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Final Rule: FFP in the Costs of Cooperative Agreements with Courts and Law Enforcement

AT-82-18

Published: December 18, 1982
Information About:
State/Local Child Support Agencies, Other Public Partners, Courts
Topics:
Funding, Cost Recovery, Federal Financial Participation (FFP), State Systems, Cost Allocation
Types:
Policy, Action Transmittals (AT), Regulations
Tags:
Cooperative Agreement

Federal Financial Participation (FFP) in the Costs of Cooperative Agreement with Courts and Law Enforcement Officials

REGULATION

ACTION TRANSMITTAL

OCSE-AT-82-18

December 16, 1982

TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT: Federal Financial Participation (FFP) in the Costs of Cooperative Agreements with Courts and Law Enforcement Officials

REGULATION REFERENCE: 45 CFR 304.21

ATTACHMENT: Attached are final regulations which implement section 404 of P.L. 96-265 and allow for expanded availability of FFP in court costs. This regulation permits FFP for certain personnel and administrative costs related to making judicial determinations in child support cases. Section 404 also specifies that FFP in these costs is available only in costs above calendar year 1978 costs. The prohibition against FFP in costs directly associated with judges and other officials who make judicial decisions remains in effect.

EFFECTIVE DATES: July 1, 1980 through September 30, 1983. Section 174 of P.L. 97- 248, the Tax Equity and Fiscal Responsibility Act of 1982, repeals section 404 of P.L. 96-265 effective October 1, 1983.

RELATED REFERENCES: OCSE-AT-77-03 dated January 28, 1977; OCSE-AT-80-14 dated August 29, 1980; and OCSE-AT-80-17 dated December 5, 1980.

INQUIRIES TO: OCSE Regional Representative

__________________________

Deputy Director

Office of Child Support

Enforcement

Office of Child Support Enforcement

45 CFR Part 304

Federal Financial Participation In the Costs of Cooperative Agreements With Courts and Law Enforcement Officials

AGENCY: Office of Child Support Enforcement (OCSE), HHS.

ACTION: Final rule.

SUMMARY: The Child Support Enforcement program in many States relies heavily on the cooperation of courts for the processing of child support cases. Some courts have experienced marked increases in the volume of these cases as a direct result of the Child Support Enforcement program. To compensate courts for this increased activity, title IV-D of the Social Security Act permits Federal matching for IV-D related court costs by means of cooperative agreements between courts and child support agencies. In addition, title IV-D permits child support agencies to enter into similar cooperative arrangements with certain law enforcement officials to provide for the prosecution of child support cases.

Section 404 of Pub. L.96-265, the Social Security Disability Amendments of 1980, amended section 455 of the Social Security Act effective July 1, 1980 by expanding the availability of Federal financial participation (FFP) in court costs. This statute for the first time permits FFP in certain costs incurred by courts in connection with the actual judicial decision-making process. These regulations implement the new statutory provision. In addition, we are making several changes in the language of the existing regulations at 45 CFR 304.21 to provide greater clarity for users of the regulations. No substantive changes are being made with respect to agreements with law enforcement officials.

DATE: November 24, 1982.

FOR FURTHER INFORMATION CONTACT: Michael P. Fitzgerald-(301) 443-5350. SUPPLEMENTARY INFORMATION:

Background

Federal policy governing the financing of prosecutorial law enforcement officials under agreements with child support agencies has undergone little change since the inception of the IV-D program. However, the policy with respect to courts has been gradually liberalized to permit increased FFP.

Original Federal policy under title IV-D provided FFP only in costs of compensation of certain court employees performing IV-D functions. FFP in all the administrative costs in support of these individuals and all other ordinary administrative costs of the judiciary system was prohibited under this early policy.

