However, in no case will the combined percentage used in determining the priority index exceed twice the percentage arrived at in paragraph (b)(1) of this section. In determining the order of priority for approving applications under section 10, applications will be classified in priority groups for funding from funds allocated for applications under section 10 as prescribed in paragraph (c) of § 114.4. A priority listing will be established for each such group in the following order:

(i) Applications requesting major repairs necessary for the safety of school children or to prevent further deterioration of existing school facili

ties;

(ii) Applications in cases where upgrading or new construction or both is necessary to meet life safety and handicapped access standards;

(iii) Applications in cases where the LEA which operates the school program in school facilities located on Federal property has given assurance and a firm commitment to the Commissioner that, upon completion of the proposed project, it will accept ownership of such school facilities under section 10(b) of the Act;

(iv) Applications in cases where there are unhoused pupils; and

(v) Applications requesting the construction of capacity or noncapacity school facilities, or the rehabilitation or remodeling of existing school facilities which is required to bring the school facilities up to a standard which will permit the offering of a contemporary educational program. (20 U.S.C. 640)

(c) In those cases in which an applicant has filed more than one project application (or in the case of section 10, when two or more applications are filed which fall within the same priority grouping, as established in paragraph (b) of this section), the priority index for the second project will be determined by:

(1) Dividing the normal capacity of first project by the total estimated membership at the close of the applicable period and (2) reducing the applicant's priority index by twice the percentage so obtained. When more

than two project applications have been filed, the priority index for each succeeding project shall be reduced by the cumulative total percentage, in the manner provided for in the preceding sentence, of all approved projects of the applicant.

(20 U.S.C. 633, 640, 644)

[40 FR 16019, Apr. 8, 1975, as amended at 44 FR 43440, July 24, 1979]

§ 114.6 Determination of subpriority indices for applications.

(a) In the event that the funds available are sufficient to cover only a portion of the project applications with identical priority indices (as determined under § 114.5), a subpriority index for each project application will be determined by dividing (1) the estimated number of federally connected children countable for payment in the local educational agency (or in the approved attendance area) or, in the case of section 10 of the Act, the number of children for whom school facilities are to be provided on Federal property by (2) the total estimated membership of all children in such an area at the close of the applicable period.

(20 U.S.C. 633, 634, 640, 644)

(b) In those cases where an applicant has more than one eligible project application in an identical priority index group, the subpriority index of the first project in such group will be computed in accordance with paragraph (a) of this section, and the subpriority index of the second priority will be determined by (1) dividing the normal capacity of the first project by the total estimated membership at the close of the applicable period and (2) reducing the applicant's subpriority index as determined in paragraph (a) of this section by twice the percentage so obtained. The subpriority index for each succeeding project will be reduced by the cumulative total capacity, as provided in the first sentence of this paragraph, of all the approved projects of the applicant.

(20 U.S.C. 633, 634, 640, 644)

§ 114.7 Priority and approval conditioned upon readiness to proceed with construction.

Initial approval of a project application under this part will be cancelled if

the applicant is not ready to proceed with construction within 120 days

after the date of initial approval

unless such period is extended by the Commissioner for good cause shown. The applicant's project and entitlement may be subordinated by reason of such failures to other project applications of lower rank or the applicant may forfeit its priority in the discretion of the Commissioner.

(20 U.S.C. 633, 634, 636(b)(1)(D), 644)

For purposes of sections 5, 8, 9, and 14 of the Act and the regulations in this part, in determining an applicant's membership, a nonresident pupil who attends a school in the applicant local educational agency on a tuition or nontuition basis may be counted in the applicant's membership if a written agreement for such attendance has been entered into between the local educational agencies concerned, and if that agreement has been approved by the Commissioner. No such agreement will be approved by the Commissioner unless it provides for education on either a tuition or nontuition basis for a period of 20 years from the date of execution of such agreement.

(20 U.S.C. 645(5))

§ 114.12 Changes in boundaries, classification and governing authority of applicants.

(a) If the applicant is a party to any merger, consolidation, or other similar action which may affect its boundaries, identity, governing authority, classification or control, it shall notify the Commissioner as soon as practicable of the effective date of that action, the extent and character thereof, and the legal authority under which the action was or is to be effected.

