Opinion ID: 457737
Heading Depth: 1
Heading Rank: 3

Heading: Disallowed Costs under CETA Title VI

Text: 59 The Secretary found, and Petitioner does not dispute, that 17 WAP participants were originally enrolled under CETA Title VI following their transfer from PFWP in 1978 when they were in fact ineligible under that Title. The County, however, claimed that any initial misallocation was cured when the costs associated with these participants were subsequently backed out of Title VI and applied to Title I, under which the participants were eligible. The Secretary rejected this argument: 60 [E]ligibility determinations should be made before a participant is enrolled in CETA and the key eligibility question is whether, at the time of application, a participant is eligible for the title in which he or she is then enrolled. See 29 CFR 99.42(a)(1). Adjustments of the type made here by the prime sponsor cannot retroactively create eligibility. Moreover, any attempt to do so would be contrary to the cost principles of Federal Management Circular 74-4 ..., codified at 41 CFR Subpart 1-15.7, incorporated by reference in the CETA regulations at 29 CFR 98.12(a). According to 41 CFR 1-15.703-2(b): 61 Any cost allocable to a particular grant or cost objective under the principles provided for in this subpart may not be shifted to other Federal grant programs to overcome fund deficiencies, avoid restrictions imposed by law or grant agreements, or for other reasons. 62 (emphasis in original) 63 Thus, Petitioner was ordered to pay the DOL the amount of the disallowed costs for these 17 participants. 64 The County's argument is unpersuasive, and its cursory description of the proceedings below has not aided our review. In addition, there are no citations to the record on the issue of cost allocation. We, therefore, have no information regarding the cryptic allusions to the subsequent backing out of the costs associated with these 17 individuals. 65 In any event, as we understand its contentions, the County, with no citation to authority, maintains that, although these individuals were initially improperly enrolled under Title VI when they were eligible under Title I, the backout of costs was a bookkeeping or accounting practice used to cure a bona fide human error in participant enrollment, and not an evasive act designed 'to avoid restrictions imposed by law,'  so that the costs should not be disallowed. We disagree. 66 CETA Titles I and VI had different eligibility criteria. Compare 29 C.F.R. Sec. 95.32 (1978) (Title I) with id. Sec. 99.42 (1978) (Title VI). The requirements of Title VI were more stringent. For example, under 29 C.F.R. Sec. 99.42(a)(1)(ii), the participant (1) must have been unemployed or receiving unemployment compensation for 15 out of the 20 weeks preceding his application and (2) must not have obtained permanent, unsubsidized, full-time employment during that 20-week period. We gather from the ALJ's decision that he relied on the employee-record evaluation described in the affidavit of Helen Humphrey, a Manpower Development Specialist for the DOL. With reference to the 17 individuals under consideration, Ms. Humphrey, because of the County's inadequate documentation, found that none of these participants met the requirement of 29 C.F.R. Sec. 99.42(a)(1)(ii). 67 29 C.F.R. Sec. 99.43(a) (1978) provides that [p]rime sponsors shall be liable for any payments made to participants determined ineligible during program audits or reviews or otherwise. See also 29 C.F.R. Secs. 96.25, 99.42(c)(1) (1978). 29 C.F.R. Sec. 99.43(b) and (c) set out procedures that would allow prime sponsors to protect their liability [sic]. See also 20 C.F.R. Sec. 676.88(c) (1983). Petitioner has in no way indicated that it followed those procedures with reference to these 17 participants. Although disallowance of the costs may appear inflexible, the regulations discussed above set out the limited circumstances under which the County may escape liability. Otherwise, it bears the risk that the associated costs will be disallowed. The County is essentially arguing that it is unfair to impose this sanction. Although the regulations do not suggest that equitable exceptions are available, we need not decide this question, as the equities clearly do not weigh in the County's favor. We, therefore, affirm the ALJ's decision that the costs associated with these 17 individuals be disallowed.