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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Spending Taxpayer Dollars
Oregon Health Authority's
Prior Labor-Charging
Practices Under EPA Grants
Did Not Meet Requirements
Report No. 16-P-0313	September 12, 2016
Related
indirect costs
Fringe
benefits
$12.1
million
Labor

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Report Contributors:	Angela Bennett
Darren Schorer
Abbreviations
CFR	Code of Federal Regulations
DWSRF	Drinking Water State Revolving Fund
EPA	U.S. Environmental Protection Agency
OIG	Office of Inspector General
PHD	Public Health Division
PWSS	Public Water Supply Supervision
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(202) 566-2391
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
16-P-0313
September 12, 2016
Why We Did This Audit
The U.S. Environmental
Protection Agency (EPA),
Office of Inspector General
(OIG), conducted this audit to
determine whether labor-
charging practices at the
Oregon Health Authority's
Public Health Division (PHD)
comply with federal
requirements. The OIG also
sought to determine the effect
of any noncompliance on
amounts PHD claimed under
EPA grant awards.
The Oregon Health Authority
has received EPA funding in
such areas as the Drinking
Water State Revolving Fund,
Public Water System
Supervision and Lead-Based
Paint.
This report addresses the
following EPA goals or
cross-agency strategies:
•	Protecting America's
waters.
•	Ensuring the safety of
chemicals and preventing
pollution.
•	Working toward a
sustainable future.
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.gov/oia.
Listing of OIG reports.
Oregon Health Authority's Prior Labor-Charging Practices
Under EPA Grants Did Not Meet Requirements
What We Found
The Oregon Heath Authority's PHD did not always
comply with federal labor-charging requirements.
Prior to May 2014, PHD charged labor, fringe
benefits and indirect costs to its Drinking Water
State Revolving Fund, Public Water System
Supervision and Lead-Based Paint grants based
on budget allocations rather than actual activities
performed. Also, employee certifications for those
charging solely to one grant were not sufficient.
The Code of Federal Regulations (CFR), in 2 CFR Part 225, requires that where
employees work on multiple activities or cost objectives, labor charges must be
based on the after-the-fact distribution of an employee's actual activity. Labor
charges should also be supported by employee-signed personnel activity reports
or the equivalent. A periodic certification of time charges is also required for
those employees working solely on one grant. Oregon's statewide online system
allows employees to override the assigned codes and enter hours based on
actual activity. However, despite state guidance, prior to May 2014, PHD
employees did not use the override function. PHD staff and employees said they
were unaware of the override function.
PHD's practice prior to
May 2014 of charging
labor hours based on
budget allocations rather
than actual activities, as
well as insufficient
employee certifications,
resulted in more than
$12 million in
unsupported costs.
In response to an EPA administrative review, PHD updated its employee time
reporting guidance, and starting in May 2014, PHD employees began properly
reporting costs. However, we still question as unsupported the $12,136,214 in
labor, fringe benefits and related indirect costs claimed by PHD on EPA grants
prior to May 2014.
Recommendations and Recipient's Response to Draft Report
We recommend that the Regional Administrator, Region 10, disallow and recover
$12,136,214 of unsupported labor and related fringe benefits and indirect costs
claimed prior to May 2014, unless Oregon PHD can provide support for the labor
charges. The region should also identify and recover any unsupported costs prior
to May 2014 from any other PHD-administered EPA grants not covered by this
audit. PHD concurred with the findings, but did not agree with the
recommendation to disallow the labor costs, noting it provided a comparative
analysis of payroll charges to support its position, plus it is now in full compliance
with grant requirements. We acknowledge that PHD's labor-charging practices
are currently in compliance with requirements, but the analysis provided does not
support that labor costs prior to May 2014 meet federal requirements. Region 10
did not respond to the draft report and understands it has the opportunity to
respond to the final report. The recommendations remain unresolved.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
September 12, 2016
MEMORANDUM
SUBJECT: Oregon Health Authority's Prior Labor-Charging Practices Under
EPA Grants Did Not Meet Requirements
Report No. 16-P-031Q
FROM: Arthur A. Elkins Jr.
TO:
Dennis McLerran, Regional Administrator
Region 10
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY15-0118.
This report contains findings that describe the problems the OIG has identified and corrective actions the
OIG recommends. This report represents the opinion of the OIG and does not necessarily represent the
final EPA position. Final determinations on matters in this report will be made by EPA managers in
accordance with established audit resolution procedures.
EPA Region 10's Office of Water and Watersheds administers and manages project grants to the states,
including the Drinking Water State Revolving Fund and the Public Water Supply Supervision programs.
Region 10's Office of Compliance and Enforcement administers and manages the Lead-Based Paint
program.
Action Required
In accordance with EPA Manual 2750, you are required to provide a written response to this report
within 120 days, or on January 10, 2017. You should include planned corrective actions and completion
dates for all unresolved recommendations. Your response will be posted on the OIG's public website,
along with our memorandum commenting on your response. Your response should be provided as an
Adobe PDF file that complies with the accessibility requirements of Section 508 of the Rehabilitation
Act of 1973, as amended. The final response should not contain data that you do not want to be released
to the public; if your response contains such data, you should identify the data for redaction or removal
along with corresponding justification.
We will post this report to our website at www.epa.gov/oig.

