| 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. |