B-2227, MARCH 17, 1939, 18 COMP. GEN. 723

B-2227, MARCH 17, 1939, 18 COMP. GEN. 723

SOCIAL SECURITY - CRIPPLED CHILDREN FEDERAL-AID PAYMENTS - ADJUSTMENTS ACCOUNT INCREASED STATE FUND EXPENDITURES AND ESTIMATES SECTION 514 OF THE SOCIAL SECURITY ACT OF AUGUST 14, 1935, 49 STAT. 632, PROVIDING FOR PAYMENTS TO STATES FOR CARRYING OUT STATE PLANS FOR SERVICES FOR CRIPPLED CHILDREN, NOT PRESCRIBING ANY LIMITATION AS TO THE AMOUNT OF DEFICIENCIES IN PRECEDING ESTIMATES WHICH MAY BE ADJUSTED IN CONNECTION WITH PAYMENT OF THE AMOUNT ESTIMATED FOR SUBSEQUENT QUARTERS, AMOUNTS OF STATE FUNDS EXPENDED DURING PRIOR QUARTERS OF THE FISCAL YEAR IN EXCESS OF THE AMOUNTS REQUIRED TO MATCH THE FEDERAL FUNDS PAID FOR THE SAID QUARTERS, AND FOR SUCH PURPOSES AND UNDER SUCH CONDITIONS AS TO MEET ALL REQUIREMENTS NECESSARY TO HAVE WARRANTED THE CONSIDERATION OF SUCH EXPENDITURES IN ESTIMATING THE AMOUNT OF THE FEDERAL PAYMENTS FOR SUCH QUARTERS, MAY BE ADMINISTRATIVELY CONSIDERED FOR PAYMENT TO THE STATE OF SUCH DEFICIENCY FOR THE PRIOR QUARTERS IN ADDITION TO THE AMOUNTS, IF ANY, OTHERWISE AUTHORIZED TO BE PAID FOR SUBSEQUENT QUARTERS ON THE BASIS OF ESTIMATED EXPENDITURES FROM STATE FUNDS IN THE SUBSEQUENT QUARTERS, BUT PRIOR QUARTER DEFICIENCY PAYMENTS SHOULD NOT BE CONSIDERED AS PART OF THE ALLOTMENTS OR PAYMENTS MADE TO THE STATE FOR THE SUBSEQUENT QUARTERS WHICH, UNDER THE LAW, ARE REQUIRED TO BE MATCHED BY STATE FUNDS AND EXPENDED DURING SUCH QUARTERS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF LABOR, MARCH 17, 1939:

I HAVE YOUR LETTER OF MARCH 10, 1939, AS FOLLOWS:

A QUESTION HAS ARISEN IN CONNECTION WITH THE ADMINISTRATION OF THE FLORIDA STATE PLAN FOR SERVICES FOR CRIPPLED CHILDREN UNDER PART 2 OF TITLE V OF THE SOCIAL SECURITY ACT UPON WHICH YOUR OPINION IS REQUESTED. THIS QUESTION INVOLVES THE PROPRIETY OF ALLOWING A CREDIT TO THE STATE FOR CERTAIN EXPENDITURES MADE BY IT IN THE FIRST TWO QUARTERS OF THE CURRENT FISCAL YEAR FOR SERVICES FOR CRIPPLED CHILDREN.

THE STATE OF FLORIDA QUALIFIED FOR GRANTS-IN-AID UNDER PART 2 OF TITLE V OF THE SOCIAL SECURITY ACT DURING THE 1936 FISCAL YEAR BY SUBMITTING TO THE CHIEF OF THE CHILDREN'S BUREAU A PLAN FOR SERVICES FOR CRIPPLED CHILDREN WHICH UPON REVIEW WAS FOUND TO CONTAIN ADEQUATE PROVISIONS TO CARRY OUT THE PURPOSES OF THIS PART OF THE SOCIAL SECURITY ACT AND WAS, THEREFORE, APPROVED BY THE CHIEF OF THE CHILDREN'S BUREAU AS PROVIDED IN SECTION 513 (B) OF THE ACT. IN KEEPING WITH THE PROCEDURES ESTABLISHED BY THE CHILDREN'S BUREAU THE STATE OF FLORIDA HAS SUBMITTED AND HAD APPROVED ANNUAL PLANS FOR EACH FISCAL YEAR THEREAFTER.