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Oregon Health Authority's Prior Labor-Charging Practices
Under EPA Grants Did Not Meet Requirements
16-P-0313
Table of C
Chapters
1	Introduction		1
Purpose		1
Background		1
Responsible Offices		2
Scope and Methodology		2
2	Labor-Charging Practices Did Not Comply With
Federal Requirements		4
Labor Charges Based on Budget Estimates		4
Recommendations		6
Auditee Response		7
EPA Comments		7
OIG Comment on Auditee Response		7
Status of Recommendations and Potential Monetary Benefits		9
Appendices
A Grants Selected for Review		10
B Oregon Health Authority PHD's Response to Draft Report		11
C Distribution		13

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Chapter 1
Introduction
Purpose
The U.S. Environmental Protection Agency (EPA), Office of Inspector General
(OIG), conducted this audit to determine whether labor-charging practices at the
Oregon Health Authority's Public Health Division (PHD) comply with federal
requirements. The OIG also sought to determine the effect of noncompliance on
amounts PHD claimed under EPA grant awards.
Background
On July 1, 2011, the Oregon Legislature split the state's old Department of Human
Services into two agencies: the Department of Human Services and the Oregon
Health Authority. The PHD is one of several divisions within the Oregon Health
Authority. PHD's mission is to promote health and prevent the leading causes of
death, disease and injury in Oregon. PHD programs funded by the EPA include
drinking water, operator certification, lead-based paint, beach monitoring, and
radon awareness. As of October 19, 2015, PHD had approximately $32 million in
active EPA grants. PHD had closed another $85.7 million in grants over the last
3 years
In April 2013, staff in EPA Region 10's Grants Administration Unit performed a
review of EPA Grant No. PB96054202 (lead program) awarded to PHD. The
review focused on programmatic and technical aspects of the grant, as well as the
level of full-time equivalents and payroll charges. This review, focusing on the
6-month period ending March 31, 2013, disclosed that the payroll documentation
system did not meet the requirements of the Code of Federal Regulations (CFR)
in 2 CFR Part 225. Specifically, the payroll documentation did not provide a
distribution of salaries or wages supported by personnel activity reports or
equivalent documentation. As a result, Region 10 questioned labor costs charged
under the grant. Based on discussions with Region 10 staff, the questioned cost
issue remains unresolved.
In response to the EPA administrative review, PHD updated its employee time
reporting guidance. The PHD also revised time and activity reports used for
supervisory review of employee time charges. The changes became effective for
the pay period beginning May 2014.
We initiated this audit to evaluate PHD's compliance with federal requirements
on all of its EPA grant programs, and its updated guidance and labor-charging
practices.
16-P-0313
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Responsible Offices
EPA Region 10's Office of Water and Watersheds administers and manages
project grants to the states, including the Drinking Water State Revolving Fund
(DWSRF) and the Public Water Supply Supervision (PWSS) programs.
Region 10's Office of Compliance and Enforcement administers and manages the
Lead-Based Paint program.
Scope and Methodology
We conducted this performance audit from October 19, 2015, to May 18, 2016,
in accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based upon our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives.
We used information in the EPA's Integrated Grants Management System to
identify the grants with the most labor and fringe benefits. Our analysis included
both open and closed grants. We searched the system for grants and cooperative
agreements awarded to the PHD that were open from October 19, 2012 to
October 19, 2015. The audit universe cut-off date was established to ensure that all
grants selected for review were within the 3-year record-retention period required
by 40 CFR § 31.42(b). We identified 21 grants within the applicable period.
We reviewed the grant budgets to determine the amount of labor and fringe
benefits the EPA is responsible for funding (EPA share) by program. We totaled
the EPA share for all programs and determined the percentage of the total EPA
share by program. We focused our audit on the three programs with the highest
percentage of the total EPA share—DWSRF, PWSS and Lead-Based Paint.
Table 1 shows all EPA-funded programs, the total award amount, the EPA's share
of labor and fringe benefits, and the percentage of the total EPA share by program.
Table 1: EPA share of labor and fringe benefits by program
Program
Total
EPA's share
EPA's percent of
total EPA share
DWSRF
$11,880,041
$8,629,247
56.17%
PWSS
4,725,017
3,400,058
22.13%
Lead-Based Paint
2,236,747
2,236,747
14.56%
Operator certification
430,488
430,488
2.80%
Indoor Radon
598,588
299,294
1.95%
Beach Monitoring
270,480
270,480
1.76%
DWSRF - ARRA*
96,299
96,299
0.63%
Totals
$20,237,660
$15,362,613

