82-000167 Division Of Employment And Training vs. Putnam County Board Of County Commissioners Status: Closed Recommended Order on Friday, April 16, 1982.

Summary: Comprehensive Employment and Training Act (CETA) grant funds paid to ineligible applicants must be repaid to state.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF LABOR & )

EMPLOYMENT SECURITY, DIVISION OF )

EMPLOYMENT & TRAINING, )

)

Petitioner, )

)

vs. ) CASE NO. 82-167

)

PUTNAM COUNTY BOARD OF COUNTY )

COMMISSIONERS, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held before the Division of

Administrative Hearings by its duly designated Hearing Officer DONALD R.

ALEXANDER, on March 30, 1982, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Sonja P. Mathews, Esquire

Suite 117-Montgomery Building

2562 Executive Center Circle, East

Tallahassee, Florida 32301

For Respondent: Sam S. Browning, III

Post Office Box 758

Palatka, Florida 32077

BACKGROUND

On January 6, 1982, Petitioner, Department of Labor and Employment

Security, Division of Employment and Training (Division), issued its Final

Determination concerning certain expenditures of funds by Respondent, Putnam

County Board of County Commissioners, under the Comprehensive Employment and

Training Act ( CETA). In the Final Determination, Petitioner recommended that

$20,653 in expenditures made under various contracts be disallowed because

Respondent had failed to comply with applicable regulations, and that it repay

the Division that amount of monies.

Respondent disputed the recommendation and requested a formal hearing

pursuant to Subsection 120.57(1), Florida Statutes. The matter was forwarded by

Petitioner to the Division of Administrative Hearings on January 22, 1982, with

a request that a Hearing Officer be assigned to conduct a hearing. By Notice of

Hearing dated February 19, 1982, the final hearing was scheduled for March 30,

1982, in Tallahassee, Florida.

At the final hearing Petitioner presented the testimony of Sam S. Browning,

III, Director of Special Services for Putnam County, and James Harris, Division

Internal Auditor, and offered Petitioner's Exhibits 1-5, each of which was

received into evidence. Respondent presented the testimony of Larry Miklus,

Division Employment Training Specialist, and Sam S. Browning, III, Director of

Special Services for the County.

Pursuant to the provisions of Rule 28-5.1055, Florida Administrative Code,

the undersigned made a diligent inquiry of Respondent's prospective

representative, Sam S. Browning, III, during a non-adversary proceeding, under

oath and on the record, to assure that the prospective representative was

qualified to appear in this proceeding and capable of representing the rights

and interests of Respondent. Such a finding was made and read into the record.

Proposed findings of fact and conclusions of law, were filed by Petitioner

on April 9, 1982, and have been considered by the undersigned in the preparation

of this order. Findings of fact not included in this order were considered

irrelevant to the issues, immaterial to the results reached, or not supported by

competent and substantial evidence.

At issue herein is whether Respondent should be required to repay $20,653

in monies allegedly expended in violation of applicable rules and standards.

Based upon all the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. The State of Florida is the recipient of financial assistance through a

grant from the United States Department of Labor under the terms of the

Comprehensive Employment and Training Act ( CETA). The monies are to be used to

provide job training and employment opportunities for economically

disadvantaged, unemployed or underemployed persons. Petitioner, Department of

Labor and Employment Security, Division of Employment and Training (Division),

acting on behalf of the State, disburses the Federal monies to various units of

local government pursuant to contracts entered into by Petitioner and those

units. Such contracts require that all monies expended thereunder be in

accordance with applicable regulations. As is pertinent here, these regulations

include portions of Sections 94, 99 and 676 of Volume 20, Code of Federal

Regulations, Section 29-70.216-5 of Volume 41, Code of Federal Regulations, and

Federal Office of Management and Budget Circulars A-87, 74-4 and 102-G.

2. The Division, in conjunction with an independent certified public

accounting firm, is responsible for auditing CETA contracts to insure compliance

with applicable regulations. Any costs found to be in contravention of Federal

or State regulations are recommended to be disallowed. After the audit is

completed a Final Determination is issued by the Division containing its

determination of allowable and non-allowable costs. The final disposition of

these costs at the State level is appealable to and reviewed by the United

States Department of Labor.

