the opinions expressed herein do not necessarily reflect the position or policy of the U.S. Office of Education, and no official endorsement by the U.S. Office of Education should be inferred.

(20 U.S.C. 1221c(b)(1).)

§ 100b.220 Determining percentage of participation.

(a) Various provisions in this subpart require a determination of the percentage of Federal (or recipient) participation in the cost of the project or program in order to compute the amount of compensation for the value, or proceeds from sale, of property. In determining the applicable percentage, there shall first be deducted from the allowable costs incurred during the grant period, any royalties or other income (not including interest income or proceeds from sale of property) earned by the federally supported project or program during the grant period.

(b) The deduction of income required by paragrapn (a) of this section is independent of, and is not intended to control, the disposition of such income pursuant to Subpart M of this part.

(OMB Circular No. A-102, Attachment N.)

Subpart M-Program Income

§ 100b.230 Scope of subpart.

This subpart sets forth standards for recipients in accounting for program income and other income related to projects and programs financed in whole or in part with Federal funds. (OMB Circular A-102, Attachment E.)

§ 100b.231 Meaning of program income.

As used in this subpart, the term "program income" shall have the meaning set forth for that term in § 100b.401.

(OMB Circular No. A-102, Attachment E.)

§ 100b.232 Interest income.

(a) As used in paragraph (b) of this section:

(1) The term "State" shall have the meaning set forth in section 102 of the Intergovernmental Cooperation Act of

1968.

(2) The term "grant-in-aid" shall have the meaning set forth for that term in Section 106 of the Intergovernmental Cooperation Act of 1968.

(b) In accordance with Section 203 of the Intergovernmental Cooperation Act of 1968, States shall not be held accountable for interest earned on grant-in-aid funds, pending their disbursement for program purposes.

(c) In all other cases, recipient shall remit to the Federal Government any interest earned on advances of Federal funds.

(Pub. L. 90-577, secs. 102, 106, 203; OMB Circular No. A-102, Attachment E.)

§ 100b.233 Sale of real and personal property.

Proceeds from the sale of real and tangible personal property whose acquisition cost was borne in whole or in part by Federal funds shall be handled in accordance with Subpart L of this part.

(OMB Circular No. A-102, Attachment N.) § 100b.234 Royalties.

(a) Applicability-(1) Copyrights. This section applies to royalties received by recipients from copyrights on publications or other works developed under a federally-assisted project.

(2) Patents. This section also applies to royalties received by recipients from patents on inventions conceived or first actually reduced to practice in the course of or under federally-assisted projects.

(b) During the grant period. (1) Royalties received during the grant period shall be retained by the recipient. The terms and conditions of the subgrant shall provide either:

(i) That such royalties shall be used by the recipient for any purposes which further the objectives of the legislation under which the subgrant was made, or

(ii) That such royalties shall be deducted from total project costs for the purpose of determining the net costs on which the Federal share of costs shall be based.

(2) The recipient shall elect either of the alternatives specified in paragraph (b)(1) of this section if the terms and

conditions of the subgrant do not specify which is to be followed.

(c) After the grant period—(1) Copyrights. The Federal share of copyright royalties in excess of $200 received annually shall be paid by the recipient to the Federal Government. The Federal share of the royalties shall be computed on the same ratio basis as the percentage of Federal participation in the cost of the project or program. This percentage of participation shall be determined in accordance with § 100b.220.

(2) Patents. Disposition of patent royalties received after the termination or completion of the period for obligation shall be governed by the regulations contained in Parts 6 and 8 of this title.

(OMB Circular No. A-102, Attachment E.)

§ 100b.235 Other program income.

(a) This section applies to all program income earned during the period for obligation except royalties and proceeds from the sale of real property or tangible personal property.

(b) All such income earned during the period for obligation shall be retained by the recipient. The recipient may elect either of the following alternatives to satisfy its accountability to the Federal Government for the income:

(1) The income may be used by the recipient for purposes which further the objections of the legislation under which the award was made, or

(2) The income may be deducted from total project costs for the purpose of determining the net costs on which the Federal share of costs shall be based.

(OMB Circular No. A-102, Attachment E.)

§ 100b.236 Earmarked revenues.

State agencies shall record the receipt and expenditure of revenues such as taxes, special assessments, levies, fines, etc., as a part of grant project transactions when such revenues are specifically earmarked for a project in accordance with a State plan (or State application).

(OMB Circular No. A-102, Attachment E.)

Subpart N Miscellaneous Requirements

§ 100b.250 Financial interest prohibited.

A person who is a public official, officer, or member of, or who is otherwise associated with a recipient may not participate in an administrative decision with respect to a project if such decision can be expected to result in any benefit or remuneration, including, without limitation, a royalty, commission, contingent fee, brokerage fee, or other benefit, to him or to any member of his immediate family.

(20 U.S.C. 1232c(b)(1).)