Source: OIG-generated table using data from the EPA's Integrated Grants Management System.
*ARRA: American Recovery and Reinvestment Act
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Within the three programs, there were 14 open grants from October 19, 2012, to
October 19, 2015. The 14 grants represent approximately 93 percent of the EPA's
share of labor and fringe benefits budgeted for the grants in our universe.
Appendix A of this report contains a summary of the 14 grants. Nine of the 14
grants were subsequently closed after October 19, 2012.
To address PHD's labor-charging practices, we:
•	Discussed labor-charging practices and policies with PHD management.
•	Selected a judgmental sample of payroll transactions from each of the
grant programs for testing; the sample included transactions before and
after the change in payroll practices in May 2014.
•	Interviewed selected employees to determine current labor-charging
practices.
To determine the effect of noncompliance, we identified 11 grants with costs
claimed prior to May 2014. For those grants, we obtained accounting records and
reconciled the recorded amounts to the Standard Form 425, Federal Financial
Report, and the EPA's Compass Data Warehouse records, as appropriate. We
identified labor and related fringe benefits and indirect costs claimed prior to
May 2014.
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Chapter 2
Labor-Charging Practices Did Not Comply With
Federal Requirements
PHD did not comply with federal requirements for charging labor and related
fringe benefits and indirect costs prior to May 2014. PHD charged the costs based
on budget allocations rather than actual activities performed. Also, employee
certifications for those employees working solely on one grant are not sufficient.
Title 2, CFR Part 225, Appendix B, provides pertinent guidance as follows:
•	Section 8.h.(4) requires that where employees work on multiple activities
or cost objectives, a distribution of their salaries or wages will be
supported by personnel or equivalent documentation that meet the
standards in Section 8.h.(5).
•	Section 8.h.(5)(a) states the documentation must reflect an after-the-fact
distribution of the actual activity of each employee, and (5)(d) states the
documentation must be signed by the employee.
•	Section 8.h.(3) requires a periodic certification of time charges for
employees who work solely on a single federal award or cost objective.
Based on these requirements, budget estimates or other distribution percentages
determined before the services are performed do not qualify as support for charges to
federal awards. In response to an EPA administrative review, PHD updated its
employee time reporting guidance, and starting in May 2014 PHD employees began
properly reporting costs. However, we still question as unsupported the $12,136,214
in labor, fringe benefits and related indirect costs claimed by PHD on EPA grants
prior to May 2014.
Labor Charges Based on Budget Estimates
Prior to May 2014, PHD distributed labor charges based on budget estimates
entered into the statewide online time charging system. While the statewide online
time charging system allowed employees to input actual time, management was
unaware of this capability. We identified 11 of the 14 grants reviewed with labor
charges prior to May 2014. Table 2 summarizes these costs.
16-P-0313
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Table 2: Unsupported amounts by grant and cost category
Program/grant number
Direct
labor
Fringe
benefits
Indirect
costs
Total
Lead-Based Paint




PB96054201
$827,046
$374,406
$142,973
$1,344,425
PB96054202
204,953
114,322
44,347
363,622
PWSS




F00031212
523,184
293,219
97,152
913,555
F00031213
508,454
294,065
88,357
890,877
F00031214
381,776
209,935
89,940
681,652
DWSRF




FS98009008
894,400
415,976
69,188
1,379,564
FS98009009
1,168,452
571,861
194,045
1,934,358
FS98009010
1,388,169
712,251
197,439
2,297,859
FS98009011
605,065
328,021
110,851
1,043,937
FS98009012
618,006
328,202
107,111
1,053,319
FS98009013
154,533
78,513

