Impact Aid Program, 33157-33170 [2015-14213]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 80, Number 112 (Thursday, June 11, 2015)]
[Rules and Regulations]
[Pages 33157-33170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14213]


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DEPARTMENT OF EDUCATION

34 CFR Part 222

RIN 1810-AB21


Impact Aid Program

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

ACTION: Final regulations.

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SUMMARY: The Secretary amends the Impact Aid Program regulations to 
reflect changes made to title VIII of the Elementary and Secondary 
Education Act of 1965 (ESEA or Act), as amended by various statutes, to 
delete obsolete provisions, to correct technical errors, and to 
incorporate relevant statutory and regulatory changes from the 
Individuals with Disabilities Education Act (IDEA) and its implementing 
regulations. The Secretary makes minor technical, clarifying, and 
streamlining changes for the reader's convenience, including reordering 
the regulations that implement the section of the Act regarding local 
contribution rates that are based on generally comparable local 
educational agencies (LEAs).

DATES: These regulations are effective June 11, 2015.

[[Page 33158]]


FOR FURTHER INFORMATION CONTACT: Kristen Walls-Rivas, U.S. Department 
of Education, 400 Maryland Avenue SW., Room 3C155, 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.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., braille, large print, audiotape, or compact 
disc) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: These final regulations make technical 
changes to the existing regulations for the Impact Aid Program in 34 
CFR part 222. The existing regulations contain technical errors and 
language that is inconsistent with other regulations and with the 
current provisions of the Impact Aid statute (title VIII of the ESEA) 
and statutory and regulatory provisions of parts B and C of the IDEA. 
The Impact Aid statute has been amended by a number of laws in recent 
years, including, for purposes of these regulations:
     The National Defense Authorization Act for Fiscal Year 
2013 (Pub. L. 112-239);
     The 2002 Supplemental Appropriations Act (Pub. L. 107-
206);
     The No Child Left Behind Act of 2001 (Pub. L. 107-110);
     The Department of Education Appropriations Act, 2001 (Pub. 
L. 106-554); and
     The Impact Aid Reauthorization Act of 2000 (Pub. L. 106-
398).
    These final regulations make technical corrections, align the 
regulations with statutory changes made to the program and to relevant 
statutory and regulatory changes related to the IDEA, delete obsolete 
provisions, and streamline the regulations. There are also recent 
statutory changes that will require public comment in order to make 
changes to the regulations. These substantive changes are not included 
in this notice. We will seek public comment on them in a notice of 
proposed rulemaking that we intend to publish at a later date.
    In implementing the Impact Aid Program, the Secretary generally 
issues regulations only where absolutely necessary or to provide 
increased flexibility or reduce burden. We discuss the major technical 
changes made by these regulations under the sections of the regulations 
to which they pertain. We do not discuss minor technical changes.

Subpart A--General

     Revising Sec.  222.2 to reflect that the definition of 
``modernization'' in section 8013 of the Act is applicable to this 
part.
     Revising Sec. Sec.  222.3 and 222.5 to reflect a change to 
the ESEA requiring that we use preceding-year data in calculating 
payments under section 8002 of the Act, which means that applications 
for sections 8002 and 8003 payments are based on the same year's data.
     Revising Sec.  222.4 to remove outdated references to the 
submission of applications via U.S. mail.
     Revising Sec.  222.6 to conform to the requirement in 
section 8005 of the ESEA that we give written notice to an applicant 
following the applicant's failure to comply with the applicable filing 
deadline.
     Revising Sec. Sec.  222.12 and 222.13, concerning 
overpayment forgiveness, to remove references to obsolete statutory 
provisions and deadlines since overpayments under those provisions no 
longer exist.
     Revising Sec.  222.19 to update the list of statutes and 
regulations that apply to the program.

Subpart B--Payments for Federal Property Under Section 8002 of the Act

     Revising Sec.  222.22 to conform to statutory changes to 
section 8002 of the Act concerning compensation that LEAs receive from 
Federal activities on eligible Federal property.
     Despite the fact that Sec.  222.23 is currently superseded 
by statutory changes to section 8002 of the Act, we are not removing or 
revising Sec.  222.23 because those statutory provisions are scheduled 
to expire.

Subpart C--Payments for Federally Connected Children Under Section 
8003(b) of the Act

     Revising Sec.  222.33 to indicate that an LEA makes its 
membership count before the deadline date upon which Impact Aid 
applications are due, rather than no later than that date.
     Revising Sec.  222.35(a)(2) to refer to an ``unsigned'' 
parent-pupil survey form.
     In Sec.  222.36, amending paragraphs (a) and (b) to 
reflect a statutory change related to application data submitted by 
newly established LEAs, and removing paragraph (d) as obsolete.
     In Sec.  222.38, updating the statutory references in the 
heading and paragraph (a) to conform to current statutory designations 
and renumbering the provisions of the section. In addition, we add as 
new paragraph (b) provisions that incorporate the statutory requirement 
that we use data from the most recent fiscal year for which 
satisfactory data are available for local contribution rates based on 
one-half of the State average or one-half of the national average if 
satisfactory expenditure data from the third preceding fiscal year are 
not available.
     Reorganizing the local contribution rate regulations 
currently in Sec. Sec.  222.39 through 222.41 of subpart C to 
streamline those provisions, remove redundancies, and reflect current 
law and procedures. In recent fiscal years, approximately 15 State 
educational agencies (SEAs) have opted to use these provisions. 
Fourteen of these SEAs used the provision in Sec.  222.39 and only one 
SEA used the additional factor provisions in current Sec.  222.39(c). 
For that reason we have reorganized the sections to keep the basic 
generally comparable regulations under Sec.  222.39 and move the more 
specific provisions relating to the use of additional factors to Sec.  
222.40. The substance of these provisions has not changed; in 
accordance with section 8003(b)(1)(C)(iii) of the Act, the methods that 
SEAs use to determine generally comparable local contribution rates 
remain unchanged from the regulations in effect on January 1, 1994.
    Paragraphs (a) and (b) of Sec.  222.39 describe the method SEAs use 
to identify generally comparable LEAs for determining local 
contribution rates, through grouping by grade span/legal 
classification, size, and location. The current provisions in Sec.  
222.40 and the examples also refer to grouping by grade span/legal 
classification, size, and location for determining local contribution 
rates; we move these provisions to Sec.  222.39 in order to eliminate 
redundancy and streamline the provisions. We remove the remaining 
provisions in current Sec.  222.40, and in the example that follows the 
section, as they are redundant.
    The provisions in new Sec.  222.40, moved from current Sec.  
222.39(c), describe the circumstances and procedures for using 
additional factors to identify a subgroup of generally comparable LEAs, 
for the limited number of LEAs that qualify for this option. The 
examples from current Sec.  222.39(c) are retained, with the exception 
of one example removed for redundancy. Paragraph (e) of new Sec.  
222.40 contains the provisions of current Sec.  222.39(c)(4), with the 
clarification that the SEA certifies the local contribution rate data 
by submitting that data to the Secretary, in accordance with the 
current text of section 8003(b)(1)(c)(iii) of the Act.

[[Page 33159]]

     Revising Sec.  222.41 to add a reference to new Sec.  
222.40 and to add clarifying language regarding the certification of 
data by the SEA.
     Reserving Sec.  222.42 for further provisions regarding 
local contribution rates.
     Moving to new Sec.  222.43 the content of current 
Sec. Sec.  222.63 and 222.64 (from subpart E). These provisions 
implement the authority in section 8003(b)(1)(F) of the ESEA regarding 
increases in the local contribution rate of an LEA that is unable to 
provide an equivalent level of education due to higher current 
expenditures caused by unusual geographic factors. Previously, this 
type of assistance was grouped as one type of heavily impacted district 
assistance. Although the Act does not currently treat this assistance 
as heavily impacted district funding, the substantive requirements for 
the statutory provision remain unchanged. Paragraph (a)(1)-(3) of new 
Sec.  222.43 contains the information currently in Sec.  222.63(a)-(c), 
updated to reflect statutory changes. Paragraph (a)(4) of new Sec.  
222.43 contains the provisions of current Sec.  222.63(d), specifically 
that if an LEA is in a State authorized by the Department to take into 
account Impact Aid under section 8009 of the Act, then it is not 
eligible to use the ``unusual geographic'' provision. Paragraph (b) of 
new Sec.  222.43 contains the contents of current Sec.  222.64(b), with 
clarifying changes. We remove current Sec.  222.64(a) as it is already 
covered by the provisions in Sec.  222.43.
     Moving to new Sec.  222.44 the provisions currently found 
in Sec.  222.73 related to the calculation of maximum payments for 
eligible LEAs under section 8003(b)(1)(F) of the ESEA. We remove Sec.  
222.73(c) in accordance with statutory changes. We also update 
statutory and regulatory references, and make minor clarifying changes; 
however, we do not change the content of these provisions.

