Finding 2022-002: a. Identification of the federal program and specific federal award: i. Assistance Listing title and number: Student Financial Assistance - Cluster, Federal Pell Grant (Pell) - 84.063 ii. Federal award identification number and year: P063P210331, 2021 - 2022 Federal Award Year iii. Name of federal agency: U.S. Department of Education iv. Name of the applicable pass-through entity: Not applicable b. Criteria or specific requirement (including statutory, regulatory or other citation): During the year ended May 31, 2022, the U.S. Department of Education (ED) finalized a Focused Program Review (OPE ID: 00301200) (FPR) regarding the University?s participation in the Experimental Sites Initiative (ESI), which includes the ?Pell for Students Who Are Incarcerated? experiment (Second Chance Pell), by the issuing the Final Program Review Determination (FPRD) on September 16, 2022. The FPR evaluated the University?s compliance with rules and regulations regarding participation in the ESI, specifically the Second Chance Pell program for the 2019-2020 and 2020-2021 federal award years. The FPRD contained certain findings related to the University?s interpretation of and compliance with the Code of Federal Regulations (CFR) and ED?s policies and procedures. ED determined that students who participated in the Second Chance Pell program were not participating in their respective enrolled academic programs in a standard instruction term program, but instead a separate nonstandard instruction term program (Program). During the FPR, ED determined this Program to be less than 30 weeks of instructional time and, as a result, required the University to utilize an alternative payment Formula calculation period for the Federal Pell Grant (Pell). As part of our audit of the University for the year ended May 31, 2022, we considered the results of the FPRD to determine if similar conditions existed for the 2021-2022 federal award year. c. Condition: As part of our audit for the 2021-2022 federal award year, we determined that the University used the same determination for the payment period for those students who had been awarded Pell grants that it had been using in the periods for which ED conducted the FPR. In addition to the population of students who are participating the Second Chance Pell program, the University also identified additional students, that when using ED?s interpretation of the CFR, were utilizing a payment period that did not reflect enrollment in nonstandard instructional term program. d. Cause: As noted in the FRPD, ED indicated that, according to its interpretation of the CFR, students who participate in academic programs with courses that have nonstandard instructional terms should utilize either Pell Formula 2 or 3 to determine the payment period, in accordance with the Federal Student Aid Handbook, Chapter 3 - Calculating Pell and Iraq and Afghanistan Service Grant Awards (Handbook). e. Effect or potential effect: As a result of ED?s determination in the FPRD that during the periods covered by the FPR, students participating in the University?s Second Chance Pell program were enrolled in an academic program utilizing a nonstandard instructional term and the University utilized the same payment formula calculation period for the 2021- 2022 federal award year as it did for the 2019-2020 and 2020-2021 federal award years. In addition to the students who are part of the Second Chance Pell population, when applying ED?s interpretation, the University identified additional students who were participating in nonstandard instructional terms who should also have used Pell Formula 3 as well. As a result, the University removed the amount associated with this finding as allowable Total Federal Expenditures in the accompanying Schedule of Expenditures of Federal Awards (Schedule) for the year ended May 31, 2022. This matter resulted in the qualification of the Independent Auditors? Report on Compliance for Each Major Program and Internal Control Over Compliance for the Student Financial Assistance - Cluster major program for the year ended May 31, 2022, due to the amount of questioned costs and the prevalence of the matters on attributes that are direct and material for this program. This matter impacts the University?s compliance with the Eligibility and Special Tests and Provisions attributes. f. Questioned costs: Management of the University conducted a review of all Pell awarding records for students who were enrolled in nonstandard instructional term programs as determined by ED during the FPR for the 2021-2022 federal award year and compared the amount originally awarded by the University to the amount that would have been awarded using Formula 3, as defined in the Handbook. As a result, questioned costs of $2,329,736 were identified. This amount has been removed as allowable Total Federal Expenditures in the accompanying Schedule for the year ended May 31, 2022. g. Context: For the three semesters included in fiscal year ended May 31, 2022, the University on average served approximately 3,600 incarcerated students enrolled in approximately 26,000 credit hours per semester. This finding impacted 5,687 disbursements for individuals who participated in the Second Chance Pell program during 2021-2022 federal award year, as well as 620 additional disbursements who also participated in other nonstandard instructional term programs. h. Identification as a repeat finding, if applicable: This is not a repeat finding. i. Recommendation: We recommend the University review the instructional period for students participating in the nonstandard instructional term program according to ED?s interpretation and apply the rules regarding the payment period within the Handbook based on the program length. j. Views of responsible officials: Management does not concur with the criteria of this finding due to a disagreement with the interpretation of the regulations included in the FPRD and has appealed the finding as stated in the following paragraphs. Management followed the direction received from the ED Reviewers during the FPR exit interview on September 24, 2021 stating the University should not change its practice for the Second Chance Pell students enrolled in their respective instructional program nor the calculation using Formula 1 for the payment period until the Program Review Report (PRR) is received. The PRR was received on January 3, 2022, which was after the summer and fall 2021 semesters and just weeks prior to the start of the spring 2022 semester. Moreover, pursuant to the Higher Education Act ?498A(b), the University was entitled to an opportunity to review the PRR and, within 60 days of receipt, submit a response for ED?s review prior to it preparing a final determination. The University submitted its response to the PRR on March 11, 2022. The University disagrees with the determinations in the FPRD and is vigorously defending itself against the ED interpretation of the regulations, the findings and the proposed financial assessments. The University filed an appeal of the findings and the associated financial assessments contained in the FPRD on October 24, 2022, and submitted a brief in support of the appeal on January 22, 2023, to the ED Office of Hearings and Appeals within the guidelines as prescribed by the Higher Education Act ? 487(b)(2) and U.S.C. ? 1094(b)(2). Effective with the fall 2022 semester term and with each fall and spring term thereafter, Second Chance Pell students enrolled in their respective instructional programs have a 15 week standard instructional term and the payment period qualifies for calculations utilizing Pell Formula 1.