Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Federal Supplemental Educational Opportunity Grant Program - Program Funds

AwardYear: 1997-1998
EnterChapterNo: 8
EnterChapterTitle: Federal Supplemental Educational Opportunity Grant Program
SectionNumber: 3
SectionTitle: Program Funds
PageNumbers: 11-15


[[Allocation of funds--34 CFR 673.4]]
The Higher Education Act of 1965 (HEA), as amended, describes the
Federal Supplemental Educational Opportunity Grant (FSEOG)
Program allocation process in detail; those procedures are not
repeated in the regulations. Funds are allocated directly to schools
according to the statutory formulas in section 413D of the Act.
Schools receive their disbursements in periodic installments either in
advance or as reimbursements. The U.S. Department of Education
REALLOCATES funds to a school in a manner that best carries out
the purposes of the FSEOG Program.

[[Cash Management]]
A school must maintain funds received for its administration of the
FSEOG Program in accordance with the cash management
provisions of 34 CFR 668.163 published in the Federal Register
November 29, 1996 and effective July 1, 1997. The provisions are
discussed in Chapter 3, Section 3.

[[Allocation reduction for returned funds in previous award year]]
As discussed in the Introduction to Chapter 5, if a school returns
more than 10% of its allocation for a given award year, the
Department will reduce the school's allocation for the second
succeeding award year by the dollar amount returned. The
Department may waive this provision for a specific school if it finds
that enforcement would be contrary to the interest of the program.
The Department considers enforcement to be contrary to the interest
of the program only if the school returned more than 10% of its
allocation due to circumstances that are beyond the school's control
and that are not expected to recur. The information a school provided
on its Fiscal Operations Report and Application to Participate
(FISAP) for the 1995-96 award year will determine the amount of
reduction, if any, of the school's allocation for the 1997-98 award
year.

FEDERAL SHARE AND NONFEDERAL SHARE

[[Waiver of 25% requirement]]
The federal share of FSEOGs made by a school may not exceed 75%
of the total FSEOGs. The school must contribute a nonfederal share
(also called "institutional share") of 25%. However, the Department
may waive the nonfederal share requirement and may authorize for
an award year a federal share of 100% to a school that 1) is
designated as an eligible institution under the Strengthening
Institutions Program or the Strengthening Historically Black
Colleges and Universities Program and 2) requests the increased
federal share on the FISAP for that award year.

[[Sources of nonfederal share]]
The nonfederal share of FSEOGs must be made from the school's
own resources. These resources may include

- institutional scholarships and grants,

- waivers of tuition or fees,

- state scholarships and grants, and

- funds from foundations or other charitable organizations.

[[Including state scholarships]]
The Department has determined that all state scholarships and grants,
EXCEPT for State Student Incentive Grants (SSIGs), are eligible
funds that may be used to meet the nonfederal share requirement of
FSEOGs. SSIGs, for this purpose, are defined as the federal SSIG
allocation plus the minimum required state matching amount. The
remaining state grants are not considered SSIGs.

[[Percent of state scholarships that may be used as nonfederal share--
Dear Colleague letter CB-96-16, August 1996]]
Dear Colleague Letter CB-96-16, issued in August 1996, provided a
chart indicating what percentage of each state's scholarships could be
used to provide the nonfederal share of FSEOG awards for the 1996-
97 award year. The Department computed the percentages in the
chart on the basis of information furnished by the respective states
regarding expected expenditures for state scholarships and grants for
the 1996-97 award year, and by using the 1996-97 SSIG allocation
data and required matching information. A similar chart for the
1997-98 award year will be issued in a Dear Colleague letter in
August 1997. Each school can apply the appropriate state percentage
to the state scholarships and grants its students receive to determine
the total amount of state scholarships and grants that may be used to
meet the FSEOG nonfederal share requirement.

For example, a student receives a grant of $600 from a state with a
percentage of 92.35. The school multiplies 92.35% by $600,
resulting in $554, which is the portion of the grant that may be used
to meet the nonfederal share requirement for a $2,300 FSEOG award
($1,746 is the federal share of the FSEOG award).

As a variance from use of the percentages indicated in the chart, if a
school has specific knowledge that a state scholarship or grant--
irrespective of its name--is considered to be the required state
matching portion of an SSIG, that scholarship or grant may not be
used to meet the FSEOG nonfederal share. Also, if a school has
documented knowledge that a state scholarship or grant is not
comprised of SSIG monies (federal or state), 100% of the
scholarship or grant may be used as the FSEOG nonfederal share.

[[Definition of FSEOG recipient]]
The 1997-98 nonfederal share requirement of 25% (unless the school
qualifies for a waiver) may be met by one of three methods. In the
following discussion of these methods, you should note that for a
student to meet the definition of an FSEOG recipient, some portion
of the grant awarded the student must have come from the FSEOG
federal dollars. Also, by the time the FSEOGs are disbursed
(regardless of what point in the award period the disbursements are
made), the required match must have been accomplished; that is, the
school's own resources must have been disbursed before or at the
time the federal dollars are disbursed. However, it is important to
note that outside resources*1* can be used to match FSEOGs even if
the funds are received at a later date, provided that the school has
written information about funds that the noninstitutional agency or
organization is awarding to the student involved. The written
information must be kept on file at the school.

