B-36537, SEPTEMBER 4, 1943, 23 COMP. GEN. 167

B-36537, SEPTEMBER 4, 1943, 23 COMP. GEN. 167

STATES - SERVICES RENDERED FEDERAL GOVERNMENT ON REIMBURSABLE BASIS - REIMBURSEMENT FOR CONTRIBUTIONS TO STATE EMPLOYEES' RETIREMENT FUND UNDER A CONTRACT FOR THE FURNISHING OF AIRCRAFT WARNING SERVICE TO THE UNITED STATES BY THE DIVISION OF FORESTRY, STATE OF CALIFORNIA, PROVIDING THAT THE STATE SHALL BE REIMBURSED "FOR AUTHORIZED EXPENSES INCURRED FOR HIRE AND PAY" OF AIRCRAFT OBSERVERS AND OTHER FACILITATING PERSONNEL, THE STATE MAY BE REIMBURSED FOR CONTRIBUTIONS TO THE RETIREMENT FUND REQUIRED TO BE MADE BY IT UNDER THE STATE EMPLOYEES' RETIREMENT ACT OF CALIFORNIA ON BEHALF OF STATE EMPLOYEES ENGAGED IN THE PERFORMANCE OF THE CONTRACT WORK. 12 COMP. GEN. 513, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO BRUCE STRICKLER, DEPARTMENT OF AGRICULTURE, SEPTEMBER 4, 1943:

I HAVE YOUR LETTER OF AUGUST 14, 1943, AS FOLLOWS:

A VOUCHER HAS BEEN SUBMITTED TO ME AS AN AUTHORIZED CERTIFYING OFFICER IN FAVOR OF THE STATE OF CALIFORNIA, DEPARTMENT OF NATURAL RESOURCES--- DIVISION OF FORESTRY IN THE AMOUNT OF $246.20, FOR REIMBURSEMENT OF EXPENSES INCURRED FOR FURNISHING AIRCRAFT WARNING SERVICE UNDER CONTRACT NO. A5FS-6849. THIS CONTRACT AND RENEWAL HAS BEEN FILED WITH YOUR OFFICE. THE VOUCHER AND A CERTIFIED COPY OF THE CONTRACT ARE ATTACHED FOR YOUR REVIEW.

WHEN THE WAR BEGAN DECEMBER 7, 1941, THE WAR DEPARTMENT THROUGH THE FOURTH INTERCEPTOR COMMAND REQUESTED THE DIVISION OF FORESTRY, DEPARTMENT OF NATURAL RESOURCES, STATE OF CALIFORNIA, TO OPERATE AIRCRAFT WARNING OBSERVATION POSTS ON A REIMBURSABLE BASIS FOR EXPENSES INCURRED, INCLUDING SALARIES OF OBSERVERS. THE DIVISION OF FORESTRY HAD OBSERVATION POSTS ADVANTAGEOUSLY LOCATED FOR THE PROTECTION OF CALIFORNIA FORESTS FROM FIRE WHICH WERE ALSO VANTAGE POINTS FOR DETECTION OF AIRCRAFT, ESPECIALLY IN INACCESSIBLE AREAS. SUBSEQUENTLY, THE WAR DEPARTMENT REQUESTED THE DEPARTMENT OF AGRICULTURE TO ADMINISTER THIS ACTIVITY FOR THEM IN CALIFORNIA AND PROVIDED A WORKING FUND CURRENTLY DESIGNATED APPROPRIATION "122/35911.001 WORKING FUND, AGRICULTURE FOREST SERVICE, 1942-1943. ADVANCE FROM "212/30605 SIGNAL SERVICE OF THE ARMY, 1942-1943" TO COVER EXPENSES IN CONNECTION WITH WINTERIZING AND OPERATING OBSERVATION STATIONS ESSENTIAL TO THE AIRCRAFT WARNING SERVICE OF THE WAR DEPARTMENT.' AS SOON AS POSSIBLE AFTER THIS OCCURRED, THE CONTRACT MENTIONED ABOVE WAS DRAWN UP AND EXECUTED. UNDER ITS TERMS, THE STATE OF CALIFORNIA THROUGH ITS DIVISION OF FORESTRY CONTRIBUTES THE SERVICES OF ITS FIRE DETECTION PERSONNEL FOR THE NORMAL PERIOD OF THEIR EMPLOYMENT FOR THAT PURPOSE. HIRING OF ADDITIONAL PERSONNEL TO MAINTAIN TWENTY-FOUR HOUR SERVICE DURING FIRE SEASON AND EXTENSION OF THE PERIOD OF EMPLOYMENT OF THEIR FIRE OBSERVERS BEYOND THE NEEDS OF THE DIVISION OF FORESTRY FOR FIRE DETECTION RESULTS IN AN EXTRA COST TO THAT AGENCY. BY THE TERMS OF THE CONTRACT, THE DIVISION OF FORESTRY IS TO BE REIMBURSED FOR THIS ADDITIONAL COST FROM FUNDS MADE AVAILABLE TO THE DEPARTMENT OF AGRICULTURE BY THE WAR DEPARTMENT. IN ADDITION IT IS NECESSARY TO ALTER AND IMPROVE SOME OF THE OBSERVATION POSTS WHICH WERE DESIGNED ONLY FOR SUMMER OCCUPANCY TO MAKE THEM HABITABLE DURING THE WINTER. THIS INVOLVES THE HIRING OF CARPENTERS, PURCHASE OF CONSTRUCTION MATERIALS, HEATING EQUIPMENT AND OTHER EXPENSES OF SIMILAR NATURE. THESE COSTS ARE ALSO TO BE REIMBURSED TO THE DIVISION OF FORESTRY UNDER THE TERMS OF THE CONTRACT. IN ADDITION TO THE SERVICES OF ITS REGULAR PERSONNEL WHO ARE HIRED ON A YEAR LONG BASIS AND WHO SUPERVISE THE STATE SHARE OF THIS PROGRAM. THE DIVISION OF FORESTRY ALSO CONTRIBUTES THE USE OF ITS COMMUNICATIONS FACILITIES CONNECTED WITH THESE OBSERVATION POSTS. NO REIMBURSEMENT IS MADE FOR THESE CONTRIBUTIONS.

