STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF LABOR & EMPLOYMENT ) SECURITY, DIVISION OF EMPLOYMENT ) AND TRAINING, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2938

) FRANKLIN 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 February 1, 1982, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Sonja P. Mathews, Esquire

Montgomery Building, Suite 117 2562 Executive Center Circle, East Tallahassee, Florida 32301

For Respondent: Robert L. Davis

Post Office Box 350 Apalachicola, Florida 32320

BACKGROUND

On October 12, 1981, Petitioner, Department of Labor and Employment Security, Division of Employment & Training, issued its Final Determination concerning the propriety of expenditures of funds by Respondent, Franklin County Board of County Commissioners, under the Comprehensive Employment and Training Act (CETA). In the Final Determination, Petitioner recommended that $1,753 in expenditures made in fiscal years 1979 and 1980 be disallowed for failure by Respondent to comply with applicable regulations and that it repay the Department that amount of monies.

Respondent disputed the manner in which those costs had been treated and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was forwarded to the Division of Administrative Hearings on November 19, 1981, with a request that a Hearing Officer be assigned to conduct a hearing. By Notice of Hearing dated January 5, 1982, the final hearing was scheduled for February 1, 1982, in Tallahassee, Florida.

At the final hearing Petitioner presented the testimony of Henry M. Warren, Division Internal Audit Supervisor, and offered petitioner's Exhibits 1 and 2, each of which was received into evidence. Respondent presented the testimony of Robert L. Davis, CETA Director for Franklin County, and offered Respondent's Exhibit 1, which was received into evidence.

Pursuant to the provisions of Rule 28-5.1055, Florida Administrative Code, the undersigned made a diligent inquiry of Respondent's prospective representative (Robert L. Davis) 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 February 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 the outset of the hearing, Petitioner and Respondent stipulated that $60 of costs recommended for disallowance were not in dispute and Respondent agreed to repay this sum. Remaining at issue is whether Respondent should be required to repay $1,693 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, 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 Federal Office of Management and Budget Circular A-102 and certain procedural instructions issued by the Department in July, 1978.

   
   

2. The Department's Internal Audit Supervisor, in conjunction with an outside 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 Department containing its determination of allowable and non-allowable costs.

   
   

3. As is pertinent here, Petitioner and Respondent, Franklin County Board of County Commissioners, entered into Contract No. 79MP-2U-02-29-01 covering the period April, 1979 through September, 1979. Under the terms of the contract, Respondent was to expend no more than $5,482.25 for participant fringe benefits

   during the life of the contract. Department regulations permit a 10 percent variance from budgeted expenditures through the reallocation of funds from one category to another; any expenditures in excess of this variance require a contract modification executed by both parties. A request for a modification of the contract must be made no later than thirty days prior to its expiration.

   
   

4. A Department audit of Contract No. 79-MP-2U-02-29-01 revealed actual expenditures of $7,756.16 for participant fringe benefits between April and September, 1979. After adjusting the excess expenditures for the 10 percent authorized variance, Respondent had overspent its budgeted amount by $1,693. Despite the excessive expenditures, no request for modification of the contract was ever made.

   
   

5. Respondent acknowledged that the excess costs were incurred. However, the Director of the program explained that the County's budget for participant fringes was based upon a projected number of positions and concomitant salaries made prior to the inception of the contract in April, 1979. During the life of the contract, certain positions were transferred from another federal program to CETA which caused participant fringe benefits to exceed the projected amount. Respondent advised the Department of its predicament shortly after the contract expired by letter dated October 25, 1979. A Department Bureau Chief responded by letter dated November 14, 1979, advising Respondent to request an audit hearing, and if the County could later document the excess costs, they "would be an allowable expenditure".

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

7. Pursuant to the provisions of Chapter 17, United States Code 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".

   
   

8. 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 Statutes. 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.

   
   

9. Attachment K of Federal Office of Management and Budget Circular No. A-

   102 sets forth criteria and procedures to be followed by state agencies in requiring subgrantees to report deviations from grant budgets and to request approval for budget revisions. As is pertinent here, they require that:

   
   

   3. For nonconstruction grants, grantees shall request prior approvals promptly from grantor agencies when there is reason to believe that a revision will be necessary. . .

   
   

10. Office of Manpower Planning Procedural Instruction 78-16, issued by Petitioner on July 27, 1978, provides in part as follows:

    [A]n operator must submit a modification to their (sic) contract when reallocation of

    funds between cost categories become necessary.

    
    

    Except as noted, and in accordance with the guidelines stated below, Operators may reallocate up to 10 percent of the total funds (not to exceed $5000) from a category for which funding exists in the contract to another category for which funding exists in the contract.

    
    

11. The evidence discloses that Respondent reallocated funds from an undisclosed category to Budget Category 520 (Participant Fringes) which exceeded the 10 percent limitation set forth in Procedural Instruction 78-16. It did so without seeking a modification to its contract when the reallocation of funds became necessary. Accordingly, it is concluded Respondent has expended $1,693 in funds in a manner inconsistent with Department standards, and should be required to repay that amount of money to the State. Inasmuch as Respondent orally stipulated at the hearing to repay the remaining $60 in dispute, the total amount of money to be repaid is $1,753.

    
    

12. It should be noted that the excess costs in dispute were not expended on unlawful or improper activities. Rather, the County simply transferred funds within the program without adhering to Department requirements. The error was further compounded by advice from a Department Bureau Chief who wrote that the problem could be remedied by merely requesting a hearing and furnishing documentation to justify the expenses. Although this obviously gave false hope to Respondent, it did not authorize a deviation from Department regulations.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner's Final Determination be approved and that

Respondent be required to repay $1,753 in grant funds expended in a manner inconsistent with Department regulations.

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

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 1982.

COPIES FURNISHED:

Sonja P. Mathews, Esquire Suite 117-Montgomery Building

2562 Executive Center Circle, East Tallahassee, Florida 32301

Robert L. Davis Post Office Box 350

Apalachicola, Florida 32320

Docket for Case No: 81-002938

Orders for Case No: 81-002938