Impact Aid Program

SUMMARY: The Secretary issues these final regulations governing the

Impact Aid Program under title VIII of the Elementary and Secondary

Education Act of 1965, as amended by the Improving America's Schools

Act of 1994. The program, in general, provides assistance for

maintenance and operations costs to local educational agencies (LEAs)

that are affected by Federal activities. These final regulations

implement changes from the previous Impact Aid laws, Public Law 81-874

and Public Law 81-815, which were repealed when title VIII of the

Elementary and Secondary Education Act was enacted, and replace the

regulations currently found at 34 CFR parts 218, 219, 221, 222, and

223.

EFFECTIVE DATE: These regulations take effect October 30, 1995.

FOR FURTHER INFORMATION CONTACT: Catherine Schagh, U.S. Department of

Education, 600 Independence Avenue, SW, Room 4200 Portals Building,

Washington, DC 20202-6244. Telephone: (202) 260-3907. Individuals who

use a telecommunications device for the deaf (TDD) may call the Federal

Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8

p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The 1994 reauthorization of the Elementary

and Secondary Education Act of 1965 (ESEA) revised many Federal

elementary and secondary education programs, including the Impact Aid

Program. Under that program, assistance is provided for maintenance and

operations costs to LEAs affected by Federal activities, including the

presence of tax-exempt Federal property and an increased student

population due to Federal property ownership or activities. The final

regulations in this document implement many of the changes made by

these amendments and are being published to clarify the operation of

title VIII of the ESEA (referred to in these regulations as ``the

Act'') for grantees. These final regulations also implement a change

made by an amendment to the General Education Provisions Act (GEPA).

In addition, on March 4, 1995, President Clinton announced the

Regulatory Reinvention Initiative, which directed heads of Federal

departments and agencies to review all existing regulations to

eliminate those that are outdated and modify others to increase

flexibility and reduce burden. The Department has undertaken a thorough

review of the existing Impact Aid Program regulations in light of this

initiative.

As a part of that process, the Secretary in this final regulation

has removed regulations that are obsolete due to changes made in the

statute by the Improving America's Schools Act of 1994 (IASA), or that

are unnecessary due to the fact that they simply repeated statutory

provisions. In addition, the Secretary has reorganized, streamlined,

and revised the remaining regulations so that they are more logically

organized, clearly stated, and easier to use. In that process, five

parts have been reduced to one; and the codified pages of Impact Aid

regulations have been reduced by more than 50 percent. These reductions

are due primarily to changes made by the IASA, which removed several

portions of the Impact Aid Program (e.g., the disaster assistance

program, previously codified in part 219, and much of the school

construction program, previously codified in part 221), and to the

consolidation and streamlining of remaining provisions.

Except where changes were necessary to conform the previous

regulations to the new Impact Aid law (title VIII of the ESEA), and for

a few minor procedural changes, these final regulations contain the

same substantive provisions as in the previous regulations. The

Secretary intends to publish a notice of proposed rulemaking (NPRM) in

the near future to implement a few provisions in the new law that are

not included in these final regulations, and to make any substantive

changes that have been identified as needed under the Secretary's

reinvention review.

General (Subpart A)

Subpart A has been reorganized to include all of the Impact Aid

regulations with general applicability. These regulations previously

were in subparts A, B, C, E, and I of part 222.

Sec. 222.2 What definitions apply to this part?

The following program-specific definitions have been removed as

unnecessary: Arrangements, County, Current expenditures, Current fiscal

year of the local educational agency, Entitlement, Parent-pupil survey

(incorporated into Sec. 222.35), Prorated entitlement, and School year.

The remaining definitions in this section are generally applicable to

all of part 222.

In Sec. 222.2(a)(1), the Secretary lists eight terms defined in

section 8013 of the ESEA that are used as defined in that section. The

Secretary has clarified the meanings of the remaining five terms in

section 8013 as follows: ``Federal property,'' ``Local educational

agency,'' and ``Revenues derived from local sources'' are found in

Sec. 222.2(c); and ``Free public education'' is found in Sec. 222.30

(as indicated in Sec. 222.2(a)(2)).

Sec. 222.10 How long must a local educational agency retain records?

The Department-wide record retention requirement in section 443(a)

(previously section 437(a)) of the GEPA was amended by the IASA to

reduce the period during which recipients must retain records from five

to three years. This change is implemented for the Impact Aid Program

in Sec. 222.10, which provides that an LEA now must keep its records

until the later of three years after the last payment it receives for a

fiscal year, or resolution of any pending audit or review and any

resulting payment adjustments.

Payments for Federal Property Under Section 8002 of the Act

(Subpart B)

The regulations in subpart B implement section 8002 of the ESEA,

previously section 2 of Pub. L. 81-874. These regulations, which have

been substantially streamlined by removing payment and obsolete

provisions, previously were in subpart J of part 222.

Sec. 222.21 What requirements must a local educational agency meet

concerning Federal acquisition of real property within the local

educational agency?

The general ten percent eligibility standard in section 8002 of the

ESEA (generally requiring federally owned property acquired since 1938

to comprise at least ten percent of the LEA's aggregate assessed value

as of the time of acquisition) was expanded by the ESEA under limited

circumstances. Section 222.21(a)(1)(ii) implements the expanded

standard in section 8002(a)(1)(C)(ii) of the ESEA concerning the

assessed value that is used for the purpose of determining eligibility

under section 8002(a)(1). That new standard provides that, under

certain specific circumstances, the assessed value used for that

eligibility test may be the assessed value in the first year preceding

or succeeding Federal acquisition, whichever is greater, rather than

the assessed value for the year of Federal acquisition as generally

required.

Section 222.21(a)(2) incorporates the expanded eligibility standard

in section 8002(e), allowing certain additional districts containing

Forest Service property to qualify under the ten percent standard if

they have between 20,000 and 60,000 acres of Forest Service land

(rather than 50,000-55,000 acres as previously was required), and their

counties were chartered either in

[[Page 50775]]

1875 or 1890 (rather than in 1875 only as previously required).

Sec. 222.22 How does the Secretary treat compensation from Federal

activities for purposes of determining eligibility and payments?

Section 8002(a)(2) of the ESEA retained a second eligibility

standard, which provides that an LEA may not receive a payment under

section 8002 if it is otherwise substantially compensated through

Federal activities related to the Federal property. This standard is

implemented in Sec. 222.22(a), which clarifies that the Secretary will

base the application of this standard upon the revenues that an LEA

receives from the Federal activities during the previous fiscal year,

rather than during the current year as previously occurred. This change

is consistent with the new payment provision in section 8002(b)(1) of

the ESEA, under which these revenues for the previous year must be

deducted from the amount that an LEA otherwise would be paid under

section 8002.

In addition, Sec. 222.22(b) clarifies that the lack of substantial

compensation standard will be met only if the revenues received the

preceding year do not equal or exceed the maximum payment amount under

section 8002(b) of the ESEA. This is changed from the current

regulations, under which the revenues may not equal or exceed the

``need-based'' entitlement amount. This change is necessary because the

need-based entitlement has been removed from the statute as a basis for

payment.

Payments for Federally Connected Children Under Section 8003(b) and (e)

of the Act (Subpart C)

The regulations in subpart C implement the basic payment provisions

for federally connected children under section 8003 of the ESEA,

including the provisions in section 8003(b) for basic support payments.

Under these provisions, payments are based upon certain categories of

federally connected children. Similar regulatory provisions

implementing section 3 of Pub. L. 81-874 previously were in subparts A,

C, and D of part 222.

Sec. 222.34 If an applicant makes a second membership count, when must

that count be made?

Basic support payments under section 8003 of the ESEA are based

upon the number of federally connected children in average daily

attendance (ADA) at an LEA, for whom the LEA provided a free public

education during the preceding school year. LEAs determine their number

of federally connected children through one or more membership counts

during the school year. If an LEA makes a second membership count, it

previously has been required to do so during the ``last quarter of the

school year.'' Because year-round schools often are not based upon

``quarters,'' Sec. 222.34 has been revised to clarify that if an LEA

makes a second membership count, it must do so after January 31 but

before May 15. This time period for the optional second membership

count is to avoid the double counting of certain military children that

could now otherwise occur due to the new statutory provision in section

8006 of the ESEA (payments for sudden and substantial increases of

eligible children beginning with May 15).

Sec. 222.35 How does a local educational agency count the membership

of its federally connected children?

Membership counts are made by LEAs either through a parent-pupil

survey or a source check, or both. Section 222.35 explains what

information must be obtained in a parent-pupil survey and a source

check. The Secretary removes the previous requirement that an LEA

obtain the name of each child's teacher on the parent-pupil survey form

because it is unnecessary.

Sec. 222.36 What minimum number of federally connected children must a

local educational agency have to receive a payment on behalf of those

children under section 8003(b) and (e)?

Sections 8003(a)(3) and (b)(1)(B) of the ESEA establish minimum

thresholds for the number of federally connected children that an LEA

must have to receive a payment under section 8003 (except for a hold

harmless payment under section 8003(e) for fiscal year 1995). Section

222.36, which implements these provisions, clarifies that if an LEA

does not have the minimum number of federally connected children

described in section 8003(a)(1)(F) or (G) (federally connected children

who either reside on or whose parents are employed on Federal property,

but not both) necessary to meet the special rule described in section

8003(a)(3), those children are not counted for the purpose of section

8003 payments, or in determining whether the LEA meets the minimum

threshold under section 8003(b)(1)(B).

Sec. 222.38 What is the maximum basic support payment that a local

educational agency may receive under section 8003(b)?

Section 222.38 describes the maximum basic support payment that an

LEA may receive under section 8003(b)(1)(C) of the ESEA.

Sec. 222.39 How does a State educational agency identify generally

comparable local educational agencies for local contribution rate

purposes?

Sec. 222.40 How does a local educational agency select a local

contribution rate based on generally comparable local educational

agencies?

Sec. 222.41 How does a State educational agency compute local

contribution rates based upon generally comparable local educational

agencies?

Section 8003(b)(1)(C)(iii) of the ESEA establishes that one of the

factors upon which an LEA's maximum basic support amount may be based

is a local contribution rate (LCR) based on generally comparable LEAs

as determined under the regulations implementing Public Law 81-874 that

were in effect on January 1, 1994. Although the Secretary has revised

Secs. 222.39-222.41 slightly for clarity and to make necessary

technical changes consistent with the reauthorized statute, those

regulations retain the regulatory method for determining LCRs that was

in effect on January 1, 1994.

Under those regulations, the term ``heavily impacted LEA'' is

changed to ``significantly impacted LEA'' to avoid confusion with the

section 8003(f) ``heavily impacted'' LEAs, which include LEAs with

different characteristics. Under these amended regulations,

``significantly impacted'' is limited to two types of LEAs: (1) any LEA

having 20 percent or more of its ADA composed of children described

under section 3(a) of Public Law 81-874 (now described under section

8003(a)(1)(A)-(C) of the ESEA); and (2) any LEA having 50 percent or

more of its ADA composed of children described under both sections 3(a)

and (b) of Public Law 81-874 (now described under section

8003(a)(1)(A)-(G) of the ESEA).

The Secretary revises the previous regulations to provide that LCRs

are computed based upon data from the third fiscal year preceding the

fiscal year for which the LCR is computed, rather than from the second

preceding fiscal year as in the previous regulations. This change is

based upon section 8003(c) of the ESEA, which specifies that basic

support payments are based upon one year older data than were used when

the previous LCR regulations initially were adopted.

Payments Under Section 8003(d) of the Act for Local Educational

Agencies That Serve Children with Disabilities (Subpart D)

The regulations in subpart D implement the provisions in section

8003(d) of the ESEA governing payments to LEAs that serve certain

federally connected children with

[[Page 50776]]

disabilities. Similar regulatory provisions, implementing section

3(d)(2)(C) of Pub. L. 81-874, previously were in subpart H of part 222.

Sec. 222.50 What definitions apply to this subpart?

The following definitions in the Individuals with Disabilities

Education Act or its implementing regulations, or in 34 CFR Sec. 77.1,

have been added to this section: ``children with specific learning

disabilities,'' ``individualized education program,'' ``intermediate

educational unit,'' ``preschool,'' and ``special education.'' These

definitions currently apply to Impact Aid payments for federally

connected children with disabilities, but the full definitions were not

included in the previous regulations. Because these terms are used in

the text of the regulations and recipients of section 8003(d) funds are

subject to them, the full text of the definitions are now included in

the regulations for the convenience of applicant LEAs and other

readers.

Sec. 222.51 Which children may a local educational agency count for

payment under section 8003(d)?

Section 222.51 implements section 8003(d)(1) of the ESEA, which

provides for payments based upon certain categories of federally

connected children with disabilities. Previously, only federally

connected children with disabilities who had parents on active duty in

the uniformed services or who resided on Indian lands were eligible to

be counted for an additional payment to an LEA. Under section

8003(d)(1), those two categories of federally connected children with

disabilities, as well as children with parents who are foreign military

officers, may be counted by an LEA.

Under the previous statute (Pub. L. 81-874), all LEAs received a

percentage increase in payment for each federally connected child with

disabilities served by the schools within the LEA. Under section

8003(d), a separate appropriation is provided for payments for children

with disabilities and weights are assigned to the different types of

eligible children. For children with parents on active duty in the

uniformed services or foreign military parents but who do not reside on

Federal property, an LEA receives one half of the amount that it

receives for the other categories of eligible federally connected

children with disabilities.

Additional Assistance for Heavily Impacted Local Educational Agencies

under Section 8003(f) of the Act (Subpart E)

The regulations in subpart E implement the provisions of section

8003(f) of the ESEA, which provides additional assistance to certain

heavily impacted LEAs. Although section 8003(f) is similar to section

3(d)(2)(B) of Public Law 81-874, there are several significant

additions to this section, including a provision for additional

assistance for LEAs affected by unusual geographic factors similar to

section 3(d)(3)(B)(ii) of the former law. The regulations implementing

these former provisions were previously in subpart K of part 222 and

Secs. 222.36 and 222.37, respectively.

Sec. 222.62 Which local educational agencies are eligible to apply for

an additional payment under section 8003(f)?

Section 8003(f) adds several new categories of LEAs that are

considered to be heavily impacted and eligible to apply for additional

assistance under the section. Section 222.62 describes the primary

characteristics of the categories of heavily impacted LEA applicants.

Sec. 222.63 What other requirements must a local educational agency

meet in order to be eligible for financial assistance under section

8003(f)(2)(A)?

Sec. 222.72 How does the Secretary determine a maximum payment for

local educational agencies that are eligible for financial assistance

under section 8003(f)(2)(A) and Sec. 222.63?

Maximum payments for heavily impacted LEAs eligible under section

8003(f)(2)(A) are calculated in accordance with section 8003(f)(3).

Section 222.63 specifies the requirements in addition to those in

Sec. 222.62(a), (b), or (c) that an LEA must meet in order to be

eligible for a payment under section 8003(f)(2)(A). These requirements

are similar to requirements for LEAs that applied for section

3(d)(2)(B) assistance under Public Law 81-874, including that the LEA

must be making a reasonable tax effort as further described in

Secs. 222.66-222.71 and availing itself of all other potential revenues

such as State aid. Section 222.72 establishes how payments for LEAs

eligible under section 8003(f)(2)(A) are calculated in accordance with

the new statutory provisions.

Sec. 222.64 What other requirements must a local educational agency

meet in order to be eligible for financial assistance under section

8003(f)(2)(B)?

Sec. 222.73 How does the Secretary determine a maximum payment for

local educational agencies that are eligible for financial assistance

under section 8003(f)(2)(B) and Sec. 222.64?

Payments for heavily impacted LEAs eligible under section

8003(f)(2)(B) are calculated by increasing the LCR of an eligible LEA

if the LEA's current expenditures are affected by unusual geographic

factors. Section 222.64 specifies the requirements in addition to those

in Sec. 222.62(d) that an LEA must meet in order to be eligible for

this type of payment.