Subpart D--Payments Under Section 8003(d) of the Act for Local 
Educational Agencies That Serve Children With Disabilities

     Revising this subpart to incorporate amendments that have 
been made to parts B and C of the IDEA, through the 2004 statutory 
changes to IDEA, the 2006 IDEA part B final regulations codified in 34 
CFR part 300, and the 2011 IDEA part C final regulations codified in 34 
CFR part 303.
     Revising Sec.  222.50 (definitions) by removing the 
previous definitions of the following terms and replacing them with 
cross-references to the definitions of those terms in the IDEA 
regulations: Free appropriate public education or FAPE, individualized 
education program or IEP, related services, and special education. In 
addition, we add the following relevant new terms with cross-references 
to their definitions in the applicable IDEA regulations: Child with a 
disability, early intervention services, individualized family service 
plan or IFSP, and infants, toddlers, and children with disabilities. We 
use the term ``infants, toddlers, and children with disabilities'' to 
refer to both ``infants and toddlers with disabilities'' who are 
eligible to receive early intervention services under part C of the 
IDEA and ``children with disabilities'' who are eligible to receive 
special education and related services under part B of the IDEA. 
Combined, these are all children who are eligible to receive services 
under the IDEA for purposes of the Impact Aid statute (20 U.S.C. 
7703(d)(1)(A)) and we refer to them in these regulations as ``infants, 
toddlers, and children with disabilities.'' We remove the definition of 
``preschool'' as it is unnecessary due to Impact Aid provisions that 
permit districts to claim preschool-age students regardless of whether 
their education is part of elementary education under State law, and to 
avoid any confusion with respect to the provisions in section 619 and 
part C of the IDEA regarding preschool children. We remove the 
definition of ``children with specific learning disabilities'' because 
that term is already encompassed in the definition of ``children with 
disabilities'' under part B of the IDEA. We remove the definition of 
``intermediate educational unit'' because it has been subsumed in the 
IDEA definition of LEA in 34 CFR 303.28.
     Revising Sec.  222.51(a) and (b) and adding Sec.  
222.51(c), to clarify the existing requirement, from the Impact Aid 
statute in 20 U.S.C. 7703(d)(1), that LEAs providing a free appropriate 
public education or early intervention services to infants, toddlers, 
and children with disabilities under Parts B and C of the IDEA may 
count for Impact Aid payment purposes only certain of those children 
who are federally connected and eligible to receive services under the 
IDEA. Under the Impact Aid statute and the IDEA, in order to count 
those infants, toddlers, and children with disabilities, the LEA must 
provide free appropriate public education or early intervention 
services (whichever is applicable) either directly or through an 
arrangement with another entity at no cost to the children's parents, 
and each child being counted must have in place an IEP or IFSP (as 
appropriate).
     Revising Sec. Sec.  222.52, 222.53, 222.54, and 222.55 to 
reflect revisions to part C of the IDEA by including a reference to 
early intervention services. We also revise Sec.  222.53 to improve its 
readability and consistency with IDEA statutory provisions regarding 
prior approval if funds are used for construction.

Subpart E--Payments for Heavily Impacted Local Educational Agencies 
Under Section 8003(b)(2) of the Act

     Removing subpart E in its entirety and replacing it with a 
new subpart E, consisting of a new heading and new Sec. Sec.  222.60 
through 222.79. The new subpart E, which governs payments to certain 
heavily impacted LEAs, reflects statutory changes to section 8003(b)(2) 
of the ESEA. We explain the statutory changes and implementing 
regulatory provisions by regulatory section number below.
     New Sec.  222.60 reflects the statutory change that 
payments to heavily impacted districts are no longer supplemental to 
other Impact Aid payments under section 8003(b).
     New Sec.  222.61 reflects changes to statutory 
requirements for data used to determine eligibility of heavily impacted 
LEAs. This section includes language clarifying that the tax rate 
requirement for these LEAs may be met by having a tax rate that is at 
least 95 percent of the average tax rate of either comparable LEAs as 
identified in Sec.  222.74 or all LEAs in the State, pursuant to 
section 8003(b)(2)(G) of the Act.
     New Sec.  222.62 reflects changes to the criteria in 
section 8003(b)(2) of the Act that an LEA must meet to be considered an 
eligible ``continuing'' heavily impacted LEA, and the criteria that an 
LEA must meet to be considered an eligible ``new'' heavily impacted 
LEA. An LEA that applies and satisfies the eligibility requirements for 
two consecutive fiscal years is considered a ``new'' heavily impacted 
LEA. Section 222.62(b) reflects the statutory requirement that such an 
LEA would not receive its first payment as a ``new'' heavily impacted 
LEA until the second year of application eligibility.
     New Sec.  222.63 describes the primary statutory 
categories of a ``continuing'' heavily impacted LEA. An LEA that 
applies and satisfies the eligibility requirement of one of the primary 
statutory categories and that also received a heavily impacted payment 
for fiscal year 2000 under section 8003(f) of the ESEA is considered a 
``continuing'' heavily impacted LEA.

[[Page 33160]]

     New Sec.  222.64 describes the statutory categories of a 
``new'' heavily impacted LEA. These categories are similar to those 
described in new Sec.  222.63. There is one significant difference in 
the per pupil expenditure (PPE) requirement for a ``new'' heavily 
impacted LEA that has a total enrollment of 350 or more. Those LEAs do 
not have the option of satisfying the PPE requirement by using the 
average PPE of all the States. Instead, they can only satisfy this 
requirement by using the average PPE of all the LEAs within their 
State. The tax rate requirement for these LEAs may be met by having a 
tax rate that is at least 95 percent of the average tax rate of either 
comparable LEAs as identified in Sec.  222.74 or all LEAs in the State, 
pursuant to section 8003(b)(2)(G) of the ESEA. For an LEA that has a 
total enrollment of less than 350, the PPE and tax rate are based on 
one or three comparable LEAs.]
     New Sec.  222.65 connects the new statutory requirements 
for heavily impacted LEAs with current regulatory provisions for 
calculating tax rates for those LEAs.
     New Sec.  222.66 reflects the statutory provisions 
regarding loss of and resumption of eligibility for section 8003(b)(2) 
payments. In the year that either a ``continuing'' or ``new'' heavily 
impacted LEA loses its eligibility for a payment under section 
8003(b)(2), it will still receive a section 8002(b)(2) payment for that 
year (commonly known as a ``hold harmless'' payment). However, the 
payment for the year of ineligibility will be based on the number of 
children in average daily attendance (ADA) that would be counted for 
that application if the LEA were eligible.
    For resumption of eligibility, a ``continuing'' heavily impacted 
LEA must apply and be eligible for two consecutive years in order to 
receive another section 8003(b)(2) payment. In contrast, a ``new'' 
heavily impacted LEA must only apply and be eligible for the year of 
application to receive another section 8003(b)(2) payment. The examples 
and charts are provided for additional clarity as to the statutory 
requirements.
     New Sec.  222.67 contains the provisions of current Sec.  
222.65 with updated statutory references, and reflects the statutory 
change that payments to heavily impacted districts are no longer 
supplemental to other Impact Aid payments under section 8003(b) of the 
Act. The revision also clarifies that in cases where certain States are 
certified by the Department to take into account Impact Aid payments, 
the State is still forbidden from taking into account the amount of 
Impact Aid that is due to a district's heavily impacted status. There 
is no substantive change to these provisions.
     New Sec. Sec.  222.68-222.73 contain the provisions of 
current Sec. Sec.  222.66 through 222.71, revised to reflect statutory 
changes to the eligibility requirements for heavily impacted districts 
in section 8003(b)(2)(B) and (C) of the Act, to make clarity changes, 
and to conform references to the other new regulatory sections of 
subpart E.
     Section 222.74 is revised to reflect new statutory 
requirements for the selection of one or three generally comparable 
LEAs for certain LEAs in section 8003(b)(2) of the ESEA and to update 
the statutory and regulatory citations.
     Section 222.75 is revised to reflect the new statutory 
provisions in section 8003(b)(2) of the ESEA that require the 
Department to use data from the third preceding fiscal year, and that 
limit the type of applicants for which we calculate the PPE of 
generally comparable school districts to only those districts described 
in new Sec.  222.64(a)(2)(ii), that is, ``new'' districts with less 
than 350 ADA.
     Section 222.76, which pertains to ratable reduction of 
payments for years when insufficient funds are appropriated to make 
full payments under the Act, is removed because section 8003(b)(3) of 
the Act now contains detailed provisions for years in which 
insufficient funds are appropriated and applies to all payments, 
including those for heavily impacted districts, making this provision 
unnecessary.

Subpart F--Payments to Local Educational Agencies for Children With 
Severe Disabilities Under Section 8003(g) of the Act

     Removing and reserving subpart F due to the repeal of the 
statutory authority.

Subpart J--Impact Aid Administrative Hearings and Judicial Review Under 
Section 8011 of the Act

     Revising Sec.  222.151 to remove an obsolete statutory 
reference and incorporate a statutory change lengthening the time 
period for filing a written request for an administrative hearing from 
30 to 60 days.
     Revising Sec.  222.152 to remove obsolete statutory 
references.
     Revising Sec.  222.153 to update the addresses to which 
applicants must mail or deliver those administrative hearing requests. 
We also add an option for emailing the requests and note our 
recommendation that applicants elect mail or email delivery.
     Revising Sec.  222.159 to reflect the statutory change 
that an applicant has 30 working days to seek judicial review following 
an administrative hearing determination.

Subpart K--Determinations Under Section 8009 of the Act

     Revising Sec. Sec.  222.161 and 222.163 to conform to a 
statutory change in section 8009(b)(1) of the Act that eliminated 
obsolete references to payments under the former Impact Aid law, Public 
Law 81-874. We also revise Sec.  222.161(a) to reflect changes in 
section 8009(b)(1) of the Act relating to heavily impacted districts, 
and to delete a reference to a repealed provision regarding LEAs with 
high concentrations of children with severe disabilities.
     Revising Sec.  222.165 to incorporate a statutory change 
lengthening the time period for filing a written request for an 
administrative hearing from 30 to 60 days.