233,046
Grand Total
$7,274,038
$3,720,771
$1,141,403
$12,136,214
Source: OIG-generated table from PHD accounting records.
Payroll System and Time Charging
PHD uses a statewide online system to capture time charges and assigns
employees a minimum of one labor cost code, based on budgeted estimates.
Multiple labor codes may also be entered based on an employee's duties. The
system allows employees the capability to override the assigned codes to enter
hours based on actual activity. However, prior to May 2014, employees did not
use the override function. As a result, labor and related fringe benefits and
indirect costs were charged based on budgeted percentages rather than actual
activity. Although the policy prior to May 2014 required the reporting of actual
activity, managers interviewed stated that they were unaware the system allowed
for the override of assigned codes. Interviews with selected staff confirmed that
employees did not override the assigned codes prior to May 2014.
Employees certified their time by signing a paper timesheet both before and after
May 2014. However, the timesheet only records regular or leave hours, and does
not record hours by grant or cost objective. Changes to policies and procedures,
effective May 2014, require employees to track and input time on a daily basis
using the statewide online system. Based on these changes, each employee is
assigned a labor cost code based on the employee's funding source or grant.
Employees are required to override the assigned code and enter hours worked
based on actual activity. The system now provides a Timesheet Audit and Control
Report that documents employee hours by grant. The report documents the
employee's assigned codes and override activity. Supervisors review the
Timesheet Audit and Control Report and lock the employee's time. Once locked,
the employee is unable to make changes.
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Our testing showed that, since May 2014, there is evidence supporting that labor
hour charges are based on actual activity. Review of the Timesheet Audit and
Control Report indicated that employees used the override codes. Also, selected
employees confirmed in interviews that they now track their time based on actual
activity and override assigned codes as necessary. However, if an employee does
not log onto the system daily, their time will be charged to their primary assigned
code, and must be updated with actuals prior to submission.
Employee Certification
We identified some employees who charged 100 percent of their time to one
grant. Title 2 CFR Part 225, Section 8.h.(3), requires periodic certification of
labor charges for employees charging to a single federal award or cost objective.
The certification should state that the employees worked solely on that program
for the period covered by the certification. Prior to July 2013, PHD required
employees who work on federal awards to certify their labor charges. Since July
2013, PHD has not required employees to sign certifications. With employees
charging and attesting to actual activities, periodic certifications are no longer
needed. Our review of a sample of certifications showed that the certifications are
not sufficient to meet the 2 CFR Part 225 requirements. Therefore, we are unable
to accept the certifications as support for the costs claimed prior to May 2014. We
base our conclusion on the following:
•	Employees who charged to federal grants signed certifications regardless
of whether they worked multiple charge codes or just one charge code.
•	Time charges for all employees (whether charging 100 percent to a single
federal grant or not) were based on budget estimates.
Recommendations
We recommend that the Regional Administrator, Region 10:
1.	Disallow and recover $12,136,214 of unsupported labor and related fringe
benefits and indirect costs claimed prior to May 2014 under the Drinking
Water State Revolving Fund, Public Water Supply Supervision and Lead-
Based Paint programs, unless the Oregon Health Authority's Public Health
Division can provide support for the labor charges that complies with
2 Code of Federal Regulations Part 225.
2.	Identify and recover any unsupported costs claimed prior to May 2014
under any other Oregon Health Authority Public Health Division-
administered EPA grants not covered by this audit, or the cost-impact
determination.
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Auditee Response
The Oregon Health Authority's PHD stated that the draft report was factual, and it
concurred with the findings. However, PHD did not agree with the
recommendation to disallow the labor costs for the programs reviewed. In support
of its response, PHD provided a comparison of payroll expenses for the 2-year
period prior to implementing its current process to the 1-year period after
implementation. PHD stated that the analysis shows limited differences in payroll
expenses before and after implementation of its current process, which includes
