Appendix to Part 81 - Illustrations of Proportionality
34:1.1.1.1.27.2.121.17.7 :
Appendix to Part 81 - Illustrations of Proportionality
(1) Ineligible beneficiaries. A State uses 15 percent of
its grant to meet the special educational needs of children who
were migratory, but who have not migrated for more than five years
as a Federal program statute requires for eligibility to
participate in the program. Result: Recovery of 15 percent of the
grant - all program funds spent for the benefit of those children.
Although the services were authorized, the children were not
eligible to receive them.
(2) Ineligible beneficiaries. A Federal program designed
to meet the special educational needs of gifted and talented
children requires that at least 80 percent of the children served
in any project must be identified as gifted or talented. A local
educational agency (LEA) conducts a project in which 76 students
are identified as gifted or talented and 24 are not. The project
was designed and implemented to meet the special educational needs
of gifted and talented students. Result: The LEA must return five
percent of the project costs. The LEA provided authorized services
for a project in which the 76 target students had to constitute at
least 80 percent of the total. Thus, the maximum number of
non-target students permitted was 19. Project costs relating to the
remaining five students must be returned.
(3) Ineligible beneficiaries. Same as the example in
paragraph (2), except that only 15 percent of the children were
identified as gifted or talented. On the basis of the low
percentage of these children and other evidence, the authorized
Departmental official finds that the project as a whole did not
address their special educational needs and was outside the purpose
of the statute. Result: The LEA must return its entire award. The
difference between the required percentage of gifted and talented
children and the percentage actually enrolled is so substantial
that, if consistent with other evidence, the official may
reasonably conclude the entire grant was misused.
(4) Ineligible beneficiaries. Same as the example in
paragraph (2), except that 60 percent of the children were
identified as gifted or talented, and it is not clear whether the
project was designed or implemented to meet the special educational
needs of these children. Result: If it is determined that the
project was designed and implemented to serve their special
educational needs, the LEA must return 25 percent of the project
costs. A project that included 60 target children would meet the
requirement that 80 percent of the children served be gifted and
talented if it included no more than 15 other children. Thus, while
the LEA provided authorized services, only 75 percent of the
beneficiaries were authorized to participate in the project (60
target children and 15 others). If the authorized Departmental
official, after examining all the relevant facts, determines that
the project was not designed and implemented to serve the special
educational needs of gifted or talented students, the LEA must
return its entire award because it did not provide services
authorized by the statute.
(5) Unauthorized activities. An LEA uses ten percent of
its grant under a Federal program that authorizes activities only
to meet the special educational needs of educationally deprived
children to pay for health services that are available to all
children in the LEA. All the children who use the Federally funded
health services happen to be educationally deprived, and thus
eligible to receive program services. Result: Recovery of ten
percent of the grant - all program funds spent for the health
services. Although the children were eligible to receive program
services, the health services were unrelated to a special
educational need and, therefore, not authorized by law.
(6) Set-aside requirement. A State uses 22 percent of its
grant for one fiscal year under a Federal adult education program
to provide programs of equivalency to a certificate of graduation
from a secondary school. The adult education program statute
restricts those programs to no more than 20 percent of the State's
grant. Result: Two percent of the State's grant must be returned.
Although all 22 percent of the funds supported adult education, the
State had no authority to spend more than 20 percent on secondary
school equivalency programs.
(7) Set-aside requirement. A State uses eight percent of
its basic State grant under a Federal vocational education program
to pay for the excess cost of vocational education services and
activities for handicapped individuals. The program statute
requires a State to use ten percent of its basic State grant for
this purpose. Result: The State must return two percent of its
basic State grant, regardless of how it was used. Because the State
was required to spend that two percent on services and activities
for handicapped individuals and did not do so, it diverted those
funds from their intended purposes, and the Federal interest was
harmed to that extent.
(8) Excess cost requirement. An LEA uses funds reserved
for the disadvantaged under a Federal vocational education program
to pay for the cost of the same vocational education services it
provides to non-disadvantaged individuals. The program statute
requires that funds reserved for the disadvantaged must be used to
pay only for the supplemental or additional costs of vocational
education services that are not provided to other individuals and
that are required for disadvantaged individuals to participate in
vocational education. Result: All the funds spent on the
disadvantaged must be returned. Although the funds were spent to
serve the disadvantaged, the funds were available to pay for only
the supplemental or additional costs of providing services to the
disadvantaged.