Executive Order 12866

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 final 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,

[[Page 33161]]

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 on 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 final regulations only on a reasoned 
determination that their benefits justify their costs. In choosing 
among alternative regulatory approaches, we selected those approaches 
that maximize net benefits. Based on the analysis that follows, the 
Department believes that these final regulations are consistent with 
the principles in Executive Order 13563.
    We also have determined that this regulatory action does 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.
    Upon review of the costs to LEAs, we have determined there is no 
financial or resource burden associated with these changes. The LEAs 
will benefit from an updated and streamlined regulation that will 
facilitate a better understanding of the program requirements.

Waiver of Proposed Rulemaking

    Under the Administrative Procedure Act (5 U.S.C. 553), the 
Department generally offers interested parties the opportunity to 
comment on proposed regulations. However, these final regulations 
merely reflect changes made to title VIII of the ESEA and to the IDEA 
and its implementing regulations, as well as technical corrections and 
clarifications to delete obsolete provisions, correct technical errors, 
and streamline the Impact Aid Program regulations for the reader's 
convenience. These corrections and clarifications do not affect the 
substantive rights or obligations of individuals or institutions and do 
not establish or affect substantive policy. Thus, under 5 U.S.C. 
553(b)(B), the Secretary has determined that proposed regulations are 
unnecessary.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
The small entities that are affected by these regulations are small 
LEAs receiving Federal funds under this program. These regulations 
contain technical corrections to current regulations. The changes will 
not have a significant economic impact on any of the entities affected 
because the regulations do not impose excessive burdens or require 
unnecessary Federal supervision.

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 does not require you to respond 
to a collection of information unless it displays a valid OMB control 
number. We display the valid OMB control number assigned to the 
collection of information in these final regulations at the end of the 
affected sections of the regulations.

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 program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
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84.041)

List of Subjects in 34 CFR Part 222

    Education, Education of children with disabilities, Elementary and 
secondary education, Federally affected areas, Grant programs--
education, Indians--education, Public housing, Reports and 
recordkeeping requirements, School construction.

    Dated: June 5, 2015.
Deborah Delisle,
Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Secretary amends 
part 222 of title 34 of the Code of Federal Regulations as follows:

PART 222--IMPACT AID PROGRAM

0
1-2. The authority citation for part 222 continues to read as follows:

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


0
3. Section 222.2 is amended by:
0
A. In paragraph (a)(1), adding the term ``modernization'' in 
alphabetical order.
0
B. In paragraph (b) introductory text, removing the phrase ``section 
14101'' and adding, in its place, the phrase ``section 9101''.
0
C. Revising the first sentence of the definition of ``applicant'' and 
the definition of ``federally connected children'' in paragraph (c).
    The revisions read as follows:


Sec.  222.2  What definitions apply to this part?

* * * * *
    (c) * * *
    Applicant means any LEA that files an application for financial 
assistance under section 8002 or section 8003 of

[[Page 33162]]

the Act and the regulations in this part implementing those provisions. 
* * *
* * * * *
    Federally connected children means children described in section 
8003 or section 8010(c)(2) of the Act.

(Authority: 20 U.S.C. 7703(a)(1) and 7710(c); 37 U.S.C. 101)

* * * * *

0
4. Section 222.3 is amended by revising paragraphs (a) introductory 
text, (a)(1), (b)(2), and (c)(1)(i) to read as follows:


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

* * * * *
    (a) Except as provided in paragraphs (b) and (d) of this section, 
on or before January 31 of the fiscal year preceding the fiscal year 
for which the LEA seeks assistance under section 8002 or section 8003, 
the LEA must--
    (1) File with the Secretary a complete and signed application for 
payment under section 8002 or section 8003; and
* * * * *
    (b) * * *
    (2) Except as provided in paragraph (d) of this section, within 60 
days after the applicable event occurs but not later than September 30 
of the fiscal year preceding the fiscal year for which the LEA seeks 
assistance under section 8002 or section 8003, the LEA must--
    (i) File an application with the Secretary as permitted by 
paragraph (b)(1) of this section; and
    (ii) File a copy of that application with its SEA.
    (c)(1) * * *
    (i) For an application subject to the filing deadlines in paragraph 
(a)(1) of this section, on or before February 15 of the fiscal year 
preceding the fiscal year for which the LEA seeks assistance under 
section 8002 or section 8003; and
* * * * *


Sec.  222.4  [Amended]

0
5. Section 222.4 is amended by:
0
A. In paragraph (a), removing ``, or mailed,'' and removing the 
paragraph (a) designation.
0
B. Removing paragraphs (b) and (c).

0
6. Section 222.5 is revised to read as follows:


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

    (a) An LEA may amend its application following any of the events 
described in Sec.  222.3(b)(1) by submitting a written request to the 
Secretary and a copy to its SEA no later than the earlier of the 
following events:
    (1) The 60th day following the applicable event.
    (2) By the end of the Federal fiscal year preceding the fiscal year 
for which the LEA seeks assistance.
    (b) The LEA also may amend its application based on actual data 
regarding eligible Federal properties or federally connected children 
if--
    (1) Those data were not available at the time the LEA filed its 
application (e.g., due to a second membership count of students) 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 the end of the Federal fiscal year preceding 
the fiscal year for which the LEA seeks assistance.

(Authority: 20 U.S.C. 7705)



0
7. Section 222.6 is amended by:
0
A. In paragraph (a), adding ``section'' before ``8003''.
0
B. Revising paragraph (b).
    The revision reads as follows:


Sec.  222.6  Which applications does the Secretary accept?

* * * * *
    (b) The Secretary does not accept or approve for payment any 
section 8002 or section 8003 application that is not timely filed with 
the Secretary as described in paragraph (a) of this section, except as 
follows:
    (1) The Secretary accepts and approves for payment any otherwise 
approvable application filed within--
    (i) 60 days from the application deadline established in Sec.  
222.3; or
    (ii) 60 days from the date of the Secretary's written notice of an 
LEA's failure to comply with the applicable filing date.
    (2) The Secretary reduces the payment for applications described in 
paragraph (b)(1) of this section by 10 percent of the amount that would 
have been paid if the LEA had timely filed the application.
* * * * *

0
8. Section 222.12 is amended by revising paragraph (a) to read as 
follows:


Sec.  222.12  What overpayments are eligible for forgiveness under 
section 8012 of the Act?

    (a) The Secretary considers as eligible for forgiveness under 
section 8012 of the Act (``eligible overpayment'') any amount that is 
more than an LEA was eligible to receive for a particular fiscal year 
under the Act, except for the types of overpayments listed in Sec.  
222.13.
* * * * *

0
9. Section 222.13 is revised to read as follows:


Sec.  222.13  What overpayments are not eligible for forgiveness under 
section 8012 of the Act?

    The Secretary does not consider as eligible for forgiveness under 
section 8012 of the Act any overpayment caused by an LEA's failure to 
expend or account for funds properly under the following laws and 
regulations:
    (a) Section 8003(d) of the Act (implemented in subpart D of this 
part) for certain federally connected children with disabilities.
    (b) Section 8007 of the Act for construction.

(Authority: 20 U.S.C. 7712)



0
10. Section 222.16 is amended by revising the section heading to read 
as follows:


Sec.  222.16  What information and documentation must a local 
educational agency submit for an eligible overpayment to be considered 
for forgiveness?

* * * * *

0
11. Section 222.19 is amended by:
0
A. Removing paragraphs (b)(3) and (5) and redesignating paragraph 
(b)(4) as paragraph (b)(3).
0
B. Adding new paragraph (b)(4).
0
C. Revising paragraph (c).
0
D. Adding paragraph (d).
    The additions and revision read as follows:


Sec.  222.19  What other statutes and regulations apply to this part?

* * * * *
    (b) * * *
    (4) 34 CFR part 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (c) 2 CFR part 180, as adopted and amended as regulations of the 
Department in 2 CFR part 3485 (OMB Guidelines to Agencies on 
Governmentwide Debarment and Suspension (Nonprocurement)).
    (d) 2 CFR part 200, as adopted in 2 CFR part 3474 (Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards), for payments under sections 8003(d) (payments for 
federally connected children with disabilities), 8007 (construction), 
and 8008 (school facilities).
* * * * *

0
12. Section 222.22 is amended by revising paragraphs (b)(1), (c), and 
(d) to read as follows:


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

* * * * *
    (b) * * *
    (1) The LEA received revenue during the preceding fiscal year that 
is

[[Page 33163]]

generated directly from the eligible Federal property or activities in 
or on that property; and * * *
    (c) If an LEA described in paragraph (a) of this section received 
revenue described in paragraph (b)(1) of this section during the 
preceding fiscal year that, when added to the LEA's projected total 
section 8002 payment for the fiscal year for which the LEA seeks 
assistance, exceeds the maximum payment amount under section 8002(b) 
for the fiscal year for which the LEA seeks assistance, the Secretary 
reduces the LEA's projected section 8002 payment by an amount equal to 
that excess amount.
    (d) For purposes of this section, the amount of revenue that an LEA 
receives during the previous fiscal year from activities conducted on 
Federal property does not include payments received by the agency from 
the Secretary of Defense to support--
    (1) The operation of a domestic dependent elementary or secondary 
school; or
    (2) The provision of a free public education to dependents of 
members of the Armed Forces residing on or near a military 
installation.
* * * * *

Subpart C--Payments for Federally Connected Children Under Section 
8003(b) of the Act.

0
12. Subpart C is amended by revising the subpart heading to read as set 
forth above.