An expanded level of FFP in court costs was established by a final rule published by OCSE on July 31, 1978 (43 FR 33249). It was later applied retroactively to July 1, 1975 under an amendment published October 3, 1979 (44 FR 56939). This expanded FFP is provided for in existing regulations at 45 CFR 304.21. These regulations prohibit FFP in "any costs incurred by a court in making judicial determinations," including both personnel and administrative court costs associated with the judicial determination process. Under existing regulations, however, FFP is available in the costs of compensation of non-judicial staff and in certain related administrative costs, such as office space, furnishings, supplies, computers, etc., incurred in providing child support enforcement services under the IV-D program. Costs of compensation of court referees and court masters are also eligible for FFP, but only if the referee or master does not make the actual judicial determination or sign the court order.

The Department has historically distinguished the costs of making judicial determinations from the costs of performing other child support functions such as collection and enforcement, under cooperative agreements with courts. It has been our position that funding the costs of judicial decision-making could raise questions concerning the impartiality of the judicial process. Thus, while OCSE policy has permitted FFP in certain costs incurred by courts in providing IV-D services in the interest of encouraging expansion and improvement of the Child Support Enforcement program, it has not permitted FFP in any personnel or other administrative costs incurred in the course of the judicial determination process.

New Statutory Provisions

Effective July 1, 1980, section 404 of Pub. L. 98-265 expands the availability of FFP in IV-D related court activities. Personnel and administrative costs incurred in making judicial determinations with respect to cases receiving child support enforcement services under a State's IV-D plan are now eligible for FFP under the amended statute, with the exception of "expenditures for, or in connection with, judges and other individuals making judicial determinations." Further, section 404 provides that FFP in these newly eligible costs is available only in costs above calendar year 1978 cost. The latter provision is discussed in greater detail below under the heading, "Maintenance of Effort Provision."

New Expenditures For Which FFP Is Available

Section 404 of Pub. L. 96-265 permits FFP in the costs of support staff and administration of court activities related to judicial determinations with respect to cases receiving services under the IV-D State plan. Under section 404 the costs of judicial support staff such as bailiff, stenographer and court recorder, which were previously ineligible because they are costs related to judicial determinations, are now eligible for Federal matching. In addition, administrative costs of courts attributable to judicial determinations, with the exception of those administrative costs directly related to the judicial decision maker in his or her decision-making capacity, are noneligible for FFP under the IV-D program. We define these eligible administrative costs to include office space, equipment, furnishings supplies travel and training incurred on behalf of judicial support staff performing IV-D functions under a cooperative agreement.

Under the provisions of Pub. L, 96-265, the prohibition against FFP in costs directly associated with judges and other officials who make judicial decisions remains in effect. Thus, regulations at 45 CFR 304,21(b) specify that court costs which remain ineligible for FFP are those associated with compensation of judges and other individuals who make judicial determinations, as well as the costs of personal office space, equipment, furnishings, supplies, travel and training related to judicial decision makers. Travel and training costs not related to the judicial determination process continue to be eligible for FFP under the final rule, In the notice of proposed rulemaking we excluded all costs associated with judicial decision makers, including costs of travel and training unrelated to the judicial determination process. This change from the NPRM as to travel and training is discussed below under the heading "Responses to Comments."

Maintenance of Effort Provision

Section 404 of Pub. L. 96-265 provides that "the aggregate amount of the expenditures" for which reimbursement is claimed under this statute must be "reduced (but not below zero) by the total amount of [such] expenditures * * * which were made by the State for the 12-month period beginning January 1, 1978." This provision insures that the Federal role with respect to the newly eligible court costs is one of encouraging increased court time for cases receiving IV-D services through State and local courts under cooperative agreements, rather than matching expenses which have been financed solely by State and local governments before Federal reimbursement was available.

