Impact Aid Programs, 81477-81494 [2015-32618]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Proposed Rules]
[Pages 81477-81494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32618]


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DEPARTMENT OF EDUCATION

34 CFR Part 222

RIN 1810-AB24
[ED-2015-OESE-0109]


Impact Aid Programs

AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the Impact Aid Program 
regulations issued under title VIII of the Elementary and Secondary 
Education Act of 1965, as amended (ESEA or ``the Act''). The proposed 
regulations govern Impact Aid payments to local educational agencies 
(LEAs). The program, in general, provides assistance for maintenance 
and operations costs to LEAs that are affected by Federal activities. 
These proposed regulations would update, clarify, and improve the 
current regulations.

DATES: We must receive your comments on or before February 16, 2016.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under the help tab at ``How To Use Regulations.gov.''
     Postal Mail, Commercial Delivery, or Hand Delivery: If you 
mail or deliver your comments about these proposed regulations, address 
them to Kristen Walls-Rivas, U.S. Department of Education, 400 Maryland 
Avenue SW., Room 3C103, Washington, DC 20202-6244.
    Privacy Note: The Department's policy for comments received from 
members of the public is to make these submissions available for public 
viewing in their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to include 
in their comments only information that they wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Kristen Walls-Rivas, U.S. Department 
of Education, 400 Maryland Avenue SW., Room 3C103, Washington, DC 
20202-6244. Telephone: (202) 260-3858 or by email: Impact.Aid@ed.gov.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:
    Invitation To Comment: We invite you to submit comments regarding 
these proposed regulations. We specifically invite you to comment on 
the ways in which school districts can collect data for counting 
federally-connected children for Impact Aid purposes, under proposed 
Sec.  222.35; the proposed changes to the Indian policies and 
procedures (IPPs) in Sec. Sec.  222.91 and 222.94-95; and the proposed 
changes to the equalization disparity test in Sec.  222.162. Regarding 
the first of those topics, we invite comment on the following specific 
questions:
     Are there alternative methods for counting federal-
connected children besides the parent-pupil survey form or source check 
collection tools, either in use or that you propose?

[[Page 81478]]

     What types of technical assistance would you like the 
Department to provide to properly educate and inform LEAs on the two 
regulatory methods of data collection, or on other methods?
     Can you propose ways in which online or electronic data 
collection might be used to facilitate the data collection process? 
This may include but is not limited to the electronic collection of 
parent-pupil survey forms and the use of student information systems 
for Impact Aid data collection.
    To ensure that your comments have maximum effect in developing the 
final regulations, we urge you to identify clearly the specific section 
or sections of the proposed regulations that each of your comments 
addresses and to arrange your comments in the same order as the 
proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866 and 13563 and their overall 
requirement of reducing regulatory burden that might result from these 
proposed regulations. Please let us know of any further ways we could 
reduce potential costs or increase potential benefits while preserving 
the effective and efficient administration of the Department's programs 
and activities.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations by accessing Regulations.gov. 
You may also inspect the comments in person at 400 Maryland Avenue SW., 
Washington, DC, between 8:30 a.m. and 4:00 p.m., Washington, DC time, 
Monday through Friday of each week except Federal holidays. Please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.
    Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record: On request we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of accommodation or auxiliary 
aid, please contact the person listed under FOR FURTHER INFORMATION 
CONTACT.

Background

    The Secretary proposes to amend certain regulations in part 222 of 
title 34 of the Code of Federal Regulations (CFR). The regulations in 
34 CFR part 222 pertain to the Impact Aid Program and implement Title 
VIII of the ESEA. The purpose of this regulatory action is to update 
the current regulations in response to statutory changes and related 
issues that have arisen, as many of the regulations for this section 
have not been updated since 1995; to improve clarity and transparency 
regarding Federal program operations; and to improve the LEA's 
application processes to generate a more accurate data collection, 
which will facilitate more timely Impact Aid payments. The Department 
published final technical amendments for this program on June 11, 2015, 
deleting obsolete provisions and incorporating statutory changes that 
did not require notice and comment. These proposed regulations contain 
provisions on which we seek comment from the public.
    Tribal Consultation: Before developing these proposed regulations, 
the Department held two nationally accessible tribal consultation 
teleconferences on July 15, 2015, and July 28, 2015, pursuant to 
Executive Order 13175 (''Consultation and Coordination with Indian 
Tribal Governments''), to solicit tribal input on the Impact Aid 
program regulations broadly, and specifically on the provisions that 
affect LEAs that claim students living on Indian lands. The Impact Aid 
Program announced the consultation teleconferences via the Office of 
Indian Education's listserv on July 2, 2015, and July 14, 2015. During 
the webinars, the attendees discussed a range of topics, including 
Indian lands property verification and data collection, IPPs, and IPP 
waivers. The Impact Aid Program received the most feedback on the 
regulations concerning IPPs, IPP waivers, and remedies for non-
compliance with IPPs.
    There was a concern among many consultation participants that LEAs 
are not implementing IPPs with the degree of seriousness intended by 
the law and Impact Aid program regulations. Commenters wished to see 
LEAs focus more attention on equal participation of Indian students in 
all educational programs, including Advanced Placement courses, sports, 
and other extra-curricular activities. Some participants were concerned 
that LEAs do not provide sufficient time for tribes or parents to 
review data regarding participation of Indian children in the LEAs' 
programs; others stated that some LEAs provide outdated data to tribal 
leaders.
    In addition, participants sought more guidance on the standard for 
meaningful input from tribal officials and parents of Indian children. 
Commenters were further concerned that there is no requirement in the 
current Impact Aid regulations that tribes review and affirm that an 
LEA is in compliance with the content in the IPP before it is submitted 
to the Department for review. Others stated that tribes are not 
receiving copies of IPPs at all. Many commenters felt that some LEAs 
provide tribal leaders and parents of Indian children insufficient 
notice of meetings.
    There was also a general concern among many participants that the 
current remedy for non-compliance with IPPs, the withholding of an 
LEA's Impact Aid payments, is unhelpful, because withholding all funds 
would have a negative effect on Indian children. Others stated that the 
IPP complaint process is highly adversarial; they wished to see an 
intermediate step, such as a requirement that the LEA and tribal 
leaders attend a mediation session before a complaint is submitted to 
the Department. Commenters indicated that tribes would also like to be 
informed when the Department finds that an LEA serving children on the 
tribe's land is out of compliance with the IPP requirements.
    With regard to the current program regulations regarding an LEA's 
ability to submit a waiver from a tribe in lieu of IPPs, commenters 
expressed the concern that tribes may be waiving rights without 
informed knowledge about what they are waiving.
    The Impact Aid Program also heard comments about the verification 
of students living on Indian lands. Participants were concerned that 
LEAs were not providing sufficient time for tribal officials to confirm 
that the students in question resided on Indian land. Participants also 
stated that it would be helpful for them and for the officials 
certifying Indian land to have customized training that focuses on the 
Impact Aid program's requirements.
    The Department considered the views gathered during the tribal 
consultation process in developing these proposed regulations. 
Specifically, proposed provisions regarding IPPs and waivers of IPPs 
(Sec. Sec.  222.91, 222.94, and 222.95) reflect this input.

Applicability of the Every Student Succeeds Act

    On December 10, 2015, the President signed the Every Student 
Succeeds Act (ESSA), Public Law 114-95, 129 Stat. 1802 (2015), which 
amends the Elementary and Secondary Education Act of 1965 (ESEA). The 
ESSA includes Impact Aid amendments (see new title VII of the ESEA, 
formerly title VIII), which take effect starting with fiscal year 2017 
payments. Pub. L . 114-95, Sec.  5(d). These proposed regulations are 
not directly affected by the ESSA. The statutory provisions underlying 
each regulatory provision in this document

[[Page 81479]]

were not affected in a relevant manner by the ESSA. We plan to make any 
conforming references needed, including authority citations, in the 
final regulations. The Department will be considering in the near 
future whether further changes to the Impact Aid regulations are needed 
due to the ESSA.

Summary of Proposed Changes

    These proposed changes would:
     Amend the definition of ``membership'' in Sec.  222.2 to 
clarify that an eligible student in membership must live in the same 
State as the LEA except in certain circumstances.
     Amend Sec. Sec.  222.3 and 222.5 to change the date by 
which an LEA may amend its application from September 30 to June 30 of 
the year preceding the Federal fiscal year for which it seeks 
assistance.
     Amend Sec.  222.22 to reflect a statutory change that 
would include payments in lieu of taxes (PILTs) and revenues from other 
Federal sources in the calculation of compensation from Federal 
activities, for purposes of determining eligibility and payments under 
section 8002 of the ESEA.
     Amend Sec.  222.23 to replace the current provision with a 
new provision that describes how LEAs formerly eligible for section 
8002 grants, that have consolidated with another LEA, are treated with 
respect to section 8002 grant payments.
     Amend Sec.  222.30 to exclude Federal charter school 
startup funds from the analysis of whether Federal funds provide a 
substantial portion of the educational program, for purposes of 
determining an LEA's eligibility.
     Amend Sec.  222.35 to specify certain unusual 
circumstances in which someone other than a parent or legal guardian 
may sign a parent-pupil survey form and to require the use of source 
check forms to document children residing on Indian lands or in low-
rent housing.
     Amend Sec.  222.37 to clarify the options for reporting 
average daily attendance and to make them available to all States.
     Amend Sec.  222.40 to require that an SEA submit the 
rationale for the additional factors selected to identify generally 
comparable districts and describe how those factors affect the cost of 
educating students.
     Amend Sec.  222.91 to add a requirement for an LEA 
claiming children residing on Indian lands to include with its 
application an assurance that the LEA has responded in writing to input 
from the tribes and parents of Indian children received during the IPP 
consultation process, prior to submitting the application for Impact 
Aid.
     Amend Sec.  222.94 to add a requirement that LEAs claiming 
children residing on Indian lands respond in writing to input obtained 
from parents of Indian children and tribal officials during the IPP 
consultation process, disseminate these responses to the parents of 
Indian children and tribal officials prior to submission of the Impact 
Aid application, and provide a copy of the IPPs to the tribe; and 
changing from 60 to 90 days the time period in which an LEA must amend 
its IPPs based on its own determination after obtaining tribal input.
     Amend Sec.  222.95 to allow the Department to withhold all 
or part of the Impact Aid payment from an LEA that is not in compliance 
with the requirements of Sec.  222.94, and changing from 60 to 90 days 
the time within which LEAs must revise IPPs in response to Department 
notification.
     Amend Sec.  222.161 to give the SEA the ability to request 
permission from the Secretary to make estimated State aid payments that 
consider an LEA's Impact Aid payment in the event that the Department 
does not make an equalization determination before the start of an 
SEA's fiscal year.

Significant Proposed Regulations

    We discuss substantive issues under the sections of the proposed 
regulations to which they pertain. Generally, we do not address 
proposed regulatory changes that are technical or otherwise minor in 
effect.

Sec.  222.2 What definitions apply to this part?

