[Federal Register Volume 59, Number 181 (Tuesday, September 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23245]


[[Page Unknown]]

[Federal Register: September 20, 1994]


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DEPARTMENT OF EDUCATION

 

Office of Administrative Law Judges; Intent to Compromise 
Consolidated Claims; Maine Department of Education

AGENCY: Department of Education.

ACTION: Notice of Intent to Compromise Consolidated Claims.

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SUMMARY: The U.S. Department of Education (the Department) intends to 
compromise consolidated claims against the Maine Department of 
Education (the State), in a consolidated appeal which is now pending 
before the Department's Office of Administrative Law Judges (the OALJ), 
Docket Nos. 92-88-R (ACN: 01-93245) and 92-105-R (ACN: 01-13035-G), 
under authority of Sec. 452(j)(1) of the General Education Provisions 
Act (GEPA) (20 U.S.C. 1234a(j)(1) (1988)).

DATES: Interested persons may comment on the proposed action by 
submitting written data, views, or arguments on or before November 4, 
1994.

ADDRESSES: Comments should be addressed to Adina Kole, Esq. or Daphna 
Crotty, Esq., Office of the General Counsel, U.S. Department of 
Education, 600 Independence Avenue, SW, Washington, DC 20202.

FOR FURTHER INFORMATION CONTACT: Adina Kole, Esq. at (202) 401-8316 or 
Daphna Crotty, Esq. at (202) 401-8292. Individuals who use a 
telecommunications device for the deaf (TDD) may call the Federal 
Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 
p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The consolidated claims in question arose 
from two organization-wide audits of the Maine Department of Education, 
conducted by the Maine Department of Audit for the periods between July 
1, 1987 and June 30, 1988 (ACN: 01-93245) and July 1, 1988 and June 30, 
1989 (ACN: 01-13035-G). The audits were conducted pursuant to the 
Single Audit Act of 1984 and Office of Management and Budget Circular 
No. A-128.
    In reviewing the State's administration of programs under the 
Individuals with Disabilities Education Act (Part B) (formerly the 
Education of the Handicapped Act) for the period between July 1, 1987 
and June 30, 1988, the auditors found that the State's administrative 
costs under the Part B program exceeded the allowable maximum by 
$354,211.63. The auditors determined that, due to the differences 
between State and Federal fiscal years, $65,325 of this amount had 
previously been questioned in the June 30, 1987 audit report. 
Consequently, for the period between July 1, 1987 and June 30, 1988, 
the auditors questioned administrative costs in the amount of $288,886 
(the difference between $354,211 and $65,325). Additionally, during 
this same State fiscal year, the auditors found that the State had 
charged personnel costs to various Federal programs for employees who 
had not worked exclusively on those programs, questioning $77,700 in 
Part B personnel costs.
    On October 14, 1991, the Assistant Secretary for the Office of 
Special Education and Rehabilitative Services (OSERS), issued a program 
determination letter (PDL) stating that the administrative cost finding 
had been addressed in a previous PDL (dated March 27, 1991) and that 
the personnel finding was not being sustained due to insufficient 
information in the audit report. However, upon further review and 
follow-up by the Department's Regional Inspector General for Audit with 
staff of the State Auditor's office and upon review of their 
workpapers, it was determined that there was no support for the 
charging of 100 percent of two employees' time to several different 
Part B programs. On June 29, 1992, the Assistant Secretary for OSERS 
issued a Program Redetermination Letter (PRDL) seeking recovery of 
$311,840 in fiscal year (FY) 1987 funds.
    In reviewing the State's administration of programs under Part B 
and under the Carl D. Perkins Vocational and Applied Technology 
Education Act (the Perkins Act), for the period between July 1, 1988 
and June 30, 1989, the auditors found that under the Part B program the 
State incurred $50,580 in administrative costs in excess of the 
allowable maximum. Additionally, the auditors determined that personnel 
costs for a number of employees who did not work exclusively for the 
Handicapped-State Grant Program funded under Part B, and the Vocational 
Education Basic Grants Program funded under the Perkins Act, were 
charged entirely to those Federal programs. In total, the auditors 
questioned $133,140 in personnel costs incurred in the period between 
July 1, 1988 and June 30, 1989.
    On August 25, 1992 the Assistant Secretary for OSERS and the 
Assistant Secretary for the Office of Vocational and Adult Education 
(OVAE) issued a joint PDL seeking recovery of $140,852 in FY 1989 
funds. Of that total, $90,272 was disallowed in a joint finding between 
the Assistant Secretaries for OSERS and OVAE, related to salary charges 
under Part B and the Perkins Act. Specifically, the Assistant 
Secretaries determined that in FY 1989, $44,832 awarded under Part B 
and $45,440 awarded under the Perkins Act had been used by the State to 
pay administrative salaries without the required supporting 
documentation.
    On July 29, 1992, the State filed a timely request for review of 
the Assistant Secretary for OSERS' determination in the PDL for ACN: 
