"Institution for neglected children" means, as determined by the SEA, a public or private residential facilityother than a foster home-that is operated primarily for the care of children who have been committed to the institution-or voluntarily placed in the institution under applicable State law-because of the abandonment by, neglect by, or death of parents.

"Parent." (1) The term includes a legal guardian or other person standing in loco parentis.

(2) "In loco parentis" means a person acting in place of a parent or legal guardian, and may include a person such as a grandparent, stepparent, aunt, uncle, older sibling, or other person either

(i) With whom a child lives; or

(ii) Who has been designated by a parent or legal guardian to act in place of the parent or legal guardian regarding all aspects of the child's education. "Preschool children” means children who are

(1) Below the age or grade level at which the LEA provides a free public education; and

(2) Of the age or grade level at which they can benefit from an organized instructional program provided in a school or other educational setting.

"School attendance area." (1) This term means, in relation to a particular public school, the geographic area in which the children who are normally served by that school reside.

(2) If a child's school attendance area cannot be determined on a geographic basis, the child is considered to be in the school attendance area of the school to which the child is assigned or would be assigned if the child were not attending a private school or another public school on a voluntary basis.

(Authority: 20 U.S.C. 2831(a), 2891)

88 200.7-200.9 [Reserved]

Subpart B-How Does a State Apply for and Receive a Grant?

8 200.10 What assurances must a State submit to receive a grant?

(a) A State that wishes to receive funds under this part for projects de

signed to meet the special educational needs of educationally deprived children shall submit to the Secretary, through its SEA, assurances that the SEA

(1) Will meet the requirements in section 435(b) (2) and (5) of the General Education Provisions Act (GEPA) relating to fiscal control and fund accounting procedures;

(2) Will carry out the activities in § 200.35 (evaluation) and §§ 200.37200.38 (school program improvement);

(3) Has on file a program improvement plan that meets the requirements of § 200.37(a); and

(4) Will ensure that its LEAS comply with all applicable statutory and regulatory requirements.

(b) The assurances submitted under paragraph (a) of this section remain in effect for the duration of the SEA's participation in the Chapter 1 LEA Program.

(Authority: 20 U.S.C. 2722(a))

§8 200.11-200.19 [Reserved]

Subpart C-How Does an LEA Apply for and Receive a Subgrant?

§ 200.20 How does an LEA apply for a subgrant?

(a) Contents of an application. An LEA may receive a subgrant under this part for any fiscal year if the LEA has on file with the SEA an application that contains the following:

(1) A description of the procedures to be used to conduct an annual assessment of educational needs that meets the requirements of § 200.31(b). (2) A rank ordering of eligible school attendance areas, including the identification of project areas and the basis for the selection of each project area.

(3) A description of the Chapter 1 project to be conducted, including a budget of proposed expenditures for services to public and private school children for the initial project year.

(4) A description of—

(i) The desired outcomes for children participating in the Chapter 1 project, in terms of basic and more advanced skills that all children are expected to master, that will be a basis

for evaluating the project under §200.35; and

(ii) How the LEA will measure substantial progress toward meeting the desired outcomes.

(5) A description of the services to be provided to

(i) Eligible children enrolled in private elementary and secondary schools to ensure equitable participation of those children in accordance with §§ 200.50-200.55; and

(ii) Children in local institutions for neglected or delinquent children, including children in local correctional institutions.

(6) A description of any innovation projects the LEA proposes to conduct. (7) Data showing that the LEA has maintained fiscal effort in accordance with § 200.41 if those data are not otherwise available to the SEA.

(8) If appropriate, the assurance concerning comparability of services in § 200.43(c)(1)(i).

(9) The assurances required under section 436(b) (2) and (3) of GEPA relating to fiscal control and fund accounting procedures.

