(e) "Fiscal year" means the period beginning on the first day of July and ending on the following June 30, and is designated by the calendar year in which the fiscal year ends. (f) "Institution of higher education" means an educational institution in any State which (1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, (2) is legally authorized within such State to provide a program of education beyond secondary education, (3) provides an educational program for which it awards a bachelor's degree or provides not less than a 2-year program which is acceptable for full credit toward such a degree, (4) is a public or other nonprofit institution, and (5) is accredited by a nationally recognized accrediting agency or association as determined by the Commissioner or, if not so accredited, (i) is an institution with respect to which the Commissioner has determined that there is satisfactory assurance, considering the resources available to the institution, the period of time, if any, during which it has operated, the effort it is making to meet accreditation standards, and the purpose for which this determination is being made, that the institution will meet the accreditation standards of such an agency or association within a reasonable time, or (ii) is an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited. Such term also includes any school which provides not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation and which meets the provisions of subparagraphs (1), (2), (4), and (5) of this paragraph. (20 U.S.C. 1141.) (g) "Nonprofit institution" means an institution owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual. (h) "School or department of divinity" means an institution, or a department or branch of an institution, whose educational program is specifically designed to prepare students to become ministers of religion, to enter upon some other religious vocation, or to teach theological subjects. (i) "Secretary" means the Secretary of Health, Education, and Welfare. (j) "State" includes, in addition to the several States of the Union, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, and the Virgin Islands. (k) "State agency or institution" or "State agency" means the State agency or State institution designated or created pursuant to section 105(a) of the Act and § 173.3. [31 F.R. 5562, Apr. 8, 1966, as amended at 34 F.R. 12829, Aug. 7, 1969] § 173.2 Program outline. The program described in this part shall be administered by the State agency or institution pursuant to a State plan developed and submitted through the State agency or institution and approved by the Commissioner. The State plan shall set forth a comprehensive, coordinated, and statewide system of community service programs designed to assist in the solution of community problems in rural, urban, or suburban areas (with particular emphasis on urban and suburban problems), such as, but not limited to, housing, poverty, government, recreation, employment, youth opportunities, transportation, health, and land use, by utilizing the resources of institutions of higher education: Provided, however, That, if a comprehensive, coordinated, and statewide system of community service programs cannot be effectively carried out by reason of insufficient funds, the State plan may set forth one or more proposals for community service programs in lieu of a comprehensive, coordinated, and statewide system of such programs. The State plan and necessary amendments thereof, once approved by the Commissioner, shall constitute the basis on which Federal payments will be made as well as the basis for determining the propriety of expenditures by the State and participating institutions in which there is Federal participation. (20 U.S.C. 1005.) [34 F.R. 12829, Aug. 7, 1969] Subpart B-State Plan: Submission, Amendments, Approvals § 173.3 State agency or institution. (a) The State shall designate or create a single State agency or institution to develop, submit, and administer and/or supervise the administration of the State plan. The agency or institution so designated or created shall include individuals who have special qualifications or experience in working with and solving community problems, and who are broadly representative of institutions of higher education in the State, public and private, which are competent to offer community service programs. The State may, however, designate an existing State agency or institution which does not meet the above requirements, provided that (1) the State agency or institution takes such action as necessary to acquire such qualifications and to assure participation of such institutions; or that (2) the State designates or creates a State advisory council which meets the requirements not met by the designated State agency or institution to consult with the designated State agency or institution in the preparation of the State plan and necessary amendments thereto and in connection with any policy matters arising in the administration of the plan. (b) Prior to submission of a State plan, the State shall submit to the Commissioner a satisfactory assurance and explanation regarding the basis on which the requirement of this section and section 105(a) of the Act are met. The State shall also designate the official of the State agency or institution with whom the Commissioner is to communicate for purposes of Title I of the Act. (c) The State agency or institution shall notify the Commissioner within 15 days of changes in the composition of either the State agency or institution, or the State advisory council, if any, affecting its special qualifications with respect to solving community problems or its being broadly representative of institutions of higher education in the State, public and private, which are competent to offer community service programs. § 173.4 Submission of State plan and annual amendments. (a) A State plan shall be submitted by the duly authorized officer of the State agency or institution for approval by the Commissioner. The State plan shall be amended annually, on or before such date as the Commissioner may designate, in order that the State plan will contain the information required by § 173.12. The amendment shall be signed and certified in the same manner as the original plan submitted and shall become effective upon approval by the Commissioner. (For procedure on other amendments, see § 173.5.) (20 U.S.C. 1005.) (b) Notwithstanding the approval of a State plan during any prior year, unless and until the annual amendment has been submitted by the State agency or institution and approved by the Commissioner there is no basis upon which new commitments may be made by the State agency. [31 F.R. 5562, Apr. 8, 1966, as amended at 34 F.R. 12829, Aug. 7, 1969] § 173.5 Amendments to State plan. In addition to the annual amendment required under § 173.4, the State plan shall be appropriately amended whenever there is any material change in the designation of the State agency, the content or administration of the State