0
13. Section 222.32 is amended by revising the section heading to read 
as follows:


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

* * * * *


Sec.  222.33  [Amended]

0
14. Section 222.33 is amended by:
0
A. Removing the words ``on or'' in paragraph (a)(1).
0
B. Removing ``, 7706'' from the authority citation.


Sec.  222.34  [Amended]

0
15. Section 222.34 is amended by removing ``Sec.  222.5(b)(1)'' in 
paragraph (b) and adding in its place ``Sec.  222.5(b)''.


Sec.  222.35  [Amended]

0
16. Section 222.35 is amended by:
0
A. Removing the words ``accept a parent-pupil survey form'' in 
paragraph (a)(2) and adding in their place the words ``accept an 
unsigned parent-pupil survey form''.
0
B. Removing ``and 7706'' from the authority citation.

0
17. Section 222.36 is amended by:
0
A. Revising the section heading.
0
B. Revising paragraph (a) introductory text.
0
C. Revising paragraph (b).
0
D. Removing paragraph (d).
    The revisions read as follows:


Sec.  222.36  How many federally connected children must a local 
educational agency have to receive a payment under section 8003?

    (a) An LEA is eligible to receive a payment under section 8003 for 
a fiscal year only if the total number of eligible federally connected 
children for whom it provided a free public education for the preceding 
fiscal year was--
* * * * *
    (b) An LEA is eligible to receive a payment under section 8003 for 
a fiscal year on behalf of federally connected children described in 
section 8003(a)(1)(F) or (G) only if the total number of those children 
for whom it provided a free public education for the preceding fiscal 
year was--
    (1) At least 1,000 in ADA; or
    (2) At least 10 percent of the total number of children in ADA.
* * * * *

0
18. Section 222.38 is revised to read as follows:


Sec.  222.38  What is the maximum basic support payment that a local 
educational agency may receive under section 8003(b)(1)?

    (a) The maximum basic support payment that an LEA may receive under 
section 8003(b)(1) for any fiscal year is the sum of its total weighted 
student units under section 8003(a)(2) for the federally connected 
children eligible to be counted as the basis for payment, multiplied by 
the greater of the following:
    (1) One-half of the State average per pupil expenditure for the 
third fiscal year preceding the fiscal year for which the LEA seeks 
assistance.
    (2) One-half of the national average per pupil expenditure for the 
third fiscal year preceding the fiscal year for which the LEA seeks 
assistance.
    (3) The local contribution rate (LCR) based on generally comparable 
LEAs determined in accordance with Sec. Sec.  222.39-222.41.
    (4) The State average per pupil expenditure for the third preceding 
fiscal year multiplied by the local contribution percentage as defined 
in section 8013(8) of the Act for that same year.
    (b) If satisfactory data from the third preceding fiscal year are 
not available for the expenditures described in paragraphs (a)(1) or 
(2), the Secretary uses data from the most recent fiscal year for which 
data that are satisfactory to the Secretary are available.

(Authority: 20 U.S.C. 7703(a) and (b))



0
19. Section 222.39 is amended by:
0
A. Revising paragraphs (a) introductory text, (a)(1), (a)(2)(i), and 
(a)(2)(iii).
0
B. Revising paragraph (c).
0
C. Adding an example after paragraph (d)(6).
    The revisions and addition read as follows:


Sec.  222.39  How does a State educational agency identify generally 
comparable local educational agencies for local contribution rate 
purposes?

    (a) To identify generally comparable LEAs within its State for LCR 
purposes, the State educational agency (SEA) for that State, after 
appropriate consultation with the applicant LEAs in the State, shall 
use data from the third fiscal year preceding the fiscal year for which 
the LCR is being computed to group all of its LEAs, including all 
applicant LEAs, as follows:
    (1) Grouping by grade span/legal classification alone. Divide all 
LEAs into groups that serve the same grade span and then subdivide the 
grade span groups by legal classification, if the Secretary considers 
this classification relevant and sufficiently different from grade span 
within the State. As an alternative grade-span division, divide all 
LEAs into elementary, secondary, or unified grade-span groups, as 
appropriate, within the State.
    (2) Grouping by grade span/legal classification and size. (i) 
Divide all LEAs into groups by grade span (or the alternative grade-
span groups described in paragraph (a)(1) of this section) and legal 
classification, if relevant and sufficiently different from grade span 
and size.
* * * * *
    (iii) Divide each group into either two subgroups or three 
subgroups.
* * * * *
    (c) The LCR for a ``significantly impacted'' LEA described in 
paragraph (b)(1) of this section is the LCR of any group in which that 
LEA would be included based on grade span/legal classification, size, 
location, or a combination of these factors, if the LEA were not 
excluded as significantly impacted.
    (d) * * *
    (6) * * *
    Example. An LEA applies for assistance under section 8003 and 
wishes to recommend to the Secretary an LCR based on generally 
comparable LEAs within its State.

[[Page 33164]]

    1. Characteristics of Applicant LEA. The grade span of an applicant 
LEA is kindergarten through grade 8 (K-8). In the applicant's State, 
legal classification of LEAs is based on grade span, and thus does not 
act to further subdivide groups of LEAs.
    The ADA of the applicant LEA is above the median ADA of LEAs 
serving only K-8 in the State.
    The applicant LEA is located outside an MSA.
    2. Characteristics of Other LEAs Serving Same Grade Span. The SEA 
of the applicant's State groups all LEAs in its State according to the 
factors in Sec.  222.39.
    a. The SEA identifies the following groups:
    (i) One hundred and one LEAs serve only K-8. The SEA has identified 
a group of 50 LEAs having an ADA above the median ADA for the group of 
101, one LEA having an ADA at the median, and a group of 50 LEAs having 
an ADA below the median ADA; and according to Sec.  222.39(a)(2), the 
SEA considers 51 LEAs to have an ADA below the median ADA.
    (ii) Of the 101 LEAs in the group, the SEA has identified a group 
of 64 LEAs as being inside an MSA and a group of 37 LEAs as being 
outside an MSA.
    (iii) Among the group of 50 LEAs having an ADA above the median, 
the SEA has identified a group of 35 LEAs as being inside an MSA and a 
group of 15 LEAs as being outside an MSA.
    (iv) Among the group of 51 LEAs having an ADA at or below the 
median, the SEA has identified a group of 29 LEAs as being inside an 
MSA and 22 LEAs as being outside an MSA.
    (v) One LEA has 20 percent of its ADA composed of children 
identified under section 8003(a)(1)(A)-(C) and, therefore, must be 
excluded from any group it falls within before the SEA computes an LCR 
for the group. The LEA has an ADA below the median ADA and is located 
outside an MSA.
    b. On the basis of Sec.  222.41, the SEA computes the LCR for each 
group of generally comparable LEAs that the SEA has identified.

0
20. Section 222.40 is revised to read 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?

    (a) To use the procedures in this section, the applicant LEA, for 
the year of application, must either--
    (1)(i) Be located entirely on Federal land; and
    (ii) Be raising either no local revenues or an amount of local 
revenues the Secretary determines to be minimal; or
    (2)(i) Be located in a State where State aid makes up no more than 
40 percent of the State average per pupil expenditure in the third 
fiscal year preceding the fiscal year for which the LCR is being 
computed;
    (ii) In its application, have federally connected children 
identified under section 8003(a)(1)(A)-(C) equal to at least 20 percent 
of its total ADA; and
    (iii) In its application, have federally connected children 
identified under section 8003(a)(1)(A)-(G) who were eligible to be 
counted as the basis for payment under section 8003 equal to at least 
50 percent of its total ADA.
    (b) If requested by an applicant LEA described in paragraph (a) of 
this section, the SEA follows the procedures in this section, in 
consultation with the LEA, to determine generally comparable LEAs using 
additional factors for the purpose of calculating and certifying an LCR 
for that LEA.
    (c) The SEA identifies--
    (1) The subgroup of generally comparable LEAs from the group 
identified under Sec.  222.39(a)(2) (grouping by grade span/legal 
classification and size) that includes the applicant LEA; or
    (2) For an LEA described in paragraph (a) of this section that 
serves a different span of grades from all other LEAs in its State (and 
therefore cannot match any group of generally comparable LEAs under 
Sec.  222.39(a)(2)), for purposes of this section only, a group using 
only legal classification and size as measured by ADA.
    (d) From the subgroup described in paragraph (c) of this section, 
the SEA then identifies 10 or more generally comparable LEAs that share 
one or more additional common factors of general comparability with the 
applicant LEA described in paragraph (a) of this section, as follows:
    (1)(i) The SEA must consider one or more generally accepted, 
objectively defined factors that affect the applicant's cost of 
educating its children. Examples of such cost-related factors include 
location inside or outside an MSA, an unusually large geographical area 
or an economically depressed area, sparsity of population, and the 
percentage of its students who are from low-income families or who are 
children with disabilities, neglected or delinquent children, low-
achieving children, or children with limited English proficiency.
    (ii) The SEA may not consider cost-related factors that can be 
varied at the discretion of the applicant LEA or its generally 
comparable LEAs or factors dependent on the wealth of the applicant LEA 
or its generally comparable LEAs. Examples of factors that may not be 
considered include special alternative curricular programs, pupil-
teacher ratio, and per pupil expenditures.
    (2) The SEA applies the factor or factors of general comparability 
identified under paragraph (d)(1)(i) of this section in one of the 
following ways in order to identify 10 or more generally comparable 
LEAs for the eligible applicant LEA, none of which may be significantly 
impacted LEAs:
    (i) The SEA identifies all of the LEAs in the group to which the 
eligible applicant LEA belongs under Sec.  222.39(a)(2) that share the 
factor or factors. If the subgroup containing the eligible applicant 
LEA includes at least 10 other LEAs (excluding significantly impacted 
LEAs), it will be the eligible applicant LEA's new group of generally 
comparable LEAs. The SEA computes the LCR for the eligible applicant 
LEA using the data for all of the LEAs in the subgroup except the 
eligible applicant LEA.
    Example 1. An eligible applicant LEA contains a designated 
economically depressed area, and the SEA, in consultation with the LEA, 
identifies ``economically depressed area'' as an additional factor of 
general comparability. From the group of LEAs under Sec.  222.39(a)(2) 
that includes the eligible applicant LEA, the SEA identifies two 
subgroups, those LEAs that contain a designated economically depressed 
area and those that do not. The entire subgroup identified by the SEA 
that includes the eligible applicant LEA is that LEA's new group of 
generally comparable LEAs if it contains at least 10 LEAs.
    (ii) After the SEA identifies all of the LEAs in the group to which 
the eligible applicant LEA belongs under Sec.  222.39(a)(2) that share 
the factor or factors, the SEA then systematically orders by ADA all of 
the LEAs in the group that includes the eligible applicant LEA. The SEA 
may further divide the ordered LEAs into subgroups by using logical 
division points (e.g., the median, quartiles, or standard deviations) 
or a continuous interval of the ordered LEAs (e.g., a percentage or a 
numerical range). If the subgroup containing the eligible applicant LEA 
includes at least 10 other LEAs (excluding significantly impacted 
LEAs), it will be the eligible applicant LEA's new group of generally 
comparable LEAs. The SEA computes the LCR for the eligible applicant 
LEA using the data for all of the LEAs in the