THE STATE EMPLOYEES' RETIREMENT LAW REQUIRES THAT DEDUCTIONS BE MADE FROM THE SALARIES OF ALL EMPLOYEES WHO COME WITHIN THE PURVIEW OF THE RETIREMENT ACT, AND SUCH AMOUNTS MUST BE DEPOSITED IN THE STATE RETIREMENT FUND. IT ALSO REQUIRES THAT THE STATE CONTRIBUTE TO THE RETIREMENT FUND AN ADDITIONAL 3.75 PERCENT OF THE GROSS SALARIES OF THE EMPLOYEES. IF AN EMPLOYEE RETIRES, HE IS GIVEN A PENSION, THE COST OF WHICH IS PAID FROM THIS FUND. IF AN EMPLOYEE DOES NOT RETIRE, THE AMOUNTS WHICH HAVE BEEN DEDUCTED FROM HIS SALARY ARE REFUNDED TO HIM, BUT THE AMOUNTS PAID BY THE STATE ARE RETAINED BY THE RETIREMENT FUND. COPY OF THE RETIREMENT LAW IS ATTACHED FOR YOUR REVIEW. SECTION 109A OF THIS LAW, ADDED IN 1933, MAKES THE CONTRIBUTION OF 3.75 PERCENT A STATE OBLIGATION.