01-93245, with the Office of Administrative Law Judges (OALJ). Upon 
joint motion by the parties, on March 16, 1992, the Administrative Law 
Judge (ALJ) assigned to this matter stayed the proceeding for purposes 
of mediation. On September 25, 1992, the State filed a timely request 
for review of the Assistant Secretaries for OSERS' and OVAE's 
determinations in the PDL for ACN: 01-13035-G. Upon joint motion by the 
parties, on October 22, 1992, the ALJ stayed the proceeding for 
purposes of mediation, and consolidated the two cases. On March 12, 
1993, the ALJ granted a Joint Motion to Stay the Proceedings for 
Settlement Discussions, filed by the parties.
    In the course of ensuing settlement discussions, the State 
submitted documentary evidence not previously seen by the auditors 
relevant to both the Part B excess administrative cost and the 
personnel salaries issues raised under the Part B and Perkins Act 
programs. As a result of settlement discussions, the parties 
tentatively agreed to a settlement under which the State would repay a 
total of $125,635 to the Department in full resolution of all issues.
    With regard to the Part B excess administrative costs 
determinations contained in both PDLs, during mediation and settlement 
discussions the State was able to demonstrate that it had expended 
$12,863.27 of excess administrative costs in FY 1987, and $55,817.84 of 
excess administrative costs in FY 1988, for a total of $68,681.11 in 
excess administrative costs. Under the tentative Settlement Agreement, 
the State will submit revised SF-269s to the Department reflecting its 
reconciliation of certain administrative costs expenditures for FYs 
1987 and 1988.
    With regard to both Assistant Secretaries' determinations of 
unsupported charging of personnel salaries, in the course of mediation 
and settlement discussions the State submitted documentation not seen 
by the auditors demonstrating to the Assistant Secretary for OSERS that 
the majority of two salaries questioned in the PDL for ACN: 01-93245 
were properly expended under Part B. Additionally, the State agreed 
that its charging of a $44,832 salary to the FY 1989 Part B grant was 
erroneous. The State proposed to offset the improper salary charges 
with what it believed to be allowable administrative expenditures that 
had not previously been charged to the Part B grant but that had been 
incurred during the fiscal years at issue in these audits.
    On June 14, 1994, the Assistant Secretary for OSERS filed a Notice 
of Withdrawal of Claims and Reduction of Amount in Dispute covering 
disallowances in the June 29, 1992 PRDL for ACN: 01-93245 and in the 
August 25, 1992 PDL in ACN: 01-13015-G, in which the Assistant 
Secretary reduced the Part B claims in this consolidated appeal to 
$45,272 for the June 29, 1992 PRDL and to $115,046 for the August 25, 
1992 PDL. The latter total included disallowances under the Perkins Act 
for which no reduction of claim was included in the June 14, 1994 
Notice. As a result of the June 14, 1994 withdrawal notice, the 
disallowances for both cases totalled $160,318.
    Under the tentative Settlement Agreement negotiated between the 
parties, the State has agreed to repay $125,635 to the Department in 
full resolution of the issues raised in both the PRDL and the PDL. Of 
this amount, $45,272 would be in full settlement of the claims under 
Part B contained in the June 29, 1992 PRDL. And, $80,363 would be in 
full settlement of the claims under Part B and under the Perkins Act 
contained in the August 25, 1992 PDL. Of this amount, $63,664 settles 
the Part B disallowance and $16,699 settles the Perkins Act 
disallowance.
    In addition to the repayment of funds, the State has agreed to 
submit to the Department revised Financial Status Reports for fiscal 
years 1987 through 1993 reflecting proper coding of excess 
administrative costs to the grants during each of the years within that 
period. The State has also provided an assurance in the tentative 
Settlement Agreement that it will not shift excess administrative 
expenditures forward, to fiscal years after FY 1992, that are related 
to disallowances either in the June 29, 1992 PRDL or in the August 25, 
1992 PDL. Finally, the State has certified in the tentative Settlement 
Agreement that it is currently in compliance with all requirements of 
the statutes and regulations pertaining to the practices and procedures 
that gave rise to the disallowances in question in this consolidated 
appeal.
    In accordance with the authority provided in 20 U.S.C. 1234a(j)(1), 
given the documentation submitted by the State, the certification and 
assurances provided by the State, and the estimated litigation risks 
and costs of proceeding through the appeal process, the Department has 
determined that it would not be practical or in the public interest to 
continue litigation of this case. Rather, under the authority provided 
in 20 U.S.C. 1234a(j)(1), the Department has determined that a 
compromise of this claim for $125,635 would be appropriate. The public 
is invited to comment on the Department's intent to compromise this 
claim. Additional information may be obtained by writing to Adina Kole, 
Esq. or Daphna Crotty, Esq., at the address given at the beginning of 
this notice.

    Program Authority: 20 U.S.C. 1234a(j)(2).

    Dated: September 15, 1994.
Donald R. Wurtz,
Chief Financial Officer.
[FR Doc. 94-23245 Filed 9-19-94; 8:45 am]
BILLING CODE 4000-01-P