These requirements are the same as the requirements for LEAs that

applied for section 3(d)(3)(B)(ii) assistance under Pub. L. 81-874 and

that were in Sec. 222.37 of the former regulations. Like LEAs described

in section 8003(f)(2)(A), an eligible LEA under this section also must

be making a reasonable tax effort as further described in Secs. 222.66-

222.71 and availing itself of all other potential revenues such as

State aid. Section 222.73 establishes how payments for LEAs eligible

under section 8003(f)(2)(B) are calculated.

Sec. 222.74 How does the Secretary identify generally comparable local

educational agencies for purposes of section 8003(f)?

Section 8003(f) uses the term ``generally comparable LEAs'' in

several different ways. Section 222.74 specifies how the term is

generally used throughout these regulations. Section 8003(f)(3)(A)(i)

also provides that payments for certain heavily impacted LEAs may be

calculated using the average per pupil expenditure of three generally

comparable LEAs, and Sec. 222.74 identifies how three generally

comparable LEAs are selected when that option is available. This

selection method was also available to LEAs under section 3(d)(2)(B) of

Public Law 81-874 and was described in Sec. 222.36 of the former Impact

Aid regulations.

Special Provisions for Local Educational Agencies That Claim Children

Residing on Indian Lands (Subpart G)

The regulations in subpart G implement the provisions in section

8004 of the ESEA that require an LEA that claims children residing on

Indian lands to establish policies and procedures for the equal

participation of those children in the LEA's programs and activities

supported with Impact Aid funds, and to consult with and afford parents

and Indian tribes an opportunity to present their views on those

programs and activities. Regulations implementing similar provisions in

section 5(b)(3) of Public Law 81-874 previously were in part 223.

Previously, the statute did not impose on the Secretary the duty to

provide technical assistance to the LEAs and Indian tribes. Section

8004(d) specifically imposes that requirement on the Secretary and

gives the Secretary the authority to take various enforcement actions,

including withholding payments authorized under

[[Page 50777]]

section 8003 from LEAs that fail to comply with section 8004(a).

Facilities Assistance and Transfers under Section 8008 of the Act

(Subpart I)

The regulations in subpart I implement the provisions in section

8008 of the ESEA concerning facilities maintenance. Pub. L. 81-815, the

former Impact Aid School Construction statute, was repealed as part of

the IASA. Under section 10 of Pub. L. 81-815, the Secretary had the

authority to make arrangements for ``constructing, leasing, renovating,

remodeling, or rehabilitating or otherwise providing'' the minimum

school facilities necessary for the education of certain federally

connected students for whom such facilities were unavailable.

Section 8008 specifies that the Secretary may continue to provide

assistance for the school facilities that were supported under section

10 of Public Law 81-815. However, this authority indicates that the

Secretary is, as soon as practicable, to transfer to an appropriate LEA

or entity the United States' interest in those facilities. Due to these

statutory changes, the relevant regulations, Sec. 221.5 and subpart H,

which were previously contained in 34 CFR part 221, have been clarified

and streamlined, consistent with the more limited authorities in

section 8008.

Impact Aid Administrative Hearings and Judicial Review under Section

8011 of the Act (Subpart J)

The regulations in subpart J implement the provisions in section

8011(a) of the ESEA for administrative review following an adverse

action. Regulations implementing a similar administrative review

provision in section 5(g) of Pub. L. 81-874 previously were in part

218. This subpart governs all Impact Aid administrative hearings,

except Indian policies and procedures hearings (in subpart G) and

hearings concerning determinations under section 8009 of the ESEA (in

subpart K).

In addition, the regulations in this subpart implement section

8011(b) of the ESEA, which changes the forum in which a party must seek

judicial review. Under that provision, if a party seeks review of the

Secretary's final decision following an administrative hearing

proceeding under section 8011(a), that review must be sought in the

United States Court of Appeals in the circuit in which the LEA or State

is located, rather than in a lower court such as a United States

District Court or the Court of Federal Claims as previously occurred.

Determinations under Section 8009 of the Act (Subpart K)

The regulations in subpart K implement the provisions in section

8009 of the ESEA. Under this section, States are prohibited from

considering Impact Aid in the allocation of State aid, except in those

cases where the Secretary determines and certifies that the State has

in effect a program of State aid that equalizes expenditures for free

public education among the State's LEAs. Sections 222.161-222.165

describe the substantive and procedural requirements for States to

obtain certification and consider Impact Aid in accordance with section

8009 of the ESEA. Regulations implementing similar provisions in

section 5(d) (1) and (2) of Pub. L. 81-874 previously were in subpart G

of part 222.

Sec. 222.161 How is State aid treated under section 8009 of the Act?

Section 8009 of the ESEA contains several changes from the previous

law that are implemented by Sec. 222.161. Section 222.161(a)(1)(iv)(4)

implements the new requirements in section 8009(b)(1) of the ESEA,

under which all States are prohibited from considering Impact Aid

before certification by the Secretary. Section 222.161(b) implements

the new requirement in section 8009(b)(2)(A) that determinations by the

Secretary are to be based on final data for the second fiscal year

preceding the fiscal year for which the determination is made if

substantially the same program of State aid was then in effect.

This regulation also clarifies that, in those cases in which the

Secretary determines that the State has substantially revised its State

aid program, the Secretary may certify that program for any fiscal year

only if the Secretary determines, on the basis of projected data, that

the State's program will meet the disparity standard described in

Sec. 222.162. The State must also provide an assurance to the Secretary

that, if final data do not demonstrate that the State's program met

that standard for the fiscal year for which the determination is made,

the State will pay to each affected LEA the amount by which the State

reduced State aid to the LEA. The regulation requires that data

projections submitted by a State must set forth the assumptions upon

which the data projections are founded, be accompanied by an assurance

as to their accuracy, and be adjusted by actual data for the fiscal

year of determination that must be submitted to the Secretary as soon

as those data are available.

Sec. 222.162 What disparity standard must a State meet in order to be

certified and how are disparities in current expenditures or revenues

per pupil measured?

Section 8009(b)(2) of the ESEA establishes a new, single, statutory

standard for eligibility for the consideration of Impact Aid in a

State's allocation of State aid. That standard is based upon the

allowable disparities in per-pupil revenues or expenditures, under

which the range of permissible disparity is 25 percent for fiscal years

1995-97 and 20 percent for fiscal years 1998 and 1999. Section 222.162

reflects these requirements and specifies the method the Secretary will

employ to measure the statutory disparity standard. Detailed examples

of the application of this method to State funding programs are

provided in the Appendix following subpart K.

Sec. 222.163 What proportion of funds distributed under the Act may a

State take into consideration upon certification?

Once a State is certified by the Secretary, section 8009(d) of the

ESEA provides that the State may reduce State aid in a limited amount

equal to a specified proportion of certain Impact Aid receipts.

Specifically, the proportion established by section 8009(d) is the

proportion that the local tax revenues covered under the equalization

program are of the total local tax revenues attributable to current

expenditures for free public education within that agency. Section

222.163 clarifies how the Secretary applies this statutory limitation.

Sec. 222.164 What procedures does the Secretary follow in making a

determination under section 8009?

Section 222.164 specifies the procedures to be followed by the

Secretary in making determinations under section 8009. Those procedures

include the requirement that a submission by a State seeking

certification as equalized must be received by the Secretary no later

than 120 calendar days before the beginning of the State's fiscal year

for the year of the determination. The submission must include final

second preceding fiscal year disparity data (except as provided in

Sec. 222.161(b)(2)) enabling the Secretary to determine whether the

State qualifies.

This regulation also provides that, before making a determination

under section 8009, the Secretary will afford the State, and all LEAs

in the State, an opportunity to present their views to the Department.

[[Page 50778]]

Sec. 222.165 What procedures does the Secretary follow after making a

determination under section 8009?

Section 222.165 describes the procedures for administrative appeals

of determinations by the Secretary and the procedures for corrective

actions by States.

Waiver of Proposed Rulemaking

In accordance with the Administrative Procedure Act (5 U.S.C. 553),

it is the Secretary's practice to offer interested parties the

opportunity to comment on proposed regulations. However, these

regulations merely reflect statutory changes, remove unnecessary and

obsolete regulatory provisions, reorganize and clarify the language of

the regulations, and make minor procedural revisions. Thus, the

regulations do not establish or affect substantive policy. Therefore,

the Secretary has determined with respect to amendments made due to

statutory changes that, pursuant to 5 U.S.C. 553(b)(B), publication of

a proposed rule is unnecessary and contrary to the public interest, and

with respect to the procedural changes that, pursuant to 5 U.S.C.

553(b)(A), public comment is not required.

Regulatory Flexibility Act Certification

The Secretary certifies that these regulations would not have a

significant economic impact on a substantial number of small entities.

The small entities that would be affected by these regulations are

small LEAs receiving Federal funds under this program. However, the

regulations would not have a significant economic impact on the small

LEAs affected because the regulations will not impose excessive

regulatory burdens or require unnecessary Federal supervision. The

regulations would impose minimal requirements to ensure the proper

expenditure of program funds.

List of Subjects in Part 222

Education, Education of children with disabilities, Elementary and

secondary education, Federally affected areas, Grant programs--

education, Indians--education, Public housing, Reports and

recordkeeping requirements, School construction.

34 CFR Part 218

Education, Elementary and secondary education, Federally affected

areas, Grant programs--education.

34 CFR Part 219

Education, Elementary and secondary education, Federally affected

areas, Grant programs--education, Reports and recordkeeping

requirements, School construction.

34 CFR Parts 221 and 222

Education, Elementary and secondary education, Federally affected

areas, Grant programs--education, Reports and recordkeeping

requirements, School construction.

34 CFR Part 223

Education, Elementary and secondary education, Federally affected

areas, Grant programs--education, Indians--education.

Dated: September 25, 1995.

Thomas W. Payzant,

Assistant Secretary for Elementary and Secondary Education.

(Catalog of Federal Domestic Assistance Number 84.041, Impact Aid--

Maintenance and Operations)

For the reasons set out in the preamble and under the authority at

20 U.S.C. 7701-7714, the Secretary amends chapter II of title 34 of the

Code of Federal Regulations as follows:

Part 218 [Removed]

1.Part 218 is removed.

Part 219 [Removed]

2. Part 219 is removed.

Part 221 [Removed]

3. Part 221 is removed.

Part 223 [Removed]

4. Part 223 is removed.

5. Part 222 is revised to read as follows:

PART 222--IMPACT AID PROGRAMS

Subpart A--General

Sec.

222.1 What is the scope of this part?

222.2 What definitions apply to this part?

222.3 How does a local educational agency apply for assistance

under section 8002 or 8003 of the Act?

222.4 How does the Secretary determine when an application is

timely filed?

222.5 When may a local educational agency amend its application?

222.6 Which applications does the Secretary accept?

222.7 What information may a local educational agency submit after

the application deadline?

222.8 What action must an applicant take upon a change in its

boundary, classification, control, governing authority, or identity?

222.9 What records must a local educational agency maintain?

222.10 How long must a local educational agency retain records?

222.11 How does the Secretary recover overpayments?

222.12 [Reserved]

222.13 What other statutes and regulations apply to this part?

222.14-222.19 [Reserved]

Subpart B--Payments for Federal Property under Section 8002 of the Act

222.20 What definitions apply to this subpart?

222.21 What requirements must a local educational agency meet

concerning Federal acquisition of real property within the local

educational agency?

222.22 How does the Secretary treat compensation from Federal

activities for purposes of determining eligibility and payments?

222.23-222.29 [Reserved]

Subpart C--Payments for Federally Connected Children under Section

8003(b) and (e) of the Act

222.30 What is ``free public education''?

222.31 To which local educational agencies does the Secretary make

basic support payments under section 8003(b) of the Act?

222.32 Upon what information is a local educational agency's basic

support payment based?

222.33 When must an applicant make its first or only membership

count?

222.34 If an applicant makes a second membership count, when must

that count be made?

222.35 How does a local educational agency count the membership of

its federally connected children?

222.36 What minimum number of federally connected children must a

local educational agency have to receive a payment on behalf of

those children under section 8003(b) and (e)?

222.37 How does the Secretary calculate the average daily

attendance of federally connected children?

222.38 What is the maximum basic support payment that a local

educational agency may receive under section 8003(b)?

222.39 How does a State educational agency identify generally

comparable local educational agencies for local contribution rate

purposes?

222.40 How does a local educational agency select a local

contribution rate based on generally comparable local educational

agencies?

222.41 How does a State educational agency compute local

contribution rates based upon generally comparable local educational

agencies?

222.42-222.49 [Reserved]

Subpart D--Payments under Section 8003(d) of the Act for Local

Educational Agencies That Serve Children with Disabilities

222.50 What definitions apply to this subpart?

222.51 Which children may a local educational agency count for

payment under section 8003(d) of the Act?

222.52 What requirements must a local educational agency meet to

receive a payment under section 8003(d)?

222.53 What restrictions and requirements apply to the use of funds

provided under section 8003(d)?

222.54 What supplement-not-supplant requirement applies to this

subpart?

222.55 What other statutes and regulations are applicable to this

subpart?

222.56-222.59 [Reserved]

[[Page 50779]]

Subpart E--Additional Assistance for Heavily Impacted Local Educational

Agencies under Section 8003(f) of the Act

222.60 What are the scope and purpose of these regulations?

222.61 What data are used to determine a local educational agency's

eligibility and payment under section 8003(f) of the Act?

222.62 Which local educational agencies are eligible to apply for

an additional payment under section 8003(f)?

222.63 What other requirements must a local educational agency meet

in order to be eligible for financial assistance under section

8003(f)(2)(A)?

222.64 What other requirements must a local educational agency meet

in order to be eligible for financial assistance under section

8003(f)(2)(B)?

222.65 How may a State aid program affect a local educational

agency's eligibility for assistance under section 8003(f)?

222.66 How does the Secretary determine whether a fiscally

independent local educational agency is making a reasonable tax

effort?

222.67 What tax rates does the Secretary use if real property is

assessed at different percentages of true value?

222.68 What tax rates does the Secretary use if two or more

different classifications of real property are taxed at different

rates?

222.69 What tax rates may the Secretary use if substantial local

revenues are derived from local tax sources other than real property

taxes?

222.70 How does the Secretary determine whether a fiscally

dependent local educational agency is making a reasonable tax

effort?

222.71 What information must be provided by the State educational

agency?

222.72 How does the Secretary determine a maximum payment for local

educational agencies that are eligible for financial assistance

under section 8003(f)(2)(A) and Sec. 222.63?

222.73 How does the Secretary determine a maximum payment for local

educational agencies that are eligible for financial assistance

under section 8003(f)(2)(B) and Sec. 222.64?

222.74 How does the Secretary identify generally comparable local

educational agencies for purposes of section 8003(f)?

222.75 How does the Secretary compute the average per pupil

expenditure of generally comparable local educational agencies under

this subpart?

222.76 What does the Secretary do if appropriation levels are

insufficient to pay in full the amounts calculated under

Secs. 222.72 and 222.73?

222.77-222.79 [Reserved]

Subpart F--[Reserved]

Subpart G--Special Provisions for Local Educational Agencies that Claim

Children Residing on Indian Lands

General

222.90 What definitions apply to this subpart?

222.91 What requirements must a local educational agency meet to

receive a payment under section 8003 of the Act for children

residing on Indian lands?

222.92 What additional statutes and regulations apply to this

subpart?

222.93 [Reserved]

Indian Policies and Procedures

222.94 What provisions must be included in a local educational

agency's Indian policies and procedures?

222.95 How are Indian policies and procedures reviewed to ensure

compliance with the requirements in section 8004(a) of the Act?

222.96-222.101 [Reserved]

Indian Policies and Procedures Complaint and Hearing Procedures

222.102 Who may file a complaint about a local educational agency's

Indian policies and procedures?

222.103 What must be included in a complaint?

222.104 When does the Assistant Secretary consider a complaint

received?

222.105-222.107 [Reserved]

222.108 What actions must be taken upon receipt of a complaint?

222.109 When may a local educational agency reply to a complaint?

222.110 What are the procedures for conducting a hearing on a local

educational agency's Indian policies and procedures?

222.111 What is the authority of the hearing examiner in conducting

a hearing?

