Secretary may terminate such arrangements without further notice. (20 U.S.C. 241)

Subpart G-Determinations Under Section 5(d) (1) and (2)

SOURCE: 42 FR 15546, Mar. 22, 1977, unless otherwise noted. Redesignated at 45 FR 77368, Nov. 21, 1980

§ 222.60 Scope and purpose.

(a) Scope. This subpart applies to determinations made by the Secretary pursuant to section 5(d) of the Act as amended by Pub. L. 93-380, Pub. L. 94487.

(b) Purpose. The sole purpose of the regulations in this subpart is to implement the provisions of section 5(d)(2) of the Act. The definitions and standards contained herein have been developed with respect to the particular intent of the amendment made to section 5(d) of the Act by sections 304(c) and 305(a)(2) of Pub. L. 93-380 and section 330(a) of Pub. L. 94-482 and should not be construed as establishing definitions and standards for any other purpose.

(20 U.S.C. 240(d); secs. 304(c), 305(a)(2), Pub. L. 93-380, 88 Stat. 484; 120 Cong. Rec. S8505, 8507 (daily ed. May 20, 1974))

§ 222.61 Treatment of State aid programs in general

(a) Statutory provisions. (1) Section 5(d)(1) of the Act provides that, except as provided in section 5(d)(2), no payments may be made to any local educational agency within a State which takes into consideration payments under section 5 of the Act in determining the eligibility of any agency for State aid, or the amount of that aid, with respect to free public education during the fiscal year of those payments or the preceding fiscal year, or which makes aid available in such a manner as to result in less State aid to any agency which is eligible for payments under the Act than that agency would receive if it were not so eligible.

(2) Section 5(d)(2) of the Act provides that, if a State has in effect a program of State aid for free public education for any fiscal year, which is designed to equalize expenditures for

free public education among the local educational agencies of that State, payments under the Act may be taken into consideration by that State in determining (i) the relative financial resources available to local educational agencies in that State and (ii) the relative financial need of those agencies for the provision of free public education for children served by those agencies, subject to the provisions in that section.

(3) Section 5(d)(2)(A)(ii) of the Act provides that, if a State takes payments under the Act into consideration in accordance with section 5(d)(2), the State may do so only to the extent of the proportion that the local revenues of a local educational agency covered under the equalization part of a State aid program are of that agency's total local revenues for education.

(4) Section 5(d)(2)(C) of the Act, as added by Pub. L. 94-482 provides that no payment under the Act may be withheld from and no repayment may be required of any State or local educational agency because of any noncompliance with section 5(d)(2)(A) of the Act or this subpart prior to July 1, 1977 if that State had a program of State aid whose procedures were designed to equalize expenditures for free public education among those agencies in effect on October 12, 1976. (20 U.S.C. 240(d); H.R. Rep. No. 94-1701, 235 (1976))

(b) General rules. (1) Except as provided in paragraph (b)(2) of this section, a State may take into consideration payments under the Act in allocating State aid if that State has a program of State aid which qualifies under § 222.62. However those payments may be taken into consideration for each affected local educational agency only in the proportion described in § 222.66.

(2) No program of State aid may qualify under this subpart if a court of that State has determined by final order, not under appeal, that such program fails to equalize expenditures for free public education among local educational agencies within the State or otherwise violates law.

(3) The Secretary will not interpret any of the provisions of §§ 222.62,

222.63, and 222.65 so as to consider any part of a State aid program which allocates funds for the additional cost of providing free public education for children with special educational needs as disequaliziang expenditures for free public education. For the purposes of this subpart, children with special educational needs are handicapped children, non-English speaking children, economically disadvantaged children, gifted and talented children and the like

(20 U.S.C. 240(d)(2); 20 U.S.C. 242(b))

(c) Data for determinations. Determinations under this subpart requiring the submission of financial or school population data may be made either (i) on the basis of data for the fiscal year preceding the fiscal year of determination if the same program was then in effect; or (ii) on the basis of estimates of data for the fiscal year of determination. Data submitted shall be the most currently available and complete data, whether based on revenues or current expenditures. Estimates submitted by a State educational agency or other appropriate State agency must set forth the assumptions upon which such estimates are founded, must be accompanied by an assurance as to their accuracy, and must be adjusted by actual data for the fiscal year of determination as soon as available for the purpose of verification.

(20 U.S.C. 240(d); 242(d))

(d) Definitions. For the purposes of this subpart, the following terms shall have the meanings indicated below:

(1) "State aid" means any contribution, no repayment for which is expected, which is made by a State to or on behalf of local educational agencies within the State for current expenditures in the provision of free public education;

(2) "Equalize expenditures" means to meet the standards set forth in § 222.62;

(3) "Current expenditures" means the total charges incurred for the benefit of the school year in an elementary or secondary school program, exclusive of capital outlay and debt service for capital outlay;

(4) "Revenue" means an addition to assets which does not increase any liability, does not represent the recovery of an expenditure, does not represent the cancellation of certain liabilities without a corresponding increase in other liabilities or a decrease in assets, and does not represent a contribution of fund capital in food service or pupil activity funds. Futhermore, for the purposes of this subpart, the term "revenue" includes only revenue for current expenditures.