Membership

    Statute: Section 8003 of the ESEA provides that payments are based 
on the number of eligible children in average daily attendance in 
schools of the LEA. The definition of ``average daily attendance'' in 
section 9101(1) of the ESEA provides in part that average daily 
membership can be converted to average daily attendance.
    Current Regulations: Paragraph (3) of the current definition of 
``membership'' in Sec.  222.2 excludes four categories of students.
    Proposed Regulation: The proposed regulation adds an additional 
exclusion to paragraph (3) of the definition of ``membership.'' Under 
the proposed provision, LEAs could not claim students who reside in a 
different State, unless the circumstances described in section 8010(c) 
of the Act apply, or unless the student is covered under a formal State 
enrollment or tuition agreement.
    Reasons: LEAs have sometimes attempted to claim children who reside 
in another State but attend school in the LEA. Children who reside in 
one State and attend school in a different State are generally excluded 
from Impact Aid eligibility by the current regulations because eligible 
students must be supported by State aid, and States typically do not 
provide State aid for the education of children who reside in other 
states. The proposed regulation would clarify this rule and provide the 
two exceptions to it: One is statutory (section 8010(c)) and the other 
is a situation in which children are covered under a formal written 
tuition or enrollment agreement between two States.

Parent Employed on Federal Property

    Statute: Under section 8003 of the Act, several categories of 
eligible children include those who resided with a parent who is 
employed on Federal property.
    Current Regulation: Paragraph (1)(i) of the current definition of 
``parent employed on Federal property'' in Sec.  222.2 provides that a 
parent employed on Federal property is a parent who is employed by the 
Federal government and reports to work on Federal property or whose 
place of work is on Federal property.
    Proposed Regulation: The proposed regulation would clarify the 
definition of ``parent employed on Federal property'' by revising 
paragraph (1)(i) so it specifically includes parents employed by the 
Federal government but who report to an alternate duty station, such as 
a telework location, on the survey date.
    Paragraph (1)(ii) would not change; paragraph (1)(iii) would be 
deleted. Finally, paragraph (2) of the definition would be amended to 
further clarify that children whose parent's job includes providing 
services on a Federal property, but who are not Federal employees and 
whose duty station is not on the Federal property, are not eligible to 
be counted for Impact Aid.
    Reason: The Telework Enhancement Act of 2010 has increased the 
number of Federal employees who telework on a regular basis. The 
proposed change to paragraph (1)(i) of the regulation is intended to 
include the children of Federal employees who might otherwise not be 
considered eligible for Impact Aid purposes because they telework. We 
propose deleting the provision in paragraph (1)(iii) because the 
provision is obsolete. LEAs have not used this

[[Page 81480]]

provision since it was effective and the Department does not foresee it 
being needed in the future. We propose the revision to paragraph (2) to 
clarify further that parents who provide services to a Federal 
property, but who are not Federal employees and whose main duty station 
is not located on Federal property, are not eligible under the 
definition of ``parent employed on Federal property.''

Sec.  222.3 How does a local educational agency apply for assistance 
under section 8002 or 8003 of the Act?

    Statute: Section 8005 of the Act governs the submission of 
applications for payments under sections 8002 and 8003 of the Act.
    Current Regulations: The current regulation describes how an LEA 
applies for assistance under sections 8002 and 8003 of the Act. Section 
222.3(b)(2) provides that, under the exceptional circumstances 
described in Sec.  222.3(b)(1), an LEA must file its application either 
60 days following the event or by September 30 of the Federal fiscal 
year preceding the year for which it seeks assistance, whichever comes 
later.
    Proposed Regulations: The proposed regulation would change the 
application deadline in Sec.  222.3(b)(2) for LEAs with exceptional 
circumstances from September 30 to June 30 under section 8002 and 8003.
    Reasons: The proposed regulatory change would make Sec.  
222.3(b)(2) consistent with the proposed changes in Sec.  222.5, in 
which the Department proposes to change the application amendment 
deadline from September 30 to June 30. See the discussion of proposed 
Sec.  222.5 directly below for the reasons for that change.

Sec.  222.5 When may a local educational agency amend its application?

    Statute: Section 8005 of the Act governs the submission of 
applications for payments under sections 8002 and 8003 of the Act.
    Current Regulations: Under Sec.  222.5(a)(2), an LEA may amend its 
application for situations described in Sec.  222.3(b)(1) by September 
30 following the January application deadline. In addition, Sec.  
222.5(b) permits an LEA that did not have data available at the time it 
filed its application, such as after a second membership count, to 
amend its application by September 30.
    Proposed Regulations: The Department proposes to change the 
amendment deadlines in Sec. Sec.  222.5(a)(2) and 222.5(b)(2) from 
September 30 to June 30.
    Reasons: The National Defense Authorization Act (NDAA) of 2013 
mandates that Impact Aid payments be made no later than two years after 
the funds are appropriated. Many LEAs submit their applications in 
January of each year showing incomplete counts of eligible children and 
submit amendments as late as September 30 to provide complete and 
accurate information. This procedure inhibits the Department's ability 
to review the applications and prepare initial payments. A June 30th 
amendment deadline will ensure that the Department receives complete 
application information for the review of data and release of funds in 
a timely manner.

Sec.  222.22 How does the Secretary treat compensation from Federal 
activities for purposes of determining eligibility and payment?

    Statute: Section 8002(a) of the Act provides that an LEA is not 
eligible for a payment under section 8002 if it is substantially 
compensated for the loss in revenue resulting from Federal ownership of 
land. Compensation is measured by increases in revenue from the conduct 
of Federal activities, but the statute does not define ``substantial 
compensation.'' Section 8002(b) contains a maximum payment provision 
that takes into account the amount of revenue received by the LEA from 
activities conducted on Federal property; those revenues specifically 
include payments received from any Federal agency other than the 
Department or education-related payments from the Department of Defense 
(DOD).
    Current Regulation: For purposes of determining an LEA's 
eligibility and maximum payment under section 8002, the current 
regulations provide in Sec.  222.22 that an LEA is substantially 
compensated if its other Federal revenue exceeds its maximum payment 
amount under Section 8002. In Sec.  222.22(d) the regulation excludes 
from ``other Federal revenue'' only payments from the DOD.
    Proposed Regulation: Proposed Sec.  222.22(b)(1) would specifically 
include payments in lieu of taxes (PILTS) received from any other 
Federal agencies in the amount of revenue received by the LEA from 
activities conducted on Federal property, for purposes of determining 
an LEA's eligibility for, and amount of, payment under section 8002 of 
the Act.
    Reasons: This proposed revision would conform with the statutory 
requirements for calculating the revenue received by an LEA, in 
determining both eligibility and the maximum payment under section 8002 
of the Act. The proposed regulation would specify that PILTs, which are 
payments from other Federal agencies, are part of revenues considered 
for eligibility and maximum payment purposes. In addition, by 
including, in proposed paragraph (b)(1), payments received by any other 
Federal agency, that means we do not take into account Federal funds 
from the Department, consistent with the statute and with current 
Department practice.

Sec.  222.23 How are consolidated local educational agencies treated 
for the purposes of eligibility and payment under section 8002?

    Statute: Section 8002(g) of the Act contains provisions granting 
eligibility to certain districts that consolidated from two or more 
former districts prior to 1995. The Consolidated Appropriations Act of 
2014 (Pub. L. 113-76) amended this provision to also permit LEAs that 
consolidated after 2005 to receive a section 8002 foundation payment if 
one of the former districts was eligible for section 8002 funds for the 
fiscal year prior to consolidation.
    Current Regulation: There is no current regulation regarding the 
eligibility of consolidated districts. The current regulation at Sec.  
222.23 contains the previous formula for calculating a section 8002 
payment under statutory provisions that have been replaced.
    Proposed Regulation: We propose to remove Sec.  222.23 in its 
entirety and replace it with the proposed regulatory language regarding 
consolidated districts. The new regulation would clarify which 
consolidated LEAs are eligible, what documentation is necessary to 
prove eligibility, and how foundation payments are calculated for 
consolidated districts when more than one former district qualifies. 
The regulation would also clarify that consolidated LEAs remain 
eligible for section 8002 funds as long as the amount of Federal land 
in at least one former LEA upon which eligibility is based (i.e. the 
LEA that was eligible for Section 8002 funds in the prior fiscal year) 
comprises at least 10 percent of the taxable value of the former LEA at 
the time of Federal acquisition.
    Reasons: The 2014 statutory change created a new category of school 
districts that qualify for section 8002 grant funds, and this 
regulation would clarify the eligibility and payment for these 
districts, as well as for districts eligible under the previous 
statutory provision. The proposed regulation will require that the 
consolidated district still contains, within the boundaries of

[[Page 81481]]

one of its former districts, Federal property that comprises at least 
10 percent of the taxable value of the former LEA at the time of 
Federal acquisition. This is to ensure that an LEA will not receive 
both tax revenue and section 8002 funds for the same property, if a 
significant amount of previously-eligible Federal land within the 
boundaries of the former district has been sold and is no longer 
prohibited from being taxed.
    The regulation would also provide that an eligible consolidated LEA 
receives only a foundation payment and not any ``remaining funds.'' 
Remaining funds require submission of data by LEAs to calculate a 
maximum payment, and a consolidated LEA's payment is based only on the 
last payment received by a former LEA, so there is no documentation 
available with which to calculate a maximum payment. The provisions 
that are proposed in this section reflect current Department practice.

Sec.  222.24 How does a local educational agency that has multiple tax 
rates for real property classifications derive a single real property 
tax rate?

    Statute: Section 8002(b)(2) of the Act requires the Secretary to 
use an LEA's current levied real property tax rate for current 
expenditures in calculating an LEA's maximum payment amount under 
section 8002 of the Act.
    Current Regulation: None.
    Proposed Regulation: This proposed new regulation would describe 
how an LEA with multiple tax rates for different property 
classifications derives a single tax rate. Essentially, the LEA divides 
the total revenues it received from property taxes by the assessed 
valuation of the property in the LEA.
    Reasons: The statutory formula requires a single tax rate for an 
LEA. Taxing jurisdictions often set different tax rates for each type 
of property, resulting in multiple tax rates within an LEA. This 
provision would mandate a standardized arithmetic procedure to 
determine a single tax rate under section 8002, and reflects current 
practice.

Sec.  222.30 What is ``free public education''?

    Statute: Section 8013(6) of the Act defines ``free public 
education.'' The definition includes the requirement that education 
must be at public expense, under public supervision and direction, and 
without tuition charge.
    Current Regulations: The current regulatory definition of ``free 
public education'' in Sec.  222.30(2)(ii) states in relevant part that 
education is provided at public expense if Federal funds, other than 
Impact Aid funds, do not constitute a substantial portion of the 
educational program.
    Proposed Regulation: The proposed regulation would exclude Federal 
charter school startup grant funds (Title V, part B, subpart I) from 
the calculation of the Federal portion that funds an LEA's educational 
program. The regulation would also add a provision clarifying that the 
Secretary analyzes whether a substantial portion of the education 
program is funded by Federal sources by comparing the LEA's finances to 
other LEAs in the State.
    Reasons: Under section 8003(a) of the Act, an LEA can only claim 
students for Impact Aid if the LEA provides a free public education to 
those students. Section 8003 Impact Aid funds are intended to replace 
lost local revenues due to Federal activity. Under the current 
regulations, if Federal funds are providing for the educational program 
(e.g. schools funded by the Department of Interior), then the lack of 
local tax revenue is already being compensated by another Federal 
source. As a result, the LEA is not eligible for Impact Aid for those 
students.
    The proposed regulation would also exclude charter school startup 
funds from the calculation of whether Federal funds provide a 
substantial portion of an LEA's program. These funds are generally 
available in the first two years of a charter school's operations; they 
can be used for a host of purposes other than current expenditures, and 
they are not long-term funding sources.
    Under the proposed regulation, in analyzing the portion of the 
education program that is funded by Federal sources, the Department 
would compare the LEA's finances to other LEAs in the State to account 
for the circumstances unique to the State.

