Federal Government or with funds expended for matching purposes under this or any other Federal program. All rental costs of equipment shall be computed on a per year basis or fraction thereof in terms of comparable rental charges in the community or locality for such equipment and, if the equipment is used for other purposes, prorated to the training project use.

(3) Rental of space (including the cost of utilities and custodial services) of shops, classrooms and laboratories if (1) the expenditures for the space are necessary, reasonable, and properly related to the efficient conduct of training projects, (ii) a training project will be benefited by the expenditures during the period of occupancy commensurate with such expenditures, (iii) the amounts paid do not exceed comparable rental in the particular locality, (iv) the expenditures represent an actual cost attributable to the training project, and (v) in the case of publicly owned buildings, rental charges are not in excess of those made to other agencies occupying similar space for similar purposes or, if no such charges are made, the comparable rental that would be paid for such space in the particular locality. All rentals of space shall be computed on a square foot basis per year or fraction thereof according to type of space and shall be prorated to 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.

(4) Transportation of local supervisors in carrying out supervisory responsibilities in connection with approved training projects;

(5) Minor remodeling of public buildings necessary to make existing space suitable for training purposes with allowable costs not to exceed 10 percent of the total budget for each training project;

(6) Accident or liability insurance for trainees or employees to the extent it is the policy of the school district to provide such insurance in similar programs;

(7) Transportation of trainees for instructional purposes, such as field trips; (8) Audits of projects performed under 160.9(b).

(c) Training by private institutions. In the case of projects in private educational and training institutions the allowable cost shall be the regular tuition

charge for similar training and the cost of any additional supplies, textbooks, and field trips necessary to training.

(d) Proration of costs. Only costs attributable to the carrying out of the provisions of the Agreement are allowable costs. Where only a portion of a total cost is attributable to carrying out the provisions of the Agreement, only that portion which is allowable shall be shown in the budget. Prorated salaries and wages must be documented to show time spent on carrying out provisions of the Agreement and the percent of time spent on each nonrelated activity.

(e) Date of allowable costs. Federal financial participation will be available only for expenditures incurred after the effective date of the approved training project (as defined in § 160.4 (d)) or the approved budget for State direction and supervision. (See § 160.4(b) and para

graph (a) (12) of this section.)

[31 F.R. 5559, Apr. 8, 1966, as amended at 31 F.R. 12101, Sept. 16, 1966]

(a) State agencies which have entered into an Agreement with the Commissioner shall be entitled to withdraw funds under a letter of credit issued by the Commissioner to the State. Withdrawals are made on the basis of payment vouchers in accordance with instructions furnished to the State for use of the letter of credit. The State is authorized to issue payment vouchers against the letter of credit only upon official notification from the Commissioner that a particular project has been approved and that funds necessary for the project may be withdrawn.

(b) If the actual costs incurred in completing a project or stage of a project are less than the estimated costs which constituted the Commissioner's basis for the determination of the amount of the Federal funds committed to the cost of the project or stage thereof completed, the amount of the next ensuing letter of credit shall be reduced accordingly or the amount of unexpended Federal funds remaining at the time of the completion of the project shall be refunded to the United States as an overpayment.

(c) Notice of cancellation of a specific project or a decrease in the amount originally approved for a specific project shall automatically preclude the State from drawing a payment voucher for

such project in an amount in excess of the amended approval.

§ 160.8 Effect of payments.

Neither the approval of any project or administrative budget nor any advance or other payment made to the State ragency pursuant thereto shall be deemed I to waive the right or duty of the Commissioner to withhold funds by reason of the failure of the State agency to observe, 2 before or after such administrative action, any Federal requirement.

§ 160.9 Fiscal procedures.

(a) The State agency may make payments in advance or by way of reimbursement to agencies or institutions conducting training projects under the Agreement. Except for tuition payments to private institutions such payments shall be supported by statements of expenditures, either made or proposed on forms provided by the Commissioner.

(b) The State agency shall require each training institution or agency to keep adequate records by budget classification of expenditures made for each training project. Where payment is to be made on a reimbursable basis, prior to final settlement for a training project, the State agency shall determine the correctness of account through an audit by an appropriate State audit agency or staff or independent certified public accountant. Such audits shall be conducted in accordance with standards approved by the Commissioner.