222.112 What procedures are followed after the hearing?

222.113 What are the responsibilities of the Assistant Secretary

after the hearing?

222.114-222.129 [Reserved]

Subpart H--[Reserved]

Subpart I--Facilities Assistance and Transfers under Section 8008 of

the Act

222.140 What definitions apply to this subpart?

222.141 For what types of projects may the Secretary provide

assistance under section 8008 of the Act?

222.142 What terms and conditions apply to minimum school

facilities operated under section 8008 by another agency?

222.143 What terms and conditions apply to the transfer of minimum

school facilities?

222.144-222.149 [Reserved]

Subpart J--Impact Aid Administrative Hearings and Judicial Review under

Section 8011 of the Act

222.150 What is the scope of this subpart?

222.151 When is an administrative hearing provided to a local

educational agency?

222.152 When may a local educational agency request reconsideration

of a determination?

222.153 How must a local educational agency request an

administrative hearing?

222.154 How must written submissions under this subpart be filed?

222.155 When and where is an administrative hearing held?

222.156 How is an administrative hearing conducted?

222.157 What procedures apply for issuing or appealing an

administrative law judge's decision under section 8011(a) of the

Act?

222.158 What procedures apply to the Secretary's review of an

initial decision or certified record?

222.159 When and where does a party seek judicial review?

Subpart K--Determinations under Section 8009 of the Act

222.160 What are the scope and purpose of this subpart?

222.161 How is State aid treated under section 8009 of the Act?

222.162 What disparity standard must a State meet in order to be

certified and how are disparities in current expenditures or

revenues per pupil measured?

222.163 What proportion of Impact Aid funds may a State take into

consideration upon certification?

222.164 What procedures does the Secretary follow in making a

determination under section 8009?

222.165 What procedures does the Secretary follow after making a

determination under section 8009?

222.166-222.169 [Reserved]

Appendix to Subpart K--Determinations Under Section 8009 of the Act--

Methods of Calculations for Treatment of Impact Aid Payments under

State Equalization Programs

Authority: 20 U.S.C. 7701-7714, unless otherwise noted.

Subpart A--General

Sec. 222.1 What is the scope of this part?

The regulations in this part govern the provision of financial

assistance under title VIII of the Elementary and Secondary Education

Act of 1965 (ESEA) to local educational agencies (LEAs) in areas

affected by Federal activities.

(Authority: 20 U.S.C. 7701-7714)

Sec. 222.2 What definitions apply to this part?

(a)(1) The following terms defined in section 8013 of the Act apply

to this part:

Armed forces

Average per-pupil expenditure

Construction

Current expenditures

Indian lands

Local contribution percentage

Low-rent housing

School facilities

(2) The following term defined in Sec. 222.30 applies to this part:

Free public education

(b) The following terms defined in section 14101 of the ESEA

(General Provisions) also apply to this part:

Average daily attendance (ADA)

Child

County

Department

Outlying area

Parent

[[Page 50780]]

Secretary

State

State educational agency (SEA)

(c) In addition, the following definitions apply to this part:

Act means title VIII of the Elementary and Secondary Education Act

of 1965 (ESEA), as amended.

Applicant means any LEA that files an application for financial

assistance under section 8002, 8003, or 8006 of the Act and the

regulations in this part implementing those provisions. Except as

provided in section 8005(d)(4) of the Act, an SEA may be an applicant

for assistance under section 8003 only if the SEA directly operates and

maintains facilities for providing free public education for the

children it claims in its application.

(Authority: 20 U.S.C. 7705 and 7713(9))

Application means a complete and signed application in the form

approved by the Secretary, filed by an applicant.

(Authority: 20 U.S.C. 7705)

Federally connected children means children described in sections

8003(a)(1) and 8010(c)(2) of the Act.

(Authority: 20 U.S.C. 7703(a)(1) and 7710(c)(2))

Federal property.

(1) The term means--

(i) Federal property described in section 8013; and

(ii) Ships that are owned by the United States and whose home ports

are located upon Federal property described in this definition.

(2) Notwithstanding paragraph (1) of this definition, for the

purpose of section 8002 the term does not include--

(i) Any real property that the United States does not own in fee

simple, except for Indian lands described in section 8013(7), and

transferred property described in section 8002(d); and

(ii) Real property described in section 8002(c) (real property with

respect to which payments are being made under section 13 of the

Tennessee Valley Authority Act of 1933).

(Authority: 20 U.S.C. 7702(c) and (d), and 7713(5) and (7))

Fiscally dependent LEA means an LEA that does not have the final

authority to determine the amount of revenue to be raised from local

sources for current expenditure purposes.

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

Fiscally independent LEA means an LEA that has the final authority

to determine the amount of revenue to be raised from local sources for

current expenditure purposes within the limits established by State

law.

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

Local educational agency (LEA) is defined in section 8013(9).

Except for an SEA qualifying under section 8005(d)(4), the term

includes an SEA only so long as--

(1) The SEA directly operates and maintains the facilities for

providing free public education for the children it claims in its

application;

(2) The children claimed by the SEA actually are attending those

State-operated facilities; and

(3) The SEA does not, through a tuition arrangement, contract, or

by any other means, pay another entity to operate and maintain

facilities for those children.

(Authority: 20 U.S.C. 7705(d)(4) and 7713(9))

Local real property tax rate for current expenditure purposes.

(1) For a fiscally independent LEA, the term means the entire tax

levied on real property within the LEA, if all but a de minimus amount

of the total proceeds from the tax levy are available to that LEA for

current expenditures (as defined in section 8013).

(2) For a fiscally dependent LEA, the term means the following:

(i) The entire tax levied by the general government on real

property if all but a de minimus amount of the total proceeds from that

tax levy are available to the LEA for current expenditures (as defined

in section 8013);

(ii) That portion of a local real property tax rate designated by

the general government for current expenditure purposes (as defined in

section 8013); or

(iii) If no real property tax levied by the general government

meets the criteria in paragraphs (2)(i) or (ii) of this definition, an

imputed tax rate that the Secretary determines by--

(A) Dividing the total local real property tax revenue available

for current expenditures of the general government by the total revenue

from all local sources available for current expenditures of the

general government;

(B) Multiplying the figure obtained in paragraph (2)(iii)(A) of

this definition by the revenue received by the LEA for current

expenditures (as defined in section 8013) from the general government;

and

(C) Dividing the figure obtained in paragraph (2)(iii)(B) of this

definition by the total current actual assessed value of all real

property in the district.

(3) The term does not include any portion of a tax or revenue that

is restricted to or dedicated for any specific purpose other than

current expenditures (as defined in section 8013).

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

Membership means the following:

(1)(i) The definition given to the term by State law; or

(ii) If State law does not define the term, the number of children

listed on an LEA's current enrollment records on its survey date(s).

(2) The term includes children for whom the applicant is

responsible for providing a free public education, but who are

attending schools other than those operated by the applicant under a

tuition arrangement described in paragraph (4) of the definition of

``free public education'' in Sec. 222.30.

(3) The term does not include children who--

(i) Have never attended classes in schools of the LEA or of another

educational entity with which the LEA has a tuition arrangement;

(ii) Have permanently left the LEA;

(iii) Otherwise have become ineligible to attend classes there; or

(iv) Attend the schools of the applicant LEA under a tuition

arrangement with another LEA that is responsible for providing them a

free public education.

(Authority: 20 U.S.C. 7703 and 8801(1))

Parent employed on Federal property.

(1) The term means the following:

(i) An employee of the Federal Government who reports to work on,

or whose place of work is located on, Federal property.

(ii) A person not employed by the Federal Government but who spends

more than 50 percent of his or her working time on Federal property

(whether as an employee or self-employed) when engaged in farming,

grazing, lumbering, mining, or other operations that are authorized by

the Federal Government, through a lease or other arrangement, to be

carried out entirely or partly on Federal property.

(iii) A proportion, to be determined by the Secretary, based on

persons working on commingled Federal and non-Federal properties other

than those persons covered under paragraph (1)(ii) of this definition.

(2) The term does not include a person who reports to work at a

work station not on Federal property but spends more than 50 percent of

his working time on Federal property providing services to operations

or activities authorized to be carried out on Federal property.

(Authority: 20 U.S.C. 7701 and 7703)

Real property.

(1) The term means--

(i) Land; and

(ii) Improvements (such as buildings and appurtenances to those

buildings, railroad lines, utility lines, pipelines, and other

permanent fixtures), except as provided in paragraph (2).

(2) The term does not include--

(i) Improvements that are classified as personal property under

State law; or

(ii) Equipment and movable machinery, such as motor vehicles,

movable house trailers, farm machinery, rolling railroad stock, and

floating dry

[[Page 50781]]

docks, unless that equipment or movable machinery is classified as real

property or subject to local real property taxation under State law.

(Authority: 20 U.S.C. 7702 and 7713(5))

Revenues derived from local sources.

(1) The term means--

(i) Tax funds derived from real estate; and

(ii) Other taxes or receipts that are received from the county, and

any other local tax or miscellaneous receipts.

(2)(i) For the purpose of paragraph (1)(i) of this definition, the

term ``tax funds derived from real estate'' means--

(A) Locally received funds that are derived from local taxation of

real property;

(B) Tax funds that are received on account of Wherry-Spence housing

projects (12 U.S.C. 1702 et seq.) located on private property; and

(C) All local real property tax funds that are received from either

the county or the State, serving as a collecting agency, and that are

returned to the LEA for expenditure by that agency.

(ii) The term does not include--

(A) Any payments under this Act or the Johnson-O'Malley Act (25

U.S.C. 452);

(B) Tax payments that are received on account of Wherry-Spence

housing projects located on federally owned property; or

(C) Local real property tax funds that are received by the State

and distributed to LEAs on a per-pupil or formula basis.

(Authority: 20 U.S.C. 7713(11))

State aid means any contribution, no repayment of which is

expected, made by a State to or on behalf of an LEA within the State

for the support of free public education.

(Authority: 20 U.S.C. 7703)

Uniformed services means the United States Army, Navy, Air Force,

Marine Corps, Coast Guard, National Oceanic and Atmospheric

Administration, and Public Health Service.

(Approved by the Office of Management and Budget under control

number 1810-0036).

(Authority: 20 U.S.C. 7703(a)(1); 37 U.S.C. 101)

Sec. 222.3 How does a local educational agency apply for assistance

under section 8002 or 8003 of the Act?

An LEA must meet the following application requirements to be

considered for a payment under section 8002 or 8003:

(a) Except as provided in paragraphs (b) and (d) of this section,

on or before January 31 of the fiscal year for which the LEA seeks

assistance under section 8002, or the fiscal year preceding the fiscal

year for which the LEA seeks assistance under section 8003, the LEA

must--

(1) File with the Secretary a complete and signed application for

payment under section 8002 or 8003; and

(2) Certify to the Secretary that it will file, and file, a copy of

the application referred to in paragraph (a) of this section with its

SEA.

(b)(1) If any of the following events that give rise to eligibility

for payment occur after the filing deadline in paragraph (a)(1) of this

section, an LEA must file a complete and signed application within the

time limits required by paragraph (b)(2) of this section:

(i) The United States Government initiates or reactivates a Federal

activity, or acquires real property.

(ii) The United States Congress enacts new legislation.

(iii) A reorganization of school districts takes place.

(iv) Property, previously determined by the Secretary not to be

Federal property, is determined in writing by the Secretary to be

Federal property.

(2) Except as provided in paragraph (d) of this section, within 60

days after the applicable event occurs but not later than September 30

of the fiscal year for which the LEA seeks assistance under section

8002, or of the fiscal year preceding the fiscal year for which the LEA

seeks assistance under section 8003, the LEA must--

(i) File an application, as permitted by paragraph (b)(1) of this

section, with the Secretary; and

(ii) File a copy of that application with its SEA.

(c)(1) If the SEA wishes to notify the Secretary of any

inconsistencies or other concerns with an LEA's application, the SEA

must do so--

(i) For an application subject to the filing deadlines in paragraph

(a)(1) of this section, on or before February 15 of the fiscal year for

which the LEA seeks assistance under section 8002, or of the fiscal

year preceding the fiscal year for which the LEA seeks assistance under

section 8003; and

(ii) On or before fifteen days following the date by which an

application subject to the filing deadlines in paragraph (b) of this

section must be filed.

(2) The Secretary does not process for payment a timely filed

application until any concerns timely raised by the SEA are resolved.

If the Secretary does not receive comments or notification from the SEA

by the applicable deadline set forth in paragraph (c)(1) of this

section, the Secretary assumes that the data and statements in the

application are, to the best of the SEA's knowledge, true, complete,

and correct.

(d) If a filing date in this section falls on a Saturday, Sunday,

or Federal holiday, the deadline for filing is the next succeeding

business day.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7705)

Sec. 222.4 How does the Secretary determine when an application is

timely filed?

To be timely filed under Sec. 222.3, an application must--

(a) Be received by the Secretary on or before the applicable filing

date; or

(b) Bear a U.S. Postal Service postmark dated on or before that

filing date.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7705)

Note to Paragraph (b) of this section: The U.S. Postal Service

does not uniformly provide a dated postmark. Before relying on this

method, an applicant should check with its local post office.

Sec. 222.5 When may a local educational agency amend its application?

(a) An LEA may amend its application following any of the events

described in Sec. 222.3(b)(1) by submitting a written request to the

Secretary and a copy to its SEA no later than the earlier of the

following events:

(1) The 60th day following the applicable event.

(2) By the end of the Federal fiscal year--

(i) For which assistance is sought under section 8002; or

(ii) Preceding the fiscal year for which the LEA seeks assistance

under section 8003.

(b) The LEA also may amend its application no later than the end of

the Federal fiscal year for which assistance is sought under section

8002 or of the fiscal year preceding the fiscal year for which the LEA

seeks assistance under section 8003--

(1) For an adjustment to its payment based on data obtained from a

second membership count; or

(2) For an adjustment to its payment based on actual satisfactory

data regarding eligible Federal properties or federally connected

children if those data were not available at the time the LEA filed its

application.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7705)

Sec. 222.6 Which applications does the Secretary accept?

(a) The Secretary accepts or approves for payment any otherwise

approvable application under section 8002 or 8003 that is timely filed

with the Secretary in accordance with Secs. 222.3, 222.4, and 222.5, as

applicable.

(b)(1) Except as provided in paragraph (b)(2) of this section, the

Secretary does not accept or approve for payment any application under

section 8002 or 8003 that is not timely filed with the Secretary.

(2) The Secretary accepts and approves for payment any otherwise

approvable application filed within 60

[[Page 50782]]

days of the applicable filing date established in Sec. 222.3, but

reduces the payment based on the application by 10 percent of the

amount that would have been paid if the application had been filed by

the applicable filing date established in that section.

(Authority: 20 U.S.C. 7705)

Sec. 222.7 What information may a local educational agency submit

after the application deadline?

(a) General. Except as indicated in paragraph (b) of this section,

the Secretary does not consider information submitted by an applicant

after the deadlines prescribed in this subpart for submission of

applications and amendments to applications.

(b) Information solicited by the Secretary. The Secretary may

solicit from an applicant at any time additional information to process

an application.

(Authority: 20 U.S.C. 1221e-3, 7702, 7703, 7705, 7706)

Sec. 222.8 What action must an applicant take upon a change in its

boundary, classification, control, governing authority, or identity?

(a) Any applicant that is a party to an annexation, consolidation,

deconsolidation, merger, or other similar action affecting its

boundaries, classification, control, governing authority, or identity

must provide the following information to the Secretary as soon as

practicable:

(1) A description of the character and extent of the change.

(2) The effective date of the change.

(3) Full identification of all predecessor and successor LEAs.

(4) Full information regarding the disposition of the assets and

liabilities of all predecessor LEAs.

(5) Identification of the governing body of all successor LEAs.

(6) The name and address of each authorized representative

officially designated by the governing body of each successor LEA for

purposes of the Act.

