In our experience with College and University A-133 audits of Student Financial Aid, the second step in the Return of Title IV calculation could lead to many compliance issues for schools.  The calculation is very important because it determines how much money must be returned to the government; as well as who must return the funds. If calculated incorrectly, the school can return too much or not enough federal dollars. If too little is returned, then the school runs the risk of missing the 45 day deadline to return the funds.  The calculation of completed calendar days as a percentage of total calendar days in a term is seemingly simple; however, scheduled breaks and their exclusion from the calculation and/or the use of the mid-point cause some confusion.  Below is a refresher on how to handle scheduled breaks and the use of mid-point:

A scheduled break is a break of five or more consecutive calendar days that are excluded from the Return calculation.  For example, a school has an official break on the calendar that is Monday the 10th – Friday 15^th and does not hold weekend classes. The break starts the first day after the last class is held (prior to the break) or in our example Saturday the 8^th.  The last day of the break would be the Sunday before classes resume or in our example Sunday the 17^th.  This causes for nine days to be excluded from the calculation (Saturday 8^th to Sunday 17^th).    Scheduled breaks for five or more days are excluded from both the earned days and days in the term.

If a school cannot determine a student’s official date of withdrawal, then they can utilize the mid-point method of returning funds.  The mid-point should not be confused with mid-term.  For mid-point, you calculate the total number of calendar days in the semester and find the mid-point or the number of days earned to make the calculation equal 50%.  For example, a school has 108 days in the term excluding scheduled breaks, when mid-point is used the numerator (number of days earned) would be 54 days or 50%. 

For more information, visit http://ifap.ed.gov or contact Megan Herde, MHerde@ddfky.com

During the re-design process of the new Form 990, the IRS placed more emphasis on tax exempt hospitals’ reporting requirements through Schedule H of the new form.  For 2008, Schedule H was optional except for information in Part V regarding the hospital’s facility information.  However, for 2009, the form is required to be completed in its entirety for all applicable activities pertaining to each hospital.  Substantially more documentation will be required by the filing organization.

Part I of the new schedule is designed to provide information regarding charity care and community benefit activities. Information is requested on whether the hospital has a charity care policy and the criteria surrounding the policy.  Hospitals are required to show a detailed analysis of their charity care and community benefit amounts at cost.

Part II is designed to detail any community building activities that the hospital completed during the year that helped to protect or improve the community’s health or safety.  Examples of community health and safety activities could be improvements to housing buildings for vulnerable populations, creating new employment opportunities for community residents, mentoring programs, support groups and disaster readiness programs.

Part III is designed to report the hospital’s bad debt, medicare and collection practices.  The hospital will be asked to report on costing methodologies and rationale for bad debt and medicare policies.  The hospital will also have to describe the collection policies utilized for patients who qualify for charity care and financial assistance.

Part IV is designed to describe activities associated with management companies and joint ventures in which the hospital is a partner or shareholder.

Part V was the only section that was required to be completed with the 2008 return. Within this section, the hospital describes the types of services the hospital provides, such as whether it is a licensed hospital, a critical access facility, a research facility, etc.

Part VI of the schedule, Supplemental Information, allows the hospital more room to describe information listed in other parts of the schedule.  The hospital will also be asked to provide information on how the hospital assesses the health care needs of the community, how the hospital educates and informs patients and persons about their eligibility for financial assistance, information about the community it serves, and how the hospital furthers its exempt purpose.

While the new Schedule H appears cumbersome, it allows the hospital an opportunity to describe the good things it is doing for the community it serves. 

With state governments considering whether to implement minimum amounts of charity care and the federal government considering whether hospitals should lose their tax exempt status, it is becoming increasingly important for tax-exempt hospitals to place a greater emphasis on their community benefit activities.

Please see the following link for Schedule H:   http://www.irs.gov/pub/irs-pdf/f990sh.pdf

Allison Carter�
alcarter@ddfky.com