(10)(i) Assurances that the LEA's Chapter 1 projects—

(A) Are of sufficient size, scope, and quality to give reasonable promise of substantial progress toward meeting the special educational needs of the children being served;

(B) Are designed and implemented in consultation with teachers (including early childhood professionals, pupil services personnel, and librarians, if appropriate);

(C) Provide for parental involvement in accordance with § 200.34;

(D) Provide for the allocation of time and resources for frequent and regular coordination between Chapter 1 staff and the regular staff to ensure that both the Chapter 1 and regular instructional programs meet the special educational needs of children participating in programs under this part; and

(E) Provide maximum coordination between Chapter 1 services and services provided to address children's handicapping conditions or limited English proficiency; and

(ii) With the least possible paperwork and burden, additional informa

tion an SEA finds necessary to ensure compliance with these assurances.

(b) Development and approval of application. An application must be— (1) Developed in consultation with parents and teachers; and

(2) Approved by the SEA under § 200.21.

(c) Frequency of submission. (1) An LEA shall submit to the SEA an application prior to each project period.

(2) A project period may cover a period of not more than three years.

(d) Annual updating of information in the application. An LEA shall annually update its application by submitting to the SEA

(1) Information on eligible school attendance areas and the selection of project areas required in paragraph (a)(2) of this section;

(2) Data showing that the LEA has maintained fiscal effort in accordance with § 200.41 if those data are not otherwise available to the SEA: and

(3) A budget of proposed expenditures for services to public and private school children under this part for the project year.

(e) Further updating of information in the application. If there are substantial changes in the number or needs of the children to be served or the services to be provided, an LEA shall submit a description of the changes to the SEA.

(Approved by the Office of Management and Budget under control number 18100504)

(Authority: 20 U.S.C. 2721(b), 2722 (b)-(c), 2723, 2728 (a), (c), 2838(c))

[54 FR 21756, May 19. 1989; 54 FR 27793, June 30, 1989, as amended at 54 FR 30737, July 24, 1989]

§ 200.21 Under what conditions does an SEA approve an LEA's application? (a) Standards for approval. An SEA shall approve an LEA's application for a subgrant if

(1) The application meets the requirements in § 200.20; and

(2) The SEA determines that the LEA

(i) Maintained fiscal effort in accordance with § 200.41; or

(ii) Has modified its application to take into account its reduced alloca

(b) Effect of SEA approval. SEA approval of an application under paragraph (a) of this section does not relieve the LEA of its responsibility to comply with all applicable requirements.

(Authority: 20 U.S.C. 2722, 2728(a))

ALLOCATION OF BASIC GRANTS

§ 200.22 How does an SEA allocate funds for basic grants to an LEA?

(a) If the Secretary determines the amount of funds that each LEA in a State is eligible to receive under section 1005 ax2)(A) of the Act, an SEA shall allocate that amount to each

LEA within the State.

determines

(b) If the Secretary county aggregate amounts under section 1005(a)(2)(B) of the Act, the SEA shall allocate those county aggregate amounts to LEAS in accordance with §§ 200.23-200.24.

(Authority: 20 U.S.C. 2711(a))

[54 FR 21756, May 19. 1989; 54 FR 27793, June 30, 1989]

§ 200.23 How does an SEA allocate county aggregate amounts?

Except as provided in § 200.24, an SEA shall allocate county aggregate amounts to LEAS as follows:

(a) Allocations based on children in local institutions for neglected or delinquent children. (1)(i) Except as provided in paragraphs (a)(2), (3), and (4) of this section the SEA shall first allocate to a particular LEA that portion, if any, of the county aggregate amount that is based on the total number of children aged 5 to 17, inclusive, in the LEA's school district who resided in a local institution for neglected or delinquent children-and were not counted under Subpart 3 of Part D of Chapter 1 (programs for neglected or delinquent children operated by State agencies)-for at least 30 consecutive days, at least one day of which was in the month of October of the preceding fiscal year.

