period July 1, 1986 to March 31,
1989 by the Director, Division of Cost Allocation (DCA), Region II, that
New Jersey was required to return $2,571,215 to the federal government.
1/  That amount represented the federal share at 50 percent federal
financial participation (FFP) for administrative expenditures for New
Jersey Department of Labor (NJDOL) wage reporting costs.  The DCA
Director found that NJDOL billed DHS for costs of wage data collection.
Citing provisions of the Social Security Act (Act) and Departmental
regulations, the DCA Director found that these provisions allow federal
reimbursement only for the cost of matching wage data and do not provide
reimbursement for the cost of collecting and recording the wage data.
The DCA Director also noted that the disallowance included allowable
costs for wage matching activities; New Jersey had not separately
identified these costs and the DCA Director could not separate them out.
Therefore, he determined to disallow the entire amount.

New Jersey also appealed two subsequent disallowances for the period
April 1, 1989 through December 31, 1989, which were consolidated with
the initial disallowance in Docket No. 90-226 for purposes of the appeal
process.  The disallowance in Docket No. 90-248 was in the amount of
$82,866 FFP for costs claimed under title IV-D, and the disallowance in
Docket No. 90-15 was in the amount of $313,974 FFP for costs claimed
under title IV-A.  Thus, the total amount in dispute in these
consolidated appeals is $2,968,055.

For the reasons discussed below, we conclude that New Jersey's
administrative costs of collecting wage data are not reimbursable under
its title IV-A, IV-D, XIX and Food Stamp Programs.  New Jersey uses its
unemployment program to operate its wage reporting system, and the
statutory intent under section 1137(a) of the Act was that costs of
collecting wage data should be reimbursed under that program.
Therefore, we sustain DCA's disallowance with respect to the costs
associated with collection of wage data.  DCA did not dispute that New
Jersey is entitled to federal reimbursement for the costs associated
with wage matching activities, however.  Thus, DCA should provide New
Jersey with a reasonable opportunity to document what part of the
disallowed costs were attributable to wage matching.

Statutory Background

Section 1137 of the Act, entitled "Income and Eligibility Verification
System" (IEVS), provides in part as follows:

 (a)  In order to meet the requirements of this section, a State
 must have in effect an income and eligibility verification
 system . . . under which--

   (2) wage information from agencies administering
   State unemployment compensation laws available
   pursuant to section 3304(a)(16) of the Internal
   Revenue Code of 1954, wage information reported
   pursuant to paragraph (3) of this subsection,
   and wage, income, and other information from the
   Social Security Administration and the Internal
   Revenue Service available pursuant to section
   6103(l)(7) of such Code, shall be requested and
   utilized to the extent that such information may
   be useful in verifying eligibility for, and the
   amount of benefits available under any program
   listed in subsection (b), as determined by the
   Secretary of Health and Human Services (or in
   the case of the unemployment compensation
   program, by the Secretary of Labor, or, in the
   case of the food stamp program, by the Secretary
   of Agriculture);

   (3) employers in such State are required,
   effective September 30, 1988, to make quarterly
   wage reports to a State agency (which may be the
   agency administering the State's unemployment
   compensation law) except that the Secretary of
   Labor (in consultation with the Secretary of
   Health and Human Services, and the Secretary of
   Agriculture) may waive the provisions of this
   paragraph if he determines that the State has in
   effect an alternative system which is effective
   and timely for purposes of providing employment
   related income and eligibility data for the
   purposes described in paragraph (2);

   (4) the State agencies administering the
   programs listed in subsection (b) adhere to
   standardized formats and procedures established
   by the Secretary of Health and Human Services
   (in consultation with the Secretary of
   Agriculture) under which-- (A) the agencies will
     exchange with each other
     information in their possession
     which may be of use in
     establishing or verifying
     eligibility or benefit amounts
     under any such program; (B) such
     information shall be made
     available to assist in the child
     support program under part D of
     title IV of this Act . . .

   (7) accounting systems are utilized which assure
   that programs providing data receive appropriate
   reimbursement from the programs utilizing the
   data for the costs incurred in providing the
   data.