[[Page 33165]]

subgroup except the eligible applicant LEA.
    Example 2. An eligible applicant LEA serves an unusually high 
percentage of children with disabilities, and the SEA, in consultation 
with the LEA, identifies ``proportion of children with disabilities'' 
as an additional comparability factor. From the group of LEAs under 
Sec.  222.39(a)(2) that includes the eligible applicant LEA, the SEA 
lists the LEAs in descending order according to the percentage of 
children with disabilities enrolled in each of the LEAs. The SEA 
divides the list of LEAs into four groups containing equal numbers of 
LEAs. The group containing the eligible applicant LEA is that LEA's new 
group of generally comparable LEAs if it contains at least 10 LEAs.
    (iii) The SEA may apply more than one factor of general 
comparability in identifying a new group of 10 or more generally 
comparable LEAs for the eligible applicant LEA. If the subgroup 
containing the eligible applicant LEA includes at least 10 other LEAs 
(excluding significantly impacted LEAs), it will be the eligible 
applicant LEA's new group of generally comparable LEAs. The SEA 
computes the LCR for the eligible applicant LEA using the data from all 
of the LEAs in the subgroup except the eligible applicant LEA.
    Example 3. An eligible applicant LEA is very sparsely populated and 
serves an unusually high percentage of children with limited English 
proficiency. The SEA, in consultation with the LEA, identifies 
``sparsity of population'' and ``proportion of children with limited 
English proficiency'' as additional comparability factors. From the 
group of LEAs under Sec.  222.39(a)(2) that includes the eligible 
applicant LEA, the SEA identifies all LEAs that are sparsely populated. 
The SEA further subdivides the sparsely populated LEAs into two groups, 
those that serve an unusually high percentage of children with limited 
English proficiency and those that do not. The subgroup of at least 10 
sparsely populated LEAs that serve a high percentage of children with 
limited English proficiency is the eligible applicant LEA's new group 
of generally comparable LEAs.
    (e)(1) Using the new group of generally comparable LEAs selected 
under paragraph (d) of this section, the SEA computes the LCR for the 
eligible applicant LEA according to the provisions of Sec.  222.41.
    (2) The SEA certifies the resulting LCR by submitting that LCR to 
the Secretary and providing the Secretary a description of the 
additional factor or factors of general comparability and the data used 
to identify the new group of generally comparable LEAs.
    (3) The Secretary reviews the data submitted by the SEA, and 
accepts the LCR for the purpose of use under section 8003(b)(1)(C)(iii) 
in determining the LEA's maximum payment under section 8003 if the 
Secretary determines that it meets the purposes and requirements of the 
Act and this part.

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii))


0
21-22. Section 222.41 is amended by revising the section heading, the 
introductory text, and paragraph (d) to read as follows:


Sec.  222.41  How does a State educational agency compute and certify 
local contribution rates based upon generally comparable local 
educational agencies?

    Except as otherwise specified in the Act, the SEA, subject to the 
Secretary's review and approval, computes and certifies an LCR for each 
group of generally comparable LEAs within its State that was identified 
using the factors in Sec.  222.39, and Sec.  222.40 if appropriate, as 
follows:
* * * * *
    (d) The SEA certifies the resulting figure for each group as the 
LCR for that group of generally comparable LEAs to be used by the 
Secretary under section 8003(b)(1)(C)(iii) in determining the LEA's 
maximum payment amount under section 8003.
* * * * *

0
23. Section 222.43 is added to read as follows:


Sec.  222.43  What requirements must a local educational agency meet in 
order to be eligible for financial assistance under section 
8003(b)(1)(F) due to unusual geographic features?

    An LEA is eligible for financial assistance under section 
8003(b)(1)(F) if the Secretary determines that the LEA meets all of the 
following requirements--
    (a)(1) The LEA is eligible for a basic support payment under 
section 8003(b), including meeting the maintenance of effort 
requirements in section 8003(g) of the Act;
    (2) The LEA timely applies for assistance under section 
8003(b)(1)(F) and meets all other requirements of subparts A and C;
    (3) The LEA is meeting the tax rate requirement in Sec.  222.68(c) 
and the other applicable requirements of Sec. Sec.  222.68 through 
222.72; and
    (4) The LEA is not in a State that takes the LEA's payment under 
section 8003(b)(1)(F) into account in an equalization program that 
qualifies under section 8009 of the Act.
    (b)(1) As part of its section 8003 application, the LEA indicates 
in writing that it wishes to apply for an ``unusual geographic'' 
payment and it will provide the Secretary with documentation upon 
request that demonstrates that the LEA is unable to provide a level of 
education equivalent to that provided by its generally comparable LEAs 
because--
    (i) The applicant's current expenditures are affected by unusual 
geographic factors; and
    (ii) As a result, those current expenditures are not reasonably 
comparable to the current expenditures of its generally comparable 
LEAs.
    (2) The LEA's documentation must include--
    (i) A specific description of the unusual geographic factors on 
which the applicant is basing its request for compensation under this 
section and objective data demonstrating that the applicant is more 
severely affected by the factors than any other LEA in its State;
    (ii) Objective data demonstrating the specific ways in which the 
unusual geographic factors affect the applicant's current expenditures 
so that they are not reasonably comparable to the current expenditures 
of its generally comparable LEAs;
    (iii) Objective data demonstrating the specific ways in which the 
unusual geographic factors prevent the applicant from providing a level 
of education equivalent to that provided by its generally comparable 
LEAs; and
    (iv) Any other information that the Secretary may require to make 
an eligibility determination under this section.

(Authority: 20 U.S.C. 7703(b)(1)(F))


0
23-24. Section 222.44 is added to read as follows:


Sec.  222.44  How does the Secretary determine a maximum payment for 
local educational agencies that are eligible for financial assistance 
under section 8003(b)(1)(F) and Sec.  222.43?

    The Secretary determines a maximum payment under section 
8003(b)(1)(F) for an eligible LEA, using data from the third preceding 
fiscal year, as follows:
    (a) Subject to paragraph (b) of this section, the Secretary 
increases the eligible LEA's local contribution rate (LCR) for section 
8003(b) payment purposes to the amount the Secretary determines will 
compensate the applicant for the increase in its current expenditures 
necessitated by the unusual geographic factors identified under Sec.  
222.43(b)(2).

[[Page 33166]]

    (b) The Secretary does not increase the LCR under this section to 
an amount that is more than--
    (1) Is necessary to allow the applicant to provide a level of 
education equivalent to that provided by its generally comparable LEAs; 
or
    (2) The per pupil share for all children in ADA of the increased 
current expenditures necessitated by the unusual geographic factors 
identified under Sec.  222.43, as determined by the Secretary.

(Authority: 20 U.S.C. 7703(b)(1)(F))


0
25. Section 222.50 is revised to read as follows:


Sec.  222.50  What definitions apply to this subpart?

    In addition to the terms referenced or defined in Sec.  222.2, the 
following definitions apply to this subpart:
    Child with a disability as defined in 34 CFR 300.8.
    Early intervention services as defined in 34 CFR 303.13.
    Free appropriate public education or FAPE as defined in 34 CFR 
300.17.
    Individualized education program or IEP as defined in 34 CFR 
300.22.
    Individualized family service plan or IFSP as defined in 34 CFR 
303.20.
    Infant or toddler with a disability as defined in 34 CFR 303.21.
    Infants, toddlers, and children with disabilities, for these 
regulations, means both a ``child with a disability'' as defined in 34 
CFR 300.8 and an ``infant or toddler with a disability'' as defined in 
34 CFR 303.21.
    Related services as defined in 34 CFR 300.34.
    Special education as defined in 34 CFR 300.39.

(Authority: 20 U.S.C. 1401, 1414, 1432, 1436, 7703, 7705, 7713; 34 
CFR parts 300 and 303)



0
26. Section 222.51 is revised to read as follows:


Sec.  222.51  Which children may a local educational agency count for 
payment under section 8003(d) of the Act?

