Finding FA 2022-002: Special Tests and Provision: Return of Title IV Funds: Incorrect Calculation of Return of Title IV Funds, Untimely Notification of Grant Overpayment to Students and Secretary, and Distance Education Courses ? Lack of Formal Process to Determine Accuracy of Student Withdrawal Date (Repeat Finding) Federal Program Information Federal Catalog Number: ALN 84.063 and 84.268 Federal Program Name: Student Financial Assistance Cluster: Federal Pell Grant Program Federal Direct Student Loans Federal Agency: U.S. Department of Education Passed Through Entity: N/A Federal Award Number: P063P210033, P063P215263, P063P210034, P063P210658, P063P210035, P063P215261, P063P215260, P063P210036, P063P215262, P268K220033, P268K225263, P268K220034, P268K220658, P268K220035, P268K225261, P268K225260, P268K220036, P268K225262 Federal Award Year: July 1, 2021, to June 30, 2022 Campuses: Los Angeles City College (Repeat Finding) East Los Angeles College Los Angeles Harbor College (Repeat Finding) Los Angeles Mission College Los Angeles Pierce College (Repeat Finding) Los Angeles Southwest College (Repeat Finding) Los Angeles Trade Technical College (Repeat Finding) Los Angeles Valley College (Repeat Finding) West Los Angeles College (Repeat Finding) Compliance Requirement: Special Tests and Provisions ? Return of Title IV Funds Criteria or Specific Requirement: Per 34 Code of Federal Regulations 668.22 Treatments of Title IV Funds. A. When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student's withdrawal date in accordance with paragraph (e) of 34 Code of Federal Regulations 668.22. Per the Unform Guidance Compliance Supplement: - If an institution is required to take attendance, the withdrawal date is the last date of academic attendance, as determined by the institution from its attendance records. - If an institution is not required to take attendance, the withdrawal date is (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student?s control, the date the institution determines is related to that circumstance; (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Notwithstanding the above, an institution that is not required to take attendance may use as the withdrawal date, the last date of attendance at an academically related activity as documented by the institution (34 CFR668.22(c) and (l)). Title IV funds may be expended only towards the education of the students who can be proven to have been in attendance at the institution. In a distance education context, documenting that a student has logged into an online distance education platform or system is not sufficient, by itself, to demonstrate attendance by the student. To avoid returning all funds for a student that did not begin attendance, an institution must be able to document ?attendance at any class.? To qualify as a last date of attendance for Return of Title IV purposes, an institution must demonstrate that a student participated in class or was otherwise engaged in an academically related activity, such as by contributing to an online discussion or initiating contact with a faculty member to ask a course-related question. The Uniform Guidance Compliance Supplement requires auditors to identify a sample of students who received Title IV assistance who withdrew, dropped out, or never began attendance during the audit period. Auditors are to review the return of Title IV funds determinations/calculations for conformity with Title IV requirements. B. Within 30 days of the date of the institution?s determination that the student withdrew, an institution must send a notice to any student who owes a title IV, HEA grant overpayment as a result of the student?s withdrawal from the institution in order to recover the overpayment in accordance with paragraph (h)(4)(i) of this section. An institution must refer to the Secretary, in accordance with procedures required by the Secretary, an overpayment of Title IV, HEA grant funds owed by a student as a result of the student?s withdrawal from the institution if? (A) The student does not repay the overpayment in full to the institution, or enter a repayment agreement with the institution or the Secretary in accordance with paragraph (h)(4)(i) of this section within the earlier of 45 days from the date the institution sends a notification to the student of the overpayment or 45 days from the date the institution was required to notify the student of the overpayment; C. For an institution that is not required to take attendance, an institution must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the (1) payment period or period of enrollment, (2) academic year in which the student withdrew, or (3) educational program from which the student withdrew. D. The institution must disburse directly to a student any amount of a post-withdrawal disbursement of grant funds that is not credited to the student's account. The institution must make the disbursement as soon as possible, but no later than 45 days after the date of the institution's determination that the student