Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Federal Work-Study Program - Program Funds

AwardYear: 1998-1999
EnterChapterNo: 7
EnterChapterTitle: Federal Work-Study Program
SectionNumber: 5
SectionTitle: Program Funds
PageNumbers: 35-44


Specific information on funding for the Federal Work-Study (FWS)
Program for the 1998-99 award year was not available at the time
this handbook went to print. The Department will inform schools of
the 1998-99 funding at a later date, in the form of a Dear Colleague
letter or an Action Letter. Up-to-date funding information will also
be available on the SFA BBS.

[[100% Federal share authorized for FWS job as reading tutor--34
CFR 675.26(d)(2)]]

Funding for the Federal Work-Study (FWS) Program for the 1997-98
award year was increased to $830 million by the Omnibus
Consolidated Appropriations Act (P.L. 104-208). This amount
represents an increase of $213.5 million over the 1996-97 FWS
funding level of $616.5 million. To encourage schools to use the
increased funds for community service, with emphasis on
employment of FWS recipients as reading tutors, the Department
amended the FWS regulations by adding 34 CFR 675.26(d)(2),
which authorizes payment of a 100% federal share of the wages of a
student employed as a reading tutor for children who are in preschool
through elementary school (refer to the Federal Register printed
November 27, 1996--Part IV); the work performed by the student
must be for the school itself, for a federal, state, or local public
agency, or for a private nonprofit organization. (Community service
jobs are discussed in Section 4 of this chapter, and federal share
requirements are discussed on pages 7-38 and 7-39.) This regulatory
change will provide schools with the flexibility needed to respond to
the "America Reads Challenge," which will mobilize resources to
ensure that all children can read independently by the end of the third
grade. The America Reads Challenge is also discussed in Section 4
of this chapter.

Schools were notified of the increase in funding for the FWS
Program in Dear Colleague Letter CB-96-22, dated November 1996.
The letter, in advance of the tentative 1997-98 funding level notice,
provided each school with an estimate of its increased funding level
for the 1997-98 award year, based on the increased FWS
appropriation and on the allocation formula in the law; however, the
school could receive increased FWS funding only if the school
requested such funding. As schools were not aware of the increased
funding level when they submitted their 1997-98 Fiscal Operations
Reports and Applications to Participate
(FISAPs), the letter to each
school provided instructions for increasing the amount of FWS funds
requested for 1997-98. The Department provided schools with as
much time as possible to do the planning and development necessary
to match and spend any increased FWS allocation for the 1997-98
award year.


ALLOCATION AND REALLOCATION
-------------------------------

The Higher Education Act of 1965, as amended, describes the
allocation process in detail; the procedures are not repeated in the
regulations for the FWS Program. FWS funds are allocated directly
to schools according to the statutory formulas in section 442 of the
Act. (See Chapter 5, Introduction.)

All federal funds a school receives as part of its FWS allocation must
be held in trust for the students who are the intended beneficiaries
under the FWS Program with the exception of funds the school
receives for the administrative cost allowance (ACA) and for certain
activities under the Job Location and Development (JLD) Program.
(See Section 6.) The funds may not be used for, or serve as collateral
for, any other purpose.

[[Transfer of funds to FSEOG--34 CFR 676.18]]
A school may transfer up to 25% of its FWS allocation, as well as
25% of its Federal Perkins Loan federal capital contribution (FCC)
allocation, to the Federal Supplemental Educational Opportunity
Grant (FSEOG) Program. The FSEOG regulations prohibit the
transfer of funds from the FSEOG Program to any other program.
However, a school that transfers funds from the FWS Program to
the FSEOG Program during an award year must transfer any
unexpended FWS funds back to the FWS Program at the end of the
award year. (For more information, see page 7-41.)

[[Reduction of allocation due to returned funds--34 CFR
673.4(d)(3)]]

If a school returns more than 10% of its FWS allocation for an award
year, the school's allocation for the second succeeding award year
will be reduced by the dollar amount returned, unless the Department
waives this provision. The Department may do so for a specific
school if the Department finds that enforcement would be contrary to
the interests of the program. The Department considers enforcement
to be contrary to the interest of the program only if the school
returned more than 10% of its allocation due to circumstances that
are beyond the school's control and are not expected to recur. (See
Chapter 5, Introduction.)

Under the provisions of the Higher Education Amendments of 1992,
unexpended funds returned to the Department will be reallocated to
eligible schools that used at least 10% of their total FWS allocation
to pay students employed in community service activities. A school
must request the reallocated FWS funds, and the school must have a
fair-share shortfall to receive these funds. Refer to Dear Colleague
Letter CB-96-11, dated June 1996.) A school must use all the
reallocated funds and must use them only to pay students in
community service jobs.

