Intent To Repay to the Commonwealth of Pennsylvania Department of Education Funds Recovered as a Result of a Final Audit Determination

DEPARTMENT OF EDUCATION

Intent To Repay to the Commonwealth of Pennsylvania Department of

Education Funds Recovered as a Result of a Final Audit Determination

AGENCY: Department of Education.

ACTION: Notice of intent to award grantback funds.

-----------------------------------------------------------------------

SUMMARY: Under section 459 of the General Education Provisions Act

(GEPA), the U.S. Secretary of Education (Secretary) intends to repay to

the Commonwealth of Pennsylvania Department of Education, the State

educational agency (SEA), an amount equal to 75 percent of the $210,000

recovered by the U.S. Department of Education (Department) as a result

of a final audit determination. This notice describes the SEA's plan,

submitted on behalf of the Philadelphia School District, the local

educational agency (LEA), for the use of the repaid funds and the terms

and conditions under which the Secretary intends to make those funds

available. The notice invites comments on the proposed grantback.

DATES: All comments must be received on or before July 7, 1995.

ADDRESSES: Comments concerning the grantback should be addressed to

Mary Jean LeTendre, Director, Compensatory Education Programs, Office

of Elementary and Secondary Education, U.S. Department of Education,

600 Independence Avenue SW (Portals Building, Room 4400), Washington,

D.C. 20202-6132.

FOR FURTHER INFORMATION CONTACT: S. Colene Nelson, U.S. Department of

Education, 600 Independence Avenue SW (Portals Building, Room 4400),

Washington, D.C. 20202-6132. Telephone: (202) 260-0979. Individuals who

use a telecommunications device for the deaf (TDD) may call the Federal

Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8

p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION:

A. Background

The Department has recovered $210,000 from the SEA in satisfaction

of claims arising from an audit of the LEA covering fiscal year (FY)

1987. The claims involved the SEA's administration of Chapter 1 of the

Education Consolidation and Improvement Act of 1981 (Chapter 1, ECIA),

a program that provided financial assistance to State and local

agencies to address the special educational needs of educationally

deprived children in areas with high concentrations of children from

low-income families.

Specifically, the auditors found that for the period July 1, 1986

through March 18, 1987, the LEA's Office of Planning, Research and

Evaluation (OPRE) prorated staff did not maintain time and effort

reports properly to support $604,611 of allocable charges under Chapter

1. Alternative documentation in the form of sign-in sheets and

evaluation reports was reviewed by the auditors and also found to be

inadequate for allocating OPRE salaries to Chapter 1 because it did not

demonstrate the actual time that prorated staff spent on Chapter 1

activities. The auditors therefore questioned $604,611 of salaries,

fringe benefits, and indirect costs.

On March 19, 1987, the LEA implemented a time and effort reporting

system to be used by the OPRE staff. However, the auditors found that

for the period March 19, 1987 through June 30, 1987, the time and

effort reports maintained by OPRE-prorated staff did not support the

full amount of Chapter 1 claims submitted by the LEA. The auditors

therefore questioned an additional $20,066 improperly charged to the

Chapter 1 program for salaries, fringe benefits, and indirect costs for

the remainder period of time. The auditors recommended a total refund

to the Department in the amount of $624,677 for the first finding.

In a second finding, the auditors found that the LEA failed to

retain documentation supporting student eligibility for the Chapter 1

Reading and English to Speakers of Other Languages (ESOL) projects.

Therefore, the teachers' salaries and fringe benefits charged to the

Chapter 1 program for the Reading and ESOL projects during the period

July 1, 1986 through June 30, 1987 were unsupported. As a result, the

auditors identified $137,661 of Chapter 1 salaries, fringe benefits,

and indirect costs charged to the Chapter 1 program, for the Reading

and ESOL teachers, for [[Page 30077]] which student eligibility

documentation could not be located.

Based on these two findings, the Assistant Secretary for Elementary

and Secondary Education (Assistant Secretary) issued a final

determination on March 29, 1991, that concluded that salaries, fringe

benefits, and indirect costs charged to the Chapter 1 program were

unsupported or incorrectly calculated. The determination required a

refund totaling $762,338.

The SEA appealed the final determination of the Assistant Secretary

through the Office of Administrative Law Judges. Review of additional

documentation submitted during this period of appeal and negotiations

between the school district and the Department resulted in an order of

dismissal issued on April 15, 1992, by the Department settling the

audit at $210,000 in questioned costs. Subsequently, on June 4, 1992,

the LEA submitted a check for $210,000.

B. Authority for Awarding a Grantback

Section 459(a) of GEPA, 20 U.S.C. 1234h(a), provides that whenever

the Secretary has recovered program funds following a final audit

determination, the Secretary may consider those funds to be additional

funds available for the program and may arrange to repay to the SEA or

LEA affected by the determination an amount not to exceed 75 percent of

the recovered funds. The Secretary may enter into this grantback

arrangement if the Secretary determines that--

(1) Practices or procedures of the SEA or LEA that resulted in the

audit determination have been corrected, and the SEA or LEA is, in all

other respects, in compliance with the requirements of the applicable

program;

(2) SEA has submitted to the Secretary a plan for the use of the

funds to be awarded under the grantback arrangement that meets the

requirements of the program, and, to the extent possible, benefits the

population that was affected by the failure to comply or by the

misexpenditures that resulted in the audit exception; and

(3) Use of funds to be awarded under the grantback arrangement in

accordance with the SEA's plan would serve to achieve the purposes of

the program under which the funds were originally granted.