 (b) The programs which must participate in the income and
 eligibility verification system are--

   (1) the aid to families with dependent children
   program under part A of title IV of this Act;

   (2) the medicaid program under title XIX of this
   Act;

   (3) the unemployment compensation program under
   section 3304 of the Internal Revenue Code of
   1954;

   (4) the food stamp program under the Food Stamp
   Act of 1977; and

   (5) any State program under a plan approved
   under title I, X, XIV, and XVI of this Act.

Factual Background

Revisions to the New Jersey Unemployment Compensation Law in 1984
provided that each employer subject to that statute shall file a report
with the Controller of the New Jersey Department of Labor (NJDOL) within
30 days of the end of each calendar quarter listing the Social Security
Number, name, wages paid to, and the base weeks earned by each employee
during the preceding calendar quarter.  New Jersey Unemployment
Compensation Law, R.S. 43.21 et seq., specifically 43.21-14(a)(2)(A) and
(C);  see also Appellant's Appeal File, p. 51 and Respondent's Exhibit
(Ex.) R-5.  Pursuant to this statutory change, NJDOL began collecting
quarterly wage reports for the third calendar quarter of 1984, the
quarter ended September 30, 1984.  Appellant's Appeal File, p. 51.  New
Jersey instituted this change prior to September 30, 1988, the date by
which states were required by section 1137(a)(3) of the Act to have a
quarterly wage reporting system.  The costs of developing New Jersey's
quarterly wage reporting system were funded by the U. S. Department of
Labor (USDOL).  Transcript (Tr.), p. 45.

Parties' arguments

DCA found that New Jersey is entitled to federal reimbursement under
titles IV-A, IV-D, XIX of the Act and under the Food Stamp Program (the
public assistance programs) only for the costs of matching wage data,
and not for the costs associated with collecting wage data.  DCA said
section 1137 of the Act precluded reimbursement of the costs of
collecting wage data.  DCA contended that section 1137(a)(7) refers only
to allocating costs of "providing" data to those programs using the data
and that the regulations show that "providing" means the exchange or
matching of data.

New Jersey argued that section 1137(a)(3) requires quarterly wage
reporting to a state agency which may or may not be the state agency
administering the unemployment insurance (UI) program.  New Jersey
contended that since it is required by section 1137(a)(3) to have a wage
reporting system for collecting data, the cost of collection is a
necessary cost of the programs that benefit from the data.  New Jersey
also contended that the cost of collecting wage data is part of the cost
of providing data since a state must collect the data in order to
"provide" it.  New Jersey claimed that the cost of collecting data
therefore is a joint cost which should be allocated under Office of
Management and Budget (OMB) Circular A-87 to all benefitting programs
and that it did so properly allocate the cost under a USDOL approved
CAP.

Analysis

1.  New Jersey implemented a wage reporting system for purposes of its
UI program and the costs of collecting the data are properly costs of
the UI program.

In New York State Dept. of Social Services, DAB No. 415 (1983), this
Board addressed the allowability of collection costs of wage data under
a wage reporting system.  The costs had been disallowed on the basis
that they were not a "necessary" cost of the public assistance programs
(as required by OMB Circular A-87, Attachment A, Item C.1.a.) since
there was no requirement for those programs that a state collect such
data and since USDOL would fund such a system for a state's UI program.
The Board reversed the disallowance.  The Board stated that, while it
would normally defer to an agency's discretionary decision on what was a
"necessary" cost, the disallowance was based on the incorrect premise
that only required costs are "necessary."  The Board held that a cost
may be necessary for the proper and efficient operation of a program
even if a state is not required to incur the cost.

The Board also discussed in New York the differences between a state
which chooses to be funded by USDOL as a "wage request" state and one
which chooses to be funded as a "wage reporting" state.  The Board found
that the New York Department of Labor had opted to be a "wage request"
state because it thought the type of wage reporting system USDOL would
fund was inadequate.  The Board also found that the particular wage
reporting system at issue was designed by New York specifically to
provide information for its public assistance programs and later placed
in the New York Tax Department. 2/


This case is distinguishable from New York since the wage reporting
system here was developed with funding from USDOL and was established as
part of New Jersey's UI program.  As New Jersey noted, the New York
decision did not specifically state that collection costs from a wage
reporting system set up for UI purposes would not be allowable under the
public assistance programs.  The decision did, however, distinguish the
wage reporting system at issue there (which was conceived of as serving
only public assistance activities and used primarily for that purpose)
from files set up for other purposes.  See New York at 10.

