The State plan shall contain a statement of the policies, procedures, criteria, and priorities to be followed by the State agency in approving local educational agency programs which will assure substantial progress (with respect to all segments of the adult population and all areas of the State) in the establishment or expansion of adult basic education programs. Such criteria and priorities shall be designed to assure that first priority will be given to programs which provide for instruction in speaking, reading, or writing the English language for persons functioning at the fifth grade level or below. Second priority will be given to such instruction for persons functioning above the fifth and through the eighth grade level.

In establishing such criteria, the State agency shall give consideration to factors such as the following:

(a) Whether and to what extent a program will serve adults in those geographic areas of the State which have high concentration of adults in need of basic education;

(b) Whether and to what extent a program will serve adults with the greatest basic education deficiencies which are impairing their ability to obtain employment and become more productive and responsible citizens;

(c) Whether and to what extent a program has been planned and/or will be conducted in cooperation with Com

munity Action programs, Work Experience programs, VISTA, Work Study programs, Manpower Development and Training programs, Vocational Education programs, and other programs relating to the antipoverty effort (see § 166.11);

(d) Whether and to what extent a program will utilize qualified instructional staff, adequate facilities, equipment, materials, and guidance and counseling services;

(e) Whether and to what extent a program will provide health information and services to the extent available through cooperative arrangements with State health authorities;

(f) Whether and to what extent a program makes provision for effective recruiting of adults for enrollment;

(g) Whether and to what extent a program will provide for the use of personnel in college work study programs, VISTA, and other antipoverty programs;

(h) Whether and to what extent a program incorporates the results of research, or techniques which have been proven effective;

(i) Whether and to what extent a program incorporates innovative or imaginative instructional methods; and

(j) Whether and to what extent a program provides for effective administration and supervision by the local educational agency to assure efficient and economical operation.

§ 166.10 Cooperative arrangements between State educational agency and State health authority.

The State plan shall provide for cooperative arrangements between the State educational agency and the State health authority authorizing the use of such health information and services for adults as may be available from such agencies and as may reasonably be necessary to enable them to benefit from the instruction provided pursuant to the Act. § 166.11 Cooperation in antipoverty efforts.

The State plan shall set forth the policies and procedures which the State agency will follow prior to approving local educational agency programs, and special projects, teacher-training, or research grants to assure maximum cooperation of effort with Community Action programs, Work Experience programs, VISTA, Work Study, and other programs relating to the antipoverty effort and to

ascertain that there is no unnecessary duplication of other programs offering adult basic education or teacher training for such programs.

§ 166.12

Special projects, teacher training and research.

The State plan shall describe the policies, procedures, criteria and priorities which the State agency will follow in making grants for adult basic education to public and private nonprofit agencies for special projects, teacher training and research. The State plan shall set forth the criteria and priorities it will use to assure that priority will be given to special projects, teacher training, and research programs related to speaking, reading, or writing the English language at the eighth grade level or below. The State plan shall state whether the State agency is prohibited under State law from making such grants to private nonprofit agencies and, if so, the basis for this determination.

§ 166.13

State fiscal control and accounting procedures.

(a) General. The State plan shall set forth such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of funds paid to the State, including funds paid by the State to local educational agencies; funds paid by the State to public and private nonprofit agencies for special projects, teacher training, and research; and all matching funds. Such procedures shall be in accordance with applicable State laws and regulations which shall be cited in the plan. In addition, the State plan shall specify the particular accounting basis (cash, accrual, or obligation) to be used by the State agency and cite the authority under State and local laws, rules, and regulations for such 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 indi

cate how the expenditures of local educational agencies and other agencies participating under the State plan wil 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 t 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 overal objectives stated in the plan.

The State plan shall provide that the State agency will make and submit to the Commissioner the reports described

§ 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 pertiner: 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.

amendments thereto shall include a certification by the State's Attorney Genat eral, 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; Is 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
Participation

§ 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.

§ 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 ex

pended 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.

(a) No payment may be made from a State's allotment under the Act for any educational program, activity or service related to sectarian instruction or religious worship or any adult basic education program provided by a school or department of divinity, as defined in § 166.1(k). An institution which has a school, branch, department or other administrative 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.

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.

§ 166.32 Federal and State shares of eligible expenditures.

(a) Federal share. The Federal share of expenditures to carry out a State plan shall be paid from a State's allotment available for grants to such State; and, for the fiscal year ending June 30, 1967, and the succeeding fiscal year, the Federal share for each State shall be 90 per centum.

(b) Limitation. The expenditures which are to be considered in computing the amount of Federal financial participation under a State plan are only those 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. § 166.33 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 shal 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, which cost the Federal Government b participated are sold or no longer us for the purpose authorized by the A the Federal Government shall be cred ited with its proportionate share of the value of such equipment, the value being determined on the basis of the sale pric in the case of a bona fide sale or on the fair market value in the case of discor tinuance of use or diversion for other than State plan purpose.

(b) Inventories and records are re quired to be kept for all items of equip ment referred to in paragraph (a) of thi section. The State agency is responsibi for having available in the State agency's office information sufficient for a deter mination of whether such equipme continues to be used for a purpose provided for under the Act.

§ 166.36 Proration of costs.

Federal financial participation % available only with respect to that por tion of any eligible costs as defined § 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 b carrying out the activities under State plan and the percentage of time spent on each other activity. The Stat and all recipients of Federal funds u der the State plan shall maintain records, documented on an after-the-fact basis, to substantiate the proration expenditures for applicable items suc as salaries, travel, rental, supplies, and equipment.

arnings shall be refunded to the U.S. Office of Education. The State agency Shall submit as a part of each annual -inancial report a statement showing the amount of interest earned on Federal unds 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 deteramine 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.

The State agency

(a) General rule. 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;

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(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.