4000‑01-U

DEPARTMENT OF EDUCATION

34 CFR Part 222

## RIN 1810-AA96

Impact Aid Programs

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

ACTION: Final regulations.

SUMMARY: The Secretary issues these final regulations to implement the
Impact Aid Discretionary Construction program, which is authorized under
section 8007(b) of the Elementary and Secondary Education Act of 1965
(the Act), as amended by the No Child Left Behind Act of 2001 (NCLB).
The program provides competitive grants for emergency repairs and
modernization of school facilities to certain eligible school districts
that receive Impact Aid formula funds. These final regulations
incorporate statutory requirements and provide guidance for applying and
qualifying for, as well as spending, the Federal funds provided under
this program. These final regulations apply to the grant competitions
after fiscal year (FY) 2002.

DATES: These regulations are effective (INSERT DATE 30 DAYS AFTER DATE
OF PUBLICATION IN THE FEDERAL REGISTER).

FOR FURTHER INFORMATION CONTACT: Marilyn Hall, Impact Aid Program, U.S.
Department of Education, 400 Maryland Avenue, S.W., Washington, DC
20202-6244. Telephone: (202) 260-3858 or via Internet: Impact.Aid@ed.gov

If you use a telecommunications device for the deaf (TDD), you may call
the Federal Information Relay Service (FIRS) at 1-800-877-8339.

Individuals with disabilities may obtain this document in an alternative
format (e.g., Braille, large print, audiotape, or computer diskette) on
request to the contact person listed under FOR FURTHER INFORMATION
CONTACT.

SUPPLEMENTARY INFORMATION:

These final regulations implement the Impact Aid Discretionary
Construction program, which is authorized under section 8007(b) of the
Act, as amended by the NCLB (Pub. L. 107-110, enacted January 8, 2002).
Final regulations for the FY 2002 grant competition were published in
the [Federal Register]{.underline} on August 16, 2002.

On October 22, 2003, the Secretary published a notice of proposed
rulemaking (NPRM) for this program in the [Federal Register]{.underline}
(68 FR 60598). The NPRM was similar to the final FY 2002 regulations,
but we included clarifying language based on our experiences in
implementing this program. These clarifications were made in §§ 222.172,
222.173, and 222.176 of title 34 of the Code of Federal Regulations.

The purpose of the Impact Aid Discretionary Construction program is to
assist certain eligible Impact Aid school districts in meeting the
emergency or modernization needs of their school facilities. In the
preamble to the NPRM, the Secretary summarized and discussed on pages
60598 and 60599 the substantive issues under the sections of the
regulations to which they pertain.

These final regulations reflect one change from the NPRM, resulting from
public comments. Section 222.192 is amended to specify that when
assessing a grant recipient's available resources for capital
improvements, the Secretary will not consider funds associated with
legally binding written commitments in a district's capital fund that
have been obligated but not yet liquidated.

[Analysis of Comments and Changes]{.underline}

In response to the Secretary\'s invitation in the NPRM, two parties
submitted comments on the proposed regulations. An analysis of the
comments and of the change in the regulations since publication of the
NPRM follows. Generally, we do not address technical and other minor
changes \-- and suggested changes the law does not authorize the
Secretary to make.

[Available Local Funds (§222.192)]{.underline}

[Comment]{.underline}: One commenter recommended that we amend the
regulations to allow the Secretary, when assessing a potential grantee's
available capital resources, to review revised annual audit reports or
other written proof of binding obligations that the grantee has made but
not yet paid for.

[Discussion]{.underline}: Prior to making final funding decisions and
determining final grant awards, the Secretary may verify certain data
with applicants' States and will also assess available resources for all
highly ranked grantees, limitations on the grant awards for certain
grantee categories, and the availability of in-kind contributions. The
Secretary considers as available to fund the project the closing capital
fund balance identified in the LEA's audited financial report for the
prior year, not including \$100,000 or ten percent of the average annual
capital expenditures of the applicant for the three previous fiscal
years, whichever is greater. We agree that the regulations and the
program implementation would be improved with the change recommended by
the commenter. We also believe that the benefits of this provision to
the few cases to which it would apply justify the minimal costs to the
applicants required to submit the documents that would be associated
with this addition.