plan, or when there has been a change in pertinent State law. Such amendment shall clearly indicate the changes and shall be signed and certified in the same manner as the original plan submitted and shall become effective upon approval by the Commissioner. § 173.6 Approval of State plan; noncompliance; judicial review. (a) The Commissioner shall approve any State plan or amendment thereof which complies with the provisions set forth in the Act and this part. (For effective date of State plan, see § 173.24.) No plan, or amendment thereof, shall be finally disapproved until the State agency or institution submitting the plan is afforded reasonable notice and opportunity for a hearing. (b) Where the Commissioner, after giving reasonable notice and opportunity for a hearing to the State agency or institution administering a State plan approved under section 105(b) of the Act, finds that (1) the State plan has been so changed that it no longer complies with any provision of section 105 (a) of the Act, or that (2) in the administration of the plan there is a failure to comply substantially with any such provision, the Commissioner shall notify the State agency that the State is no longer regarded as eligible to participate in the program until the Commissioner is satisfied that there is no longer any such failure to comply. (c) Final actions of the Commissioner with respect to approval of a State plan or amendment thereto, or changes in or noncompliance with an approved State plan or amendment thereto are subject to judicial review, pursuant to section 108 of the Act. § 173.7 Ineligible programs. No payment may be made from a State's allotment under this part for (a) any community service program which relates to sectarian instruction or religious worship or (b) any community service program which is provided by a school or department of divinity. An institution of higher education which has a school, branch, department or other administrative unit within the definition of "school or department of divinity" as set out in § 173.1(h), is not precluded for that reason from participating in the program described in this part, if the community service program is not offered by that school, branch, department, or administrative unit and, as in all other cases, the community service program is not related to sectarian instruction or religious worship. § 173.8 Relation to other Federal programs. Nothing in this part shall be construed to mean that a proposed program shall be excluded from participation on the basis that it would also be eligible to receive financial assistance under another Federal program. Subpart C-State Plan Provisions § 173.9 Administrative information. The State plan shall contain a statement of the name of the designated or created State agency or institution and of the official to whom communications shall be directed; and an assurance that the agency or institution so designated or created shall be the sole agency for administration of the plan or for supervision of the administration of the plan, and that such agency or institution shall consult with any required State advisory council with respect to policy matters arising in the preparation and administration of the plan. § 173.10 Policies and procedures for selection of community problems. The State plan shall contain a general statement setting forth the policies and procedures which will be followed by the State agency in selecting those community problem(s) or specific aspects thereof for the solution of which Federal funds allotted under this program will be used. The statement shall describe any general methods and/or criteria which the State agency has determined will be used in making such selection(s). § 173.11 Policies and procedures for selection of institutions. The State plan shall contain a statement of the policies and procedures to be used in selecting the institution(s) of higher education for participation under the State plan. This statement shall describe the policies and procedures to be used in connection with the review of applications submitted by institutions of higher education interested in participating in this program, and shall insure that adequate notice of the selected community problem(s) for the solution of which financial assistance under this program shall be used, will be given to institution(s) of higher education which might qualify for participation. The State agency or institution shall indicate the criteria which will be used in selecting institutions of higher education for participation and the consideration which will be given to the following: (a) Whether the program, service, or activity proposed to be undertaken by an institution of higher education is specifically designed to directly assist in the solution of urban, rural, or suburban problems with special emphasis upon urban and suburban problems; (b) Whether the relative capacity and willingness of the particular institution(s), public or private, will be utilized to provide effective community service programs; (c) Whether the program, service, or activity will effectively utilize the special resources of the institution(s) of higher education and its faculty; (d) Whether the program, service, or activity will be consistent with the overall educational program of the institution(s) of higher education; (e) Whether a single community service program will be undertaken by two or more institutions of higher education within the State or by or with one or more institutions in other States; and (f) Whether the results of periodic, objective and systematic evaluations of the programs, services, and activities will be considered in the light of information regarding current and anticipated community problems. § 173.12 Annual program plan. (a) The annual program plan shall be submitted as an amendment on an annual basis as required under § 173.4. (b) The annual program plan submission shall contain a statement describing the specific aspects of the comprehensive, coordinated, and statewide system of community service programs or, if it is determined that a comprehensive, coordinated, and statewide system of community service programs cannot be effectively carried out by reason of insufficient funds, a brief summary of the basis of this determination, a description of the community service programs proposed in lieu thereof for which financial assistance is requested, and the basis for the selection thereof. The description of the method followed by the State agency in determining the community problem(s) or aspects thereof to be solved shall indicate that, and the degree to which: (1) The State agency has consulted with representative community leaders, associations, and organizations, and with representatives of institutions of higher education; (2) Due consideration has been given to the existence of other federally financed programs dealing with similar and other community problems in the State and coordination with those programs, particularly in determining priorities of problems; (3) Due