(2) Funds allotted to States from appropriations under section 102(b) of the Act for each fiscal year for vocational education for the disadvantaged and which are reallotted to other States pursuant to § 102.157; and

(3) Funds allotted to States under part D of the Act.

(b) A use of funds under parts C and D of the Act for grants or contracts for programs or projects shall be the awarding of such grants or contracts by the State board. Otherwise, a use of funds under the Act by a State board or local educational agency shall be determined as that prescribed by State and local laws and regulations which govern the allocation of uses of State and local funds to a particular time period (such as a fiscal year or biennium); or, if there is no State or local law governing a particular use of funds, a basis which is not inconsistent with State and local laws, rules, regulations, and customs. The State plan shall indicate precisely the acts or occurrences necessary to charge the use of funds to a particular time period for personal services, utilities, travel, acquisition, and rental of facilities and equipment, and the construction of facilities. If the State board or local educational agency uses other than a cash basis of accounting, the State plan shall indicate the time period or other factors governing the incurring and liquidating of obligations. If the State board or local educational agency uses an accounting basis in connection with construction which results in the charging of the cost of construction of school facilities to a date prior to that of entering into a construction contract, the State plan shall also indicate within which reasonable period of time after the date of charging the Federal allotment such construction contract must be entered into.

(c) Notwithstanding paragraphs (a) and (b) of this section, any funds allotted to the States to carry out the programs under the Act for any fiscal year, ending prior to July 1, 1973, which are not used prior to the beginning of the fiscal year succeeding the fiscal year for which such funds were appropriated shall remain available for use by State boards, local educational agencies, and State advisory councils during such succeeding fiscal year, provided during such succeeding fiscal year.

[35 F.R. 7334, May 9, 1970, as amended at 35 F.R. 16634, Oct. 27, 1970]

§ 102.124 Application of State rules.

Subject to the provisions and limitations of the Act and regulations in this part, Federal financial participation under the State plan shall be available only for expenditures made in accordance with applicable State and local laws, rules, regulations, and standards governing expenditures by the States and their political subdivisions, or agencies thereof.

§ 102.125 Payments by State boards to local educational agencies.

Payments may be made by the State board to local educational agencies for activities approved under the State plan in installments and in advance or by way of reimbursement with necessary adjustments on account of overpayments or underpayments.

§ 102.126 Proration of costs.

Only costs attributable to the carrying out of the provisions of the State plan are allowable costs. To cover situations where an expenditure is only partly attributable to an eligible purpose or activity under the State plan or where an expenditure is attributable to two or more eligible purposes or activities, each State board and local educational agency shall maintain records, documented on an after-the-fact basis, to substantiate the proration of expenditures for applicable items such as salaries, travel, rent, supplies, equipment, and construction.

§ 102.127 Adjustments.

The State board shall adjust its accounts, records, and reports to reflect refunds, credits, underpayments, or overpayments resulting from Federal or State administrative reviews and audits. Such adjustments shall be set forth in the State's financial reports filed with the Commissioner.

§ 102.128 Federal audits.

Audit agencies representing the Department will audit the State agency's program records available at the State board to determine whether the program funds have been properly accounted for and administered. Audit reports of the participating local educational agencies and the State review and other control procedures will be evaluated to determine the adequacy of information upon which to base the audit findings. Only where the available information is deemed to be inadequate will the auditor arrange, through the State board, to audit the records of the participating local educational agencies.

§ 102.129 Retention of records.

(a) General rule. The State board shall provide for keeping accessible and intact all (1) records identified as to individual program allotments to which they relate supporting claims for Federal grants or relating to the accountability of the State board or any local educational agency participating under the plan for the expenditure of such grants and matching funds; and (2) records supporting compliance with maintenance of effort and other requirements of the Act, the regulations in this part, and the State plan.

(b) Time period. Records referred to in paragraph (a) of this section shall be retained for 3 years after the close of the fiscal year in which the expenditure was made under the State plan; or, if a Federal audit has not occurred within 3 years, (1) for 5 years after the close of the fiscal year in which the expenditure was made under the State plan; or (2) until the State board is notified of the completion of the Federal audit, whichever is earlier.

