| AwardYear: 1995-1996 EnterChapterNo: 6 EnterChapterTitle: Federal Perkins Loan Program SectionNumber: 11 SectionTitle: Maintaining Program Funds PageNumbers: 107-108 [[Final Rule 12-1-94]] The "cash management" regulations--the General Provisions Final Rule published in the Federal Register on December 1, 1994-- include provisions in Section 668.164, summarized below, that affect the way a school must maintain program funds for the Federal Perkins Loan Program. Most schools that participate in the Federal Perkins Loan Program must maintain-- - an interest-bearing account that is federally insured or secured by collateral of value reasonably equivalent to the amount of SFA program funds in the account or - an investment account consisting predominantly of low-risk income-producing securities such as obligations issued or guaranteed by the United States. If a school maintains federal funds in an investment account, the school must maintain sufficient liquidity in that account to make required disbursements to students. However, a school is not required to maintain an interest-bearing account if one of the conditions listed below applies to the school: - in the prior award year, the school drew down less than $3 million from the SFA programs; - for the total amount of SFA program funds that the school drew down in the prior award year and maintained in an interest- bearing account, the school earned less than $250 in interest on those funds; or - for the total amount of SFA program funds that the school draws down during the award year, the school demonstrates by its cash management practices that it would not earn over $250 in interest if it maintained those funds in an interest-bearing account. If a school is eligible to maintain a non-interest-bearing account, the account must be federally insured or secured by collateral of value reasonably equivalent to the amount of SFA program funds in the account. A school must remit at least annually to ED the interest or investment revenue earned on SFA program funds maintained in an interest-bearing or investment account, with the following exceptions: - A school must retain for the purposes of the Federal Perkins Loan Program all interest or investment revenue earned on Federal Perkins Loan Program funds maintained in an interest- bearing or investment account. - Other than interest or investment revenue earned on Federal Perkins Loan Program funds, a school may retain for administrative expense up to $250 per year of the interest or investment revenue earned on SFA program funds maintained in an interest-bearing or investment account. ED may require a school to maintain SFA program funds, including the funds a school maintains for purposes of the Federal Perkins Loan Program, in a separate bank account that contains no other funds if ED determines that-- 1. The school's accounting and internal control systems do not-- - identify the cash balances of SFA program funds maintained in the school's bank account as readily as if those funds were maintained for each program in a separate account or - identify adequately the interest or investment revenue earned on SFA program funds maintained in its bank account; 2. The school's financial records-- - are not maintained on a current basis; - do not reflect accurately all SFA program transactions; or - are not reconciled at least monthly; or 3. The school has otherwise failed to comply with the recordkeeping and reporting requirements in the December 1, 1994 General Provisions Final Rule and the regulations that govern each SFA program in which the school participates. A school must exercise the level of care and diligence required of a fiduciary with regard to maintaining and investing federal funds. |