Sec.  222.32 What information does the Secretary use to determine a 
local educational agency's basic support payment?

    Statute: Section 8005(b)(1) of the Act specifies that an LEA must 
submit an application that includes information for the Secretary to be 
able to determine the LEA's eligibility and payment amount.
    Current Regulations: Section 222.32(b) requires that an LEA must 
submit its federally connected membership based on a student count 
described in Sec. Sec.  222.33 through 222.35 of the regulations.
    Proposed Regulations: The proposed regulation would clarify that 
the LEA must submit its federally connected membership count in its 
timely and complete annual application.
    Reasons: The proposed regulation would clarify that each LEA must 
include an accurate membership count in its application by the deadline 
of January 31. In recent years, the Department's Impact Aid field 
reviews of LEAs have revealed that some applicants submitted estimated 
data on the section 8003 Impact Aid application, and then relied on the 
amendment process to provide the actual counted data. Accurate 
application information must be submitted before the program can review 
the application and calculate payments. If LEAs submit estimated data 
and rely on the amendment process to provide accurate data, the Impact 
Aid Program is delayed in processing payments to all districts.

Sec.  222.33 When must an applicant make its membership count?

    Statute: Section 8003 of the Act does not directly address when an 
LEA must make its membership count. The Secretary has the authority to 
regulate when an LEA calculates its membership under 20 U.S.C. 1221-e 
and 3474.
    Current Regulations: The current regulation refers to the ``first 
or only'' membership count.
    Proposed Regulations: The proposed regulation would remove the 
reference to the first or only membership count. Additionally, the 
proposed regulation would clarify that the data from the only 
membership count must be complete by the application deadline.
    Reasons: The proposed regulatory change in Sec.  222.34 (see below) 
would eliminate the current regulatory option of a second membership 
count. That change in turn would eliminate the need to reference first 
or only membership count, since there would be only one count. The 
proposed language in Sec.  222.33(c) stating that the LEA must complete 
its membership count by the application deadline supports the proposed 
changes in Sec.  222.32 that would help to ensure submission of a 
complete application by the deadline.

Sec.  222.34 If an applicant makes a second membership count, when must 
that count be made?

    Statute: Section 8003 of the Act does not directly address when an 
LEA must make its membership count. The Secretary has the authority to 
regulate when an LEA calculates its membership under 20 U.S.C. 1221-e 
and 3474.
    Current Regulations: The current regulation describes the process 
for undertaking a second membership survey.

[[Page 81482]]

    Proposed Regulations: The proposed regulations would delete this 
provision and reserve the section for future use.
    Reasons: This provision has become obsolete over time. The second 
membership survey provision has not been used since 2012 and at that 
time it was used by only two LEAs. This change would streamline the 
review process to support timely and accurate payments. Allowing second 
membership surveys late in the year causes delays in the review process 
and potentially delays payment. The Department has determined that the 
impact of removing this provision is low and the benefits outweigh any 
foreseen consequence.

Sec.  222.35 How does a local educational agency count the membership 
of its federally connected children?

    Statute: Section 8005(b)(1) of the Act specifies that an LEA must 
submit an application that includes information for the Secretary to be 
able to determine the LEA's eligibility and payment amount.
    Current Regulations: The current regulation describes the 
information required on a parent-pupil survey form and on a source 
check form.
    Proposed Regulations: The proposed regulation would reorganize 
paragraph (a) regarding parent-pupil survey forms, to first list the 
information required for all types of children, followed by specific 
requirements for certain categories of children. In addition, proposed 
paragraph (a)(4) would clarify for LEAs the rare situations in which an 
LEA may accept a parent-pupil survey form that is not signed by a 
parent or legal guardian. The regulation also would clarify that the 
Department will not accept parent-pupil survey forms signed by an 
employee of the LEA, unless the employee is a parent of a child 
attending school within the LEA, signing their own child's form.
    Proposed paragraph (b) pertains to source check documents, which 
are a data collection alternative to the parent-pupil survey form. The 
proposed regulations would require source check documents for children 
residing on Indian lands and for children residing in eligible low-rent 
housing. Under the proposed regulation, the source check forms must 
contain sufficient information to verify the eligibility of both the 
Federal property and the individual children claimed on the source 
check form.
    Reasons: With regard to parent-pupil survey forms, recent Impact 
Aid field reviews of LEAs have revealed instances of LEA staff members 
signing forms for parents or verifying the information by phone, 
without a parent signature on the form. The proposed revisions to 
paragraph (a) would clarify the requirements and provide examples of 
the few unusual situations in which someone other than a parent may 
sign a parent-pupil survey form. In no instance would an employee of 
the LEA be permitted to sign a form for a parent. These proposed 
changes reflect current Department policy.
    Paragraph (b) would be revised to require that LEAs claiming 
children who reside on Indian lands, and children who reside in low-
rent housing, use a source check document to obtain the data required 
to determine the children's eligibility. The parent-pupil survey form 
is insufficient to document the different types of eligible Indian 
lands property and low-rent housing property and confirm that 
property's eligibility, because parents are unlikely to have the 
necessary documentation or information. In order to ensure accurate and 
timely eligibility and payment determinations, LEAs need to reach out 
directly to the government entities (e.g. for Indian lands--tribal 
officials, Bureau of Indian Affairs (BIA) staff, and/or tax assessors; 
for low-rent housing--the U.S. Department of Housing and Urban 
Development (HUD) and/or local housing authorities) who have access to 
the records that document the legal status of a specific parcel of land 
and can certify that the status is consistent with the Federal property 
definition.

Sec.  222.37 How does the Secretary calculate the average daily 
attendance of federally connected children?

    Statute: Section 8003 the Act requires that payments be based on 
the average daily attendance (ADA) of federally connected children. 
Section 9101(1) of the Act defines ADA.
    Current Regulations: The current regulations describe the process 
for calculating ADA for LEAs that reside in States that use actual ADA 
when determining State aid, and for LEAs that reside in States where 
something other than ADA is used to calculate State aid. The current 
regulations also describe other options for LEAs or States if the State 
does not use ADA for determining State aid, including the use of a 
State average attendance ratio (which has informally been referred to 
as a ``negotiated ratio,''), sampling, or the use of data similar to 
ADA.
    Proposed Regulations: The proposed regulation would reorganize this 
section so that the options for LEAs, the States, and the Secretary are 
grouped together by actor. The proposed regulation would allow any 
State to ask the Secretary for a State average attendance ratio. In 
addition, in cases where there is reliable public data, the Secretary 
may calculate a State average attendance ratio.
    Reasons: Use of a State average attendance ratio typically benefits 
most LEAs and those that do not benefit have the option to submit 
actual attendance data to obtain a higher payment. Currently, 35 States 
have a State average attendance ratio. The proposed change would give 
LEAs in all States the opportunity to use a State average attendance 
ratio and alternative options for obtaining an attendance rate. This 
would reduce the LEAs' data collection burden and provide more options 
for each LEA to obtain a higher attendance rate, which may typically 
result in a higher Impact Aid payment.

Sec.  222.40 What procedures does a State educational agency use for 
certain local educational agencies to determine generally comparable 
local educational agencies using additional factors, for local 
contribution rate purposes?

    Statute: Section 8003(b)(1) of the Act contains the formula for 
determining an LEA's maximum payment amount, based in part on 
calculating each LEA's local contribution rate (LCR). The statute 
states that the LCR is to be determined under the procedures set forth 
in the Department's regulations as they were in effect on January 1, 
1994.
    Current Regulations: The current regulations in Sec.  222.39-Sec.  
222.41 provide that an LEA's LCR is determined by identifying generally 
comparable districts. Under Sec.  222.40, for certain qualifying LEAs, 
the SEA may use additional factors in identifying the generally 
comparable LEAs for the purpose of calculating and certifying an LCR. 
Section 222.40(d) provides that if an SEA proposes to use a special 
additional factor to select a group of generally comparable districts 
(GCDs) to support a higher LCR for a specific LEA, it must be a 
generally accepted, objectively defined factor that affects the LEA's 
cost of educating its students.
    Proposed Regulations: The proposed regulation would clarify that 
SEAs that wish to use special additional factors to identify GCDs for 
purposes of calculating a higher LCR for certain LEAs must provide a 
rationale and explain how the selected factor or factors affect the 
cost of education. The proposed regulation does not substantively alter 
the manner in which the LCRs are calculated.
    Reasons: To determine GCDs for local contribution rate purposes, an 
SEA may use a special additional factor only if that factor has an 
impact on the cost of

[[Page 81483]]

education for an LEA. In the past, the Department has had to contact 
the SEA to learn the rationale for a specific factor or factors after 
the GCD data were submitted. Requiring the rationale as part of the 
submission process would help ensure timely and accurate payments to 
the LEAs in the State.

Sec.  222.62 How are local educational agencies determined eligible 
under section 8003(b)(2)?

    Statute: Section 8003(b)(2) of the Act contains the requirements 
for eligibility and payment for heavily impacted districts.
    Current Regulations: The current regulation does not address how an 
applicant may apply for heavily impacted funding under section 
8003(b)(2) on the Impact Aid application.
    Proposed Regulations: The proposed regulation would require that an 
LEA that wishes to be considered for a heavily impacted payment under 
section 8003(b)(2) submit with its initial application the information 
needed to establish eligibility.
    Reasons: The majority of applicants that request assistance under 
section 8003(b)(2) do not meet the eligibility requirements for these 
payments, nor have they investigated the eligibility requirements and 
learned whether they may qualify. Requiring the LEAs to submit the 
supporting documentation that indicates potential eligibility would 
facilitate faster determinations of eligibility and payment for heavily 
impacted districts. This proposed regulatory change would be 
complemented by a change to the application forms to require submission 
of a brief document certified by the SEA to trigger a Department review 
for section 8003(b)(2) eligibility.

Sec.  222.91 What requirements must a local educational agency meet to 
receive a payment under section 8003 of the Act for children residing 
on Indian lands?