DURING THE PAST YEAR THE DIVISION OF FORESTRY HAS SUBMITTED SOME VOUCHERS CLAIMING REIMBURSEMENT FOR THE STATE CONTRIBUTION TO THE RETIREMENT FUND. THESE VOUCHERS HAVE BEEN REJECTED BY THIS OFFICE BECAUSE THE DECISION OF THE COMPTROLLER GENERAL TO THE CHAIRMAN OF THE FEDERAL BOARD FOR VOCATIONAL EDUCATION DATED JANUARY 31, 1933, (12 C.G. 513) WHICH APPEARED TO BE A PARALLEL CASE. HOWEVER, THE ACCOUNTING OFFICER FOR THE STATE OF CALIFORNIA, DEPARTMENT OF NATURAL RESOURCES, HAS JUST RESUBMITTED A VOUCHER CLAIMING REIMBURSEMENT FOR THE GROSS SALARY, INCLUDING EMPLOYEE'S CONTRIBUTION TO RETIREMENT FUND AND VICTORY TAX, AND THE STATE'S CONTRIBUTION TO THE RETIREMENT FUND FOR JAMES R. CORDER, A CARPENTER EMPLOYED BY THE DIVISION OF FORESTRY, WHO IS WITHIN THE PURVIEW OF THE STATE EMPLOYEES RETIREMENT LAW AND WHO WORKED ON THE ALTERATION OF AN OBSERVATION POST TO MAKE IT SUITABLE FOR AIRCRAFT WARNING SERVICE USE DURING THE MONTH OF JUNE 1943. THIS VOUCHER WAS PREVIOUSLY REJECTED BECAUSE IT INCLUDED AN AMOUNT OF $8.90, REPRESENTING THE STATE'S CONTRIBUTION TO THE RETIREMENT FUND FOR THE PERIOD OF THIS MAN'S EMPLOYMENT ON REIMBURSABLE AIRCRAFT WARNING SERVICE ACTIVITIES. WHEN RESUBMITTING THIS VOUCHER THE ACCOUNTING OFFICER FOR THE DEPARTMENT OF NATURAL RESOURCES REQUESTED A REVIEW OF THE CASE ON THE BASIS OF A PRECEDENT HE SAYS HAS BEEN ESTABLISHED WHEREBY THE FEDERAL GOVERNMENT REIMBURSES THE STATE DEPARTMENT OF SOCIAL WELFARE AND THE STATE DEPARTMENT OF EMPLOYMENT FOR THE CONTRIBUTIONS THE STATE IS REQUIRED TO MAKE TO THE RETIREMENT FUND FOR EMPLOYEES IN THOSE DEPARTMENTS. A REVIEW OF YOUR PUBLISHED DECISIONS DOES NOT INDICATE THAT THE STAND TAKEN IN 1933 IN THE DECISION MENTIONED ABOVE HAS BEEN REVERSED AND I DO NOT HAVE ACCESS TO ANY TRANSACTIONS INVOLVING REIMBURSEMENT TO THE TWO STATE DEPARTMENTS MENTIONED. IF IT IS POSSIBLE TO PAY THIS CLAIM, IT IS THE DESIRE OF THE ADMINISTRATIVE OFFICERS OF THIS AGENCY THAT REIMBURSEMENT BE MADE SINCE IT APPARENTLY REPRESENTS A CHARGE AGAINST THE FUNDS OF THE DIVISION OF FORESTRY, FOR WHICH IT DOES NOT RECEIVE ANY ADDITIONAL APPROPRIATION.

WOULD YOU PLEASE TELL ME WHETHER I MAY CERTIFY THIS VOUCHER INCLUDING THE ITEM OF $8.90 FOR THE CONTRIBUTION TO THE STATE RETIREMENT FUND FOR PAYMENT, ASSUMING THAT THE CHARGE FOR THE EMPLOYEE'S SERVICE IS PROPERLY REIMBURSABLE TO THE STATE UNDER THE CONTRACT MENTIONED?

BECAUSE OF ITS APPARENT RELEVANCY TO THE PRESENT MATTER, IT IS DEEMED NECESSARY TO CONSIDER HERE THE DECISION OF JANUARY 31, 1933, 12 COMP. GEN. 513, CITED IN YOUR SUBMISSION, UPON THE AUTHORITY OF WHICH YOU STATE PRIOR CLAIMS FOR REIMBURSEMENT FOR THE STATE CONTRIBUTION TO THE STATE EMPLOYEES' RETIREMENT FUND HAVE BEEN REJECTED BY YOUR OFFICE. UNDER THE STATUTE THERE INVOLVED--- THE ACT OF FEBRUARY 23, 1917, 39 STAT. 931--- FEDERAL FUNDS WERE MADE AVAILABLE FOR THE PAYMENT OF SALARIES TO CERTAIN STATE EMPLOYEES IN CONNECTION WITH THEIR PREPARATION AND TRAINING AS TEACHERS, SUPERVISORS, AND DIRECTORS OF AGRICULTURAL SUBJECTS, AND TEACHERS OF TRADE, INDUSTRIAL AND HOME ECONOMICS SUBJECTS. THERE, AS HERE, BESIDES THE AMOUNT DEDUCTED FROM THE EMPLOYEE'S SALARY AS HIS CONTRIBUTION, THE STATE WAS REQUIRED TO CONTRIBUTE AN ADDITIONAL AMOUNT TO THE RETIREMENT FUND. THE QUESTION AS TO WHETHER THE FEDERAL FUNDS COULD BE USED TO PAY THE STATE'S CONTRIBUTION TO THE RETIREMENT FUND WAS ANSWERED IN THE NEGATIVE, IT BEING HELD, WITH RESPECT THERETO, THAT:

* * * THIS ADDITIONAL AMOUNT DOES NOT CONSTITUTE COMPENSATION OF EMPLOYEES FOR SERVICES RENDERED, BUT IS IN THE NATURE OF A GRATUITY OR PENSION, NO BENEFIT FROM WHICH IS TO BE RECEIVED BY THE TEACHER UNLESS AND UNTIL RETIRED. SECTION 9 OF THE STATUTE ABOVE QUOTED SPECIFICALLY PROVIDES THAT THE FEDERAL APPROPRIATION FOR SALARIES OF TEACHERS, ETC., "SHALL BE DEVOTED EXCLUSIVELY TO THE PAYMENT OF SALARIES.' * * *

IT IS EVIDENT FROM THE FOREGOING THAT THE CONCLUSION REACHED IN SAID DECISION WAS COMPELLED BY THE LANGUAGE OF THE APPROPRIATION ACT WHICH PLACED A SPECIFIC LIMITATION UPON THE USAGE OF THE FUNDS MADE AVAILABLE THEREBY. NO SUCH RESTRICTION, HOWEVER, EXISTS IN THE INSTANT CASE; NOR IS THERE INVOLVED A FEDERAL GRANT OR ALLOTMENT OF FUNDS TO A STATE AS IN THE DECISION OF JANUARY 31, 1933. THE SOURCE OF THE FUNDS PROPOSED TO BE EXPENDED HERE APPEARS TO BE THE MILITARY APPROPRIATION ACT, 1943, APPROVED JULY 2, 1942, 56 STAT. 618, 619, WHEREIN, UNDER THE APPROPRIATION ITEM " SIGNAL SERVICE OF THE ARMY," FUNDS WERE MADE AVAILABLE " FOR ALL EXPENSES INCIDENT TO THE PREPARATION OF PLANS, AND CONSTRUCTION, PURCHASE, INSTALLATION, EQUIPMENT, MAINTENANCE, REPAIR, AND OPERATION OF AIRCRAFT WARNING SERVICE SYSTEMS, AND THEIR ACCESSORIES, INCLUDING PURCHASE OF LANDS AND RIGHTS-OF-WAY, ACQUISITION OF LEASEHOLDS AND OTHER INTERESTS THEREIN, AND TEMPORARY USE REOF.' THE MAKING OF THE AGREEMENT BY THE DEPARTMENT OF AGRICULTURE, FOREST SERVICE, ON BEHALF OF THE WAR DEPARTMENT, WITH THE STATE OF CALIFORNIA, DEPARTMENT OF NATURAL RESOURCES DIVISION OF FORESTRY, FOR THE FURNISHING OF AIRCRAFT WARNING SERVICE BY THE LATTER WOULD SEEM TO BE A PROPER EXERCISE OF THE AUTHORITY CONTAINED IN THE ACT OF JULY 2, 1942, SUPRA.

HAVING REGARD FOR THE INDICATED FACTUAL DISPARITY BETWEEN THE DECISION IN 12 COMP. GEN. 513, AND THE INSTANT CASE, THE VIEW APPEARS JUSTIFIED THAT SAID DECISION IS NOT CONTROLLING HERE, BUT THAT THE DETERMINATION OF THE QUESTION PRESENTED MUST REST UPON THE TERMS OF THE AGREEMENT ABOVE REFERRED TO.

THE SAID CONTRACT (ENTITLED " MEMORANDUM OF UNDERSTANDING") DATED APRIL 21, 1942, AND WHICH HAS BEEN EXTENDED TO JUNE 30, 1944, PROVIDES IN PERTINENT PART, AS FOLLOWS:

WHEREAS, IN FURTHERANCE OF THE WAR DEPARTMENT OBLIGATION TO ESTABLISH AND MAINTAIN AN EFFECTIVE AIRCRAFT WARNING SERVICE, A NUMBER OF OBSERVATION POSTS WITHIN THE STATE OF CALIFORNIA OWNED AND OPERATED BY THE NATIONAL FOREST SERVICE, THE STATE OF CALIFORNIA, AND VARIOUS COUNTIES OF THE STATE HAVE BEEN SELECTED BY THE FOURTH INTERCEPTOR COMMAND AS OBSERVATION POSTS; AND

WHEREAS, THE SECRETARY OF WAR HAS EXPRESSED IN HIS LETTER OF JANUARY 1, 1942, TO THE SECRETARY OF AGRICULTURE, HIS DESIRE THAT THE UNITED STATES FOREST SERVICE BE MADE RESPONSIBLE FOR THE EFFICIENT OPERATION OF ALL OF THESE OBSERVATION POSTS, IN DIRECT COOPERATION WITH THE INTERCEPTOR COMMAND; AND