[[Three methods of meeting institutional share]]
The three methods a school may use to meet its nonfederal share
follow:

1. Individual FSEOG recipient basis--the school provides its share
to an individual FSEOG recipient together with the federal share;
that is, each student's total FSEOG would consist of 25%
nonfederal resources and 75% federal dollars for the 1997-98
award year.

2. Aggregate basis--the school ensures that the sum of all funds
awarded to FSEOG recipients in the 1997-98 award year
comprises 75% FSEOG federal funds and 25% nonfederal
resources. For example, if a school awards a total of $60,000 to
FSEOG recipients in 1997-98, it has to ensure that $45,000 comes
from FSEOG federal funds and $15,000 comes from nonfederal
resources; if there are 100 FSEOG recipients, the entire $15,000
nonfederal resource requirement can be met by awarding a total of
$15,000 in nonfederal resources to four FSEOG recipients.
However, each FSEOG recipient must receive some FSEOG
federal funds.

3. Fund-specific basis--the school establishes an "FSEOG fund"
into which it deposits FSEOG federal funds and the required 25%
nonfederal share. Awards to FSEOG recipients then are made
from the fund.

ADMINISTRATIVE COST ALLOWANCE

When a school calculates its administrative cost allowance for the
1997-98 award year, the school must include in its calculation the
full amount of its FSEOGs--both the 75% federal share and the
required 25% nonfederal share. However, a school that chooses to
provide more than a 25% institutional share to FSEOG recipients
may not include an FSEOG institutional share in excess of 25%
in its FISAP or in the calculation of its administrative cost
allowance. If the Department has granted a school a waiver of
its required nonfederal share, that school may calculate its
administrative cost allowance only on the full federal portion.
For additional information about the administrative cost allowance,
refer to Chapter 5, Section 3.

TRANSFER OF FUNDS FROM FSEOG PROHIBITED

[[Transferring funds to FSEOG]]
The HEA prohibits the transfer of FSEOG Program funds to any
other program. Since the 1993-94 award year, schools have been
prohibited from transferring FSEOG funds to the Federal Work-
Study (FWS) Program. However, a school may transfer up to 25% of
its FWS allocation and 25% of its Federal Perkins Federal Capital
Contribution (FCC) allocation to the FSEOG Program.

A school that transfers funds to the FSEOG Program from FWS
during an award year must transfer any unexpended funds BACK to
the FWS Program at the end of the award year. The same
requirement exists for Perkins Loan FCC funds transferred to the
FSEOG Program.

FISCAL PROCEDURES AND RECORDS

[[Cash management--34 CFR 668.163]]
Requirements for maintaining and accounting for Student Financial
Assistance (SFA) program funds are included in 34 CFR 668.163 of
the cash management regulations published in the Federal Register
November 29, 1996, effective July 1, 1997. The cash management
requirements that apply in general to SFA programs (those in the
General Provisions) are discussed in Chapter 3, Section 3. The cash
management requirements specific to the campus-based programs
(those in the FWS, FSEOG, and Perkins Loan regulations) are
discussed in Chapter 5, Section 3.

[[Recordkeeping requirements--34 CFR 668.24 & 676.19]]
New recordkeeping requirements for all SFA programs were
published in the Federal Register (Part IX) November 27, 1996 and
become effective July 1, 1997. Revised was 34 CFR 668.24, and
amended was 34 CFR 676.19, which now states that a school must
follow the recordkeeping requirements in the General Provisions
and those in the FSEOG regulations. The recordkeeping
requirements that apply in general to SFA programs (those in the
General Provisions) are discussed in Chapter 3, Section 7. The
recordkeeping requirements specific to the campus-based programs
(those in the FWS, FSEOG, and Perkins Loan regulations) are
discussed in Chapter 5, Section 3. Information on FWS payroll
records is provided in Section 3 of this chapter.

[[Fiscal procedures and records requirements--34 CFR 676.19]]
In addition to following the fiscal procedures and records
requirements mentioned in Chapter 3, Sections 3 and 7, in Chapter 5,
Section 3, and in Section 3 of this chapter, a school must meet the
following requirements, which are included in the FSEOG
regulations:

- A school must establish and maintain an internal control system of
checks and balances that insures that no office can both authorize
FSEOG payments and disburse FSEOG funds to students.

- A school must establish and maintain program and fiscal records
that are reconciled at least monthly.

- Each year a school must submit a Fiscal Operations Report and
other information the Department requires. The information must
be accurate and must be provided on the form and at the time
specified by the Department.

*1* For example, state scholarships and foundation or other
charitable organization funds.

Last Modified: 07/28/1998