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 review.

Right to hearing and judicial

(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.

missioner 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;

(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

(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 incor

porated 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.

§ 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, as personnel in adult education programs designed to carry out the purposes of the Act (section 302).

(a) Special projects. Any local educational agency or other public or private nonprofit agency, including an educational television station, is eligible to submit an application.

(b) Teacher-training projects. Any college or university, State or local educational agency, or other appropriate public or private nonprofit agency or organization is eligible to submit an application.

(c) Ineligible applicants. The following are not eligible: (1) Individuals; (2) any agency, institution, or organization whose net earnings lawfully inure or may inure to the benefit of any individual; or (3) any "school or department of divinity" as defined in section 313 of the Act.

§ 166.64 Application procedures.

(a) General. Any eligible applicant may submit an application to undertake either a special project or a teachertraining project, or both. A separate application must be submitted for each type of proposed project. The application must be filed on forms supplied by the Commissioner and executed by the applicant, or an official of the applicant, duly authorized to make such application. A certified copy of the authorization to submit the proposal shall be made a part of each application. The Commissioner may establish and announce "cut-off dates" for the receipt of applications where he deems it necessary for the efficient administration of the program.

(b) Project description. The application shall describe the nature, duration, purpose, and plan of the proposed project; the qualifications of the project director and of the professional personnel who will be involved in the project; the facilities and resources that will be made available; a justification of the amount of Federal funds requested; the portion of the cost of the project proposed to be contributed by the applicant and any other information and assurances as the Commissioner may require.

(c) Administrative information. The application shall contain the following: The name of the official authorized to submit the application; the name of the individual or official who will be respon

sible for carrying out the project; the individual or official to whom communications shall be directed; the individual or official who shall be responsible for the receipt and disbursement of Federal funds; and, where appropriate, the individual or official who shall have ultimate responsibility for the accounting of such Federal funds.

(d) Fiscal information. The application shall state the accounting basis (cash, accrual, or obligation) used by the applicant and, where appropriate, the applicable State or local laws requiring or establishing such accounting procedure. Where the applicant does not operate on the cash system, the application shall contain a statement indicating when, under its accounting system, an expenditure is deemed to have been incurred.

§ 166.65

Evaluation of applications.

Applications will be evaluated on the basis of criteria set forth in § 166.66(a) (special projects) and § 166.66(b) (teacher-training projects). On the basis of his evaluation, the Commissioner may approve the application for negotiation in whole or in part, or disapprove it, and will notify the applicant accordingly. Subsequent to such negotiation, a grant agreement will be entered into, which agreement will set forth the terms and conditions upon which the grant is made. If an applicant wishes to have an application reconsidered for approval during a subsequent fiscal year, the application must be resubmitted.

§ 166.66 Criteria.

(a) Special projects. In evaluating applications for special projects, the Commissioner will give consideration to such factors as:

(1) Whether and to what extent the project involves the use of innovative methods, systems, materials, or programs which may have national significance or be of special value in promoting effective programs to encourage and expand basic education 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;

(2) Whether and to what extent the project is to be carried out in cooperation with other Federal, federally assisted, State or local programs which

have unusual promise in promoting 8 comprehensive or coordinated approach to the problems of persons with basic educational deficiencies;

(3) Whether and to what extent the project has unusual promise in establishing or improving instruction in speaking, reading, or writing the English language at the eighth grade level or below;

(4) Whether and to what extent the project is related to and is carried out in conjunction with a teacher-training project in adult education;

(5) Whether and to what extent the applicant proposes to make periodic, systematic and objective reviews and evaluations in order to determine the status and progress of the project in terms of its overall objective;

(6) Whether and to what extent there will be effective administration and supervision to assure efficient and economical operation;

(7) Whether and to what extent the project is soundly designed and has educational significance; the project will utilize competent and adequate personnel, both professional and administrative; the applicant has and will make available adequate facilities to insure successful carrying out of the project; and

(8) Whether and to what extent the project will result in the development of new materials and methods which may be of value in increasing the effectiveness of basic educational programs for adults.

(b) Teacher-training projects. In evaluating applications for teachertraining projects, the Commissioner will give consideration to such factors as:

(1) Whether and to what extent the teacher-training project will include training in the utilization of innovative methods, systems, materials, or programs;

(2) Whether and to what extent the teacher-training project will meet local

needs;

(3) Whether and to what extent the teacher-training project can be expected to meet needs for teachers of adult basic education beyond the geographic region in which the applicant is located;

(4) Whether and to what extent the applicant proposes to make periodic, systematic and objective reviews and evaluations of the teacher-training project;

(5) Whether and to what extent the teacher-training project is related to and carried out in conjunction with a special project under this Act;

(6) Whether and to what extent the teacher-training project is coordinated with the adult basic education program being sponsored under the State plan of the State in which the applicant is located or of any other State from which trainees are drawn or to which trainees may be expected to return;

(7) Whether and to what extent the teacher-training project is soundly designed and has educational significance; the project will utilize competent and adequate personnel, both professional and administrative; the applicant has and will make available adequate facilities to insure successful operation of the proposed teacher-training project; and (8) Whether and to what extent there will be effective administration and supervision to assure efficient and economical operation.