3. As is pertinent here, Petitioner and Respondent, Putnam County Board of

County Commissioners, entered into Contract Nos. 79MP-1B-04-64-01, 79- MP-2U-04-

64-01, 79MP-2U-04-64-01, 79MP-1F-04-64-01-P2, 80ET-86-04-64-01-015 and 80ET-87-

04-64-01-026 covering the periods between October 1, 1978 and September 30,

1980. These contracts were subsequently audited by the Division and found to

contain discrepancies in the following four areas:

(a) Ineligible participants - In late 1979 and early 1980, Respondent

enrolled Randall K. Addison, Edward Offord, Edward L. Baker and Alvin Lavain as

participants in Title II-D and Title VI programs. During their involvement with

the programs, the individuals received $15,558 in contract funds as compensation

for their services. All were certified as being eligible by Respondent on the

basis that each had been unemployed at least fifteen out of the twenty weeks

preceding the date of their applications. The certifications were based upon

information supplied by the applicants to Respondent's intake officer.

A subsequent Division audit disclosed that the participants had not

been unemployed at least fifteen out of the preceding twenty weeks as required

by applicable regulations, and were therefore ineligible for participation. In

making this finding, Division auditors relied upon a master printout of

employment history complied by the Bureau of Unemployment Compensation which

contained a detailed history of dates of employment of each of the individuals.

It also found information on certain applications themselves which should have

alerted Respondent that the applicants may have been ineligible.

When the certifications were made, Respondent's policy was to rely

upon the employment information supplied by applicants. If the individuals

cited prior employment in the Palatka area, subsequent inquiries with those

employers were made to verify the accuracy of information given by the

applicants. Out-of-town employment histories were not verified, and the County

did not have the ability to ascertain whether the individuals had truthfully

reported all employment, particularly where it occurred outside Putnam County.

It also did not have access to the Bureau's master computer printout to confirm

the accuracy of information supplied by applicants.

(b) Roger Livingston - Roger Livingston was employed in Title II-D

and Title VI programs between October, 1978 and September, 1979. While

employed, he received $3,132 in compensation. He was assigned to work as a cook

for Putnam Half-Way Houses, Inc., a subcontractor of Respondent. It was later

discovered that Livingston's brother, W.C. Livingston, served on the

subcontractor's Board of Directors at the same time and actually signed his

brother's timesheets. Department regulations prohibit the hiring of any person

if a member of that person's immediate family is engaged in an administrative

capacity for the employing agency. Because the participant's brother occupied

such a position, the costs were properly disallowed.

(c) Insurance costs - Between October, 1978 and September, 1980,

Respondent allocated to the applicable contracts a pro-rata portion of group

insurance costs totaling $1,324 for four County staff members who dedicated a

part, of their time to CETA functions. An allocation was required since the

staff members were covered by a County group self-insurance program. In

allocating the costs, the County used the same method of allocation as was used

in allocating the pro-rata insurance costs of other CETA participants employed

by the County. Although the Division questioned these costs on the basis that

no supporting documentation was furnished, the County did provide the basis for

allocation of the charges.

(d) Workman's compensation - Respondent estimated its workman's

compensation premiums when preparing its original budgets. Actual expenditures

exceeded budgeted amounts by $196, and that amount was expended without

authority from the Division. Therefore, the costs were properly disallowed.

4. In reply to the charges, Respondent contended it acted in good faith in

attempting to comply with Division regulations. As to the insurance charges in

question, it stated it provided documentation to the auditors to verify the

consistency of the charges. In the case of Roger Livingston, Respondent

asserted that his brother did not supervise him nor could he hire or fire him.

The County also sought clarification as to Livingston's status from a Division

placement planner assigned to Putnam County, and was told the matter was

insignificant in relation to the total size of the budget. Finally, the County

contended it had no access to state employment records to verify employment

histories of applicants. Because of this, it necessarily had to rely upon

information supplied by applicants, but did make a good faith effort to check

local references to insure that applicants were indeed eligible.