    Statute: Section 8004 of the Act requires that an LEA claiming 
children who reside on Indian lands must establish IPPs. As an 
alternative, the LEA may obtain a waiver of this requirement from each 
tribe indicating that the tribe is satisfied with the educational 
services the LEA is providing to the children of the tribe.
    Current Regulations: The current regulation requires that an LEA 
claiming children residing on Indian lands submit with its application 
its IPPs and a signed assurance attesting that the LEA developed its 
IPPs in consultation with the parents of Indian children and tribal 
officials. The current regulation provides that in the alternative, an 
LEA can submit documentation that the LEA has received a waiver that 
complies with section 8004(c) of the Act.
    Proposed Regulations: The proposed regulation would require an 
assurance that the LEA has provided a written response to the comments, 
recommendations, and concerns expressed by the parents of children who 
reside on Indian lands and tribal officials during the IPP consultation 
process. In addition, the proposed regulation would require that an IPP 
waiver submitted with an application include a written statement from 
an appropriate tribal official stating that the tribe has received a 
copy and understands the requirements of Sec. Sec.  222.91 and 222.94 
that are being waived and that it is satisfied with the LEA's 
educational services provided to the tribe's students. An LEA would be 
required to submit its waiver at the time it submits its application.
    Reasons: The Department's tribal consultations yielded many 
concerns from the Indian community that LEAs are not engaging in 
meaningful consultation with the tribes and families, or providing 
meaningful opportunities for engagement and communication. One of the 
concerns most frequently voiced was that LEAs have not considered the 
tribes or parents' comments, concerns or recommendations when creating 
the educational program or making decisions about school-sponsored 
activities.
    The Department has taken these concerns into account and proposes 
to add to the Impact Aid section 8003 application package an assurance 
that the LEA has provided written responses to comments, concerns, or 
recommendations received through the IPP consultation process. This 
assurance does not mean that an LEA must adopt any specific 
recommendations; rather it will require the LEAs to explain in writing 
to the parents of Indian children and tribal officials why the LEA is 
not adopting the recommendations, or how it will implement or take into 
consideration those recommendations or concerns.
    With regard to a waiver of IPPs, the proposed rules would clarify 
that a waiver must be voluntary and must reflect an understanding on 
the part of the tribal official of the rights being waived. The 
statutory option of a waiver was intended to be used only when a tribe 
is truly satisfied with an LEA's program and services, and not as a way 
for an LEA to avoid the IPP process. The proposed regulation would 
require that a waiver be submitted with the application and not later; 
in the past when the Department has reviewed IPPs, some LEAs have 
submitted a waiver as an application amendment in order to avoid 
amending the IPPs, under circumstances that call into question whether 
the waiver has been knowing and voluntary on the part of the tribe.
    Based on the discussions during the consultation process, the 
Department is also considering administrative options, such as 
providing additional technical assistance to better support and assist 
LEAs, parents, and tribal officials as they negotiate the IPP 
consultation process.

Sec.  222.94 What provisions must be included in a local educational 
agency's Indian policies and procedures?

    Statute: Section 8004 of the Act states that an LEA claiming 
children residing on Indian lands must establish and maintain a set of 
IPPs in order to receive funds under section 8003 of the Act. The IPPs 
are intended to ensure: That Indian children participate on an equal 
basis in the educational program and activities sponsored by the LEA; 
that parents of Indian children and tribal leaders are given the 
opportunity to present their views on programs and activities and make 
recommendations; that the LEA consults with parents of Indian children 
and tribal leaders in the planning and development of the educational 
program and activities; and that the LEA disseminates evaluations, 
reports and program plans to the parents of Indian children and the 
tribes.
    Current Regulations: The current regulation identifies eight 
specific procedures than an LEA must describe in its IPPs. The IPPs 
must describe how the LEA: (1) Gives tribal officials and parents of 
Indian children the opportunity to comment on whether or not Indian 
children participate on an equal basis with non-Indian children in the 
LEA's educational program and school sponsored activities; (2) assesses 
whether or not Indian children participate on an equal basis; (3) 
modifies, if necessary, its education program to ensure equal 
participation for Indian children; (4) disseminates relevant 
documentation related to the education programs to parents of Indian 
children and tribes with sufficient time to allow the tribes and 
parents of Indian children an opportunity to review the documentation 
and make informed recommendations on the needs of the Indian children; 
(5) gathers information concerning Indian views in general and related 
to the frequency, location, and time of meetings; (6) notifies Indian

[[Page 81484]]

parents and tribes of the time and location of meetings; (7) consults 
and involves tribal officials and parents of Indian children in the 
planning and development phase of the LEA's education programs and 
activities; and (8) modifies the IPPs, if necessary.
    Proposed Regulations: The proposed regulation would reorganize the 
information from Sec. Sec.  222.94 and 222.95(e)-(g); it would also add 
a requirement that the LEA respond in writing, at least annually, to 
the comments and recommendations of the tribes or parents of Indian 
children and disseminate these responses to the tribes and parents 
prior to the submission of the IPPs to the Department. The regulation 
would also require the LEA to provide a copy of the IPPs to the tribe 
annually. Additionally, the proposed regulation would move paragraphs 
(e)-(g) of section Sec.  222.95 to the revised Sec.  222.94. Under 
those relocated provisions, proposed Sec.  222.94(c)(3) would change 
the number of days that an LEA has to amend its IPPs, if it determines 
that they are not in compliance, from 60 days to 90 days.
    Reasons: The proposed provisions of Sec. Sec.  222.94 and 
222.95(e)-(g) are reorganized for clarity and order. Proposed Sec.  
222.94 would emphasize that the LEA must consult with, and actively 
solicit involvement from, the local tribes and parents of Indian 
children in the development of both the IPPs and the educational 
program and activities.
    Proposed Sec.  222.94(b)(5) would add a requirement that the LEA 
provide written responses at least annually to comments and 
recommendations received through the IPP consultation process. This 
proposal stems from one of the most frequent concerns raised during the 
Indian consultation; that many LEAs have not considered the tribes or 
parents' comments, concerns or recommendations when creating the 
educational program or making decisions about school-sponsored 
activities. This provision would not require that an LEA adopt any 
specific recommendations; rather it would require the LEA to explain in 
writing to the parents of Indian children and tribal officials why the 
LEA is not adopting the recommendations, or how it will implement or 
take into consideration those recommendations or concerns. The LEA's 
response would demonstrate how the feedback has been thoughtfully 
considered in the development of the educational program, and would be 
reflected in the IPPs. Optimally, the outcome of the IPP consultation 
process would be a document that demonstrates to the tribe that the LEA 
has heard and acknowledged the feedback from the parents of Indian 
children and tribes.
    In addition, we learned during consultations that tribes do not 
always have access to a copy of the IPPs; thus the revisions would 
require the LEA to provide a copy of the IPPs to the tribe annually.
    Because LEAs are often required by State or local law to have the 
school board (or equivalent) certify any changes to the IPPs, extending 
the time that an LEA has to revise its IPPs from 60 to 90 days would 
allow time for both the revision and any necessary procedural steps. 
The provisions in proposed paragraph (c) were moved from current Sec.  
222.95(e)-(g) to keep the provisions related to the creation, content, 
and revision of IPPs under one regulatory section.

Sec.  222.95 How are Indian policies and procedures reviewed to ensure 
compliance with the requirements in section 8004(a) of the Act?

    Statute: Section 8004(e) of the Act provides for a complaint 
procedure for tribes with regard to IPPs. Under certain circumstances 
following a hearing and a determination by the Secretary, if the 
Department finds that the LEA is still in noncompliance with the 
provisions of section 8004, the Department must withhold Impact Aid 
payments to the LEA until the LEA undertakes the required remedy, 
unless the withholding would substantially disrupt the LEA's education 
programs.
    Current Regulations: The current regulation describes how the 
Department reviews and evaluates IPPs to ensure compliance with 
Sec. Sec.  222.91 and 222.94. It provides that the Secretary will 
review IPPs periodically to ensure compliance. If an LEA is not in 
compliance, the Secretary will notify the LEA in writing of the 
deficiencies.
    Current Sec.  222.95(d) states that the Department may withhold all 
payments if the LEA fails to bring its IPPs into compliance within 60 
days of receipt of the Department's formal notification.
    Proposed Regulations: Proposed Sec.  222.95(c) would change the 
number of days that an LEA has to remedy issues of noncompliance from 
60 days to 90 days. The proposed regulation would also change the 
provision on withholding all section 8003 payments to the option to 
withhold all or part of the section 8003 payments. Finally, the 
proposed regulations would move paragraphs (e)-(g) of current Sec.  
222.95 into proposed Sec.  222.94.
    Reasons: LEAs often need to have the school board (or equivalent 
body) certify any changes to the IPPs. Extending the time that an LEA 
has to revise its IPPs following Department notification from 60 to 90 
days would allow time for both the revision and school board 
certification.
    Under the current withholding provisions, if an LEA does not 
correct deficiencies in its IPPs within 60 days, the Department's only 
sanction is to withhold all section 8003 payments, unless the 
withholding would substantially disrupt the LEA's education programs. 
As many LEAs rely heavily on Impact Aid funds, withholding all section 
8003 funds would prevent some LEAs from being able to provide an 
adequate educational program to the students they serve. The 
Secretary's intent in proposing to amend this regulation is to adopt 
clear, fair, and flexible withholding procedures in the event a 
withholding action is required. We learned through the tribal 
consultation that tribes favor incentives to encourage LEAs to bring 
deficient IPPs into compliance with the law in a way that does not 
interrupt the educational services provided to their children. The 
proposed withholding procedure balances the need for compliance with 
the interests of ensuring the LEA has the resources needed to provide 
adequate educational services to the children they serve.
    Regarding the comments we heard requesting a more informal process 
for resolving disputes about IPPs, we fully encourage school districts 
and tribes to use alternative methods of dispute resolution, such as 
mediation or arbitration. This could obviate the need for a formal 
complaint to the Department, and nothing in the proposed or current 
regulations would prevent such a step. In addition, a party, once it 
has initiated a formal complaint, may request the Department to stay 
the proceedings to pursue mediation, and the Department would do so if 
both parties agree. In addition, the Impact Aid Program is willing to 
provide technical assistance to both parties to facilitate a common 
understanding before a formal complaint is launched.

Subpart K--Determinations Under Section 8009 of the Act

Section 222.161 How is State aid treated under Section 8009 of the Act?

    Statute: Section 8009(d)(2) of the Act prohibits States from taking 
Impact Aid into consideration as local revenues when making State aid 
payments before the Secretary certifies that the State's program of aid 
is equalized.
    Current Regulations: The current regulation in Sec.  222.161(a)(5) 
repeats the statutory prohibition against a State taking Impact Aid 
into consideration

[[Page 81485]]

before being certified. The current regulation does not specifically 
address the data needed from a State that was not previously certified 
but that is now requesting certification under section 8009 of the Act.
    Proposed Regulations: Under the proposed regulations, if the 
Secretary has not issued a certification before the beginning of the 
State's fiscal year, the State may request permission from the 
Secretary to make estimated State aid payments that take Impact Aid 
into account as local revenue. Before granting permission, the 
Secretary would consider whether the Secretary certified the State as 
equalized for the prior fiscal year, and whether the State revised its 
State aid program since the date of the prior year's certification. 
Also, the State must assure that if the State does not meet the 
disparity standard, the State will reimburse each LEA the amount 
deducted, within 60 days of the Department's determination.
    The proposed regulations would also clarify that if the Secretary 
has not previously certified a State's program of State aid and the 
State wishes to apply for certification, the State would submit 
projected data showing that it would meet the disparity standard if it 
were authorized to deduct Impact Aid under section 8009 of the Act.
    Reasons: The Department interprets section 8009 of the Act to 
prohibit States from making final, as opposed to estimated, State aid 
payments that consider eligible Impact Aid funds as local effort 
without the Secretary's certification. In instances where a State or 
LEA requests a pre-determination hearing under Sec.  222.164(b)(5) and 
the issues presented are complex, the Secretary may not be able to make 
a final determination as to whether the State is equalized before the 
beginning of the State's fiscal year. In these instances, States should 
have the option of including estimated eligible Impact Aid revenues as 
local effort when making estimated State aid payments, rather than 
removing these Impact Aid revenues from consideration. Because 
certifications apply to an entire State fiscal year, if a State were 
required to remove Impact Aid revenues from estimated State aid 
payments and the Secretary later determines that the State is 
equalized, the State would need to adjust all State aid payments and 
Impact Aid recipients would have to return funds to the State. This 
could seriously destabilize an LEA's budget. On the other hand, if the 
State begins by taking eligible Impact Aid payments into account in its 
estimated State aid payments, as these regulations propose, and the 
Secretary does not certify the State as equalized, the State would have 
to increase each Impact Aid LEA's State aid within 60 days. The effect 
on the LEA's budget would then be positive, rather than negative. Even 
though the State would have to come up with additional funds, States 
are not required to request this advanced permission to make estimated 
payments that consider Impact Aid.