Although the statute quoted above refers to 1978 expenditures "made by the State," we interpret the statutory maintenance of effort provision as applying to each cooperative agreement under which FFP is claimed. We believe that this is the most practical interpretation of this requirement because it will necessitate that expenditure totals be accumulated only one time, generally at the local level. A statewide expenditure total would require that aggregate court costs for all cooperative agreements be maintained by the State in addition to costs for each individual agreement. Only when the aggregate statewide costs were exceeded would any of the newly eligible costs of making judicial determinations be eligible for FFP. Under a statewide application of the maintenance of effort clause, the impact of courts that refuse to participate in the expansion of IV-D activities permitted by the new statute would be to increase the 1978 base year "deductible" expenditures without adding to the eligible expenditures for the current period. This would be burdensome on those courts interested in participating. Accumulating costs in this fashion could thus frustrate the intent of Congress by discouraging increased court participation in the adjudication of IV-D cases in those courts that are willing to increase their expenditures. We believe that applying the maintenance of effort requirements by agreement rather than statewide is therefore more advantageous to interested courts, in addition to being more practical.

For the above reasons, the regulations at 45 CFR 304,21(c) require that for each cooperative agreement, the State or local jurisdiction must spend up to its calendar year 1978 level of expenditures for the activities eligible under section 404 of Pub. L. 96-265 before it can receive FFP in the eligible expenditures above this level. This rule applies both to agreements covering individual courts and those covering multiple courts. The administration of this provision requires that 1978 expenditures for applicable eligible items be reconstructed for each cooperative agreement.

Reconstruction of 1978 Costs

According to section 404, the 1978 costs which must be subtracted from claims for FFP in the newly covered court activities are those "attributable to the performance of services which are directly related to, and clearly identifiable with, the operation of the IV-D State plan." Thus, the 1978 base period expenditures which are reconstructed by courts in order to make claims for FFP under section 404 should include only expenditures incurred on behalf of cases receiving services under the IV-D State plan. Cases receiving services under the IV-D State plan during the 1978 base period are those for which either (a) an assignment under 45 CFR 232.11 was in effect, or (b) an application for services under 45 CFR 302.33 had been made. Expenditures for other types of child support cases must not be included in the reported calendar year 1978 costs.

Section 404 specifies that the 1978 base period expenditures which are used to reduce the amount of Federal reimbursement for the newly eligible costs must be the "total amount" of such costs which were incurred in 1978. OCSE interprets this to apply even if claims filed under an agreement do not include all the costs for which reimbursement is available under section 404, Therefore, the 1978 base period expenditure figure for each agreement must include all the costs incurred in calendar year 1978 for the activities now eligible under section 404, regardless of whether all such costs are currently claimed for reimbursement under the agreement.

Determination of 1978 base period expenditures may prove to be administratively difficult for courts which did not keep records in relation to IV-D cases in 1978 and are now required, in retrospect, to reconstruct these costs. In recognition of this potential difficulty, which is unavoidable under the requirements of the statute, we have instructed our regional offices to assist States in developing acceptable methods of reconstructing 1978 costs incurred on behalf of IV-D cases.

In our proposed rules, we included a requirement that States follow OCSE instructions regarding reconstruction of 1978 costs. In the interim it has become clear that the differences in court structures, accounting methods, etc., make it unreasonable to impose a standardized set of instructions on how to reconstruct 1978 expenditures. Therefore, we have changed this final rule at § 304.21(e) to instead States the discretion to design for reconstructing these costs, subject to Regional Office approval. We continue to encourage States to consult the instructions on documentation required to support claims for FFP under cooperative agreements contained in OCSE-AT-77-3, dated January 28, 1977. The acceptable methods for documenting costs in that AT are: daily time records, predetermined fixed rates negotiated with the IV-D agency, sampling techniques, and other alternative methods the IV-D agency may propose. In addition, the general instructions regarding the new court costs provisions contained in OCSE-AT-80-14, dated August 29, 1980, and OCSE-AT-80-17, dated December 5, 1980, remain in effect and will be helpful to States or courts in designing a reconstruction methodology.