CONCLUSIONS OF LAW

5. The Division of Administrative Hearings has jurisdiction of the subject

matter and the parties thereto pursuant to Subsection 120.57(1), Florida

Statutes.

6. Pursuant to the provisions of Chapter 17, United States Code Section

801 et seq. the State of Florida received financial assistance from the United

States Department of Labor for the purpose of establishing programs to provide

comprehensive employment and training services for economically disadvantaged

persons

7. Petitioner is responsible for carrying out the duties and

responsibilities reposed by the Department of Labor upon recipients of manpower

funds received by the State. Subsection 450.55(2), Florida Statues. These

duties include "...(signing) contracts on behalf of the state ... with program

operators contracting with the state under the Comprehensive Employment and

Training Act..." Subsection 450.55(3), Florida Statutes.

8. At issue are four broad categories of expenditures. Each will be

discussed separately.

A. Ineligible participants - The Department contends that the contract

funds paid to four ineligible participants in 1979 and 1980 should be repaid

under the authority of 20 CFR 99.42(a)(1)( i) which provides in part as follows:

(1) An eligible person ... must be a

person:

( i) Who, during 15 of the 20 weeks

immediately prior to the application, has

been unemployed...

The ineligibility of the participants was discovered by Division auditors who

reviewed the applications and compared them with Bureau of Unemployment

Compensation records to verify the accuracy of the information submitted by the

applicants.

Respondent relied upon the employment information given by applicants to

its intake officer. Other than local references, it had no ability to verify

undisclosed employment outside the county. Further, it had no access to the

computer data assembled by the Bureau of Unemployment Compensation. Even if 30-

day and 60-day checks were made, as required by regulations, Respondent would

still have been unable to detect any undisclosed employment of applicants

outside of the Palatka area. Accordingly, it is concluded that those costs

associated with participants who were later found to be ineligible due to

employment outside Putnam County should be allowed. However, the contract funds

paid to participants who were employed in Putnam County just prior to the

applications being filed, and who should have been determined to be ineligible

by reasonable checks, or by a review of the applications themselves, should be

disallowed.

B. Charles Livingston - The Division contends the funds expended on

Livingston should be disallowed on the ground a member of his immediate family

was on the Board of Directors of the organization with whom he was employed.

Subsections 676.66(a) and (c) of Volume 20, Code of Federal Regulations, provide

in part as follows:

(a) No recipient, subrecipient or employing

agency may hire a person in (a) ... public

service employment position, or on-the-job

training position funded under the Act if a

member of that person's immediate family is

engaged in an administrative capacity for

that recipient, subrecipient or employing

agency.

(c) For purposes of this section:

(1) The term "immediate family"

means ... brother ...

(2) The term "person in an administrative

capacity" includes those persons who have

overall administrative responsibility for a

program, including all ... officials who have

any responsibility for the obtaining of and/or

approval of any grant funded under the Act,

as well as other officials who have influence

or control over the administration of the

program...

Clearly, Livingston's brother is a member of his immediate family and served in

an administrative capacity within the meaning of the rule. Accordingly, the

expenditure of funds for Livingston was incorrect, and the County should repay

the Division $3,132.

C. Insurance Costs - The recommended disallowance of $1,324 in costs is

based upon Subsection 2(g) of Office of Management and Budgeting Circular No. A-

102, Attachment G. That subsection requires that a subgrantee provide:

[a] ccounting records that area supported

by source documentation.

It is alleged that Respondent was unable to furnish the internal auditors

sufficient "source documentation" to support the pro-rata allocation of certain

group insurance costs. In response, the County points out that it did in fact

provide certain documentation to reflect that the costs were allocated on a

basis consistent with the allocation of group insurance costs for other CETA

participants. Although Petitioner contends that Respondent did not submit a

"plan" for approval of these charges, it cited no regulation imposing this

requirement. This being so, it is concluded Petitioner has failed to

demonstrate precisely what type of auditing evidence was required, and why the

documentation shown was insufficient. Accordingly, these costs should be

allowed.

D. Workman's Compensation - Respondent acknowledged it underestimated its

workman's compensation costs thereby resulting in an over-expenditure for this

item. Because the charges were in contravention of the contract, they should be

disallowed.

