basis. If the State or local agency utilizes other than a cash accounting basis, the State plan shall indicate the time period or other conditions governing the liquidation of obligations. Accounts and supporting documents relating to any adult basic education programs involving Federal financial participation shall be adequate to permit an accurate and expeditious audit of the program. (b) Audit of expenditures. All expenditures claimed for Federal financial participation shall be audited either by the State, a State-authorized audit agency, or by an independent certified public accountant. The State plan shall indicate how the expenditures of local educational agencies and other agencies participating under the State plan will be audited; and, if the audit is to be carried out by other than the State or its authorized audit agency, how the State agency will secure such information. § 166.14 Disbursement of funds. The State plan shall state whether funds are paid to participating agencies under the plan on the basis of either (a) a reimbursement for actual expenditures already made, (b) an advance prior to the expenditure of funds, or (c) both. § 166.15 Policies and procedures for State agency administrative review and evaluation. The State plan shall contain a statement of the policies and procedures to be followed by the State agency in making periodic, systematic and objective administrative reviews and evaluations in order to evaluate the status and progress of the program in terms of the overall objectives stated in the plan. The State plan shall provide that the State agency will make and submit to the Commissioner the reports described in § 166.47; and that the State agency will maintain records in support thereof as required under § 166.40. § 166.17 Amendment. The State plan shall provide that it will be amended to reflect any material changes in the program provided for by such plan, any changes in pertinent State law, or any changes in the designation or organization of operations, policies, and methods of administration to be followed by the State agency; and that amendments will be submitted and certified in the same manner as the State plan. § 166.18 Certification of the State plan. (a) Certification by State agency. The State plan and all amendments thereto shall include a certification by the officer of the State agency authorized to submit the State plan that the plan or amendment has been adopted by the State agency and that the plan, or plan as amended, will constitute the basis for operation and administration of the program in which there is Federal financial participation. (b) Certification by State Attorney General. (1) The State plan and all amendments thereto shall include a certification by the State's Attorney General, or other official designated in accordance with State law to advise the State agency on legal matters, that all plan provisions and amendment thereto are consistent with State law. He shall further certify the official title of the officer authorized to submit the State plan; that the State agency named in the plan has authority under State law to submit the State plan; that the State Treasurer (or, if here be no State Treasurer, the officer identified by title exercising similar functions for the State) has authority under State law to receive, hold, and disburse Federal funds under the State plan. (2) There shall be included as part of the plan copies of, or citations to, all pertinent laws and interpretations of laws by appropriate State officials or courts relevant to the State plan provisions. All such copies or citations shall be certified to be correct by the Attorney General or other appropriate State official. Subpart C-Federal Financial § 166.25 Federal payments to a State. The Commissioner will determine the amount of each State's allotment in accordance with the provisions of section 305(a) of the Act. Payments will be made only after approval of the State plan and the submission of estimates and reports required under section 306(a) (6) of the Act and § 166.47 (a) and (b). Payments will be made in advance or by way of reimbursement, at such time or times and in such installments as the Commissioner may determine, after necessary adjustment on account of any previously made overpayment or underpayment. which are made by the State or any participating agency in furtherance of the purpose of the Act and which do not inure to the personal benefit of any donor. § 166.26 Approval of State plan. The Commissioner shall approve a State plan which he determines complies with the applicable provisions of the Act and the regulations, and shall so notify the State agency. The Commissioner shall not finally disapprove a State plan or amendment thereto without first affording the State reasonable notice and opportunity for a hearing. § 166.27 Effective dates of State plan and amendments. Federal financial participation is available only with respect to amounts expended under an approved State plan or amendments. Absent any contrary notification, the date on which the State plan or amendments thereto shall be considered to be in effect is the date of approval by the Commissioner, but in no event shall such effective date precede the date on which the State plan or amendment was received by the Commissioner. The State agency will be apprised of the effective date in the notice of approval sent to the State agency by the Commissioner. § 166.28 Condition precedent to receiving Federal funds. Before a State may receive a payment from its allotment under section 304(b) of the Act, the Commissioner must find, pursuant to section 307(b) of the Act, that there will be available for expenditure by the State including its political subdivisions, for basic education for adults, from non-Federal sources during the fiscal year for which the allotment is made, an amount equal to not less than the total amount expended for such purposes from such sources during the preceding fiscal year. The information received under § 166.47 (a) and (b) shall serve as the basis of the Commissioner's finding. ministrative unit within the definition of "school or department of divinity" is not precluded for that reason from participating in the program described in Subpart B of this part if the adult basic education program is not offered by that school, branch, department, or administrative unit and, as in all other cases, the adult basic education program is not related to sectarian instruction or religious worship. (b) Adults enrolled in an adult basic education program conducted under Subpart B of this part may not be charged tuition, fees, or any other charges, or be required to purchase any books