[Change]{.underline}: The Secretary will also exclude from consideration
capital funds that a grantee can show have been committed by a written
binding agreement but have not yet been paid from the grantee's capital
fund. We have amended §222.192 to reflect this revision.

#### Permissible uses of funds (§222.172)

#### Comment: One commenter expressed a concern that §222.172 would prohibit any grants to LEAs that do not hold title to a school facility. In the commenter's State, LEAs often have exclusive use through ground leases of a school facility located on Indian lands. 

[Discussion]{.underline}: The regulations provide that an LEA may
receive emergency or modernization grants for repairs or renovations to
a facility in which it has an interest, including a leasehold interest.
Accordingly, LEAs leasing space on Indian lands for their schools would
be eligible to receive these types of grants. It is only in §222.172(c)
where we limit the grant of funds for the construction of a new school
to situations where an LEA holds title to the facility to be replaced
and documents that partial or complete replacement is less expensive or
more cost-effective than improving the existing facility. We do not
believe a change to the regulations is necessary.

[Change]{.underline}: None.

#### Executive Order 12866

We have reviewed these final regulations in accordance with Executive
Order 12866. Under the terms of the order we have assessed the potential
costs and benefits of this regulatory action.

The potential costs associated with the final regulations are those
resulting from statutory requirements and those we have determined to be
necessary for administering this program effectively and efficiently.

In assessing the potential costs and benefits\--both quantitative and
qualitative\--of these final regulations, we have determined that the
benefits of the regulations justify the costs.

We have also determined that this regulatory action does not unduly
interfere with State, local, and tribal governments in the exercise of
their governmental functions.

###### Summary of potential costs and benefits

We discussed the potential costs and benefits of these final regulations
in the preamble to the NPRM under the heading Paperwork Reduction Act of
1995. We include additional discussion of potential costs and benefits
in the section of this preamble titled Analysis of Comments and Changes.

### 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. However, in the FY 2002
grant competition, fewer than 40 applications that were eligible to be
evaluated by field readers were submitted by small entities. In
addition, we do not believe that the regulations have a significant
economic impact on the limited number of small LEAs affected because the
regulations do not impose excessive regulatory burdens or require
unnecessary Federal supervision.

The regulations benefit both small and large entities in that they
clarify confusing and complex statutory requirements. Also, since the
statute requires Impact Aid school districts to apply if they wish to
receive these discretionary funds, the Department is not able to award
these funds without the specified application information. The
application process will ensure that districts do not provide
significant amounts of information that is already available to the
Department from annual Impact Aid formula grant applications.

In addition, electronic applications will be available for the
competition to award FY 2003 funds, which will further minimize burden
to all applicants. The software will populate certain application data
fields for applicants that submitted an Impact Aid section 8003
application for FY 2003, and will have built-in checks for completion of
all necessary items. This software will reduce the burden on applicants
of organizing and entering data that were already submitted to the
Impact Aid Program, will help applicants determine whether their LEAs
meet the program's eligibility requirements, and will reduce the number
of errors in applications. Also, whenever possible, certain fiscal data
are collected from State agencies, which are not defined as "small
entities" in the Regulatory Flexibility Act.

The Secretary specifically invited comment in the NPRM on the effects of
the proposed regulations on small entities but we received no comments
on that topic. The regulations impose minimal paperwork burden
requirements for all applicants and minimal requirements with which the
grant recipients must comply.

[Paperwork Reduction Act of 1995]{.underline}

Sections 222.183, 222.184, 222.185, and 222.186 contain information
collection requirements. 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 numbers
assigned to the collections of information in these final regulations at
the end of the affected sections of the regulations.

[Intergovernmental Review]{.underline}

This program is subject to the requirements of Executive Order 12372 and
the regulations in 34 CFR part 79. The objective of the Executive Order
is to foster an intergovernmental partnership and a strengthened
federalism by relying on processes developed by State and local
governments for coordination and review of proposed Federal financial
assistance.