consideration has been given to the resources of institutions of higher education especially relevant or adaptable to develop and carry out community service programs related to the community problems selected; (4) Due consideration has been given to the relationship of the aspect of the community problem (s) selected for solution to other significant community problems in the State; and (5) Other criteria have been used in selecting community service problems to be included under the program. (20 U.S.C. 1005.) (c) In describing the particular community problem(s) and the aspects thereof that the State will attempt to solve, the State plan shall indicate, specifically, the part of the overall problem(s) with which each particular program will be concerned; the scope, prevalence, complexity, duration, and other appropriate specific aspects of the problems; and the relationship between 84-006-72-22 the types of activities proposed and similar tyes of existing or contemplated activities in the State. The statement shall also indicate whether the problem(s) and specific aspects thereof exist in all types of communities or whether they are of general significance to the State as a whole although not specifically manifested in all communities thereof. The statement shall also indicate the approximate amount from the State's allotment that the State agency estimates will be required in order to carry out each type of program which will be undertaken in attempting to solve these problems. (d) As an alternative, if a State has determined the programs, activities, and services which will be undertaken pursuant to its plan to assist in the solution of the community problems selected as part of a comprehensive, coordinated, and statewide system of community service programs, it may set forth such programs, activities, and services in detail and cost estimates for each, in lieu of the descriptions required under the above paragraph. (e) If a State indicates a desire to solve community problems other than those possible under its allotment, it may indicate such problems with the same specificity as given those presently to be undertaken and give the priority of importance and the basis therefor together with budgetary estimates of each program, service, or activity. Such programs, services, and activities will be considered for reallocation of funds as provided for under section 103(b) of the Act and § 173.34. [31 F.R. 5562, Apr. 8, 1966, as amended at 34 F.R. 12829, Aug. 7, 1969] § 173.13 Fiscal assurances. The State plan shall contain: (a) A statement of the policies and procedures designed to assure that Federal funds allotted to the State for the program described in this part will not be used to supplant State or local funds, or funds of institutions of higher education but to supplement and, to the extent practicable, to increase the amount of such funds that would otherwise be made available for community service programs. (b) A statement of assurance that the State agency will, prior to approval of any community service program under the plan, provide the certification required under § 173.22. § 173.14 Fiscal procedures. The State plan shall contain: (a) A statement setting forth such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal funds paid to the State, including such funds paid by the State to institutions of higher education. Such procedures shall be in accordance with applicable State law and regulations which shall be set forth in the plan or an appendix thereto and shall assure that accounts and supporting documents relating to any program involving Federal financial participation shall be adequate to permit an accurate and expeditious audit of the program. (b) A statement assuring that all expenditures of institutions of higher education claimed for Federal financial participation or matching purposes or for any other purpose relevant to the program described in this part will be audited either by the State or by appropriate auditors; and indicating, if the audit is to be conducted at the institutional level, how the State agency will secure information necessary to assure proper use of funds expended under the Act by such institutions of higher education. § 173.15 Institutional assurance. (a) The State plan shall contain a statement of assurance that, prior to approval of any community service program under the plan, each institution of higher education proposing such community service program shall submit to the State agency a certification: (1) That the proposed program is not otherwise available; (2) That the conduct of the program or performance of the activity or service is consistent with the institution's overall educational program and is of such a nature as is appropriate to the effective utilization of the institution's special resources and the competencies of its faculty; and (3) That, if courses are involved, such courses are extension or continuing education courses and (i) that they are fully acceptable toward an academic degree, or (ii) that they are of college level as determined by the institution offering the courses. (b) Copies of the certification required by paragraph (a) of this section shall be maintained by the State agency and made available to the Commissioner upon request. § 173.16 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 particular programs in terms of the annual program proposals and overall objectives stated in the plan. § 173.17 Transfer of funds to participating institutions. The State plan shall contain a statement of the policies and procedures to be followed in determining, for each institution selected for participation under the plan, whether payment of funds shall be made (a) as a reimbursement for actual expenditures; (b) as an advance prior to actual expenditures; or (c) a combination of reimbursements and advances. The State plan shall provide that when, under any payment procedure, the State agency determines that an overpayment has been made, adjustments shall be made by repayment or by setoff against payment thereafter. § 173.18 Accounting bases for expendi tures. (a) State level expenditures. The State plan shall specify the particular accounting basis (cash, accrual, or obligation) used by the State agency and shall set forth the relevant State laws, rules, and regulations. (Accounting practices relating to payments to participating institutions are described in § 173.23(b).) (b) Participating institutions expenditures. The State plan shall provide that the State agency will be responsible for ascertaining the accounting practice of each institution at the time of its selection for participation under the State plan and for maintaining such information in the State agency. § 173.19 Certification of State plan. (a) The State plan shall include as a part or appendix thereto: (1) A certification by the official of the State agency authorized to submit the State plan that the plan (or amendment) has been adopted by the State agency and will constitute the basis for |