THE ANNUAL PLAN FOR THE 1939 FISCAL YEAR, UNDER WHICH THE PRESENT QUESTION ARISES, WAS SUBMITTED BY THE OFFICIAL STATE AGENCY TO THE CHIEF OF THE CHILDREN'S BUREAU ON JULY 6, 1938, FOR APPROVAL. DUE TO CERTAIN DEFICIENCIES WHICH IT IS NOT NECESSARY HERE TO ENUMERATE, AND WHICH WERE NOT OF SUFFICIENT MAGNITUDE TO REQUIRE DISCONTINUANCE OF THE PROGRAM OF SERVICES, THE CHIEF OF THE CHILDREN'S BUREAU CONSIDERED IT UNWISE TO APPROVE THE PLAN WITHOUT QUALIFICATION AND, ACCORDINGLY, ON AUGUST 6 INFORMED THE STATE AGENCY THAT THE PLAN WAS APPROVED "WITH THE UNDERSTANDING THAT THERE WILL BE A CONSULTATION WITH THE CHILDREN'SBUREAU IN REGARD TO THE ADMINISTRATION OF THE PLAN FOR THE REMAINDER OF THE FISCAL YEAR, PRIOR TO THE END OF THE FIRST QUARTER.' EXPENDITURE OF FUNDS GRANTED TO THE STATE FOR THE FIRST QUARTER WAS AUTHORIZED IN THE SUM OF $10,074.97, THIS BEING APPROXIMATELY ONE FOURTH OF THE TOTAL SUM PLANNED FOR EXPENDITURE FROM FEDERAL FUNDS DURING THE ENTIRE FISCAL YEAR. NEGOTIATIONS WERE CONDUCTED DURING THE FIRST QUARTER OF THE FISCAL YEAR BUT THE DEFICIENCIES IN THE PLAN NOT BEING REMOVED AUTHORIZATION WAS GIVEN TO THE STATE TO EXPEND FUNDS GRANTED TO THE STATE FOR THE SECOND QUARTER OF THE FISCAL YEAR ONLY.

THE ANNUAL PLAN SUBMITTED BY THE STATE AGENCY CONTAINED A BUDGET WHICH PROVIDED FOR A TOTAL EXPENDITURE OF $80,599.82, ONE-HALF OF WHICH WAS TO BE PAID FROM FUNDS GRANTED TO THE STATE BY THE FEDERAL GOVERNMENT THE OTHER HALF FROM FUNDS PROVIDED BY THE STATE AND ITS POLITICAL SUBDIVISIONS. ESTIMATES OF EXPENDITURES SUBMITTED BY THE STATE FOR THE FIRST AND SECOND QUARTERS OF THE FISCAL YEAR PROVIDED FOR THE EXPENDITURE OF $20,149.94 IN EACH QUARTER, $10,074.97 OF EACH SUCH SUM TO BE PAID FROM FUNDS GRANTED TO THE STATE AND A LIKE SUM TO BE EXPENDED FROM THE FUNDS PROVIDED BY THE STATE AND ITS POLITICAL SUBDIVISIONS. QUARTERLY REPORTS OF EXPENDITURES WERE SUBMITTED BY THE STATE AGENCY SHOWING THAT IN THE FIRST QUARTER $20,181.90 HAD BEEN EXPENDED, $10,087.99 BEING EXPENDED FROM FUNDS GRANTED TO THE STATE BY THE FEDERAL GOVERNMENT AND $10,093.91 BEING EXPENDED FROM FUNDS OF THE STATE AND ITS POLITICAL SUBDIVISIONS. THE REPORT FOR THE SECOND QUARTER SHOWED THAT $20,125.31 HAD BEEN EXPENDED, $10,062.28 BEING EXPENDED FROM FUNDS GRANTED TO THE STATE AND $10,063.03 BEING EXPENDED FROM FUNDS OF THE STATE AND ITS POLITICAL SUBDIVISIONS. THUS THE REPORTS INDICATED THAT $20,150.27 HAD BEEN EXPENDED FROM FUNDS GRANTED TO THE STATE AND $20,156.94 HAD BEEN EXPENDED FROM FUNDS MADE AVAILABLE BY THE STATE AND ITS POLITICAL SUBDIVISIONS.