    (a) An LEA may count children described in sections 
8003(a)(1)(A)(ii), (a)(1)(B), (a)(1)(C), and (a)(1)(D) of the Act who 
are eligible for services under the provisions of Part B or Part C of 
the Individuals with Disabilities Education Act (20 U.S.C. 1400 et 
seq.) (IDEA), for the purpose of computing a payment under section 
8003(d) in accordance with the provisions of this section.
    (b)(1) An LEA may count a child with a disability described in 
paragraph (a) of this section who attends a private school or 
residential program if the LEA has placed or referred the child in 
accordance with the provisions of section 613 of the IDEA and 34 CFR 
part 300, subparts C and D.
    (2) An LEA may not count a child with a disability described in 
paragraph (a) of this section who is placed in a private school by his 
or her parents, but that child may participate in public school 
programs that use section 8003(d) funds.
    (c) An LEA may count infants and toddlers with disabilities 
described in paragraph (a) of this section if--
    (1) The LEA provides early intervention services or FAPE to each of 
those children--
    (i) Either directly or through an arrangement with another entity; 
and
    (ii) The State does not charge a fee or other out-of-pocket cost to 
the child's parents under the State's system of payments on file with 
the Secretary required under 34 CFR 303.203(b)(1), 303.520, and 
303.521, and there is no other cost to the child's parents (the costs 
of premiums do not count as out-of-pocket costs); and
    (2) Each of those children has an IFSP or IEP (as appropriate).

(Authority: 20 U.S.C. 1400 et seq. and 7703(d))



0
27. Section 222.52 is amended by revising paragraph (b) to read as 
follows:


Sec.  222.52  What requirements must a local educational agency meet to 
receive a payment under section 8003(d)?

* * * * *
    (b) Have in effect written IEPs or IFSPs for all federally 
connected children with disabilities it claims under section 8003(d); 
and
* * * * *

0
28. Section 222.53 is amended by:
0
A. In paragraph (a), removing the phrase ``part 300'' and adding in its 
place the phrase ``parts 300 and 303''.
0
B. Revising paragraph (c)(1).
0
C. In paragraph (c)(2) introductory text, adding ``, and early 
intervention services for,'' following the words ``public education 
of''.
0
D. In paragraphs (c)(2)(i) and (ii), adding ``, or early intervention 
services for,'' following the words ``public education of''.
0
E. In paragraph (d)(2) introductory text adding the phrase ``and for 
early intervention services'' following ``special education and related 
services''.
0
F. In paragraph (d)(2)(i), adding the phrase ``and for early 
intervention services'' following ``special education and related 
services''.
0
G. In paragraph (d)(3), adding the phrase ``and for early intervention 
services'' following ``special education and related services''.
    The revision reads as follows:


Sec.  222.53  What restrictions and requirements apply to the use of 
funds provided under section 8003(d)?

* * * * *
    (c) * * *
    (1) Expenditures that are reasonably related to the conduct of 
programs or projects for the free appropriate public education of, or 
early intervention services for, federally connected children with 
disabilities, which may include--
    (i) Program planning and evaluation; and
    (ii) Construction of or alteration to existing school facilities, 
but only when in accordance with section 605 of the IDEA and when the 
Secretary authorizes in writing those uses of funds.
* * * * *


Sec.  222.54  [Amended]

0
29. Section 222.54 is amended by adding ``, and for early intervention 
services,'' in paragraph (b) following ``all funds for programs''.


Sec.  222.55  [Amended]

0
30. Section 222.55 is amended by removing the phrase ``part 300'' and 
adding, in its place, the phrase ``parts 300 and 303''.
0
31. Subpart E is revised to read as follows:

Subpart E--Payments for Heavily Impacted Local Educational Agencies 
Under Section 8003(b)(2) of the Act
Sec.
222.60 What are the scope and purpose of this subpart?
222.61 What data are used to determine a local educational agency's 
eligibility under section 8003(b)(2) of the Act?
222.62 How are local educational agencies determined eligible under 
section 8003(b)(2)?
222.63 When is a local educational agency eligible as a continuing 
applicant for payment under section 8003(b)(2)(B)?
222.64 When is a local educational agency eligible as a new 
applicant for payment under section 8003(b)(2)(C)?
222.65 What other requirements must a local educational agency meet 
to be eligible for financial assistance under section 8003(b)(2)?
222.66 How does a local educational agency lose and resume 
eligibility under section 8003(b)(2)?
222.67 How may a State aid program affect a local educational 
agency's eligibility for assistance under section 8003(b)(2)?
222.68 How does the Secretary determine whether a fiscally 
independent local educational agency meets the applicable tax rate 
requirement?
222.69 What tax rates does the Secretary use if real property is 
assessed at different percentages of true value?

[[Page 33167]]

222.70 What tax rates does the Secretary use if two or more 
different classifications of real property are taxed at different 
rates?
222.71 What tax rates may the Secretary use if substantial local 
revenues are derived from local tax sources other than real property 
taxes?
222.72 How does the Secretary determine whether a fiscally dependent 
local educational agency meets the applicable tax rate requirement?
222.73 What information must the State educational agency provide?
222.74 How does the Secretary identify generally comparable local 
educational agencies for purposes of section 8003(b)(2)?
222.75 How does the Secretary compute the average per pupil 
expenditure of generally comparable local educational agencies under 
this subpart?
222.76-222.79 [Reserved]

Subpart E--Payments for Heavily Impacted Local Educational Agencies 
Under Section 8003(b)(2) of the Act


Sec.  222.60  What are the scope and purpose of this subpart?

    The regulations in this subpart implement section 8003(b)(2) of the 
Act, which provides financial assistance to certain heavily impacted 
local educational agencies (LEAs). The specific eligibility 
requirements are detailed in Sec. Sec.  222.62 through 222.66.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.61  What data are used to determine a local educational 
agency's eligibility under section 8003(b)(2) of the Act?

    (a) Computations and determinations made with regard to an LEA's 
eligibility under section 8003(b)(2) in Sec. Sec.  222.61 through 
222.66 of these regulations are based on the LEA's final student, 
revenue, expenditure, and tax data from the third fiscal year preceding 
the fiscal year for which it seeks assistance.
    (b) Except for an LEA described in Sec.  222.64(a)(3)(ii), the LEAs 
used for meeting the applicable tax rate requirement are the comparable 
LEAs that are identified in Sec.  222.74 or all LEAs in the applicant's 
State.
    (c) As used in this subpart, the phrase ``tax rate for general fund 
purposes'' means ``local real property tax rates for current 
expenditures purposes'' as defined in Sec.  222.2. ``Current 
expenditures'' is defined in section 8013(4) of the ESEA.

(Authority: 20 U.S.C. 7703(b)(2))

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

    (a) An LEA that is eligible to apply for a ``continuing'' heavily 
impacted payment under section 8003(b)(2)(B) is one that received an 
additional assistance payment under section 8003(f) for fiscal year 
2000 and that meets eligibility requirements specified in Sec.  222.63.
    (b) An LEA that is eligible to apply for a ``new'' heavily impacted 
payment under section 8003(b)(2)(C) is one that did not receive an 
additional assistance payment under section 8003(f) for fiscal year 
2000 and that meets eligibility requirements specified in Sec.  222.64 
for two consecutive application years.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.63  When is a local educational agency eligible as a 
continuing applicant for payment under section 8003(b)(2)(B)?

    A continuing heavily impacted LEA must have--
    (a) The same boundaries as those of a Federal military 
installation;
    (b)(1) An enrollment of federally connected children described in 
section 8003(a)(1) equal to at least 35 percent of the total number of 
children in average daily attendance (ADA) in the LEA;
    (2) A per pupil expenditure (PPE) that is less than the average PPE 
of the State in which the LEA is located or of all the States, 
whichever PPE is greater (except that an LEA with a total student 
enrollment of less than 350 students shall be determined to have met 
the PPE requirement); and
    (3) A tax rate for general fund purposes of at least 95 percent of 
the average tax rate of comparable LEAs identified under Sec.  222.74 
or all LEAs in the applicant's State;
    (c)(1) An enrollment of federally connected children described in 
section 8003(a)(1) equal to at least 30 percent of the total number of 
children in ADA in the LEA; and
    (2) A tax rate for general fund purposes of at least 125 percent of 
the average tax rate of comparable LEAs identified under Sec. Sec.  
222.39-40 or of all LEAs in the applicant's State; or
    (d) A total enrollment of at least 25,000 students, of which at 
least 50 percent are children described in section 8003(a)(1) and at 
least 6,000 of such children are children described in section 
8003(a)(1)(A) and (B).

(Authority: 20 U.S.C. 7703(b)(2)(B))

Sec.  222.64  When is a local educational agency eligible as a new 
applicant for payment under section 8003(b)(2)(C)?