withdrew, as defined in paragraph (l)(3) of this section. E. Title IV funds may be expended only towards the education of the students who can be proven to have been in attendance at the institution. In a distance education context, documenting that a student has logged into an online distance education platform or system is not sufficient, by itself, to demonstrate attendance by the student. To avoid returning all funds for a student that did not begin attendance, an institution must be able to document ?attendance at any class.? To qualify as a last date of attendance for Return of Title IV purposes, an institution must demonstrate that a student participated in class or was otherwise engaged in an academically related activity, such as by contributing to an online discussion or initiating contact with a faculty member to ask a course-related question. Per 668.173 Refund reserve standards. A. In accordance with procedures established by the Secretary or FFEL Program lender, an institution returns unearned title IV, HEA program funds timely if? 1) The institution deposits or transfers the funds into the bank account it maintains under ?668.163 no later than 45 days after the date it determines that the student withdrew; 2) The institution initiates an electronic funds transfer (EFT) no later than 45 days after the date it determines that the student withdrew; 3) The institution initiates an electronic transaction, no later than 45 days after the date it determines that the student withdrew, that informs an FFEL lender to adjust the borrower?s loan account for the amount returned; or 4) The institution issues a check no later than 45 days after the date it determines that the student withdrew. An institution does not satisfy this requirement if? i. The institution?s records show that the check was issued more than 45 days after the date the institution determined that the student withdrew; or ii. The date on the canceled check shows that the bank used by the Secretary or FFEL Program lender endorsed that check more than 60 days after the date the institution determined that the student withdrew. Identified Condition: Summary No. Identified Condition Campus A. B. Incorrect Calculation of Return of Title IV Funds Untimely Notification of Grant Overpayment to Students and Secretary West Los Angeles College Los Angeles Southwest College Los Angeles Trade Technical College C. Distance Education Courses - Lack of Formal Process to Determine Accuracy of Student Withdrawal Date Los Angeles City College East Los Angeles College Los Angeles Harbor College Los Angeles Mission College Los Angeles Pierce College Los Angeles Southwest College Los Angeles Trade Technical College Los Angeles Valley College West Los Angeles College Description A. Incorrect Calculation of Return of Title IV Funds West Los Angeles College We noted 1 of 15 students selected for return of Title IV funds testwork from the population of students who had withdrawn, dropped out, or never began attendance that had an incorrectly determined withdrawal date in Summer 2022, the effect of which decreased the amount due from school by $681. B. Untimely Notification of Grant Overpayment to Students and Secretary Los Angeles Southwest College We noted that 2 of 15 students selected for compliance testwork were notified beyond 30 days from the date of the institution?s determination that the student withdrew and owed overpayments as a result of the students? withdrawal. The required notification was submitted to both students 11 days after the institution?s determination date. Los Angeles Trade Technical College We noted that 1 of 15 students selected for compliance testwork was never provided with a Post Withdrawal Disbursement notification. Consequently, no disbursement was made to the student. C. Distance Education Courses - Lack of Formal Process to Determine Accuracy of Student Withdrawal Date For distance education (DE) courses, we noted that the withdrawal date used in the calculation of return to Title IV funds is the actual date the student initiated the withdrawal from the course in the system. The District does not currently have a formal process in place to monitor a student?s active participation in an online class and engagement in academic activities related to a DE course in order to determine the reasonableness and accuracy of the student?s withdrawal date in the system. Causes and Effect: A. Incorrect Calculation of Return of Title IV Funds The incorrect calculation of Return of Title IV (R2T4) funds was caused by human error. Staff failed to create the R2T4 worksheet timely, which could result in disciplinary action taken by the U.S. Department of Education. B. Untimely Notification of Grant Overpayment to Students and Secretary Untimely notification of grant overpayment to students and secretary was caused by human error. FA Technicians failed to send overpayment notifications timely, which may result in untimely return of unearned Title IV funds. Untimely notifications and untimely result of Title IV aid can result