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This is the second in series of messages designed to assist you in preparing for the substantially increased allocations in Federal Work-Study (FWS) funds that may be available to your institution for the 1997-98 award year.

PublicationDate: 12/4/96
Summary: This is the second in series of messages designed to assist you in preparing for the substantially increased allocations in Federal Work-Study (FWS) funds that may be available to your institution for the 1997-98 award year.
Author: ODAS - Office of the Deputy Assistant Secretary - SFA


Posted December 4, 1996

Dear Colleagues:

This is the second in series of messages designed to assist
you in preparing for the substantially increased allocations in
Federal Work-Study (FWS) funds that may be available to
your institution for the 1997-98 award year. This message
describes a new regulatory change concerning the FWS
matching requirement, reminds institutions of the deadline to
amend FWS and other campus-based requests for 1997-98,
and provides information about the steps we at the
Department will be taking to help the community prepare for
1997-98 awarding of FWS


There Will Be a New Waiver Provision in Effect for 1997-98

In the final Federal Work-Study regulations published by
November 27, 1996 a new provision has been added to 34
CFR 675.26 to waive the institutional share for Federal
Work-Study performed by reading tutors for preschool and
elementary children at the Federal, State or local public
agency, non-profit organization or the institution itself. These
final regulations were adopted to provide for flexibility in
responding to the President's "America Reads " challenge.
The provision waiving institutional share was not part of the
original Notice of Proposed Rulemaking (NPRM) of
September 19,1996 but rather appears now in final form so as
to increase institutional flexibility in expanding its FWS
options to students without increasing administrative or fiscal
burden.

December 6 Is the Deadline to Amend Your Request for
Funds

We are aware that a number of institutions did not realize that
the preliminary estimates of 1997-98 FWS allocations were
mailed in the same envelope with instructions for amending
the FISAP. We made this decision to mail them together in
order to expedite the notification of expanded eligibility.
Please read the two letters (96 CB-21 and 96 CB-22)
carefully.

December 6, 1996 is the deadline to not only to amend your
institution's FISAP for 1997-98 but also to change the request
for funds in all the campus-based programs. You are urged to
request all the funds your institution needs. The preliminary
estimate of your FWS allocation should not limit your
request; if your students need additional funds please ask for
them at this time.

Letter to Presidents

A letter was sent by Assistant Secretary David Longanecker
to college presidents informing them of the expansion of the
FWS program and encouraging their support, particularly
with respect to the budgetary and administrative planning an
increase in this area will entail. Hopefully that kind of
encouragement will assist you as well as you prepare for the
1997-98 award year.

The Allocation Formula for FWS Produces Widely Varying
Results

Among the many questions we have been receiving at the
Department about the expanded FWS allocations has been
concern about why, although the FWS appropriation has
increased approximately 35%, we are seeing institutional
increases much smaller and larger than 35%.

Attached is a brief explanation of the allocation formula
which may help to explain the variations in the estimated
allocations.


A Workgroup Was Convened on November 22.

On Friday, November 22, representatives from the financial
aid community, student employment groups, several States,
the Corporation for National Service, and NASFAA gathered
in Washington to share ideas, suggestions, and practical
advice to implement successful expansion of the FWS
program. We heard about the concerns and issues this
expansion presents. We also heard about successes and
linkages that can be made with State commissions on
community and national service and school districts. In
addition, participants offered observations on barriers to
success as well as suggestions for regulatory and statutory
relief to better address the implementation of the FWS
program. In my next message I will provide a list
of participants and a summary of that meeting. Future
messages we will provide additional information to the
community including a guide to off -campus job
development and more information about the Job Location
and Development (JLD) option.

Thanks to all who have given so generously of their time and
energy in helping us make this expanded FWS opportunity a
reality on the campuses.

Respectfully submitted,

Elizabeth Hicks
Deputy Assistant Secretary
Student Financial Aid Programs

******************************************************************************


1997-1998 FWS Allocations


A school's need for FWS allocations is based upon the
number of students enrolled and the average cost of
attendance. The school's relative need is their FWS need
divided by the total need of all schools applying for FWS
funds. The school's fair share of the FWS allocation is
determined by taking a portion of the total FWS allocation
based upon this relative need. By using each school's relative
need, a portion of the FWS allocation is designated as the fair
share of FWS funds that each school should receive based
upon need. The amount by which a school's fair share is
greater than what it is already receiving as an adjusted base
guarantee is termed a shortfall. If a school is receiving
more base guarantees than its fair share, it will not receive
additional funds from the funds available for fair share. If the
school's adjusted base guarantee is less than its fair
share, funds from the funds available for fair share will be
allocated to the school. If there were enough funds in the
funds available for fair share, all schools would achieve
their fair share funding levels. However, this is not the case so
the amount of funds a school receives from the funds available
for fair share is based on a percentage of their shortfall to the
total shortfall of all schools. This relative shortfall is used to
allocate a portion of the funds available for fair share to each
school with a shortfall.

In the case of Institution A, this school has had large
shortfalls for the last 7 years because their base guarantee is
small and their calculated need is large. For the 1996-1997
school year, only 18% of the shortfall for Institution A was
funded because of the small amount of funds in the funds
available for fair share. However, in the 1997-1998 school
year, 95% of the shortfall for Institution A can be funded
because of the large amount of funds in the funds available for
fair share. The numbers for Institution A are shown below:

1996-97 1997-98
Adjusted Base Guarantee $ 490,379 $ 490,379
Fair Share based on need $1,250,004 $1,467,440
Shortfall $ 759,625 $ 977,440

Amount of shortfall allocated $ 140,500 $ 930,202
Percent of shortfall allocated 18% 95%

The result of the large shortfalls for Institution A is a result
of a low base guarantee. The base guarantee is the school's
1985-1986 expenditures of FWS funds. Base guarantees
are based upon a 10 year old number and during that time
schools could have changed dramatically in both size and
tuition costs. This would affect the school's need and fair
share portion of FWS funds. Since the base guarantee remains
the same, the shortfall would change dramatically if the need
and fair share portion changed dramatically.

A comparison of the funds available for fair share are shown
below. This is 75% of the amount of funds left over after base
guarantees are funded from the total amount of FWS funds.
(The remaining 25% is allocated as pro rata increases to each
school.)

1996-97 1997-98
National Funds Available $ 32,870,292 $194,063,122
for Fair Share
National Total of Shortfalls $184,192,997 $366,977,742
Ratio 18% 53%

The increase in the 1997-98 adjusted FWS allocation for
Institution A over last year (1996-97) is 127%. This resulted
because of the findings described above. Institution B, as well
as most of the other schools, only received a 10% increase in
their 1997-98 adjusted FWS allocation over last years
allocation. The reason for this was that Institution B's fair
share need of FWS funds was less than its adjusted base
guarantee. Therefore, Institution B did not receive any funds
from the funds available for fair share because they were
already receiving their fair share from the money available
through the guarantee. Institution B did receive a pro rata
increase as did all the other universities which resulted in the
10% increase in their allocation. The pro rata increase comes
from 25% of the funds that are left after all schools' base
guarantees are subtracted from the total FWS funds available.
The school receives a portion of the funds available for pro
rata based upon the ratio of the school's base guarantee to the
national total of base guarantees.

Last Modified: 08/16/1999