drawn down by the State educational agency or transferred to local educational agencies in installments substantially coinciding with the need for such funds based upon the estimated rates of expenditure by such State or local educational agencies.

§ 116.44 Limitation on payments to a State.

No payments by the Commissioner under Title I of the Act will be made to a State for any fiscal year in which the State has taken such payments into consideration in determining the eligibility of a local educational agency for State aid, or in determining the amount of that aid, with respect to the free public education of children in such a way as to penalize the local educational agency in relation to the availability of State or local funds. § 116.45

Limitations on payments to a local educational agency.

(a) No payments to a State under Title I of the Act for any fiscal year may be paid by the State educational agency to a local educational agency unless the State educational agency finds that the combined fiscal effort of that local educational agency and the State with respect to the provision of free public education by that local educational agency for the preceding fiscal year was not less than such a combined fiscal effort for that purpose for the second preceding fiscal year.

(b) For purposes of this section, fiscal effort by a local educational agency shall be measured by the amount of the current expenditures per pupil by the local educational agency other than expenditures from funds derived from Federal sources for which the local educational agency is required to account to the Federal Government directly or through the State educational agency, such as funds under Titles I, II, and III of the Act, Titles III and V of the National Defense Education Act of 1958, and the Economic Opportunity Act of 1964. Expenditures by a State with respect to a local educational agency rather than by such a local educational agency itself shall be deemed to have been maintained at the same level in the preceding fiscal year as in the second preceding fiscal year unless the basis for making such expenditures has been altered or if such expenditures are assumed by such a local educational

agency. In such an event, the actual expenditures of that nature shall be taken into account in both years in determining combined fiscal effort. A combined fiscal effort in the preceding fiscal year shall not be deemed to be a reduction from that in the second preceding fiscal year unless the per pupil expenditure in the preceding fiscal year is less than that in the second preceding fiscal year by more than 5 percent. Any such reduction in fiscal effort by a local educational agency for any fiscal year by more than 5 percent will disqualify a local educational agency unless the local educational agency is able to demonstrate to the satisfaction of the State educational agency that such a reduction was occasioned by an unusual event, such as the removal of a large segment of property from the tax rolls, that could not have been fully anticipated or reasonably compensated for by the local educational agency and that fiscal effort of the local educational agency does not otherwise indicate a diminished fiscal effort. § 116.46 Use of Federal funds and liquidation of obligations by State or local educational agencies.

(a) Federal funds granted under Title I of the Act to State and local educational agencies shall remain available until August 31 following the fiscal year in which such amounts were made available for use by such State and local educational agencies for projects approved during that fiscal year. Grants for construction of school facilities shall remain available for use for that purpose for a reasonable period of time as determined pursuant to § 116.21(c).

(b) Federal funds made available under Title I of the Act to State educational agencies for administration and technical assistance will remain available for such use until the close of the current fiscal year.

(c) For the purposes of this section a use of funds under Title I of the Act by a State or local educational agency will be determined on the basis of documentary evidence of binding commitments for the acquisition of goods or property, for the construction of school facilities, or for the performance of work, or on the basis of a reservation of funds for administrative activities in connection with the completion of project activities such as evaluation and auditing activities, except that the use of funds for personal services other than those for administrative

activities for which such a reservation of funds has been made, for services performed by public utilities, for travel, and for rental of equipment and facilities shall be determined respectively on the basis of the time such services were rendered, such travel was performed, and such rented equipment and facilities were used.

(d) Federal funds under Title I of the Act shall not be available for use with respect to binding commitments (other than those relating to personal services, utility services, travel, or the rental of equipment or facilities) entered into, or with respect to personal services, utility services, travel or the rental of equipment or facilities rendered or performed by or for a State educational agency with respect to administration or technical assistance prior to the effective date of the approval by the Commissioner of the State application for participation, which in no event will be earlier than the date on which it was received by the Commissioner in substantially approvable form and appropriations are made for that purpose.

(e) Federal funds granted to State educational agencies for establishing or improving programs of education under Title I of the Act for migratory children of migratory agricultural workers, and Federal funds distributed to local educational agencies (including State agencies directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) for programs under Title I of the Act, shall not be available with respect to binding commitments (other than those relating to personal services, utility services, travel, or the rental of equipment or facilities) entered into prior to, or with respect to personal services, utility services, travel, or the rental of equipment or facilities rendered or performed prior to, the effective date of the approval by the Commissioner of the State application for participation or (except for commitments or services related to planning projects) prior to the date on which the applicant was notified that the application of the State or local educational agency for a grant with respect to that project was submitted for approval to the State educational agency or the Commissioner in substantially approvable form. Federal funds from two separate

36-099-70-20

fiscal year appropriations are not available for payment with respect to a single such commitment.

(f) Obligations entered into by State and local educational agencies and payable out of funds under Title I of the Act shall be liquidated prior to the end of the fiscal year following the fiscal year in which such funds are made available for use by such agencies unless prior to the end of that following fiscal year the State educational agency determines that the time for so liquidating specific obligations should be extended, extends such time, and notifies the Commissioner of the extension.