The importance of this distinction is that costs which are incurred to
meet the requirements of a particular program should generally be borne
by that program, even if they may tangentially benefit other programs.
Moreover, OMB Circular A-87 prohibits a state from shifting costs from
one program to another to avoid funding restrictions.  OMB Circular
A-87, Att. A, Item C.1.f. and C.2.b.  Here, New Jersey did not deny that
it had opted to be a wage reporting state for UI purposes, and had
implemented its wage reporting system as part of its UI program.
Indeed, the wage reporting requirements are part of its unemployment
compensation law.  New Jersey thus must incur the costs of collecting
the data irrespective of whether the data is shared with the public
assistance programs.

New Jersey argued nonetheless that the enactment of section 1137 had
rendered a wage reporting system a required cost of the public
assistance programs, and that this was determinative of the allowability
of the costs.  Thus, we next discuss the effect and intent of section
1137.

2.  The legislative history of DEFRA indicates that Congress did not
intend to use public assistance funds for the collection costs at issue
here.

There is nothing in section 1137 of the Act which specifically precludes
or authorizes reimbursement of the administrative costs of collecting
wage data.  The general rule of statutory construction is that the plain
meaning of the statute should control.  If the statute is ambiguous,
however, it is necessary to consult the legislative history of a statute
to determine legislative intent.

The statutory provisions for income and eligibility verification
procedures were included in section 2651 of the Deficit Reduction Act
(DEFRA) of 1984, Public Law 98-369, upon the recommendation of the
President's Private Sector Survey on Cost Control (the Grace
Commission).   The Grace Commission noted that prior to enactment of
this provision, wage data was used by the Social Security Administration
and the Department of Agriculture for verifying eligibility for certain
public assistance programs.  See Senate Committee on Finance,
Explanation of Provisions Approved By the Committee on March 21, 1984,
S. Prt. 169, Vol. 1, 98th Cong., 2d Sess. 993 (Committee Print).  The
federally administered Supplemental Security Income program crosschecked
data supplied by the  beneficiaries with Internal Revenue Service and
Social Security data.  State and local welfare agencies had to request
this data too unless quarterly wage data was available from their state
unemployment compensation agencies.  The Commission determined that 42
jurisdictions collected wage data on a quarterly basis through their UI
programs, and three other states obtained this data through other means.

The legislative history further indicates that the primary purpose of
the new statutory provision was to authorize and require the Internal
Revenue Service and Social Security Administration to make available for
the first time to federal and state agencies data on earned and unearned
income for use in administering public assistance programs.  The
Committee anticipated that this data would be provided to agencies by
means of exchanging information and matching wage information data
collected by states under their state unemployment compensation
programs.

The Committee also provided that:

 . . . the quarterly wage reporting requirement does not mandate
 a State to collect data through its unemployment insurance
 program, nor would any State be required to change its UI system
 to comply with the amendment.  Further, no State now collecting
 quarterly wage information through the UI system, or by any
 other means, would be required to alter its existing wage
 reporting format or the extent of its coverage so long as an
 existing system is reasonably comprehensive.

 States which do not have quarterly wage reporting systems would
 have the option of developing such systems either within their
 unemployment compensation programs or elsewhere in State
 government.  If States use the unemployment program to operate
 the wage reporting system, its costs would be reimbursable as an
 unemployment administrative expense on the same basis and under
 the same conditions as now apply to those 40 States which
 currently use wage reporting for the unemployment program.
 However, the amendment requires that other programs utilizing
 the data make appropriate payments for the costs involved in
 providing information.  If a State elects to establish a wage
 reporting system in a manner which would not, under existing
 rules, qualify for reimbursement as an unemployment insurance
 program cost, the costs of the wage reporting system would be
 appropriately shared among all those programs required by the
 amendment to use the information it provides and among any other
 programs for which the State used the system.

Committee Print (emphasis added).

