The Ohio Department of Job and Family Services (ODJFS) is issuing Fiscal Administrative Procedure Letter No. 34 which supersedes previously published Fiscal Administrative Procedure Letter (FAPL) No. 17 "Mass Severance Pay" dated September 30, 2009.

All costs associated with abnormal/mass severance pay, as defined in the Implementation Guide for OMB Circular A-87 (ASMB C-10), are unallowable costs unless they have been approved by the U.S. Department of Health and Human Services (DHHS). As stated in FAPL 17, DHHS initially denied counties' requests for federal financial participation (FFP); however, ODJFS continued discussions with DHHS and has been successful in obtaining conditional approval to claim FFP for such costs on behalf of county family services agencies.

DHHS reviews requests for approval to claim FFP for mass/abnormal severance on a case by case basis and requires a review and recommendation from ODJFS, as the grantee, prior to any submission for approval.

Federal Requirements

In accordance with 2 CFR 225 (formally OMB Circular A-87) Appendix B, Chapter 8 (g) entitled "Severance Pay," severance payments associated with "normal turnover" may be charged to federally-funded programs. DHHS, our cognizant Federal agency, has advised ODJFS that "normal turnover" is considered the retirements/resignations/terminations that occur during normal daily operations; and, "abnormal or mass severance pay" is associated with reductions due to program cutbacks or elimination/reductions in the government workforce/buy-outs/etc. DHHS has clarified that they consider employer-initiated reductions of the workforce (i.e. layoffs) to be abnormal or mass severance pay. Severance payments associated with all "abnormal or mass severance pay" must be considered on a case-by-case basis and are allowable only if approved by the cognizant Federal agency. Although severance pay associated with a buy-out (or other incentive offered to employees to retire or leave public service) is subject to a higher level of scrutiny than lay-offs, all requests to claim FFP for any costs characterized as abnormal or mass severance pay must be approved by DHHS.

The Implementation Guide for OMB Circular A-87 (ASMB C-10) lists the following as costs associated with abnormal or mass severance:

• Lump-sum payment that may be linked to years of service;
• Increased pension benefits such as granting additional years or eliminating penalties for early retirement;
• Payments of unused leave; and
• The cost of any other incentive offered to employees as an incentive to leave government service, such as buy-outs.

If DHHS approves the use of federal funds for abnormal/mass severance pay costs, they may also establish stipulations surrounding that approval. These stipulations may include additional audit requirements and monitoring reports to insure the county is experiencing savings in excess of one-time costs.

All requests to claim costs associated with abnormal/mass severance pay must be accompanied by a recommendation from ODJFS. DHHS will not accept requests directly from a county agency. Requests for approval to claim FFP for costs associated with abnormal/mass severance pay are sent to:

Ohio Department of Job and Family Services

Office of Fiscal and Monitoring Services

Bureau of County Finance and Technical Assistance

30 East Broad Street - 37th Floor

Columbus, Ohio 43215-3414

Early Retirement Incentive Plans

(or other plans that offer an incentive to employees to leave government service)

Submittal of Requests

Information submitted to ODJFS with a request for FFP for early retirement plans must include the following:

• The plan name.
• The reasons the county family services agencies is considering a voluntary early retirement plan. If the reason for the plan involves the closing of federal programs/dollars, list the programs and which title, etc.
• The enabling resolution and governing law.
• The time period during which the county family services agency plans to offer voluntary early retirement.
• The terms of the plan, including policies concerning rehiring and forfeiture of voluntary early retirement or other severance payments if rehiring policies are not followed. Employee eligibility requirements, including a statement that the early retirement incentive (ERI) will be implemented county-wide or the reason the plan will not be implemented county-wide.
• An analysis of the effect downsizing will have on the operation, continuity, and effectiveness of service delivery, or programs.
• An estimate of the total number of employees in the county family services agency expected to retire early during the period covered by the request.
• The estimated savings, in total and in federal dollars, for the estimated number of employees expected to participate in the ERI.
• The estimated costs, in total and in federal dollars, for the estimated number of employees expected to participate in the ERI.

If DHHS and ODJFS approve the ERI plan for FFP, and changes occur in the plan, the county family services agency must submit a revised ERI plan to be approved before submitting the costs for FFP. The revised ERI plan will be considered in its entirety by DHHS and ODJFS.

DHHS or ODJFS may terminate FFP approval for an ERI if it determines the county family services agency is no longer operating in accordance with the plan that formed the basis for the original approval. DHHS or ODJFS may amend, limit, or terminate FFP for an ERI to ensure voluntary early retirement authority regulations are being properly followed.

Additional guidance and details regarding the submittal of claims for FFP are found in Part 3 of the ASMB C-10.

Approval and Submittal of Costs

ODJFS requires the county to enter into a reimbursement agreement before approval can be granted to claim FFP for these costs. Upon conditional approval by DHHS, ODJFS will prepare the reimbursement agreement and forward to the county for execution.

The approval of costs associated with mass/abnormal severance (buyout programs) is based on estimated costs which are subject to adjustment. Once DHHS approval has been obtained and all reimbursement agreements have been signed, ODJFS will work with the county agencies on a case by case basis regarding the allocation of the actual costs. In most cases, costs will be claimed as shared costs and be proportionately distributed across all funding sources received by the agency, using cost allocation methodology and statistics in place prior to the incurrence of any costs.

Monitoring and Reporting

To ensure the federal government achieves savings as a result of participating in the costs of these programs, each county family service agency claiming these costs will be required to complete and submit a worksheet to ODJFS within 45 days after the end of the federal fiscal year (FFY). The category used for monitoring will be "state agency costs" as defined by 45 C.F.R. Part 95.505.

ODJFS will review and forward these worksheets to DHHS until such time that DHHS notifies ODJFS the annual report is no longer necessary.

In addition, ODJFS is required to conduct a review of the final compliance with these provisions during the regular course of subrecipient monitoring reviews or any other audits/reviews.

If the buyout program fails to achieve savings at least equal to the cost to federal programs, the county family services agencies will be required to submit a cash refund to ODJFS.

Lay-offs

(or other reductions in the workforce)

Submittal of Requests

Information submitted to ODJFS with a request for FFP for costs associated with other reductions in the workforce (i.e. layoffs) must include the following:

• A detailed reason for the reduction.
• An analysis of the effect downsizing will have on the operation, continuity, and effectiveness of service delivery, programs.
• An estimate of the total number of employees in the county family services agency expected to be laid-off during the period covered by the request.
• The estimated costs, in total and in federal dollars, for the estimated number of employees expected to be laid-off (projected payout of unused leave and unemployment benefits.)
• The estimated savings, in total and in federal dollars, for the estimated number of employees expected to be laid off.

Approval and Submittal of Lay-off Costs

Once DHHS approval has been obtained, ODJFS will work with the county agencies on a case by case basis regarding the allocation of the actual costs. In most cases, costs will be claimed as shared costs (using the statistics for the quarter prior to the lay-off) and be proportionately distributed across all funding sources received by the agency.

Monitoring and Reporting of Lay-off Costs

Any costs claimed for FFP are subject to audits and monitoring reviews to assure that costs are claimed in accordance with program regulations, as well as being allowable, allocable, and reasonable as outlined in 2 CFR 225. ODJFS may conduct a review of the final compliance with these provisions during the regular course of subrecipient monitoring reviews or any other audits/reviews.

Please contact your ODJFS Fiscal Analyst or call the Bureau of County Finance and Technical Assistance at (614) 752-9194 if you need additional guidance.

Attachments (2) -ODJFS Reimbursement Agreement

Worksheet(Annual Reporting)