(9) Maintenance-of-effort requirement. An LEA
participates in a Federal program in fiscal year 1988 that requires
it to maintain its expenditures from non-Federal sources for
program purposes to receive its full allotment. The program statute
requires that non-Federal funds expended in the first preceding
fiscal year must be at least 90 percent of non-Federal funds
expended in the second preceding fiscal year and provides for a
reduction in grant amount proportional to the shortfall in
expenditures. No waiver of the requirement is authorized. In fiscal
year 1986 the LEA spent $100,000 from non-Federal sources for
program purposes; in fiscal year 1987, only $87,000. Result: The
LEA must return 1/30 of its fiscal year 1988 grant - the amount of
its grant that equals the proportion of its shortfall ($3,000) to
the required level of expenditures ($90,000). If, instead, the
statute made maintenance of expenditures a clear condition of the
LEA's eligibility to receive funds and did not provide for a
proportional reduction in the grant award, the LEA would be
required to return its entire grant.
(10) Supplanting prohibition. An LEA uses funds under a
Federal drug education program to provide drug abuse prevention
counseling to students in the eighth grade. The LEA is required to
provide that same counseling under State law. Funds under the
Federal program statute are subject to a supplement-not-supplant
requirement. Result: All the funds used to provide the required
counseling to the eighth-grade students must be returned. The
Federal funds did not increase the total amount of spending for
program purposes because the counseling would have been provided
with non-Federal funds if the Federal funds were not available.
(11) Matching requirement. A State receives an allotment
of $90,000 for fiscal year 1988 under a Federal adult education
program. It expends its full allotment and $8,000 from its own
resources for adult education. Under the Federal statute, the
Federal share of expenditures for the State's program is 90
percent. Result: The State must return the unmatched Federal funds,
or $18,000. Expenditure of a $90,000 Federal allotment required
$10,000 in matching State expenditures, $2,000 more than the
State's actual expenditures. At a ratio of one State dollar for
every nine Federal dollars, $18,000 in Federal funds were
unmatched.
(12) Application requirements. In order to receive funds
under a Federal program that supports a wide range of activities
designed to improve the quality of elementary and secondary
education, an LEA submits an application to its State educational
agency (SEA) for a subgrant to carry out school-level basic skills
development programs. The LEA submits its application after
conducting an assessment of the needs of its students in
consultation with parents, teachers, community leaders, and
interested members of the general public. The Federal program
statute requires the application and consultation processes. The
SEA reviews the LEA's application, determines that the proposed
programs are sound and the application is in compliance with
Federal law, and approves the application. After the LEA receives
the subgrant, it unilaterally decides to use 20 percent of the
funds for gifted and talented elementary school students - an
authorized activity under the Federal statute. However, the LEA
does not consult with interested parties and does not amend its
application. Result: 20 percent of the LEA's subgrant must be
returned. The LEA had no legal authority to use Federal funds for
programs or activities other than those described in its approved
application, and its actions with respect to 20 percent of the
subgrant not only impaired the integrity of the application
process, but caused significant harm to other Federal interests
associated with the program as follows: the required planning
process was circumvented because the LEA did not consult with the
specified local interests; program accountability was impaired
because neither the SEA nor the various local interests that were
to be consulted had an opportunity to review and comment on the
merits of the gifted and talented program activities, and the LEA
never had to justify those activities to them; and fiscal
accountability was impaired because the SEA and those various local
interests were, in effect, misled by the LEA's unamended
application regarding the expenditure of Federal funds.
(13) Harmless violation. Under a Federal program, a
grantee is required to establish a 15-member advisory council of
affected teachers, school administrators, parents, and students to
assist in program design, monitoring, and evaluation. Although the
law requires at least three student members of the council, a
grantee's council contains only two. The project is carried out,
and no damage to the project attributable to the lack of a third
student member can be identified. Result: No financial recovery is
required, although the grantee must take other appropriate steps to
come into compliance with the law. The grantee's violation has not
measurably harmed a Federal interest associated with the
program.
(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234b(a), and 3474(a))
[54 FR 19512, May 5, 1989; 54 FR 21622, May 19, 1989]