GAB Decision 397
March 14, 1983
Louisiana Department of Health and Human Resources;
Garrett, Donald; Settle, Norval Ford, Cecilia
The Louisiana Department of Health and Human Resources (State)
appealed a disallowance by the Office of Human Development Services
(Agency) of federal financial participation (FFP) claimed under Title XX
of the Social Security Act. The State appealed $61,509 of $77,210 FFP
disallowed for 47 Title XX student trainees (stipendees) for Fiscal
Years 1977-1980.
The major issue presented is whether the State is entitled to FFP
under Title XX for the costs of training individuals who ultimately were
employed by the State agency, but not in positions directly related to
the operation of the Title XX program. For reasons stated below, we
find that the Title XX regulations require, if FFP is to be received,
that the stipendees actually be employed in positions directly related
to the Title XX program. We therefore sustain the disallowance subject
to an adjustment if the State can demonstrate that it was precluded from
hiring some of the stipendees for Title XX-related employment by its
Merit System requirements or by any other of the circumstances set forth
in 45 CFR 1396.83(b)(1).
There are no material issues of fact in dispute. We have determined,
therefore, to proceed to decision based on the appeal file and the
parties' briefs. The State declined to submit a reply brief.
Regulatory Background
Title XX of the Socil Security Act authorized states to implement
programs providing social services to low income individuals and
families. /1/ The Title XX program is administered at the federal level
by the Office of Human Development Services, but states have the primary
responsibility for the overall supervision, control, and oversight of
Title XX activities. 45 CFR 1396.5(e)(10) (1980).
(2) Subpart H of 45 CFR Part 1396 contains regulations for personnel
training costs, which, if directly related to the provision of Title XX
services, are eligible for FFP at a 75 percent rate. /2/ FFP is
available for training only certain groups of individuals, including:
Persons preparing for employment in the State agency in all classes
of positions which directly relate to operation of the Title XX program.
45 CFR 1396.81(d).
FFP is available for the training expenditures of individuals
preparing for employment in the State agency, provided the individuals
are:
(i) Selected by the State agency and accepted by the school;
(ii) Pursuing educational programs approved by the agency; and
(iii) Legally committed to work for the State agency for a period of
time at least equal to the period for which financial assistance is
granted if employment is offered within 6 months after training is
completed. If not employed by the State agency, such persons shall keep
the agency informed of their employment status for one year.45 CFR
1396.83(a)(2).
The State agency is required to:
(1) Offer employment to the individual preparing for employment in
the State agency during the 6 months following completion of the
training, unless precluded by Merit System requirements, legislative
cuts, position freezes, or other circumstances beyond the agency's
control; and
(2) Evaluate the training program. 45 CFR 1396.83(b).
Statement of the Case
The Agency reviewed information concerning 259 individuals who
received Title XX training funds for Fiscal Years 1977-1980. While
approving FFP for 212 of the stipendees, the Agency disallowed FFP of
$77,210 for the other 47. The State did not contest the disallowance of
$15,701 FFP for three individuals for which there were no records and
for 11 individuals who did not make themselves available for employment
as required by 45 CFR 1396.83(a)(2)(iii). The Agency based its
disallowance (3) of $61,509 FFP for the remaining 33 stipendees on the
fact that, while employed by the State, they were employed in non-Title
XX positions.
Discussion
The State challenged the Agency's interpretation of the Title XX
training regulations that Title XX stipendees are required to be
employed in positions directly related to the Title XX program. The
State contended that the regulations require only that a stipendee must
be preparing for such employment to qualify for FFP. The State argued
that all 33 stipendees met the requirements of 45 CFR 1396.83(a)(2):
they were selected by the designated State agency for Title XX purposes;
they pursued educational programs approved by the State agency; and
they were legally committed to work for the State agency for an
appropriate period of time. The State contended that all 33 stipendees
were employed by the Department of Health and Human Resources, the
designated Title XX State agency, although they worked in a part of the
Department other than that which is directly related to the Title XX
program. According to the State, the training the 33 stipendees
received was identical to that received by stipendees employed in the
Title XX program; furthermore, many of the functions performed by the
33 stipendees were indirectly related to the Title XX program. For
these reasons, the State believed that the relationship between the
stipendees' training and employment and the Title XX program is
sufficient to qualify the stipendees for FFP.
