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Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division SUBJECT: Florida Department of Children and Families Docket No. A-06-27 Decision No. 2080 DATE: May 3, 2007 DECISION The Florida Department of Children and Families (Florida, DCF) appeals a determination by the Administration for Children and Families (ACF) disallowing $1,076,006 in federal financial participation (FFP) for the period January 1, 2002 though March 31, 2005. Florida claimed this FFP in the costs of training persons for employment as social workers with private agencies that deliver foster care services under contract with Florida. Florida claimed the costs as training expenses under the foster care program of title IV-E of the Social Security Act (Act), for which the Act provides 75% reimbursement. ACF disallowed Florida’s claims at the 75% rate on the ground that funding for title IV-E training costs is not available for training persons for employment at private agencies. For the reasons explained below, we sustain the disallowance in principle. At the parties’ request, we address only the legal issue, and not issues raised by the parties regarding calculation of the amount of the disallowance. Upon receipt of this decision, ACF should consult with Florida to determine the amount of the claims that are at issue here. After such consultation, ACF should issue a written notice to Florida stating the amount of the disallowance and how that amount was determined. If Florida disputes ACF’s determination of the disallowance amount, it may appeal that determination to the Board within 30 days of receiving it. Applicable law and regulations Title IV-E of the Act, “Federal Payments for Foster Care and Adoption Assistance,” authorizes appropriations to enable states to provide, in appropriate cases, maintenance payments for foster care children who would otherwise have been eligible for 2 assistance under the former Aid to Families with Dependent Children program (AFDC) of title IV-A of the Act, and adoption assistance for children with special needs. The AFDC program was repealed by Public Law No. 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which replaced AFDC with the Temporary Assistance for Needy Families (TANF) block grant program. Whereas title IV-E had long applied the AFDC eligibility standards to determine eligibility for foster care and adoption assistance, PRWORA amended title IV-E to apply the former AFDC eligibility requirements as in effect on June 1, 1995, a date subsequently changed to July 16, 1996. Pub. L. No. 105-33, § 5513(b), 111 Stat. 251, 620 (1997). A state may receive federal funding for IV-E expenditures if it has a plan approved by the Secretary of the Department of Health and Human Services that (among other requirements)-­ (1) provides for foster care maintenance payments in accordance with section 472 and for adoption assistance in accordance with section 473; (2) provides that the State agency responsible for administering the program authorized by subpart 1 of part B of this title [child welfare services] shall administer, or supervise the administration of, the program authorized by this part; . . . . Section 471(a) of the Act (42 U.S.C. § 671(a)).1 Section 472 provides for foster care maintenance payments with respect to an eligible child, where-– such child’s placement and care are the responsibility of (A) the State agency administering the State plan approved under section 471, or (B) any other public agency with whom the State agency administering or supervising the administration of the State plan 1 The current version of the Social Security Act can be found at www.ssa.gov/OP_Home/ssact/comp-ssa.htm. Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section. Also, a cross reference table for the Act and the United States Code can be found at 42 U.S.C.A. Ch. 7, Disp Table. 3 approved under section 471 has made an agreement which is still in effect . . . . Section 472(a)(2) of the Act. Section 474 of the Act specifies the costs for which a state may receive federal funding and the rates of reimbursement. States may receive– 75 per centum of so much of such expenditures as are for the training (including both short-and long-term training at educational institutions through grants to such institutions or by direct financial assistance to students enrolled in such institutions) of personnel employed or preparing for employment by the State agency or by the local agency administering the plan in the political subdivision, . . . . Section 474(a)(3)(A) of the Act.2 Section 1356.60(b) of 45 C.F.R. similarly authorizes FFP at the 75% rate in the costs of “[t]raining personnel employed or preparing for employment by the State or local agency administering” the IV-E plan. 45 C.F.R. § 1356.60(b)(1)(i). The regulation further provides that “[s]hort and long term training at educational institutions and in-service training may be provided in accordance with the provisions of §§ 235.63 – 235.66(a) of this title.” 