[[5% of funds for community service jobs--34 CFR 675.18(h)]]
A school must use at least 5% of its FWS initial and supplemental
allocations for an award year to pay the federal share of wages to
students employed in community service jobs unless the Department
approves a waiver. The school may request a waiver of the 5%
community service requirement in writing. However, the Department
will approve a waiver only if it determines that the school has
demonstrated that enforcing the requirement would cause hardship
for the students at the school.

[[Request for waiver]]
To request a waiver for the 1998-99 award year, schools must send a
waiver request and any supporting information or documents to the
Department by the deadline the Department establishes. In early
1998, the Department will send schools a Dear Colleague letter
announcing this deadline. The waiver request must be signed by an
appropriate school official and above the signature, the official must
include this statement: "I certify that the information the institution
provided in this waiver request is true and accurate to the best of my
knowledge. I understand that the information is subject to audit and
program review by representatives of the Secretary of Education." If
a financial aid administrator has any questions regarding the FWS
community service expenditure requirements or waiver procedures,
he or she may contact the school's campus-based programs Financial
Management Specialist in the Institutional Financial Management
Division of the Department; a list of state specialists is included in
Chapter 1, Section 2 of this Handbook.

FWS community service expenditures for the 1997-98 award year
will be reported on the Fiscal Operations Report and Application to
Participate
(FISAP) a school receives in July 1998, as that FISAP is
the one the school will use to report its 1997-98 program
expenditures.

When a school receives reallocated FWS funds, the minimum
amount of FWS federal funds the school must expend on community
service jobs is the greater of the following two amounts:

- 5% of the total FWS allocation

- 100% of the amount of the reallocated FWS funds

[[FWS funds for less-than-full-time or independent students--
34 CFR 675.10]]

If a school's FWS allocation is based in part on the financial need of
less-than-full-time or independent students and if the need of all of
these students exceeds 5% of the total need of all students at the
school, the school must offfer those students at least 5% of its FWS
allocation. (This provision is in discussed in Chapter 5, Section 1.)

An approved school may use part of its FWS allocation for the
purpose of meeting the costs of the new Work-Colleges Program
discussed in the introduction to this chapter.


FEDERAL SHARE LIMITATION
----------------------------

[[Exceptions to the 75% limitation--34 CFR 675.26(a)]]
The federal share of FWS wages paid to a student may not exceed
75%, with the following exceptions:

- The federal share of FWS wages to a student employed by a
private for-profit organization may not exceed 50%.

[[100% Federal share for reading tutors in FWS--34 CFR
675.26(d)(2)]]

- The Department authorizes a 100% federal share of FWS wages
earned by a student who is employed as a reading tutor for
children who are in preschool through elementary school; the
work performed by the student must be for the school itself, for a
federal, state or local agency, or for a private nonprofit
organization. A school is not required to ask the Department for a
waiver of the FWS nonfederal share requirement to receive the
100% federal share authorization for an FWS student employed as
a reading tutor. Instead, the school should use 100% federal
dollars to pay such a student and then show on its FISAP that it
did so. All schools are encouraged to place FWS students as
reading tutors for children as an important way to meet the FWS
community service expenditure requirement. A discussion of
employing FWS students as reading tutors is in Section 4 of this
Chapter.

[[100% Federal share for eligible schools]]
- The Department may authorize a federal share of 100% of FWS
wages at schools designated as eligible schools under the
Strengthening Institutions Program, the Strengthening Historically
Black Colleges and Universities Program, or the Strengthening
Historically Black Graduate Institutions Program. The school must
request the increased federal share for an award year on the FISAP
for that year, and the work performed by the student must be for
the school itself, for a federal state or local public agency, or for a
private nonprofit organization.

The federal share may be lower than 75% if the school chooses to
contribute more than the minimum required nonfederal share. For
example, if a school has a large demand for FWS jobs from its
various departments, it may contribute more than the usual 25% to
allow for additional employment.

[[Restrictions on the use of the federal share]]
The federal share may not be used to provide fringe benefits such
as sick leave, vacation pay, or holiday pay or employer's
contributions to Social Security, Workers' Compensation, retirement,
or any other welfare or insurance program. These restrictions on the
federal share apply even when the Department authorizes a federal
share of 100% of FWS wages.

The federal share limitation does not affect federal agencies that
want to enter an off-campus FWS job agreement. They may provide
the required share of student compensation normally paid by off-
campus agencies plus any other employer costs that they agree to
pay.

The federal share of allowable costs in carrying out the JLD Program
may not exceed 80% of such costs. (See Section 6 of this chapter.)