(ii) For the purpose of this section, the SEA shall consider children who are in local correctional institutions to

(2) If the SEA determines that the LEA is unable or unwilling to provide for the special educational needs of the children referred to in paragraph (aX1) of this section, the SEA shall

(i) Reduce the LEA's allocation by the amount that is based on those children, including any concentration grant funds generated by those children; and

(ii) Assign that portion of the LEA's allocation to

(A) The SEA if the SEA assumes educational responsibility for those children; or

(B) Another State agency or LEA that agrees to assume educational responsibility for those children.

(3) If no public agency is willing to assume educational responsibility for the children referred to in paragraph (a)(1) of this section, the SEA may not reallocate to any other LEA that portion of the LEA's allocation that is based on those children.

(4) If a local institution for neglected or delinquent children closes and the children are transferred to an institution in the school district of another LEA, the SEA shall adjust the allocations of the two LEAs to reflect the transfer.

(b) Allocations based on the distribution of children from low-income families (1) General rule. (i) After following the procedures in paragraph (a) of this section, the SEA shall allocate the remaining county aggregate amount to LEAS in the county on the basis of the best available data on the number of children from low-income families in the school districts of those LEAS.

(ii) The SEA shall determine the number of children from low-income families in the school districts of the LEAS in the county by using the same measure of low-income throughout the State.

(iii) In accordance with section 1403(a) of the Act, an LEA's allocation under paragraphs (a) and (b)(1)(i) of this section may not be less than 85 percent of the allocation it received for the previous fiscal year.

(2) Special circumstances. The SEA shall adjust the allocations it makes under paragraph (b)(1) of this section

to reflect the following special circumstances:

(i) LEAs in more than one county. If a school district of an LEA overlaps a county boundary, the SEA shall make, on a proportionate basis, a separate allocation to the LEA from the county aggregate amount for each county in which the school district of the LEA is located provided the aggregate number of children from low-income families in the LEA is 10 or more.

(ii) LEAs serving children from another LEA. If an LEA serves a substantial number of children within the same geographic area as another LEA, the SEA may adjust the allocations between the LEAS in a manner the SEA determines will best carry out the purposes of Chapter 1.

(iii) Changes in LEAs. If an LEA's school district is merged or consolidated, or a portion of the district is transferred to another LEA, the SEA may

(A) Adjust the allocations for the affected LEAs to reflect the number of children from low-income families for whom each LEA is providing a free public education; or

(B) Permit an LEA that has submitted an approved application to carry out the project, by itself or in cooperation with another LEA, during the remainder of the fiscal year.

(3) Minimum allocation. The SEA is not required to allocate to an LEA a basic grant of funds under this part generated by fewer than 10 children. (Approved by the Office of Management and Budget under control number 18100060)

(Authority: 20 U.S.C. 2711, 2822-2823)

[54 FR 21756, May 19. 1989; 54 FR 27793, June 30, 1989, as amended at 54 FR 30737, July 24, 1989]

§ 200.24 Are there exceptions to how an SEA allocates county aggregate amounts?

(a) In any State in which a large number of LEAS overlap county boundaries, the SEA may apply to the Secretary for authority to make allocations directly to LEAS without regard to counties.

(b) If an SEA allocates directly to LEAS under paragraph (a) of this section, the SEA shall use the same factors contained in section 1005(c) of the

Act to determine the LEAS' allocations as the Secretary used to compute county aggregate amounts under section 1005(a)(2)(B) of the Act.

(c) An LEA dissatisfied with the determination by the SEA under this section may appeal directly to the Secretary for a final determination.

(Authority: 20 U.S.C. 2711)

ALLOCATION OF CONCENTRATION GRANTS

8 200.25 How does an SEA allocate concentration grants to an LEA?

(a) General rule. (1) Except as provided in paragraph (b) of this section, an SEA shall allocate a county's concentration grant funds only to LEAS

(i) Whose school districts lie, in whole or in part, within the county; and

(ii) That meet the eligibility criteria in § 200.3(c)(1).

