B-237081, Dec 6, 1989

B-237081, Dec 6, 1989

APPROPRIATIONS/FINANCIAL MANAGEMENT - Federal Assistance - Grants - State/local governments - Funding levels - Approval DIGEST: The Commissioner of the Administration on Aging has authority to approve and disapprove intrastate funding formulas under Title 3 of the Older Americans Act (42 U.S.C. Sec. 3001 et seq.) However, GAO product suggesting use of approval process should include recommendation for legislation or matter for consideration for consideration for Congress.

Assistant Director, HRD - Susan Kladiva

Associate General Counsel, OGC/HRD - Barry Bedrick

Assistant General Counsel, OGC/HRD - Robert G. Crystal

Intrastate funding formulas under the Older Americans Act (File B-237081; Code 118268):

Incident to your review of funding formulas established by states under Title III of the Older Americans Act, you asked whether the Commissioner on Aging has authority to approve or disapprove the formulas-- i.e., authority, in effect, to require a state to change its formula. In the final GAO product, you plan to discuss the possibility of the Commissioner instituting a regular approval process for intrastate formulas that would involve determining whether a formula adequately takes into account economic and social need, particularly low-income minority status. You would like to know whether legislation would be necessary to authorize such a process.

We conclude that the Commissioner does have authority to approve and disapprove funding formulas. As explained below, however, we think any discussion in a GAO report or other product suggesting the use of an approval process should include a recommendation for legislation or a matter for consideration for the Congress.

Background

Title III of the Older Americans Act of 1965, as amended (42 U.S.C. Sec. 3001 et seq. (1982), referred to hereafter as the Act, authorizes the federal government to provide grants to states for various programs for older American citizens. The Administration on Aging (AOA), Department of Health and Human Services, headed by the Commissioner on Aging, is responsible for administering the Act at the federal level. 42 U.S.C. Sec. 3011.

The Act requires a state, as a condition of grant eligibility, to "submit to the Commissioner a State plan of action ... which meets such criteria as the Commissioner may be regulation prescribe." 42 U.S.C. Sec. 3027(a). Section 3027(a) sets forth specific conditions which all plans are required to meet. Once the plan is submitted, the Commissioner must approve it "if it fulfills the requirements of subsection (a)"; if, that is, it meets the conditions in section 3027(a) and any criteria which the Commissioner prescribes by regulation. See 42 U.S.C. Sec. 3027(b), (c).

If the law said nothing about state formulas, it would be easy to conclude, based on section 3027, described above, that the Commissioner could prescribe a regulation governing funding formulas, and disapprove any plans which did not fulfill the requirements of that regulation. Similarly, under section 3027(d), the Commissioner could discontinue payments upon a finding that the state plan no longer met the requirements. However, the law does discuss state formulas in a way which raises a question about the Commissioner's authority to disapprove the states' actions Funding formulas are dealt with in section 3025, a part of the law which arguably limits the Commissioner's authority to reviewing and commenting on that state formula, rather than approving or disapproving it.

In addition to having an "approved" state plan, a state must have an intrastate funding formula in order to be eligible for a grant under the Act. 42 U.S.C. Sec. 3025(a)(2)(C). The Act also requires states to "provide assurances that preference will be given to providing services to older individuals with the greatest economic or social needs, with particular attention to low-income minority individuals." 42 U.S.C. Sec. 3025(a) (2) (E).

The Act requires a state to "develop a formula, in accordance with guidelines issued by the Commissioner, for the distribution within the State of funds received under Title III. ..." 42 U.S.C. Sec. 3025 (a)(2)(C). The Commissioner has issued guidelines requiring and service areas "reflect the proportion among the planning and service areas (into which a state is divided for purposes of carrying out programs for older Americans) of persons age 60 and over in greatest economic or social need with particular attention to low-income minority individuals." 45 C.F.R. Sec. 1321.37 (1988).

The state is then required to submit this intrastate funding formula to the Commissioner for "review and comment." 42 U.S.C. Sec. 3025 (a)(2)(D). It is this language which arguably limits the Commissioner's function to reviewing and commenting and, by implication, prevents him from doing any more than that.

Discussion

The question is whether the Commissioner's authority to "review and comment" on intrastate funding formulas limits action he may take to affect the formulas-- i.e. precludes him from disapproving formulas that fail to comply with his guidelines. We find no such limitation.

To reiterate, one of the requirements for state eligibility for a grant is an intrastate funding formula that conforms to the Commissioner's guidelines. Where an agency has authority to issue guidelines for certain state activities, it follows that the agency has authority to enforce those guidelines.

