data which are to be submitted on the application form prescribed by the Commissioner, required by the State commission to be submitted in connection with the filing of an application, or contained in reports or publications readily available to the State commission and the institutions of higher education within the State; (3) must be such as will enable an applicant to calculate in advance (on the assumption that sufficient funds will be available to cover all applications) the estimated Federal share which the State commission will certify to the Commissioner if it recommends the project for a Federal grant; and (4) must be consistent with the criteria published by the Commissioner with respect to the determination of relative priorities among projects and be promotive of the purposes of title VI.

§ 171.7 Fiscal control and fund accounting procedures.

(a) State commissions. Each State plan shall contain specific information regarding fiscal control and fund accounting procedures, as required by the Commissioner to ensure proper disbursement of and accounting for Federal funds which may be paid to the State commission for expenses necessary for the proper and efficient administration of the State plan.

Applicants shall

(b) Institutions. maintain adequate and separate accounting and fiscal records and accounts of all funds provided from any source to pay the cost of equipment, materials, and minor remodeling for each approved project, and audit of such records by the Commissioner's designated representatives shall be permitted and facilitated by applicants at any reasonable time. In addition, applicants shall make available for audit purposes financial accounting records and analyses which substantiate the total amount of pertinent expenditures for equipment, materials and minor remodeling for the particular institution or branch campus for the Federal fiscal year in which the grant is awarded, as well as the total amount of such expenditures for the preceding fiscal year.

§ 171.8 Retention of records.

(a) State commissions. (1) Accounts and documents supporting expenditures for expenses of State commissions shall be maintained until notification of com

pletion of Federal audits for the Federal fiscal year concerned.

(2) State commissions shall: Establish a complete case file on each application received; inform applicants of official actions and determinations, by letter or similar type of correspondence; and retain records regarding each case for at least 2 years after final action with respect to the application is taken by the State commission. In addition, each State commission shall maintain a full record of all proceedings by which it establishes relative priorities and recommended Federal shares for eligible projects considered according to each specified closing date and shall retain such records for at least 2 years after each such closing date.

(b) Institutions. All accounting records relating to approval projects and to verification of the applicant's maintenance of effort, as specified in paragraph (b) of § 171.7, including bank deposit slips, cancelled checks and other supporting documents and contract awards (or microfilm facsimiles thereof), shall be retained intact by the applicant for audit or inspection by authorized representatives of the Federal government for a period of 3 years after completion of the project or until the applicant is notified of the government's audit, whichever is later.

§ 171.9 State plans.

(a) The Commissioner shall approve a State plan only after he has received satisfactory assurance and explanation regarding the basis on which the State commission submitting the plan meets the requirements of section 601 of the Act. A State plan submitted in accordance with section 601 of the Act shall be submitted on forms or in a format supplied by the Commissioner and shall contain all provisions required by the Commissioner pursuant to section 603 of the Act and other sections of the regulations in this part, together with such additional organizational and administrative information as the Commissioner may request.

(b) All proposed amendments to the State plan shall be submitted to the Commissioner for his approval in such form and in accordance with such instructions as are established for that purpose. Such amendments shall apply uniformly to all applications to be considered together as of any closing date, and, unless otherwise provided in the State plan, shall be

come effective immediately upon approval by the Commissioner, except that in no event shall any amendment which affects the standards and methods for determining priorities or Federal shares or any amendment providing for an additional closing date or for the change in an existing closing date become effective sooner than 60 days after the date the proposal to make such amendment is received by the Commissioner and 30 days after the date of the Commissioner's approval of the amendments as a part of the State plan: Provided, however, That amendments which are required by amendments of the Act or are designed to promptly implement amendments of the Act may be made effective immediately upon their approval by the Commissioner.

§171.10 Requirement for economical methods of purchase.

All equipment, materials, and minor remodeling work, the cost of which is to be charged to an approved project, shall be procured in an economical manner consistent with sound business practice. Proposed methods of purchase shall be set forth by the applicant as part of each project application, and shall include specific justification for any proposal to follow procedures other than open, competitive bidding.

§ 171.11

Determination of costs eligible for Federal participation.