(b) If a payment is made under section 8002 or 8003 to an LEA that

has ceased to be a legally constituted entity during the regular school

term due to an action described in paragraph (a) of this section, the

LEA may retain that payment if--

(1) An adjustment is made in the payment of a successor LEA to

account for the payment to the predecessor LEA; or

(2)(i) The payment amount does not exceed the amount the

predecessor LEA would have been eligible to receive if the change in

boundaries or organization had not taken place; and

(ii) A successor LEA is not an eligible applicant.

(c) A predecessor LEA receiving any portion of a payment under

section 8002 or 8003 that exceeds the amount allowed by paragraph

(b)(2)(i) of this section must return the excessive portion to the

Secretary, unless the Secretary determines otherwise under section 8012

of the Act.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7702 and 7703)

Sec. 222.9 What records must a local educational agency maintain?

Except as otherwise provided in Sec. 222.10--

(a) An LEA must maintain adequate written records to support the

amount of payment it received under the Act for any fiscal year;

(b) On request, the LEA must make its records available to the

Secretary for the purpose of examination or audit; and

(c) Each applicant must submit such reports and information as the

Secretary may require to determine the amount that the applicant may be

paid under the Act.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 1221e-3, 1232f, 7702, 7703, 7704, 7706)

Sec. 222.10 How long must a local educational agency retain records?

An LEA must retain the records described in Sec. 222.9 until the

later of--

(a) Three years after the last payment for a fiscal year; or

(b) If the records have been questioned on Federal audit or review,

until the question is finally resolved and any necessary adjustments to

payments have been made.

(Authority: 20 U.S.C. 1221e-3, 1232f, 7702, 7703, 7704, 7706)

Sec. 222.11 How does the Secretary recover overpayments?

Except as otherwise provided in section 8012, the Secretary adjusts

for and recovers overpayments as follows:

(a) If the Secretary determines that an LEA has received a payment

in excess of what it should have received under the Act and this part,

the Secretary deducts the amount of the overpayment from subsequent

payments for which the LEA is eligible under the Act.

(b)(1) If the LEA is not eligible for subsequent payments under the

Act, the LEA must promptly refund the amount of the overpayment to the

Secretary.

(2) If the LEA does not promptly repay the amount of the

overpayment or promptly enter into a repayment agreement with the

Secretary, the Secretary may use the procedures in 34 CFR part 30 to

offset that amount against payments from other Department programs or,

under the circumstances permitted in part 30, to request that another

agency offset the debt.

(Authority: 20 U.S.C. 1221e-3, 1226a-1, 7702, 7703, 7706, 7712)

Sec. 222.12 [Reserved]

Sec. 222.13 What other statutes and regulations apply to this part?

(a) The following Federal statutes and regulations on

nondiscrimination apply to assistance under this part:

(1) The provisions of title VI of the Civil Rights Act of 1964

(Pub. L. 88-352) (prohibition of discrimination on the basis of race,

color or national origin), and the implementing regulations (34 CFR

part 100).

(Authority: 42 U.S.C. 2000d-2000d-4)

(2) The provisions of title IX of the Education Amendments of 1972

(Pub. L. 92-318) (prohibition of discrimination on the basis of sex),

and the implementing regulations (34 CFR part 106).

(Authority: 20 U.S.C. 1681-1683)

(3) The provisions of section 504 of the Rehabilitation Act of 1973

(Pub. L. 93-112) (prohibition of discrimination on the basis of

disability), and the implementing regulations (34 CFR part 104).

(Authority: 29 U.S.C. 794)

(4) The provisions of title II of the Americans with Disabilities

Act of 1990 (Pub. L. 101-336) (prohibition of discrimination on basis

of disability), and any implementing regulations.

(Authority: 42 U.S.C. 12101-12213)

(5) The provisions of the Age Discrimination Act of 1975 (Pub. L.

94-135) (prohibition of age discrimination), and any implementing

regulations.

(Authority: 42 U.S.C. 6101)

(b) The following Education Department General Administrative

Regulations (EDGAR):

(1) Subparts A, E, F, and Secs. 75.900 and 75.910 of 34 CFR part 75

(Direct Grant Programs) for payments under sections 8003(d) (payments

for federally connected children with disabilities), 8007

(construction), and 8008 (school facilities), except for the following:

(i) Section 75.603 does not apply to payments under section 8007

(construction) or section 8008 (school facilities).

(ii) Section 75.605 does not apply to payments under section 8007

(construction).

(iii) Sections 75.600-602, 75.604, and 75.606-617 apply to payments

under section 8007 (construction) only to the extent that funds

received under that section are used for major renovations or to

construct new school facilities.

(2) 34 CFR part 77 (Definitions that Apply to Department

Regulations).

(3) 34 CFR part 80 (Uniform Administrative Requirements for Grants

and Cooperative Agreements to State and Local Governments), for

payments under sections 8003(d) (payments for federally connected

children with

[[Page 50783]]

disabilities), 8007 (construction), and 8008 (school facilities).

(4) 34 CFR part 82 (New Restrictions on Lobbying).

(5) 34 CFR part 85 (Governmentwide Debarment and Suspension

(Nonprocurement) and Governmentwide Requirements for Drug-free

Workplace (Grants)).

(Authority: 20 U.S.C. 1221e-3)

Secs. 222.14-222.19 [Reserved]

Subpart B--Payments for Federal Property under Section 8002 of the

Act

Sec. 222.20 What definitions apply to this subpart?

In addition to the terms referenced or defined in Sec. 222.2, the

following definitions apply to this subpart:

Acquisition or acquired by the United States.

(1) The term means--

(i) The receipt or taking by the United States of ownership in fee

simple of real property by condemnation, exchange, gift, purchase,

transfer, or other arrangement;

(ii) The receipt by the United States of real property as trustee

for the benefit of individual Indians or Indian tribes; or

(iii) The imposition by the United States of restrictions on sale,

transfer, or exchange of real property held by individual Indians or

Indian tribes.

(2) The definition of ``acquisition'' in 34 CFR 77.1(c)

(Definitions that Apply to Department Regulations) of this title does

not apply to this subpart.

(Authority: 20 U.S.C. 7702)

Assessed value. For the purpose of determining eligibility under

section 8002(a)(1) and Sec. 222.21, the following definition applies:

(1) The term means the value that is assigned to real property, for

the purpose of generating local real property tax revenues for current

expenditures (as defined in section 8013 of the Act), by a State or

local official who is legally authorized to determine that assessed

value.

(2) The term does not include--

(i) A value assigned to tax-exempt real property;

(ii) A value assigned to real property for the purpose of

generating other types of revenues, such as payments in lieu of taxes

(PILOTs);

(iii) Fair market value, or a percentage of fair market value, of

real property unless that value was actually used to generate local

real property tax revenues for current expenditures (as defined in

section 8013); or

(iv) A value assigned to real property in a condemnation or other

court proceeding, or a percentage of that value, unless that value was

actually used to generate local real property tax revenues for current

expenditures (as defined in section 8013).

(Authority: 20 U.S.C. 7702(a)(1))

Eligible Federal property.

(1) The term means ``Federal property'' as defined in Sec. 222.2(c)

for section 8002, which meets the following additional requirements:

(i) The United States has acquired the Federal property since 1938;

and

(ii) The Federal property was not acquired by exchange for other

Federal property that the United States owned within the school

district before 1939.

(2) In addition, for local educational agencies (LEAs) that are

eligible under Sec. 222.21(a)(2), the term also means land acquired by

the United States Forest Service between 1915 and 1990.

(Authority: 20 U.S.C. 7702)

Sec. 222.21 What requirements must a local educational agency meet

concerning Federal acquisition of real property within the local

educational agency?

(a) For an LEA with an otherwise approvable application to be

eligible to receive financial assistance under section 8002, the LEA

must meet the requirements in subpart A of these regulations and

Sec. 222.22, and, unless otherwise provided by statute as meeting the

requirements in section 8002(a)(1)(C), document--

(1) That the United States owns or has acquired ``eligible Federal

property'' within the LEA, that has an aggregate assessed value of 10

percent or more of the assessed value of--

(i) All real property in that LEA, based upon the assessed values

of the eligible Federal property and of all real property (including

that Federal property) on the date or dates of acquisition of the

eligible Federal property; or

(ii) All real property in the LEA as assessed in the first year

preceding or succeeding acquisition, whichever is greater, only if--

(A) The assessment of all real property in the LEA is not made at

the same time or times that the Federal property was so acquired and

assessed; and

(B) State law requires an assessment be made of property so

acquired; or

(2)(i) That, as demonstrated by written evidence from the United

States Forest Service satisfactory to the Secretary, the LEA contains

between 20,000 and 60,000 acres of land that has been acquired by the

United States Forest Service between 1915 and 1990; and

(ii) That the LEA serves a county chartered by State law in 1875 or

1890.

(b) ``Federal property'' described in section 8002(d) (certain

transferred property) is considered to be owned by the United States

for the purpose of paragraph (a) of this section.

(c) If, during any fiscal year, the United States sells, transfers,

is otherwise divested of ownership of, or relinquishes an interest in

or restriction on, eligible Federal property, the Secretary

redetermines the LEA's eligibility for the following fiscal year, based

upon the remaining eligible Federal property, in accordance with

paragraph (a) of this section. This paragraph does not apply to a

transfer of real property by the United States described in section

8002(d).

(d) Except as provided under paragraph (a)(2) of this section, the

Secretary's determinations and redeterminations of eligibility under

this section are based on the following documents:

(1) For a new section 8002 applicant or newly acquired eligible

Federal property, only upon--

(i) Original records as of the time(s) of Federal acquisition of

real property, prepared by a legally authorized official, documenting

the assessed value of that real property; or

(ii) Facsimiles of those records such as microfilm or other

reproduced copies.

(2) For a redetermination of an LEA's eligibility under section

8002(a)(1), only upon--

(i) Records described in paragraph (d)(1) of this section; or

(ii) Department records.

(e) The Secretary does not base the determination or

redetermination of an LEA's eligibility under this section upon

secondary documentation such as estimates, certifications, or

appraisals.

(Authority: 20 U.S.C. 7702(a)(1))

Sec. 222.22 How does the Secretary treat compensation from Federal

activities for purposes of determining eligibility and payments?

(a) An LEA with an otherwise approvable application is eligible to

receive assistance under section 8002 for a fiscal year only if the LEA

meets the requirements in subpart A of these regulations and

Sec. 222.21, and is not substantially compensated, for the loss in

revenue resulting from Federal ownership of real property by increases

in revenue accruing to the LEA during the previous fiscal year from

Federal activities with respect to the eligible Federal property in the

LEA.

(b) The Secretary considers that an LEA is substantially

compensated by increases in revenue from Federal activities with

respect to the eligible Federal property if--

(1) The LEA received new or increased revenue during the preceding

fiscal year that is generated directly from the eligible Federal

property or activities in or on that property; and

(2) The revenue described in paragraph (b)(1) of this section

equals or exceeds the maximum payment amount under section 8002(b) for

the fiscal year for which the LEA seeks assistance.

(c) If an LEA described in paragraph (a) of this section received

revenue described in paragraph (b)(1) of this

[[Page 50784]]

section during the preceding fiscal year that is less than the maximum

payment amount under section 8002(b) for the fiscal year for which the

LEA seeks assistance, the Secretary reduces the LEA's section 8002

payment by an amount equal to that amount of revenue.

(d) For purposes of this section, the amount of revenue that an LEA

receives during the previous fiscal year from activities conducted on

Federal property shall not include payments received by the agency from

the Secretary of Defense to support--

(1) The operation of a domestic dependent elementary or secondary

school; or

(2) The provision of a free public education to dependents of

members of the Armed Forces residing on or near a military

installation.

(Authority: 20 U.S.C. 7702(a)(2) and (b)(1)(A))

Secs. 222.23-222.29 [Reserved]

Subpart C--Payments for Federally Connected Children under Section

8003(b) and (e) of the Act

Sec. 222.30 What is ``free public education''?

In addition to the terms defined in Sec. 222.2, the following

definition applies to this part:

Free public education. (1) The term means education that is

provided--

(i) At public expense;

(ii)(A) As the complete elementary or secondary educational program

as determined under State law through grade 12; and

(B) Preschool education, whether or not included as elementary

education by State law;

(iii) In a school of the local educational agency (LEA) or under a

tuition arrangement with another LEA or other educational entity; and

(iv) Under public supervision and direction, except with respect to

children with disabilities.

(2) For the purpose of paragraph (1)(i) of this definition,

education is provided at public expense if--

(i) There is no tuition charge to the child or the child's parents;

and

(ii) Federal funds, other than funds under the Act, do not provide

a substantial portion of the educational program.

(3) For the purpose of paragraph (1)(ii) of this definition, the

complete elementary or secondary educational program is the program

recognized by the State as meeting all requirements for elementary or

secondary education for the children claimed and, except for preschool

education, does not include a program that provides only--

(i) Supplementary services or instruction; or

(ii) A portion of the required educational program.

(4) For the purpose of paragraph (1)(iii) of this definition, a

tuition arrangement must--

(i) Satisfy all applicable legal requirements in the State; and

(ii) Genuinely reflect the applicant LEA's responsibility to

provide a free public education to the children claimed under section

8003.

(5) For the purpose of paragraph (1)(iv) of this definition,

education provided under public supervision and direction means

education that is provided--

(i) In a school of the applicant LEA or another LEA; or

(ii) By another educational entity, over which the applicant LEA,

or other public agency, exercises authority with respect to the

significant aspects of the educational program for the children

claimed. The Secretary considers significant aspects of the educational

program to include administrative decisions relating to teachers,

instruction, and curriculum.

(Authority: 20 U.S.C. 7703, 7709, 7713(6))

Sec. 222.31 To which local educational agencies does the Secretary

make basic support payments under section 8003(b) of the Act?

The Secretary makes payments to an LEA with an otherwise approvable

application for children claimed under section 8003(b) of the Act if--

(a) The LEA meets the requirements in subpart A of these

regulations and this subpart; and

(b)(1) The LEA is responsible under applicable State or Federal law

for providing a free public education to those children;

(2) The LEA is providing a free public education to those children;

and

(3) The State provides funds for the education of those children on

the same basis as all other public school children in the State, unless

permitted otherwise under section 8009 of the Act.

(Authority: 20 U.S.C. 7703 and 7709)

Sec. 222.32 Upon what information is a local educational agency's

basic support payment based?

(a) The Secretary determines an LEA's payment under section 8003(b)

on the basis of information in the LEA's application, including

information regarding the membership of federally connected children.

(b) The LEA must supply information in its application regarding

its federally connected membership on the basis of any count described

in Secs. 222.33 through 222.35.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703 and 7705)

Sec. 222.33 When must an applicant make its first or only membership

count?

(a)(1) An applicant must select a day in the current school year as

the survey date for making the first membership count, which must be no

earlier than the fourth day of the regular school year and on or before

January 31.

(2) The applicant must use the same survey date for all schools in

the LEA.

(b) As of the survey date, the applicant must--

(1) Count the membership of its federally connected children; and

(2) Count the total membership of its children--both federally

connected and non-federally connected.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703, 7705, 7706)

Sec. 222.34 If an applicant makes a second membership count, when must

that count be made?

(a)(1) The applicant may, but is not required to, make a second

count of membership.

(2) If the applicant chooses to make a second count of membership,

the applicant must select a day after January 31, but no later than May

14, as the survey date for making the second membership count, and make

that count in accordance with Sec. 222.33(b).

(3) The applicant must use the same survey date for the second

membership count for all schools in the LEA.

(b) The applicant may use the information obtained from a second

membership count to amend its application for assistance as described

in Sec. 222.5(b)(1).

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703 and 7705)

Sec. 222.35 How does a local educational agency count the membership

of its federally connected children?

An applicant counts the membership of its federally connected

children by using one or both of the following methods:

(a) Parent-pupil survey. An applicant may conduct a parent-pupil

survey to count the membership of its federally connected children,

which must be counted as of the survey date.

(1) The applicant shall conduct a parent-pupil survey by providing

a form to a parent of each pupil enrolled in the LEA to substantiate

the pupil's place of residence and the parent's place of employment. A

parent-pupil survey form must include the following:

(i) Pupil enrollment information (this information may also be

obtained from school records), including--

(A) Name of pupil;

(B) Date of birth of the pupil; and

(C) Name of public school and grade of the pupil.