or any other materials. § 166.30 Allotment availability. Federal allotments to a State under the Act are available with respect to eligible expenditures during the Federal fiscal year for which funds are allotted. § 166.31 Reallotments. The amount of any State's allotment for any fiscal year under section 305(a) of the Act which the Commissioner determines will not be required during that fiscal year for carrying out that State's plan may be reallotted by the Commissioner on such dates during such year as he may fix, to other States for carrying out their plans in the same proportion as the original allotments were made for such purposes to such other States in the manner provided for in section 305(b) of the Act. Any amounts reallotted shall be determined by the Commissioner on the basis of (a) reports filed by the States of the amounts required to carry out the State plan and (b) such other information as he may have available. Any amounts reallotted shall be deemed part of the State's allotment for that fiscal year. § 166.33 State laws governing expendi tures. Federal financial participation under the State plan shall be available only for those eligible costs for which State or local funds are expended or authorized to be expended under applicable State and local laws, rules, regulations, and standards. § 166.34 Determination of fiscal year's allotment to which an expenditure is chargeable. An expenditure made under the Act will be charged to that Federal fiscal year in which the expenditure was incurred. State and local laws and regulations shall determine when an expenditure by the State agency or participating entity is incurred. § 166.35 Disposition of equipment. (a) Whenever items of equipment, each initially costing $100 or more, in which cost the Federal Government has participated are sold or no longer used for the purpose authorized by the Act, the Federal Government shall be credited with its proportionate share of the value of such equipment, the value being determined on the basis of the sale price in the case of a bona fide sale or on the fair market value in the case of discontinuance of use or diversion for other than State plan purpose. (b) Inventories and records are required to be kept for all items of equipment referred to in paragraph (a) of this section. The State agency is responsible for having available in the State agency's office information sufficient for a determination of whether such equipment continues to be used for a purpose provided for under the Act. § 166.36 Proration of costs. Federal financial participation is available only with respect to that portion of any eligible costs as defined in § 166.41 attributable to carrying out the provisions of an approved State plan. Prorated salaries and wages must be documented to show the time spent in carrying out the activities under the State plan and the percentage of time spent on each other activity. The State and all recipients of Federal funds un The State agency shall adjust its accounts, records, and reports to reflect refunds, credits, underpayments, or overpayments, as well as any adjustments resulting from Federal or State administrative reviews and audits. Such adjustments shall be set forth in the State's financial reports filed with the Commissioner. § 166.38 Interest on Federal funds. In the event that any interest is earned on Federal funds, such interest earnings shall be refunded to the U.S. Office of Education. The State agency shall submit as a part of each annual financial report a statement showing the amount of interest earned on Federal funds by the State and participating agencies during that fiscal year. § 166.39 Fiscal audits. Audit agencies representing the Department will audit the program records available at the State agency to determine whether the Federal program funds have been properly accounted for and administered. Audit reports of the participating agencies and State review and other control procedures will be evaluated to determine the adequacy of information upon which to base the audit findings. Only where the available information is deemed to be inadequate will the auditor arrange, through the State agency, to audit the records of the participating agencies. § 166.40 Retention of records. (a) General rule. The State agency shall provide for keeping accessible and intact all records supporting claims for Federal grants or relating to the accountability of the State agency or any other agency participating under the plan for the expenditure of such grants, expenditure of matching funds, and records supporting maintenance of effort. Such records shall be kept (1) for 3 years after the close of the fiscal year in which the expenditure was liquidated, (2) until notification that such records are not needed for program administrative review, or (3) until notification of the completion of the Federal fiscal audit, whichever is the latest. (b) Questioned expenditures. The records pertaining to any claim or expenditure which has been questioned at the time of audit shall be maintained until necessary adjustments have been reviewed and cleared by the Department of Health, Education, and Welfare. § 166.41 Eligible costs. To the extent that they are reasonably necessary for and attributable to carrying out the State plan, the eligible costs may at the discretion of the State agency include the following: (a) Salaries of the professional and clerical staff, including all amounts deducted or withheld as contributions to retirement, health, or other welfare benefit funds maintained for such staff; (b) Employer's contribution to retirement, health, workmen's compensation, and other welfare funds maintained for employees. For employees of the State agency, the retirement fund contributions may be computed in conformity with State laws or regulations governing the State's share of such contribution; (c) Fees and approved expenses of consultants and other persons or groups acting in an advisory capacity; (d) Expenses connected with committees, workshops, and conferences: (e) Travel expenses of staff and consultants thereto, in accordance with established appropriate State, local, or institutional travel regulations and limitations: (f) Communications costs; (g) Supplies, printing, and printed materials, including processed instructional films; (h) Rental of, or, where economically Justified, purchase of office and program equipment; (i) Rental of space (including the cost of utilities and custodial services) if: The cost does not exceed comparable rental on a square foot basis in the particular locality for the period of occupancy; the expenditures represent an actual cost; and like charges are made to