State Agency Requirement

In order both to provide a record of the 1978 expenditure levels required by the statute and to encourage State oversight with regard to the new expenditure items, § 304.21(d)(1) requires State IV-D agencies to submit a 1978 expenditure figure to the regional office for each cooperative agreement under which FFP is claimed for costs associated with judicial decisions. In addition, § 304.21(d)(2) requires State IV-D agencies to determine what background information is needed in support of the 1978 expenditure figure described in paragraph (d)(1) and to submit that information as well. These requirements apply both to existing and to new cooperative agreements. The 1978 figures must be calculated according to an approved methodology, as noted above. Again, this rule is applicable by agreement, not necessarily by court, so that only one 1978 expenditure figure must be submitted for each agreement, regardless of the number of courts under that agreement.

Responses to Comments

A notice of proposed rulemaking was published on June 4, 1981 in the Federal Register (46 FR 29964). The Department received six comments from State agencies. One commenter simply acknowledged the relationship of the proposed requirements with those of the statute, and another expressed support for the provisions of the NPRM. The remaining substantive comments and our responses are as follows:

1. Comment: The proposed regulation precludes IV-D reimbursement under a cooperative agreement with a court for the costs of travel and training incurred by judges who make judicial determinations, even when the travel and training are not connected with judicial determinations. This policy is detrimental to the Child Support Enforcement program because it precludes judges from attending program-related meetings and workshops. It also constitutes a new restriction, since the Department has previously permitted FFP in the costs of judges' travel and training when these costs were not associated with the judicial determination process.

Response: Our decision to propose a prohibition against FFP in the costs of judges' travel and training, even though some of these costs were eligible in the past, was based on a literal reading of the statutory language. The statute specifically excludes "expenditures for or in connection with judges and other individuals making judicial determinations." In our proposed regulations we interpreted this broad prohibition to apply to the costs of judicial travel and training.

This commenter is correct that the Department has in the past allowed FFP in costs of IV-D related travel and training of judges when these costs were not directly connected with the judicial determination process. Thus, even under the older, more restrictive statutory provisions with respect to court costs, Federal IV-D funds have been available, for example, for judges to attend IV-D related conferences and training workshops. The commenter is also correct that the participation of judges in these activities has been extremely beneficial to the IV-D program.

In response to this comment, we have reexamined the new statutory provisions with respect to their effect on travel and training of judges. We have concluded that it is legally permissible to continue to permit FFP in the costs of IV-D related travel and training of judges when this travel and training is not directly associated with the judicial determination process, for two reasons.

First, the statutory language, "making judicial determinations," suggests that prohibition against FFP in costs associated with judges applies to activities in their role as decision makers, and not to such costs as can be attributable to travel and training which, while related to the IV-D program, are wholly unconnected with the judicial determination process. Thus, the statutory language itself can be understood to permit FFP in IV-D related judicial travel and training.

Our further belief that some exception can be made with respect to judicial travel and training arises from the underlying intent of the new statutory provisions. Congress enacted these provisions for the clear purpose of expanding the availability of FFP in the costs of judicial determinations with respect to IV-D cases. There is nothing in the legislative history of these provisions to suggest that Congress intended to restrict the availability of FFP where it had not been restricted in the past. This further supports our conclusion that the statutory prohibition against FFP in "expenditures for or in connection with judges and other individuals making judicial determinations" need not apply to judges' travel and training when these activities are not connected with the judicial determination process,

Accordingly, we have amended this final rule at § 304.21(b) to narrow the prohibition against FFP in this area to "costs of travel and training related to the judicial determination process incurred by judges or other officials who make judicial decisions." An example of travel costs that would not be eligible for FFP would be the travel costs associated with a circuit judge who travels to one or more locations to hear cases. However, the costs of judges' travel or training not associated with the judicial determination process, such as the costs of attending a IV-D related training conference, will continue to be eligible for FFP aa they have in the past. These previously eligible costs need not be incorporated into the 1978 base period amount to costs of judicial determinations.

2. Comment: Does judicial support staff include supervisory and clerical staff not directly attached to the Circuit Court, but providing background and social history data for making judicial determinations?