(ii) Pupil residence and parent employment information, including--

(A) Address of the pupil's residence (or other location information

for that residence, such as legal description),

[[Page 50785]]

including the name of the Federal facility if the pupil's residence is

on Federal property; and

(B) Name (as it appears on the employer's payroll record) of the

parent (mother, father, legal guardian or other person standing in loco

parentis) who is employed on Federal property and with whom the pupil

resides (unless the parent is a member of the uniformed services on

active duty);

(C) Name and address of the Federal property on which the parent is

employed (or other location information, such as legal description),

unless the parent is a member of the uniformed services on active duty;

(D) If the parent is a member of the uniformed services on active

duty, the name, rank, and branch of service of that parent;

(E) If the parent is a civilian employed on a Federal vessel, the

name of the vessel, hull number, and name of the controlling agency;

(F) The signature of the parent supplying the information and the

date of such signature; and

(G) The name of the parent's employer and the employer's address

(or other location information, such as legal description), unless a

parent is a member of the uniformed services on active duty.

(2) An LEA may accept a parent-pupil survey form, or a parent-pupil

survey form that is signed by a person other than a parent, only under

unusual circumstances. In those instances, the parent-pupil survey form

must show why the parent did not sign the survey form, and when, how,

and from whom the residence and employment information was obtained.

(b) Source Check. (1) An applicant may count the membership of its

federally connected children by using a source check to substantiate a

pupil's place of residence or parent's place of employment on the

survey date.

(2) A source check is a form provided--

(i) To a parent's employer, on which the employer certifies as to

the place of employment of a parent of a pupil claimed;

(ii) To a housing official, on which the official certifies as to

the residence of each pupil claimed; or

(iii) To a tribal official, on which the official certifies as to

the residence of each pupil claimed residing on Indian lands over which

that tribal official has jurisdiction.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703 and 7706)

Sec. 222.36 What minimum number of federally connected children must a

local educational agency have to receive a payment on behalf of those

children under section 8003(b) and (e)?

(a) Except as provided in paragraph (d) of this section, an LEA is

eligible to receive a payment under section 8003(b) (basic support and

learning opportunity threshold) and (e) (hold harmless) for a fiscal

year only if the total number of its eligible federally connected

children for whom it provided a free public education for the preceding

fiscal year was--

(1) At least 400 who were in average daily attendance (ADA); or

(2) At least 3 percent of the total number of children in ADA.

(b) Except as provided in paragraph (d) of this section, an

applicant LEA is eligible to receive a payment under section 8003 for a

fiscal year on behalf of federally connected children described in

section 8003(a)(1)(F) or (G) only if the total number of those children

for whom it provided a free public education for the preceding fiscal

year was at least--

(1) 2,000 in ADA; and

(2) 15 percent of the total number of the children in ADA.

(c) Children described in paragraph (b) of this section are counted

for the purposes of paragraph (a) of this section only if the applicant

LEA is eligible to receive a payment on behalf of those children under

section 8003.

(d) This section does not apply to hold harmless payments under

section 8003(e) for fiscal year 1995.

(Authority: 20 U.S.C. 7703(a)(3) and (b)(1)(B))

Sec. 222.37 How does the Secretary calculate the average daily

attendance of federally connected children?

(a) This section describes how the Secretary computes the ADA of

federally connected children for each category in section 8003 to

determine an applicant's payment.

(b) If an LEA is in a State that collects actual ADA data for

purposes of distributing State aid for education, the Secretary

calculates the ADA of that LEA's federally connected children for the

current fiscal year payment as follows:

(1) Except as provided in paragraph (b)(3) of this section--

(i) By dividing the ADA of all the LEA's children for the second

preceding fiscal year by the LEA's total membership on its survey date

for the second preceding fiscal year (or, in the case of an LEA that

conducted two membership counts in the second preceding fiscal year, by

the average of the LEA's total membership on the two survey dates); and

(ii) By multiplying the figure determined in paragraph (b)(1)(i) of

this section by the LEA's total membership of federally connected

children in each subcategory described in section 8003 and claimed in

the LEA's application for the current fiscal year payment (or, in the

case of an LEA that conducts two membership counts, by the average of

the LEA's total membership of federally connected children in each

subcategory on the two survey dates).

(2)(i) For purposes of this section, actual ADA means raw ADA data

that have not been weighted or adjusted to reflect higher costs for

specific types of students for purposes of distributing State aid for

education.

(ii) If an LEA provides a program of free public summer school,

attendance data for the summer session are included in the LEA's ADA

figure in accordance with State law or practice.

(iii) An LEA's ADA count includes attendance data for children for

whom it makes tuition arrangements with other educational entities.

(3) Attendance data are not counted for any child--

(i) Who is not physically present at school for the daily minimum

time period required by the State, unless the child is--

(A) Participating via telecommunication or correspondence course

programs that meet State standards; or

(B) Being served by a State-approved homebound instruction program

for the daily minimum time period appropriate for the child; or

(ii) Attending the applicant's schools under a tuition arrangement

with another LEA.

(c) If an LEA is in a State that does not collect ADA data for

purposes of distributing State aid for education, the LEA or SEA shall

submit data necessary for the Secretary to calculate the ADA of the

LEA's federally connected children as follows:

(1) If an LEA is in a State that formerly collected ADA data for

purposes of distributing State aid for education, the SEA may submit

the total ADA and total membership data for the State for each of the

last three fiscal years that ADA data were collected. The Secretary

uses these data to calculate the ADA of the LEA's federally connected

children by--

(i) Dividing the total ADA data by the total membership data for

each of the three fiscal years and averaging the results; and

(ii) Multiplying the average determined in paragraph (c)(1)(i) of

this section by the LEA's total membership of federally connected

children as described in paragraph (b)(1)(ii) of this section.

(2) An LEA may submit attendance data based on sampling conducted

during the previous fiscal year. The sampling must include attendance

data for all children for at least 30 school days. The data must be

collected during

[[Page 50786]]

at least three periods evenly distributed throughout the school year.

Each collection period must consist of at least five consecutive school

days. The Secretary uses these data to calculate the ADA of the LEA's

federally connected children by--

(i) Determining the ADA of all children in the sample;

(ii) Dividing the figure obtained in paragraph (c)(2)(i) of this

section by the LEA's total membership for the previous fiscal year; and

(iii) Multiplying the figure determined in paragraph (c)(2)(ii) of

this section by the LEA's total membership of federally connected

children for the current fiscal year, as described in paragraph

(b)(1)(ii) of this section.

(3) If an LEA is in a State that distributes State aid for

education based on data similar to attendance data, the SEA may request

that the Secretary use those data to calculate the ADA of the LEA's

federally connected children. If the Secretary determines that those

data are, in effect, equivalent to attendance data, the Secretary

allows use of the requested data and determines the method by which the

ADA of the LEA's federally connected children will be calculated.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703, 7706, 7713)

Sec. 222.38 What is the maximum basic support payment that a local

educational agency may receive under section 8003(b)?

The maximum basic support payment that an LEA may receive under

section 8003(b) for any fiscal year is the sum of its total weighted

student units under section 8003(a)(2) for the federally connected

children eligible to be counted as the basis for payment, multiplied by

the greater of one of the following:

(a) One-half of the State average per pupil expenditure for the

third fiscal year preceding the fiscal year for which the LEA seeks

assistance.

(b) One-half of the national average per pupil expenditure for the

third fiscal year preceding the fiscal year for which the LEA seeks

assistance.

(c) The comparable local contribution rate (LCR) determined in

accordance with Secs. 222.39-222.41.

(d) The State average per pupil expenditure multiplied by the local

contribution percentage as defined in section 8013(8) of the Act.

(Authority: 20 U.S.C. 7703 (a), (b) and (c))

Sec. 222.39 How does a State educational agency identify generally

comparable local educational agencies for local contribution rate

purposes?

(a) To identify generally comparable LEAs within its State for LCR

purposes, the State educational agency (SEA) for that State shall use

data from the third fiscal year preceding the fiscal year for which the

LCR is being computed to group all of its LEAs, including all applicant

LEAs, as follows:

(1) Grouping by grade dpan/legal classification alone. Divide all

LEAs into groups that serve the same grade span and then subdivide the

grade span groups by legal classification, if the Secretary considers

this classification relevant and sufficiently different from grade span

within the State. As an alternative grade-span division, after

consultation with the applicant LEAs in the State, divide all LEAs into

elementary, secondary, or unified grade-span groups, as appropriate,

within the State.

(2) Grouping by Grade Span/Legal Classification and Size. (i)

Divide all LEAs into groups by grade span (or the alternative grade-

span groups described in paragraph (a)(1)) of this section and legal

classification, if relevant and sufficiently different from grade span

and size.

(ii) List all LEAs within each group in descending order by size as

measured by ADA, placing the LEA with the largest ADA at the top of the

list. A State that does not tabulate actual annual ADA shall use the

same formula for establishing ADA for the purpose of ranking LEAs by

size as the Department has approved for the purpose of calculating

payments under section 8003 for applicant LEAs in the State.

(iii) After consultation with the applicant LEAs in the State,

divide each group into either two subgroups or three subgroups.

(iv) To determine the subgroups, divide each list at the point(s)

that will result in as nearly equal numbers of LEAs in each subgroup as

possible, so that no group is more than one LEA larger than any other

group.

(3) Grouping by grade span/legal classification and location.

Divide all LEAs into groups by grade span (or the alternative grade-

span groups described in paragraph (a)(1) of this section) and, if

relevant and sufficiently different from grade span and location, legal

classification; then subdivide these groups by location, as determined

by placement inside or outside a metropolitan statistical area (MSA) as

defined by the U.S. Bureau of the Census. The Department will supply

SEAs with lists of MSA classifications for their LEAs, and only the

classifications on those lists will be recognized by the Department for

the purposes of these regulations.

(4) Grouping by grade span/legal classification, size, and

location. (i) Divide all LEAs into groups by grade span (or the

alternative grade-span groups described in paragraph (a)(1) of this

section) and, if relevant and sufficiently different from grade span,

size, and location, legal classification; then subdivide these groups

by size (into two or three subgroups for each grade span, as described

in paragraph (a)(2) of this section); and further subdivide these

groups by location (inside or outside an MSA).

(ii) In using both the size and location factors, the SEA shall

subdivide according to the size factor before the location factor.

(b) After applying the following restrictions, the SEA shall

compute an LCR according to the provisions of Sec. 222.41 for each

group of generally comparable LEAs identified under paragraph (a) of

this section, as follows:

(1) The SEA shall not, when computing an LCR, include the following

``significantly impacted'' LEAs in any group of generally comparable

LEAs:

(i) Any LEA having--in the third fiscal year preceding the fiscal

year for which the LCR is being computed--20 percent or more of its ADA

composed of children identified under section 8003(a)(1)(A)-(C).

(ii) Any LEA having--in the third fiscal year preceding the fiscal

year for which the LCR is being computed--50 percent or more of its ADA

composed of children identified under section 8003(a)(1)(A)-(G) who

were eligible under Sec. 222.36 to be counted as the basis for payment

under section 8003.

(2) The SEA may not compute an LCR for any group that contains

fewer than 10 LEAs.

(c)(1) For an applicant LEA that satisfies the requirements

contained in paragraph (c)(3) of this section, the SEA, in consultation

with the LEA, may select a subgroup of 10 or more generally comparable

LEAs from the group identified under paragraph (a)(2) of this section

that includes the applicant LEA.

(2) An LEA that otherwise meets either of the requirements of

paragraph (c)(3) of this section but serves a different span of grades

from all other LEAs in its State (and therefore cannot match any group

of generally comparable LEAs under paragraph (a)(2) of this section)

must be matched, for purposes of this paragraph (c) only, to a group

using legal classification and size as measured by ADA. The group

identified using legal classification and size will be the applicant's

group under paragraph (a)(2) of this section for purposes of this

paragraph (c) only.

(3) In order to qualify under paragraph (c) (1) or (2) of this

section, an applicant LEA must either--

(i)(A) Be located entirely on Federal land; and

(B) Be raising either no local revenues or an amount of local

revenues the Secretary determines to be minimal; or

(ii)(A) Be located in a State where State aid makes up no more than

40

[[Page 50787]]

percent of the State average per pupil expenditure in the third fiscal

year preceding the fiscal year for which the LCR is being computed;

(B) In its application, have federally connected children

identified under section 8003(a)(1)(A)-(C) equal to at least 20 percent

of its total ADA; and

(C) In its application, have federally connected children

identified under section 8003(a)(1)(A)-(G) who were eligible under

Sec. 222.36 to be counted as the basis for payment under section 8003

equal to at least 50 percent of its total ADA.

(4) In the case of an applicant LEA that meets either of the

requirements contained in paragraph (c)(3) of this section, the SEA, in

consultation with the LEA, may select 10 or more generally comparable

LEAs that share one or more common factors of general comparability

with the eligible applicant LEA, as follows:

(i)(A) The SEA must consider one or more generally accepted,

objectively defined factors that affect the applicant's cost of

educating its children. Examples of such cost-related factors include

location inside or outside an MSA, sparsity of population, an unusually

large geographical area, economically depressed area, low-income

families, children with disabilities, neglected or delinquent children,

low-achieving children, children with limited English proficiency, and

minority children.

(B) The SEA may not consider cost-related factors that can be

varied at the discretion of the applicant LEA or its generally

comparable LEAs or factors dependent on the wealth of the applicant LEA

or its generally comparable LEAs. Examples of factors that may not be

considered include special alternative curricular programs, pupil-

teacher ratio, and per pupil expenditures.

(ii) The SEA must apply the factor or factors of general

comparability recommended under paragraph (c)(4)(i)(A) of this section

in one of the following ways in order to identify 10 or more generally

comparable LEAs for the eligible applicant LEA, none of which may be

significantly impacted LEAs:

(A) The SEA identifies all of the LEAs in the group to which the

eligible applicant LEA belongs under paragraph (a)(2) of this section

that share the recommended factor or factors. If the subgroup

containing the eligible applicant LEA includes at least 10 other LEAs

(excluding significantly impacted LEAs), it will be the eligible

applicant LEA's new group of generally comparable LEAs. The LCR for the

eligible applicant LEA shall be computed using the data for all of the

LEAs in the subgroup except the eligible applicant LEA.

Example. An eligible applicant LEA contains a designated

economically depressed area, and the SEA recommends ``economically

depressed area'' as an additional factor of general comparability.

From the group of LEAs under paragraph (a)(2) of this section that

includes the eligible applicant LEA, the SEA identifies two

subgroups, those LEAs that contain a designated economically

depressed area and those that do not. The entire subgroup identified

by the SEA that includes the eligible applicant LEA is that LEA's

new group of generally comparable LEAs if it contains at least 10

LEAs.

(B) After the SEA identifies all of the LEAs in the group that the

eligible applicant LEA belongs to under paragraph (a)(2) of this

section that share the recommended factor or factors, the SEA then

systematically orders all of the LEAs in the group that includes the

eligible applicant LEA. The SEA may further divide the ordered LEAs

into subgroups by using logical division points (e.g., the median,

quartiles, or standard deviations) or a continuous interval of the

ordered LEAs (e.g., a percentage or a numerical range). If the subgroup

containing the eligible applicant LEA includes at least 10 other LEAs

(excluding significantly impacted LEAs), it will be the eligible

applicant LEA's new group of generally comparable LEAs. The LCR for the

eligible applicant LEA shall be computed using the data for all of the

LEAs in the subgroup except the eligible applicant LEA.