(20 U.S.C. 240(d)(2))

§ 222.62 General qualifying standard for State aid programs.

General standard. For the purposes of section 5(d)(2) of the Act, the Secretary will consider a program of State aid to be designed to equalize expenditures for free public education among local educational agencies in that State if the program

(a) Is authorized by State law in effect for the fiscal year for which the determination under this subpart is

made;

(b) Provides for the appointment of State aid among local educational agencies in the State in order to carry out the objectives of the programs;

(c) Provides that in determining the amount to be apportioned to each local educational agency in the State, the State will take into consideration the relative financial resources available to local educational agencies in that State for the program; and

(d) Meets the standard of either §§ 222.63, 222.64 or 222.65 of this subpart.

[42 FR 18279, Apr. 6, 1977. Redesignated at 45 FR 77368, Nov. 21, 1980]

§ 222.63 Disparity standard.

(a) 25 percent disparity limitation. The Secretary will consider a program of State aid to have fulfilled the requirement of § 222.62(a)(4) of this subpart if the disparity in the amount of current expenditures or revenue per pupil for free public education among local educational agencies in the State is no more than 25 percent for the fiscal year for which a determination is made under this subpart. The

Secretary may terminate such arrangements without further notice. (20 U.S.C. 241)

Subpart G-Determinations Under Section 5(d) (1) and (2)

SOURCE: 42 FR 15546, Mar. 22, 1977, unless otherwise noted. Redesignated at 45 FR 77368, Nov. 21, 1980

§ 222.60 Scope and purpose.

(a) Scope. This subpart applies to determinations made by the Secretary pursuant to section 5(d) of the Act as amended by Pub. L. 93-380, Pub. L. 94487.

(b) Purpose. The sole purpose of the regulations in this subpart is to implement the provisions of section 5(d)(2) of the Act. The definitions and standards contained herein have been developed with respect to the particular intent of the amendment made to section 5(d) of the Act by sections 304(c) and 305(a)(2) of Pub. L. 93-380 and section 330(a) of Pub. L. 94-482 and should not be construed as establishing definitions and standards for any other purpose.

(20 U.S.C. 240(d); secs. 304(c), 305(a)(2), Pub. L. 93-380, 88 Stat. 484; 120 Cong. Rec. S8505, 8507 (daily ed. May 20, 1974))

§ 222.61 Treatment of State aid programs in general

(a) Statutory provisions. (1) Section 5(d)(1) of the Act provides that, except as provided in section 5(d)(2), no payments may be made to any local educational agency within a State which takes into consideration payments under section 5 of the Act in determining the eligibility of any agency for State aid, or the amount of that aid, with respect to free public education during the fiscal year of those payments or the preceding fiscal year, or which makes aid available in such a manner as to result in less State aid to any agency which is eligible for payments under the Act than that agency would receive if it were not so eligible.

(2) Section 5(d)(2) of the Act provides that, if a State has in effect a program of State aid for free public education for any fiscal year, which is designed to equalize expenditures for

free public education among the local educational agencies of that State, payments under the Act may be taken into consideration by that State in determining (i) the relative financial resources available to local educational agencies in that State and (ii) the relative financial need of those agencies for the provision of free public education for children served by those agencies, subject to the provisions in that section.

(3) Section 5(d)(2)(A)(ii) of the Act provides that, if a State takes payments under the Act into consideration in accordance with section 5(d)(2), the State may do so only to the extent of the proportion that the local revenues of a local educational agency covered under the equalization part of a State aid program are of that agency's total local revenues for education.

(4) Section 5(d)(2)(C) of the Act, as added by Pub. L. 94-482 provides that no payment under the Act may be withheld from and no repayment may be required of any State or local educational agency because of any noncompliance with section 5(d)(2)(A) of the Act or this subpart prior to July 1, 1977 if that State had a program of State aid whose procedures were designed to equalize expenditures for free public education among those agencies in effect on October 12, 1976. (20 U.S.C. 240(d); H.R. Rep. No. 94-1701, 235 (1976))

(b) General rules. (1) Except as provided in paragraph (b)(2) of this section, a State may take into consideration payments under the Act in allocating State aid if that State has a program of State aid which qualifies under § 222.62. However those payments may be taken into consideration for each affected local educational agency only in the proportion described in § 222.66.

(2) No program of State aid may qualify under this subpart if a court of that State has determined by final order, not under appeal, that such program fails to equalize expenditures for free public education among local educational agencies within the State or otherwise violates law.