Response: This comment points out a problem that we expect many courts will have when trying to determine which costs are subject to the new provisions, especially the maintenance of effort requirements, and which costs are reimbursable under the earlier statute, which did not require a maintenance of effort. There will be many instances where the distinction will not be readily clear.

One basis for determining whether reimbursement is available under the old provisions (i.e, with no maintenance of effort) rather than under the new provisions (i.e., where a maintenance of effort is required) is whether the court received reimbursement in the past for the costs in question. If so, this would suggest that the costs in question are sufficiently remote from the judicial determination process that no maintenance of effort is required. Alternatively, if the costs in question were specifically excluded under an earlier cooperative agreement because they were considered costs associated with the judicial determination process, this would suggest that the new statutory requirements, including the maintenance of effort provisions, will govern the reimbursement of these costs.

When courts or State agencies encounter situations where the applicability of the new as opposed to the old court costs provisions is unclear, or where any questions arise as to the availability of FFP in court costs, we strongly encourage that they contact the appropriate Regional Office for guidance. This will help to avoid problems associated with the disallowance of ineligible or improperly calculated expenditures at a later date. It will also help to ensure that the court or State agency does not needlessly inflate the 1978 base period cost and thereby reduce the level of FFP to which the court may be entitled under the statute.

3. Comment: We should clarify which costs related to the judicial decision maker are excluded from FFP.

Response: The costs incurred in the processing of cases receiving services under the IV-D State plan which are excluded under this rule are the judicial decision maker's salary and benefits, and the personal supplies, furniture, equipment, office space, travel and training related to the decision-making process. All other costs related to the judicial decision maker's processing of cases receiving services under the IV-D State plan are eligible for FFP above the 1978 level of these costs. These costs include all expenditures associated with the staff of the judicial decision maker, including the salaries and benefits for these staff and the supplies, furniture, equipment, and office space for these staff. As explained above, costs of IV-D related travel and training for judicial decision makers are also eligible for FFP, if the travel and training are not associated with a particular judicial decision on a case or cases.

4. Comment: The difference between the 1978 base year expenditures and the contract budget amount should be prorated over the entire twelve months of the contract period. Adjustments would be made in the last month of the contract period to recoup any overpayment to ensure that the total reimbursement did not exceed the 1978 expenditures.

Response: This approach would involve reimbursement to State agencies based on estimates of expenditures rather than expenditures actually incurred. Section 455(c)(1) of the act specifies that a State's expenditures for a quarter shall include expenditures of courts attributable to performance of services directly related to, and clearly identifiable with, the operation of the IV-D State plan. This precludes reimbursement based on estimated expenditures, as described by the commenter.

5. Comment: Because of the difficulty of reconstructing 1978 IV-D case costs, the statute should be amended to allow for reimbursement of costs based on actual expenditures incurred under the cooperative agreement.

Response: Because of the severe budgetary constraints now facing the Congress, we believe that a recommendation to remove the maintenance of effort provision of the statute at this time is not feasible. In addition, the President has signed Pub. L. 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, which effective October 1, 1983, repeals section 404 of Pub. L. 96-265. Thus, Federal financial participation is only available for the costs of support staff and administration of court activities related to the judicial determination process during the period July 1, 1980 through September 30, 1983.

Interim Instructions

Section 404 of Pub. L. 96-265 was effective on July 1, 1980. Because of the short time between enactment of the statute and its effective date, we issued an Action Transmittal (OCSE-AT-80-14, dated August 29, 1980) to establish interim procedures for FFP in the newly eligible court costs, pending the development of regulations for this purpose. A subsequent Action Transmittal (OCSE-AT-80-17, dated December 5, 1980) revised certain instructions contained in the earlier Action Transmittal. As discussed above, these Action Transmittal remain in effect and will be helpful to States as a supplement to these regulations.

OMB Review

Reporting requirements contained in this regulation (45 CFR 304.21(d)) have been approved by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act of 1980 (Pub. L. 96-511), and have been assigned OMB control number 0960-0305.