NONFEDERAL SHARE
-------------------

[[Exceptions to 25% minimum]]
The nonfederal share of a student's FWS wages must be at least 25%
for 1993-94 and subsequent award years, with the following
exceptions:

- The nonfederal share of FWS wages must be at least 50% in the
case of work for private for-profit organizations; the 50%
nonfederal share is not subject to waiver.

- The Department provides a waiver of the FWS institutional-share
requirement for FWS wages earned by a student who is employed
as a reading tutor for children who are in preschool through
elementary school. As stated previously, a school is not required to
ask the Department for a waiver of the FWS nonfederal share
requirement to receive the 100% federal share authorization for
FWS students employed as reading tutors. (For more information
on employing FWS students as reading tutors, see Section 4 of this
chapter).

[[Waiver of institutional share]]
- The Department may grant a waiver of the FWS institutional-
share requirement to a school that is designated as an eligible
institution under the Strengthening Institutions Program, the
Strengthening Historically Black Colleges and Universities
Program, or the Historically Black Graduate Institutions Program
if the designated institution requests a waiver.

If the Department grants a waiver, the school to which the waiver is
granted has the option of providing an institutional share and
determining the amount of the share. The school, however, must
provide the proper federal and institutional shares for any portion of
its FWS allocation that it expends under the provisions governing
student employment provided by a private for-profit organization
(50% federal-share limitation) or for the administration of the JLD
Program (80% federal-share limitation). The institutional-share
requirement for these two categories of FWS expenditures may not
be waived.

A school may use any resource available to pay its share of FWS
compensation except federal funds allocated under the FWS
Program. The school's share may come from its own funds, from
outside funds (such as from an off-campus agency), or from both.

[[Using noncash contribution to pay institutional share]]
The school also has the option of paying its share of a student's FWS
wages in the form of a noncash contribution of services or
equipment--for example, tuition and fees, room and board, and books
and supplies. If the school's share for the award period is paid by
noncash contributions, the share must be paid before the end of the
student's final payroll period.

[[Costs off-campus agency pays]]
The school must document all amounts claimed as noncash
contributions. If a school has assessed a charge against a student who
is employed under FWS (such as a parking fine or library fine), the
school may not include forgiveness of such a charge as part of the
school's noncash contribution for the student.

[[Excess funds from off-campus agency]]
Any FWS employment agreement a school may have with an off-
campus agency should specify what share of student compensation
and what other costs the agency will pay. The agreement between the
school and a for-profit organization must require the employer to
pay the nonfederal share of student earnings. The agreement between
the school and an employing agency or nonprofit organization may
require the employer to pay

- the nonfederal share of student earnings;

- required employer costs, such as the employer's share of Social
Security or Workers' Compensation; and

- the school's administrative costs not already paid from its ACA.

If a school receives more money under an employment agreement
with an off-campus agency than the sum of (1) required employer
costs, (2) the school's nonfederal share, and (3) any share of
administrative costs the employer agreed to pay, the school must
handle the excess in one of three ways:

- use it to reduce the federal share on a dollar-for-dollar basis;

- hold it in trust for off-campus employment during the next award
year; or

- refund it to the off-campus employer.

Funds from programs sponsored by federal agencies (such as the
National Science Foundation or the National Institutes of Health)
may be used to pay the nonfederal share, as long as the programs
have the authority to pay student wages. A school should contact the
appropriate federal agency to see if the program in question does
have this authority.

As discussed at the beginning of this section, with three exceptions,
the federal share of FWS wages cannot exceed 75%. If the school's
noncash contribution is less than the remaining 25%, the school must
make up the difference in cash.


CARRY FORWARD/CARRY BACK
----------------------------

[[Reporting carried forward funds]]
A school may spend up to 10% of its current year's FWS allocation
(initial and supplemental) in the following award year (carry
forward). If the school carried forward funds to be spent in the
following award year, the school must report that amount on the
FISAP. For example, if a school carried forward 10% of its FWS
1997-98 allocation to be spent in 1998-99, the school must report
this amount on the October 1998 FISAP, in Part V of the Fiscal
Operations Report for 1997-98. Before a school may spend its
current year's allocation, it must spend any funds carried forward
from the previous year.

[[This file contains the carry forward/carry back graphic
on page 7-41 in Portable Document Format (PDF). It can be viewed
with version 3.0 or greater of the free Adobe Acrobat Reader software.]]

[[Spending current year funds on previous year's costs]]
A school is also permitted to spend up to 10% of its current year's
FWS allocation (initial and supplemental) for expenses incurred in
the previous award year. The official allocation letter for a
specific award period is the school's authority to exercise this option.