(3) The Secretary will not interpret any of the provisions of §§ 222.62,

222.63, and 222.65 so as to consider any part of a State aid program which allocates funds for the additional cost of providing free public education for children with special educational needs as disequaliziang expenditures for free public education. For the purposes of this subpart, children with special educational needs are handicapped children, non-English speaking children, economically disadvantaged children, gifted and talented children and the like

(20 U.S.C. 240(d)(2); 20 U.S.C. 242(b))

(c) Data for determinations. Determinations under this subpart requiring the submission of financial or school population data may be made either (i) on the basis of data for the fiscal year preceding the fiscal year of determination if the same program was then in effect; or (ii) on the basis of estimates of data for the fiscal year of determination. Data submitted shall be the most currently available and complete data, whether based on revenues or current expenditures. Estimates submitted by a State educational agency or other appropriate State agency must set forth the assumptions upon which such estimates are founded, must be accompanied by an assurance as to their accuracy, and must be adjusted by actual data for the fiscal year of determination as soon as available for the purpose of verification.

(20 U.S.C. 240(d); 242(d))

(d) Definitions. For the purposes of this subpart, the following terms shall have the meanings indicated below:

(1) "State aid" means any contribution, no repayment for which is expected, which is made by a State to or on behalf of local educational agencies within the State for current expenditures in the provision of free public education;

(2) "Equalize expenditures" means to meet the standards set forth in § 222.62;

(3) "Current expenditures" means the total charges incurred for the benefit of the school year in an elementary or secondary school program, exclusive of capital outlay and debt service for capital outlay;

(4) "Revenue" means an addition to assets which does not increase any liability, does not represent the recovery of an expenditure, does not represent the cancellation of certain liabilities without a corresponding increase in other liabilities or a decrease in assets, and does not represent a contribution of fund capital in food service or pupil activity funds. Futhermore, for the purposes of this subpart, the term "revenue" includes only revenue for current expenditures.

(20 U.S.C. 240(d)(2))

§ 222.62 General qualifying standard for State aid programs.

General standard. For the purposes of section 5(d)(2) of the Act, the Secretary will consider a program of State aid to be designed to equalize expenditures for free public education among local educational agencies in that State if the program

(a) Is authorized by State law in effect for the fiscal year for which the determination under this subpart is made;

(b) Provides for the appointment of State aid among local educational agencies in the State in order to carry out the objectives of the programs;

(c) Provides that in determining the amount to be apportioned to each local educational agency in the State, the State will take into consideration the relative financial resources available to local educational agencies in that State for the program; and

(d) Meets the standard of either §§ 222.63, 222.64 or 222.65 of this subpart.

[42 FR 18279, Apr. 6, 1977. Redesignated at 45 FR 77368, Nov. 21, 1980]

§ 222.63 Disparity standard.

(a) 25 percent disparity limitation. The Secretary will consider a program of State aid to have fulfilled the requirement of § 222.62(a)(4) of this subpart if the disparity in the amount of current expenditures or revenue per pupil for free public education among local educational agencies in the State is no more than 25 percent for the fiscal year for which a determination is made under this subpart. The

method for calculating the percentage of that disparity in a State is set out in the appendix to this subpart.

(b) (1) Weighted average disparity for different grade level groups. If a State requests it, the Secretary will make separate disparity computations for different groups of local educational agencies in the State which have similar grade levels of instruction.

(2) In those cases, the weighted average disparity, based on the proportionate number of pupils in each group, may not be more than 25 percent for all the groups. The method for calculating the weighted average disparity percentage is set out in the appendix to this subpart.

(c) Per pupil figure computations. In calculating the current expenditures or revenue disparities under this section, computations of per pupil figures are made on the following bases:

(1) Except as provided in paragraph (c)(2) of this section, the per pupil amount of current expenditures or revenue for a local educational agency is computed on the basis of the total number of pupils receiving free public education in the schools of the agency. The total number of pupils is determined in accordance with whatever standard measurement of pupil count is used in the State.

(2) If a State aid program uses a "weighted pupil," a "classroom," "instructional unit," or other designated unit of need in determining allocations of State aid in order to take account of special cost differentials, the computation of per pupil revenue or current expenditures may be made on those bases. There are two allowable categories of special cost differentials: (i) Those associated with pupils having special educational needs, such handicapped children, economically disadvantaged children, non-English speaking children, and gifted and talented children; and (ii) those associated with sparsity or density of population, cost of living, or special socioeconomic characteristics within the area served by an agency.

as

(d) Revenues and current expenditures included in determinations. The following revenues or current expenditures must be included for each local educational agency in the State in de

termining the percentage of disparity under paragraph (a) of this section:

(1) All revenues or current expenditures from State sources, except those applied or contributed outside any equalized part of the State aid program which are designated for special cost differentials of the type specified in paragraph (c)(2) of this section. (2) All revenues for current expenditures from local or intermediate sources, except those taken into consideration under any equalized part of the State aid program which are designated for special cost differentials of the type specified in paragraph (c)(2) of this section.

(3) Pub. L. 81-874 funds received by the agency under sections 2, 3 and 4 of the Act, except to the extent that (i) they are not taken into consideration under the State aid program, and (ii) they exceed the proportion of those funds that the State would be allowed to take into consideration § 222.66 of this subpart; and

under

(4) Any other Federal funds received by the agency for which the agency is not accountable to the Federal Government for their use such as Federal Forest Reserve funds (16 U.S.C. 500).