(b) A local educational agency succeeding to the territory of one or more local educational agencies whose applications were approved (or in due course would have been approved) prior to the change in boundaries or

organization may secure all the rights

and benefits which were vested in such

application(s) by notifying the Com

missioner and by submitting the following:

(1) A letter from the authorized representative of the successor local educational agency (i) requesting that the successor local educational agency be substituted for the original applicant agencies, and (ii) stating that the successor local educational agency agrees to be bound by the obligations and assurances undertaken or made by such original applicant local educational agencies in their applications to the same extent as such original applicants would have been bound;

(2) An opinion of the appropriate legal officer of the County or State showing that (i) the change in boundaries or organization was accomplished in accordance with the laws of the State; and (ii) that the assignment and acceptance or the transfer of the interest of the applicant local educational agency to the successor local educational agency is in accordance with the laws of the State and is effective to accomplish the changes described; and

(3) Assignments, citations or quotations as follows:

(i) If the State law provides for the settlement of the assets and liabilities (including such matters as right to successorship in property, debts, obligations, unfulfilled contracts, details of the assumption of bonded indebtedness, State aid and taxes) the appropriate quotations from or citations to specific State laws involved should be submitted; or

(ii) If the State law does not clearly provide for the disposition of such property rights, an assignment from each of the former local educational agencies to the successor agencies should be submitted showing (a) the transfer of ownership of the building or buildings under construction or contract, (b) the transfer of any unexpended funds or rights to funds for the approved projects then on hand,

and (c) the transfer of all rights and obligations of the applicant local educational agencies in and to any project application not yet approved and any future payments or benefits which might accrue under the pending applications.

(c) The rights and benefits under the Act of the successor agency cannot be greater than the total of all rights and benefits which originally were vested in the component agencies which had valid applications on file to the effective date of the change in boundaries or organization.

(20 U.S.C. 645(11))

§ 114.14 Estimated average daily membership under section 5(a)(3).

For the purpose of eligibility and entitlement under section 5(a)(3) of the Act, the estimated number of children in average daily membership during the year shall be 97 percent of the difference between (1) the total number of children in membership whose parents are employed (as determined by a parent-pupil survey made as of any specific date during the increase period) in establishments with respect to which a responsible official thereof certifies that there has been an increase in employment subsequent to the base year in order to fulfill Federal contracts or subcontracts, and (2) the number of such children whose parents moved into the applicant school district subsequent to such a base year.

(20 U.S.C. 635 (a) (3), (d)(2)(B))

§ 114.15 Determination of undue financial burden.

A determination under section 5(c) of the Act of undue financial burden on the taxing and borrowing authority of an applicant will be made as follows:

(a) If the cost of providing minimum school facilities for the increase in eligible federally connected children under section 5(a)(3) of the Act plus the outstanding bonded debt for building purposes, would result in the necessity of incurring a percentage obligation against assessed valuation in building bonds or other debentures which exceeds the average percentage

of such indebtedness incurred for such obligations by school districts in the applicant's State, an undue financial burden is deemed to exist;

(b) In marginal cases, additional consideration may be given to such factors as (1) dollars per child in assessed valuation, (2) increase in total assessed valuation in relation to increase in membership during the increase period, (3) ratio of assessed valuation to true value, and (4) special State laws or practices.

(20 U.S.C. 635(c))

§ 114.16 Additional payments under section 8.

(a) An amount not to exceed 10 percent of any amount appropriated under the Act (exclusive of any sums appropriated for administration) may be reserved and used by the Commissioner to make grants to applicants (except to applicants under section 14 of the Act) when (1) the application would be approved but for the applicant's inability, unless aided by such a grant, to finance the nonfederal share of the cost of a project; or (2) after the approval of the application the project cannot, without such grant, be completed because of flood, fire, or similar emergency affecting either the work on the project or the applicant's ability to finance the nonfederal share of the cost of the project.

(b) Under paragraph (a)(1) of this section, a complete application (except applications under section 14 of the Act and applications with respect to which the Commissioner has waived or reduced eligibility requirements under section 5(e) of the Act) may be considered for payment of part or all of the nonfederal share of the cost of any project which does not include more than minimum facilities for unhoused children only if:

(1) The application contains a request for payment under the Act; (2) the estimated number of children countable for payment under section 5 of the Act for the increase period equals or exceeds the number obtained by taking 12 percent of the average daily membership of the applicant district for the base year applicable to the increase period under consideration, except that, if 1 or more years in

the increase period were included in a previous application for which payment has been made or may be made, the percent shall be 9 percent if 1 year was included, 6 percent if 2 years were included, and 3 percent if 3 years were included; (3) the applicant has exhausted all fiscal resources, including State aid, bonding authority, and Federal aid, which are practicably available to it and is unable to pay the nonfederal share of the cost of the project; (4) it has been reached on the priority or subpriority indices established under this part; and (5) Federal money reserved under paragraph (a) of this section is available. The additional payment to the applicant under this section may not exceed the cost of providing minimum school facilities for the number of unhoused children as of the end of the increase period, less all financial resources practicably available to the applicant as of the same period; nor may it exceed the difference between (i) the actual cost of providing minimum facilities for the federally connected pupils eligible for payment under the Act, or the average cost in the State of providing such facilities, whichever is the lesser, and (ii) the Federal funds made available to the applicant under section 5 of the Act plus local and State funds which may be made available for this purpose.

