Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Iowa Department of Human Services
DATE: April 29, 1993
Docket No. A-93-029
Decision No. 1407
DECISION
The Iowa Department of Human Services (Iowa) appealed a determination
by
the Administration for Children and Families (ACF) which
disallowed
$20,458 in federal financial participation (FFP) claimed by Iowa
as
direct costs of training under Title IV-D of the Social Security
Act
(Act) for five quarters beginning with the quarter ended December
1990.
ACF disallowed the costs because they were listed as indirect
cost
charges under a training contract between Iowa and Iowa State
University
(ISU), and ACF determined that this portion of the contract
charges
could not reasonably be viewed as "direct costs" within the meaning
of
the applicable regulations. Based on the following, we reverse
ACF's
disallowance in full.
Background
Congress established the Child Support and Establishment of
Paternity
Program as Title IV-D of the Act by Public Law 63-457, effective
July 1,
1975. Federal funds were made available to the states for
"enforcing
the support obligations owed by absent parents to their
children,
locating absent parents, establishing paternity, and obtaining
child
support." Section 451 of the Act.
Iowa entered into a contractual agreement with ISU to train employees
who
implement Title IV-D of the Act. The training costs were billed to
Iowa
on vouchers from ISU. See Iowa Exhibit (Ex.) 4. In addition
to
the total cost of the training, the vouchers indicate how ISU
calculated
the total by listing the following items and the cost of each
(when
applicable):
o Salaries, Wages & Benefits o Supplies o Travel o Printing
o
Computer Time o Other o Indirect Cost
Id. ACF disallowed the total of the amounts shown for the indirect
cost
category on the vouchers for the periods noted above. Although
ACF
stated that the costs at issue were properly allocated under Iowa's
cost
allocation plan, ACF maintained that the costs are not allowable
under
45 C.F.R. . 304.23(d), which provides that FFP is not available
for:
Education and training programs and educational services
except
direct cost of short term training provided to IV-D agency
staff
. . . .
ACF brief (br.) at 1 (emphasis added). According to ACF:
[t]his
prohibition limits training costs eligible for FFP to
those
expenditures such as tuition, books, etc., that are
specifically
identifiable to individual title IV-D employees
participating in
the training courses offered by the University.
Id.
Analysis
The issue presented here is whether the full contractual fee paid to
the
outside vendor is allowable under the regulations. We conclude that
the
full amount was a "direct" cost to the IV-D agency and hence
was
allowable under the regulations. The scope of the contract was
limited
specifically to the provision of short-term training to IV-D
employees,
and consequently all of the costs of the contract can be
identified with
IV-D training objectives. 1/ Thus, these costs fit
squarely within the
cost principles' definition of "direct cost." See
Office of Management
and Budget Circular A-87, Attachment A, section E., made
applicable here
by 45 C.F.R. . 74.171(a). ACF did not point to any
requirement that ISU
itemize its costs in providing the services and it is
purely
coincidental that ISU's contractual fee was broken down into
various
categories of ISU's costs. Indeed, if ISU had submitted an
invoice that
did not itemize the elements used to arrive at its fee or had
simply
called the fee a "tuition," ACF appears to concede that the full
amount
would be allowable. ACF br. at 4. Ultimately, any outside
source that
charged a single fee or tuition for its training services would
want to
include, at a minimum, all elements of its costs for providing
the
training.
Moreover, ACF did not argue here that the full contractual fee was in
any
way excessive or unreasonable. Indeed, since ISU broke down the
fee
into specific elements, ACF was in a better position to review
whether
the cost as a whole was a reasonable charge to the program.
Finally, the Board decision cited by ACF is not determinative of
the
issues in this case. ACF argued that New York State Dept. of
Social
Services, DAB No. 794 (1986), required Iowa to make an effort to
show
that the costs labeled by ISU as indirect were actually direct
costs.
However, New York merely upheld a disallowance of Title IV-D costs
where
the state failed to present sufficient evidence that the employees
were
Title IV-D employees, and is totally inapposite here.
Conclusion
Based on the foregoing analysis, we reverse ACF's disallowance in full.
Cecilia Sparks Ford
M. Terry Johnson
Donald F. Garrett
Presiding
Board Member
1. Initially, the question of whether ISU's training
courses were
provided solely to Title IV-D employees was also an issue in the
case.
However, during the course of this proceeding, Iowa
submitted
documentation that ACF found adequate to establish that only Title
IV-D
employees were trained. Iowa Ex.