(c) When the unit cost of equipment is $50 or more, the State agency shall maintain an up-to-date inventory of (1) all equipment purchased as a part of a training project approved under the Act, (2) all equipment purchased for use in State direction and supervision of training, and (3) all equipment purchased for program development by other agencies. A separate inventory must be maintained for subparagraphs (1), (2), and (3) of this paragraph. All equipment inventoried under this subparagraph must be clearly marked to identify it as having been purchased with funds provided under the Act. Such inventories shall be maintained (i) until the expiration of the useful life of such equipment, (ii) until the State agency is notified by the Department that the State may sell such equipment, or (iii) until the Federal Government agrees to accept credit for its share of the value of the

equipment sold or diverted to uses inconsistent with carrying out the agreement as described in § 160.10(b) (2). § 160.10 Equipment and teaching aids. (a) Equipment and teaching aids purchased by State. (1) Title to equipment and teaching aids purchased by a State or local educational agency with funds to carry out the provision of the agreement shall vest only in the State and not in a local educational agency or any other agency or institution. So long as the Act is in force, such equipment and teaching aids shall not be disposed of by the State without the consent of the Department, and shall be made available by the State agency during their useful lives for the purpose of carrying out the agreement, including the conduct of training projects other than those for which the equipment and teaching aids were originally purchased.

(2) Whenever items of equipment, each initially costing $50 or more, in which cost the Federal Government has participated, are sold or diverted to uses inconsistent with carrying out the agreement prior to the expiration of 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 diversion for uses other than the purpose of carrying out the agreement. If such equipment is loaned to another party for uses other than adult basic and vocational education which do not interfere with its full use in carrying out the agreement, the Federal Government shall be credited with its proportionate share of the fair rental value of such use or, in the case of a bona fide lease, the rent prescribed in the lease arrangement.

(b) Federal personal property. Excess or other Federal personal property on loan from other Federal agencies is available, on a loan basis, to and through the State agency for use in training projects. The right of possession only is granted; title to such property remains in the United States. The use of such property is subject to the following conditions: (1) The State agency shall maintain separate records of all excess or other Federal personal property received in such form and detail as will permit the location and identification of such property at any time; (2) the possessor shall be responsible for such prop

erty from the time of receipt or its release to the transportation agent, whichever is earlier; and, (3) in the event of any loss or damage to any of such property, the State agency shall file such claim and/or institute and prosecute to conclusion such proceedings as may be necessary to recover, for the account of the United States, the fair value of any such property.

§ 160.11 Separate records.

The State agency shall maintain adequate records showing separately its activities under the agreement for (a) State direction and supervision, (b) program development by other agencies, and (c) training projects. Such records will indicate these activities as separate and distinct from other activities of the State agency. The State agency also will include a provision in its arrangements for training with each public or private educational agency or institution requiring the maintenance of separate and distinct records showing the training activities under the Act.

§ 160.12 Evaluation.

The State agency shall make provision for periodic reviews and evaluations of the training provided under the agreement. Such evaluations shall include the State agency's recommendations for improvement and the need for continuing such training. Reports containing such reviews and evaluations shall be submitted by the State agency to the Commissioner at such times as he may request.

§ 160.13 Records retention.

(a) The State agency shall provide for keeping accessible and intact all records supporting claims for Federal funds or relating to the accountability of a State agency for expenditure of such funds and relating to the expenditure of its share of the costs of providing training under the Act:

(1) For 3 years after the close of the fiscal year in which the expenditure was made by the State agency or any public or private educational agency or institution; or

(2) Until the State agency is notified of the completion of the Federal fiscal audit, whichever is later.

(b) The records involved in any claim or expenditure which has been questioned by the Federal fiscal audit shall be further maintained until necessary

adjustments have been made and the adjustments have been approved by the Commissioner.

§ 160.14 Fees and charges.

No fees or charges are to be collected from trainees as a condition of enrollment, participation, or completion of any approved training course of instruction. However, the cost of services or materials for which such fees or charges are normally made by the training agency to enrollees for similar training may be included as a separate item in the budget for each training project.

§ 160.15

Disposal of saleable items.

(a) State educational agencies shall insure that if items produced from supplies paid for in whole or in part with Manpower funds, or otherwise resulting from Manpower training projects, are disposed of, the disposition shall not involve the sale or resale of such items except as may be specifically authorized by the Commissioner.