Definition of Current Expenditures

    Statute: Section 8013(4) of the Act defines ``current 
expenditures.''
    Current Regulations: The current regulation in paragraph (c) 
repeats the definition of ``current expenditures'' in the Act, and 
lists specific exclusions from that definition for the purposes of 
section 8009, such as expenditures from revenues designated for special 
cost differentials.
    Proposed Regulations: The Department proposes that the regulatory 
definition for ``current expenditures'' refer to, rather than repeat, 
the definition in section 8013(4) of the Act, and then list the 
additional exclusion for purposes of section 8009 of the Act. We would 
remove the exclusions in current subparagraphs (1) through (5) as part 
of the reorganized definition.
    Reasons: Referring applicants to the statutory definition of 
``current expenditures'' will reduce redundancy. Subparagraphs (1) and 
(2) are contained in the statutory definition and thus are not needed. 
The intent of paragraphs (3) and (4), regarding special cost 
differentials, will be more clearly addressed by proposed Sec.  
222.162, which would define the four acceptable methods of calculating 
cost differentials for purposes of the disparity test. The substance of 
the current subparagraph (5) is combined into the text of the proposed 
regulation for clarity.

Section 222.162 What disparity standard must a State meet in order to 
be certified and how are disparities in current expenditures or 
revenues per pupil measured?

    Statute: Section 8009(b)(2)(B)(ii) of the Act states that when 
certifying a State as equalized, the Secretary may take into account 
the extent to which a State aid program reflects additional costs of 
providing education in areas with special geographical factors or for 
students with particular needs, such as students with disabilities.
    Current Regulations: The current regulations explain the data a 
State should submit to the Secretary as evidence that its State aid 
program is equalized. The regulations identify the types of ``special 
cost differentials'' a State may account for when calculating per-pupil 
expenditures or revenues for each LEA, but do not explain specifically 
how these differentials are to be considered.
    Proposed Regulations: The Department proposes that a State may 
account for special cost differentials in one of four ways: The 
inclusion method on a revenue basis, the inclusion method on an 
expenditure basis, the exclusion method on a revenue basis, or the 
exclusion method on an expenditure basis. Using the inclusion method, a 
State would divide an LEA's revenue or total current expenditures by a 
pupil count that includes weights associated with special cost 
differentials. Using the exclusion method, a State would take an LEA's 
total revenues or current expenditures, subtract those revenues or 
expenditures associated with special cost differentials, and divide by 
the LEA's unweighted pupil count.
    Reasons: The current regulations are not clear regarding how States 
should treat special cost differentials in submitting data under the 
disparity test. The Department's longstanding interpretation of section 
8009 of the Act and Sec.  222.162 of the regulations is that there are 
four methods available, logically and mathematically, for treating 
those cost differentials. Explicitly defining the four options for 
taking special cost differentials into account would clarify the 
Department's long-standing interpretation of the statute, and avoid 
potential controversy over data submission under section 8009.

Section 222.164 What procedures does the Secretary follow in making a 
determination under section 8009?

    Statute: Section 8009(c)(2) of the Act states that before making a 
determination under section 8009, the Secretary shall afford the State, 
and LEAs in the State, an opportunity to present their views.
    Current Regulations: Under the current regulations, the party 
initiating the proceeding under section 8009 shall notify the State and 
all LEAs in the State of their right to present views before the 
Secretary makes a determination.
    Proposed Regulations: The Department proposes that the Secretary, 
rather than a State or LEA initiating a proceeding, notify the State 
and all LEAs in the State of their right to present their views before 
the Secretary makes a determination under section 8009.
    Reasons: It is more practical for the Secretary to send the 
notification that the State and all LEAs in the State may present 
views, because the Department coordinates the predetermination

[[Page 81486]]

hearing, and the request for the informal hearing needs to be made to 
the Department. In current practice, the Department notifies all LEAs 
in the State when the State submits written notice of its intention to 
consider Impact Aid payments in providing State aid to LEAs, and at 
that time gives instructions for requesting a predetermination hearing.

Executive Orders 12866 and 13563

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and, therefore, subject to 
the requirements of the Executive order and subject to review by the 
Office of Management and Budget (OMB). Section 3(f) of Executive Order 
12866 defines a ``significant regulatory action'' as an action likely 
to result in a rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This proposed regulatory action is not a significant regulatory 
action subject to review by OMB under section 3(f) of Executive Order 
12866.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency--
    (1) Propose or adopt regulations only upon a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing these proposed regulations only on a reasoned 
determination that their benefits would justify their costs. In 
choosing among alternative regulatory approaches, we selected those 
approaches that would maximize net benefits. Based on the analysis that 
follows, the Department believes that these proposed regulations are 
consistent with the principles in Executive Order 13563.
    We also have determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    In accordance with both Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs associated 
with this regulatory action are those resulting from statutory 
requirements and those we have determined as necessary for 
administering the Department's programs and activities. Upon review of 
the costs to the LEA, we have determined there is minimal financial or 
resource burden associated with these changes, and that the net impact 
of the changes would be a reduction in burden hours. Certain affected 
LEAs would need to respond in writing to comments from tribes and 
parents of Indian students, but this time burden would be balanced by 
other proposed regulatory changes that reduce the burden, which result 
in a net decrease of both burden hours and cost associated with these 
regulations.

Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example, 
Sec.  222.2 What definitions apply to this part?)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand? To send any comments that concern how the 
Department could make these proposed regulations easier to understand, 
see the instructions in the ADDRESSES section.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities.
    The U.S. Small Business Administration Size Standards define 
institutions as ``small entities'' if they are for-profit or nonprofit 
institutions with total annual revenue below $5,000,000 or if they are 
institutions controlled by governmental entities with populations below 
50,000. These proposed regulations would affect LEAs that meet this 
definition; therefore, these proposed regulations would affect small 
entities, but they would not have a significant economic impact on 
these entities.
    The proposed regulations would benefit both small and large 
institutions, including those that qualify as small entities, by 
removing the paperwork burden for reporting average daily attendance, 
reducing the burden for collection of data for the LEAs reporting 
children residing on Indian lands and low-rent housing. Multiple 
children can

[[Page 81487]]

be verified on one form instead of one form per child. Thus, small 
entities would experience regulatory relief and a positive economic 
impact as a result of these proposed regulations.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department provides the general public and Federal agencies 
with an opportunity to comment on proposed and continuing collections 
of information in accordance with the Paperwork Reduction Act of 1995 
(PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public 
understands the Department's collection instructions, respondents can 
provide the requested data in the desired format, reporting burden 
(time and financial resources) is minimized, collection instruments are 
clearly understood, and the Department can properly assess the impact 
of collection requirements on respondents.
    Sections 222.35, 222.37, 222.40, 222.62, and 222.91 contain 
information collection requirements. Under the PRA the Department has 
submitted a copy of these sections to OMB for its review.
    A Federal agency may not conduct or sponsor a collection of 
information unless OMB approves the collection under the PRA and the 
corresponding information collection instrument displays a currently 
valid OMB control number. Notwithstanding any other provision of law, 
no person is required to comply with, or is subject to penalty for 
failure to comply with, a collection of information if the collection 
instrument does not display a currently valid OMB control number.
    In the final regulations we will display the control number 
assigned by OMB to any information collection requirement proposed in 
this NPRM and adopted in the final regulations.
    The Department currently collects information from LEA applicants 
for the Impact Aid program using a program-specific grant application 
package (OMB Control Number 1810-0687). The application package, and 
some information grantees are required to submit, would change as a 
result of the proposed regulations.
    We estimate the total burden for the collection of information 
through the application package to be 104,720 hours. Based on past 
experience with this program, we estimate that a total of 1,264 
applications would be received annually for the grant program. We 
estimate that it would take each applicant 82.8 hours to complete the 
application package, including time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. The 
proposed changes to the regulations would change the burden hours for 
this collection by -35,959.

Collection of Information

Section 222.35

    The proposed regulations would require that LEAs claiming children 
who reside on Indian lands, and children who reside in low-rent 
housing, use a source check document to obtain the data required to 
determine the children's eligibility. The current burden hour 
estimation includes 500,000 parent respondents for the parent pupil 
survey form estimating 15 minutes per form for a total burden hours of 
125,000 burden hours. The new provision would reduce the total number 
of parent respondents to 355,000 because the 145,000 children residing 
on Indian lands or low rent housing will no longer be surveyed using 
the parent pupil survey form. The burden hours for this category would 
reduce to 88,750 total burden hours. This is a reduction of 36,250 
burden hours.
    The 145,000 children are distributed across approximately 500 LEAs. 
The previous burden hour calculation included 500 LEAs at an average of 
3 hours for source checks per LEA, resulting in 1,500 total burden 
hours. Under the proposed regulation, the number of LEAs would increase 
to 1,000 LEAs increasing the burden hours to 3,000 for source checks, 
an increase of 1,500 burden hours. The net change in burden hours 
between parent pupil survey forms and source checks is a decrease of -
34,750 burden hours.
    The program has also reduced the average number of hours per LEA to 
submit its application from 10 hours to 9 hours due to enhancements in 
the e-Application reporting system. This adjustment decreases the 
burden hours by -1,264, which results in a total decrease in this 
section of -36,014 burden hours.

Section 222.37

    Under existing regulations, the burden estimation of hours is 900 
LEAs taking 20 minutes each to report ADA for a total of 300 hours 
total burden. Since the last estimation of burden hours, the number of 
LEAs that are required to submit this data has reduced and will reduce 
again to zero under the proposed regulations. An LEA may exercise the 
option to report ADA in order to try and increase its attendance rate 
above the State average. We estimate that approximately 100 LEAs may 
use this option and the amount of time would be 5 minutes to report the 
data as it is readily available and accessible to the LEA. The entire 
estimated hours for all applicants would be an insignificant 8.3 total 
hours for this component.

Section 222.40

    Proposed Sec.  222.40 would require SEAs that opt to use special 
additional factors for the selection of GCDs to provide a rationale 
demonstrating how the special factors selected impact the cost of 
education.
    In the past 10 years (2006-2016) there are 14 SEAs that have used 
the GCD provision. In those 10 years, only one SEA has used the special 
additional factors provision. The SEA already submits the data, they 
are simply now providing a very brief narrative justification. At a 
maximum, this should only take 20 minutes to complete as the majority 
of the work is already accounted for in the burden hour calculation. As 
a result, there is essentially no increase for this provision.

Section 222.62

    The burden hours associated with this activity have already been 
factored into the active data collection total burden hours; there is 
no increase to the burden hour calculation.

Section 222.94

    The proposed regulatory provision would require LEAs claiming 
children residing on Indian lands to respond in writing to comments, 
recommendations, and concerns from the parents of Indian children and 
tribal officials. There is an associated increase with this requirement 
for the LEA. There are approximately 800 LEAs that are required to 
comply with this new requirement. We estimate 1.3 hours for the 
completion of this requirement, which would result in an increase of 
1,040 total burden hours.

