Department of Labor-Cap on Administrative Expenses Under Job

B-260990 Jun 13, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DOL regulations implement these statutes by providing that states and SDAs "shall have the 3-year period of fund availability to comply with the cost limitations in section 108 of the Act." 20 C.F.R. The effect of this regulation is to permit funds set aside for administration. Provided the percentage limitation ultimately is satisfied. This regulation is consistent with the Act. DECISION This is in response to a request from the Inspector General of the Department of Labor (DOL) for a decision relating to the DOL's interpretation of a statute which limits state and local program administrative costs to not more than 20 percent of the funds provided in a single appropriation act to the local programs under the Job Training Partnership Act (JTPA or Act). View Decision Matter of: Department of Labor-Cap on Administrative Expenses Under Job Training Partnership Act File: B-260990 Date: June 13, 1996 Under the Job Training Partnership Act (JTPA or Act), Public Law 97-300, October 13, 1982, the Department of Labor (DOL) obligates training funds and allots those funds to states and territories. Section 161(b)(1) of JTPA makes such funds available for expenditure by "service delivery areas" (SDA) for 3 program years. Section 108 of JTPA requires charging of grant funds "for any program year" to appropriate cost categories. DOL regulations implement these statutes by providing that states and SDAs "shall have the 3-year period of fund availability to comply with the cost limitations in section 108 of the Act." 20 C.F.R. Sec. 627.445(c)(2) (1995). The effect of this regulation is to permit funds set aside for administration, from any program year allocation, to be used for any administrative cost during the 3-year life of an appropriation, provided the percentage limitation ultimately is satisfied. This regulation is consistent with the Act. DECISION This is in response to a request from the Inspector General of the Department of Labor (DOL) for a decision relating to the DOL's interpretation of a statute which limits state and local program administrative costs to not more than 20 percent of the funds provided in a single appropriation act to the local programs under the Job Training Partnership Act (JTPA or Act). DOL interprets this provision as requiring only that the local program administrators not spend more than 20 percent of the total funds on administrative costs over the 3-year period of availability of the funds. The Inspector General interprets the statute as imposing a 20 percent administrative cost limitation on funds expended in each of the 3 years that funds remain available to the local program. For the reasons that follow, we believe that the DOL's interpretation is reasonable. Background The Job Training Partnership Act, Public Law 97-300, October 13, 1982, 96 Stat. 1324, as amended, provides job training and employment skills to economically disadvantaged individuals. Although the Department of Labor has overall responsibility for implementation of the Act, provision of services under the Act is highly decentralized, with most participants receiving job training services through programs administered by the 56 states and territories and over 600 local programs called service delivery areas (SDA). The Inspector General's request for a decision specifically concerns Title II-A of the Act, which authorizes adult and youth programs, although, as he points out, the same legal principles would apply to other JTPA grant programs with similar statutory authority. Under the mechanism established by the Act, the Department of Labor obligates Title II-A funds and allots those funds to states and territories, in accordance with a fixed formula. JTPA Sec. 201; 29 U.S.C. Sec. 1601. DOL allots funds on a July 1 through June 30 "program year" basis, consistent with section 161(a) of the Act, which provides that funds "shall be available for obligation only on the basis of a program year" and that the program year "shall begin on July 1 in the fiscal year for which the appropriation is made." JTPA Sec. 161(a); 29 U.S.C. Sec. 1571(a). See also 20 C.F.R. Sec. 627.405. The governor of the state or territory then allocates Title II-A funds to SDAs within the state or territory. JTPA Sec. 202; 29 U.S.C. Sec. 1602. See 20 C.F.R. Part 628, Subpart C (1995). Under section 164 of the Act, each state or territory is required to establish "such fiscal control and fund accounting procedures as may be necessary to assure the proper disbursal of, and accounting for, federal funds paid to the recipient under titles II and III" of the Act. Section 165 of the Act requires SDAs to keep records that are sufficient to permit the preparation of reports required by the Act "and to permit the tracing of funds to a level of expenditure adequate to insure that the funds have not been spent unlawfully." JTPA Sec. 165(a)(1); 29 U.S.C. Sec.