§ 175.27 Use of funds.

(a) Federal funds allocated to an institution under this part may be used by the institution (1) to pay the Federal share of compensation for the services rendered by its eligible students employed in its eligible Work-Study Program, (2) as payments in lieu of reimbursement for its expenses in administering the program during the fiscal year, and (3) to transfer to the Supplemental Educational Opportunity Grant Program pursuant to § 175.26.

(b) An institution of higher education shall be entitled to use as payment in lieu of reimbursement for its administrative expenses for each fiscal year for which it receives an allocation under § 175.4 an amount equal to not more than three percent of the compensation earned by students, including the Federal share from its allocation for that fiscal year and the institutional share for both on and offcampus programs. However the aggregate amount paid to an institution in lieu of expenses for administration under this part and the Supplemental Educational Opportunity Grants Program plus the amount withdrawn for such purposes from the institution's National Direct Student Loan fund may not in the aggregate exceed $125,000 for any fiscal year.

(42 U.S.C. 2754; 20 U.S.C. 1088b)

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§ 175.28 Fiscal procedures and records. (a) Fiscal procedures. (1) The institution shall administer the College Work-Study Program in such manner as to provide for an adequate system of internal controls. The var ious administrative procedures shall be divided so as to provide for a system of checks and balances under which no person will be responsible for all aspects of the program. The functions of authorizing payment and disbursing funds shall be divided in such a fashion that no office has responsibility for both functions with respect to any particular student aided under the program.

(2) If a fiscal agent is utilized by the institution, its function must be limited solely to the performance of ministerial acts.

(3) Physical segregation of cash depositories for Federal funds which are provided to an institution is not required. However, institutions shall give notice to any bank in which they deposit Federal funds of all accounts in that bank in which such funds are deposited. This notice can be accomplished in either of the following ways:

(i) Include in the name of the account the fact that Federal funds are deposited therein; or

(ii) Send a letter to the bank listing the accounts in which Federal funds will be deposited. A copy of this letter must be retained in the institution's files.

(b) Records and reporting. (1) Each institution shall establish and maintain on a current basis, adequate records which reflect all transactions with respect to the program and shall establish and maintain such general ledger control accounts and related subsidiary accounts as are necessary to identify separately all transactions relating to the program. Such records shall:

(i) Be maintained in such a manner as to identify all program transactions separately from other institutional funds and activities;

(ii) Be reconciled no less frequently than monthly;

(iii) Include a weekly (or monthly) time record showing hours worked per day for each student. This form must contain a certification by an official of the institution (or off-campus agency) who is the student's supervisor stating that the student has worked the number of hours listed and whether the work has been performed in a satisfactory manner;

(iv) Include a payroll voucher containing sufficient information to support all payroll disbursements;

(v) Include a noncash contribution record to support by adequate documentation any payment or partial payment of the institution's share of the student's earnings which has been made in the form of services and equipment as permitted by § 175.23;

(vi) Afford ready identification of each student's account and the status thereof;

(vii) Be adequate to demonstrate the eligibility of every student aided under the program;

(viii) Indicate the amount of need determined for each student and the way that need has been met; and

(ix) Identify the institutional officer who made the determination of such need.

(2) An institution shall submit an annual Institutional Fiscal-Operations Report and such other reports and information in such form and at such times as the Commissioner may require in connection with the administration of this part and shall comply with such requirements as the Commissioner may find necessary to insure the correctness of such reports.

(c) Retention of records. (1) Records. Each institution shall keep intact and accessible records relating to the receipt and expenditure of Federal funds in accordance with section 434(a) of the General Education Provisions Act (20 U.S.C. 1232c), including all accounting records and related original and supporting documents that substantiate costs charged to the award and such records required by § 175.9(e).

(2) Period of retention. Except as provided in paragraph (c)(4) of this section, the records specified in paragraph (c)(1) of this section shall be retained for 5 years after the date of the submission of the annual Institutional Fiscal-Operations Report.