(c) Under paragraph (a)(2) of this section, a request by the applicant may be considered for the additional payment of part or all of the funds required to complete a project (to the extent that the completed project will not provide more than minimum school facilities for unhoused children) for which a project application under the Act has been approved only if:

(1) Federal money reserved under paragraph (a) of this section is available; (2) the applicant cannot complete the project because of flood, fire, or similar emergency affecting either the work on the project or the applicant's ability to finance the nonfederal share of the cost of the project; and (3) the applicant has exhausted all financial resources practicably available to it, including State aid, bonding authority, and Federal aid. The payment to be

(b) The Commissioner when proper request therefor is made in a complete application, may: (1) Make available to such applicant such temporary school facilities as may be necessary to take care of the membership of such children as the Commissioner determines will be of temporary duration only, as defined in § 114.1(o), or (2) where the applicant gives assurance in a complete application that at least minimum school facilities will be provided for such children, pay (on such terms and conditions as he deems appropriate to carry out the purposes of the Act) to such applicant for use in constructing school facilities an amount not greater than the amount which he estimates will be necessary to make available temporary facilities for such children, but the amount so paid shall not exceed the cost of constructing minimum school facilities for such children. In no case will provision for such children be made unless they are deemed to be without minimum school facilities.

(20 U.S.C. 634, 639)

§ 114.18 Determination of eligibility under section 14.

(a) The requirements contained in section 14(a)(1) of the Act will be deemed to have been met when one of the following conditions exist:

60-136 0-81--14

(1) The total number of children who reside on Indian lands (for whom the applicant is providing, or upon completion of the school facilities for which provision is made, will provide, free public education, and whose membership in the schools of such applicant has not formed and will not form the basis for payments under other provisions of the Act) is at least 15 and represent at least 33% percent of the total number of children for whom the applicant is providing free public education (such percentage requirement may, however, be waived by the Commissioner under § 114.35);

(2) The Indian lands in the school district of the applicant represent at least 33% percent of the total land area of the school district; or

(3) The applicant is providing, or upon completion of the school facilities for which provision is made will provide, free public education to 100 or more children who reside on Indian lands located outside the local educational agency.

(20 U.S.C. 644(a)(1))

(b) The requirement contained in section 14(a)(4) of the Act will be deemed to have been met when, in accordance with the provisions of paragraph (d) of § 114.1, the applicant does not have available sufficient funds to provide minimum school facilities for at least 95 percent of the total number of children estimated to be in membership in the applicant's schools as of the end of the second year following the end of the increase period for which the application is filed.

(20 U.S.C. 644(a)(4))

(c) The requirement in section 14(b)(1) of the Act will be deemed to have been met when one of the following conditions exist:

(1) The estimated number of children who reside on Indian lands as of the close of the increase period (for whom the applicant is providing, or upon completion of the school facilities for which provision is made, will provide, free public education, and whose membership in the schools of such applicant has not formed and will not form the basis for payments under other provisions of the Act) is at least

15 and represents at least 10 percent of the total number of children for whom the applicant is providing free public education. (Such percentage requirement may, however, be waived by the Commissioner under § 114.36);

(2) The Indian lands in the school district of the applicant represent at least 10 percent of the total land area of such school district; or

(3) The applicant is providing, or upon completion of the school facilities for which provision is made, will provide, free public education to 100 or more children who reside on Indian lands located outside the applicant's school district.

(20 U.S.C. 644(b)(1))

(d) The requirement in section 14(c)(1) of the Act will be deemed to have been met when the following conditions exist:

(1) The total number of children who are inadequately housed by minimum school facilities (for whom the applicant is providing, or upon completion of the school facilities for which provision is made, will provide, free public education, and whose membership in the schools of such applicant has not formed and will not form the basis for payments under other provisions of the Act) is at least 20 and represents at least 33% percent of the total number of children for whom the applicant is providing free public education (such percentage requirement may, however, be waived by the Commissioner under § 114.37); and

(2) The Federal property in the school district of the applicant represents at least 33% percent of the total land area of the school district.

(20 U.S.C. 644(c)(1))

(e) The requirement in section 14(c)(4) of the Act will be deemed to have been met when, in accordance with the provisions of paragraph (d) of § 114.1, the applicant does not have available sufficient funds to provide minimum school facilities for at least 95 percent of the total number of children estimated to be in the applicant's schools as of the end of the second year following the end of the increase period for which the application is filed.

(20 U.S.C. 644(c)(4))