SHORTLY AFTER THE EXPIRATION OF THE SECOND QUARTER OF THE FISCAL YEAR, HOWEVER, THE STATE AGENCY ADVISED THE CHILDREN'S BUREAU THAT, ALTHOUGH ITS REPORT OF EXPENDITURES FROM GRANTS-IN-AID TO THE STATE WAS CORRECT, THE STATE AGENCY HAD IN FACT EXPENDED $72,089.70 FROM ITS OWN FUNDS FOR CRIPPLED CHILDREN'S SERVICES. AS STATED ABOVE, THE STATE PLAN PROVIDED FOR A TOTAL EXPENDITURE OF $80,599.82, ONE-HALF OF WHICH, $40,299.91, WAS TO BE DERIVED FROM FUNDS OF THE STATE AND ITS POLITICAL SUBDIVISIONS. THE ADDITIONAL EXPENDITURES MADE BY THE STATE REPRESENT EXPENDITURES FOR CRIPPLED CHILDREN'S SERVICES CONDUCTED BY THE STATE, OUTSIDE THE MATCHING PROGRAM PROVIDED FOR IN THE STATE PLAN.

UNDER THE PRACTICE ESTABLISHED BY THE CHILDREN'S BUREAU CREDIT IS NOT ALLOWED FOR ANY EXPENDITURE BY THE STATE IN EXCESS OF THE AMOUNT PLANNED FOR EXPENDITURE FROM ITS OWN FUNDS IN THE ABSENCE OF AN APPROVED AMENDMENT OF THE STATE'S PLAN. THE SPECIFIC QUESTION WHICH HAS ARISEN, THEREFORE, IS LIMITED TO THE EXPENDITURE OF $40,299.91 OF STATE FUNDS DURING THE FIRST SIX MONTHS OF THE CURRENT FISCAL YEAR. AS IS STATED ABOVE, THE AMOUNT ESTIMATED FOR EXPENDITURE BY THE STATE FOR THIS PERIOD WAS $20,149.94 AND THIS ESTIMATE WAS REVIEWED AND APPROVED BY THE CHIEF OF THE CHILDREN'S BUREAU PRIOR TO THE BEGINNING OF THE RESPECTIVE QUARTERS OF THIS PART OF THE FISCAL YEAR. THE QUESTION IS, THEN, WHETHER THE EXCESS EXPENDITURE OF $20,149.97 MAY AT THIS TIME BE ALLOWED BY THE CHIEF OF THE CHILDREN'S BUREAU AS A CREDIT TO THE STATE FOR THE PURPOSE OF COMPUTING THE AMOUNTS TO BE CERTIFIED FOR PAYMENT TO THE STATE IN THE THIRD AND FOURTH QUARTERS OF THE PRESENT FISCAL YEAR UNDER SECTION 514 OF THE SOCIAL SECURITY ACT. THIS COMPUTATION, OF COURSE, WILL BE BASED ON THE 50-50 MATCHING FORMULA ESTABLISHED BY SECTION 514, MAKING THE AMOUNT OF THE FEDERAL CONTRIBUTION ONE-HALF OF THE $20,149.97 EXCESS EXPENDITURE, OR $10,074.98.