Burden Hour Estimates for the Impact Aid Section 8003 Information 
Collection Package

    The Impact Aid Program is extending the existing and approved 1810-
0687, and renewing its section 8003 application package with this 
notice. The following charts identify the changes from the current 
information collection with the proposed substantive changes to this 
information collection. Some of the changes in burden hours are a 
result of the proposed regulations, while others are the result of more 
accurate numbers of

[[Page 81488]]

impacted LEAs and to account for system enhancements that make 
reporting easier. The activities associated directly with the changes 
proposed in this notice have been denoted with an asterisk. Table 1 
provides a summary of the total burden hours associated with completing 
an Impact Aid application. Table 2 breaks down the hours associated 
with the completion of tables 1-5 of the Impact Aid application for 
reporting an applicant's federally-connected children. All applicants 
must complete at least one of these tables to be eligible to receive 
funding. Table 3 breaks down the burden hours associated with 
supplemental information that some or all Impact Aid applicants must 
submit with their applications. Table 4 shows the dollar change 
associated with the changes in the burden hours. For more complete 
information on burden hours and the justifications, please refer to the 
Information Collection Request (ICR).

    Table 1--Summary of Burden Hours To Submit a Complete Impact Aid
                           Application Package
------------------------------------------------------------------------
                                                         Estimated total
                                          Total annual    annual burden
  By regulatory section or subsection     burden hours     hours under
                                         under current     the proposed
                                          regulations      regulations
------------------------------------------------------------------------
34 CFR 222.35, 34 CFR 222.50-52,              139,140          103,126
 Tables 1-5...........................
34 CFR 222.37, Table 6................          1,264              100
34 CFR 222.53, Table 7................            217              217
34 CFR 222.141-143, Table 8...........              5                5
Reporting Construction Expenditures...             40               40
Housing Official Certification Form...             13                5
Indian Policies and Procedures (IPPs).              0              187
IPP Responses. *                                    0            1,040
                                       ---------------------------------
    Total.............................        140,679          104,720
Number of LEAs........................          1,265            1,264
Average Hours Per LEA (total divided              111.2             82.8
 by number of LEAs)...................
------------------------------------------------------------------------
* Denotes changes directly associated with the proposed regulatory
  changes.


                         Table 2--Reporting Numbers of Federally-Connected Children on Tables 1-5 of the Impact Aid Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Current est.    Proposed est.
                      Task                           number          number       Average hours    Total hours                 Explanation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parent-pupil surveys *.........................         500,000         355,000            0.25          88,750  Assumes 355,000 federally-connected
                                                                                                                  children identified through a survey
                                                                                                                  form completed by a parent. The number
                                                                                                                  is reduced due to new regulations
                                                                                                                  requiring source check forms for
                                                                                                                  children residing on Indian lands or
                                                                                                                  children residing on eligible low rent
                                                                                                                  housing.
Source check with Federal official to document              500            1000            3              3,000  Assumes 3 hours verify information on a
 children living on Federal property (LEAs). *                                                                    source check.
Collecting and organizing data to report on               1,265           1,264            9             11,376  Assumes time to complete and organize
 Tables 1-5 in the Application (LEAs).                                                                            survey/source check data on federally-
                                                                                                                  connected children averages nine
                                                                                                                  hours.
                                                --------------------------------------------------------------------------------------------------------
    Total Current..............................  ..............  ..............  ..............         103,126
                                                --------------------------------------------------------------------------------------------------------
    Total Previous.............................  ..............  ..............  ..............         139,140
Change.........................................  ..............  ..............  ..............         -36,014
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes changes directly associated with the proposed regulatory changes.


                      Table 3--Additional Reporting Tasks and Supplemental Information on Tables 6-10 of the Impact Aid Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Current est.    Proposed est.
                      Task                           number          number       Average hours    Total hours                 Explanation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting enrollment and attendance data on               1,264             100            1                100  The proposed regulations would reduce
 Table 6 (LEAs). *                                                                                                the number even further to
                                                                                                                  approximately 100 LEAs who will have a
                                                                                                                  higher attendance rate than the State
                                                                                                                  average.

[[Page 81489]]

 
Collecting and reporting expenditure data for               869             868             .25             217  This assumes that an average of 868
 federally-connected children with disabilities                                                                   LEAs received a payment for children
 on Table 7 (LEAs).                                                                                               with disabilities in the previous year
                                                                                                                  and is required by law to report
                                                                                                                  expenditures for children with
                                                                                                                  disabilities for the prior year.
Reporting children educated in federally-owned                5               5            1                  5  Assumes LEAs maintain data on children
 school buildings on Table 8 (LEAs).                                                                              housed in the small number of schools
                                                                                                                  owned by ED but operated by LEAs.
Reporting expenditures of Section 8007 funds on             159             159            0.25              40  Assumes that the LEAs eligible to
 Table 10 (LEAs).                                                                                                 receive these funds have ready access
                                                                                                                  to financial reports to retrieve and
                                                                                                                  report these data.
Indian Policies and Procedures (IPPs)..........             625             625            0.3              187  The LEA does not have to collect any
                                                                                                                  new information to meet this
                                                                                                                  requirement.
IPP Response *.................................               0             800            1.3            1,040  This assumes some LEAs may have to
                                                                                                                  respond to more than one tribe.
Contact Form for Housing Undergoing Renovation               10              10            0                  0  The time associated is too small to
 or Rebuilding.                                                                                                   calculate (<5 minutes per applicant).
Housing Official Certification Form............              10              10             .50               5  Amount of time for the housing official
                                                                                                                  to estimate the number of school-age
                                                                                                                  children that would have resided in
                                                                                                                  the housing had it not been
                                                                                                                  unavailable due to renovation or
                                                                                                                  rebuilding.
                                                --------------------------------------------------------------------------------------------------------
    Total Current..............................  ..............  ..............  ..............           1,594
                                                --------------------------------------------------------------------------------------------------------
    Total Previous.............................  ..............  ..............  ..............           1,529
Change.........................................  ..............  ..............  ..............              65
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Denotes changes directly associated with the proposed regulatory changes.


                              Table 4--Estimation of Annualized Cost to Applicants
----------------------------------------------------------------------------------------------------------------
                                                     Hours per                       Number of
                   Respondent                        response     Rate  ($/hour)    respondents        Cost
----------------------------------------------------------------------------------------------------------------
Parent Respondents *............................             .25              10         355,000        $887,500
LEA Respondents.................................            9                 15           1,264         170,640
                                                 ---------------------------------------------------------------
    Total Cost..................................  ..............  ..............  ..............       1,058,140
Prior Cost Estimate.............................  ..............  ..............  ..............       1,443,992
Cost Change.....................................  ..............  ..............  ..............        -385,852
----------------------------------------------------------------------------------------------------------------
* Denotes changes directly associated with the proposed regulatory changes.

    We have prepared an ICR for these information collection 
requirements. If you want to review and comment on the ICR, please 
follow these instructions:
    In preparing your comments you may want to review the ICR, 
including the supporting materials, in www.regulations.gov by using the 
Docket ID number specified in this notice. This proposed collection is 
identified as proposed collection 1810-0687.
    We consider your comments on this proposed collection of 
information in--
     Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques.
    Between 30 and 60 days after publication of this document in the 
Federal Register, OMB is required to make a decision concerning the 
collection of information contained in these proposed regulations. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives your comments on this ICR by January 
29, 2016. This does not affect the deadline for your comments to us on 
the proposed regulations.
    When commenting on the ICR for these proposed regulations, please 
specify the Docket ID number and indicate ``Information Collection 
Comments'' on the top of your comments.
    Written requests for information or comments submitted by postal 
mail or delivery related to the information collection requirements 
should be addressed to the Director of the Information Collection 
Clearance

[[Page 81490]]

Division, U.S. Department of Education, 400 Maryland Avenue SW., 
Mailstop L-OM-2E319LBJ, Room 2E115, Washington, DC 20202-4537.

Intergovernmental Review

    This program is not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the person listed under FOR 
FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register and the 
Code of Federal Regulations is available via the Federal Digital System 
at: www.gpo.gov/fdsys. At this site you can view this document, as well 
as all other documents of this Department published in the Federal 
Register, in text or Adobe Portable Document Format (PDF). To use PDF 
you must have Adobe Acrobat Reader, which is available free at the 
site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department. (Catalog of Federal Domestic Assistance Number 
84.041 Impact Aid)

List of Subjects in 34 CFR Part 222

    Administrative practice and procedure, Education of individuals 
with disabilities, Elementary and secondary education, Federally 
affected areas, Grant programs--education, Indians--education, 
Reporting and recordkeeping requirements, School construction.

    Dated: December 22, 2015.
Ann Whalen,
Delegated the authority to perform the functions and duties of 
Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Assistant Secretary 
for Elementary and Secondary Education proposes to amend part 222 of 
title 34 of the Code of Federal Regulations as follows:

PART 222--IMPACT AID PROGRAM

0
1. The authority citation for part 222 continues to read as follows:

    Authority: 20 U.S.C. 7701-7714, unless otherwise noted.

0
2. Section 222.2 is amended in paragraph (c) by:
0
A. Revising paragraph (3)(iv) under the definition of ``Membership'', 
and adding paragraph (3)(v).
0
B. Revising the definition of ``Parent employed on Federal property''.
    The revisions and addition read as follows:


Sec.  222.2  What definitions apply to this part?

* * * * *
    (c) * * *
    Membership means the following:
    (3) * * *
    (iv) Attend the schools of the applicant LEA under a tuition 
arrangement with another LEA that is responsible for providing them a 
free public education; or
    (v) Reside in a State other than the State in which the LEA is 
located, unless the student is covered by the provisions of--
    (A) Section 8010(c) of the Act; or
    (B) A formal State tuition or enrollment agreement.
* * * * *
    Parent employed on Federal property. (1) The term means:
    (i) An employee of the Federal Government who reports to work on, 
or whose place of work is located on, Federal property, including a 
federal employee who reports to an alternative duty station on the 
survey date, but whose regular duty station is on Federal property.
    (ii) A person not employed by the Federal Government but who spends 
more than 50 percent of his or her working time on Federal property 
(whether as an employee or self-employed) when engaged in farming, 
grazing, lumbering, mining, or other operations that are authorized by 
the Federal Government, through a lease or other arrangement, to be 
carried out entirely or partly on Federal property.
    (2) Except as provided in paragraph (1)(ii) of this definition, the 
term does not include a person who is not employed by the Federal 
government and reports to work at a location not on Federal property, 
even though the individual provides services to operations or 
activities authorized to be carried out on Federal property.

(Authority: 20 U.S.C. 7703)

* * * * *


Sec.  222.3  [Amended]

0
3. Section 222.3 is amended by removing the phrase ``September 30'' in 
paragraph (b)(2) introductory text and adding in its place ``June 30''.
0
4. Section 222.5 is amended by revising paragraphs (a)(2) and (b)(1) 
and (2) to read as follows:


Sec.  222.5  When may a local educational agency amend its application?

    (a) * * *
    (2) By June 30 of the Federal fiscal year preceding the fiscal year 
for which the LEA seeks assistance.
    (b) * * *
    (1) Those data were not available at the time the LEA filed its 
application and are acceptable to the Secretary; and
    (2) The LEA submits a written request to the Secretary with a copy 
to its SEA no later than June 30 of the Federal fiscal year preceding 
the fiscal year for which the LEA seeks assistance.
* * * * *
0
5. Section 222.22 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  222.22  How does the Secretary treat compensation from Federal 
activities for purposes of determining eligibility and payments?

