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APPENDIX III

APPENDIX III

Department Comment

We concur in the need for clarification of the term "employed on Federal property." A number of legal opinions have been rendered by the Department's Office of General Counsel relating to the concept of "employed on" Federal property since the beginning of the program. We will undertake to rewrite instructions which have been issued for use by LEAs and Program staff to make them more definitive. Prior to revising current instructions the problems inherent in modifying current understandings and developing more definitive statements will be reviewed thoroughly. GAO Recommendation

2.

Requiring adequate documentation from LEAS to determine

whether a child with a civilian parent employed or working on Federal property actually resides with the federally-connected parent.

Department Comment

Federal Regulations (45 CFR 115.3(j)) state that "Name...of parent...who is employed on Federal property and with whom such pupil resides, unless the parent is a member of the uniformed services on active duty," is a required item on the parent-pupil survey form. Some LEAS use the above phraseology intact while others ask for both the parent's and child's address to show they reside together. We will strengthen instructions in this area but believe that only through extensive field review with a larger regional staff could this situation be appreciably improved.

GAO Recommendation

3.

Requiring adequate documentation from LEAS to determine

whether a child is a dependent of a uniformed services parent. Department Comment

P.L. 81-874 Section 3(a)(2) states -- "had a parent who was on active duty in the uniformed services." No requirement of dependency is expressed in the statute. However, in the past, including FY 1973, the uniformed services clause was administered, generally, in such a manner as to require the federally-connected child to reside with the spouse of, or the parent who was on active duty. Revised regulations eliminated the "reside with" qualification so that it would be in keeping with the statutory language. We do not believe it is feasible to seek

APPENDIX III

APPENDIX III

more information than is currently required. However, we would be interested in obtaining clarification from GAO as to what type of information they believe is required and where the "dependency" requirement fits into the language.

GAO Recommendation

4.

Adopting an alternative procedure to be used for States and
LEAS that have different procedures for computing ADA to help
insure the ADA estimates are made on the same basis.

Department Comment

P.L. 81-874 Section 403(10) establishes the definition of Average Daily
Attendance as that which is determined in accordance with State law.
Not to accept the ADA computed in this manner would require a change in
the present language. We concur with GAO that by using a national
average of ADA ratio to membership for all States and LEAS, would
simplify administration of the law and could lessen ADA computational

errors.

Another alternative would be to compute entitlement and an entitlement for payment on the basis of membership. A number of States now rely upon membership or average daily membership (ADM) data for financial and statistical purposes and do not keep attendance or ADA data except for Federal program purposes. Following this trend may avoid computational errors associated with conversion to ADA data. Recommendations will be made as to how the law must be modified to permit this type of computational average.

GAO Recommendation

5.

Reviewing State aid allocation formulas relative to the
supplant provision of the law.

Department Comment

It should be noted that with the passage of P.L. 93-380, which included
the amendments to Section 5(d), in depth examinations of State aid
programs will occur. States under certain conditions, with these
amendments, now may consider P.L. 874 funds as local resources when
computing State aid. OE has required field reviews and reports each
year from Regional SAFA Program Officers relative to Sections 5(d) (1)
and (2). We do concur with GAO that this is a necessary safeguard and
a very important action. Again, it is dependent upon having the proper
qualified number of Program Officers available in Regional Offices to
make these studies, and States notifying the Office of Education of any
change in State assistance law, policy or procedure.

94-584 77 - 61

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APPENDIX III

GAO Recommendation

6. GAO recommends that the Secretary direct OE to: Review the
revenue which LEAs and SEAs report to determine if it is
received from State or local sources.

Department Comment

We concur in principle. However, the manpower now located in the SAFA Regional Offices cannot fulfill their present workloads which includes an in depth analysis of revenues to determine their sources in every instance.

GAO Recommendation

7. Specify in instructions for SEAS and LEAs the weight that should be given to its published criteria items, and establish ranges for each criterion to assist in compiling the data necessary for selecting comparable LEAS.

Department Comment

We recognize the need for study of this problem to determine whether improvements can be made. If the use of a weighting system is deemed advisable, recommendations will be made to accordingly change existing regulations.

GAO Recommendation

8.

Develop procedures for approving Federal payment rates derived using comparable LEAS which are consistent with its instructions for selecting such LEAS.

Department Comment

We disagree since present procedures do provide for a review of the criteria set forth in the instructions for selecting comparable LEAs. The methods used for actual computation of the local contribution rates is set forth in 45 CFR 115.31.

GAO Recommendation

9.

Require that applicants use as comparables only those LEAS
that do not receive SAFA aid or determine an alternative
procedure to remove the influence of federally-connected
children from per pupil cost calculations.

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APPENDIX III

Department Comment

To the extent possible, we have followed this practice. The instructions to applicant LEAs (OE Form 4019, 10/75)page 7 states: "The 5 comparable districts should not include applicants under Section 3 of the Act and should be selected in accordance..." Page 12 of the same instructions somewhat modifies the above by saing "if an applicant district is included among the suggested comparable districts..." However, in some States it is difficult to select comparable districts which are not federally impacted to some degree. In those instances their influence is reduced to the extent possible in computing the local contribution rate.

GAO note:

Deleted general comments pertain to matters
which were presented in the draft report but
have been revised in this final report.

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