IN THE MATTER OF TEMPLE UNIVERSITY,
Docket No. 89-26-S
Student Financial Assistance Proceeding
Appearances: Adelaide Ferguson, Esq. for the Respondent
Carol S. Bengle, Esq. for the Office of the General
Counsel, United States Department of Education
Before: Judge Allan C. Lewis
This is an appeal by Temple University of Philadelphia,
(Temple) regarding one aspect of a program review determination by the
Department of Education (Department) in which the Department requested
reimbursement of $169,208 for the fiscal years ending June 30, 1983 through
1985.See footnote 1
The Department determined that Temple's payments to its graduate assistants in the School
of Communication and Theater (Scat) under the College
Work-Study Program (CWS) were improper on two grounds, namely, that the
graduate assistants who worked as actors and set designers were employed by
the school in ineligible jobs as defined by the regulations in effect during
the period in issue and that Temple maintained deficient records regarding
their employment. Temple counters that the appropriate, applicable definition
of an eligible job is the definition set forth in the current regulations.
Under this definition, Temple asserts that the graduate assistants performed
work in eligible jobs. In addition, Temple argues that, with respect to the
record keeping requirement, the regulations in effect during the fiscal years
in issue govern and that it has complied with these regulations. I conclude
that the regulations in effect during the period in issue govern, that
Temple's records comply with the record keeping requirement, and that the
students were performing work in ineligible jobs. Therefore, I hold for the
I. FINDINGS OF FACT
Temple is an accredited institution of higher education and a
the Commonwealth System of Higher Education in Pennsylvania.See footnote 2
As part of Temple's student aid program during the fiscal years ending June 30, 1983
through 1985, it participated in the CWS program with the Department. Its
participation was effected by means of a program participation agreement with
the Secretary of the Department. This agreement provided in pertinent part--
ARTICLE II. GENERAL PROVISIONS
1. a. The Institution understands and agrees that it is subject to
the program statute and implementing regulations for each program
in which it particip-ates. . .
b. The Institution agrees to use the funds advanced to it under each program solely for the purposes specified in, and in accordance with the provisions set forth in, the program statute . . . and the regulations which implement those statutes. The Institution further agrees to properly account for the funds it receives.
. . . .
ARTICLE VII. COLLEGE WORK-STUDY - SPECIFIC PROVISIONS
. . . .
6. The Institution agrees to award CWS employment, to the maximum extent practicable, which will complement and reinforce each recipient's educational program or career goals.
One of Temple's schools, Scat, offers majors in acting and scene
design. As an integral and mandatory requirement in these majors, Scat requires that
its graduates students participate in productions conducted by the Theater
Department. During the graduate students' first semester of their first year,
they serve as ushers or ticket takers in the productions. Thereafter, they
are required to participate as set designers or as actors in the rehearsals
and performances of the productions.
As part of Scat's graduate program, it offers graduate assistantships
for students in financial need under the CWS program. Under this program,
qualifying graduate students are paid on an hourly basis for working as an
usher or ticket taker during their first semester and for working in the
theater productions in set design or acting during their subsequent semesters.
While these activities are required of all Scat graduate students as part of
their curriculum, Temple pays only the CWS students for the set design and
acting work while it pays both the CWS and non-CWS students when they serve as
ushers and ticket takers.
In its books and records, the Theater Department recorded the
periods worked by the CWS graduate assistants in the set design and acting
areas erroneously.See footnote 3
It recorded the time spent on these jobs as having occurred during the day, when in fact,
the rehearsals and performances
actually took place in the evening.See footnote 4
Thus, while the total number of hours worked by each graduate assistant in the CWS
program was correctly recorded,
the clock time period was incorrectly stated.See
The Department mailed its program determination letter to Temple
March 30, 1989. Thereafter, on May 16, 1989, Temple filed its timely request
for a hearing on the record. 34 C.F.R. §668.113(b) (1988). Briefs were filed
by the parties and an oral argument was held on February 2, 1990.
The CWS program was originally authorized by Congress in 1964
"designed to provide basic financial assistance through part-time employment
to the able but needy college student." H.R. Rep. No. 1458, 88th Cong., 2d
Sess.(1964), reprinted in 1964 U.S. Code Cong. & Admin. News 2900, 2906.