WHILE THE STATE AGENCY HAS NOT COMPLIED WITH THE USUAL PRACTICES OF THE CHILDREN'S BUREAU WITH RESPECT TO THE REVISION OF ESTIMATES OF EXPENDITURES PRIOR TO THE MAKING OF SUBSTANTIAL DEPARTURES THEREFROM AND IN REPORTING EXPENDITURES IN SUBSTANTIAL ACCORDANCE WITH SUCH REVISED ESTIMATES, THE ADMINISTRATION OF THE PROGRAM IN THIS STATE HAS BEEN PROPERLY CONDUCTED. THE STATE AGENCY HAS REPRESENTED TO THE CHILDREN'S BUREAU THAT ALL OF THE EXCESS EXPENDITURES WHICH ARE INVOLVED IN THIS QUESTION WERE MADE FOR PURPOSES WITHIN THE SCOPE OF THE STATE'S ANNUAL PLAN AND THAT THE ALLOWANCE OF A CREDIT TO THE STATE FOR THESE EXPENDITURES WOULD BE HIGHLY DESIRABLE FOR THE PURPOSES OF THE CRIPPLED CHILDREN'S PROGRAM IN THIS STATE. THE STATE WILL BE REQUIRED TO SUBMIT DETAILED REPORTS OF THE EXCESS EXPENDITURES FOR REVIEW BY THE CHILDREN'S BUREAU BEFORE ITS REQUEST FOR APPROVAL OF THE SAME WILL BE GRANTED.

IT IS CLEAR THAT THE SOCIAL SECURITY ACT DOES NOT REQUIRE STRICT CONFORMITY BY THE STATES TO THEIR ESTIMATES OF EXPENDITURES. IN PARAGRAPH 1 OF SECTION 514 (B) QUARTERLY ESTIMATES OF EXPENDITURES ARE PROVIDED FOR AND THE FOLLOWING PARAGRAPH MAKES IT ENTIRELY CLEAR THAT THE STATES ARE NOT REQUIRED TO SPEND STRICTLY ACCORDING TO SUCH ESTIMATES. THIS PARAGRAPH PROVIDES AS FOLLOWS:

"/2) THE SECRETARY OF LABOR SHALL THEN CERTIFY THE AMOUNT SO ESTIMATED BY HIM TO THE SECRETARY OF THE TREASURY, REDUCED OR INCREASED, AS THE CASE MAY BE, BY ANY SUM BY WHICH THE SECRETARY OF LABOR FINDS THAT HIS ESTIMATE FOR ANY PRIOR QUARTER WAS GREATER OR LESS THAN THE AMOUNT WHICH SHOULD HAVE BEEN PAID TO THE STATE FOR SUCH QUARTER, EXCEPT TO THE EXTENT THAT SUCH SUM HAS BEEN APPLIED TO MAKE THE AMOUNT CERTIFIED FOR ANY PRIOR QUARTER GREATER OR LESS THAN THE AMOUNT ESTIMATED BY THE SECRETARY OF LABOR FOR SUCH PRIOR QUARTER.'

WHILE STRICT CONFORMITY TO QUARTERLY ESTIMATES HAS NOT BEEN REQUIRED BY THE CHILDREN'S BUREAU, IT HAS RECOGNIZED THAT SUBSTANTIAL CONFORMITY TO ESTIMATES IS DIRECTLY RELATED TO THE CONTINUITY OF SERVICES PROVIDED IN APPROVED PLANS AND THAT IT IS NOT GOOD FINANCIAL PRACTICE TO PERMIT SUBSTANTIAL DEPARTURES BY THE STATES FROM THEIR ESTIMATES OF EXPENDITURES WITHOUT OBTAINING PRIOR APPROVAL FROM THE CHILDREN'S BUREAU. NEVERTHELESS, IT IS BELIEVED THAT THE ALLOWANCE OF A CREDIT TO THE STATE FOR ITS EXCESS EXPENDITURES HERE IN QUESTION IS CONSISTENT WITH THE EXPRESS TERMS OF THE STATUTE AND WILL BEST SERVE THE PURPOSES FOR WHICH IT WAS ENACTED.

BEFORE MAKING AN ALLOWANCE OF A CREDIT TO THE STATE OF FLORIDA WE DESIRE TO HAVE YOUR INTERPRETATION OF THE PERTINENT PROVISIONS OF THE SOCIAL SECURITY ACT WITH RESPECT TO THE CIRCUMSTANCES OF THIS CASE. IF YOU DESIRE ANY ADDITIONAL INFORMATION IN CONNECTION WITH THIS QUESTION WE SHALL BE GLAD TO FURNISH IT OR TO ARRANGE FOR A REPRESENTATIVE OF THIS DEPARTMENT TO CONFER WITH YOU.