In response, the Agency argued that a literal reading of the
regulations mandates the conclusion that a stipendee's employment must
actually be in a position directly related to the Title XX program. The
Agency stated that section 1396.81(d) requires more than that a
stipendee be "preparing" for employment in a State agency; the
stipendee must be preparing for a position directly related to the Title
XX program. Because the stipendees were not employed in Title XX
positions and despite the fact the stipendees may have performed some
functions indirectly associated with the Title XX program, the Agency
concluded that the disallowance must be sustained in full.
We conclude that the Agency's interpretation of the regulations is
correct. The exclusive focus of 45 CFR Part 1396 is the Title XX
program. Throughout this part there are numerous regulatory references
limiting FFP to personnel training for positions directly related to the
provision of Title XX services. See, e.g., 45 CFR 1396.51(a) and
1396.80. While the State is literally correct in its position that
section 1396.81(d) states FFP is available for "persons preparing for
employment" (State's emphasis), it is clear from a reading of the
regulations as a whole that actual employment of a stipendee in a Title
XX position is required in order for the State to receive FFP. If
actual employment were not required and mere preparation to work
sufficient, then the legal commitment-to-work requirement of section (4)
1396.83(a)(2)(iii) would be meaningless. Nor do we believe that
employment in a part of the single State agency that does not administer
Title XX services is sufficient. It is unreasonable to suppose that it
was the intent of Congress that scarce Title XX funds be used for the
training of personnel who would not be employed in Title XX positions.
While we thus uphold the Agency's interpretation of the regulations,
we nevertheless believe that the amount of the disallowance may be
subject to an adjustment. The State asserted that at least nine of the
stipendees were unable to secure positions within the Title XX program
because of Civil Service Merit System rules and regulations or because
of geographical restrictions on availability. Others, according to the
State, were unable to score competitively on the Civil Service test for
entry-level Title XX positions, but were able to pass Civil Service
tests for non-Title XX positions. The State employed these stipendees
in non-Title XX positions.
If these assertions by the State are true, we believe that the
conditions, set forth at section 1396.83(b)(1), justifying a state's
failure to offer employment in a Title XX position may be applicable
here. The State should not be penalized, through a denial of FFP, for
stipendees who were unable to secure Title XX positions because of their
inability to pass a Civil Service test or "other circumstances beyond
the (State) agency's control." The State should supply the Agency with
sufficient information as to each of the stipendees it believes falls
within the conditions of section 1396.83(b)(1). If the Agency
determines that the State was prohibited for some acceptable reason from
placing any of the stipendees in a Title XX position, it should reduce
the disallowance by the appropriate amount. The parties may return to
the Board if they are unable to agree whether any particular stipendee
meets the enumerated circumstances.
Conclusion
For the reasons stated above, we sustain the disallowance subject to
a possible adjustment if the State can demonstate that any of the
stipendees were precluded from Title XX employment by the conditions set
forth in 45 CFR 1396.83(b)(1). /1/ Effective October 1, 1981 the
provisions of Title XX at issue were amended by provisions
establishing a new Title XX social services block grant program.
Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35). /2/ The
Title XX training regulations were redesignated as 45 CFR Part 1396 on
August 25, 1980 (45 Fed. Reg. 56707). Previously they had been
codified at 45 CFR Part 228 (1977). Although the period in question
here is Fiscal Years 1977-1980, both parties referred to the 1980
codification of the regulations in their briefs. As there were no
relevant substantive changes in the regulations from 1977 to 1980, we
use the 1980 codification at 45 CFR Part 1396 throughout this decision.
SEPTEMBER 22, 1983