
Las Vegas Session C-29 Program Compliance 101 An Inside Look at the Operations of the School Participation Teams Douglas Parrott Geneva Leon U.S. Department of Education
Program Compliance Office, FSAVictoria Edwards, Chief Compliance Officer • School eligibility • Financial institutions oversight • Integrated partner management • Administrative actions & appeals • Performance improvement & procedures 2
Domestic Schools & Funding By Type Proprietary 1,836 27.7% Public 1,944 29.3% Proprietary $13.3B 17.4% Public $37.2B 48.6% Priv. Non Profit $25.4B 33% Priv. Non Profit 2,012 30.3%
School Eligibility - Foreign Schools Update • 2007 Foreign School Population (FFEL Only) • 20,624 Students • $525 M • 1.0% Default Rate
Annual Financial Statements Annual Compliance Audits School Elig: Ensuring Program Integrity Comprehensive Compliance Review Eligibility & Recertification Program Review Method of Payment
Comprehensive Compliance Review-CCR Every year, Over 50% Schools Reviewed • Eligibility Reviews (e.g., Recertifications, CIOs) • Compliance Audits with Deficiencies • Financial Statements that Do Not Conform • Statistical Analysis of School or Student Data • Program Review
CCR: School Oversight * A school may be counted in 1 or more of these activities
CCR: Data Anomalies • Perform statistical analysis of student & school data • Identify data anomalies & develop action plan • Take follow-up actions & evaluate • Examples • Dependency Override • Verification • AGI Inconsistencies • Recipients over age 65
Eligibility & Recertification(Begins w/E-App) • Perform Acceptability Review • Review Electronic File & Supporting Documentation, Request Add’l Information • Analyze Information Submitted & Verify w/ Accreditor and State • Confirm School’s Policies Meet Requirements • Examine the School’s Website for Additional Information
Changes that require 10 day notification only thru E-App: • Name, Address, Phone, Fax • Principals: • President, CEO, CFO, FAA, Board • Owners who can influence • 3rd Party servicers • Academic Measurement • Closure of a Location • Change in Governance • New Locations* • New Programs* *unless required to “apply for” & wait for approval
Eligibility Changes Requiring Application & Approval Prior to Awarding Title IV Funds • New Educational Programs • Higher Level Offerings, New Vocational Programs, Short-term Programs • New Locations, if • Provisionally Certified, On Cash Monitoring, Acquired Assets of Another School, Subject to Default Rate Sanction, or Otherwise Restricted by FSA • Changes in Accreditation, Licensure, Structure • Adding New Title IV Programs
Provisional Reasons • Late Submission of Audits, E-App • Unresolved Program Review or Audit Significant Findings • Provisional Alternative-Letter of Credit • Deficiencies in Administrative Capability • Cohort Default Rates Exceeding Thresholds • Restrictions Imposed by Accreditor & State
Ez-Audit System https://ezaudit.ed.gov/EZWebApp/common/login.jsp • Provides Instant Audit Info • Identifies Overdue Audits • Streamlined FSA Review Process • Non-editable PDF file (official record) Retained & Used to Validate Data • Add’l Changes to Reduce Reporting Burden
Acceptability Review Process • Audits Reviewed for Acceptability & Completeness (Source document is compared to data entered) • Incomplete Notice Posted to the eZ-Audit if not Accepted (return within timeline provided) • Findings are Identified & Sent for Additional Resolution if Necessary • Financial Failures & Adverse Disclosures (i.e. Contingent Liabilities, Debt Agreement Violations, Reviews & Investigations) Identified & Sent for Resolution
Financial Responsibility ED Determines by Reviewing Audited Financial Statements (34 CFR §668.171 & 34 CFR §668.15) for the Following: With an Initial, Recertification, or Reinstate Application to Participate With a CIO/Merger Application Annually Submitted Audited Financial Statements 17
