ity. Before determining the relative priority or Federal share for any application for grant assistance under Part A, Title VI of the Act, the State commission shall satisfy itself that the data contained in the application are valid, and that the institution (or each institution in a combination of institutions) and the project meet the basic eligibility requirements set forth in the Act and the regulations governing the administration of the Act. In any case where in the opinion of the State commission a question may be raised as to the eligibility of the institution, or of a combination of institutions, or of a project, the State commission shall promptly forward a copy of the application to the Office of Education for clarification of such eligibility. In any such case, the State commission shall continue to process and rank such applications considered as of the same closing date until receipt of notification by the Office of Education of the disposition of the eligibility question.

(20 U.S.C. 1125(d).)

(d) Determination of relative priorities and Federal shares. All applications received by each specified closing date, and verified by State commission review to be accurate and complete, shall be considered together and assigned relative priorities and recommended Federal shares in accordance with the provisions of the State plan. (20 U.S.C. 1125(b).)

(e) Procedures where funds are insufficient to provide full Federal shares for all eligible projects. In any case where the funds available in a State allotment for projects in either category considered as of a particular closing date are insufficient to cover all eligible applications, the State commission shall nevertheless determine the full Federal share, calculated according to the State plan, for all projects in their order of relative priority, in each category until the remaining available funds are insufficient to provide the full Federal share as calculated for the next project in order of priority. The amount of the remaining funds shall be offered as a reduced Federal share for the next project in order of rela

tive priority for which less than the full Federal share as calculated is available. An applicant offered such a reduced Federal share shall be entitled to reduce the scope of the project to a level not less than that required to qualify under the State plan for such a Federal share amount.

(20 U.S.C. 1124(b).)

(f) Recommendation by State Commissions. Promptly upon completing its consideration of applications as of each closing date, and no later than March 31 of each Federal fiscal year, each State Commission will forward to the Commissioner:

(1) A current project report, on forms supplied by the Commissioner, listing applications in each category received or carried over from the previous closing date, each application returned to the applicant and the reason for return of such application, each application considered as of the closing date, and the priority and Federal share determined according to the State plan for each project considered;

(2) The application form and exhibits in the number of copies requested by the Commissioner for each project assigned a priority high enough to qualify for a Federal grant within the amount of funds available in the allotment for the State; and

(3) Copies of correspondence documenting the offering and either the acceptar.ce or rejection of a reduced Federal share pursuant to paragraph (e) of this section.

(20 U.S.C. 1123(3).)

(g) Notification to applicants. The State commission shall promptly notify each applicant of the result of all final determinations regarding its application as of each closing date and the records of official State commission proceedings shall be a matter of public record within the State.

(20 U.S.C. 1123.)

(h) Disposition of applications which are not recommended for grants. Applications which are not recommended for a grant within the fiscal year for which they are filed, shall be retained by the State commission until such commission is notified

that all recommended applications for such fiscal year have been approved by the Commissioner. New applications shall be required to be filed each fiscal year for each project which does not receive a recommendation for a grant and which the applicant desires to have reconsidered in a subsequent year.

(20 U.S.C. 1124(a).)

(i) Offer and acceptance of grant. For a project application which meets all eligibility requirements the Commissioner will approve the application and reserve Federal funds from the appropriate State allotment and will prepare and send to the applicant a grant award which sets forth the pertinent terms and conditions, and which is contingent upon acceptance by the applicant within a specified period of time.

(20 U.S.C. 1126.)

(j) Amendment of project applications. Any time prior to a closing date for which an application is to be considered, the applicant may make changes in the application by written notification to the State commission. After any such closing date, no changes in applications shall be permitted, except corrections or submission of additional data as requested by the State commission and reductions in project scope as provided for in paragraph (e) of this section. Once an application has been recommended for a grant by a State commission, no increase in recommended Federal grant funds for the particular project will be considered, except where funds become available to supplement reduced Federal shares for projects for which the full Federal share calculated under the State plan was not available at the time the project application was recommended by the State commission.

(20 U.S.C. 1125(c).)

§ 171.5 Criteria for standards and methods to determine relative priorities of eligible projects.

(a) The State plan shall set forth a single set of standards for determining relative priorities for Category I grants and for Category II grants. Sep

arate applications, however, must be filed with respect to each category. Such standards shall include the following, each of which shall be assigned at least the indicated percentage of the total weight possible to be assigned to all standards for such projects.