45 C.F.R. § 1356.60(b)(3). Section 235.63(a) of 45 C.F.R. states that “FFP is available only for training provided personnel employed in all classes of positions, 2 States may also receive 75% FFP for the “short-term training of current or prospective foster or adoptive parents and the members of the staff of State-licensed or State-approved child care institutions providing care to foster and adopted children receiving assistance under this part . . . ." Section 474(a)(3)(B)). Florida described the training at issue here as long-term training for persons who were to be employed as social workers and did not cite this provision or argue that it applies. Fla. Brief (Br.) at 1. Additionally, states may receive 50% FFP for “administrative expenditures necessary for the proper and efficient administration of the title IV-E State plan.” 45 C.F.R. § 1356.60(c); see also section 474(a)(3)(E) of the Act. As we explain below, ACF has determined to allow Florida’s claims as title IV-E administrative costs at the 50% rate of FFP, and so that provision is not relevant to our analysis. 4 volunteers, and persons preparing for employment by the State or local agency administering the program.” 45 C.F.R. § 235.63(a). “Long-term training” is defined as training for eight consecutive work weeks or longer. 45 C.F.R. § 235.61(e). FFP in training costs, including long-term training, “is available for personnel employed and persons preparing for employment by the State or local agency provided the following conditions are met, and with the following limitations” (among others): (1) Employees in full-time, long-term training make a commitment to work in the agency for a period of time equal to the period for which financial assistance is granted. A State agency may exempt an employee from fulfilling this commitment only if failure to continue in employment is due to death, disability, employment in a financial assistance program in a public assistance agency in another State, or other emergent circumstances determined by the single State agency head to be valid for exemption; * * * (5) Persons preparing for employment are committed to work for the State or local agency for a period of time at least equal to the period for which financial assistance is granted if employment is offered within 2 months after training is completed; (6) The State or local agency offers the individual preparing for employment a job upon completion of training unless precluded by merit system requirements, legislative budget cuts, position freezes, or other circumstances beyond the agency’s control; and if unable to offer employment, releases the individual from his or her commitment; . . . . 45 C.F.R. § 235.63(b). Factual background Florida contracts with private, community-based agencies to provide foster care services. DCF oversees the delivery of services, is responsible for the quality of contracted services and programs, and is required to ensure that services are delivered in accordance with applicable federal and state statutes and regulations. At issue are Florida’s claims for the costs of training persons preparing for employment at those private agencies. 5 Florida reports that following the passage of PRWORA, which replaced AFDC with the TANF block grant program, Florida “reformed its foster care system through outsourcing to local, private agencies . . . .” Fla. Br. at 3, citing Fla. Stat. Ann. § 409.1671 (West 1998, 2005). As a result, “Florida has adopted a statutory scheme that now requires that foster care services be delivered by private, local community-based care agencies [CBCs] (which contract with and are overseen by the Florida Department of Children & Families) rather than by employees of the State of Florida.” Fla. Br. at 1-2. Florida reports that it “uses CBCs to deliver the State’s foster care services.” Fla. Reply Br. at 7. Under this system, “some DCF employees remain responsible for interfacing with CBCs to ensure that foster care services are appropriately delivered to children in Florida.” Fla. Br. at 4, citing Fla. Stat. Ann. § 409.1671(l)(1)(2)(a) (West 2005). Florida’s title IV-E long-term training program provides funding, including a yearly living allowance, for full-time students pursuing Bachelor and Master of Social Work degrees at Florida schools of social work that contract with DCF. Fla. Br. at 4-5; Fla. Ex. 4, at Att. 1, Fla. App. File at 34. The training, which Florida must approve, is intended to provide “the skills necessary to deliver high-quality foster care case management services.” Fla. Br. at 4-5. As a condition of receiving payments, students upon graduating “are contractually obligated to fulfill employment commitments with DCF or a CBC in the amount of one year for each stipend the student received.” Id. at 5. Florida reports that as a result of its foster care outsourcing, “almost all students participating in DCF’s title IV-E long-term training program (