Harambee Child Development Council, Inc.

Harambee Child Development Council, Inc. (Harambee) appealed determinations by the Administration for Children and Families (ACF) dated May 28, 1996 and April 2, 1997 disallowing costs charged to Harambee's Head Start grants. Proceedings in Harambee's appeals of these determinations--docketed by the Board as No. A-96-136 and No. A-97-106 respectively--were stayed pending settlement negotiations by the parties. ACF withdrew the disallowance of a substantial amount of the costs pursuant to an April 30, 1997 mediation agreement and withdrew the disallowance of additional costs without a formal agreement. For the reasons explained below, we sustain ACF's determination that the remaining costs are not allowable.

We note at the outset that the amount to be repaid by Harambee is not equal to the total of the remaining costs identified below. Some of the costs were charged to federal Head Start funds while other costs were claimed as part of Harambee's non-federal share of the cost of its Head Start program. The federal share may not exceed 80% of a grantee's approved Head Start budget and the grantee must contribute a 20% matching share in cash or in-kind, unless a waiver is granted. See 42 U.S.C.

� 9835(b). ACF must recalculate the disallowance taking into account both the unallowable costs charged to federal Head Start funds and the unallowable non-federal share costs.

The remaining costs, which were summarized in a letter from ACF dated March 22, 1999, consist of the following:⁽¹⁾

Docket No. A-96-136

o $16,101 in travel costs which ACF found were undocumented. ACF noted that the mediation agreement provided that Harambee could submit additional documentation to support these costs, but that Harambee failed to submit any such documentation.

o $3,214 in insurance costs for an employee's privately owned vehicle. ACF noted that the mediation agreement provided that Harambee could submit additional documentation to support the $9,000 in insurance costs then in dispute, but that $3,214 of this amount was not suppported by the information submitted by Harambee.⁽²⁾

o $25,300 in rental costs for the Blalock facility (claimed as non-federal share). ACF noted that the mediation agreement provided that Harambee would withdraw its appeal of $12,100 of these costs and that the remaining $13,200 disallowance would be withdrawn by ACF if Harambee submitted additional information, but that Harambee did not submit any additional information.⁽³⁾

o $56,360 for parents' volunteer activities in connection with GED and adult literacy programs (claimed as non-federal share). ACF noted that the mediation agreement provided that Harambee could submit additional information to support this amount, but that Harambee subsequently informed ACF that it could not provide additional information and that it would abandon its appeal of the disallowance of this item.

o $68,202 in rental costs for the Tift property (claimed as non-federal share). ACF noted that the mediation agreement provided that the parties would obtain new appraisals of the property. ACF stated that it had accepted an appraised amount of $4.75 per square foot after receiving an appraisal from Harambee of $6.00 per square foot and its own appraisal of $3.50 per square foot, resulting in a reduction of the disallowance to the $68,202 currently in dispute.

o $14,490 for mileage of private vehicles used by employees or parents on Head Start travel (claimed as non-federal share). ACF noted that although Harambee's former counsel indicated that he had obtained affidavits from parents supporting the claimed amount, copies of those affidavits were never provided to ACF. ACF stated that it would withdraw this disallowance if the affidavits were provided.

Docket No. A-97-106

o $21,292 for compensatory time payments made to Harambee administrators in violation of Harambee's personnel policy prohibiting payment of compensatory time to employees earning in excess of $15,000 per year.

Harambee responded to ACF's summary of the remaining disallowed costs by letter dated April 21, 1999. Harambee indicated that it was difficult for it to respond since Harambee was reconstituted in July 1997 with a new Board of Directors, Executive Director, Chair of the Board and General Counsel. Harambee stated that, although its previous counsel asserted that he had delivered his file for this case to Harambee's central office, there was no record of such a delivery and Harambee as a result has no documents concerning the disputed costs. Harambee further stated that it was therefore "constrained to acquiesce to the contentions" in ACF's March 22, 1999 letter regarding the disallowed items. Harambee nevertheless argued that it was unfair to expect it "to correct past wrongs of a previous board and director . . . ." Finally, Harambee stated that it was unclear how it could pay the disallowed amount since it has neither such funds nor any means of raising such funds in the near future.

We conclude that there is no basis for reversing the disallowance of any of the remaining disallowed costs. Harambee did not dispute that the costs for which it failed to provide additional documentation or information as provided in the mediation agreement are not allowable in the absence of such documentation or information. In addition, Harambee did not contend that the other disallowed costs remaining in dispute are allowable. Instead, Harambee in effect took the position that the disallowances should be reversed because its current administration was not involved in the activities that resulted in the disallowances. Harambee cited no legal authority for this position and we conclude that it is not a proper basis for reversing the disallowances. In response to a similar argument in an appeal of a grant termination, the Board stated that the grantee was--

responsible for the proper administration of its grant program, despite any problems it asserts it had with staff or its Board. If ACYCC's employees have violated rules of its organization, then AFYCC must pursue these individuals through other available avenues, but cannot rely on this as a reason not to account for grant funds.

Action for Youth Christian Council, Inc., DAB No. 1651, at 15 (1998). (See also Board decisions cited therein.) Thus, Harambee is accountable for any grant funds misspent under a previous administration notwithstanding the lack of involvement of its current administration in these matters.

Moreover, even if Harambee has no funds available to repay the disallowed costs, that is no basis for reversing the disallowance. In response to a similar allegation of inability to repay a disallowance, the Board stated that it does not have jurisdiction to forgive a disallowance where the grantee does not contest the legal or factual basis of the disallowance but merely seeks equitable relief. Community Action Agency of Yamhill County, Inc., DAB No. 1587, at 2 (1996). As indicated above, Harambee did not argue that the costs in question are allowable as a matter of law or fact. Accordingly, any request by Harambee for equitable relief based on its inability to repay must fail.

For the foregoing reasons, we sustain ACF's determination that $40,607 charged to Harambee's Head Start grants and $164,352 claimed by Harambee as part of its non-federal share are unallowable. If Harambee disagrees with ACF's recalculation of the amount disallowed, taking into account both the unallowable costs charged to federal Head Start funds and the unallowable non-federal share costs, Harambee may seek Board review pursuant to 45 C.F.R. Part 16 on this limited issue only.

1. ACF's letter was submitted following a telephone conference at which the Board requested that ACF identify the costs remaining in dispute and any supporting documentation that might establish the allowability of those costs.

2. The mediation agreement also stated that "[w]hether or not ACF deletes part or all of this item from the disallowance after reviewing [Harambee's} additional documentation, the parties agree that a grantee may not pay for insurance for privately owned vehicles from Head Start funds and may not treat vehicle insurance costs as non-federal share . . . ."

3. The mediation agreement stated that if Harambee showed that it attempted to obtain the necessary county government approval to renovate the facility (which the disallowance letter indicated was never used), ACF would pay the cost of one year's rental for the facility.