    A new heavily impacted LEA must have--
    (a)(1)(i) Federally connected children equal to at least 50 percent 
of the total number of children in average daily attendance (ADA) in 
the LEA if children described in section 8003(a)(1)(F)-(G) are eligible 
to be counted for a section 8003(b)(1) payment; or
    (ii) Federally connected children equal to at least 40 percent of 
the total number of children in ADA if children described in section 
8003(a)(1)(F)-(G) are not eligible to be counted for a section 
8003(b)(1) payment; and
    (2)(i) If the LEA has a total ADA of more than 350 children,
    (A) A per pupil expenditure (PPE) that is less than the average of 
the State in which the LEA is located; and
    (B) A tax rate for general fund purposes equal to at least 95 
percent of the average tax rate of comparable LEAs identified in Sec.  
222.74 or of all LEAs in the applicant's State; or
    (ii) If the LEA has a total ADA of less than 350 children,
    (A) A PPE that is less than the average PPE of one or three 
generally comparable LEAs identified in Sec.  222.74(b); and
    (B) A tax rate equal to at least 95 percent of the average tax rate 
of one or three generally comparable LEAs identified in Sec.  
222.74(b);
    (b) The same boundaries as those of a Federal military 
installation; or
    (c)(1) The same boundaries as island property held in trust by the 
Federal government;
    (2) No taxing authority; and
    (3) Received a payment under section 8003(b)(1) for fiscal year 
2001.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.65  What other requirements must a local educational agency 
meet to be eligible for financial assistance under section 8003(b)(2)?

    Subject to Sec.  222.66, an LEA described in Sec.  222.63 or Sec.  
222.64 is eligible for financial assistance under section 8003(b)(2) if 
the Secretary determines that the LEA meets the following requirements:
    (a) The LEA timely applies for assistance under section 8003(b)(2) 
and meets all of the other application and eligibility requirements of 
subparts A and C of these regulations.
    (b) Except for an LEA described in Sec.  222.63(a) or (d), or Sec.  
222.64(b) or (c), the LEA meets the applicable tax rate requirement in 
accordance with the procedures and requirements of Sec. Sec.  222.68 
through 222.74.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.66  How does a local educational agency lose and resume 
eligibility under section 8003(b)(2)?

    (a) A continuing heavily impacted LEA that fails to meet the 
eligibility requirements in Sec.  222.63 in any fiscal year or a new 
heavily impacted LEA that received a section 8003(b)(2)

[[Page 33168]]

payment but then fails to meet the eligibility requirements in Sec.  
222.64 will still receive a heavily impacted payment in the first year 
of ineligibility, based on the number of children in ADA that would be 
counted for that application if the LEA were eligible.
    (b)(1) A continuing heavily impacted LEA may resume eligibility for 
a heavily impacted payment if it applies in the fiscal year preceding 
the year for which it seeks eligibility and it meets the eligibility 
requirements in Sec.  222.63 for both fiscal years.
    (2) In the first fiscal year that a continuing heavily impacted LEA 
qualifies to resume eligibility, it cannot receive a heavily impacted 
payment but instead will receive a basic support payment under section 
8003(b)(1) for that year.
    Example:
CONTINUING LEA
    In Federal Fiscal Years (FFYs) 1 and 2, a continuing LEA is 
eligible for a section 8003(b)(2) payment. In FFY 3, the LEA applies 
but is ineligible for section 8003(b)(2). However, it will still 
receive a payment under section 8003(b)(2) for FFY 3 (a ``hold 
harmless'' payment under Sec.  222.66(a)). For FFY 4, the LEA applies 
and meets the requirements. The LEA is not eligible to receive a 
section 8003(b)(2) payment in FFY 4 but is instead eligible for a 
section 8003(b)(1) payment (see Sec.  222.66(b)). In FFY 5, the LEA 
applies, meets the requirements, and receives a section 8003(b)(2) 
payment. The LEA not only must apply one year in advance and meet the 
section 8003(b)(2) requirements (FFY 4) but it must apply and meet the 
requirements for the subsequent FFY (year 5). The effects of these 
requirements on a continuing applicant's status and payments are 
summarized in the table below.

                                                                     Continuing LEAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              FFY 1                   FFY 2                  FFY 3                  FFY 4                  FFY 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
8003(b)(2) Eligibility.............  Yes...................  Yes...................  No...................  Yes..................  Yes
Payment Type.......................  (b)(2)................  (b)(2)................  (b)(2) Hold Harmless.  (b)(1)...............  (b)(2)
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (c) A new heavily impacted LEA may resume eligibility for a heavily 
impacted payment if it meets the eligibility requirements in Sec.  
222.64 for the fiscal year for which it seeks a payment.
    Example:
NEW LEA
    A new LEA applies for a section 8003(b)(2) payment and meets the 
applicable eligibility criteria. The LEA does not receive a section 
8003(b)(2) payment in FFY 1 and it must apply and meet the requirements 
again in FFY 2 before it can receive a (b)(2) payment (see Sec.  
222.62(b)). If that new district is then ineligible for a year, it can 
regain eligibility only if it meets the applicable criteria in a 
subsequent year. For example, if a new LEA loses its section 8003(b)(2) 
eligibility in FFY 3 because its tax rate dropped to 94 percent of the 
average tax rate of comparable districts in the State, that LEA is 
still entitled to receive a payment under section 8003(b)(2) in FFY 3 
if it applies for such payment (a ``hold harmless'' payment under Sec.  
222.66(a)). Then if the LEA applies in FFY 4 and meets the eligibility 
requirement under section 8003(b)(2), it is once again eligible to 
receive a section 8003(b)(2) payment (see Sec.  222.66(c)). The effects 
of these requirements on a new applicant's status and payments are 
summarized in the table below.

                                                                        New LEAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              FFY 1                   FFY 2                  FFY 3                  FFY 4                  FFY 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
8003(b)(2) Eligibility.............  Yes...................  Yes...................  No...................  Yes..................  Yes
Payment Type.......................  (b)(1)................  (b)(2)................  (b)(2) Hold Harmless.  (b)(2)...............  (b)(2)
--------------------------------------------------------------------------------------------------------------------------------------------------------


(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.67  How may a State aid program affect a local educational 
agency's eligibility for assistance under section 8003(b)(2)?

    The Secretary determines that an LEA is not eligible for financial 
assistance under section 8003(b)(2) if--
    (a) The LEA is in a State that has an equalized program of State 
aid that meets the requirements of section 8009; and
    (b) The State, in determining the LEA's eligibility for or amount 
of State aid, takes into consideration the portion of the LEA's payment 
under section 8003(b)(2) that exceeds what the LEA would receive under 
section 8003(b)(1).

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.68  How does the Secretary determine whether a fiscally 
independent local educational agency meets the applicable tax rate 
requirement?

    (a) To determine whether a fiscally independent LEA, as defined in 
Sec.  222.2(c), meets the applicable tax rate requirement in Sec. Sec.  
222.63(b)(3), 222.63(c)(2), and 222.64(a)(3), the Secretary compares 
the LEA's local real property tax rate for current expenditure 
purposes, as defined in Sec.  222.2(c) (referred to in this part as 
``tax rate'' or ``tax rates''), with the tax rates of its generally 
comparable LEAs.
    (b) For purposes of this section, the Secretary uses--
    (1) The actual tax rate if all the real property in the LEA and its 
generally comparable LEAs is assessed at the same percentage of true 
value; or
    (2) Tax rates computed under Sec. Sec.  222.69-222.71.
    (c) The Secretary determines that an LEA described in Sec. Sec.  
222.63(b), 222.63(c), or 222.64(a) meets the applicable tax rate 
requirement if--
    (1) The LEA's tax rate is equal to at least 95 percent (or 125 
percent under 222.63(c)) of the average tax rate of its generally 
comparable LEAs;
    (2) Each of the LEA's tax rates for each classification of real 
property is equal to at least 95 percent (or 125 percent under 
222.63(c)) of each of the average tax rates of its generally comparable 
LEAs for the same classification of property;
    (3) The LEA taxes all of its real property at the maximum rates 
allowed by the State, if those maximum rates apply uniformly to all 
LEAs in the State

[[Page 33169]]

and the State does not permit any rates higher than the maximum; or
    (4) The LEA has no taxable real property.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.69  What tax rates does the Secretary use if real property is 
assessed at different percentages of true value?

    If the real property of an LEA and its generally comparable LEAs 
consists of one classification of property but the property is assessed 
at different percentages of true value in the different LEAs, the 
Secretary determines whether the LEA meets the applicable tax rate 
requirement under Sec.  222.68(c)(1) by using tax rates computed by--
    (a) Multiplying the LEA's actual tax rate for real property by the 
percentage of true value assigned to that property for tax purposes; 
and
    (b) Performing the computation in paragraph (a) of this section for 
each of its generally comparable LEAs and determining the average of 
those computed tax rates.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.70  What tax rates does the Secretary use if two or more 
different classifications of real property are taxed at different 
rates?

    If the real property of an LEA and its generally comparable LEAs 
consists of two or more classifications of real property taxed at 
different rates, the Secretary determines whether the LEA meets the 
applicable tax rate requirement under Sec.  222.68(c)(1) or (2) by 
using one of the following:
    (a) Actual tax rates for each of the classifications of real 
property.
    (b) Tax rates computed in accordance with Sec.  222.69 for each of 
the classifications of real property.
    (c) Tax rates computed by--
    (1) Determining the total true value of all real property in the 
LEA by dividing the assessed value of each classification of real 
property in the LEA by the percentage of true value assigned to that 
property for tax purposes and aggregating the results;
    (2) Determining the LEA's total revenues derived from local real 
property taxes for current expenditures (as defined in section 8013);
    (3) Dividing the amount determined in paragraph (c)(2) of this 
section by the amount determined in paragraph (c)(1) of this section; 
and
    (4) Performing the computations in paragraphs (c)(1), (2), and (3) 
of this section for each of the generally comparable LEAs and then 
determining the average of their computed tax rates.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.71  What tax rates may the Secretary use if substantial local 
revenues are derived from local tax sources other than real property 
taxes?