As stated in Section 3 of this chapter, a school is authorized to make
payments to students for services performed on or after May 15 of
the previous award year but prior to the beginning of the current
award year (that is, for summer employment) from the current award
year's allocation. This "carry-back" authority is in addition to the
previous authority to carry back 10% of the current year's allocation
for use at any time during the previous award year.


LIMITATIONS ON USE OF FUNDS CARRIED FORWARD OR BACK
----------------------------------------------------------

Schools are not permitted to add funds that are carried forward or
back to the total FWS allocation for an award year when determining
the maximum percentage of available funds that may be used in that
award year for any of the purposes listed below:

- the transferring of FWS funds to FSEOG,

- providing the federal share of wages in private for-profit sector
jobs, or

- the JLD Program.

For example, for the 1998-99 award year, schools may not add to the
1998-99 total FWS allocation any FWS funds carried forward into
1998-99 from 1997-98 or carried back into 1998-99 from 1999-2000
when determining the maximum percentage of available funds that
may be used in 1998-99 for the purposes listed above. The maximum
amount usable for each of the three purposes listed in the previous
paragraph is the appropriate percentage of a school's total 1998-99
original FWS allocation plus any supplemental 1998-99 FWS
allocation.


TRANSFER OF FUNDS TO THE FSEOG PROGRAM
-------------------------------------------

[[25% maximum to FSEOG--34 CFR 676.18(c)]]
A school may transfer up to 25% of its total FWS allocation (initial
and supplemental) to the FSEOG Program. The Department's
permission is not required. Note that this total FWS allocation for an
award year does not include FWS funds carried forward or carried
back into the award year from other award years (see the example
that follows). The school must report any transfer of FWS funds to
FSEOG as an expenditure on its FWS Fiscal Operations Report.
However, a school that transfers funds to the FSEOG Program from
the FWS Program during an award year must transfer any
unexpended FWS funds back to the FWS Program at the end of the
award year.


[[This file contains the graphic accompanying this
example on page 7-43 in Portable Document Format (PDF). It
can be viewed with version 3.0 or greater of the free Adobe Acrobat
Reader software.]]


ADMINISTRATIVE COST ALLOWANCE (ACA)
----------------------------------------

As discussed in Chapter 5, Section 3, a school participating in the
FWS Program is entitled to an ACA if it provides FWS employment
to its student in that award year. The allowance may be used to help
offset administrative costs such as salaries, furniture, travel, supplies,
and equipment. The formula a school uses to calculate its total ACA
for the campus-based programs is on page 5-20.

[[Paying administrative costs of conducting a community service
program--34 CFR 673.7(f)]]

A school may use up to 10% of the ACA attributable to the school's
FWS Program expenditures to pay administrative costs of conducting
its community service program. These costs may include the costs of

- developing mechanisms to ensure the academic quality of a
student's experience;

- ensuring student access to educational resources, expertise, and
supervision necessary to achieve community service objectives;
and

- collaborating with public and private nonprofit agencies and
programs assisted under the National and Community Service Act
of 1990, in the planning, development, and administration of these
programs.


FISCAL PROCEDURES AND RECORDS
---------------------------------

The cash management requirements that apply in general to SFA
programs (those in the General Provisions) are discussed in
Chapter 3, Section 3. The cash management requirements specific to
the campus-based programs (those in the FWS, FSEOG, and Perkins
Loan regulations) are discussed in Chapter 5, Section 3.

[[Recordkeeping Requirements--34 CFR 668.24 and
34 CFR 675.19]]

A school must follow the recordkeeping requirements in the General
Provisions and those in the FWS regulations. The recordkeeping
requirements that apply in general to SFA programs (those in the
General Provisions) are discussed in Chapter 3, Section 7. The
recordkeeping requirements specific to the campus-based programs
(those in the FWS, FSEOG, and Perkins Loan regulations) are
discussed in Chapter 5, Section 3. Information on FWS payroll
records is provided in Section 3 of this chapter.

In addition to following the fiscal procedures and records
requirements mentioned in Chapter 3, Sections 3 and 7, in Chapter 5,
Section 3, and in Section 3 of this chapter, a school must meet the
following requirements, which are included in the FWS regulations

- The school must establish and maintain an internal control system
of checks and balances that insures that no office can both
authorize FWS payments and disburse FWS funds to students.

- If the school uses a fiscal agent for FWS funds, that agent may
perform only ministerial acts.

- Each year the school must submit a Fiscal Operations Report and
other information the Department requires. The information must
be accurate and must be provided on the form and at the time the
Department specifies.