WHEREAS, THE PARTIES HERETO DESIRE TO COOPERATE WITH EACH OTHER IN CARRYING OUT SAID RESPONSIBILITY WHICH HAS BEEN DELEGATED TO AND ACCEPTED BY THE FOREST SERVICE, AND AGREE TO UNDERTAKE SUCH COOPERATION UPON THE TERMS, PROVISIONS AND CONDITIONS HEREINAFTER PROVIDED;

NOW, THEREFORE, THIS MEMORANDUM OF UNDERSTANDING WITNESSETH:

FIRST, THAT THE FOREST SERVICE SHALL:

3. MAKE FEDERAL FUNDS AVAILABLE AS PROVIDED BY THE INTERCEPTOR COMMAND OF THE WAR DEPARTMENT TO DEFRAY THE COST OF THIS PROJECT SUBJECT TO FEDERAL FISCAL CONTROL AND OTHER REQUIREMENTS GOVERNING THE EXPENDITURE OF THESE FUNDS.

4. REIMBURSE THE STATE FOR AUTHORIZED EXPENSES INCURRED FOR HIRE AND PAY OF AIRCRAFT OBSERVERS, OTHER FACILITATING PERSONNEL, AND PURCHASE OF NECESSARY SUPPLIES AND EQUIPMENT, UPON PRESENTATION OF VOUCHERS ON FORMS MUTUALLY AGREED UPON WITH THE STATE.

THE FOREGOING PROVISIONS DEMONSTRATE THAT THE CONTRACT BASICALLY CONTEMPLATES THAT THE ACTUAL COST OF THE PROJECT IS TO BE ASSUMED BY THE GOVERNMENT, AND THAT THE PAYMENTS TO BE MADE THEREUNDER ARE TO REPRESENT REIMBURSEMENT TO THE STATE OF CALIFORNIA--- BUT WITHOUT PROFIT--- OF THE COSTS INCURRED BY IT; THAT IS TO SAY, THAT THE STATE IS TO BE MADE WHOLE.

WHILE, AS STATED IN THE DECISION OF JANUARY 31, 1933, THE AMOUNT OF THE CONTRIBUTION OF THE STATE TO THE RETIREMENT FUND DOES NOT REPRESENT COMPENSATION TO THE EMPLOYEE, YET UNDER THE STATE EMPLOYEES' RETIREMENT ACT OF CALIFORNIA, THE REQUIREMENT THAT THE STATE CONTRIBUTE SUCH AMOUNT CLEARLY IS AN INTEGRAL PART OF ITS OBLIGATION TO PAY WAGES. THE CONSIDERATION FOR THE STATE'S CONTRIBUTION WOULD SEEM TO BE THE BENEFIT IT RECEIVES FROM THE PERFORMANCE OF SERVICE BY THE EMPLOYEE. HOWEVER, WHERE, AS HERE, THE EMPLOYEE PERFORMS WORK INCIDENT TO CARRYING OUT AN ACTIVITY OF THE FEDERAL GOVERNMENT UNDER THE CONTRACT INVOLVED, THE BENEFIT DERIVING THEREFROM TO THE STATE IS ONLY INCIDENTAL; BUT, SINCE THE INDIVIDUAL HAS NOT BEEN DIVESTED OF HIS STATUS AS AN EMPLOYEE OF THE STATE OF CALIFORNIA WHILE PERFORMING THAT SERVICE, THE LEGAL OBLIGATION OF THE LATTER TO MAKE THE CONTRIBUTION TO THE RETIREMENT FUND REMAINS. HENCE, SHOULD THE STATE NOT BE REIMBURSED THE AMOUNT OF SAID CONTRIBUTION IT IS NOT MADE WHOLE AS CONTEMPLATED BY THE CONTRACT.

UNDER SUCH CIRCUMSTANCES, IT MAY BE HELD THAT PURSUANT TO THE AGREEMENT TO REIMBURSE THE STATE ,FOR AUTHORIZED EXPENSES INCURRED FOR HIRE AND PAY" OF ITS PERSONNEL, CONTAINED IN PARAGRAPH 4 OF THE CONTRACT ABOVE QUOTED, THE GOVERNMENT IS OBLIGATED TO REIMBURSE THE STATE OF CALIFORNIA FOR THE EXPENSE INCURRED IN MAKING ITS CONTRIBUTION TO THE STATE EMPLOYEES' RETIREMENT FUND.

ACCORDINGLY, THE VOUCHER TRANSMITTED WITH YOUR LETTER MAY BE CERTIFIED FOR PAYMENT, IF CORRECT IN OTHER RESPECTS.