STATED BRIEFLY IT APPEARS THAT THE STATE HAS EXPENDED OUT OF ITS FUNDS FOR THE FIRST 6 MONTHS OF THE YEAR MORE THAN THE AMOUNT REQUIRED BY ITS APPROVED PLAN FOR THE WHOLE YEAR, OR MORE THAN ESTIMATED FOR EACH QUARTER DURING THE FIRST TWO QUARTERS OF THE FISCAL YEAR, AND IT IS UNDERSTOOD THE QUESTION PRESENTED IS WHETHER THE STATE MAY BE GIVEN CREDIT FOR, OR A FEDERAL CONTRIBUTION MADE TO COVER, SUCH EXCESS TO THE EXTENT OF $10,074.98.

SECTION 514 OF THE SOCIAL SECURITY ACT OF AUGUST 14, 1935, 49 STAT. 632, PROVIDES:

SEC. 514. (A) FROM THE SUMS APPROPRIATED THEREFOR AND THE ALLOTMENTS AVAILABLE UNDER SECTION 512, THE SECRETARY OF THE TREASURY SHALL PAY TO EACH STATE WHICH HAS AN APPROVED PLAN FOR SERVICES FOR CRIPPLED CHILDREN, FOR EACH QUARTER, BEGINNING WITH THE QUARTER COMMENCING JULY 1, 1935, AN AMOUNT, WHICH SHALL BE USED EXCLUSIVELY FOR CARRYING OUT THE STATE PLAN, EQUAL TO ONE-HALF OF THE TOTAL SUM EXPENDED DURING SUCH QUARTER FOR CARRYING OUT SUCH PLAN.

(B) THE METHOD OF COMPUTING AND PAYING SUCH AMOUNTS SHALL BE AS FOLLOWS:

(1) THE SECRETARY OF LABOR SHALL, PRIOR TO THE BEGINNING OF EACH QUARTER, ESTIMATE THE AMOUNT TO BE PAID TO THE STATE FOR SUCH QUARTER UNDER THE PROVISIONS OF SUBSECTION (A), SUCH ESTIMATE TO BE BASED ON (A) A REPORT FILED BY THE STATE CONTAINING ITS ESTIMATE OF THE TOTAL SUM TO BE EXPENDED IN SUCH QUARTER IN ACCORDANCE WITH THE PROVISIONS OF SUCH SUBSECTION AND STATING THE AMOUNT APPROPRIATED OR MADE AVAILABLE BY THE STATE AND ITS POLITICAL SUBDIVISIONS FOR SUCH EXPENDITURES IN SUCH QUARTER, AND IF SUCH AMOUNT IS LESS THAN ONE-HALF OF THE TOTAL SUM OF SUCH ESTIMATED EXPENDITURES, THE SOURCE OR SOURCES FROM WHICH THE DIFFERENCE IS EXPECTED TO BE DERIVED, AND (B) SUCH INVESTIGATION AS HE MAY FIND NECESSARY.

(2) THE SECRETARY OF LABOR SHALL THEN CERTIFY THE AMOUNT SO ESTIMATED BY HIM TO THE SECRETARY OF THE TREASURY, REDUCED OR INCREASED, AS THE CASE MAY BE, BY ANY SUM BY WHICH THE SECRETARY OF LABOR FINDS THAT HIS ESTIMATE FOR ANY PRIOR QUARTER WAS GREATER OR LESS THAN THE AMOUNT WHICH SHOULD HAVE BEEN PAID TO THE STATE FOR SUCH QUARTER, EXCEPT TO THE EXTENT THAT SUCH SUM HAS BEEN APPLIED TO MAKE THE AMOUNT CERTIFIED FOR ANY PRIOR QUARTER GREATER OR LESS THAN THE AMOUNT ESTIMATED BY THE SECRETARY OF LABOR FOR SUCH PRIOR QUARTER.