(2) In allocating concentration grant funds under paragraph (a) of this section, the SEA shall distribute the funds to each LEA that is eligible to receive those funds in proportion to the current number of children counted for purposes of § 200.23 or § 200.24 in the school district of each LEA compared to the current number of those children in the school districts of all LEAS that are eligible for concentration grants in the county.

(b) Exceptions. (1)(i) An SEA may reserve not more than 2 percent of the amount of concentration grant funds it receives to make direct payments to LEAS that meet the criteria in § 200.3(c)(1) (i) and (iii) but are located in counties that are not eligible under § 200.3(c)(1)(ii).

(ii) If an SEA plans to reserve concentration grant funds under paragraph (b)(1)(i) of this section, the SEA, before allocating any concentration grant funds under paragraph (a) or (b) (2)–(3) of this section, shall—

(A) Determine which LEAS located in ineligible counties are eligible to receive concentration grant funds;

(D) Rank order the LEAS eligible for concentration grant funds that are located in ineligible counties according to the number or percentage of children counted for purposes of § 200.23 or § 200.24 in the preceding fiscal year in each LEA;

(E) Select, in rank order, those LEAS that the SEA plans to provide concentration grant funds; and

(F) Distribute the reserved funds among the selected LEAs in proportion to the current number of children counted for purposes of § 200.23 or § 200.24 in the school district of each LEA compared to the current number of those children in all the school districts of the selected LEAS.

(2) In a county in which no LEA meets the eligibility criteria in § 200.3(c)(1)(iii), an SEA shall

(i) Identify those LEAS in which either the number or percentage of children counted for purposes of § 200.23 or § 200.24 in the preceding fiscal year exceeds the average number or percentage of those children in the county; and

(ii) Allocate concentration grant funds for the county among the LEAS identified in paragraph (b)(2)(i) of this section in proportion to the current number of children counted for purposes of § 200.23 or § 200.24 in the school district of each LEA compared to the current number of those children in all the school districts of those LEAS.

(3) In a State that receives a minimum concentration grant under section 1006(a)(1)(B) of the Act, the SEA shall

(i) Allocate concentration grant funds among LEAS in the State in accordance with the provisions in paragraphs (a) and (b) of this section; or

(ii) Without regard to the counties in which the LEAS are located

(A) Identify those LEAs in which either the number or percentage of children counted for purposes of § 200.23 or § 200.24 in the preceding fiscal year exceeds the average number or percentage of those children in the State; and

(B) Allocate concentration grant funds among the LEAs identified in paragraph (b)(3)(ii)(A) of this section in proportion to the current number

of children counted for purposes of § 200.23 or § 200.24 in the school district of each LEA compared to the current number of those children in all the school districts of all LEAS so identified.

(c) Use of concentration grant funds. (1) An LEA that receives concentration grant funds under this section shall use those funds to carry out activities described in its approved project aplication under § 200.20.

(2) The LEA is not required to account for concentration grant funds separately from basic grant funds.

(Authority: 20 U.S.C. 2712)

[54 FR 21756, May 19. 1989; 54 FR 27793, June 30, 1989]

REALLOCATION

§ 200.26 How does an SEA reallocate funds?

(a) An SEA shall reallocate, on a timely basis, excess Chapter 1 funds provided under §§ 200.22–200.25—

(1) From an LEA that

(i) Is not participating in the Chapter 1 LEA Program;

(ii) Has had its allocation reduced because it failed to meet the maintenance of effort requirements in § 200.41;

(iii) Has carryover funds that exceed the percentage limitation in § 200.46;

or

(iv) Has excess funds for other reasons; or

(2) That the SEA has recovered after determining that an LEA has failed to spend funds received under this part in accordance with applicable law.

(b)(1) An SEA may reallocate excess Chapter 1 funds referred to in paragraph (a) of this section only to LEAS with the greatest need for those funds because of inequities in, or mitigating hardships caused by, application of the allocation formula in section 1005 of the Act.

(2) Factors that may cause inequities in the formula include

(i) An increase since the most recent decennial census, caused by population shifts or changing economic conditions, in the number of children from low-income families.