other agencies occupying similar space for similar purposes. Rental for space in any building to the extent constructed with funds obtained from the Federal Government or with funds expended for matching purposes under any Federal program is not an allowable cost beyond the cost of utilities and custodial services; (j) Minor remodeling of space in publicly owned buildings to the extent that such costs are not included in rental; and (k) Utilities and custodial services to the extent not included in any other item of this section. § 166.42 Effect of Federal payments. Neither the approval of the State plan, the issuance of a Letter of Credit, the approval of withdrawals thereunder, nor the making of any direct payments to the State shall be deemed to waive the right or duty of the Commissioner to withhold funds by reason of the failure of the State to observe any Federal requirements set out in the Act or regulations related thereto or any other relevant Federal Act or Order, either before or after such administrative action respecting payment. If the Commissioner finds, after reasonable notice and opportunity for hearing to the State agency administering a State plan approved under the Act, that the State plan has been so changed that it no longer complies with the applicable requirements of the Act or that in the administration of the plan there is a failure to comply substantially with the provisions required to be included in the plan, he will notify such State agency that further payments will not be made to the State under the Act (or, in his discretion, that further payments will not be made with respect to the program under or portions of the State plan affected by such failure) until he is satisfied that there is no longer any such failure to comply. Until he is so satisfied, no further payments shall be made to such State for carrying out such State plan (or further payments will be limited to programs under or portions of the plan not affected by such failure). § 166.44 Right to hearing and judicial review. (a) Hearing. The Commissioner will not finally disapprove any State plan submitted under the Act, or any modification thereof, without first affording the State submitting the plan reasonable notice and opportunity for a hearing. (b) Judicial review. If any State is dissatisfied with the Commissioner's final action with respect to the approval of its State plan or with respect to his final action under section 308(a) of the Act, such State shall have the rights of appeal set out in section 308(b) of the Act. § 166.45 Termination of program. If a State desires at any time not to participate in the program, or upon termination of the program, the State shall refund to the U.S. Office of Education any unexpended or unobligated funds which have been paid to the State agency under this Act. § 166.46 Transition provisions. A State plan approved under Title II-B of the Economic Opportunity Act of 1964 (P.L. 88-452) remains in effect through May 15, 1967, unless, prior to that date, a State plan is approved under the regulations in this part or termination date has been extended by the Commissioner for good cause shown in an aplication therefor by the State agency. After such effective termination date, in order for a State to continue to receive payments under the Act, the State plan must have been revised so as to be in conformity with the regulations in this part and approved by the Commissioner. § 166.47 Reports. (a) A description of the program to be undertaken under the State plan and an estimate of amounts to be expended by the State and its political subdivisions, to be submitted annually; (b) A certification that expenditures by the State and its political subdivisions for basic educational programs for adults, from non-Federal sources, during the fiscal year for which application is made, will be not less than the amount expended for such purposes from such sources during the preceding fiscal year; (c) A detailed statement describing the operation of each program, to be submitted immediately upon approval of said program by the State agency; (d) An annual report to be submitted at the end of each fiscal year, describing the activities, by category, carried out under the State plan and indicating the expenditures from both Federal and nonFederal sources therefor; (e) An annual report containing an evaluation of the State plan program in terms of the plan provisions and program objectives; (g) Any other reports containing such information in such form as the Commissioner may, from time to time, require in order to carry out his functions under the Act. § 166.48 Patents and copyrights. (a) Any material of a copyrightable nature produced through a project with financial assistance under the Act shall be subject to the copyright policy of the U.S. Office of Education in effect at the time of project approval. (b) Any material of a patentable nature produced through a project with financial assistance under the Act shall be subject to the provisions of Parts 6 and 8 of this title which shall be incorporated into the terms and conditions of any approved project. Subpart D-Grants for Special Experimental Demonstration Projects and for Teacher-Training Projects § 166.60 Applicability. The regulations in this subpart apply to special experimental demonstration project grants (special project grants) and teacher-training grants made by the Commissioner under section 309 (b) and (c) pursuant to his authority under section 309(a) of the Act. The Commissioner is also authorized to provide teacher training (directly or by contract) under section 309(c). § 166.61 Special projects. Special project grants may be made by the Commissioner to eligible applicants in order to further the purpose of the Act (See section 302) where such project will (a) involve the use of innovative methods, systems, materials, or programs which the Commissioner determines may have national significance or be of special value in promoting effective projects under the Act, or (b) will involve programs of adult education, carried out in cooperation with other Federal, federally assisted, State, or local programs which the Commissioner determines have unusual promise in promoting a comprehensive or coordinated approach to the problems of persons with basic educational deficiencies. (f) A copy of any independent evaluations of the State plan, its program and objectives, or of any other nature, if obtained by any State, State agency or institution; and § 166.62 Teacher-training projects. (a) Teacher-training grants may be made by the Commissioner to eligible applicants in order to provide training to persons engaged, or preparing to engage, |