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

LasVegas

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Program Compliance Office, FSA

Victoria Edwards, Chief Compliance Officer

• School eligibility• Financial institutions oversight• Integrated partner management• Administrative actions & appeals• Performance improvement & procedures

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FY 2007 Domestic Schools

PublicPrivate Non-ProfitProprietary

Domestic Schools & Funding By Type

FY 2007 Funding Domestic Schools

PublicPrivate Non-ProfitProprietary

Proprietary1,83627.7%

Public1,94429.3%

Priv. Non Profit2,01230.3%

Public$37.2B48.6%

Proprietary$13.3B17.4%

Priv. Non Profit$25.4B

33%

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2007 Foreign School Population (FFEL Only)• 20,624 Students• $525 M • 1.0% Default Rate

Loan Volume

Eligible Schools2007

Funding% of

Funds

$500,000 + 93 19.3% $473,848,671 90.3%

$100,000 – 499,999

168 34.85% $ 42,606,192 8.1%

$1 – 99,999 173 35.9% $ 8,441,800 1.6%

None 48 9.95% -- --

TOTALS 482 100% $ 524,896,663 100%

School Eligibility - Foreign Schools Update

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School Elig: Ensuring Program Integrity

Program Review

Annual Compliance

Audits

Eligibility & Recertification

Annual Financial

Statements

Comprehensive Compliance

Review

Method of Payment

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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

Comprehensive Compliance Review-CCR

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OVERSIGHT ACTIVITIES FY07

Comprehensive Compliance Review 3,498 (56%)

Eligibility and Re-certification 1,874*

Deficient Audit 1,457*

Flagged Financial Statements 1,351*

Completed Merger/CIO 129*

Program Reviews 99*

CCR: School Oversight

* A school may be counted in 1 or more of these activities

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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

CCR: Data Anomalies

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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

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www.eligcert.ed.gov

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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

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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

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Action# Schools

(FY07)

Revocation 1

Denial (Initial, Recert, CIO) 25

Voluntary Withdrawal 20

Loss of Elig (Other) 68

School Eligibility - Oversight Activities

Action# Schools

(FY07)

Provisional Certification 1,253

Heightened Cash Monitoring 438

Letter of Credit (LOC) 454

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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

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Ez-Audit Systemhttps://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

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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

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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

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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

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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)

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

FSA Assessments

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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

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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 – NortheastGeneva 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) 428-3750Rosemary 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) 656-6442John Loreng – Philadelphia (215) 656-6437Michael Frola - Wash DC (202) 377-3364

Foreign SchoolsBarbara Hemelt - Wash DC (202) 377-3168

School Participation Teams-South CentralCarolyn 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) 562-6304Patricia Dickerson-Wash DC (202) 377-4218

Dallas (Arkansas, Louisiana, New Mexico, Oklahoma, Texas)

Patrick Kennedy - Dallas (214) 661-9490Janet 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) 268-0420Phillip Brumback-Wash DC (202) 377-3464

School Participation Teams - NorthwestDouglas Laine, Director – Wash DC (202) 377-3173 douglas.laine@ed.gov

Chicago (Illinois, MN, Ohio, Wisconsin, IN)

Douglas Parrott - Chicago (312) 730-1532David 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 x116Dan 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)-486-5609Martina Fernandez-Rosario (415)-486-5605Dyon Toney - Wash DC (202) 377-3639

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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

Handy Websites

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We appreciate your feedback & comments

Douglas Parrott (312) 730-1532douglas.parrott@ed.gov

Geneva Leon (202) 377-3173 geneva.leon@ed.gov

Happy Holidays!!