(c) Questioned expenditures. The records involved in any claim or expenditure which has been questioned by the Federal audit shall be maintained until necessary adjustments have been made and the adjustments have been approved by the Commissioner.

§ 102.130 Disposition of facilities and equipment.

Whenever area vocational education school facilities or items of equipment, in which cost the Federal Government has participated, are no longer used for a purpose permitted under the Act, or are sold and the proceeds from such sale are not used for such a purpose, the Federal Government shall be credited with its proportionate share of the value of such facilities or equipment at the time of such diversion or sale, the value being determined on the basis of the sale price in the case of a bona fide sale or on the fair market value in the case of discontinuance of use or diversion for other than vocational education purposes.

§ 102.131 Inventories.

Each State board and each local educational agency shall maintain inventories of items of equipment acquired by it with funds under the Act, and costing more than $200 per unit. These inventories shall be maintained at least until depreciation of such equipment results in a fair market value of less than $200 per unit or until its disposition in accordance with § 102.130. The records of inventories required by this section shall be subject to the records retention requirements of § 102.129.

§ 102.132 Federal share of expenditures under State plan.

The Federal share of expenditures incurred for the following purposes under the State plan and payable to the States from their allotments shall not exceed

(a) 50 percent of State and local expenditures for State vocational education programs under part B of the Act except that the Federal share shall be:

(1) 100 percent for programs for the disadvantaged in areas of high concentration of youth unemployment and school dropouts under part B of the Act and financed with funds under section 102(b) of the Act; and

(2) 100 percent for all programs under part B of the Act undertaken in the Trust Territory of the Pacific Islands and in American Samoa;

(b) 75 percent of expenditures for State research coordination units under part C of the Act;

(c) 90 percent of expenditures for vocational education research and personnel training programs, developmental, experimental, and pilot programs, and dissemination activities under part C of the Act;

(d) 100 percent of expenditures for exemplary programs and projects under part D of the Act;

(e) 50 percent of expenditures for consumer and homemaking programs under part F of the Act except that the Federal share shall be 90 percent for such programs in economically depressed or high unemployment areas, as determined pursuant to § 102.45;

(f) 100 percent of expenditures for cooperative vocational education programs under part G of the Act; and

(g) 80 percent of expenditures for vocational work-study programs under part H of the Act.

(a) Amount. The non-Federal share of State and local expenditures under the State plan shall be the difference between the Federal share meeting the requirements of § 102.132 and the total expenditures for the purposes for which the Federal share is paid.

(b) Statewide application. The nonFederal share of expenditures under the State plan may be on a statewide basis. It is not necessary that Federal funds be matched by non-Federal funds for each school, class, program, or activity or, in the case of funds allotted under part B, for each of the purposes in section 122(a) of the Act. Only the total expenditures from each allotment to the State (or portion thereof subject to the same Federal share percentage limitation) will be considered in determining the required non-Federal share of such expenditures.

(c) Federal conditions and requirements. The non-Federal share of expenditures under the State plan shall be made only for programs, services, and activities which meet all of the conditions and requirements of the Act, the regulations in this part, and the State plan. This means that every school, class, program, or activity supported in whole or in part by non-Federal funds required to match Federal funds must meet the same conditions and requirements as those supported by Federal funds.

(d) Sources of non-Federal share. (1) Except as provided in subparagraph (2) of this paragraph, the non-Federal share of expenditures under the State plan may come from any source other than Federal assistance for a specific purpose so long as such expenditures are made in furtherance of the purposes of the Act and do not inure to the personal benefit of any donor.

(2) The non-Federal share of expenditures under that part of the State plan relating to part B of the Act may come only from public funds at the State or local level. In addition to tax revenues and appropriated funds, such funds may include funds derived from donations by private organizations or individuals which are deposited in accordance with State or local law to the account of the State board or local educational agency without such conditions or restrictions on their use as would negate their character as public funds.