AS THE PAYMENT FOR EACH QUARTER IS REQUIRED BY THE STATUTE TO BE BASED UPON THE AMOUNT TO BE EXPENDED BY THE STATE IN THAT QUARTER, IT MUST BE HELD THAT PAYMENTS FOR THE THIRD AND FOURTH QUARTERS OF THE YEAR IN THE PRESENT CASE MAY NOT BE BASED UPON EXPENDITURES OF STATE FUNDS MADE DURING THE PRECEDING QUARTERS BUT MUST BE BASED UPON ESTIMATES OF AMOUNTS TO BE EXPENDED DURING THE THIRD AND FOURTH QUARTERS. HOWEVER, IT IS UNDERSTOOD THAT IN CARRYING OUT THE PROVISIONS OF SUBSECTION (B) (2) ABOVE IT IS FREQUENTLY NECESSARY TO MAKE ADJUSTMENTS FOR EXPENDITURES MADE DURING A GIVEN QUARTER WHEN IT IS FOUND THAT SUCH EXPENDITURES ARE NOT IN STRICT ACCORDANCE WITH THE ESTIMATES FOR THE QUARTER AND SUCH EXPENDITURES, WHEN IN EXCESS OF THE ESTIMATES, ARE SATISFACTORILY JUSTIFIED BY THE STATE AUTHORITIES AND APPROVED BY YOUR DEPARTMENT AS A PART OF THE FEDERAL PROGRAM IN COOPERATION WITH THE STATE. WHAT IS UNDERSTOOD TO BE INVOLVED HERE WITH RESPECT TO THE STATE OF FLORIDA APPEARS TO PRESENT A SIMILAR SITUATION EXCEPT THAT THE AMOUNT INVOLVED IS GREATER THAN HAS HERETOFORE BEEN CONSIDERED BY YOUR DEPARTMENT AS PROPER FOR ADJUSTMENT UNDER SAID SUBSECTION (B) (2). HOWEVER, SINCE THE STATUTE PRESCRIBES NO LIMITATION AS TO THE AMOUNT OF DEFICIENCIES IN PRECEDING ESTIMATES WHICH MAY BE ADJUSTED IN CONNECTION WITH THE PAYMENT OF THE AMOUNT ESTIMATED FOR SUBSEQUENT QUARTERS, I HAVE TO ADVISE THAT IF IT BE FOUND ADMINISTRATIVELY THAT THE AMOUNTS OF STATE FUNDS EXPENDED DURING THE FIRST TWO QUARTERS IN EXCESS OF THE AMOUNTS REQUIRED TO MATCH THE FEDERAL FUNDS PAID FOR SAID QUARTERS,OR ANY PARTS OF SUCH AMOUNTS WERE EXPENDED FOR SUCH PURPOSES AND UNDER SUCH CONDITIONS AS TO MEET ALL THE REQUIREMENTS NECESSARY TO HAVE WARRANTED THE CONSIDERATION OF SUCH EXPENDITURES IN ESTIMATING THE AMOUNT OF THE FEDERAL PAYMENTS FOR SUCH QUARTERS, WITH THE RESULT THAT THE AMOUNT OF THE FEDERAL PAYMENT TO THE STATE FOR EITHER OR BOTH OF SAID FIRST TWO QUARTERS WAS LESS THAN IT SHOULD HAVE BEEN, THERE WOULD APPEAR TO THIS OFFICE NO LEGAL OBJECTION TO PAYING THE AMOUNT OF SUCH DEFICIENCY IN EITHER OR BOTH OF THE PAYMENTS FOR THE FIRST TWO QUARTERS TO THE STATE IN ADDITION TO THE AMOUNTS, IF ANY, OTHERWISE AUTHORIZED TO BE PAID FOR THE THIRD OR FOURTH QUARTER ON THE BASIS OF EXPENDITURES TO BE MADE FROM STATE FUNDS IN SAID LATTER QUARTERS. BUT IT SHOULD BE UNDERSTOOD THAT ANY AMOUNT SO PAID BECAUSE OF A DEFICIENCY, IF ANY, IN THE PAYMENTS FOR THE FIRST OR SECOND QUARTER IS NOT TO BE CONSIDERED A PART OF THE ALLOTMENTS OR PAYMENTS MADE TO THE STATE FOR THE THIRD AND FOURTH QUARTERS WHICH, UNDER THE LAW, ARE REQUIRED TO BE MATCHED BY STATE FUNDS AND EXPENDED DURING SUCH QUARTERS.