Example 1. An eligible applicant LEA serves an unusually high

percentage of children with disabilities, and the SEA recommends

``proportion of children with disabilities'' as an additional

comparability factor. From the group of LEAs under paragraph (a)(2)

of this section that includes the eligible applicant LEA, the SEA

lists the LEAs in descending order according to the percentage of

children with disabilities enrolled in each of the LEAs. The SEA

divides the list of LEAs into four groups containing equal numbers

of LEAs. The group containing the eligible applicant LEA is that

LEA's new group of generally comparable LEAs if it contains at least

10 LEAs.

Example 2. An eligible applicant LEA serves an unusually high

percentage of minority children, and the SEA recommends ``proportion

of minority children'' as an additional comparability factor. From

the group of LEAs under paragraph (a)(2) of this section that

includes the eligible applicant LEA, the SEA lists the LEAs in

descending order according to the percentage of minority children

enrolled in each of the LEAs. The SEA chooses from the list of LEAs

the 15 LEAs whose percentages of minority children are closest to

the eligible applicant LEA's. These 15 LEAs will be the eligible

applicant LEA's new group of generally comparable LEAs.

(C) The SEA may recommend and apply more than one factor of general

comparability in selecting a new group of 10 or more generally

comparable LEAs for the eligible applicant LEA. If the subgroup

containing the eligible applicant LEA includes at least 10 other LEAs

(excluding significantly impacted LEAs), it will be the eligible

applicant LEA's new group of generally comparable LEAs. The LCR for the

eligible applicant LEA shall be computed using the data from all of the

LEAs in the subgroup except the eligible applicant LEA.

Example. An eligible applicant LEA is very sparsely populated

and serves an unusually high percentage of children with limited

English proficiency. The SEA recommends ``sparsity of population''

and ``proportion of children with limited English proficiency'' as

additional comparability factors. From the group of LEAs under

paragraph (a)(2) of this section that includes the eligible

applicant LEA, the SEA identifies all LEAs that are sparsely

populated. The SEA further subdivides the sparsely populated LEAs

into two groups, those that serve an unusually high percentage of

children with limited English proficiency and those that do not. The

subgroup of at least 10 sparsely populated LEAs that serve a high

percentage of children with limited English proficiency is the

eligible applicant LEA's new group of generally comparable LEAs.

(4)(i) Using the new group of generally comparable LEAs selected

under paragraph (c)(4) of this section, the SEA shall compute the LCR

for the eligible applicant LEA according to the provisions of

Sec. 222.41.

(ii) The SEA shall submit the resulting LCR to the Secretary and

provide the Secretary a description of the additional factor or factors

of general comparability and the data used to identify the new group of

generally comparable LEAs.

(iii) The Secretary reviews the data submitted by the SEA, and

accepts the LCR for the purpose of use under section 8003(b)(1)(C)(iii)

in determining the LEA's maximum payment under section 8003 if the

Secretary determines that it meets the purposes and requirements of the

Act and this part.

(d) This section does not apply to applicant LEAs located in--

(1) Puerto Rico;

(2) Wake Island;

(3) Guam;

(4) American Samoa;

(5) Any outlying area; and

(6) Any State in which there is only one LEA.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii))

Sec. 222.40 How does a local educational agency select a local

contribution rate based on generally comparable local educational

agencies?

(a) In selecting an LCR based upon generally comparable LEAs, an

LEA shall use the following steps:

(1) Step 1. The LEA shall select the factor or factors in

Sec. 222.39 the LEA wishes to use as the basis for general

comparability.

[[Page 50788]]

(2) Step 2. Using State-supplied data, the LEA shall identify

within the State the entire group of LEAs (containing at least 10 LEAs

exclusive of significantly impacted LEAs described in

Sec. 222.39(b)(1)) that matches the factor or factors selected in Step

1 and that contains the applicant LEA or would contain the applicant

LEA if it were not significantly impacted.

(3) Step 3. The LEA shall recommend to the Secretary the LCR, which

the SEA has computed according to the provisions of Sec. 222.39, based

on the group identified in Step 2.

(b) A significantly impacted LEA described in Sec. 222.39(b)(1)

may--

(1) Apply for assistance under this program; and

(2) Under the generally comparable LEA method, recommend for itself

the LCR of any group in which it would be included based on grade span/

legal classification, size, location, or a combination of these

factors, if it were not excluded as significantly impacted in

Sec. 222.39(b)(1).

Example. An LEA applies for assistance under section 8003 and

wishes to recommend to the Secretary an LCR based on generally

comparable LEAs within its State.

1. Characteristics of Applicant LEA

The grade span of the applicant LEA is kindergarten through

grade 8 (K-8). In the applicant's State, legal classification of

LEAs is based on grade span, and thus does not act to further

subdivide groups of LEAs.

The ADA of the applicant LEA is above the median ADA of LEAs

serving only K-8 in the State.

The applicant LEA is located outside an MSA.

2. Characteristics of Other LEAs Serving Same Grade Span

The SEA of the applicant's State groups all LEAs in its State

according to the factors in Sec. 222.39.

(a) The SEA identifies the following groups:

(i) One hundred and one LEAs serve only K-8. The SEA has

identified a group of 50 LEAs having an ADA above the median ADA for

the group of 101, one LEA having an ADA at the median, and a group

of 50 LEAs having an ADA below the median ADA; and according to

Sec. 222.39(a)(2)(i), the SEA considers 51 LEAs to have an ADA below

the median ADA.

(ii) Of the 101 LEAs in the group, the SEA has identified a

group of 64 LEAs as being inside an MSA and a group of 37 LEAs as

being outside an MSA.

(iii) Among the group of 50 LEAs having an ADA above the median,

the SEA has identified a group of 35 LEAs as being inside an MSA and

a group of 15 LEAs as being outside an MSA.

(iv) Among the group of 51 LEAs having an ADA at or below the

median, the SEA has identified a group of 29 LEAs as being inside an

MSA and 22 LEAs as being outside an MSA.

(v) One LEA has 20 percent of its ADA composed of children

identified under section 8003(a)(1)(A)-(C) and, therefore, must be

excluded from any group it falls within before the SEA computes an

LCR for the group. The LEA has an ADA below the median ADA and is

located outside an MSA.

(b) On the basis of Sec. 222.41, the SEA computes the LCR for

each group of generally comparable LEAs that the SEA has identified.

3. Selection of Generally Comparable LEAs

The applicant LEA selects the group of generally comparable LEAs

matching the factor or factors it wishes to use as the basis for

general comparability. Under the requirements of Sec. 222.39, the

applicant LEA must begin with the group that includes all LEAs with

its grade span, and, if relevant and sufficiently different, legal

classification. In this case, grade span and legal classification

happen to be the same. Thus, the group would include 100 LEAs, after

excluding the one significantly impacted LEA. The applicant LEA then

has several options:

(a) Option 1. The applicant LEA may select as its group of

generally comparable LEAs on which to base its recommended LCR the

entire group of 100 LEAs serving K-8, after excluding the one

significantly impacted LEA. The applicant LEA then recommends to the

Secretary as its LCR the rate computed for this group by the SEA.

(b) Option 2. Instead of selecting the group of 100, the

applicant LEA may select as its generally comparable group only

those LEAs within the 101 (the significantly impacted LEA must be

included initially for the purpose of determining the median ADA)

that have an ADA above the median ADA, that is, the group of 50. The

applicant LEA then recommends to the Secretary as its LCR the rate

computed for the group by the SEA.

(c) Option 3. Instead of selecting either of the groups

described in Options 1 and 2, the applicant LEA may select as its

generally comparable group only those LEAs within the 100 that are

outside an MSA; that is, the group of 36, after excluding the one

significantly impacted LEA. The applicant LEA then recommends to the

Secretary as its LCR the rate computed for this group by the SEA.

(d) Option 4. Instead of selecting any of the groups described

in Options 1, 2, and 3, the applicant LEA may select as its

generally comparable group only those LEAs that both have an ADA

above the median ADA for the 101 and are outside an MSA; that is,

the group of 15. The applicant LEA then recommends to the Secretary

as its LCR the rate computed for this group by the SEA. However, as

provided in Sec. 222.39(b)(2), if the SEA were to have identified

fewer than 10 LEAs under any factor or combination of factors, the

SEA would not have computed a rate for such a group. Therefore, an

applicant LEA included in such a group would not be able to use this

factor or combination of factors in recommending its LCR to the

Secretary. The significantly impacted LEA described in

Sec. 222.39(b)(1), while included for determining the median ADA, is

excluded from the computation of any group's LCR. However, the

significantly impacted LEA may recommend for itself the LCR of any

group it matches in grade span/legal classification, size, location,

or a combination of these factors, (that is, in the case of the

significantly impacted LEA referred to in this example, below the

median ADA and outside an MSA), provided the group contains at least

10 LEAs that are not significantly impacted.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii) and 7703(f)(3)(A)(i)(II)

and (III))

Sec. 222.41 How does a State educational agency compute local

contribution rates based upon generally comparable local educational

agencies?

Except as otherwise specified in the Act, the SEA, subject to the

Secretary's review and approval, shall compute an LCR for each group of

generally comparable LEAs within its State that was identified using

the factors in Sec. 222.39, as follows:

(a)(1) The SEA shall compile the aggregate local current

expenditures of the comparable LEAs in each group for the third fiscal

year preceding the fiscal year for which the LCR is being computed.

(2) For purposes of this section, the SEA shall consider only those

aggregate current expenditures made by the generally comparable LEAs

from revenues derived from local sources. No State or Federal funds may

be included.

(b) The SEA shall compile the aggregate number of children in ADA

to whom the generally comparable LEAs in each group provided a free

public education during the third fiscal year preceding the fiscal year

for which the LCR is being computed.

(c) The SEA shall divide--

(1) The aggregate current expenditures determined under paragraph

(a) of this section by;

(2) The aggregate number of children determined under paragraph (b)

of this section.

(d) The SEA shall submit the resulting figure as the ``comparable

LCR'' to be used by the Secretary under section 8003(b)(1)(C)(iii) in

determining the LEA's maximum payment amount under section 8003.

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii))

Secs. 222.42-222.49 [Reserved]

Subpart D--Payments under Section 8003(d) of the Act for Local

Educational Agencies That Serve Children with Disabilities

Sec. 222.50 What definitions apply to this subpart?

In addition to the terms referenced or defined in Sec. 222.2, the

following definitions in 20 U.S.C. 1401 or 34 CFR Sec. 77.1 apply to

this subpart:

Children with disabilities means children--

(1)(i) With mental retardation, hearing impairments including

deafness, speech or language impairments, visual impairments including

blindness, serious emotional disturbance, orthopedic impairments,

autism, traumatic brain injury, other health impairments, or specific

learning disabilities; and

(ii) Who, by reason thereof, need special education and related

services.

(2) The term ``children with disabilities'' for children aged 3 to

5,

[[Page 50789]]

inclusive, may, at a State's discretion, include children--

(i) Experiencing developmental delays, as defined by the State and

as measured by appropriate diagnostic instruments and procedures, in

one or more of the following areas: physical development, cognitive

development, communication development, social or emotional

development, or adaptive development; and

(ii) Who, by reason thereof, need special education and related

services.

Children with specific learning disabilities means children who

have a disorder in one or more of the basic psychological processes

involved in understanding or in using language, spoken or written,

which disorder may manifest itself in imperfect ability to listen,

think, speak, read, write, spell, or do mathematical calculations.

These disorders include conditions such as perceptual disabilities,

brain injury, minimal brain dysfunction, dyslexia, and developmental

aphasia. This term does not include children who have learning problems

which are primarily the result of visual, hearing, or motor

disabilities, of mental retardation, of emotional disturbance, or of

environmental, cultural, or economic disadvantage.

Free appropriate public education means special education and

related services that--

(1) Have been provided at public expense, under public supervision

and direction, and without charge;

(2) Meet the standards of the State educational agency;

(3) Include an appropriate preschool, elementary, or secondary

school education in the State involved; and

(4) Are provided in conformity with the individualized education

program (IEP) required under section 1414(a)(5) of the Individuals with

Disabilities Education Act.

Individualized education program (IEP) means--

(1) A written statement for each child with a disability developed

in any meeting by a representative of the LEA or an intermediate

educational unit who shall be qualified to provide, or supervise the

provision of, specially designed instruction to meet the unique needs

of children with disabilities, the teacher, the parents or guardian of

the child, and whenever appropriate, the child, which statement must

include--

(i) A statement of the present levels of educational performance of

the child;

(ii) A statement of annual goals, including short-term

instructional objectives;

(iii) A statement of the specific educational services to be

provided to the child, and the extent to which the child will be able

to participate in regular educational programs;

(iv) A statement of the needed transition services for students

beginning no later than age 16 and annually thereafter (and, when

determined appropriate for the individual, beginning at age 14 or

younger), including, when appropriate, a statement of the interagency

responsibilities or linkages (or both) before the student leaves the

school setting;

(v) The projected date for initiation and anticipated duration of

these services; and

(vi) Appropriate objective criteria and evaluation procedures and

schedules for determining, on at least an annual basis, whether

instructional objectives are being achieved.

(2) In the case where a participating agency, other than the

educational agency, fails to provide agreed upon services, the

educational agency shall reconvene the IEP team to identify alternative

strategies to meet the transition objectives.

Intermediate educational unit means any public authority, other

than an LEA, that is under the general supervision of a State

educational agency, that is established by State law for the purpose or

providing free public education on a regional basis, and that provides

special education and related services to children with disabilities

within that State.

Preschool means the educational level from a child's birth to the

time at which the State provides elementary education.

Related services means transportation and those developmental,

corrective, and other supportive services (including speech pathology

and audiology, psychological services, physical and occupational

therapy, recreation, including therapeutic recreation, social work

services, counseling services, including rehabilitation counseling, and

medical services, except that medical services must be for diagnostic

and evaluation purposes only) as may be required to assist a child with

a disability to benefit from special education, and includes the early

identification and assessment of disabling conditions in children.

Special education means specially designed instruction, at no cost

to parents or guardians, to meet the unique needs of a child with a

disability, including--

(1) Instruction conducted in the classroom, in the home, in

hospitals and institutions, and in other settings; and

(2) Instruction in physical education.

(Authority: 20 U.S.C. 1221e-3(a)(1), 1401, 7703, 7705, 7713; 37

U.S.C. 101)

Sec. 222.51 Which children may a local educational agency count for

payment under section 8003(d) of the Act?

(a) Except as provided in paragraph (b)(2) of this section, the

children described in sections 8003(a)(1)(A)(ii), (a)(1)(B), (a)(1)(C),

and (a)(1)(D) of the Act who are eligible for services under the

provisions of the Individuals with Disabilities Education Act (20

U.S.C. 1400 et seq.) may be counted by the local educational agency

(LEA) for the purpose of computing a payment under section 8003(d).

(b)(1) An LEA may count a child or children described in paragraph

(a) of this section who attend private schools or residential programs

if the LEA has placed or referred the child or children in accordance

with the provisions of section 613 of the Individuals with Disabilities

Education Act, 20 U.S.C. 1400 et seq. and 34 CFR Part 300, subparts C

and D.

(2) Children who are placed in private schools by their parents may

not be counted under section 8003(d), but may participate in public

school programs that use section 8003(d) funds.

(Authority: 20 U.S.C. 1400 et seq. and 7703(d))

Sec. 222.52 What requirements must a local educational agency meet to

receive a payment under section 8003(d)?

To receive a payment under section 8003(d), an eligible LEA shall--

(a) State in its application the number of federally connected

children with disabilities it claims for a payment under section

8003(d);

(b) Have in effect a written IEP for each federally connected child

with disabilities claimed for a payment under section 8003(d); and

(c) Meet the requirements of subparts A and C of the regulations in

this part.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 1400 et seq. and 7703)

Sec. 222.53 What restrictions and requirements apply to the use of

funds provided under section 8003(d)?

(a) An LEA shall use funds provided under section 8003(d) in

accordance with the provisions of section 8003(d)(2) and 34 CFR part

300.

(b) Obligations and expenditures of section 8003(d) funds may be

incurred in either of the two following ways:

(1) An LEA may obligate or expend section 8003(d) funds for the

fiscal year for which the funds were appropriated.

(2) An LEA may reimburse itself for obligations or expenditures of

local and general State aid funds for the fiscal year for which the

section 8003(d) funds were appropriated.

(c) An LEA shall use its section 8003(d) funds for the following

types of expenditures:

(1) Expenditures that are reasonably related to the conduct of

programs or

[[Page 50790]]

projects for the free appropriate public education of federally

connected children with disabilities. These expenditures may include

program planning and evaluation but may not include construction of

school facilities.