Subsequently, the program was extended to include not only students from low-
income families but also "students requiring assistance [who] . . . are
technically [not] from low-income families." S. Rep. No. 673, 89th Cong., 1st
Sess.(1965), reprinted in 1965 U.S. Code Cong. & Admin. News 4027, 4065.
In addition, Congress has clarified and modified in a limited degree over the years the general nature of eligible employment. For example, the employment should not result in the displacement of employed workers;See footnote 6 6/ it should, but is not required to, complement and reinforce the student's educational program or vocational goals;See footnote 7 7/ and it was expanded from the governmental and non-profit sectors to include the private sector.See footnote 8 8/
Despite the above actions by Congress, it has not set forth a
definition of eligible employment. During the period in issue, Section 441(4)
of the Higher Education Act of 1965, Pub. L. 89-329, 79 Stat. 1219, 1266-67(to
be codified at 42 U.S.C. § 2754(a)) stated that the student shall perform
"part-time employment" and "such work . . . will be governed by such
conditions of employment as will be appropriate and reasonable in light of
such factors as type of work performed, geographical region, and proficiency
of the employee." In the absence of a specific statutory definition, the
Department promulgated regulations beginning in 1969 regarding the nature and
scope of eligible employment.
The initial dispute between the parties is whether the current
regulations or the regulations in effect during the period in issue govern
regarding the nature of eligible employment. Temple argues, relying on
Bradley v. Richmond School Board, 416 U.S. 696 (1974), that the current regulations govern.
The Department, on the other hand, rejects this
retroactive application concept and asserts that the regulations in effect
during the period in issue govern. In this regard, the Department relies upon
an exception to Bradley, Bennett v. New Jersey, 470 U.S. 632 (1985).See footnote 9
In Bradley, 416 U.S. at 711, the Court established a broad principle
that "a court is to apply the law in effect at the time it renders its
decision, unless doing so would result in manifest injustice or there is
statutory direction or legislative history to the contrary." However, in New Jersey, the
Court refused to follow Bradley and held that statutory provisions which eased the standard of
compliance for federal educational grant-in-aids
should not be applied retroactively. The basis, as explained by the Court,
rested under a contract theory(470 U.S. at 637-38)--
Both the nature of the obligations that arose under the Title I
and Bradley itself suggest that changes in substantive requirements for federal grants should not
be presumed to operate retroactively.
Moreover, practical considerations related to the administration of
federal grant programs imply that obligations generally should be
determined by reference to the law in effect when the grants were made.
The case at hand is squarely within the facts of New Jersey. Like
New Jersey, the federal grant funds from the Department were distributed pursuant to a contract
type agreement which established rights and obligations of the
parties. Similarly, the recipient of the funds seeks to avoid repayment for a
purported misuse of the funds by virtue of a subsequent change in the law
which eases one of the conditions. Thus, the circumstances in New Jersey and the instant case
are identical.See footnote 10
Moreover, the rationale of New Jersey applies with equal force.
With regard to the grant, Temple gave assurances that it would abide by the
conditions of the grant, and, the Department, as a correlative matter in the
event these assurances were not met, had a pre-existing right of recovery
before the 1987 modification in the regulations. Thus, as in New Jersey, the retroactive
application of modified regulations would significantly change the
rights as well as the obligations of the parties. The practical
considerations in New Jersey are also similar. Federal auditors must base findings on known,
applicable substantive standards and Temple had no basis to
believe that the propriety of its expenditures would be judged by any standard
other than the standard in the regulation in effect during the period in
Temple distinguishes New Jersey on the ground that it dealt with a
statutory amendment, while the case at hand involves a change in a regulation.
Such a distinction is meaningless. A regulation generally clarifies,
amplifies, or interprets a statute. Caterpillar Tractor Co. v. United States, 589 F.2d 1040, 1043
(Ct.Cl. 1978). Here, the implementing regulations were
incorporated by reference into the participation agreement between Temple and
the Department. Thus, whether the underlying agreement incorporates a statute
as in New Jersey or a regulation as in the case at hand, the same effect occurs in a contractual
type setting, namely, it creates rights and
obligations and pre-existing rights of recovery in the event certain
assurances by either party are not met. Accordingly, the regulations in
effect during the period in issue govern.