(1) One or more standards dealing with relative financial needs of the applicant institution or combinations of institutions (at least 30 percent of total weight) with priority advantage given to applicant institutions with relatively greater financial need.

(2) One or more standards designed to measure the extent to which the applicant's program will be improved by the proposed project (at least 10 percent of total weight).

(b) The State plan may include additional standards for determining relative priorities of projects which are not inconsistent with the criteria set forth in paragraph (a) of this section and which will carry out the purposes of the Act.

(c) Unless otherwise provided for in the State plan, in the case of any new institution which has not been in operation for at least one year preceding the year in which the application is filed, the State plan shall provide for assigning one-half of the points provided for in the standards required by paragraph (a) (1) and (2) of this section.

(d) The methods for application of the standards shall provide for the assignment of point values for each standard applied, and shall provide specific methods for determining the number of points which each application considered shall be awarded for each standard including provisions for averaging priority factors for individual institutions covered in an application for a combination of institutions on a weighted or composite basis according to semester credit hour equivalents. The assignment of points for each standard may be by any one of the following methods, or by similar methods, a different one of which may be used in connection with each standard.

(1) Applications may be ranked according to relative performance for the standard, and assigned a point score for relative rank.

(2) Applications may be compared to a scoring table for the standard and assigned points accordingly. In connection with standards required by paragraph (a)(1) of this section, State plans may provide for separate scoring scales for applications for different sizes or different educational or functional types of institutions if such tables are supported by normative data based on recent research and analysis.

(3) Applications may be compared to a fixed requirement for the standard, and assigned points if they meet the requirement or denied points if they do not. This type of scoring should be used where comparison against the standards involve a "yes-no" decision.

(e) The method of application of the standard shall provide also for determination of relative priorities on the basis of the total of the points earned by each application for each applicable standard and shall specify factors to be applied in determining which application shall receive the higher priority in the case of identical scores for applications where funds available in the applicable State allotment are insufficient to provide full Federal shares for both or all of the applications.

(f) The standards and methods for determining relative priorities must be developed on the basis of information which is to be submitted on the application form prescribed by the Commissioner, required by the State commission to be submitted in connection with the filing of an application, or contained in reports or publications readily available to the State commission and the institutions within the State. In no event shall an institution's readiness to admit out-of-State students or the number of such out-ofState students be considered as a priority factor adverse to such institution, and in no event may the nature of the control or sponsorship of the institution be considered as a priority factor either in favor of, or adverse to, an institution.

(20 U.S.C. 1124(a).)

§ 171.6 Criteria for standards and methods to determine Federal shares of eligible projects.

(a) The State plan shall prescribe the standards and methods in accordance with which the State commission shall determine the Federal share of such costs. In no event may the Federal share of a project exceed the percentage of the eligible project cost specified by the Act.

(20 U.S.C. 1124(a).)

(b) The State plan may provide for Federal shares of up to 80 percent of the project cost for institutions proving an insufficiency of resources to otherwise participate in the program under this part and an inability to acquire such resources. Any such provision in a State plan shall include specification of criteria which will have to be satisfied before such a determination will be made by the State commission. The Federal share may in no case be increased above 50 percent except where such provisions are included in the State plan as approved by the Commissioner. In the instance of an applicant qualifying as a developing institution pursuant to Title III of the Act, the State commission may provide for special consideration.

(20 U.S.C. 1124(b).)

(c) Standards and methods for determining the Federal share pursuant to paragraphs (a) and (b) of this section (1) must be clearly defined and simple to apply; (2) must involve the use only of information which is to be submitted on the application form prescribed by the Commissioner, required by the State commission to be submitted on supplemental State forms to accompany the application, or contained in reports or publications readily available to the State commission and the institutions of higher education in the States; (3) must be such as will enable an applicant to calculate in advance (on the assumption that sufficient funds will be available to cover all applications) the Federal share of the estimated eligible project costs which the State commission will certify to the Commissioner if it recommends the project for a Federal grant; and (4) must be consistent with criteria pub

lished by the Commissioner with respect to the determination of relative priorities among projects and be promotive of the purposes of Part A, Title VI of the Act.

(20 U.S.C. 1124.)

§ 171.7 Fiscal control and fund accounting procedures.

(a) State commissions. Each State plan shall contain specific information regarding fiscal control and fund accounting procedures, as required by the Commissioner, to ensure proper disbursement of and accounting for Federal funds which may be paid to the State commission for expenses necessary for the proper and efficient administration of the State plan.