§ 102.134 Allowable expenditures for State vocational education programs and services.

(a) General. Funds appropriated under section 102(a) of the Act and allotted to States for the purposes of part B of the Act may be applied to expenditures in categories such as the following which are reasonably attributable to the vocational education programs, services, and activities described in § 102.51 (except construction):

(1) Salaries, wages, and other personnel service costs of permanent and temporary staff employees, members of advisory groups and consultants for the performance of services reasonably related to programs, services, and activities under the State plan, including (i) the costs of regular contributions of employers and employees to retirement, workmen's compensation, and other welfare funds, and (ii) payments for leave earned with respect to such services, including sabbatical or educational leave to the extent provided for in paragraph (b) of this section;

(2) Fees, tuition charges, or other payments for the education or training of employees whether or not on educational leave, while attending courses, workshops, conferences, or seminars, approved in advance by the State board for the benefit of programs, services, and activities under the State plan;

(3) Travel and transportation expenses to the extent provided in paragraph (c) of this section;

(4) Acquisition, maintenance (including insurance), and repair of equipment, supplies, teaching aids, and other materials to the extent provided for in paragraph (d) of this section;

(5) Rental of space to the extent provided for in paragraph (e) of this section;

(6) Production and acquisition of printed and published materials, including records, films, tapes, and other media material;

(7) Communications, utilities, and custodial services;

(8) Minor remodeling and alterations in previously completed building space; and

(9) Accident and liability insurance for trainees and employees to the extent that such insurance is otherwise provided for trainees and employees in similar programs and circumstances.

(b) Sabbatical and educational leave. (1) Funds used under the State plan for salaries paid to nonclerical employees under the State plan may include that part of the salary paid for time spent on (i) sabbatical leave, or (ii) eúucational or other leave needed to obtain additional education, training, or experience of benefit to programs, services, and activities under the State plan, provided in either case that such leave is in conformity with the policy of the employing board, agency, or institution applicable also to other employees of similar rank and grade.

(2) The fact that funds are used for the salary of an employee on such leave does not preclude Federal financial participation in the salary of the person employed to replace him, as long as the replacement is otherwise eligible.

(3) In the case of sabbatical leave earned by the employee on the basis of time of service, Federal financial participation will be based on the prorated portion of the employee's time that was given to programs, services, and activities under the State plan during the period in which the leave was earned.

(4) In the case of education or other leave not earned on the basis of time of service, Federal financial participation will be based on the relative benefit of such leave to programs, services, and activities under the State plan. Prorations required under this section will be made in accordance with the principles set forth in § 102.126.

(c) Travel and transportation expenses. Funds under the State plan may be used for travel and transportation expenses necessary for and attributable to programs, services, and activities under the State plan. Such expenses shall be in accordance with State laws and regulations as required in § 102.124, but in no case shall exceed the costs of transportation by common carrier, or in the absence of suitable transportation by common carrier, in excess of reasonable rates established by the State for transportation by official or private conveyance. Included in allowable travel and transportation expenses are the following:

(1) Travel expenses of employees, advisory committee members, and other consultants whose personnel service costs are supported with funds under the State plan;

(2) Travel expenses of members of the State board;

(3) Transportation expenses of prospective teachers enrolled in an approved teacher-training program when they are sent to serve as student teachers in approved vocational education schools or classes so located as to require transportation expense;

(4) Transportation expenses of vocational education students which include only

(i) Transportation for one round trip per semester or shorter period determined by the duration of the program from the student's home to the place where he will reside while enrolled in the program;

(ii) Transportation for one round trip daily between a student's place of residence and the school;

(iii) Transportation between classes in which the student is enrolled;

(iv) Transportation between a school and the place where work experience for students is being provided;

(v) Transportation of students for field work.