(b) State educational agencies shall also insure that services rendered by trainees as a part of a Manpower training project will not have the effect of supplanting persons presently engaged in, or available for, employment in connection with supplying such services. § 160.16 In-kind matching.

The total dollar value of in-kind matching, whether of plant, equipment, and/or services, shall be computed annually on a statewide basis for the fiscal year involved, and is allowable not in excess of one-ninth of the Federal payments towards all allowable costs under the Agreement (State direction and supervision, training by public agencies or institutions and, to the extent matching is required, training by private institutions).

[31 F.R. 12101, Sept. 16, 1966]

(a) "Act" means the Adult Education Act of 1966 (Title III of P.L. 89-750, 80 Stat. 1191; 20 U.S.C. 1201-1213).

(b) "Adult" means any individual who has attained the age of 18 and is not currently enrolled in school.

(c) "Adult basic education" means education for adults whose inability to speak, read, or write the English language constitutes a substantial impairment of their ability to get or retain employment commensurate with their real ability, which is designed to help eliminate such inability and raise the level of education of such individuals with a view to making them less likely to become dependent on others, to improving their ability to benefit from occupational training and otherwise increasing their opportunities for more productive and profitable employment, and to making them better able to meet their adult responsibilities.

(d) "Adult education" means services or instruction below the college level (as determined by the Commissioner), for adults who

(1) Do not have a certificate of graduation from a school providing secondary education and who have not achieved an equivalent level of education, and

(2) Are not currently enrolled in schools.

(e) "Commissioner" means the U.S. Commissioner of Education, Department of Health, Education, and Welfare.

(f) "Department" means the Department of Health, Education, and Welfare.

(g) "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.

(h) "Local educational agency" means a public board of education or other public authority legally constituted within a State for either administrative control or direction of public elementary or sec

(1) "Private nonprofit agency" means an agency, organization or institution no part of whose net earnings may legally inure to the benefit of any private shareholder or individual.

(j) "Public agency" means an entity established by a State or a political subdivision thereof supported in whole or in part by public funds, and administered and controlled by publicly elected or appointed officials.

(k) "School or department of divinity" means an institution, or a department or branch of an institution, whose program is specifically for the education of students to prepare them to become ministers of religion, to enter upon some other religious vocation, or to prepare them to teach theological subjects.

(1) "State" includes the District of Columbia, and (except for the purposes of section 305(a) of the Act) the Commonwealth of Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Virgin Islands.

(m) "State educational agency" or "State agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary and secondary schools, or if there is a separate State agency or officer primarily responsible for supervision of adult education in public schools then such agency or officer may be designated for the purposes of the Act by the Governor or by State law. If no agency or officer qualifies under the preceding sentence, such term shall mean an appropriate agency or officer designated for the purposes of the Act by the Governor.

Subpart B-State Plan Purposes and Provisions

§ 166.2 State plan purposes.

The purposes of the State plan are to set forth the manner and procedures under which the State will carry out

the State program to encourage the establishment or expansion of basic educational programs for adults to enable them to overcome English language limitations, to improve their basic education in preparation for occupational training and more profitable employment, and to become more productive and responsible citizens, and to provide the basis on which Federal payments are made. Therefore, in order to participate in the program described in this subpart, & State must submit to the Commissione: a State plan which meets the requirements of this subpart applicable to suct program.

The State plan shall give the official name of the State educational agency which will be the sole agency for administering the plan, and shall state the title of the official who is authorized to submit the plan and amendments thereto. The State plan shall provide that the State agency will administer the State plan.

§ 166.4 Custody of funds.

The State plan shall provide for the receipt by the State Treasurer (or, if there be no State Treasurer, the office: identified by title exercising similar functions for the State) and for the proper safeguarding of all Federal funds granted to the State under the Act. The State plan shall provide that all Federal funds so received shall be expended solely for the purposes for which granted and that any such funds not so expended. including funds lost or diverted to other purposes, shall be paid to the U.S. Office of Education.

§ 166.5 Organization.

The State plan shall describe, by chart or otherwise, the organization of the State agency, its unit functions, and the lines of authority between the State agency and agencies participating under the State plan in order to assure coordination of this and all other adult basic education programs within the State both in developing and carrying out the programs.