USDOL/OALJ Reporter
85ct105a.htm
DATE: August 3, 1993
CASE NO. 85-CTA-105
IN THE MATTER OF
COUNTY OF NASSAU CONSORTIUM,
COMPLAINANT,
v.
U.S. DEPARTMENT OF LABOR,
RESPONDENT.
BEFORE: THE SECRETARY OF LABOR
FINAL DECISION AND ORDER
This case arises under the Comprehensive Employment and
Training Act (CETA), 29 U.S.C. §§ 801-999 (Supp. V
1981) and the implementing regulations at 20 C.F.R. Parts 675-680
(1990). [1] On January 12, 1987, the County of Nassau
Consortium (County) appealed the December 31, 1986, order of the
Administrative Law Judge (ALJ) to the Secretary of Labor. The
ALJ's order affirmed the Grant Officer's Final Determination
disallowing $71,281.00 charged by the County to its CETA grants.
The Secretary asserted jurisdiction on February 3, 1987.
BACKGROUND
The County, a CETA prime sponsor, employed personnel to
administer the CETA program. Although the CETA administrative
staff were regular County employees, they were subject to any
special considerations found in the Federal law. [2] The costs
disallowed by the Grant Officer were health insurance premiums
paid by the County on behalf of retired CETA employees for the
period from August 1, 1981, through June 30, 1984. [3] The Grant
Officer disallowed these costs as being in contravention of the
regulations at 41 C.F.R. § 1-15.711-10(a) (1984), [4] which
govern compensation for CETA personal services. [5]
[PAGE 2]
DISCUSSION
The County contends that JTPA Section 181(d), 29 U.S.C.
§ 1591(d), established "a jurisdictional predicate"
requiring all determinations to be issued before September 30,
1983, and the Grant officer's failure to issue a determination
disallowing misspent funds by that date resulted in "an absence
of jurisdiction". Complainant's Brief at 17. The County
misapprehends the transitional provisions of JTPA. In fact,
Section 181(d) anticipates administrative proceedings after
September 30, 1983, by providing: "[a]ll [CETA] orders,
determinations, rules, regulations, permits, grants, contracts,
. . . which have been issued . . . on or before September 30,
1983, shall continue in effect until modified or revoked
by the Secretary, by a court of competent jurisdiction, or by
operation of law other than this Act". By the terms of this
subsection the County's grant, issued before September 30, 1983,
was unaffected by the enactment of JTPA.
Congressional intent, as indicated in JTPA's legislative
history contemplated an orderly transition from CETA to JTPA. [6]
That Congress anticipated administrative proceedings after
September 30, 1983, is borne out by § 181(e), which states:
"The provisions of this Act shall not affect administrative or
judicial proceedings pending on the date of enactment of this
Act, or begun between the date of enactment and September 30,
1984, under the Comprehensive Employment and Training Act."
Therefore, it is clear that Congress did not regard September 30,
1983, as a date for the cessation of CETA administrative
proceedings.
The usual administrative procedure to close-out Federal
grants includes audits and the resolution of audit findings, and
nothing in either JTPA or its legislative history suggests that
the Congress intended to terminate the Secretary's authority to
recoup misspent CETA grant funds by a date certain, rather than
limit the authority to commence new proceedings. To decide
otherwise would lead to the unwarranted result that the Secretary
would be prevented from recouping misspent public funds merely
because the misexpenditure was in a grant that was awarded toward
the end of CETA's existence rather than early on. Oneida-
Herkimer Consortium v. United States Department of Labor,
Case No. 85-CTA-72, ALJ Dec. and Order, Dec. 10, 1987, slip op.
at 14; United States Department of Labor v. Oneida Herkimer
Consortium, Case No. 84-CTA-191, ALJ Dec. and Order, Sep.
10, 1986, slip op. at 2.
The cost principles applicable to the allowability of the
County's charges to its CETA grants specifically limit costs
incurred "for personal services . . . , paid currently or
[PAGE 3]
accrued, for services rendered during the period of
performance under the grant agreement". Supra, note
5. The County contends that the term "accrued" permits the
charging of costs against its CETA grants for health benefits for
retired CETA personnel to be made at that point in time when the
payment is actually made, which by definition could not commence
until after a CETA employee's period of performance. The Grant
Officer contends that the regulation specifically limits personal
costs to those incurred during an employee's active performance
of duties on behalf of CETA, and therefore no costs are allowable
after the termination of an employee's period of performance.
The regulations promulgated to govern CETA at 41 C.F.R.