C. Plan for Use of Funds Awarded Under a Grantback Arrangement

Pursuant to section 459(a)(2) of GEPA, the SEA has applied for a

grantback of $157,500--75 percent of the principal amount recovered by

the Department--and has submitted a plan on behalf of the LEA for use

of the grantback funds to meet the special educational needs of

educationally deprived children in programs administered under Chapter

1, ESEA (20 U.S.C. 2701 et seq. (1988)).

According to the plan, the LEA will use the grantback funds under

Chapter 1 to provide six weeks of summer kindergarten to be held at

eight schoolwide project sites, two classes per site for a total of 16

classrooms. Participating teachers will attend one planning meeting (2

hours) and a full day of staff development (5 hours) in June in

preparation for the program that will begin for students on July 5 and

end on August 15, 1995. The participating schools will be selected

based on the following two factors: (1) A high concentration of

students about to enter first grade who have not had a kindergarten

experience, and (2) a high concentration of poverty. The Office of

Accountability and Assessment will identify the targeted schools. If

space is available, children who entered kindergarten after January

1995 will also be included. Teachers and classroom assistants will

telephone parents to keep attendance high.

Each class will be staffed by a teacher and a classroom assistant.

The teacher-student ratio will be one to fifteen. The standardized

kindergarten curriculum for the LEA will be used as the basis for

instruction. Schools will be invited to pilot some special materials to

increase hands-on interactive, developmentally appropriate instruction.

These materials will be selected by the principal and teachers at the

school to coordinate with the instructional model in use at the school.

For the sixth week, the first grade teachers to whom the students have

been assigned will attend and work with the students. The Early Primary

Progress Report (EPPR), a developmentally appropriate kindergarten

checklist, will be administered to each participant at the completion

of the summer program. Children will be rated as competent, making

progress, or making improvement. The results will be summarized to

determine attainment of objectives for each class and the program as a

whole.

Also, the LEA staff, in consultation with nonpublic school

authorities and parents of Chapter 1 students, decided to allocate

grantback funds to support summer professional development for 20

teachers of Chapter 1 students, in order to provide these teachers with

an opportunity to focus on the needs of the Chapter 1 children they

teach and to align the regular education program with Chapter 1 support

activities in their schools. Twenty nonpublic schools with the highest

concentrations of Chapter 1 program students will be selected for

participation. Attendance will be recorded at each staff development

session and participating teachers will complete a workshop evaluation

survey at the end of the two-week session.

D. The Secretary's Determinations

The Secretary has carefully reviewed the plan submitted by the SEA.

Based upon that review, the Secretary has determined that the

conditions under section 459 of GEPA have been met. These

determinations are based upon the best information available to the

Secretary at the present time. If this information is not accurate or

complete, the Secretary may take appropriate administrative action. In

finding that the conditions of section 459 of GEPA have been met, the

Secretary makes no determination concerning any pending audit

recommendations or final audit determinations.

E. Notice of the Secretary's Intent To Enter Into a Grantback

Arrangement

Section 459(d) of GEPA requires that, at least 30 days before

entering into an arrangement to award funds under a grantback, the

Secretary must publish in the Federal Register a notice of intent to do

so, and the terms and conditions under which payment will be made.

In accordance with section 459(d) of GEPA, notice is hereby given

that the Secretary intends to make funds available to the SEA under a

grantback arrangement. The grantback award would be in the amount of

$157,500.

F. Terms and Conditions Under Which Payments Under a Grantback

Arrangement Would Be Made

The SEA and LEA agree to comply with the following terms and

conditions under which payment under a grantback arrangement would be

made:

(1) The funds awarded under the grantback must be spent in

accordance with--

(a) All applicable statutory and regulatory requirements;

(b) The plan that the SEA submitted and any amendments to that plan

that are approved in advance by the Secretary; and

(c) The budget that was submitted with the plan and any amendments

to the budget that are approved in advance by the Secretary.

(2) All funds received under the grantback arrangement must be

obligated by September 30, 1995, in accordance with section 459(c) of

GEPA and the SEA's plan. [[Page 30078]]

(3) The SEA, on behalf of the LEA, will, not later than December

31, 1995, submit a report to the Secretary that--

(a) Indicates that the funds awarded under the grantback have been

spent in accordance with the proposed plan and approved budget; and

(b) Describes the results and effectiveness of the project for

which the funds were spent.

(4) Separate accounting records must be maintained documenting the

expenditures of funds awarded under the grantback arrangement.

Dated: June 1, 1995.

Thomas W. Payzant,

Assistant Secretary for Elementary and Secondary Education.

(Catalog of Federal Domestic Assistance Number 84.010, Educationally

Deprived Children--Local Educational Agencies)

[FR Doc. 95-13850 Filed 6-6-95; 8:45 am]

BILLING CODE 4000-01-P