[32 F.R. 2742, Feb. 9, 1967, as amended at 33 FR. 17790, Nov. 28, 1968]

§ 116.47

Expenditures by State and local educational agencies.

(a) Amounts granted or distributed to State or local educational agencies for approved projects may be expended by such agencies for such projects in the amounts for which they were approved by the Commissioner or the State educational agency. Amounts for approved projects may, within the limit of the amounts made available to the State or local educational agency for programs or projects, be varied upward or downward by 10 percent of such respective amounts upon the determination by the State or local educational agency that such projects and the program of that agency will continue to meet the requirements of Title I of the Act and the regulations in this part. A variation in excess of 10 percent may be made only with the approval of the Commissioner or the State educational agency which approved the original project.

(b) All proceeds from the sale of property being inventoried pursuant to the provisions of § 116.55 but not less than the fair market value of such property, the net proceeds from the rental of such property, and any income received as the result of the conduct of an approved project shall be credited to the Federal Government.

[32 F.R. 2742, Feb. 9, 1967, as amended at 33 F.R. 17790, Nov. 28, 1968]

§ 116.48 State fiscal control and audit.

(a) The State educational agency shall, for that agency and local educational agencies, provide for such fiscal control and fund accounting procedures as may be necessary for the proper dis

bursement of funds paid to the State and to local educational agencies under Title I of the Act.

(b) All expenditures by local educational agencies or by State educational agencies of Federal funds granted under Title I of the Act shall be audited either by State auditors or by other appropriate auditors. The State educational agencies shall, with due regard for Federal auditing requirements, provide for appropriate audit standards for that purpose. The results of such audits shall be used to substantiate State agency records and shall be made available to Federal auditors. Federal auditors shall be given access to such records or other documents as may be necessary to substantiate the results of such audits. §§ 116.49-116.50

[Reserved]

Subpart F-General Provisions § 116.51 Approval of State applications.

The Commissioner will approve each application by a State, through its State educational agency, to participate in the grant program under Title I of the Act if he determines that the application meets the requirements of section 106(a) in Title I of the Act and the regulations in Subpart D of this part. He will not finally disapprove any State application, or any application by a State educational agency for migratory children of migratory agricultural workers, except after reasonable notice and opportunity for a hearing to the State educational agency with respect to the disapproval of that application.

[33 F.R. 17790, Nov. 28, 1968]

§ 116.52 Withholding by the Commis

sioner.

(a) Whenever the Commissioner, after reasonable notice and opportunity for a

hearing to any State educational

agency, finds that there has been a fallure to comply substantially with any assurance set forth in the application of that State, or in the application of that State educational agency, approved by the Commissioner, for a grant to establish or improve programs of education for migratory children of migratory agricultural workers, he will notify the agency that further payments will not be made to the State under Title I of the Act (or, in his discretion, that the State

educational agency will not make further payments under Title I of the Act to specified local educational agencies affected by the failure) until he is satisfied that there is no longer any such failure to comply. Until the Commissioner is so satisfied, further payments under Title I of the Act will not be made to that State or payments by the State educational agency will be limited to payments to local educational agencies not affected by the failure, as the case may be.

(b) Prior to initiating a hearing under this section, the Commissioner will attempt to resolve any apparent differences between him and the State educational agency regarding the interpretation or application of the provisions of Title I of the Act and the regulations in this part, including any apparent differences with respect to the disposition of matters reported by the State educational agency pursuant to § 116.31 (g). Nothing herein shall be deemed to prevent any State educational agency from seeking the advice of the Commissioner prior to disposing of such matters.

§ 116.53

Allowable expenditures.

(a) Federal funds made available to State and local educational agencies may be used by those agencies for such expenditures as are reasonably necessary for carrying out approved projects.

(b) Federal funds granted to State educational agencies for administration and for technical assistance to local educational agencies with respect to the measurements of educational achievement and evaluation of the effectiveness of projects in meeting the special educational needs of educationally deprived children may be used by those agencies for such expenditures as are reasonably necessary for carrying out those activities.

(c) Federal funds made available under Title I of the Act to local educational agencies and to State educational agencies may be used only for those expenses which are incurred as a result of the grant program under that title. They include expenses such as those for:

(1) Salaries, wages, and other personal service costs of permanent and temporary staff employees and consultants for the performance of services reasonably necessary for the grant program under Title I of the Act, including the costs of regular contributions of em

ployers to retirement, workmen's compensation, and welfare funds, and payments for leave earned with respect to such services;

(2) Communications;
(3) Utilities;

(4) The purchase of consumable supplies, including stationery;

(5) Printing and acquisition of printed and published materials;

(6) Travel and transportation expenses;

(7) Acquisition (by purchase or lease) and maintenance and repair of necessary equipment;

(8) Minor alterations in previously completed building space for use in the program under Title I of the Act;

(9) The rental of office space in privately and publicly owned buildings for use in the administration of the program under Title I of the Act, subject to the following provisions:

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

(ii) The State will receive the benefits of the expenditures during the period of occupancy commensurate with such expenditures;

(iii) The amounts paid are not in excess of comparable rental in the particular locality;

(iv) In the case of a publicly owned building, like charges are made to other State or local agencies occupying similar space for similar purposes;

(10) The acquisition of leasehold and other interests in land necessary for educational agencies to carry out approved projects successfully; and

(11) In exceptional cases, the construction of buildings, and the structural alteration of existing buildings.