Subpart 29-70.1, and specifically the "Definitions" section [7]
provide guidance in this matter. One of the
examples used to illustrate an allowable accrued expenditure is
an annuity payment, whereby a cost is allowable during the period
of performance for a future benefit to the employee. This
example, however, is not analogous to the allowance of a cost
subsequent to an employee's termination. Fairness dictates the
restrictive "period of performance" interpretation, since only by
costs incurred contemporaneously with actual CETA employment
could there be certainty that CETA is being charged for its
proportionate share of the County's benefit package for its
employees. This is particularly critical in those instances
concerning County employees whose work histories with CETA
represents only a fraction of their total County careers before
they retired.
The County's citations to the CETA statute and regulations
in support of its arguments on this issue are inapposite. The
statutory sections and the regulatory provisions cited by the
County in its initial brief and reply brief before me pertain to
CETA participants enrolled in Public Service Employment programs
under the auspices of CETA Title, Part D, and not regular County
employees.
The County's contention that the Grant Officer's
disallowance of the retired CETA employees' health benefits costs
impaired the collective bargaining agreement between the County
and the employees' unions is disingenuous. The Grant Officer's
determination denied Federal contribution for benefits for County
employees no longer employed by CETA, but it in no way interfered
with the underlying collective bargaining agreement between the
County and its employees.
ORDER
The Administrative Law Judge's decision is AFFIRMED. The
County of Nassau Consortium is ORDERED to pay $71,281.00 to the
Department of Labor. This payment shall be from non-Federal
[PAGE 4]
funds. Milwaukee County, Wisconsin v. Donovan, 771 F.2d
983, 993 (7th Cir. 1985), cert. denied, 476 U.S.
1140 (1986).
SO ORDERED.
________________________
Secretary of Labor
Washington, D.C.
OAA:SBLOOM:tm:May 16, 1995
Room S-4309:FPB:219-4728
[ENDNOTES]
[1] CETA was repealed effective October 13, 1982, and was
replaced by the Job Training Partnership Act (JTPA), 29 U.S.C.
§§ 1501-1791 (1988). However, CETA continues to govern
administrative or judicial proceedings pending on October 13,
1982, or begun between October 13, 1982, and September 30, 1984.
29 U.S.C. § 1591(e).
The last year that CETA regulations were printed in the Code
of Federal Regulations was 1990.
[2] Stipulation of Facts (Stipulation), dated April 28, 1986,
Exhibits A & B, Agreement, Nassau County Civil Service
Association and County of Nassau, for the periods January 1,
1979-December 31, 1981; and January 1, 1982-December 31, 1984,
respectively. Section 21 (identical in each agreement),
provides:
Comprehensive Employment and Training Act. The
use of CETA personnel shall be as set forth by Federal
Law.
The pertinent Federal regulation concerning grantee personnel
practices is set forth at 20 C.F.R. § 676.43, and generally
requires that a prime sponsor's method of personnel management
conform to the Federal Standards for a Merit System of Personnel
Administration.
[3] Stipulation, paragraph 3.
[4] Chapters 1-49 of 41 C.F.R. were last published in the July
1, 1984, edition. These regulations continue to apply to grants
entered into prior to September 19, 1983. 41 C.F.R. Subtitle A
[Note].
[5] Allowable costs were determined in accordance with OMB
Circular A-87, codified at 41 C.F.R. § 1-15.711-10
Compensation for personal services provides:
(a) General. Compensation for personal services
includes all remuneration, paid currently or accrued,
for services rendered during the period of performance
under the grant agreement, including but not
necessarily limited to wages, salaries, and
supplementary compensation and benefits.
[6] S. Rep. No. 97-469, reprinted in [1982] U.S.
CODE CONG. & ADM. NEWS 2636, 2664.
[7] 41 C.F.R Subpart 29-70.1- Basic Grant and Agreement
Policies, § 29-70.100 Authority provides:
Part 29-70 is promulgated by the Secretary of Labor pursuant
to authority conferred by 5 U.S.C. 301 and by the following
statutes which authorize the award of financial assistance
by the Department of Labor:
(a) The Comprehensive Employment and Training Act, as
amended (29 U.S.C. 801 et seq.);
and
29-70.102 Definitions provides:
(a) Definitions-general
* * * * *
"Accrued expenditures" are the charges incurred by the
recipient . . . during a given period requiring provision of
funds for: . . . (3) other amounts becoming owed under
programs for which no current services or performance is
required such as annuities, insurance claims and
other benefit payments. Emphasis supplied.