(3) Microfilm copies. An institution may substitute microfilm copies in lieu of original records in meeting the requirements of this section.

(4) Audit questions. The records involved in any claim or expenditure which has been questioned by Federal audit shall be further retained until resolution of any such audit questions; provided, however, that records need not be retained if they relate to a grant with respect to which actions by the United States to recover for diversion of Federal funds are barred by the statute of limitation in 28 U.S.C. 2415(b).

(5) Audit and examination. The Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, shall have access, for the purpose of audit and

examination, to the records specified in paragraph (c)(1) of this section and to any other pertinent books, documents, papers, and records of the recipient.

(d) Audits-Non-Federal. All of an institution's transactions involving its Work-Study Program funds shall be audited by the institution or at the institutions' direction to determine, at a minimum, the fiscal integrity of financial transactions and reports, and whether such transactions are in compliance with applicable laws and regulations. Such audits shall be performed in accordance with the Department of Health, Education, and Welfare "Audit Guide" for student financial aid programs, and shall be scheduled with reasonable frequency, usually annually, but not less frequently than once every two years, considering the size and the complexity of the activity of the program.

(e) Such audit reports shall be submitted to the regional office of the Department of Health, Education, and Welfare Audit Agency serving the region in which the institution is located for its review. The Audit Agency and the Commissioner shall also be given access to records or other documents as may be necessary to review the results of such audits.

(42 U.S.C. 2754; 20 U.S.C. 1232c)

§ 175.29 Termination and suspension.

(a) General. If the Commissioner finds that any of the assurances or representations made by an institution in connection with the administration and operation of the College WorkStudy Program is incomplete or inaccurate in any material respect or that there has been a failure to comply with any of the provisions of this part, he may, after giving the institution notice and an opportunity for a hearing, terminate the agreement entered into pursuant to § 175.8 or take such other actions as may be necessary and appropriate to protect the interest of the United States. The termination of the institution's participation in the program shall not affect the obligations previously incurred by either party under that agreement or this part. An obligation shall be considered

the Organization. The Institution will inform the Organization of the maximum number of hours per week a student may work.

Students will be made available to the Organization by the Institution for performance of specific work assignments. Students may be removed from work on a particular assignment or from the Organization by the Institution, either on its own initiative or at the request of the Organization. The Organization agrees that no student will be denied work or subjected to different treatment under this agreement on the grounds of race, color, national origin, or sex, and that it will comply with the provisions of the Civil Rights Act of 1964 (P.L. 88-352; 78 Stat. 252) and Title IX of the Education Amendments of 1972 (P.L. 92318) and the Regulations of the Department of Health, Education, and Welfare which implement those Acts.

(Where appropriate any of the following 3 paragraphs or other provision may be included.)

(1) Transportation for students to and from their work assignments will be provided by the Organization at its own expense and in a manner acceptable to the Institution.

(2) Transportation for the students to and from their work assignments will be provided by the Institution at its own expense.

(3) Transportation for students to and from their work assignments will not be provided by either the Institution or the Organization.

(Whether the Institution or the Organization will be considered the employer of the students covered under the agreement depends upon the specific arrangement as to the type of supervision exercised by the Organization. It is advisable to include some provision to indicate the intent of the parties as to who shall be considered the employer. As appropriate, one of the following two paragraphs may be included.)1

(It should be noted that although the following paragraphs attempt to fix the identity of the employer, they will not necessarily be determinative if the actual facts indicate otherwise. Additional wording which specifies the employer's responsibility in case of injury on the job may also be advisable, since Federal funds are not available to pay for hospital expenses or claims in case of injury on the job. In this connection it may be of interest that one or more insurance firms in at least one State have in the past been willing to write a workmen's compensation insurance policy which covers a student's injury on the job regardless of whether it is the Institution or the Organization which is ultimately determined to have been the student's employer when he was injured.)