* * * * *
    (b) * * *
    (1) The LEA received revenue during the preceding fiscal year, 
including payments in lieu of taxes (PILOTS or PILTs) and other 
payments received from any other Federal Department or agency, 
generated directly from the eligible Federal property or activities in 
or on that property; and
* * * * *
0
6. Section 222.23 is revised to read as follows:


Sec.  222.23  How are consolidated LEAs treated for the purposes of 
eligibility and payment under section 8002?

    (a) Eligibility. An LEA formed by the consolidation of one or more 
LEAs is eligible for section 8002 funds, notwithstanding section 
222.21(a)(1), if--
    (1) The consolidation occurred prior to fiscal year 1995 or after 
fiscal year 2005; and
    (2) At least one of the former LEAs included in the consolidation:
    (i) Was eligible for section 8002 funds in the fiscal year prior to 
the consolidation; and
    (ii) Currently contains Federal property that meets the 
requirements of 222.21(a) within the boundaries of the former LEA or 
LEAs.
    (b) Documentation required. In the first year of application 
following the consolidation, an LEA that meets the requirements of 
paragraph (a) must submit evidence that it meets the requirements of 
paragraphs (a)(1) and (a)(2)(ii).
    (c) Basis for foundation payment. (1) The foundation payment for a 
consolidated district is based on the total section 8002 payment for 
the last

[[Page 81491]]

fiscal year for which the former LEA received payment. When more than 
one former LEA qualifies under paragraph (a)(2), the payments for the 
last fiscal year for which the former LEAs received payment are added 
together to calculate the foundation basis.
    (2) Consolidated LEAs receive only a foundation payment and do not 
receive a payment from any remaining funds.

(Authority: 20 U.S.C. 7702(g) and Pub. L. 113-76)


0
7. Section 222.24 is added to read as follows:


Sec.  222.24  How does a local educational agency that has multiple tax 
rates for real property classifications derive a single real property 
tax rate?

    An LEA that has multiple tax rates for real property 
classifications derives a single tax rate for the purposes of 
determining its Section 8002 maximum payment by dividing the total 
revenues for current expenditures it received from local real property 
taxes by the total taxable value of real property located within the 
boundaries of the LEA. These data are from the fiscal year prior to the 
fiscal year in which the applicant seeks assistance.

(Authority: 20 U.S.C. 7702)


0
8. Section 222.30 is amended in the definition of ``free public 
education'' by revising paragraph (2)(ii) to read as follows:


Sec.  222.30  What is ``free public education''?

* * * * *
    (2) * * *
    (ii) Federal funds, other than Impact Aid funds and charter school 
startup funds (Title V, part B, subpart I of the Act), do not provide a 
substantial portion of the educational program, in relation to other 
LEAs in the State, as determined by the Secretary.
* * * * *


Sec.  222.32  [Amended]

0
9. Section 222.32 is amended in paragraph (b) by adding the phrase 
``timely and complete'' after the first instance of ``its''.
0
10. Section 222.33 is amended by:
0
A. Revising the section heading.
0
B. Removing the phrase ``the first'' in paragraph (a)(1) and adding in 
its place ``its''.
0
C. Adding paragraph (c).
    The revision and addition reads as follows:


Sec.  222.33  When must an applicant make its membership count?

* * * * *
    (c) The data resulting from the count in paragraph (b) must be 
complete by the application deadline.
* * * * *


Sec.  222.34  [Removed and Reserved]

0
10. Section 222.34 is removed and reserved.
0
11. Section 222.35 is amended by revising paragraphs (a)(1) and (2), 
adding paragraphs (a)(3) and (4), and revising paragraph (b) to read as 
follows:


Sec.  222.35  How does a local educational agency count the membership 
of its federally connected children?

* * * * *
    (a) * * *
    (1) The applicant shall conduct a parent-pupil survey by providing 
a form to a parent of each pupil enrolled in the LEA to substantiate 
the pupil's place of residence and the parent's place of employment.
    (2) A parent-pupil survey form must include the following:
    (i) Pupil enrollment information (this information may also be 
obtained from school records), including--
    (A) Name of pupil;
    (B) Date of birth of the pupil; and
    (C) Name of public school and grade of the pupil.
    (ii) Pupil residence information, including:
    (A) The complete address of the pupil's residence, or other 
acceptable location information for that residence, such as a complete 
legal description, a complete U.S. Geological Survey number, or 
complete property tract or parcel number; and
    (B) If the pupil's residence is on Federal property, the name of 
the Federal facility.
    (3) If any of the following circumstances apply, the parent-pupil 
survey form must also include the following:
    (i) If the parent is employed on Federal property, except for a 
parent who is a member of the uniformed services on active duty, parent 
employment information, including--
    (A) Name (as it appears on the employer's payroll record) of the 
parent (mother, father, legal guardian or other person standing in loco 
parentis) who is employed on Federal property and with whom the pupil 
resides; and
    (B) Name of employer, name and complete address of the Federal 
property on which the parent is employed (or other acceptable location 
information, such as a complete legal description).
    (ii) If the parent is a member of the uniformed services on active 
duty, the name, rank, and branch of service of that parent.
    (iii) If the parent is both an official of, and accredited by a 
foreign government, and a foreign military officer, the name, rank, and 
country of service.
    (iv) If the parent is a civilian employed on a Federal vessel, the 
name of the vessel, hull number, homeport, and name of the controlling 
agency.
    (4)(i) Every parent-pupil survey form must include the signature of 
the parent supplying the information and the date of such signature, 
except as provided in paragraph (a)(4)(ii) of this section.
    (ii) An LEA may accept an unsigned parent-pupil survey form, or a 
parent-pupil survey form that is signed by a person other than a 
parent, only under unusual circumstances. In those instances, the 
parent-pupil survey form must show why the parent did not sign the 
survey form, and when, how, and from whom the residence and employment 
information was obtained. Unusual circumstances may include, but are 
not limited to:
    (A) A pupil who, on the survey date, resided with a person without 
full legal guardianship of the child while the pupil's parent or 
parents were deployed for military duty. In this case, the person with 
whom the child is residing may sign the parent-pupil survey form.
    (B) A pupil who, on the survey date, was a ward of the juvenile 
justice system. In this case, an administrator of the institution where 
the pupil was held on the survey date may sign the parent-pupil survey 
form.
    (C) A pupil who, on the survey date, was an emancipated youth may 
sign his or her own parent-pupil survey form.
    (D) A pupil who, on the survey date, was at least 18 years old but 
who was not past the 12th grade may sign his or her own parent-pupil 
survey form.
    (iii) The Department does not accept a parent pupil survey form 
signed by an employee of the school district who is not the student's 
mother, father, legal guardian or other person standing in loco 
parentis.
    (b) Source check. A source check is a type of survey tool that 
groups children being claimed on the Impact Aid application by Federal 
property. This form is used in lieu of the parent-pupil survey form to 
substantiate a pupil's place of residence or parent's place of 
employment on the survey date.
    (1) A source check is required to document children residing on 
Indian lands and children residing in eligible low-rent housing.
    (2) The source check must include sufficient information to 
determine the eligibility of the Federal property and the individual 
children claimed on the form.
    (3) A source check may also include:

[[Page 81492]]

    (i) Certification by a parent's employer regarding the parent's 
place of employment;
    (ii) Certification by a military or other Federal housing official 
as to the residence of each pupil claimed; or
    (iii) Certification by a military personnel official regarding the 
military active duty status of the parent of each pupil claimed as 
active duty uniformed services.
* * * * *
0
12. Section 222.37 is amended by revising paragraphs (b) and (c) and 
adding paragraphs (d) and (e) to read as follows:


Sec.  222.37  How does the Secretary calculate the average daily 
attendance of federally connected children?

* * * * *
    (b)(1) For purposes of this section, actual ADA means raw ADA data 
that have not been weighted or adjusted to reflect higher costs for 
specific types of students for purposes of distributing State aid for 
education.
    (2) If an LEA provides a program of free public summer school, 
attendance data for the summer session are included in the LEA's ADA 
figure in accordance with State law or practice.
    (3) An LEA's ADA count includes attendance data for children who do 
not attend the LEA's schools, but for whom it makes tuition 
arrangements with other educational entities.
    (4) Data are not counted for any child--
    (i) Who is not physically present at school for the daily minimum 
time period required by the State, unless the child is--
    (A) Participating via telecommunication or correspondence course 
programs that meet State standards; or
    (B) Being served by a State-approved homebound instruction program 
for the daily minimum time period appropriate for the child; or
    (ii) Attending the applicant's schools under a tuition arrangement 
with another LEA.
    (c) An LEA may calculate its average daily attendance calculation 
in one of the following ways:
    (1) If an LEA is in a State that collects actual ADA data for 
purposes of distributing State aid for education, the Secretary 
calculates the ADA of that LEA's federally connected children for the 
current fiscal year payment as follows:
    (i) By dividing the ADA of all the LEA's children for the second 
preceding fiscal year by the LEA's total membership on its survey date 
for the second preceding fiscal year (or, in the case of an LEA that 
conducted two membership counts in the second preceding fiscal year, by 
the average of the LEA's total membership on the two survey dates); and
    (ii) By multiplying the figure determined in paragraph (c)(1)(i)(A) 
of this section by the LEA's total membership of federally connected 
children in each subcategory described in section 8003 and claimed in 
the LEA's application for the current fiscal year payment.
    (2) An LEA may submit its total preceding year average daily 
attendance data. The Secretary uses these data to calculate the ADA of 
the LEA's federally connected children by--
    (i) Dividing the LEA's preceding year's total ADA data by the 
preceding year's total membership data; and
    (ii) Multiplying the figure determined in paragraph (c)(2)(i) of 
this section by the LEA's total membership of federally connected 
children as described in paragraph (c)(1)(i)(B) of this section.
    (3) An LEA may submit attendance data based on sampling conducted 
during the previous fiscal year.
    (i) The sampling must include attendance data for all children for 
at least 30 school days.
    (ii) The data must be collected during at least three periods 
evenly distributed throughout the school year.
    (iii) Each collection period must consist of at least five 
consecutive school days.
    (iv) The Secretary uses these data to calculate the ADA of the 
LEA's federally connected children by--
    (A) Determining the ADA of all children in the sample;
    (B) Dividing the figure obtained in paragraph (c)(3)(iv)(A) of this 
section by the LEA's total membership for the previous fiscal year; and
    (C) Multiplying the figure determined in paragraph (c)(3)(iv)(B) of 
this section by the LEA's total membership of federally connected 
children for the current fiscal year, as described in paragraph 
(c)(1)(i)(B) of this section.
    (d) An SEA may submit data to calculate the average daily 
attendance calculation for the LEAs in that State in one of the 
following ways:
    (1) If the SEA distributes State aid for education based on data 
similar to attendance data, the SEA may request that the Secretary use 
those data to calculate the ADA of each LEA's federally connected 
children. If the Secretary determines that those data are, in effect, 
equivalent to attendance data, the Secretary allows use of the 
requested data and determines the method by which the ADA for all of 
the LEA's federally connected children will be calculated.
    (2) An SEA may submit data necessary for the Secretary to calculate 
a State average attendance ratio for all LEAs in the State by 
submitting the total ADA and total membership data for the State for 
each of the last three most recent fiscal years that ADA data were 
collected. The Secretary uses these data to calculate the ADA of the 
federally connected children for each LEA in the State by--
    (i)(A) Dividing the total ADA data by the total membership data for 
each of the three fiscal years and averaging the results; and
    (B) Multiplying the average determined in paragraph (d)(2)(i)(A) of 
this section by the LEA's total membership of federally connected 
children as described in paragraph (c)(1)(i)(B) of this section.
    (e) The Secretary may calculate a State average attendance ratio in 
States with LEAs that would benefit from such calculation by using the 
methodology in paragraph (d)(2)(i) of this section.
* * * * *
0
13. Section 222.40 is amended in paragraph (d)(1)(i) by adding the 
phrase ``or density'' after the word ``sparsity'' and by adding 
paragraph (d)(1)(iii).
    The addition reads as follows:


Sec.  222.40  What procedures does a State educational agency use for 
certain local educational agencies to determine generally comparable 
local educational agencies using additional factors, for local 
contribution rate purposes?