    (a) In a State in which a substantial portion of revenues for 
current expenditures for educational purposes is derived from local tax 
sources other than real property taxes, the State educational agency 
(SEA) may request that the Secretary take those revenues into account 
in determining whether an LEA in that State meets the applicable tax 
rate requirement under Sec.  222.68.
    (b) If, based upon the request of an SEA, the Secretary determines 
that it is appropriate to take the revenues described in paragraph (a) 
of this section into account in determining whether an LEA in that 
State meets the applicable tax rate requirement under Sec.  222.68, the 
Secretary uses tax rates computed by--
    (1) Dividing the assessed value of each classification of real 
property in the LEA by the percentage of true value assigned to that 
property for tax purposes and aggregating the results;
    (2) Determining the LEA's total revenues derived from local tax 
sources for current expenditures (as defined in section 8013);
    (3) Dividing the amount determined in paragraph (b)(2) of this 
section by the amount determined in paragraph (b)(1) of this section; 
and
    (4) Performing the computations in paragraphs (b)(1), (2), and (3) 
of this section for each of the generally comparable LEAs and then 
determining the average of those computed tax rates.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.72  How does the Secretary determine whether a fiscally 
dependent local educational agency meets the applicable tax rate 
requirement?

    (a) If an LEA is fiscally dependent, as defined in Sec.  222.2(c), 
the Secretary compares the LEA's imputed local tax rate, calculated 
under paragraph (b) of this section, with the average tax rate of its 
generally comparable LEAs, calculated under paragraph (c) of this 
section, to determine whether the LEA meets the applicable tax rate 
requirement.
    (b) The Secretary imputes a local tax rate for a fiscally dependent 
LEA by--
    (1) Dividing the assessed value of each classification of real 
property within the boundaries of the general government by the 
percentage of true value assigned to that property for tax purposes and 
aggregating the results;
    (2) Determining the amount of locally derived revenues made 
available by the general government for the LEA's current expenditures 
(as defined in section 8013); and
    (3) Dividing the amount determined in paragraph (b)(2) of this 
section by the amount determined in paragraph (b)(1) of this section.
    (c) The Secretary performs the computations in paragraph (b) of 
this section for each of the fiscally dependent generally comparable 
LEAs and the computations in Sec. Sec.  222.68 through 222.71, 
whichever is applicable, for each of the fiscally independent generally 
comparable LEAs and determines the average of all those tax rates.
    (d) The Secretary determines that a fiscally dependent LEA 
described in Sec.  222.63(b) or Sec.  222.64(a) meets the applicable 
tax rate requirement if its imputed local tax rate is equal to at least 
95 percent of the average tax rate of its generally comparable LEAs.
    (e) The Secretary determines that a fiscally dependent LEA 
described in Sec.  222.63(c) meets the applicable tax rate requirement 
if its imputed local tax rate is equal to at least 125 percent of the 
average tax rate of its generally comparable LEAs.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.73  What information must the State educational agency 
provide?

    The SEA of any State with an LEA applying for assistance under 
section 8003(b)(2) shall provide the Secretary with relevant 
information necessary to determine the PPE for all LEAs in the State 
and whether the LEA meets the applicable tax rate requirement under 
this subpart.

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.74  How does the Secretary identify generally comparable 
local educational agencies for purposes of section 8003(b)(2)?

    (a) Except as otherwise provided in paragraph (b) of this section, 
the Secretary identifies generally comparable LEAs for purposes of this 
subpart in accordance with the local contribution rate procedures 
described in Sec. Sec.  222.39 through 222.40.
    (b) For applicant LEAs described in Sec.  222.64(a)(2)(ii) and 
(a)(3)(ii), to identify the one or three generally comparable LEAs, the 
Secretary uses the following procedures:
    (1) The Secretary asks the SEA of the applicant LEA to identify 
generally comparable LEAs in the State by first following the 
directions in Sec.  222.39(a)(4), using data from the preceding fiscal 
year. The SEA then removes from the resulting list any LEAs that are 
significantly impacted, as described in Sec.  222.39(b)(1), except the 
applicant LEA.

[[Page 33170]]

    (2) If the remaining LEAs are not in rank order by total ADA, the 
SEA lists them in that order.
    (3) The LEA may then select as its generally comparable LEAs, for 
purposes of section 8003(b)(2) only, one or three LEAs from the list 
that are closest to it in size as determined by total ADA (i.e., the 
next one larger or the next one smaller, or the next three larger LEAs, 
the next three smaller, the next two larger and the next one smaller, 
or the next one larger and the next two smaller).

(Authority: 20 U.S.C. 7703(b)(2))

Sec.  222.75  How does the Secretary compute the average per pupil 
expenditure of generally comparable local educational agencies under 
this subpart?

    For applicant LEAs described in Sec.  222.64(a)(2)(ii), the 
Secretary computes average per pupil expenditures (APPE) by dividing 
the sum of the total current expenditures for the third preceding 
fiscal year for the identified generally comparable LEAs by the sum of 
the total ADA of those LEAs for the same fiscal year.

(Authority: 20 U.S.C. 7703(b)(2))

Sec. Sec.  222.76-222.79   [Reserved]

Subpart F [Removed and Reserved]

0
32. Subpart F, consisting of Sec. Sec.  222.80 through 222.85, is 
removed and reserved.


Sec.  222.151  [Amended]

0
33. Section 222.151 is amended by:
0
A. In paragraph (a), removing the phrase ``or Pub. L. 81-874''.
0
B. In paragraph (b)(1), removing the number ``30'' and adding in its 
place the number ``60''.


Sec.  222.152  [Amended]

0
34. Section 222.152 is amended in paragraphs (a)(1) and (c) by removing 
the phrase ``or Pub. L. 81-874'' from each of those paragraphs.
0
35. Section 222.153 is amended by revising paragraph (a) to read as 
follows:


Sec.  222.153  How must a local educational agency request an 
administrative hearing?

* * * * *
    (a)(1) If it mails the hearing request, address it to the 
Secretary, c/o Director, Impact Aid Program, Room 3E105, U.S. 
Department of Education, 400 Maryland Avenue SW., Washington, DC 20202-
6244;
    (2) If it hand-delivers the hearing request, deliver it to the 
Director, Impact Aid Program, Room 3E105, U.S. Department of Education, 
400 Maryland Avenue SW., Washington, DC 20202-6244; or
    (3) If it emails the hearing request, send it to Impact.Aid@ed.gov.
    Note to paragraph (a): The Secretary encourages applicants 
requesting an Impact Aid hearing to mail or email their requests. 
Because of enhanced security procedures, building access for non-
official staff may be limited. Applicants should be prepared to mail 
their hearing requests if they or their courier are unable to obtain 
access to the building.
* * * * *


Sec.  222.159  [Amended]

0
36. Section 222.159 is amended by removing the phrase ``60 days'' and 
adding, in its place, the phrase ``30 working days (as determined by 
the LEAs or State)''.
0
37. Section 222.161 is amended by:
0
A. Revising paragraph (a)(1)(ii).
0
B. Removing paragraph (a)(1)(iii).
0
C. Revising paragraph (a)(5).
0
D. In paragraph (c), amending paragraph (4) of the definition of 
``current expenditures'' by adding the word ``or'' after the semicolon.
0
E. In paragraph (c), amending paragraph (5) of the definition of 
``current expenditures'' by removing the phrase ``or under Pub. L. 81-
874'' and removing ``; or'' and adding in its place a period.
0
F. In paragraph (c), removing paragraph (6) of the definition of 
``current expenditures''.
    The revisions read as follows:


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

    (a) * * *
    (1) * * *
    (ii) A State may not take into consideration--
    (A) That portion of an LEA's payment that is generated by the 
portion of a weight in excess of one under section 8003(a)(2)(B) of the 
Act (children residing on Indian lands);
    (B) Payments under section 8003(d) of the Act (children with 
disabilities); or
    (C) The amount that an LEA receives under section 8003(b)(2) that 
exceeds the amount the LEA would receive if eligible under section 
8003(b)(1) and not section 8003(b)(2) (heavily impacted LEAs).
* * * * *
    (5) A State may not take into consideration payments under the Act 
before its State aid program has been certified by the Secretary.
* * * * *


Sec.  222.163  [Amended]

0
38. Section 222.163 is amended by:
0
A. In paragraph (a), removing the phrase ``and Pub. L. 81-874''.
0
B. In paragraph (c), removing the phrase ``and Pub. L. 81-874'' and 
``or payments under Pub. L. 81-874''.


Sec.  222.165  [Amended]

0
39. Section 222.165 is amended in paragraph (a)(1) by removing the 
number ``30'' and adding in its place the number ``60''.


Sec.  222.175  [Amended]

0
40. Section 222.175 is amended by:
0
A. Removing paragraphs (a)(4) and (8) and redesignating paragraphs 
(a)(5) through (7) as paragraphs (a)(4) through (6), respectively.
0
B. Redesignating paragraph (b) as paragraph (c) and adding a new 
paragraph (b).
    The addition reads as follows:


Sec.  222.175  What regulations apply to recipients of funds under this 
program?

* * * * *
    (b) The OMB Guidelines to Agencies on Governmentwide Debarment and 
Suspension (Nonprocurement) in 2 CFR part 180, as adopted and amended 
as regulations of the Department in 2 CFR part 3485, and the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards in 2 CFR part 200, as adopted and amended in 2 CFR 
part 3474.
* * * * *
[FR Doc. 2015-14213 Filed 6-10-15; 8:45 am]
 BILLING CODE 4000-01-P