(a) Costs eligible for Federal participation in connection with any project shall include only those costs to the applicant which are determined to be eligible in accordance with paragraphs (c) and (d) of § 171.3, are consistent with the plan for improvement of undergraduate instruction set forth in the approved application, are incurred in an economical manner consistent with sound business practice, and are for items which are not overly elaborate or extravagant. Expenditures in which Federal participation is claimed also may include the cost of raw or processed materials or component parts to be made into finished products or into complete equipment units, including the cost (above and beyond salaries of any regular employees of the applicant) of making and assembling such equipment.

pleted project and related financial accounts.

(c) In any case where the costs eligible for Federal participation, as determined by the final audit, exceed those provided for in the grant agreement for the project, the Federal share entitlement of the applicant shall be limited to that provided by the grant agreement.

(d) In any case where the costs eligible for Federal participation, as determined by the final audit, are less than those provided for in the grant agreement, the Commissioner shall redetermine the amount of the Federal share entitlement of the applicant in accordance with the maximum Federal share which would have been recommended for the project, based on the lesser eligible cost, under State plan provisions in effect at the time the project was recommended for a grant, if sufficient funds had been available in the State allotment at that time to provide the maximum possible Federal share provided for by the plan under such circumstances. If such redetermined Federal share entitlement is less than the amount provided in the grant agreement, the grant shall be reduced accordingly, and any overpayment of Federal funds, plus any interest earned thereon, shall immediately be due to the Government of the United States. If such redetermined Federal share is equal to or greater than the amount of the Federal share provided in the grant agreement, the final settlement shall be based on the Federal share amount provided in the grant agreement.

§ 171.12 Payment of grant funds on approved projects.

The Commissioner shall provide for payment of grant funds for the project pursuant to such methods as the Commissioner determines will best make the funds available as needed and eliminate unnecessary expense to the Federal Government.

PART 173-FINANCIAL ASSISTANCE FOR COMMUNITY SERVICE AND CONTINUING EDUCATION PROGRAMS

Subpart A-Definitions and Program Outline

shall be

Sec.

178.1

86-096-68-27

Definitions. Program outline.

Subpart A-Definitions and Program

§ 173.1

Outline

Definitions.

As used in this part:

(a) "Act" means the Higher Education Act of 1965 (P.L. 89-329, 79 Stat. 1219, 20 U.S.C. 1001).

(b) "Commissioner" means the US. Commissioner of Education, Department of Health, Education, and Welfare.

(c) "Community service program" means an educational program, activity. or service offered by an institution(s) of higher education and designed to assist in the solution of community problems in rural, urban, or suburban areas with particular emphasis on urban and suburban problems. "Community service program" may include but is not limited to a research program, an extension or continuing education activity, or a course, provided, however, that such courses are extension or continuing education courses and are either fully acceptable toward an academic degree, or of college level as determined by the institution offering such courses.

(1) "Educational service" means an aspect of the community service program involving the resources of an institution(s) of higher education, including equipment and library materials used in support of efforts to solve community problems.

(2) "Educational research program" means an experimental activity or demonstration carried out on an objective and systematic basis using the resources of an institution (s) of higher education to identify and develop new, expanding, or improved approaches to the solution of community problems.

(3) "Extension and continuing education" refers to the extension and continuance of the teaching and research resources of an institution of higher education to meet the unique educational needs of the adult population who have either completed or interrupted their formal training. Instructional methods include, but are not limited to, formal classes, lectures, demonstrations, counseling and correspondence, radio, television, and other innovative programs of instruction and study organized at 8 time and geographic location enabling individuals to participate. Programs of continuing and extension education assist the individual to meet the tasks imposed by the complexities of our society in fulfilling his role in the world of work,

as an informed and responsible citizen, and in his individual growth and development.

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

(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, 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 business school or technical institution which meets the provisions of subparagraphs (1), (2), (4), and (5) of this paragraph.

(g) "Nonprofit institution" means an institution owned and operated by one or more nonprofit corporations or assoclations 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.

(1) "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

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. 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.

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. For the fiscal year 1966, the information required by § 173.12 shall be submitted with the original State plan. The State plan must be amended prior to September 1, 1966, for the fiscal year 1967 and thereafter prior to the commencement of each fiscal year for which funds are requested, in order that the State plan will currently set forth the information required by § 173.12. This 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.)

(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.

§ 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.