§ 166.67 Federal financial participation.

(a) General. The maximum amount of Federal financial participation in any project will be set out in the grant agreement.

(b) Special projects. Recipients of special project grants will be required, whenever feasible, to contribute an amount equal to at least 10 percent of the cost of the project. The amount of such required non-Federal contribution will be stated in the grant agreement and will be determined on the basis of the resources of the institution, the size and scope of the project, the national significance of the project and any other factors bearing on either the value of the project or the ability of the grant recipient to contribute to such project which the Commissioner may determine to be relevant.

projects-pay

(c) Teacher-training ments to recipients. Recipients of teacher-training grants will be entitled to receive for purposes of payment to individual trainees enrolled in the fulltime program:

(1) The sum of $75 per week (as defined in § 166.62) in the case of a training project lasting no longer than 8 weeks, and an amount to be fixed by the Commissioner in the case of a training project lasting longer than 8 weeks;

(2) The sum of $15 per week for each dependent of a trainee. For purposes of this subpart, a dependent shall be deemed to be an individual who receives or is treated for Federal income tax purposes as having received one-half or more of his support from the trainee and is

either (i) his sopuse or (ii) a person for whom the trainee received a dependency allowance for Federal income tax purposes under section 152 of the Internal Revenue Code of 1954;

(3) One travel allowance for each trainee for domestic travel at the lowest class air fare available, from his place of residence to the institution and return, provided his residence is in excess of 50 miles from the institution. No per diem or subsistence payments will be allowed; no travel allowance will be made for dependents; and

(4) Any amounts received under any other Federal program shall be set off against the amount which a trainee would otherwise be eligible to receive under this program. A trainee shall not be precluded from receiving a loan under any Federal loan program and no deduction of such loan from the payment to a trainee is permitted.

Federal financial participation is available only with respect to amounts expended under an approved project. The effective date of the grant will be set forth in the grant agreement, but in no event shall such effective date precede the date on which the application was received by the Commissioner.

§ 166.69 Payment procedure.

Federal payment may be made either in advance or by way of reimbursement, to be determined consistent with the nature of the activities and the services involved in the project, and in accordance with the terms and conditions of the grant agreement. Ten percent of the grant amount shall be withheld pending receipt of the final program and fiscal reports. (See § 166.78 (a) and (b).)

trol and fund accounting procedures as are necessary to assure proper disbursement of, and accounting for, the Federal funds paid to it and the non-Federal contribution. Accounts and supporting documents relating to project expenditures shall be adequate to permit an accurate and expeditious audit.

(b) Auditing procedures. Each grantee shall make appropriate provision for the auditing of project expenditure records. Such records and audit reports shall be available to auditors of the Federal Government.

§ 166.72 Adjustments.

Each grantee shall, in maintaining program expenditure accounts, records, and reports, make any necessary adjustments to reflect refunds, credits, underpayments, or overpayments, as well as any adjustments resulting from Federal or local administrative reviews and audits. Such adjustments shall be set forth in the financial reports filed with the Commissioner.

§ 166.73 Interest on Federal funds.

In the event that any interest is earned on Federal funds, such interest shall be refunded to the Office of Education.

To the extent that they are reasonably necessary for and attributable to carrying out the project, eligible costs may, at the discretion of the grantee, include the following:

(a) Direct costs. (1) 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;

(2) Employer's contributions to retirement, health, workmen's compensation, and other welfare funds maintained for employees of the grantee;

(3) Fees and approved expenses of consultants and other persons or groups acting in an advisory capacity;

(4) Travel expenses of staff and consultants thereto, in accordance with established appropriate State, local or institutional travel regulations and limitations;

(5) Communications costs;

(6) Supplies, printing, and printed materials;

(7) Rental of, or, where economically justified, purchase of office and program equipment;

(8) 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;

(9) Minor remodeling of space in publicly owned buildings to the extent that such costs are not included in rental;

(10) Utilities and custodial services to the extent not included in any other item of this section; and

(11) In the case of teacher-training grants, fees required to be paid by all students (exclusive of tuition), provided that no part of such fees is to be applied to a building fund, or to the reduction of an institutional construction debt.

(b) Indirect costs. Indirect costs, if any, will be determined on the basis of negotiation in accordance with prevailing policies in effect at the time the grant is made.

§ 166.75 Proration of costs.

Federal financial participation is available only with respect to that portion of any eligible costs as defined in § 166.74 attributable to a project approved under this Subpart D. Where salaries and wages are prorated the grantee must document the time spent in carrying out activities related to the project and the percentage of time spent on each nonrelated activity. Each grantee shall maintain records documented on an after-thefact basis to substantiate the proration of expenditures for applicable items such as salaries, travel, rental, supplies, and equipment.

§ 166.76 Retention of records.

(a) General rule. Each grantee shall provide for keeping accessible and intact all records pertaining to the expenditure of the Federal grant and the non-Federal