Finding FA 2023-002: 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, Distance Education Courses – Lack of Formal Process to Determine Accuracy of Student Withdrawal Date (Repeat Finding)
Federal Program Information
Federal Catalog Number: ALN 84.007, 84.033, 84.038, 84.048, 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: P007A210456, P063P215260, P268K225260
P007A210676, P063P215262, P268K225262, 21-C01-740
Federal Award Year: July 1, 2022, to June 30, 2023
Campuses: Los Angeles City College (Repeat Finding)
East Los Angeles College (Repeat Finding)
Los Angeles Harbor College (Repeat Finding)
Los Angeles Mission College (Repeat Finding)
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 (a)(1) through (a)(5):
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 aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs as outlined in this section and no additional disbursements may be made to the student for the payment period or period of enrollment. If the amount the student earned is greater than the amount disbursed, the difference between the amounts must be treated as a post-withdrawal disbursement.
Per the Uniform Guidance Compliance Supplement:
Withdrawal Date:
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. An institution is required to take attendance if:
a. The institution is required to take attendance for some or all of its students by an entity outside of the
institution (such as the institution’s accrediting agency or state agency);
b. The institution itself has a requirement that its instructors take attendance; or
c. The institution or an outside entity has a requirement that can only be met by taking attendance or a
comparable process, including, but not limited to, requiring that students in a program demonstrate
attendance in the classes of that program or a portion of that program (34 CFR 668.22(b)(3)).
Note: As provided in the Department’s Program Integrity Q&As for Return of Title IV Funds, the monitoring
of whether online students log into classes does not by itself result in an institution being an institution that
is required to take attendance for Title IV, HEA program purposes because monitoring logins alone is not
monitoring academic engagement (as defined under 34 CFR 600.2). However, an institution that collects
and maintains information about students’ online activities for the purpose of tracking academic
engagement is considered to be an institution that is required to take attendance for programs involving
such tracking if that tracking:
1. Involves monitoring student attendance in a synchronous class, lecture, recitation, or field or laboratory
activity, physically or online via a distance education platform, where there is an opportunity for
interaction between the instructor and students; or
2. Is used to administratively withdraw students or to enforce an institutional attendance policy.
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.
Timing of Return of Title IV Funds
Returns of Title IV funds are required to be deposited or transferred into the SFA account or electronic fund
transfers initiated to ED as soon as possible, but no later than 45 days after the date the institution
determines that the student withdrew. Returns by check are late if the check is issued more than 45 days
after the institution determined the student withdrew or the date on the canceled check shows the check
was endorsed more than 60 days after the date the institution determined that the student withdrew (34
CFR 668.173(b)).
An institution that is not required to take attendance 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 (34 CFR 668.22(j)). The institution must also
notify the recipient of Title IV loans returned (34 CFR 685.306(a)(2)).
Identified Condition:
See schedule of findings and questioned costs
Description
A. Incorrect Calculation of Return to Title IV Funds
East Los Angeles College
We noted 1 of 15 students selected for return of Title IV funds test work from the population of students
who had withdrawn, dropped out, or never began attendance that had an incorrect calculation of
percentage of completion for Spring 2023 based on the student’s actual number of days completed
during the enrollment period. The student was enrolled in a session module course, which is a program
that does not span the entire length of the payment period or period of enrollment. For this type of
course, the student’s “actively enrolled days” should have been used in the return of Title IV funds
calculation. This error resulted in an overstatement of the institutional return by $13 and an
overstatement of the student’s return by $21. The effect of the overstatement of the student’s return did
not result in a questioned cost due to grant protection.
Los Angeles Southwest College
We noted 6 of 20 students selected for return of Title IV funds test work from the population of students
who had withdrawn, dropped out or never began attendance for Fall 2022 that had had an incorrect
calculation of the percentage of completion based on the student’s number of days completed during
the enrollment period.
For 3 students, these errors resulted in:
• 1 student with an understatement of institutional return of $37 and an understatement of student
return of $287.
• 1 student with an understatement of institutional return of $11 and an understatement of student
return of $197.
• 1 student with an overstatement of institutional return of $10 and overstatement of student return of
$20. The effect of the above overstatement of the student return did not result in questioned costs
due to grant protection.
For the remaining 3 students, we noted these students were enrolled in a session module course,
which is a program that does not span the entire length of the payment period or period of enrollment.
For this type of course, the student’s “actively enrolled days” should have been used in the return of
Title IV funds calculation These errors resulted in:
• 1 student with an overstatement of institutional return of $30.
• 1 student with an overstatement of institutional return of $187.
• 1 student with an overstatement of institutional return of $21 and an overstatement of student
return of $9. The effect of the overstatement of the student return did not result in questioned costs
due to grant protection.
B. Untimely Notification of Grant Overpayment to the Secretary
We noted that 1 out of 15 students selected for compliance test work at East Los Angeles College that
owed an overpayment of $187 as a result of the student’s withdrawal was referred to the Secretary of
the Department of Education beyond the 30-day timeframe from the date of the institution’s
determination that the student withdrew and owed overpayments as a result of the student’s
withdrawal. The required notification was submitted to the National Student Loan Data System
(NSLDS) 260 days late.
C. Distance Education Courses – Lack of Formal Process to Determine Accuracy of Student Withdrawal
Date
The District has not yet implemented a formal process in place to monitor a student’s active
participation in an online class and engagement in academic activities related to a distance education
(DE) course in order to determine the reasonableness and accuracy of the student’s withdrawal date in
the system. Currently, the withdrawal date used in the calculation of return to Title IV funds is the actual
date the student initiates the withdrawal from the course in the system.