§ 100b.254 Transfer of funds to subgrantees.

(a) State agencies shall establish policies and procedures to be used in the payment of funds to subgrantees (where applicable) pursuant to an approved project either: (1) As a reimbursement for actual expenditures or (2) as an advance prior to expenditures.

(b) Advances shall not be eligible for inclusion as expenditures for the purposes of earning Federal financial participation until adequate evidence of actual expenditures for approved projects has been received and verified by the State agency.

(c) Reimbursement or payment need not be uniform to all recipients, and the State agency may provide a method by which the ratio of reimbursement to expenditures in particular cases may be adjusted on the basis of comparative needs of individual recipients.

(20 U.S.C. 1232c(b)(1).)

§ 100b.257 Custody of funds.

The State agency shall provide for the receipt by the State treasurer (or, if there is no State treasurer, the officer identified by title exercising similar functions for the State) and for the proper safeguarding of all Federal funds granted to the State. The State agency shall provide that all Federal funds so received shall be expended solely for the purposes for which granted.

(20 U.S.C. 1232c(b)(2).)

§ 100b.258 Leasing facilities.

In the case of the lease of a facility, the State agency or other recipient shall have the right to occupy, and to operate, and if necessary to maintain and improve, the premises to be leased during the proposed period of the project.

(20 U.S.C. 1221c(b)(1).)

§ 100b.262 Civil rights.

(a) Federal financial assistance is subject to the regulations in part 80 of this title, issued by the Secretary of Health, Education, and Welfare and approved by the President, to effectuate the provisions of title VI of the Civil Rights Act of 1964 (Pub. L. 88352).

(42 U.S.C. 2000d.)

(b) Federal financial assistance is also subject to the provisions of title IX of the Education Amendments of 1972 (prohibition of sex discrimination), and any regulations issued thereunder.

(Pub. L. 92-318, title IX.)

§ 100b.274 Application of State rules.

Subject to the provisions and limitations of applicable Federal statutes and regulations, Federal financial participation shall be available only for expenditures made in accordance with applicable State and local laws, rules, regulations, and standards governing expenditures.

(20 U.S.C. 1221(b)(1).)

§ 100b.275 Coordination.

Each project (and each State plan) shall be developed so as to be in coordination with other public and private programs for similar educational purposes. Such coordination shall be continuous during the period in which such project or plan remains in effect. (20 U.S.C. 1232c(b)(1).)

Subpart O-Financial Management Systems

§ 100b.300 Scope of subpart.

This subpart prescribes standards for financial management systems of

Federally supported activities conducted by State agencies and their subgrantees.

(OMB Circular No. A-102, Attachment G.) § 100b.301 Standards.

State agency financial management systems for grants and subgrantee financial management systems for subgrants shall provide for:

(a) Accurate, current, and complete disclosure of the financial results of each grant in accordance with Subpart P of this part, and for each subgrant in accordance with the State agency's requirements. Except when specifically required by law, the Commissioner will not require financial reporting on the accrual basis from organizations whose records are not maintained on that basis. However, when accrual reporting is required by law, organizations whose records are not maintained on that basis will not be required to convert their accounting systems to the accrual basis; they may develop the accrual information through an analysis of the documentation on hand or on the basis of best estimates.

(b) Records which identify adequately the source and application of funds for grant- or subgrant-supported activities. These records shall contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays, and income.

(c) Effective control over and accountability for all grant or subgrant funds, and real and personal property acquired with grant or subgrant funds. Grantees and subgrantees shall adequately safeguard all such property and shall assure that it is used solely for authorized purposes.

(d) Comparison of actual with budgeted amounts for each grant or subgrant, and when specifically required by the performance or productivity data, including the production of unit cost information.

(e) Procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement by the State agency, whenever cash is advanced by the Federal Government.

When advances are made by a letterof-credit method, the State agency shall make drawdowns from the U.S. Treasury through its commercial bank as close as possible to the time of making the disbursements. Subgrantees shall institute analogous procedures when funds are advanced by the State agency.

(f) Procedures for determining the allowability and allocability of costs in accordance with the applicable cost principles prescribed by Subpart G of this part.

(g) Accounting records which are supported by source documentation.

(h) Audits to be made by the State agency or subgrantee or at its direction to determine, at a minimum, the fiscal integrity of grant or subgrant financial transactions and reports, and the compliance with applicable statutes, regulations, and terms and conditions of the grant or subgrant. The grantee or subgrantee will schedule such audits with reasonable frequency, usually annually, but not less frequently than once every two years, considering the nature, size, and complexity of the activity.

(i) A systematic method to assure timely and appropriate resolution of audit findings and recommendations. (OMB Circular No. A-102, Attachment G.)

§ 100b.302 Subgrantees.

The standards of § 100b.301, insofar as they apply to subgrantees, shall be included in the terms and conditions of subgrants by State agencies.