Under the regulations in effect during the period in issue, CWS "employment . . . may involve work-- (i) For the institution itself . . . includ[ing] work in those operations the institution typically performs directly for its students [such as] . . . in food service, cleaning, maintenance, or security." Education College Work-Study and Job Location and Development Programs, 34 C.F.R. § 675.22(a),(b)(1987). In addition, Reg. Sec. 675.23 defined an eligible job as--
(a) General. (1) A CWS eligible job
is a job that an employer normally has paid other persons to do outside the CWS
(2) If no other person has held that job for that employer, it must be a job for which other employers would normally pay.
(b) Work for academic credit. Work that is otherwise eligible is not ineligible because it satisfies a requirement for a degree or certificate.
With respect to the above regulation, the Department argues that
initial inquiry is limited by subsection (a)(1) to whether Temple compensated
non-CWS individuals for performing the same job in issue. If such a job did
not exist at Temple, continues the Department's argument, then the inquiry
focuses under subsection (a)(2) on a second matter, namely, whether this type
of job is one which an employer in the community would normally pay for its
performance. Temple, on the other hand, asserts that both subsections apply
concurrently, that is, it may show that paid positions of the type in issue
exist within its facility or within the community.
The regulation is clear and unambiguous. A two step approach is
mandated by the dependent clause in subsection (a)(2) "[i]f no other person
has held that job for that employer."(emphasis added) This dependent clause
acknowledges that an initial inquiry must be made within the institution
regarding the existence of the job in issue and that such inquiry resulted in
a negative determination before a second inquiry may be made with respect to
the existence of the practice in the outside community to compensate
individuals who perform such a task.See footnote 11
Applying the two step approach in the instant case, Temple had
students performing the same tasks as scene designers and actors in its
theater productions that its CWS graduate assistants performed. In addition,
these non-CWS students were not paid for their services, Accordingly, under
Reg. Sec. 675.23(a)(1) the CWS graduate assistants were performing work in
ineligible jobs for purposes of the CWS program.See
The Department also argues that Temple must refund the monies
paid to the Scat graduate assistants for working as scene designers and actors in the
theater productions on the ground that Temple did not comply with the record
keeping requirement of 34 C.F.R. § 675.19(b)(2)(i)(1987). Reg. Sec.
675.19(b)(2)(i) requires that the institution maintain program and fiscal
records that includes, inter alia, a certification signed by "an official of the institution or
off-campus agency [indicating] . . . [f]or students paid on
an hourly basis, a time record showing the hours each student worked."
The Department urges that the plain language of the regulation
a certification of the actual hours worked. Thus, even though Temple's
records correctly reflected the number of hours worked, they were deficient
because the actual hours worked were incorrectly indicated. Temple responds
that the regulation only requires records which reflect the number of hours
worked and therefore, though the actual hours worked were misstated, it has
nevertheless complied with the regulation.See
The Department's proposed construction is inconsistent with its
regulations. The above record keeping regulation requires the institution to
maintain the identical records regarding the hours worked whether the student
is employed by the institution or by a governmental or private nonprofit
organization under an arrangement between the institution and the off-campus
organization. Where the student is employed off-campus in the CWS program,
the regulations require an agreement between the institution and off-campus
organization. The Department's model off-campus agreement states in pertinent
(3) At times agreed upon in writing,
the institution will
pay to the organization an amount calculated to cover the Federal
share of the compensation of students employed under this
agreement and paid by the organization. Under this arrangement
the organization will furnish to the institution for each payroll period the following records for
review and retention:
(a) Time reports indicating the total hours worked each week and containing the supervisor's certification as to the accuracy of the hours reported and of satisfactory performance on the part of the students;
34 C.F.R. § 675, Appendix B(emphasis added).
Thus, the records for off-campus employment require only reporting the total
number of hours worked in order to satisfy the reporting requirement in Reg.
Sec. 675.19(b)(2)(i). The regulation should not be construed differently for
records regarding institutionally employed students, Accordingly, Temple's
records satisfied the reporting requirement of Reg. Sec. 675.19(b)(2)(i).
For the foregoing reasons, it is concluded that the United States
Department of Education is entitled to recover the sum of $169,208 from Temple
University. Accordingly, IT IS ORDERED that Temple University refund this sum to the
United States Department of Education forthwith.
Allan C. Lewis
Administrative Law Judge
Issued: February 22, 1990