in institutional liability and disciplinary action taken by the U.S. Department of Education C. Distance Education Courses - Lack of Formal Process to Determine Accuracy of Student Withdrawal Date The calculation of return to Title IV funds is a complex manual process. An incorrect calculation can result in institutional liability and/or disciplinary action taken by the U.S. Department of Education. Questioned Costs: A. Incorrect Calculation of Return of Title IV Funds See schedule of findings and Questioned Costs The District has a known net overstatement of the amount due from the student of $108 and known net understatement of the amount due from District of ($457). The projected total net understatement of amounts due from both the student and District is $2,358 as follows: See schedule of findings and Questioned Costs This is computed by dividing the errors found in samples per term (Summer term ? net understatement $350 and Fall/Spring terms ? net understatement $0 over the total Pell awards disbursed in the sample size per term (Summer term - $31,869 and Fall/Spring terms - $83,972) multiplied by the total Pell awards disbursed for the identified colleges per term (Summer term - $214,918 and Fall/Spring terms - $3,097,004). The computation is made on a per-term basis on a campus level and not on a district-wide level. The District has a known net overstatement of the post-withdrawal disbursement by $6. Not all students accept post-withdrawal disbursements. As such, questioned cost is not extrapolated. B. Untimely Notification of Grant Overpayment to Students and Secretary Refer to item A. above. C. Distance Education Courses ? Lack of Formal Process to Determine Accuracy of Student Withdrawal Date None. Recommendation: We recommend that the District implement additional controls at the course instructor level to effectively monitor student participation and engagement in academic activities related to DE courses in order for the course instructor to determine the reasonableness and accuracy of a student?s withdrawal date listed in the system. This will help ensure that the withdrawal date used in the calculation of return of title IV funds is accurate. Additionally, we recommend that the District evaluate and improve its existing process and control procedures related to the return of Title IV funds, including notification and return due date requirements. This will help ensure 1) that the returns of Title IV funds are accurately calculated and 2) compliance with the notification and return due date requirements, in accordance with the Uniform Guidance and the Code of Federal Regulation. . Views of Responsible Officials and Planned Corrective Actions: A. Incorrect Calculation of Return of Title IV Funds The student in question has an unusual circumstance because the college canceled the last enrolled class. The student was correctly identified as a withdrawal through an external student information system (SIS) query designed to identify students with unusual circumstances not currently identified by the R2T4 program. Unfortunately, the R2T4 worksheet was not manually added to the SIS due to an inadvertent oversight. We believe this is an isolated incident, but in order to automate the manual process, CFAU requested the Office of Information Technology to incorporate the external query logic into the R2T4 program. The worksheet has been manually added. Note that the internal controls have been substantially strengthened which has reduced the number of students impacted year-over-year. B. Untimely Notification of Grant Overpayment to Students and Secretary The college inadvertently failed to report the student overpayment to NSDLS timely. Due to SIS communication limitations with this last batch for the summer 2022 term, the District was unable to send the notification through SIS and had to send the R2T4 OP notification outside of SIS manually resulting in the late notification. C. Distance Education Courses ? Lack of Formal Process to Determine Accuracy of Student Withdrawal Date With regards to student withdrawal dates as it relates to DE courses, the District will provide communications to all faculty throughout the semester instructing them to assess individual student participation in the class and to exclude students from the class if prior to exclusion deadlines, or drop students if exclusion deadlines have passed. The communications will refer to the Academic Senate guidelines on regular and substantive interaction and use of authentic assessments to ensure that active participation is being effectively evaluated. Communications will be times around core deadlines for enrollment and financial aid processes. The DE Coordinators will be informed of the new standard to supplement the existing required and optional trainings currently provided to teaching faculty. This process will be implemented in Fall 2022. Personnel responsible for implementation: Steve Giorgi Position of responsible personnel: CFAU Financial Aid Manager Expected Date of Implementation: Fall 2022