(OMB Circular No. A-102, Attachment G.)

Subpart P-Financial Reporting Requirements

§ 100b.400 Scope of subpart.

This subpart prescribes requirements for State agencies to report financial information to the Commissioner and to request advances and reimbursement when a letter-of-credit method is not used, and promulgates standard forms incident thereto.

(OMB Circular No. A-102, Attachment H.)

§ 100b.401 Definitions. As used in this subpart and in the forms identified by this subpart:

the

"Accrued expenditures" are charges incurred by the State agency during a given period requiring the provision of funds for: (a) goods and other tangible property received; (b) services performed by employees, contractors, subgrantees, and other payees; and (c) amounts becoming owed under programs for which no current services or performance are required.

"Accrued income" is the earnings during a given period which is a source of funds resulting from (a) services performed by the State agency, (b) goods and other tangible property delivered to purchasers, and (c) amounts becoming owed to the State agency for which no current services or performance are required by the State agency. "Disbursements" are payments in cash or by check.

"Federal funds authorized" represents the total amount of the Federal funds authorized for obligations and establishes the ceiling for obligation of Federal funds. This amount may include any authorized carryover of unobligated funds from prior fiscal years.

"In-kind contributions" represent the value of noncash contributions provided by the State agency or third parties. In-kind contributions may consist of charges for real property and nonexpendable personal property, and value of goods and services directly benefiting and specifically identifiable to the federally-supported activity. Unless otherwise authorized by Federal legislation, charges for property purchased wholly with Federal funds, and charges based on the Federal share of the value of property purchased partly with Federal funds, may not be considered as the State agency's in-kind contributions.

"Obligations" are the amounts of orders placed, contracts and grants awarded, services received, and similar transactions during a given period, which will require payment during the same or a future period.

“Outlays” represent charges made to the grant project or program. Outlays may be reported on a cash or accrued expenditure basis.

"Program income" represents earnings by the recipient realized from the federally-supported activities as a result of the grant. Such earnings exclude interest income and may include, but will not be limited to, income from service fees, sale of commodities, usage or rental fees, sale of assets purchased with grant funds, and royalties on patents and copyrights. Program income may be reported on a cash or accrued income basis.

"Unobligated balance" is the portion of the funds authorized by the Commissioner which has not been obligated by the State agency and is determined by deducting the cumulative obligations from the funds authorized.

"Unpaid obligations" represent the amount of obligations incurred by the State agency which have not been paid.

(OMB Circular No. A-102, Attachment H.)

§ 100b.402 Authorized forms and instructions.

(a) Only those forms specified in §§ 100b.403 through 100b.406, inclusive, and such supplementary or other forms as may from time to time be authorized by the Commissioner may be used:

(1) For obtaining financial information from State agencies for federallyassisted programs, or

(2) For requesting advances or reimbursements when letters of credit are not used.

(b) All applicable standard instructions promulgated for use in connection with the forms specified in §§ 100b.403 through 100b.406, inclusive, shall be followed.

(c) State agencies shall submit the original and two copies of forms required pursuant to this subpart. However, the Commissioner may waive the requirement for the second copy, or both copies, when not needed.

(d) The forms (with their instructions) specified in §§ 100b.403 through 100b.406, inclusive, will be available to the public upon request to the Commissioner.

(OMB Circular No. A-102, Attachment H.)

§ 100b.403 Financial status report.

(a) Form. State agencies shall use the standard Financial Status Report prescribed by Attachment H of OMB Circular No. A-102 to report the status of funds for all non-construction grant programs. The Commissioner may choose not to require the Financial Status Report when the Request for Advance or Reimbursement (see § 100b.405) is determined to provide adequate information to meet his needs, except that a final Financial Status Report is required at the completion of the grant when the Request for Advance or Reimbursement form is used only for advances.

(b) Accounting basis. Each State agency shall report outlays and program income on the same accounting basis, i.e., cash or accrued expenditure (accrual), which it used in maintaining its accounting records. The basis used by a State agency must be consistent for all grants.

(c) Frequency. For research project grants, reports shall be submitted annually, and a final report shall be submitted upon completion or termination of Federal support. For all other types of grants, the Commissioner will prescribe the frequency of the report, considering the size and complexity of the particular program. However, the report will not be required more frequently than quarterly or less frequently than annually, and a final report is required upon completion or termination of Federal support.

an

(d) Due date. When reports are required on a quarterly or semi-annual basis, they shall be due thirty days after the end of the specified reporting period. When required on annual basis, they shall be due ninety days after the end of the grant year. Final reports shall be due ninety days after the completion or termination of Federal support. Justified requests from individual State agencies for extension of reporting due dates will be approved whenever feasible.

(OMB Circular No. A-102, Attachment H.)

§ 100b.404 Report of Federal cash transactions.

(a) Form. When funds are advanced to State agencies through letters of