(d) The expenditure of funds under Title I of the Act shall not be included in the determination of average per pupil expenditure pursuant to § 116.1(d) or in the determination of fiscal effort pursuant to § 116.45.

(e) None of the funds under Title I of the Act may be used for religious worship or instruction.

(20 U.S.C. 885) [32 F.R. 2742, Feb. 9, 1967, as amended at 33 F.R. 17790, Nov. 28, 1968] § 116.54 Retention of records.

(a) Subject to the provisions of paragraph (c) of § 116.55, each State educational agency and local educational

agency receiving a grant under Title I of the Act shall keep intact and accessible all records relating to such Federal grants or the accountability of the grantee for the expenditure of such grants (1) for 5 years after the close of the fiscal year in which the expenditure was made, or (2) until the State educational agency is notified that such records are not needed for administrative review, whichever is the earlier.

(b) The records involved in any claim or expenditure which has been questioned shall be further maintained until necessary adjustments have been made and such adjustments have been reviewed and approved by the Department of Health, Education, and Welfare. [32 F.R. 2742, Feb. 9, 1967, as amended at 33 FR. 17790, Nov. 28, 1968]

§ 116.55 Inventories of equipment.

(a) Each State and local educational agency shall maintain an inventory of all equipment it has acquired with funds under Title I of the Act and placed in the temporary custody of persons in a private school. Such inventories shall be maintained until the equipment is discharged from such custody and, if costing $100 or more per unit, for the expected useful life of the equipment or until its disposition.

(b) Each State educational agency and each local educational agency shall maintain inventories of all other equipment it has acquired with funds under Title I of the Act and costing $100 or more per unit for the expected useful life of the equipment or until its disposition.

(c) The records of such inventories of equipment shall be retained for a period of one year following the period for which the inventories are required under this section to be maintained.

[32 F.R. 2742, Feb. 9, 1967, as amended at 33 F.R. 17790, Nov. 28, 1968]

§ 116.56 Financial interest of officials. No board or staff member of a State or local educational agency may participate in an administrative decision with respect to a grant program under Title I of the Act if such a decision appears likely to result in any benefit or remuneration, such as a royalty, commission, contingent fee, or brokerage fee, or other benefit to him or any member of his immediate family.

§ 116.57 Copyrights and patents.

(a) If a copyright is obtained on materials produced through a project with financial assistance under Title I of the Act, the Federal Government shall be granted a nonexclusive, irrevocable, royalty-free license to reproduce and publish the material so copyrighted, including the power to sublicense for all governmental purposes.

(b) Any materials of a patentable nature produced through a project with financial assistance under Title I of the Act shall be subject to the provisions of Parts 6 and 8 of this title. [33 F.R. 17790, Nov. 28, 1968]

117.43

117.44

117.45

Subpart F-Payment Procedures
Financial reports.

Payment of funds under Title II of
the Act.

Withholding of funds. 117.46 Reallotment.

AUTHORITY: The provisions of this Part 117 issued under sec. 703, 79 Stat. 57, as renumbered by secs. 201-207, 79 Stat. 36-37, and sec. 161, 80 Stat. 1204, 20 U.S.C. 883. Interpret or apply secs. 701, 703-705, 79 Stat. 55, 57-58, as renumbered by sec. 161, 80 Stat. 1204, 20 U.S.C. 821-827, 881, 883-885.

SOURCE: The provisions of this Part 117 appear at 32 F.R. 2753, Feb. 9, 1967, unless otherwise noted.

§ 117.1

Subpart A-Definitions
Definitions.

As used in this part

(a) "Act" means the Elementary and Secondary Education Act of 1965 (Public Law 89-10), as amended.

(b) "Children" means those persons who are in attendance in elementary or secondary schools of a State which provide education or which comply with State compulsory school attendance laws or are otherwise recognized by some procedure customarily used in the State. The age limits are the permissible ages for attendance at the public elementary and secondary schools of the State, but children does not include persons enrolled in adult education courses, or in courses beyond grade 12.

(c) "Commissioner" means the U.S. Commissioner of Education.

(d) "Elementary school" means a day or residential school which provides elementary education, as determined under State law or as determined by the Department of the Interior or the Department of Defense.

(e) "Fiscal year" means the period beginning on July 1 and ending on the following June 30. (A fiscal year is designated by the calendar year of the ending date.)