(2) Acquisition cost (net invoice price) of equipment required for

the free appropriate public education of federally connected children

with disabilities.

(i) If section 8003(d) funds are used for the acquisition of any

equipment described in this paragraph (c)(2) of this section, the fair

market value of any financial advantage realized through rebates,

discounts, bonuses, free pieces of equipment used in a program or

project for the free appropriate public education of federally

connected children with disabilities, or other circumstances, is not an

allowable expenditure and may not be credited as an expenditure of

those funds.

(ii) Funds awarded under the provisions of section 8003(d) may be

used to acquire equipment for the free appropriate public education of

the federally connected children with disabilities only if title to the

equipment would be in the applicant agency.

(d) An LEA shall account for the use of section 8003(d) funds as

follows:

(1) By recording, for each fiscal year, the receipt (or credit) of

section 8003(d) funds separately from other funds received under the

Act, i.e., on a line item basis in the general fund account or in a

separate account; and

(2) By demonstrating that, for each fiscal year, the amount of

expenditures for special education and related services provided to the

federally connected children with disabilities is at least equal to the

amount of section 8003(d) funds received or credited for that fiscal

year. This is done as follows:

(i) For each fiscal year determine the amount of an LEA's

expenditures for special education and related services provided to all

children with disabilities.

(ii) The amount determined in paragraph (d)(2)(i) of this section

is divided by the average daily attendance (ADA) of the total number of

children with disabilities the LEA served during that fiscal year.

(iii) The amount determined in paragraph (d)(2)(ii) of this section

is then multiplied by the total ADA of the LEA's federally connected

children with disabilities claimed by the LEA for that fiscal year.

(3) If the amount of section 8003(d) funds the LEA received (or was

credited) for the fiscal year exceeds the amount obtained in paragraph

(d)(2)(iii) of this section, an overpayment equal to the excess section

8003(d) funds is established. This overpayment may be reduced or

eliminated to the extent that the LEA can demonstrate that the average

per pupil expenditure for special education and related services

provided to federally connected children with disabilities exceeded its

average per pupil expenditure for serving non-federally connected

children with disabilities.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(d))

Sec. 222.54 What supplement-not-supplant requirement applies to this

subpart?

Funds provided under section 8003(d) may not supplant any State

funds that were or would have been available to the LEA for the free

appropriate public education of children counted under section 8003(d).

(a) No section 8003(d) funds may be paid to an LEA whose per pupil

State aid for federally connected children with disabilities, either

general State aid or special education State aid, has been or would be

reduced as a result of eligibility for or receipt of section 8003(d)

funds, whether or not a State has a program of State aid that meets the

requirements of section 8009 of the Act and subpart K of the

regulations in this part.

(1) A reduction in the per pupil amount of State aid for children

with disabilities, including children counted under section 8003(d),

from that received in a previous year raises a presumption that

supplanting has occurred.

(2) The LEA may rebut this presumption by demonstrating that the

reduction was unrelated to the receipt of section 8003(d) funds.

(b) In any State in which there is only one LEA, all funds for

programs for children with disabilities other than funds from Federal

sources are considered by the Secretary to be local funds.

(Authority: 20 U.S.C. 7703(d))

Sec. 222.55 What other statutes and regulations are applicable to this

subpart?

Local educational agencies receiving funds under section 8003(d)

are subject to the requirements of the Individuals with Disabilities

Education Act, and related regulations (20 U.S.C. 1401 et seq. and 34

CFR part 300).

(Authority: 20 U.S.C. 1401 et seq., 6314, and 7703(d))

Secs. 222.56 222.59 [Reserved]

Subpart E--Additional Assistance for Heavily Impacted Local

Educational Agencies under Section 8003(f) of the Act

Sec. 222.60 What are the scope and purpose of these regulations?

The regulations in this subpart implement section 8003(f) of the

Act, which provides financial assistance, in addition to payments under

sections 8003(b) and 8003(d) of the Act, to certain heavily impacted

local educational agencies (LEAs) that meet all relevant eligibility

requirements.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.61 What data are used to determine a local educational

agency's eligibility and payment under section 8003(f) of the Act?

(a) Computations and determinations made with regard to an LEA's

eligibility (Secs. 222.61-222.71) and payment (Secs. 222.72-222.73)

under section 8003(f) are based on the LEA's final student and

financial data for the fiscal year for which it seeks assistance and,

in certain cases, final financial data for the preceding and second

preceding fiscal years of the LEAs determined under Secs. 222.39-222.41

or Sec. 222.74 to be generally comparable to the applicant LEA

(``generally comparable LEAs'').

(b) For purposes of this subpart, ``level of education'' means

average per pupil expenditure amount.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.62 Which local educational agencies are eligible to apply for

an additional payment under section 8003(f)?

Local educational agencies that are eligible to apply for

additional assistance under section 8003(f) include those that have--

(a)(1) A tax effort equal to at least 95 percent of the average tax

rate of generally comparable LEAs identified under Secs. 222.39-222.41

or 222.74; and

(2)(i) Federally connected children equal to at least 50 percent of

the total number of children in average daily attendance (ADA) if a

section 8003(b) payment is received on behalf of children described in

section 8003(a)(1)(F)-(G); or

(ii) Federally connected children equal to at least 40 percent of

the total number of children in ADA if a section 8003(b) payment is not

received on behalf of children described in section 8003(a)(1)(F)-(G);

(b)(1) A tax effort equal to at least 125 percent of the average

tax rate of generally comparable LEAs identified under Secs. 222.39-

222.41; and

(2) Federally connected children equal to at least 35 percent of

the total number of children in ADA;

(c) The same boundaries as those of a Federal military

installation; or

(d) Current expenditures that are not reasonably comparable to

those of generally comparable LEAs identified under Secs. 222.39-222.41

because unusual geographical factors affect the applicant LEAs' current

expenditures necessary to maintain a level of education equivalent to

that of generally comparable LEAs.

(Authority: 20 U.S.C. 7703(f))

[[Page 50791]]

Sec. 222.63 What other requirements must a local educational agency

meet in order to be eligible for financial assistance under section

8003(f)(2)(A)?

Subject to Sec. 222.65, an LEA described in Sec. 222.62(a), (b), or

(c) is eligible for financial assistance under section 8003(f)(2)(A) if

the Secretary determines that the LEA meets all of the following

requirements:

(a) The LEA is eligible for a basic support payment under section

8003(b).

(b) The LEA timely applies for assistance under section 8003(f) and

meets all of the other application and eligibility requirements of

subparts A and C of these regulations.

(c) The LEA is exercising due diligence in availing itself of

revenues derived from State and other sources and, except for an LEA

described in Sec. 222.62(c), is making a reasonable tax effort in

accordance with the requirements of Secs. 222.66 - 222.71.

(d) The eligibility of the LEA for State aid and the amount of

State aid are determined on a basis no less favorable than that for

other LEAs in the State.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.64 What other requirements must a local educational agency

meet in order to be eligible for financial assistance under section

8003(f)(2)(B)?

Subject to Sec. 222.65, an LEA described in Sec. 222.62(d) is

eligible for financial assistance under section 8003(f)(2)(B) if the

Secretary determines that the LEA meets all of the following

requirements--

(a) The LEA complies with the requirements of Sec. 222.63(a)-(d).

(b)(1) As part of its section 8003(f) application, the LEA provides

the Secretary with documentation that demonstrates that the LEA is

unable to provide a level of education equivalent to that provided by

its generally comparable LEAs because--

(i) The applicant's current expenditures are affected by unusual

geographical factors; and

(ii) As a result, those current expenditures are not reasonably

comparable to the current expenditures of its generally comparable

LEAs.

(2) The LEA's application must include--

(i) A specific description of the unusual geographical factors on

which the applicant is basing its request for compensation under this

section and objective data demonstrating that the applicant is more

severely affected by these factors than any other LEA in its State;

(ii) Objective data demonstrating the specific ways in which the

unusual geographical factors affect the applicant's current

expenditures so that they are not reasonably comparable to the current

expenditures of its generally comparable LEAs;

(iii) Objective data demonstrating the specific ways in which the

unusual geographical factors prevent the applicant from providing a

level of education equivalent to that provided by its generally

comparable LEAs; and

(iv) Any other information that the Secretary may require to make

an eligibility determination under this section.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.65 How may a State aid program affect a local educational

agency's eligibility for assistance under section 8003(f)?

The Secretary determines that an LEA is not eligible for financial

assistance under section 8003(f) if--

(a) The LEA is in a State that has an equalized program of State

aid that meets the requirements of section 8009; and

(b) The State, in determining the LEA's eligibility for or amount

of State aid, takes into consideration the LEA's payment under section

8003(f).

(Authority: 20 U.S.C. 7703(f))

Sec. 222.66 How does the Secretary determine whether a fiscally

independent local educational agency is making a reasonable tax effort?

(a) To determine whether a fiscally independent LEA, as defined in

Sec. 222.2(c), is making a reasonable tax effort as required by

Secs. 222.63 or 222.64, the Secretary compares the LEA's local real

property tax rates for current expenditure purposes (referred to in

this part as ``tax rates''), as defined in Sec. 222.2(c), with the tax

rates of its generally comparable LEAs.

(b) For purposes of this section, the Secretary uses--

(1) Actual tax rates if all the real property in the LEA and its

generally comparable LEAs is assessed at the same percentage of true

value; or

(2) Tax rates computed under Secs. 222.67-222.69.

(c) The Secretary determines that an LEA described in

Sec. 222.62(a) or (d) is making a reasonable tax effort if--

(1) The LEA's tax rate is equal to at least 95 percent of the

average tax rate of its generally comparable LEAs;

(2) Each of the LEA's tax rates for each classification of real

property is equal to at least 95 percent of each of the average tax

rates of its generally comparable LEAs for the same classification of

property;

(3) The LEA taxes all of its real property at the maximum rates

allowed by the State, if those maximum rates apply uniformly to all

LEAs in the State; or

(4) The LEA has no taxable real property.

(d) The Secretary determines that an LEA described in

Sec. 222.62(b) is making a reasonable tax effort if--

(1) The LEA's tax rate is equal to at least 125 percent of the

average tax rate of its generally comparable LEAs;

(2) Each of the LEA's tax rates for each classification of real

property is equal to at least 125 percent of each of the average tax

rates of its generally comparable LEAs for the same classification of

property;

(3) The LEA taxes all of its real property at the maximum rates

allowed by the State, if those maximum rates apply uniformly to all

LEAs in the State; or

(4) The LEA has no taxable real property.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.67 What tax rates does the Secretary use if real property is

assessed at different percentages of true value?

If the real property of an LEA and its generally comparable LEAs

consists of one classification of property but the property is assessed

at different percentages of true value in the different LEAs, the

Secretary determines whether the LEA is making a reasonable tax effort

under Sec. 222.66(c)(1) or (d)(1) by using tax rates computed by--

(a) Multiplying the LEA's actual tax rate for real property by the

percentage of true value assigned to that property for tax purposes;

and

(b) Performing the computation in paragraph (a) of this section for

each of its generally comparable LEAs and determining the average of

those computed tax rates.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.68 What tax rates does the Secretary use if two or more

different classifications of real property are taxed at different

rates?

If the real property of an LEA and its generally comparable LEAs

consists of two or more classifications of real property taxed at

different rates, the Secretary determines whether the LEA is making a

reasonable tax effort under Sec. 222.66(c)(1) or (2) or

Sec. 222.66(d)(1) or (2) by using one of the following:

(a) Actual tax rates for each of the classifications of real

property.

(b) Tax rates computed in accordance with Sec. 222.67 for each of

the classifications of real property.

(c) Tax rates computed by--

(1) Determining the total true value of all real property in the

LEA by dividing the assessed value of each classification of real

property in the LEA by the percentage of true value assigned to that

property for tax purposes and aggregating the results;

(2) Determining the LEA's total revenues derived from local real

property taxes for current expenditures (as defined in section 8013);

[[Page 50792]]

(3) Dividing the amount determined in paragraph (c)(2) of this

section by the amount determined in paragraph (c)(1) of this section;

and

(4) Performing the computations in paragraphs (c)(1), (2), and (3)

of this section for each of the generally comparable LEAs and

determining the average of their computed tax rates.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.69 What tax rates may the Secretary use if substantial local

revenues are derived from local tax sources other than real property

taxes?

(a) In a State in which a substantial portion of revenues for

current expenditures for educational purposes is derived from local tax

sources other than real property taxes, the State educational agency

(SEA) may request that the Secretary take those revenues into account

in determining whether an LEA in that State is making a reasonable tax

effort under Sec. 222.66.

(b) If, based upon the request of an SEA, the Secretary determines

that it is appropriate to take the revenues described in paragraph (a)

of this section into account in determining whether an LEA in that

State is making a reasonable tax effort under Sec. 222.66, the

Secretary uses tax rates computed by--

(1) Dividing the assessed value of each classification of real

property in the LEA by the percentage of true value assigned to that

property for tax purposes and aggregating the results;

(2) Determining the LEA's total revenues derived from local tax

sources for current expenditures (as defined in section 8013);

(3) Dividing the amount determined in paragraph (b)(2) of this

section by the amount determined in paragraph (b)(1) of this section;

and

(4) Performing the computations in paragraphs (b)(1), (2), and (3)

of this section for each of the generally comparable LEAs and

determining the average of those computed tax rates.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.70 How does the Secretary determine whether a fiscally

dependent local educational agency is making a reasonable tax effort?

(a) If an LEA is fiscally dependent, as defined in Sec. 222.2(c),

the Secretary compares the LEA's imputed local tax rate, calculated

under paragraph (b) of this section, with the average tax rate of its

generally comparable LEAs, calculated under paragraph (c) of this

section, to determine whether the LEA is making a reasonable tax

effort.

(b) The Secretary imputes a local tax rate for a fiscally dependent

LEA by--

(1) Dividing the assessed value of each classification of real

property within the boundaries of the general government by the

percentage of true value assigned to that property for tax purposes and

aggregating the results;

(2) Determining the amount of locally derived revenues made

available by the general government for the LEA's current expenditures

(as defined in section 8013); and

(3) Dividing the amount determined in paragraph (b)(2) of this

section by the amount determined in paragraph (b)(1) of this section.

(c) The Secretary performs the computations in paragraph (b) of

this section for each of the fiscally dependent generally comparable

LEAs and the computations in Secs. 222.67-222.69, whichever is

applicable, for each of the fiscally independent generally comparable

LEAs and determines the average of all those tax rates.

(d) The Secretary determines that a fiscally dependent LEA

described in Sec. 222.62 (a) or (d) is making a reasonable tax effort

if its imputed local tax rate is equal to at least 95 percent of the

average tax rate of its generally comparable LEAs.

(e) The Secretary determines that a fiscally dependent LEA

described in Sec. 222.62(b) is making a reasonable tax effort if its

imputed local tax rate is equal to at least 125 percent of the average

tax rate of its generally comparable LEAs.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.71 What information must be provided by the State educational

agency?

The SEA of any State with an LEA applying for assistance under

section 8003(f) shall provide the Secretary with relevant information

necessary to determine whether the LEA is making a reasonable tax

effort under Secs. 222.67-222.70, whichever is applicable.

(Approved by the Office of Management and Budget under control

number 1810-0036.)

(Authority: 20 U.S.C. 7703(f))

Sec. 222.72 How does the Secretary determine a maximum payment for

local educational agencies that are eligible for financial assistance

under section 8003(f)(2)(A) and Sec. 222.63?