New Jersey and DCA did not address this part of the legislative history.
However, this part shows that, while section 1137 of the Act does not
unambiguously prohibit the allocation of the administrative costs of
collecting wage information data, the clear intent of the legislation
was that if a state had a qualifying wage reporting system under the UI
program, these administrative costs would not be charged to the other
programs that would use the data.  Rather, those costs would be
administrative costs under the UI program. 3/

The consideration here by the Grace Commission, which was established to
find ways of saving costs in the federal government, was that requiring
such a system would not result in any additional cost to the federal
government nor the states.  The reason was that, at the time this
statute was enacted, most states already had quarterly wage reporting
systems for their UI programs, the administrative costs of which were
reimbursable by the USDOL.  See also Notice of Proposed Rulemaking, 50
Fed. Reg. 10452 (1985).  Consequently, the Grace Commission reasoned
that the only additional costs to other federal benefit programs would
be the cost of exchanging data or making data matches.

In light of the legislative history, we conclude that even though
Congress required states to have a wage reporting system in section
1137(a)(3) of the Act, Congress did not intend for the public assistance
programs to reimburse states for the costs of collecting the underlying
data where the states were already collecting such data under a UI
program.  This conclusion also makes sense since states that had wage
reporting systems for UI purposes would not need to incur any additional
costs to meet the section 1137(a)(3) requirements.

Thus, we reject New Jersey's argument that the requirement in section
1137(a)(3) of the Act means that Congress intended to cover the data
collection costs associated with New Jersey's quarterly wage reporting
system.

3.  The phrase "costs incurred in providing the data" in section
1137(a)(7) of the Act and the federal regulations cannot reasonably be
read as encompassing costs of collecting the data.

Given the pertinent legislative history discussed above, we agree with
DCA's position that the word "providing" in section 1137(a)(7) and the
implementing regulations covers only the matching or exchange of data,
and not data collection.

First, the only reimbursement mentioned in the statute for the IEVS is
in section 1137(a)(7) of the Act.  That section ensures that "programs
providing data receive appropriate reimbursement from the programs
utilizing the data for the costs incurred in providing the data."
Section 1137 of the Act does not specifically mention collection costs
as part of the appropriate reimbursement.  Thus, the issue is whether
collection costs are part of the "costs incurred in providing the data."
New Jersey's position that its collection costs are part of the costs of
providing the data is inconsistent with the legislative history
discussed above.  Congress envisioned that an IEVS system would build on
already existing wage reporting systems set up for UI purposes.

The language of the regulations also supports the conclusion that there
was no intent to reimburse collection costs as part of the costs of
providing data.  Just the title of the applicable title IV-A regulation,
"Requirements for requesting and furnishing eligibility and income
information" is indicative.  45 C.F.R. .205.55.  The regulation
provides:

 (e) The State agency must, upon request, reimburse another
 agency for reasonable costs incurred in furnishing income and
 eligibility information as prescribed in this section, including
 new developmental costs associated with furnishing such
 information, in accordance with specific agreements as described
 in 205.58.

(Emphasis added.)  Similarly, the regulations of the other programs
uniformly address only the costs of requesting and furnishing data.  See
42 C.F.R. .435.945 (Medicaid), 7 C.F.R. .272.8 (Food Stamp program), and
20 C.F.R. .603.6(b)(5) (Federal-State Unemployment Compensation
Program).  The Child Support Enforcement program regulation is even more
specific and provides  for federal financial participation only for the
utilization of state wage information resources.  45 C.F.R.
.304.20(b)(1)(iii)(B).

As DCA pointed out, all of the regulations address only the cost of
furnishing the data after a state agency makes a request for that
information.  Also, the preamble to the proposed rule refers to the
legislative purpose of section 1137 as the exchange of information
already collected by participating programs and agencies.  See
Respondent's Ex. R-4, 50 Fed. Reg. 10450 (1985); Senate Committee Print,
p. 169.  Also, the background section of the Notice of Proposed
Rulemaking entitled "Agreements" states that "[c]urrent rules concerning
wage matching require that, prior to accessing wage information from SSA
and/or UC agencies, AFDC and Food Stamp agencies must execute
agreements.  These agreements must detail the procedures for requesting
and providing wage information."  50 Fed. Reg. 10450, 10455 (1985).  The
term "accessing" indicates use of existing data.

Therefore, we conclude that the term "providing" does not include
collecting information but only matching or exchanging the information.