In accordance with the order, we intend this document to provide early
notification of the Department's specific plans and actions for this
program.

[Electronic Access to This Document]{.underline}

You may view this document, as well as all other Department of Education
documents published in the [Federal]{.underline}

[Register]{.underline}, in text or Adobe Portable Document Format (PDF)
on the Internet at the following site:

www.ed.gov/news/fedregister

To use PDF you must have Adobe Acrobat Reader, which is available free
at this site. If you have questions about using PDF, call the U.S.
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in
the Washington, DC, area at (202) 512-1530.

You may also view this document in PDF at the following site:

www.ed.gov/programs/8007b/

[Note]{.underline}: The official version of this document is the
document published in the [Federal Register]{.underline}. Free Internet
access to the official edition of the [Federal Register]{.underline} and
the Code of Federal Regulations is available on GPO Access at:

www.gpoaccess.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number 84.041C Impact Aid
Discretionary Construction Program.)

[List of Subjects in 34 CFR Part 222]{.underline}

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

Dated:

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> Raymond Simon,
>
> [Assistant Secretary for Elementary and Secondary]{.underline}
>
> [Education]{.underline}.

For the reasons discussed in the preamble, the Secretary amends title 34
of the Code of Federal Regulations by revising subpart L of part 222 to
read as follows:

Part 222\--IMPACT AID PROGRAMS

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

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

2\. Revise subpart L of part 222 to read as follows:

Subpart L \-- Impact Aid Discretionary Construction Grant Program Under
Section 8007(b) of the Act

# General

# Sec.

222.170 What is the purpose of the Impact Aid Discretionary Construction
grant program (Section 8007(b) of the Act)?

222.171 What LEAs may be eligible for Discretionary Construction grants?

222.172 What activities may an LEA conduct with funds received under
this program?

222.173 What activities will not receive funding under a Discretionary
Construction grant?

222.174 What prohibitions apply to these funds?

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

222.176 What definitions apply to this program?

# Eligibility

222.177 What eligibility requirements must an LEA meet to apply for an
emergency grant under the first priority?

222.178 What eligibility requirements must an LEA meet to apply for an
emergency grant under the second priority?

222.179 Under what circumstances may an ineligible LEA apply on behalf
of a school for an emergency grant under the second priority?

222.180 What eligibility requirements must an LEA meet to apply for a
modernization grant under the third priority?

222.181 What eligibility requirements must an LEA meet to apply for a
modernization grant under the fourth priority?

222.182 Under what circumstances may an ineligible LEA apply on behalf
of a school for a modernization grant under the fourth priority?

# 

# How to Apply for a Grant

222.183 How does an LEA apply for a grant?

222.184 What information must an application contain?

222.185 What additional information must be included in an emergency
grant application?

222.186 What additional information must be included in a modernization
grant application?

222.187 Which year's data must an SEA or LEA provide?

# How Grants Are Made

222.188 What priorities may the Secretary establish?

222.189 What funding priority does the Secretary give to applications?

222.190 How does the Secretary rank and select applicants?

## 222.191 What is the maximum award amount? 

222.192 What local funds may be considered as available for this
project?

222.193 What other limitations on grant amounts apply?

222.194 Are "in-kind" contributions permissible?

# Conditions and Requirements Grantees Must Meet

222.195 How does the Secretary make funds available to grantees?

222.196 What additional construction and legal requirements apply?

# General

[§222.170 What is the purpose of the Impact Aid Discretionary
Construction grant program (Section 8007(b) of the Act)?]{.underline}

The Impact Aid Discretionary Construction grant program provides
competitive grants for emergency repairs and modernization of school
facilities to certain eligible local educational agencies (LEAs) that
receive formula Impact Aid funds.

(Authority: 20 U.S.C. 7707(b))

[§222.171 What LEAs may be eligible for Discretionary Construction
grants?]{.underline}

\(a\) Applications for these grants are considered in four funding
priority categories. The specific requirements for each priority are
detailed in §§222.177 through 222.182.