Grant recipients are obligated to perform grant conditions and the federal government has the inherent right to sue to enforce those obligations. United States v. Marion County School District, 625 F.2d 607, 609 (1980), citing numerous cases. Where the grant condition is that the state provide assurance that it will do certain things, the federal government may sue to require the state to carry out those assurances. Id. Since a condition of an AOA grant is that a state provide assurances that it will give preference based on economic and social needs, with attention to minority status, AOA has authority to sue to enforce assurances regardless of the formula and the Commissioner's guidelines.

Moreover, if the government can require a state to carry out assurances, it must have authority to sue to require a state to comply with federal guidelines where such compliance is a grant condition. In the present case, it is clearly a condition of AOA grants (under section 3025) that the states have intrastate funding formulas that comply with the Commissioner's guidelines. It follows that AOA has authority to sue to require the states to have formulas that do, indeed, comply with the guidelines, and may disapprove formulas that do not comply.

What then is the significance of the portion of section 3025 which says that proposed state funding formulas are to be submitted to the Commissioner for review and comment? Arguably, rather than limiting the Commissioner's authority, the review and comment procedure adds to it. Without the review and comment procedure, the Commissioner has no direct impact on the funding formula when it is being developed. He can decide that a state is ineligible because it lacks a funding formula or because its formula fails to comply with his guidelines, but only after first giving notice and holding a hearing. 42 U.S.C. Sec. 3027(d). All this presumably takes place after the formula has been adopted and put into effect. The review and comment procedure gives the Commissioner a role, albeit an advisory one, in the development of the funding formula.

Although the legislative history stresses the flexibility given to the states in developing formulas, that is not inconsistent with our conclusion. According to the Senate report, the Commissioner is supposed to give the states leeway to develop funding formulas suited to conditions in each state, and not to impose a uniform formula among all states. See S.Rep. No. 855, 95th Cong., 2d Sess. 8 (1978). When the Commissioner writes the guidelines, for example, he is expected to leave to the discretion of the states the decision where to target the funds (as long as the states comply with the general requirements of the law). Id. However, this discretion to target funds is not inconsistent with the idea that a state whose plan does not meet the guidelines is ineligible and therefore subject to disapproval.

The law, in other words, arguably provides the Commissioner with two chances to judge the funding formula. First, the Commissioner can review and comment on the formula as it is being developed by the state. This puts the state on notice of potential problems, although the Commissioner lacks authority to prevent adoption by the state of the formula. Second, once the state has adopted the formula, the Commissioner can determine whether it meets his guidelines and, if it does not, can initiate the administrative procedure to declare the state ineligible.

This interpretation of the law is not the only possible one. However, it does account for the language and avoid a conflict between two provisions of the same act.

With regard to what we should say in the report, we could say that the Commissioner has legal authority to force states to change their funding formulas by withholding funds, and should use it. This may not be very helpful because it must be qualified: the Commissioner may disapprove only when the state funding formula is not consistent with the guidelines. the existing guidelines are relatively loose and nonspecific, it would of course be difficult for the Commissioner to disapprove state plans based on inconsistency with the guidelines.

We could address this problem by including a recommendation that the Commissioner issue more stringent guidelines. He might respond (somewhat legitimately) that the legislative history discourages this approach because it would interfere with the states' ability to respond to local conditions.

If this were a situation where the agency was anxious to act vigorously and was refraining only because of doubts or timidity about its legal authority, we could usefully say that we think the agency has that authority and should use it, in conjunction with more stringent guidelines, if necessary. However, this appears to be a case where the agency, for policy reasons, is not anxious to act. Under the circumstances, a recommendation for administrative action by AOA is likely to draw the response that more stringent guidelines would be contrary to congressional intent.

In this connection, we understand your concern to be that the funding formulas do not adequately take into account economic and social needs, particularly of low-income minority individuals. The law already specifically requires the states to provide assurances that preference will be given to these individuals and to include methods of carrying out this preference in the state plan. 42 U.S.C. Sec. 3025(a)(2)(E). A state which fails to provide such assurances and to include such methods is unambiguously ineligible to participate in the program. This suggests that the problem is not one of lack of legal authority.

If we can be reasonably specific about what we want the states to do that is not now being done, and can show how the changes we want will still permit different states to continue to target funds differently, as the Senate committee wanted, then a recommendation to AOA may be viable. The specificity of such a recommendation forestalls the criticism that it can't be done without flying in the face congressional intent.

The possibility remains, however, that AOA will respond that it does not agree with us, and that it lacks legal authority to do what we suggest. We have no way to comply AOA to adopt out interpretation of the law, and we cannot say that AOA's interpretation is perverse or without foundation.

Since it appears unlikely that AOA will change the guidelines or enforce deviations from them, we should consider a recommendation or matter for consideration to the Congress for a change in the law, partly to give AOA authority to cut off funding in order to force changes in the formula-- even though we think that AOA has that authority now, it would be a good idea for the Congress to eliminate any doubt-- but also to prescribe whatever reforms we think necessary in the current funding formulas.