.03 Withholding State Aid (Not Applicable to Baltimore City Community College).

A. If the Commission determines that satisfactory progress has not been made toward correcting material weaknesses or implementing any other audit recommendations that the Commission considers appropriate, the Commission shall declare that the college is subject to withholding of State aid if the problem is not corrected within a reasonable time specified by the Commission. The local government shall be notified about the potential for the withholding of State aid if corrective actions are not undertaken.

B. When the Commission formally notifies the college in accordance with §A of this regulation, the Commission shall advise the college of the maximum amount of aid that is at risk. In arriving at this amount, the Commission shall consider the number and degree of materiality of the uncorrected management letter recommendation or recommendations. The amount withheld shall be not less than 10 percent of the estimated aid payment for the fiscal year in which aid is withheld. Aid withheld may not be subsequently reimbursed to the college.

C. The Commission may require a college to consider an alternative response or require that the college provide a report about the progress made in correcting problems cited in the management letter, or both.

D. In accordance with Education Article, §16-315(c), Annotated Code of Maryland, the Commission shall find that satisfactory progress has not been made toward correcting material weaknesses when a college management letter repeats a prior year recommendation that the college indicated it would correct, or that the Commission determined that the college should have corrected but did not. Upon making this finding, the Commission shall, after providing the college with an opportunity for a hearing on the matter, direct the State Comptroller to withhold State aid in the amount described in §B of this regulation. If a management letter recommendation is repeated but the Commission determines corrective actions are progressing on an acceptable timetable, then the Commission shall consider that satisfactory progress towards correction has been made and aid payments may not be withheld.