Cause and Effect:
A. Incorrect Calculation of Return to Title IV Funds
East Los Angeles College
The Financial Aid Technician who processed the Spring 2023 return to Title IV had an oversight on that
record during his review process. He had a family emergency during that period and had to leave in the
middle of his review process. As a result, he forgot to deduct the spring break period from the total
number of days for the enrollment period. This caused the calculation to be slightly off.
Los Angeles Southwest College
The person who was assigned the role of handling the return to Title IV program received limited
training before he assumed the duties of return to Title IV calculations while also having to maintain his
full load as a Financial Aid Technician. In addition to the limited training, there were changes as to how
the program was administered and modules were calculated. This is an arduous task for a seasoned
professional and a very challenging task for a novice at best. As with all newly assigned duties, given
more time he would have become an expert in handling this program with minimal to zero errors.
B. Untimely Notification of Grant Overpayment to the Secretary
Every two weeks a new batch of return to Title IV report is released to be processed. The urgency for
each report to be completed within a certain time frame created confusion for the NSLDS reporting due
date. The same Financial Aid Technician was in charge of completing each step of the process. East
Los Angeles College has the largest return to Title IV population. The demand to meet the deadline
process caused an oversight for the NSLDS report.
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 process. The District has invested significant
resources to improve the accuracy of the process. The District is centralizing and automating the return
to Title IV process to minimize potential errors. However, there are still manual aspects to the process.
In particular, distance education courses (DE) require faculty to withdraw students from Canvas, the
online content delivery application, and Peoplesoft, the District’s student information system.
Peoplesoft is used to maintain student records and for administering aid. Incorrect information entered
into either system can lead to an incorrect return to Title IV calculation, resulting in institutional liability
and/or disciplinary action taken by the U.S. Department of Education.
Questioned Costs:
A. Incorrect Calculation of Return to Title IV Funds
See schedule of findings and questioned costs
The District has a known net understatement of the amount due from the student of $434 and a known
net overstatement of the amount due from the District of $213. The Projected total net understatement
of amounts due from both the student and District is $4,006 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
$0 and Fall/Spring terms – net understatement $221 over the total Pell awards disbursed in the sample
size per term (Summer term – $5,000 and Fall/Spring terms – $176,293) multiplied by the total Pell
awards disbursed for the identified colleges per term (Summer term – $67,595 and Fall/Spring terms –
$3,195,662). The computation is made on a per-term basis on a campus level and not on a
district-wide level.
B. Untimely Notification of Grant Overpayment to the Secretary
None.
C. Distance Education Courses – Lack of Formal Process to Determine Accuracy of Student Withdrawal
Date
None.
Recommendation:
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.
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
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 the return of Title IV funds
is accurate.
Views of Responsible Officials and Planned Corrective Actions:
A. Incorrect Calculation of Return to Title IV Funds
East Los Angeles College
The corrective action plan that will be put in place is to develop a chart with a predetermined number of
days based on the enrollment period. This will avoid the manual counting of the number of days for
each student. We also trained an additional staff member to help with the workload. This will ensure
that errors will be caught before the completion of the review process. Implementation will begin in
Spring 2024. Staff is currently being trained.
Personnel Responsible for Implementation: Gavino Herrera
Position of Responsible Personnel: Financial Aid Supervisor
Expected Date of Implementation: Spring 2024
Los Angeles Southwest College
The corrective action that we are implementing to remediate this finding is to move the campus return
to Title IV processing to the “R2T4 Unit” at the District Office.
Personnel Responsible for Implementation: Muniece R. Bruton
Position of Responsible Personnel: Financial Aid Manager
Expected Date of Implementation: December 1, 2023
B. Untimely Notification of Grant Overpayment to Students and Secretary
East Los Angeles College
The Corrective Action plan is being implemented by providing an additional staff member to assist with
the return to Title IV process along with helping with the validation to ensure calculation, notification,
and reporting to NSLDS will be completed on a timely basis. A reminder is set in the Financial Aid
Technician Outlook calendar to help remind them to help meet the deadline of the reporting
requirement.
Personnel Responsible for Implementation: Gavino Herrera
Position of Responsible Personnel: Financial Aid Supervisor
Expected Date of Implementation: Fall 2023
C. Distance Education Courses – Lack of Formal Process to Determine Accuracy of Student Withdrawal
Date
In the fall 2022 term, the District implemented training for all Distance Education (DE) faculty members
to reduce the risk of data entry errors. DE faculty receive follow-up notifications at the beginning of
every term). In addition, the District attempted to conduct random sampling to ensure the accuracy of
the data entry. However, the District did not have the authorization or resources to perform sampling
during the audit period. As a result, the corrective action plan (CAP) was only partially implemented
during fiscal year 2023. In fall 2023, the District secured the human resources and required
authorizations to conduct random sampling of the faculty data entry. The District’s Internal Audit
Department (IAD) is performing random sampling of all campuses. As of fall 2023, all corrective actions
have been fully implemented.
Personnel Responsible for Implementation: Steve Giorgi, Betsy Regalado, Keyna Crenshaw
Position of Responsible Personnel: Financial Aid Manager, Associate Vice Chancellor of Educational
Programs and Institutional Effectiveness, LACCD Supervising Auditor)
Expected Date of Implementation: Fall 2023