[Federal Register: August 7, 2000 (Volume 65, Number 152)]
[Page 48313-48315]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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Part III

Department of Education


Office of Elementary and Secondary Education; Intent To Repay to the
State of Alabama Department of Education Funds Recovered as a Result of
a Final Audit Determination; Notice

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Office of Elementary and Secondary Education; Intent to Repay to
the State of Alabama Department of Education Funds Recovered as a
Result of a Final Audit Determination

AGENCY: Department of Education.

ACTION: Notice of intent to award grant-back funds.


SUMMARY: Under section 459 of the General Education Provisions Act
(GEPA) (20 U.S.C. 1234th), the Secretary of Education (Secretary
intends to repay to the State of Alabama Department of Education, the
State educational agency (SEA), an amount equal to 75 percent of the
principal amount of funds returned to the Department as the result of
final audit determinations. The U.S. Department of Education's
(Department) recovery of funds followed a Cooperative Audit Resolution
and Oversight Initiative (CAROI) agreement entered into by the Lawrence
County Board of Education and the Alabama State Department of Education
to resolve issues relating to Lawrence County's compliance with the use
of Federal funds. The CAROI agreement signed on March 25, 1997 required
that Lawrence County repay a total of $110,779.78, which was
subsequently returned to the Department on March 19, 1997. This notice
describes the SEA's plan, submitted on behalf of Lawrence County Board
of Education, the local educational agency (LEA), for the use of the
repaid funds and the terms and conditions under which the Department
intends to make those funds available. The notice invites comments on
the proposed grantback.

DATES: All comments must be received on or before September 6, 2000.

ADDRESSES: All written comments should be addressed to Mary Jean
LeTendre, Director, Compensatory Education Programs, Office of
Elementary and Secondary Education, U.S. Department of Education, 400
Maryland Avenue, SW, Federal Office Building 6, Room 3W230, Washington,
D.C. 20202-6132. Comments may also be sent through the Internet to:

FOR FURTHER INFORMATION CONTACT: S. Colene Nelson, U.S. Department of
Education, 400 Maryland Avenue, SW, Federal Office building 6, Room
3E335, Washington, DC 20202-6132. Telephone: (202) 260-0979. Internet
address: Colene_Nelson@ed.gov.
    If you use a telecommunications device for the deaf (TDD), you may
call the Federal Information Relay Service at 1-888-877-8339.
    Individuals with disabilities may obtain this document in an
alternative format, (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed in the preceding


A. Background

    The Department has recovered $110,779.78 from the Alabama SEA in
satisfaction of claims arising from an audit of the Lawrence County
Board of Education, conducted by the Alabama Department of Examiners of
Public Accounts for fiscal years (FY) 1990 through 1993.
    Some claims involved the LEA's administration of Chapter 1 of Title
I of the Elementary and Secondary Education Act of 1965, as amended in
1988, a program providing financial assistance to State and local
educational agencies to address the special educational needs of
educationally deprived children in areas with high concentrations of
children from low-income families (Chapter 1). Additional claims
involved the administration of the Even Start Program which provides
funds for family-centered education projects to help parents become
full partners in the education of their children, to assist children in
reaching their full potential as learners, and to provide literacy
training for their parents.
    Specifically with respect to Chapter 1 for FY 1990 and 1991, the
auditors found that competitive bids had not been taken for facilities
renovations and, thus, the payments for those renovations were found to
be in conflict with Federal procurement standards. The auditors
questioned $11,900.00 of Chapter 1 funds. The auditors also found that
a part-time clerical assistant was paid $480.00 through accounts
payable rather than the normal payroll process. Other violations of
Federal guidelines for compensation of personal services included:

    (1) Twenty-five percent of a janitor's salary was paid from
Chapter 1 funds where central office space occupied by Chapter 1
offices appeared to be less than five percent of the total floor
space ($5,126.06 in questioned costs);
    (2) Salary payments exceeding the approved budget totaled
$17,361.67 and were identified as questioned costs of Chapter 1.

