Community Action Agency of Yamhill County, Inc., DAB No. 1587 (1996)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

SUBJECT: Community Action Agency of Yamhill
County, Inc.
Docket No. A-96-123
Decision No. 1587

DATE: July 1, 1996

DECISION

The Community Action Agency of Yamhill County, Inc.
(YCAP) appealed a decision by the Administration for
Children and Families (ACF) disallowing $396,247 in
federal funds claimed under the Head Start Act.

ACF disallowed these funds because they were embezzled by
a former employee of YCAP. In its appeal to the Board,
YCAP did not dispute the amount of the disallowance and
did not dispute that the disallowed funds were embezzled.
Rather, YCAP explained that --

[t]hrough the prolonged and deliberate negotiations
with officials of the ACF Regional Office, it was
agreed that, if this agency would relinquish its
status as the program grantee for Yamhill County,
the Regional Office would advocate for forgiveness
of the disallowed amount. This proposal was
accepted by resolution of our Board of Directors on
March 26, 1996.

YCAP Notice of Appeal dated May 6, 1996, at 2.

Additionally, YCAP relied on the following statement by
the Region X Head Start Branch Manager in his letter of
April 11, 1996:

While this office is compelled to declare a
disallowance for the Federal funds embezzled . . .
should YCAP appeal this action based upon inability
to pay, per 45 CFR 30, I am willing to advocate to
the Secretary . . . to consider the circumstances
and impact of the collection of the disallowance debt on the YCAP agency and the Yamhill County
community.

Id.

Therefore, from the record, it appeared that YCAP was
seeking equitable relief from the disallowance and was
not contesting the legal or factual basis of the
disallowance. Because the Board does not have
jurisdiction to grant such equitable relief or to
compromise a disallowance under 45 C.F.R. Part 30, the
Board conducted a telephone conference call to discuss
the case with the parties.

In the conference call, YCAP reiterated its understanding
that it was seeking a compromise of this disallowance on
the basis of its inability to pay and its voluntary
relinquishment of its Head Start grant. The Region X
Head Start Branch Manager confirmed that he was prepared
to recommend a compromise of this disallowance and would
forward YCAP's request for compromise to the appropriate
component of the Office of the Assistant Secretary for
Management and Budget (ASMB). He further represented
that documents filed by YCAP in conjunction with its
appeal were sufficient for such a request to ASMB. Both
parties consented to the entry of a decision affirming
the disallowance and providing for the return of YCAP's
record before the Board to the Region X Head Start office
for its submission to ASMB.

For the preceding reasons, we uphold this disallowance in
full. We return YCAP's record before the Board to the
attorney for ACF so that the Region X Head Start office
can forward the record to ASMB along with its
recommendation for compromise of this disallowance.

__________________________
Donald F. Garrett

__________________________
Norval D. (John) Settle

__________________________
M. Terry Johnson
Presiding Board Member