Section 30604 - Institution Fiscal and Administrative Procedures(a) The Commission may conduct audits or program compliance reviews of any Institution to ensure compliance with program requirements, including statutory and regulatory requirements. If the Commission conducts such an audit or review of an Institution, the Institution shall make available at the time of the audit or review, or at any time at the request of the Commission, any records and personnel related to the administration of the Program.(b) Institutions shall maintain written policies and procedures governing the administration and processing of Program funds. Institutions shall develop and retain program and fiscal records that demonstrate Institutional, employer, and student eligibility, and ensure the accuracy of payments reported. Institutions shall retain Commission funding allocation, and student payment, records for a minimum of three years following the last day of the academic year in which a Program payment was expended, or until outstanding audits are resolved, whichever is later.(c) Each Institution shall use no more than five percent of the Program funds provided by the Commission for its administrative costs. Institutions shall not collect any additional fees or surcharges from Participating external Employers to cover Institution costs.(d) All Program funds constitute State funds, which are owned by and held in trust for the State, until withdrawn for Program use. If Program funds are deposited in an interest bearing account, all interest accrued by the Institution on LAEP funds shall be used for student compensation or returned to the Commission.(e) Program funds allocated to an Institution may be rolled over to future years; however, all Program funds must be expended by June 30, 2031, with any unspent Program funds returned to the Commission by September 30, 2031.(f) Because the Program is a need-based program, the Institution shall ensure that the Participating Student's projected earnings will not exceed the Participating Student's financial need when packaging aid. If circumstances change after the award is packaged and a Participating Student earns, or will earn, more than the Participating Student's financial need, the Institution shall take the following steps in the order listed:(1) The Institution shall reevaluate and adjust the Participating Student's financial aid package as applicable to ensure that the total earned does not exceed the Participating Student's financial need.(2) If the Participating Student's earnings still exceed the Participating Student's need by $300 or less after the Institution has made appropriate adjustments to the financial aid award and has withheld payment of any undisbursed loan or grant (except the Pell Grant), no further action is necessary.(3) Institutions shall maintain documentation of the steps the institution took to adjust the financial aid award of any Participating Student whose earnings exceeded the Participating Student's financial need by up to $300.(4) Participating Students cannot be required to repay wages earned. LAEP earnings can only be adjusted by reducing the hours Participating Students can work in the future, thus reducing future earnings. If the Participating Student's earnings exceed the Participating Student's need by more than $300 after taking the steps above, the Institution must reimburse the Commission from the Institution's funds.(g) Program funds shall only be used to pay student wages and not towards sick leave, vacation pay, holiday pay, fringe benefits, workers' compensation, retirement, transportation costs, or other benefits.(h) Applicable deductions for taxes and other required deductions shall be made from a Participating Student's paycheck in accordance with applicable laws. For purposes of determining the award of other financial aid to a Participating Student, the Institution shall consider net earnings received by the Participating Student through LAEP and not the Participating Student's gross earnings.(i) An Institution may not credit a Participating Student's institutional account with owed LAEP earnings for use towards institutional charges without the Participating Student's permission.(j) Each Institution shall annually reconcile and report to the Commission its total Program expenditures, including student compensation and administrative costs. Such report shall be made no later than September 30 of each year.(k) If the Commission determines that an Institution has failed to substantially comply with its obligations under the Program's statutes, regulations, or the LAEPA, the Commission may take action to implement corrective measures to bring the Institution into compliance. Corrective measures which may be implemented include, but are not limited to: (1) The Institution may be directed to implement policy and procedural changes to improve Program administration and protection of State funds.(2) Institution staff may be directed to participate in training related to Program noncompliance.(3) The Commission may terminate the Institution's participation in the Program if deemed appropriate.Cal. Code Regs. Tit. 5, § 30604
Note: Authority cited: Section 69967(a), Education Code. Reference: Sections 69967 and 69969, Education Code.
1. New section filed 10-18-2023; operative 1/1/2024 (Register 2023, No. 42).