Thus, questioned costs for FY 1990 and 1991 totaled $34,867.73 of
Chapter 1 monies.
    For FY 1992 and 1993, a part-time employee was paid from Chapter 1
funds without approved from the Lawrence County Board for employment,
resulting in questioned costs of $1,481.25. Furthermore, the Chapter 1
director was paid $732.66 more than his approval salary in FY 1992,
resulting in that amount of questioned costs. Also, the Chapter 1 Even
Start Director was paid $5,735.57 more than his approved salary during
FY 1993, resulting in that amount of questioned costs.
    The auditors further found that in FY 1993 the LEA purchased
computer labs without obtaining timely approval and failing to follow
proper purchasing procedures. $182,165.99 was identified in questioned
costs. Lastly, audit work revealed that during FY 1991 through 1993
Chapter 1 and Even Start funds as well as General Fund resources were
expended for the renovation of a school building. However, there was no
documentation reflecting the Lawrence County School Board of
Education's approval of the renovation, nor supporting compliance with
Alabama's building codes or their administrative and financial rules.
No competitive bids were found to have been taken for materials or
labor related to the renovation. Questioned costs under Chapter 1 were
$66,913.95 and those under Even Start were $13,263.39. Total questioned
costs for FY 1992 and 1993 were $270,292.81. (Use of funds for
construction or renovation is no longer allowable under either the
Title I or Even Start program statutes.)
    Summarily, audit exceptions resulting in a return of funds
initially totaled $305,160.54 covering four fiscal years, 1990 through
1993. This amount was reduced to $110,780 because the SEA determined
that some of the funds in question were actually used to provide
satisfactory program services to eligible Title I students. Of this
amount, $10,995.35 related to the Even Start questioned costs, and the
balance ($99,784.65) to Chapter 1.

B. Authority for Awarding a Grantback

    Section 459(a) of GEPA, 20 U.S.C. 1234h, 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 that 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 the--
    (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, provided that

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the SEA or LEA was notified of any noncompliance with such requirements
and given a reasonable period of time to remedy that noncompliance;
    (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 exceptions; and
    (3) Use of funds to be awarded under the grantback arrangement in
accordance with the SEA's plan would serve in 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 $83,085--75 percent of the principal amount recovered by
the Department--and has submitted a plan on behalf of the LEA for use
of $74,838 of the grantback funds to meet the special educational needs
of educationally deprived children in programs administered under Title
I, Part A, of ESEA, successor to Chapter 1, as well as $8,247 of the
grantback funds to provide funds for family-centered education projects
to help parents become full partners in their children's education
under Title I, Part B, of ESEA.
    According to the plan, the LEA will equitably distribute the
$74,838 of grantback funds under Title I to the K-12 Title I schools in
the district to purchase computers. Computer equipment will be used for
each school listed below. There are two targeted assistance schools:
Hatton Elementary and East Lawrence Elementary. Also, there are nine
schools operating schoolwide programs: Hazlewood Elementary, Hazlewood
High School, R.A. Hubbard School, Courtland High School, East Lawrence
Middle, Moulton Elementary, Moulton Middle, Speake School, and Mt. Hope
School. The LEA recently completed system networking for internet
access. The updated equipment will help provide enhanced opportunities
for Lawrence County's disadvantaged students attending high poverty
schools to achieve to challenging academic standards. The amount of
$8,247 will be used for Even Start personnel salaries and benefits.

D. The Assistant Secretary's Determination

    The Assistant Secretary has carefully reviewed the plan submitted
by the SEA. Based upon that review, the Assistant 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 Assistant Secretary at the present time. If this information is not
accurate or complete, the Assistant Secretary may take appropriate
administrative action. In finding that the conditions of section 459 of
GEPA have been met, the Assistant Secretary makes no determination
concerning any pending audit recommendations or final audit

E. Notice of the Assistant 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
Department 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, a notice is hereby given
that the Assistant Secretary intends to make funds available to the SEA
under a grantback arrangement. The grantback award would be in the
amount of $83,085.

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
    (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 Assistant Secretary; and
    (c) The budget that was submitted with the plan and any amendments
to the budget that are approved in advance by the Assistant Secretary.
    (2) All funds received under the grantback arrangement must be
obligated in accordance with the SEA's plan but, in no event, after
September 30, 2000 as required under 459(c) of GEPA.
    (3) The SEA, on behalf of the LEA, will, not later than December
31, 2000, submit a report to the Assistant 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
expenditure of funds awarded under the grantback arrangement.

Electronic Access to This Document

    You may view this document, as well as all other Department of
Education documents published in the Federal Register, in text or Adobe
Portable Document Format (PDF) on the Internet at either of the
following sites:


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    Note:  The official version of this document is the document
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(Catalog of Federal Domestic Assistance Numbers: 84.010, Title I,
Improving Basic Programs Operated by Local Education Agencies;
84.213, Even Start--State Education Agencies)

    Dated: July 31, 2000.
Thomas M. Corwin,
Acting Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 00-19802 Filed 8-4-00; 8:45 am]