* * * * *
    (d) * * *
    (1) * * *
    (iii) The SEA must submit its rationale for selecting the 
additional factors and describe how they affect the cost of education 
in the LEA.
* * * * *
0
14. Section 222.62 is amended:
0
A. By redesignating paragraphs (a) and (b) as paragraphs (b) and (c), 
respectively.
0
B. By adding a new paragraph (a).
0
C. In newly redesignated paragraph (b), by removing the phrase ``an 
additional assistance payment under section 8003(f)'' and adding in its 
place ``a heavily impacted payment''.
0
D. In newly redesignated paragraph (c), by removing the phrase ``an 
additional assistance payment under section 8003(f)'' and adding in its 
place ``a heavily impacted payment''.
    The addition reads as follows:

[[Page 81493]]

Sec.  222.62  How are local educational agencies determined eligible 
under section 8003(b)(2)?

    (a) An applicant that wishes to be considered to receive a heavily 
impacted payment must submit the required information indicating 
eligibility under Sec. Sec.  222.63 or 222.64 with the annual section 
8003 Impact Aid application.
* * * * *
0
15. Section 222.91 is revised to read as follows:


Sec.  222.91  What requirements must a local educational agency meet to 
receive a payment under section 8003 of the Act for children residing 
on Indian lands?

    (a) To receive a payment under section 8003 of the Act for children 
residing on Indian lands, a local educational agency (LEA) must--
    (1) Meet the application and eligibility requirements in section 
8003 and subparts A and C of these regulations;
    (2) Except as provided in paragraph (b), develop and implement 
policies and procedures in accordance with Sec.  222.94; and
    (3) Include in its application for payments under section 8003--
    (i) An assurance that the LEA established these policies and 
procedures in consultation with and based on information from tribal 
officials and parents of those children residing on Indian lands who 
are Indian children, except as provided in paragraph (b) of this 
section;
    (ii) An assurance that the LEA has provided a written response to 
the comments, concerns and recommendations received through the Indian 
policy and procedures consultation process, except as provided in 
paragraph (b) of this section; and
    (iii) Either a copy of the policies and procedures, or 
documentation that the LEA has received a waiver in accordance with the 
provisions of paragraph (b) of this section.
    (b) An LEA is not required to comply with Sec.  222.94 with respect 
to students from a tribe that has provided the LEA with a waiver that 
meets the requirements of this paragraph.
    (1) A waiver must contain a voluntary written statement from an 
appropriate tribal official or tribal governing body that--
    (i) The LEA need not comply with Sec.  222.94 because the tribe is 
satisfied with the LEA's provision of educational services to the 
tribe's students; and
    (ii) The tribe was provided a copy of the requirements in Sec.  
222.91 and Sec.  222.94, and understands the requirements that are 
being waived.
    (2) The LEA must submit the waiver at the time of application.
    (3) The LEA must obtain a waiver from each tribe that has Indian 
children living on Indian lands claimed by the LEA on its application 
under section 8003 of the Act. If the LEA only obtains waivers from 
some, but not all, applicable tribes, the LEA must comply with the 
requirements of Sec.  222.94 with respect to those tribes that did not 
agree to waive these requirements.

(Authority: 20 U.S.C. 7703(a), 7704)


0
16. Section 222.94 is revised to read as follows:


Sec.  222.94  What are the responsibilities of the LEA with regard to 
Indian policies and procedures?

    (a) An LEA that is subject to the requirements of Sec.  222.91(a) 
must consult with and involve local tribal officials and parents of 
Indian children in the planning and development of:
    (1) Its Indian policies and procedures (IPPs), and
    (2) The LEA's general educational program and activities.
    (b) An LEA's IPPs must include a description of the specific 
procedures for how the LEA will:
    (1) Disseminate relevant applications, evaluations, program plans 
and information related to the LEA's education program and activities 
with sufficient advance notice to allow tribes and parents of Indian 
children the opportunity to review and make recommendations.
    (2) Provide an opportunity for tribes and parents of Indian 
children to provide their views on the LEA's educational program and 
activities, including recommendations on the needs of their children 
and on how the LEA may help those children realize the benefits of the 
LEA's education programs and activities. As part of this requirement, 
the LEA will--
    (i) Notify tribes and the parents of Indian children of the 
opportunity to submit comments and recommendations, considering the 
tribe's preference for method of communication, and
    (ii) Modify the method of and time for soliciting Indian views, if 
necessary, to ensure the maximum participation of tribes and parents of 
Indian children.
    (3) At least annually, assess the extent to which Indian children 
participate on an equal basis with non-Indian children in the LEA's 
education program and activities. As part of this requirement, the LEA 
will:
    (i) Share relevant information related to Indian children's 
participation in the LEA's education program and activities with tribes 
and parents of Indian children; and
    (ii) Allow tribes and parents of Indian children the opportunity 
and time to review and comment on whether Indian children participate 
on an equal basis with non-Indian children.
    (4) Modify the IPPs if necessary, based upon the results of any 
assessment or input described in paragraph (b) of this section.
    (5) Respond at least annually in writing to comments and 
recommendations made by tribes or parents of Indian children, and 
disseminate the responses to the tribe and parents of Indian children 
prior to the submission of the IPPs by the LEA.
    (6) Provide a copy of the IPPs annually to the affected tribe or 
tribes.
    (c)(1) An LEA that is subject to the requirements of Sec.  
222.91(a) must implement the IPPs described in paragraph (b) of this 
section.
    (2) Each LEA that has developed IPPs shall review those IPPs 
annually to ensure that they comply with the provisions of this 
section, and are implemented by the LEA in accordance with this 
section.
    (3) If an LEA determines, after input from the tribe and parents of 
Indian children, that its IPPs do not meet the requirements of this 
section, the LEA shall amend its IPPs to conform with those 
requirements within 90 days of its determination.
    (4) An LEA that amends its IPPs shall, within 30 days, send a copy 
of the amended IPPs to--
    (i) The Impact Aid Program Director for approval; and
    (ii) The affected tribe or tribes.

(Authority: 20 U.S.C. 7704)

Sec.  222.95  [Amended]

0
17. Section 222.95 is amended:
0
A. In paragraph (c), by removing the number ``60'' and adding in its 
place ``90''.
0
B. In paragraph (d), by adding the phrase ``or part of the'' after the 
word ``all''.
0
C. By removing paragraphs (e), (f), and (g).
0
18. Section 222.161 is amended by:
0
A. Adding the phrase ``Except as provided in paragraph (a)(6),'' to the 
beginning of paragraph (a)(5) and lowercasing the word ``A''.
0
B. Adding paragraphs (a)(6) and (b)(3).
0
C. Revising paragraph (c).
    The additions and revisions read as follows:


Sec.  222.161  How is State aid treated under section 8009 of the Act?

    (a) * * *
    (6)(i) If the Secretary has not made a determination 30 days before 
the

[[Page 81494]]

beginning of the State's fiscal year, the State may request permission 
from the Secretary to make estimated or preliminary State aid payments 
that consider a portion of Impact Aid payments as local resources in 
accordance with this section.
    (ii) The State must include with its request an assurance that if 
the Secretary determines that the State does not meet the requirements 
of section 222.162 for that State fiscal year, the State must pay to 
each affected LEA, within 60 days of the Secretary's determination, the 
amount by which the State reduced State aid to the LEA.
    (iii) In determining whether to grant permission, the Secretary may 
consider factors including whether--
    (A) The Secretary certified the State under Sec.  222.162 in the 
prior State fiscal year; and
    (B) Substantially the same State aid program is in effect since the 
date of the last certification.
    (b) * * *
    (3) For a State that has not previously been certified by the 
Secretary under Sec.  222.162, or if the last certification was more 
than two years prior, the State submits projected data showing whether 
it meets the disparity standard in Sec.  222.162. The projected data 
must show the resulting amounts of State aid as if the State were 
certified to consider Impact Aid in making State aid payments.
    (c) Definitions. The following definitions apply to this subpart:
    Current expenditures is defined in section 8013(4) of the Act. 
Additionally, for the purposes of this section it does not include 
expenditures of funds received by the agency under sections 8002 and 
8003(b) (including hold harmless payments calculated under section 
8003(e)) that are not taken into consideration under the State aid 
program and exceed the proportion of those funds that the State would 
be allowed to take into consideration under Sec.  222.162.

(Authority: 20 U.S.C. 7709)


0
19. Section 222.162 is amended:
0
A. In paragraph (c)(2) introductory text, by removing the phrase ``on 
those bases'' in the first sentence and adding in its place ``using one 
of the methods in paragraph (d)''.
0
B. Revising paragraph (d).
    The revision reads as follows:


Sec.  222.162  What disparity standard must a State meet in order to be 
certified and how are disparities in current expenditures or revenues 
per pupil measured?

* * * * *
    (d) Accounting for Special Cost Differentials. In computing per-
pupil figures under paragraph (c) of this section, the State accounts 
for special cost differentials that meet the requirements of paragraph 
(c)(2) of this section in one of four ways:
    (1) The Inclusion Method on a Revenue Basis. The State divides 
total revenues by a weighted pupil count that includes only those 
weights associated with the special cost differentials.
    (2) The Inclusion Method on an Expenditure Basis. The State divides 
total current expenditures by a weighted pupil count that includes only 
those weights associated with the special cost differentials.
    (3) The Exclusion Method on a Revenue Basis. The State subtracts 
revenues associated with the special cost differentials from total 
revenues, and divides this net amount by an unweighted pupil count.
    (4) The Exclusion Method on an Expenditure Basis. The State 
subtracts current expenditures that come from revenues associated with 
the special cost differentials from total current expenditures, and 
divides this net amount by an unweighted pupil count.
* * * * *
0
20. Section 222.164 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  222.164  What procedures does the Secretary follow in making a 
determination under section 8009?

    (a) * * *
    (2) Whenever a proceeding under this subpart is initiated, the 
party initiating the proceeding shall provide either the State or all 
LEAs with a complete copy of the submission required in paragraph (b) 
of this section. Following receipt of the submission, the Secretary 
shall notify the State and all LEAs in the State of their right to 
request from the Secretary, within 30 days of the initiation of a 
proceeding, the opportunity to present their views to the Secretary 
before the Secretary makes a determination.
* * * * *
[FR Doc. 2015-32618 Filed 12-29-15; 8:45 am]
BILLING CODE 4000-01-P