Add’l Financial Review Tasks • Review Zone Reporting Requirements • Administer Letters of Credit • Release Institutions from Zone, Provisional & LOC Alternatives • Assess Violations of Debt Payment, Financial Obligation & Past Performance Standards • Perform Pre-Acquisition Review for CIO • Make Quality Control Referrals to OIG
Letters of Credit New Institutions minimum 50% LOC only Participating Institutions – 10% LOC (minimum), Provisional Certification, Zone Reporting Requirements, HCM-1 or HCM-2 or 50% LOC (minimum) Considered Financially Responsible FY 2007: 454 Schools on LOC’s ($298.5 M) 19
Integrated Partner Mgmt (IPM) (Phase I: E-App, Ez-Audit, Lender App) • User Interface w/ Additional Help Features • Easier Navigation & Single Entry Point for FSA Service • Increased Partner Security Using a Unique Entity Identifier (Routing Identifier or RID) • Proactive Communications w/Partners, Notifying in Advance When Submissions/Information- Due to FSA • More Electronic Information & Electronic Signatures (App & PPA)
External Review Process • Audits (Annual & OIG) • Program Reviews (ED & GA) Purpose of External Reviews • Evaluate if Institutions are Properly Administering Title IV Programs • Fulfill Oversight Responsibilities for Title IV Programs
Audit Resolution Process • ED Performs Acceptability Review • Teams Perform Further Analysis of Compliance Audits w/Deficiencies & CCR • Teams can Contact School or Auditor to Requesting or Clarify Information (may include a total file review) • Teams issue a Final Audit Determination Letter
Audit – Finding Incorrect • Ask Auditor which Regulation or Law was Violated & Discuss a Reasonable Resolution • Indicate in CAP Reasons Why the Finding is Erroneous • Necessary for Audit Resolution Process • Provide Details to Support Position & Cite Regulation or Law in Support of Assertion
Audit Findings-High Dollar • R2T4 Calculation Errors, Not Made or Made Late • Audit Report Not Submitted – Closed School • Verification Violations • Attendance Records Missing/Policy Inadequate
Audit Findings-High Dollar (Cont.) • Account Records Inadequate/Not Reconciled • Ineligible Branch/Location • FFEL Disbursements Attributed to Unattended/ Incorrect Payment Periods • Single Delivery of FFEL Proceeds/Improper Disbursement Schedule
Program Review ProcessAuthority 34 CFR 668.24(f) • Select School for Review • Research Available Data • Determine Type of Review (On or Off-Site; Focused, General Assessment) • Notify the Institution & Request Information • Conduct Entrance Conference & Request Student Files • School Provides Access to Records (FERPA 34 CFR 599.31, 99, 35) & FSA Performs Review
Program Review: Critical Items • Institutional & Program Eligibility • Fiscal & FISAP Review • Financial Responsibility • Campus Security • Incentive Compensation • Borrower Choice & Lender/GA Inducements • Managing Access to ED Systems
Program Review: Student Items • Student Eligibility • R2T4 & ATB • Credit Balances • Enrollment Status • Attendance & SAP • Verification & PJ • Dependency Overrides • Cost of Attendance • Calculations & Disbursements-Title IV Funds
Program Review Outcomes • Conduct Exit Conferences & Provide Preliminary Findings (Optional) • Analyze Workpapers, Prepare & Issue Program Review Report (May Include Total File Review &/or Change in Method of Payment) • If Institution Disagrees w/Finding(s) It Should Provide Details to Support Position • Review Institution’s Response • Make & Send Final Determinations
Program Review & Audit Liabilities • Must be Repaid within 45 Days of Receipt of the FPRD Unless: • Institution Makes Repayment Plan w/ED • Files an Appeal within 45 days • Appeal of Liabilities Must Include: • Findings, Issues & Facts Being Disputed • School’s Position w/ Pertinent Facts & Reasons for Position Clearly Stated • Copy of Final Audit or PR Determination Letter