4.  There is no bar to USDOL reimbursement of wage data collection
costs.

During oral argument, New Jersey raised the theory that under the
Federal Unemployment Tax Act (FUTA), 26 U.S.C. .3304, a state's
unemployment compensation program is set up as a specific trust fund for
the sole purpose of benefitting the unemployment program.  Tr., p. 7.
New Jersey contended that the trust fund cannot be used to fund a
generic activity such as collection of wage data for non-unemployment
insurance benefit programs.  It argued that it would violate the USDOL
requirements if New Jersey's UI program were to pay for costs associated
with non-UI programs.  New Jersey indicated also that it disagreed with
DCA here that "USDOL funds, or must fund, all wage reporting costs . .
."  Appellant's Post-argument Brief, p. 5. 4/

We see no violation of USDOL requirements here if wage collection costs
are funded as administrative costs of New Jersey's UI program.  New
Jersey argued that such funding would be reimbursement of the costs for
the collection of wage data for non-UI programs is simply untrue.
Quarterly wage reporting by employers to the state is not a generic
activity.  It is required by New Jersey's unemployment statute.
Respondent's Ex. R-5.  Whether or not the provisions of section 1137
existed, New Jersey statute would require the collection of this
information for the proper administration of its UI program.  Tr., p.
64.  DCA indicated and New Jersey did not dispute that no additional
wage data collection is done for New Jersey's Department of Human
Services.  Tr., p. 29.  New Jersey did not show that the FUTA provisions
have been interpreted to preclude the allocation of wage data collection
costs solely to New Jersey's UI program as an administrative cost of
that program.  Since the collection of the wage data is required and
necessary for New Jersey's UI program, the use of the trust fund to
provide reimbursement for these costs appears appropriate.

New Jersey indicated that since DCA has no programmatic or fiscal
responsibility for the UI program it cannot presume what costs are
reimbursable by the agency administering that program.  New Jersey,
however, explained that under sections 901 and 301 of the Social
Security Act, USDOL must provide payments to New Jersey for the
administration of the New Jersey UI program.  Since the collection of
wage information is required under New Jersey's UI program, under the
provisions of the sections 901(c) and 302 of the Act, these costs are
properly considered administrative costs of New Jersey UI program. 5/

Contrary to New Jersey's contention, we see no inconsistency here with
these provisions and the allocation of the administrative costs of
collection of quarterly wage reports solely to the New Jersey UI
program.  The fact that public assistance programs may request wage
information that has been collected for the New Jersey UI program does
not mean that the cost of collecting the information in the first place
should be an administrative cost of the public assistance programs.
Thus, we agree with DCA that these costs are fully allocable to New
Jersey's UI program even if USDOL is not presently funding the complete
cost of New Jersey's wage data collection costs.

Therefore, we conclude that reimbursement from the public assistance
programs for the period in question is limited to the cost of matching
and exchanging wage data. 6/  The collection costs of the wage
information data are not reimbursable under these programs since New
Jersey had a qualifying wage reporting system under its UI program.

5. An approved cost allocation plan does not preclude the disallowance
action here.

New Jersey argued that under OMB Circular A-87, Attachment A, Item C.1
and 2, the wage collection costs are both allowable and allocable to the
public assistance programs because they are necessary and reasonable
costs for the proper administration of these programs and because they
benefit from NJDOL's collection of this wage data.  New Jersey also
indicated that the USDOL, who has responsibility for administering the
UI program, accepted New Jersey's cost allocation plan which allocated
the collection costs between the State unemployment program and these
other benefitting programs.

First, as we discussed above, New Jersey opted to be a wage reporting
state for its UI program and to satisfy the requirements of its UI
statute.  The State, therefore, incurs the costs of collecting data
irrespective of whether the data may be shared with the public
assistance programs.  Consequently, while the public assistance programs
may tangentially benefit, we conclude that the wage data collection
costs were not allowable under these programs.  As discussed above, in
light of the legislative history and implementing regulations, section
1137 cannot reasonably be read as authorizing FFP in the costs at issue
here.  Moreover, general authority to provide funding for administrative
costs is limited to costs found necessary for the proper and efficient
administration of the programs.  See e.g., .. 403(a)(3) and 1903(a)(7)
of the Act; OMB Circular A-87, Att. A, Item C.1.a.  DCA reasonably found
that collection costs were not necessary costs of the public assistance
programs because the State was already incurring the costs for its UI
program.