the override of codes to reflect actual charges.
Under the drinking water programs, staff that are assigned to drinking water work
funded by EPA grants are housed in a single organizational unit. PHD stated that
drinking water programs have received generally stable federal funding and
staffing over recent years. PHD states that, given the centralized organization of
drinking water staff and the stability of funding and staffing, the analysis
demonstrates that payroll expenses are not materially different before and after
the work charge code override implementation.
PHD stated that the Lead-Based Paint program's funding and expenditures are
more variable. Staff-work assignments fluctuate as needed to meet specific grant
deliverables in any given year. Vacancies also contributed to the payroll variation.
Overall, PHD believes it expends funds for purposes outlined in EPA-approved
work plans, and that its work performance has been verified by periodic reviews
by EPA Region 10. PHD also stated that it has brought labor charging into full
compliance with EPA grant requirements. For these reasons, PHD believes
disallowing and recovery of expended funds by the EPA is not warranted.
EPA Comments
EPA Region 10 stated it would not respond to the draft report and understands it
will have the opportunity to respond to the final report.
OIG Comment on Auditee Response
We acknowledge that the funding for the drinking water programs has been
stable. We also acknowledge that PHD has brought its labor-charging practice
into compliance with federal grant requirements. We reviewed PHD's analysis of
payroll expenses and believe that PHD needs to provide additional documentation
to support its conclusion that disallowing and recovery of expended funds is not
warranted.
As discussed in Chapter 2 of this report, 2 CFR Part 225, Appendix B, Sections
8.h.(4), 8.h.(5)(a) and 8.h.(5)(d) provide specific requirements pertaining to labor
charging. The fact that there are limited differences in payroll expenses before and
16-P-0313
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after implementation of override codes does not address the finding that PHD
charged labor and related fringe benefits and indirect costs based on budget
allocations rather than actual activities performed. The data provided by PHD only
include EPA payroll expenses and do not provide other sources of funding
available. The analysis should provide the distribution of employee hours worked
for all available funding sources, including state matching funds. The analysis
should demonstrate that distribution of hours to all activities or cost objectives prior
to May 2014 is comparable to the distribution of hours from May 2014 forward.
Thus, we consider Recommendation 1 to be unresolved.
PHD did not address Recommendation 2, concerning costs claimed prior to
May 2014 under any other PHD-administered EPA grants not covered by this
audit. Therefore, we also consider Recommendation 2 to be unresolved.
We held an exit conference with PHD and EPA Region 10 on August 22, 2016, to
discuss the findings and recommendations.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Potential
Planned	Monetary
Rec. Page	Completion	Benefits
No. No.	Subject	Status1 Action Official	Date	(In $000s)
1	6 Disallowandrecover$12,136,214ofunsupportedlaborand	U Regional Administrator,	$12,136
related fringe benefits and indirect costs claimed priorto	Region 10
May 2014 underthe Drinking Water State Revolving Fund,
Public Water Supply Supervision and Lead-Based Paint
programs, unless the Oregon Health Authority's Public Health
Division can provide support for the labor charges that complies
with 2 Code of Federal Regulations Part 225.
2	6 Identify and recover any unsupported costs claimed prior to	U Regional Administrator,
May 2014 under any other Oregon Health Authority Public	Region 10
Health Division-administered EPA grants not covered by this
audit, or the cost-impact determination.
0 = Recommendation is open with agreed-to corrective actions pending.
C = Recommendation is closed with all agreed-to actions completed.
U = Recommendation is unresolved with resolution efforts in progress.
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Appendix A
Grants Selected for Review
Grant
number
Project
start date
Project end
date
Closed date
Total project
costs
Award
amount
Budgeted
labor
Budgeted
fringe
benefits
Budgeted
labor and
fringe
benefits
EPA's share
of labor and
fringe
benefits
F00031215
10/01/2014
09/30/2015
Open
$2,325,515
$1,624,000
$769,665
$426,394
$1,196,059
$835,256
FS98009012
08/01/2012
07/31/2015
Open
14,265,412
9,863,460
1,155,545
640,173
1,795,718
1,241,604
FS98009013
08/02/2013
07/31/2018
Open
10,947,300
8,421,000
624,614
346,037
970,651
746,655
FS98009014
07/01/2014
06/30/2019
Open
16,331,900
12,563,000
1,638,491
875,942
2,514,433
1,934,179
PB00J90401
10/01/2014
09/30/2015
Open
238,022
238,022
108,645
60,406
169,051
169,051