PR Findings-High Dollar • Improper/Undocumented Dependency Overrides • Pell- Ineligible Pell Disbursements • Ability to Benefit Violations • Refunds Calculation-Most Fair & Equitable Not Used • Falsification of Records
PR Findings-High Dollar (cont.) • Improper Certification of FFEL • Ineligible Program-Approval Requirements Not Met • Verification Violations • Pell-Overpayment/Underpayment • Fed Perkins Prom Note-Missing, Unsigned, Inaccurate
FSA Assessments • Self-assessment Tool Designed to Assist Schools in Evaluating their Financial Aid Policies, Processes, & Procedures • Includes Assessment Modules on Students, Schools, Managing Funds, and Policies and Procedures http://www.ifap.ed.gov/qahome/fsaassessment.html
Method of Payment • Advanced Funding – Most Schools Receive Title IV thru the Method • HCM 1–FSA Uses This Restriction Generally w/Financial Failure & Requires Additional Financial Reporting & Disbursements First • HCM 2 – More Strict Used w/Administrative Capability Concerns (Permits FSA to Sample Submission) • Reimbursement – Similar to HCM2 (No Sampling) Major Program Integrity Concerns
Program Compliance School Eligibility Victoria Edwards, Chief Compliance Officer– DC (202) 377-4275 Robin Minor, General Manager – Wash DC (202) 377-3173 Call the appropriate School Participation Team for information and guidance on audit resolution, financial analysis, program reviews, school and program eligibility/recertification and school closure information. School Participation Teams – Northeast Geneva Leon, Director – Wash DC (202) 377-3173 geneva.leon@ed.gov New York/Boston (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Puerto Rico, Virgin Islands) William Swift – New York (646) 428-3750 Rosemary Torpey - Boston (617) 289-0133Elizabeth Coughlin-New York (646) 428-3737Patrice Fleming - Wash DC (202) 377-4209 Philadelphia (DC, Delaware, Maryland, Pennsylvania, Virginia, West Virginia) Nancy Gifford - Philadelphia (215) 656-6442 John Loreng – Philadelphia (215) 656-6437 Michael Frola - Wash DC (202) 377-3364 Foreign Schools Barbara Hemelt - Wash DC (202) 377-3168 School Participation Teams-South Central Carolyn White, Director – Wash DC (202) 377-3173 carolyn.white@ed.gov Atlanta (Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina) Charles Engstrom - Atlanta (404) 562-6315Christopher Miller – Atlanta (404) 562-6304 Patricia Dickerson-Wash DC (202) 377-4218 Dallas (Arkansas, Louisiana, New Mexico, Oklahoma, Texas) Patrick Kennedy - Dallas (214) 661-9490 Janet Dragoo - Dallas (214) 661-9481Clifton Knight - Wash DC (202) 377-4244 Kansas City (Iowa, Kansas, Kentucky, Missouri, Nebraska, Tennessee) Ralph LoBosco-Kansas City (816) 268-0410Dvak Corwin – Kansas City (816) 268-0420 Phillip Brumback-Wash DC (202) 377-3464 School Participation Teams - Northwest Douglas Laine, Director – Wash DC (202) 377-3173 douglas.laine@ed.gov Chicago (Illinois, MN, Ohio, Wisconsin, IN) Douglas Parrott - Chicago (312) 730-1532 David Heath – Chicago (312) 730-1522 Earl Flurkey – Chicago (312) 730-1521 Denver (Colorado, Michigan, Montana, North Dakota, South Dakota, Utah, Wyoming) Harry Shriver - Denver (303) 844-3677 x116 Dan Whiting - Denver (303) 844-3677 x120 San Francisco/Seattle (American Samoa, Arizona, California, Guam, Hawaii, Nevada, Palau, Marshall Islands, N. Marianas State of Micronesia, Alaska, Idaho, Oregon, Wash.) Linda Henderson- San Fran (415)-486-5609 Martina Fernandez-Rosario (415)-486-5605 Dyon Toney - Wash DC (202) 377-3639
Handy Websites • Schools Portal: www.fsa4schools.ed.gov • Students Portal: www.studentaid.ed.gov • Information for Financial Aid Professionals: www.ifap.ed.gov • School & Program Eligibility/Recertification: http://www.eligcert.ed.gov
Happy Holidays!! We appreciate your feedback & comments Douglas Parrott (312) 730-1532 douglas.parrott@ed.gov Geneva Leon (202) 377-3173 geneva.leon@ed.gov