(20 U.S.C. 1123(5).)

(b) Institutions and combinations of institutions. Applicants shall maintain adequate accounting and fiscal records and accounts of all funds provided from any source to pay the cost of equipment, materials, and minor remodeling for each approved project, and audit of the financial records of the institution by the Commissioner's designated representative shall be permitted and facilitated by applicants at any reasonable time. In connection with combinations of institutions, fiscal control shall be the responsibility of the agency or institution designated or created by the group of institutions to file the application.

(20 U.S.C. 1123(5)(A).)

§ 171.8 Retention of records.

State commissions shall establish a complete case file on each Title VIPart A application received; inform applicants of official actions and determinations by letter or similar type of correspondence, and retain records regarding each case for at least three years after final action with respect to the application has been taken by the State commission. In addition, each State commission shall maintain a full record of all hearings on appeals pursuant to Section 604(3) of the Act, and all proceedings by which it establishes relative priorities and recommended Federal shares for eligible projects considered as of each specified closing

date and shall retain such records for at least three years.

(20 U.S.C. 1124(5)(B).)

§ 171.9 State plans.

(a) The Commissioner shall approve a State plan only after he has received satisfactory assurance and explanation regarding the basis on which the State commission submitting the plan meets the requirements of section 603 of the Act. A new or revised State plan submitted in accordance with section 603 shall be submitted on forms or in a format supplied by the Commissioner and shall contain all provisions required by the Commissioner pursuant to section 603 of the Act and other sections of the regulations in this part, together with such additional organizational and administrative information as the Commissioner may request.

(b) All proposed amendments to the State plan shall be submitted to the Commissioner for his approval in such form and in accordance with such instructions as are established for that purpose. Such amendments shall apply uniformly to all applications to be considered together as of any closing date, and, unless otherwise provided in the State plan, shall become effective immediately upon approval by the Commissioner, except that in no event shall any amendment which affects the standards and methods for determining priorities or Federal shares or any amendment providing for an additional closing date or for the change in an existing closing date become effective sooner than 60 days after the date the proposal to make such amendment is received by the Commissioner and 30 days after the date of the Commissioner's approval of the amendment as part of the State plan: provided, however, that amendments which are required by amendments of the Act or of these regulations or are designed to implement promptly amendments of the Act or of these regulations may be made effective immediately upon their approval by the Commissioner.

(c) State plan amendments conforming to the provisions in these regulations regarding closing dates and determination of priorities shall be sub

mitted and approved prior to State commission actions on any Part A, Title VI applications.

(20 U.S.C. 1123.)

§ 171.11 Determination of costs eligible for Federal participation.

(a) Projects under this part may cover only equipment, materials and directly associated minor remodeling which are consistent with the plan for improvement of instruction set forth in the approved project applications. (20 U.S.C. 1124(b).)

(b) Costs eligible for Federal participation in connection with any approved project shall include only those costs which are for items set forth in paragraph (a) of this section, and are incurred in accordance with § 100a.80 of this chapter. Only costs incurred after filing of the application with the State commission and not later than the end of the 12th month after the grant is approved by the Commissioner or under contracts entered into within such time, shall be eligible for Federal grant participation. Costs under agreements for the leasing of equipment and materials shall be further limited to those covering a period not exceeding 12 months after such agreements are entered into. Expenditures in which Federal participation is claimed also may include the cost of raw or processed materials or component parts to be made into finished products or into complete equipment units, including the cost (above and beyond salaries of regular employees of the applicant) of making and assembling such equipment.

(20 U.S.C. 1124(b).)

(c) Budgets for projects as approved shall be based upon tentative equipment lists which will be required to be submitted with each application. Applicants may substitute or add other eligible items which are similar in nature or serve the same defined or basic instructional function and are in line with the plan for improvement of undergraduate instruction set forth in the application as originally approved. Examples of possible reasons are as follows:

(1) The original instructional goal will be better accomplished by new items to be substituted.

(2) Limitations of availability or source of supply may compel substitution.

(3) Specifications of original items cannot be met by manufacturers.

(4) Substitutions needed to accommodate changes in instructional curriculum or academic personnel.

(5) Advances in educational technology may result in availability of newer or more appropriate equipment. (20 U.S.C. 1125(a).)

GUIDELINES FOR INSTRUCTIONAL EQUIPMENT GRANTS FOR INSTITUTIONS OF HIGHER EDUCATION