List of Subjects in 45 CFR Part 304

Child welfare, Grant programs/social programs.

PART 304-(AMENDED)

45 CFR 304.21 is revised to read as follows:

304.21 Federal financial participation in the costs of cooperative agreements with courts and law enforcement officials.

(a) General. Subject to the conditions and limitations specified in this Part, Federal financial participation (FFP) at the 75 percent rate is available in the costs of cooperative agreements with appropriate courts and law enforcement officials in accordance with the requirements of § 302.34 of this chapter. "Law enforcement officials" means district attorneys, attorneys general, and similar public attorneys and prosecutors and their staff. Then performed under written agreement, costs of the following activities are subject to reimbursement:

(1) The activities, including administration of such activities, specified in § 304.20(b)(2)-(8) of this chapter:

(2) Reasonable and essential short term training of court and law enforcement staff assigned on a full or part time basis to support enforcement functions under the cooperative agreement.

(b) Limitations. Federal financial participation is not available in:

(1) Service of process and court filing fees unless the court or law enforcement agency would normally be required to pay the cost of such fees:

(2) Costs of compensation (salary and fringe benefits) of judges or other individuals who make judicial decisions;

(3) Costs of travel and training related to the judicial determination process incurred by judges or other officials who make judicial decisions:

(4) Office related costs, such as space, equipment, furnishings and supplies, incurred by judges or other officials who make judicial decisions.

(c) Special conditions pertaining to costs related to judicial decisions. (1) Administrative and personnel costs incurred by courts as part of the judicial decision-making process are eligible for FFP only insofar as these costs with respect to a particular cooperative agreement under the IV-D State plan exceed the level of calendar year 1978 expenditures for these items.

(2) Claims for FFP in expenditures incurred under paragraph (c)(1) of this section with respect to a particular cooperative agreement will be paid only after such expenditures within the calendar year exceed the level of calendar year 1978 expenditures.

(d) State agency requirement. For each cooperative agreement under which FFP in costs associated with judicial determinations is claimed, the State IV-D agency shall:

(1) Submit to the Regional Office the lump sum total of all calendar year 1978 costs related to judicial determinations incurred on behalf of cases receiving services under the IV-D State plan, except those costs specified in paragraphs (b)(2) through (4) of this section; and

(2) Determine what background information is needed in support of the 1978 expenditure figure described in paragraph (d)(1) of this section and submit that information to the Regional Office.

(e) Methods of determining costs. (1) The State IV-D agency has discretion with respect to the method of calculating eligible expenditures by courts and law enforcement officials under cooperative agreements. However, any method used must account for specific costs incurred on behalf of cases receiving services under the IV-D State plan.

(2) The State IV-D agency shall obtain Regional Office approval for the method used to reconstruct 1978 expenditures under the requirements of paragraphs (c) and (d) of this section prior to claiming the excess expenditures for reimbursement.

(f) When agreements take effect. FFP is available in IV-D costs incurred as of the first day of the calendar quarter in which a cooperative agreement or amendment is signed by parties sufficient to create a contractual arrangement under State law.

Note.-The Secretary has determined that this document is not a major rule as described by Executive Order 12291, because it does not meet any of the criteria set forth in Section 1 of the Executive Order. The Secretary certifies that because these regulations apply to States and will not have a significant economic impact on a substantial number of small entities, they do not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980.

(Section 1102 of the Social Security Act, 42 U.S.C. 1302 and Section 452(a) of the Social Security Act, 42 U.S.C. 652(a))

(Catalog of Federal Domestic Assistance Program No. 13.679, Child Support Enforcement Program)

Dated: April 29, 1982.

John A. Svahn,

Director, Office of Child Support Enforcement.

Approved: September 8, 1982.

Richard S. Schweiker,

Secretary.

[FR Doc. 82-32198 Filed 11-23-82: 8:45 am]

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