(d) Equipment, supplies, teaching aids, and other materials. (1) Funds used for instruction may be expended for the acquisition (by purchase or lease), maintenance, and repair of equipment, supplies, and teaching aids (including reference materials and textbooks to be retained by the local educational agency) used by instructional personnel in teaching, or by their students in learning, in an instructional situation such as a classroom, library, laboratory, shop, or field. Such funds may not be used for supplies to be made into equipment or products to be sold, or to be used by students, teachers, or other persons; except that supplies made into equipment for use under the State plan may be regarded as equipment eligible for Federal financial participation to the same extent as purchased equipment.

(2) Funds under the State plan may also be used for the acquisition (by purchase or lease), maintenance, and repair of office or other equipment, consumable supplies, or other materials which are reasonably attributable to programs, services, and activities under the State plan.

(e) Rental of space. Funds under the State plan may be used for rental of

space (including the cost of utilities and janitorial services) in privately or publicly owned buildings if:

(1) The expenditures for the space are necessary, reasonable, and properly related to the efficient administration of the program;

(2) The State board or local educational agency will receive the benefits of the expenditures during the period of occupancy commensurate with such expenditures;

(3) The amounts paid by the State board or local educational agency are not in excess of comparable rental in a particular locality;

(4) Expenditures represent a current cost to the State board or local educational agency; and

(5) In publicly owned buildings like charges are made to other agencies occupying similar space for similar purposes.

§102.135 Allowable expenditures for construction of area vocational education schools.

(a) Funds appropriated under section 102(a) of the Act and allotted to States for the purposes of part B of the Act may be used for the construction of area vocational education schools undertaken by the State board, or by local educational agencies with the approval of the State board in accordance with the requirements of § 102.44. There can be no Federal financial participation in any expenditures for construction of such school facilities prior to the approval of such construction by the State board except expenditures for the acquisition of land pursuant to subparagraph (3) of this paragraph and expenditures for architectural, engineering, and inspection services pursuant to subparagraph (5) of this paragraph. Such funds may be used for expenditures in the following categories:

(1) Erection of new buildings to the extent they will include such school facilities and initial equipment as defined in § 102.3 (v) (2) (i);

(2) Acquisition, expansion, alteration, and remodeling (as distinguished from the maintenance and repair) of existing buildings to the extent they will include such school facilities and initial equipment as defined in § 102.3(v) (2) (ii);

(3) Acquisition, within 1 year prior to approval of construction by the State board, of the fee, leasehold, or other

interest in land on which there is to be construction of new buildings or expansion of existing buildings;

(4) Site grading and improvement of land on which there is to be construction of new buildings and expansion of existing buildings; and

(5) Architectural, engineering, and inspection services rendered subsequent to the date of site selection.

(b) For the purposes of paragraph (a) of this section, "acquisition" includes all expenses (other than interest and carrying charges on bonds) related to the acquisition of land or school facilities (from sources other than the State board or local educational agency) if such expenses constitute an actual disbursement or transfer of public funds in accordance with usual procedures generally applicable to all State and local agencies and institutions, as provided for in § 102.124.

§ 102.136 Allowable expenditures for vocational education for disadvantaged persons.

Funds appropriated under section 102 (b) of the Act and allotted to States for the purpose of section 122(a) (4) (A) of the Act may be applied to expenditures in categories such as those enumerated in § 102.134 that are reasonably attributable to vocational education programs for disadvantaged persons.

§ 102.137 Allowable expenditures for research and training programs.

Funds appropriated under section 102(a) of the Act and allotted to the States for use by State boards for the purposes of part C of the Act may be applied to expenditures in categories such as those enumerated in § 102.134 that are reasonably attributable to the establishment and operation of State research coordination units, and to programs or projects for which grants or contracts as described in § 102.70 (a) are made.

§ 102.138 Allowable expenditures for exemplary programs and projects. Funds appropriated under section 142 of the Act and allotted to States for use by State boards for the purposes of part D of the Act may be applied to expenditures in categories such as those enumerated in §§ 102.134, 102.141, and 102.142(a) that are reasonably attributable to the exemplary programs or projects for which grants or contracts as described in § 102.76 (a) are made.