(1) The Institution shall be deemed the employer for purposes of this agreement. It has the ultimate right to control and direct the services of the student for the Organization. It shall also determine that the students meet the eligibility requirements for employment under the College Work-Study Program, assign students to work for the Organization, and determine that the students do perform their work in fact. The Organization's right shall be limited to direction of the details and means by which the result is to be accomplished.

(2) The Organization shall be deemed the employer for purposes of this agreement. It has the right to control and direct the services of the student, not only as to the result to be accomplished, but also as to the means by which the result is to be accomplished. The Institution shall be limited to determining that the students meet the eligibility requirements for employment under the College Work-Study Program, to assigning students to work for the Organization, and to determining that the students do perform their work in fact.

(Wording of the following nature may be included, as appropriate, to locate responsibility for payroll disbursements and payment of employers' payroll contributions.) Compensation of students for work performed on a project under this agreement will be disbursed-and all payments due as an employer's contribution under State or local workmen's compensation laws, under Federal or State social security laws, or under other applicable laws, will be madeby the (Organization), (Institution), (strike one).

(Where appropriate any of the following paragraphs may be included.)

(1) At such times as are agreed upon in writing, the Organization will pay to the Institution an amount calculated to cover the Organization's share of the compensation of students employed under this agreement.

(2) In addition to the payment specified in paragraph (1) above, at such times as are agreed upon in writing, the Organization will pay, by way of reimbursement to the Institution, or in advance, an amount equal to any and all payments required to be made by the Institution under State or local workmen's compensation laws, or under Federal or State social security laws, or under any other applicable laws, on account of students participating in projects under this agreement.

(3) At such times as are agreed upon in writing, the Institution will pay to the Organization an amount calculated to cover the Federal share of the compensation of students employed under this agreement and paid by the Organization. Under such an arrangement the Organization will furnish to the Institution for each payroll period the following records for review and retention:

(a) Time reports indicating the total hours worked each week and containing the supervisor's certification as to the accuracy of the hours reported and of satisfactory performance on the part of the students;

(b) A payroll form identifying the period of work, the name of each student, his rate per hour, the number of hours worked, his gross pay, all deductions and net earnings, and the total Federal share applicable to each payroll; 2 and

(c) Documentary evidence that students received payment for their work, such as photographic copies of cancelled checks.

§ 176.1 Purpose.

It is the purpose of this part to provide, through institutions of higher education, Supplemental Educational Opportunity Grants (Supplemental Grants) to assist in making available the benefits of post-secondary education to qualify students, who for lack of financial means of their own or of their families, would be unable to obtain such benefits without such a grant.

(20 U.S.C. 1070b)

§ 176.2 Definitions.

For the purposes of this part:

(a) "Academic year" means a perica of time generally of not less than 8 months in which a full-time student would normally be expected to complete the equivalent of two semesters, two trimesters, three quarters, or 900 clock hours of instruction.

(b) "Act" means Title IV-Part A Subpart 2 of the Higher Education Act of 1965, as amended.

(c) "Clock hour" means a period of time which is the equivalent of (1) a 50 to 60 minute class, lecture or recitation or (2) a 50 to 60 minute faculty supervised laboratory, shop training, or internship.

(d) "College Work-Study Program" is a federally-supported program of part-time employment authorized by Title IV, Part C, of the Higher Education Act of 1965.

(42 U.S.C. 2751-2756)

an

(e) "Continuing grant" means award of a Supplemental Educational Opportunity Grant (Supplemental Grant) to a student that does not qualify as an "initial grant" as defined in § 176.2.

(f) "Dependent student" means any student who does not qualify as a "self-supporting or independent student" as defined in § 176.2.

(g) "Expected family contribution of a dependent student" means the sum of the amounts which reasonably may be expected from the student and his spouse to meet the student's cost of education as described in § 176.11 and the amount which reasonably may be expected to be made available to him by his parents for such purpose.