(a) Except as otherwise provided in paragraphs (b) through (c) of

this section or Sec. 222.76, the Secretary determines a maximum payment

under section 8003(f)(2)(A) for an eligible LEA by--

(1) First calculating the greater of--

(i) The State average per pupil expenditure (APPE) or the national

APPE;

(ii) The APPE of generally comparable LEAs identified under

Secs. 222.39-222.41; or

(iii) The APPE of three generally comparable LEAs identified under

Sec. 222.74;

(2) Next subtracting from the amount calculated in paragraph (a)(1)

of this section the average State aid per pupil amount received by the

LEA;

(3) Multiplying the amount calculated in paragraph (a)(2) of this

section by the total number of federally connected students in ADA who

are eligible for basic support payments under section 8003(b);

(4) In the case of an LEA whose tax rate is at least 95 percent but

less than 100 percent of the average tax rate of its generally

comparable LEAs, reducing the amount calculated in paragraph (a)(3) of

this section by the percentage that the average tax rate of its

generally comparable LEAs exceeds the tax rate of the LEA; and

(5) Subtracting from the amount calculated in paragraph (a)(3), or

paragraph (a)(4) of this section, the total amount of payments received

by the eligible LEA under sections 8003 (b) and (d) for the fiscal year

for which a payment is being determined under section 8003(f).

(b) For the first step of the computations described in paragraph

(a) of this section, the Secretary calculates a maximum payment under

section 8003(f)(2)(A) for an eligible LEA described in Sec. 222.62 (b)

or (c) by multiplying the national APPE by .70, except that the

resulting amount may not exceed 125 percent of the State APPE.

(c) For the fourth step of the computations described in paragraph

(a) of this section, generally comparable LEAs for reasonable tax

effort purposes are the LEAs whose APPE is identified in

Sec. 222.72(a)(1) except that for applicant LEAs for whom the national

APPE is identified, all LEAs in the applicant's State will be used as

generally comparable LEAs for reasonable tax effort purposes.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.73 How does the Secretary determine a maximum payment for

local educational agencies that are eligible for financial assistance

under section 8003(f)(2)(B) and Sec. 222.64?

Except as otherwise provided in paragraphs (b) and (c) of this

section and Sec. 222.76, the Secretary determines a maximum payment

under section 8003(f)(2)(B) for an eligible LEA as follows:

(a) The Secretary increases the eligible LEA's local contribution

rate (LCR) for section 8003(b) payment purposes up to the amount the

Secretary determines will compensate the applicant for the increase in

its current expenditures necessitated by the unusual geographical

factors identified under Sec. 222.64(b)(2), but no more than is

[[Page 50793]]

necessary to allow the applicant to provide a level of education

equivalent to that provided by its generally comparable LEAs.

(b) The increase in the LCR referred to in paragraph (a) of this

section may not exceed the per pupil share (computed with regard to all

children in ADA), as determined by the Secretary, of the increased

current expenditures necessitated by the unusual geographical factors

identified under Sec. 222.64(b)(2).

(c) In the case of an LEA whose tax rate is at least 95 percent but

less than 100 percent of the average tax rate of its generally

comparable LEAs, reducing the amount calculated in paragraph (a) of

this section by the percentage that the average tax rate of its

generally comparable LEAs exceeds the tax rate of the LEA.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.74 How does the Secretary identify generally comparable local

educational agencies for purposes of section 8003(f)?

(a) Except as otherwise provided in paragraph (b) of this section,

the Secretary identifies generally comparable LEAs for purposes of this

subpart in accordance with the LCR procedures described in

Secs. 222.39-222.41.

(b) For applicant LEAs described in Sec. 222.62(a), to identify the

three generally comparable LEAs referred to in Sec. 222.72(a)(1)(iii),

the Secretary uses the following procedures:

(1) The Secretary asks the SEA of the applicant LEA to identify

generally comparable LEAs in the State by first following the

directions in Sec. 222.39(a)(4), using data from the preceding fiscal

year. The SEA then removes from the resulting list any LEAs that are

significantly impacted, as described in Sec. 222.39(b)(1), except the

applicant LEA.

(2) If the remaining LEAs are not in rank order by total ADA, the

SEA shall list them in that order.

(3) The LEA may then select as its generally comparable LEAs, for

purposes of section 8003(f) only, three LEAs from the list that are

closest to it in size as determined by total ADA (e.g., the next three

larger LEAs, the next three smaller, the next two larger and the next

one smaller, or the next one larger and the next two smaller).

(Authority: 20 U.S.C. 7703(f))

Sec. 222.75 How does the Secretary compute the average per pupil

expenditure of generally comparable local educational agencies under

this subpart?

The Secretary computes APPE under this subpart by--

(a) Dividing the sum of the total current expenditures for the

preceding fiscal year for the identified generally comparable LEAs by

the sum of the total ADA of those LEAs for the same fiscal year and

performing this calculation again using data for the second preceding

year; and

(b) Increasing or decreasing the APPE for the preceding fiscal year

by the percentage the APPE of the generally comparable LEAs increased

or decreased from the second preceding fiscal year to the preceding

fiscal year.

(Authority: 20 U.S.C. 7703(f))

Sec. 222.76 What does the Secretary do if appropriation levels are

insufficient to pay in full the amounts calculated under Secs. 222.72

and 222.73?

Payments under section 8003(f) for eligible LEAs will be ratably

reduced if the funds available for assistance under that section are

insufficient to pay the full amounts determined under Secs. 222.72 and

222.73.

(Authority: 20 U.S.C. 7703(f))

Secs. 222.77-222.79 [Reserved]

Subpart F--[Reserved]

Subpart G--Special Provisions for Local Educational Agencies That

Claim Children Residing on Indian Lands

General

Sec. 222.90 What definitions apply to this subpart?

In addition to the definitions in Sec. 222.2, the following

definitions apply to this subpart:

Indian children means children residing on Indian lands who are

recognized by an Indian tribe as being affiliated with that tribe.

Indian tribe means any Indian tribe, band, nation, or other

organized group or community, including any Alaska Native village or

regional or village corporation as defined in or established under the

Alaska Native Claims Settlement Act (85 Stat. 688), which is recognized

as eligible for the special programs and services provided by the

United States to Indians because of their status as Indians.

(Authority: 20 U.S.C. 7713, 7881, 7938, 8801)

Sec. 222.91 What requirements must a local educational agency meet to

receive a payment under section 8003 of the Act for children residing

on Indian lands?

To receive a payment under section 8003 of the Act for children

residing on Indian lands, a local educational agency (LEA) must--

(a) Meet the application and eligibility requirements in section

8003 and subparts A and C of these regulations;

(b) Develop and implement policies and procedures in accordance

with the provisions of section 8004(a) of the Act; and

(c) Include in its application for payments under section 8003--

(1) An assurance that the LEA established these policies and

procedures in consultation with and based on information from tribal

officials and parents of those children residing on Indian lands who

are Indian children; and

(2) A copy of the policies and procedures or documentation that the

LEA has received a waiver in accordance with the provisions of section

8004(c).

(Authority: 20 U.S.C. 7703(a), 7704(a), (c), and (d)(2))

Sec. 222.92 What additional statutes and regulations apply to this

subpart?

(a) The following statutes and regulations apply to LEAs that claim

children residing on Indian lands for payments under section 8003:

(1) The General Education Provisions Act (GEPA) in 20 U.S.C. 1221

et seq., unless otherwise noted.

(2) Other relevant regulations in this part.

(b) The following statutes, rules, and regulations do not apply to

any hearing proceedings under this subpart:

(1) Administrative Procedure Act.

(2) Federal Rules of Civil Procedure.

(3) Federal Rules of Evidence.

(4) GEPA, Part E.

(5) 34 CFR Part 81.

(Authority: 20 U.S.C. 1221 et seq. unless otherwise noted, 7703, and

7704)

Sec. 222.93 [Reserved]

Indian Policies and Procedures

Sec. 222.94 What provisions must be included in a local educational

agency's Indian policies and procedures?

(a) An LEA's Indian policies and procedures (IPPs) must include a

description of the specific procedures for how the LEA will--

(1) Give the tribal officials and parents of Indian children an

opportunity to comment on whether Indian children participate on an

equal basis with non-Indian children in the education programs and

activities provided by the LEA;

(2) Assess the extent to which Indian children participate on an

equal basis with non-Indian children served by the LEA;

(3) Modify, if necessary, its education program to ensure that

Indian children participate on an equal basis with non-Indian children

served by the LEA;

(4) Disseminate relevant applications, evaluations, program plans

and information related to the education programs of the LEA in

sufficient time to allow the tribes and parents of Indian children an

opportunity to review the materials and make recommendations on the

needs of the Indian children and how the LEA may help those children

realize the benefits of the LEA's education programs and activities;

(5) Gather information concerning Indian views, including those

regarding

[[Page 50794]]

the frequency, location, and time of meetings;

(6) Notify the Indian parents and tribes of the locations and times

of meetings;

(7) Consult and involve tribal officials and parents of Indian

children in the planning and development of the LEA's education

programs and activities; and

(8) Modify the IPPs if necessary, based upon the results of any

assessment described in paragraph (b) of this section.

(b) Tribes and parents of Indian children may assess the

effectiveness of their input regarding the participation of Indian

children in the LEA's education programs and activities and the

development and implementation of the IPPs, and share the results of

that assessment with the LEA.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704)

Sec. 222.95 How are Indian policies and procedures reviewed to ensure

compliance with the requirements in section 8004(a) of the Act?

(a) The Director of the Impact Aid Program (Director) periodically

reviews applicant LEAs' IPPs to ensure that they comply with the

provisions of section 8004(a) and Sec. 222.94.

(b) If the Director determines either that the LEA's IPPs do not

comply with the minimum standards of section 8004(a), or that the IPPs

have not been implemented in accordance with Sec. 222.94, the Director

provides the LEA with written notification of the deficiencies related

to its IPPs and requires that the LEA take appropriate action.

(c) An LEA shall make the necessary changes within 60 days of

receipt of written notification from the Director.

(d) If the LEA fails to make the necessary adjustments or changes

within the prescribed period of time, the Director may withhold all

payments that the LEA is eligible to receive under section 8003.

(e) Each LEA that has developed IPPs shall review those IPPs

annually to ensure that they--

(1) Comply with the provisions in section 8004(a); and

(2) Are implemented by the LEA in accordance with Sec. 222.94.

(f) If an LEA determines that its IPPs do not meet the requirements

in paragraphs (e) (1) and (2) of this section, the LEA shall amend its

IPPs to conform with those requirements within 60 days of its

determination.

(g) An LEA that amends its IPPs shall send a copy of the amended

IPPs to--

(1) The Director for approval; and

(2) The affected tribe or tribes.

(Authority: 20 U.S.C. 1221e-3(a)(1), 7704 (a) and (d)(2))

Secs. 222.96-222.101 [Reserved]

Indian Policies and Procedures Complaint and Hearing Procedures

Sec. 222.102 Who may file a complaint about a local educational

agency's Indian policies and procedures?

(a) Only a tribal chairman or an authorized designee for a tribe

that has students attending an LEA's schools may file a written

complaint with the Assistant Secretary for Elementary and Secondary

Education (Assistant Secretary) regarding any action of the LEA

pursuant to, or relevant to, section 8004(a) and Sec. 222.94.

(b) If a tribe files a complaint through a designee, the tribe

shall acknowledge in writing in the complaint that the designee is

authorized to act on its behalf.

(Authority: 20 U.S.C. 7704(e)(1))

Sec. 222.103 What must be included in a complaint?

For purposes of this subpart, a complaint is a signed statement

that includes--

(a) An allegation that an LEA has failed to develop and implement

IPPs in accordance with section 8004(a);

(b) Information that supports the allegation;

(c) A specific request for relief; and

(d) A statement describing what steps the tribe has taken to

resolve with the LEA the matters on which the complaint is based.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e)(1))

Sec. 222.104 When does the Assistant Secretary consider a complaint

received?

(a) The Assistant Secretary considers a complaint to have been

received only after the Assistant Secretary determines that the

complaint--

(1) Satisfies the requirements in Secs. 222.102 and 222.103; and

(2) Is in writing and signed by the tribal chairman or the tribe's

authorized designee.

(b) If the Assistant Secretary determines that a complaint fails to

meet the requirements in Secs. 222.102-222.103, the Assistant Secretary

notifies the tribe or its designee in writing that the complaint has

been dismissed for purposes of invoking the hearing procedures in

Secs. 222.102-222.113.

(c) Any notification that a complaint has been dismissed includes

the reasons why the Assistant Secretary determined that the complaint

did not meet the requirements in Secs. 222.102 and 222.103.

(d) Notification that a complaint has been dismissed does not

preclude other efforts to investigate or resolve the issues raised in

the complaint, including the filing of an amended complaint.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e)(1))

Sec. 222.105-222.107 [Reserved]

Sec. 222.108 What actions must be taken upon receipt of a complaint?

Within 10 working days of receipt of a complaint, the Secretary or

his designee--

(a) Designates a hearing examiner to conduct a hearing;

(b) Designates a time for the hearing that is no more than 30 days

after the designation of a hearing examiner;

(c) Designates a place for the hearing that, to the extent

possible, is--

(1) Near the LEA; or

(2) At another location convenient to the tribe and the LEA, if it

is determined that there is good cause to designate another location;

(d) Notifies the tribe and the LEA of the time, place, and nature

of the hearing; and

(e) Transmits copies of the complaint to the LEA and the affected

tribe or tribes.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e))

Sec. 222.109 When may a local educational agency reply to a complaint?

An LEA's reply to the charges in the complaint must be filed with

the hearing examiner within 15 days of the date the LEA receives a copy

of the notice and complaint described in Sec. 222.108 (d) and (e) from

the hearing examiner.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e))

Sec. 222.110 What are the procedures for conducting a hearing on a

local educational agency's Indian policies and procedures?

Hearings on IPP complaints filed by an Indian tribe or tribes

against an LEA are conducted as follows:

(a) The hearing must be open to the public.

(b) Parties may be represented by counsel.

(c)(1) Each party may submit oral and written testimony that is

relevant to the issues in the proceeding and make recommendations

concerning appropriate remedial actions.

(2) A party may object to evidence it considers to be irrelevant or

unduly repetitious.

(d) No party shall communicate orally or in writing with the

hearing examiner or the Assistant Secretary on matters under review,

except minor procedural matters, unless all parties to the complaint

are given--

(1) Timely and adequate notice of the communication; and

(2) Reasonable opportunity to respond.

(e) For each document that a party submits, the party shall--

(1) File one copy for inclusion in the record of the proceeding;

and

(2) Provide a copy to each of the other parties to the proceeding.

[[Page 50795]]

(f) Each party shall bear only its own costs in the proceeding.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e))

Sec. 222.111 What is the authority of the hearing examiner in

conducting a hearing?

The hearing examiner is authorized to conduct a hearing under

section 8004(e) and Secs. 222.109-222.113 as follows:

(a) The hearing examiner may--

(1) Clarify, simplify, or define the issues or consider other

matters that may aid in the disposition of the complaint;

(2) Direct the parties to exchange relevant documents or

information; and

(3) Examine witnesses.

(b) The hearing examiner--

(1) Regulates the course of proceedings and conduct of the parties;

(2) Arranges for the preparation of a transcript of each hearing

and provides one copy to each party;

(3) Schedules the submission of oral and documentary evidence;

(4) Receives, rules on, excludes, or limits evidence;

(5) Establishes and maintains a record of the proceeding, including

any transcripts referenced above;

(6) Establishes reasonable rules governing public attendance at the

proceeding; and

(7) Is bound by all applicable statutes and regulations and may

neither waive them nor rule them invalid.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e))

Sec. 222.112 What procedures are followed after the hearing?

(a) Each party may submit to the hearing examiner additional

evidence that is relevant to the issues raised at the hearing, within

the time period and in the manner specified by the hearing examiner.

(b) Within 30 days after the hearing, the hearing examiner--

(1) Makes, on the basis of the record, written findings of fact and

recommendations concerning any appropriate remedial action that should

be taken;

(2) Submits those findings and recommendations, along with the

hearing record, to the Assistant Secretary; and

(3) Sends a copy of those findings and recommendations to each

party.

(c)(1) Each party may file with the Assistant Secretary comments on

the hearing examiner's findings and recommendations.

(2) The comments must be received by the Assistant Secretary within

10 days after the party receives a copy of the hearing examiner's

findings and recommendations.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 7704(e))

Sec. 222.113 What are the responsibilities of the Assistant Secretary

after the hearing?

(a) Within 30 days a

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