Furthermore, the fact that New Jersey allocated the collection costs in
a cost allocation plan that was accepted by the USDOL does not mean that
those costs are allowable.  See Oregon Dept. of Human Resources, DAB No.
729 (1986), and New York Dept. of Social Services, DAB No. 759 (1986).
The cost allocation plan merely determines if the State's method of
allocation is permissible and fairly distributes costs; there is no
determination as to whether the costs allocated within the plan are in
fact allowable costs of the programs to which they are allocated.

Moreover, cost allocation plans are generally approved by a Department's
Division of Cost Allocation.  This Division has no programmatic
responsibility and is not necessarily knowledgeable about whether a
particular cost allocated in the plan is allowable or not.  Contrary to
what the State argued, the mere fact that DCA may agree with USDOL that
the allocation method in the cost allocation plan is appropriate for
distributing wage matching costs does not mean that DCA agrees that
collection costs are properly treated as joint costs of all the
programs, rather than being direct costs of the UI program, nor that HHS
has interpreted the Act to permit reimbursement of these collection
costs by public assistance programs.  Moreover, New Jersey did not
allege that USDOL had consulted with HHS about the treatment of
collection costs.

Therefore, we conclude that approval of New Jersey's cost allocation
plan is not a determination that the costs are also allowable.  Thus, we
find that the cost allocation plan did not preclude the disallowance
action here.

Conclusion

For the reasons discussed above, we conclude that New Jersey's
administrative costs of collecting wage data are not reimbursable under
its title IV-A, IV-D, XIX and Food Stamp programs.  Therefore, we
sustain DCA's disallowance with respect to the costs associated with
collection of wage data.  DCA did not dispute that New Jersey is
entitled to federal reimbursement for the costs associated with wage
matching activities, however.  Thus, DCA should provide New Jersey with
a reasonable opportunity to document what part of the disallowed costs
were attributable to wage matching.

 


 _____________________________ Donald F. Garrett

 

 _____________________________ Norval D. (John) Settle

 

 _____________________________ Judith A. Ballard Presiding Board
 Member


1.  The initial disallowance of $2,571,215 for the period July 1, 1986
through March 31, 1989 in Docket No. 90-226 required adjustments in the
amount of $554,665 to title IV-A of the Social Security Act, $285,710 to
title IV-D, $770,223 to title XIX, and $960,617 to the Food Stamp
Program.  The amount disallowed for the Food Stamp Program is not within
the jurisdiction of this Board, although the disapproval of a cost
allocation plan is, as are disallowances under titles IV-A, IV-D, and
XIX.

2.  DCA mischaracterized the New York decision by describing the system
at issue there as a wage request system.  The New York system was a wage
reporting system, but was not set up for UI purposes.  Instead, New York
had a separate wage request system for UI purposes.

3.  The DEFRA provisions required that by September 30, 1988, states
must have employers make quarterly wage reports to a state agency unless
the state has received approval for an alternate system from the
Secretary of Labor.  At the time the legislation was enacted in 1984,
only eight states did not already have quarterly wage reporting by
employers.

4.  The State asserted vaguely that USDOL was no longer fully funding
the cost of its wage reporting system, but did not explain whether this
was simply because the State had allocated the costs to the public
assistance programs, because of UI funding restrictions, or for some
other reason.

5.  Section 904(g) of the Act provides that unemployment administrative
expenditures as they relate to an unemployment trust fund are defined to
include expenditures for titles III and IX of the Act as well as those
relating to FUTA.  Furthermore, section 3304 of FUTA discusses USDOL
approval of state unemployment compensation laws.

6.  The State did not refer to the disallowance relating to the quarter
ended September 30, 1986 which preceded the effective date of the
statutory provisions of the IEVS.  DCA, however, indicated that the
regulations then in effect for the title IV-A and IV-D programs and the
Food Stamp program limited reimbursement to the cost of requesting and
providing wage information.  See 45 C.F.R. ..205.58(b)(5) and
304.20(b)(1)(iii)(B); 7 C.F.R. .272.8 (1984).  In any event, we conclude
that our analysis for the period prior to the effective date of section
1137 would essentially be the same: the collection costs are not
necessary costs of the public assistance programs because the State has
a qualifying wage reporting system under its State UI