9. Petitioner did not present any evidence on the remaining $443 in

dispute. Accordingly, that amount should also be allowed.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that Respondent repay Petitioner: (1) $3,124 for wages paid to

Charles Livingston, (2) $196 in excess workman's compensation charges, and (3)

those costs associated with participants later found to be ineligible by reason

of not being unemployed 15 of the 20 weeks prior to the date of their

applications and whose ineligibility was based upon employment in Putnam County

prior to their applications being filed. All other questioned costs should be

allowed.

DONE and ENTERED this 16th day of April, 1982, in Tallahassee, Florida.

___________________________________

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of April, 1982.

COPIES FURNISHED:

Sonja P. Mathews, Esquire

Suite 117-Montgomery Building

2562 Executive Center Circle, East

Tallahassee, Florida 32301

Sam S. Browning, III

P.O. Box 758

Palatka, Florida 32077

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF LABOR AND

EMPLOYMENT SECURITY, DIVISION OF

EMPLOYMENT AND TRAINING,

Petitioner,

vs. CASE NO. 82-167

PUTNAM COUNTY BOARD OF COUNTY

COMMISSIONERS,

Respondent.

___________________________________/

FINAL ORDER

The undersigned, as Director of the Division of Employment and Training,

has reviewed the findings and recommendations of Donald R. Alexander, Hearing

Officer, Division of Administrative Hearings, which were based upon the evidence

presented at a hearing held in Tallahassee, Florida on March 30, 1982. The

findings and recommendations are attached hereto, marked Exhibit "A", and

thereby made a part hereof.

FINDINGS OF FACT

1. The Division of Employment and Training has alleged that the Putnam

County Board of County Commissioners, in administering grants under the

Comprehensive Employment and Training Act ( CETA), failed to comply with the

applicable rules and regulations. As a result thereof, a total of $20,653.00

was spent in violation of applicable rules and regulations.

The Putnam County Board of County Commissioners acknowledged that the money

was spent as alleged. However, the County contends that the spending was not in

violation of CETA, were legitimate costs and should, therefore, be allowed.

2. The findings of fact of the Hearing Officer as set out in the

Recommended Order are hereby accepted and adopted.

CONCLUSIONS OF LAW

The Conclusions of Law of the Hearing Officer are accepted, except as set

out herein.

3. As those findings of law in paragraph 4.A., the CETA regulations in

effect at the time of the contracts in question, required that all persons meet

eligibility requirements. See 20 C.F.R. 99.42(a)(1)( i). There is no regulation

which excuses the payments of benefits to ineligible participants.

If an ineligible participant is served, there is absolute liability unless

forgiven by the Grant Officer. See 20 C.F.R. 676.88(c). Therefore, based upon

the CETA regulations, all funds paid to ineligible applicants must be

disallowed.

4. As to the conclusion of law found in 4.C., Office of Budget Circular A-

87, Attachment B, Paragraph B.13(b), requires that fringe benefits such as

insurance costs, must be paid pursuant to an approved plan. In that no plan was

submitted, the insurance costs of $1,324.00 should be disallowed.

WHEREFORE, it is Ordered:

That within thirty (30) days from the Order Putnam County Board of County

Commissioners repay $20,210.00 which was spent in violation of CETA and the

applicable rules and regulations.

In the event either party disagrees with this determination, an appeal can

be filed with Mr. Lawrence Weatherford, Regional Administrator, United States

Department of Labor, 1371 Peachtree Street, N.E., Room 405, Atlanta, Georgia

30309. The provisions pertaining to the appeal process, 20 C.F.R. 676.83 et.

seq., are attached hereto.

Dated this 29th day of June, 1982, in Tallahassee, Leon County, Florida.

_________________________________

CHARLES R. RUSSELL, Director

Division of Employment & Training

CERTIFICATE OF SERVICE

I DO HEREBY CERTIFY that a true and correct copy of the foregoing Final

Order has been furnished by U.S. Mail to SAM S. BROWNING, III Post Office Box

758, Palatka, Florida 32077 this 29th day of June, 1982.

_________________________________

Gloria Byrd