Subtotal

$44,108,149
$32,709,482
$4,296,960
$2,348,952
$6,645,912
$4,926,745
F00031212
10/01/2011
09/30/2012
01/07/2013
$2,233,332
$1,674,500
$754,072
$417,756
$1,171,828
$878,609
F00031213
10/01/2012
09/30/2013
01/02/2014
2,233,332
1,582,000
754,072
417,756
1,171,828
830,074
F00031214
10/01/2013
09/30/2014
01/07/2015
2,248,439
1,624,000
762,749
422,553
1,185,302
856,119
FS98009008
01/01/2009
12/31/2013
03/25/2014
14,294,400
11,912,000
834,413
391,255
1,225,668
1,021,390
FS98009009
09/01/2009
08/30/2013
12/23/2013
14,294,400
11,912,000
1,094,751
582,406
1,677,157
1,397,631
FS98000010
07/01/2010
06/30/2014
02/03/2015
16,287,600
13,573,000
1,053,906
530.114
1,584,020
1,320,017
FS98009011
11/01/2011
10/31/2014
02/25/2015
12,228,400
9,418,000
808,598
447,964
1,256,562
967,772
PB96054201
10/01/2007
09/30/2012
01/13/2014
1,889,520
1,580,121
1,016,851
523,298
1,540,149
1,540,149
PB96054202
10/01/2012
09/30/2012
01/21/2015
686,404
557,814
339,477
188,070
527,547
527,547


Subtotal

$66,395,827
$53,833,435
$7,418,889
$3,921,172
$11,340,061
$9,339,308


Total

$110,503,976
$86,542,917
$11,715,849
$6,270,124
$17,985,973
$14,266,053
Source: OIG-generated table from data obtained from the EPA's Integrated Grants Management System.
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Appendix B
Oregon Health Authority PHD's
Response to Draft Report
[Submitted by email July 6, 2016]
John M. Trefry
Director, Forensic Audits
Office of Inspector General
U.S. EPA
Washington D.C. 20460
Dear Mr. Trefry:
We received and reviewed the Draft Report, Oregon Health Authority's Prior Labor Charging
Practices Did Not Meet Requirements. The draft report is factual, and we concur with the
findings. While we do not concur with the recommendations to disallow the labor costs for the
programs reviewed, we offer this response and supporting documentation.
Please find attached our analysis of payroll expenses for the two years prior to implementing
work charge code overrides, compared to the one year period after implementing overrides.
Payroll expenses are presented by EPA grant type for both the Lead Program and Drinking
Water Services. Detailed documentation is attached supporting the payroll expenses cited. This
analysis shows that there are limited differences in payroll expenses before and after
implementation of labor charge overrides.
Oregon Health Authority (OHA) Public Health Division staff assigned to drinking water work
funded by EPA grants is housed in a single organizational unit, Drinking Water Services (DWS),
located within the Center for Health Protection. The only exception is several staff that conduct
drinking water laboratory accreditation required under our primacy agreement with EPA, and
these staff are located in the Public Health Laboratory within the Center for Health Practice.
Drinking Water Services has generally stable federal funding and staffing over recent years, as
well as generally stable work assignments outlined in detail in annual work plans that are
approved by EPA Region X as part of the annual grant award process. In addition, EPA region
project officers review DWS performance periodically for conformance to approved work plans.
Given the centralized organization of drinking water staff and the stability of funding and work
plan functions, the attached analysis demonstrates that payroll expenses are not materially
different before and after work charge code override implementation. The limited variation that
is evident year-to-year results from individual staff work assignments necessary to meet
workloads during specific time periods, notably in the local assistance set asides for capacity
development and protection implementation. In addition, staff were assigned more tasks in set
aside work as we strove to expend legacy Unliquidated Obligations as requested by EPA.
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The Lead-based Paint Program's funding and expenditures are more variable. Grant funding
from the EPA has steadily decreased since 2012. Staff work assignments fluctuate as needed to
meet specific grant deliverables in any given year, and vacancies also contributed to the payroll
variation. A 2013 EPA audit of the Lead-based Paint Program found that OHA charged a very
small amount of payroll to the grant for answering general phone calls about toxics. Due to the
small amount involved, EPA declined reimbursement of those grant funds, and OHA assured
that that this work is charged to other accounts.
In conclusion, we expend EPA grant funds for purposes outlined in EPA-approved work plans.
Our work performance has been verified by periodic reviews by EPA Region X. We have
brought labor charging into full compliance with EPA grant requirements. For these reasons, we
believe disallowing and recovery of expended funds by EPA is therefore not warranted.
Sincerely,
Jere High
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Appendix C
Distribution
Regional Administrator, Region 10
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
Deputy Regional Administrator, Region 10
Director, Office of Water and Watersheds, Region 10
Director, Office of Compliance and Enforcement, Region 10
Director, Grants and Interagency Agreements Management Division, Office of Administration
and Resources Management
Audit Follow-Up Coordinator, Region 10
Administrator, Center for Health Protection, Oregon Health Authority
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