(b)(1) Generally, to be eligible for an emergency construction grant, an
LEA must\--

\(i\) Enroll a high proportion (at least 40 percent) of federally
connected children in average daily attendance (ADA) who reside on
Indian lands or who have a parent on active duty in the U.S. uniformed
services;

\(ii\) Have a school that enrolls a high proportion of one of these
types of students;

\(iii\) Be eligible for funding for heavily impacted LEAs under section
8003(b)(2) of the Act; or

\(iv\) Meet the specific numeric requirements regarding bonding
capacity.

\(2\) The Secretary must also consider such factors as an LEA's total
assessed value of real property that may be taxed for school purposes,
its availability and use of bonding capacity, and the nature and
severity of the emergency.

(c)(1) Generally, to be eligible for a modernization construction grant,
an LEA must\--

\(i\) Be eligible for Impact Aid funding under either section 8002 or
8003 of the Act;

\(ii\) Be eligible for funding for heavily impacted LEAs under section
8003(b)(2) of the Act;

\(iii\) Enroll a high proportion (at least 40 percent) of federally
connected children in ADA who reside on Indian lands or who have a
parent on active duty in the U.S. uniformed services;

\(iv\) Have a school that enrolls a high proportion of one of these
types of students; or

\(v\) Meet the specific numeric requirements regarding bonding capacity.

\(2\) The Secretary must also consider such factors as an LEA's total
assessed value of real property that may be taxed for school purposes,
its availability and use of bonding capacity, and the nature and
severity of its need for modernization funds.

(Authority: 20 U.S.C. 7707(b))

[§222.172 What activities may an LEA conduct with funds received under
this program?]{.underline}

\(a\) An LEA may use emergency grant funds received under this program
only to repair, renovate, alter, and, in the limited circumstances
described in paragraph (c) of this section, replace a public elementary
or secondary school facility used for free public education to ensure
the health and safety of students and personnel, including providing
accessibility for the disabled as part of a larger project.

\(b\) An LEA may use modernization grant funds received under this
program only to renovate, alter, retrofit, extend, and, in the limited
circumstances described in paragraph (c) of this section, replace a
public elementary or secondary school facility used for free public
education to provide school facilities that support a contemporary
educational program for the LEA's students at normal capacity, and in
accordance with the laws, standards, or common practices in the LEA's
State.

(c)(1) An emergency or modernization grant under this program may be
used for the construction of a new school facility but only if the
Secretary determines\--

\(i\) That the LEA holds title to the existing facility for which
funding is requested; and

\(ii\) In consultation with the grantee, that partial or complete
replacement of the facility would be less expensive or more
cost-effective than improving the existing facility.

\(2\) When construction of a new school facility is permitted, emergency
and modernization funds may be used only for a new school facility that
is used for free public education. These funds may be used for the\--

\(i\) Construction of instructional, resource, food service, and general
or administrative support areas, so long as they are a part of the
instructional facility; and

\(ii\) Purchase of initial equipment or machinery, and initial utility
connections.

(Authority: 20 U.S.C. 7707(b))

[§222.173 What activities will not receive funding under a Discretionary
Construction grant?]{.underline}

The Secretary does not fund the following activities under a
Discretionary Construction grant:

\(a\) Improvements to facilities for which the LEA does not have full
title or other interest, such as a lease-hold interest.

\(b\) Improvements to or repairs of school grounds, such as
environmental remediation, traffic remediation, and landscaping, that do
not directly involve instructional facilities.

\(c\) Repair, renovation, alteration, or construction for stadiums or
other facilities that are primarily used for athletic contests,
exhibitions, and other events for which admission is charged to the
general public.

\(d\) Improvements to or repairs of teacher housing.

\(e\) Except in the limited circumstances as provided in §222.172(c),
when new construction is permissible, acquisition of any interest in
real property.

\(f\) Maintenance costs associated with any of an LEA's school
facilities.

(Authority: 20 U.S.C. 7707(b))

[§222.174 What prohibitions apply to these funds?]{.underline}

Grant funds under this program may not be used to supplant or replace
other available non-Federal construction money. These grant funds may be
used for emergency or modernization activities only to the extent that
they supplement the amount of construction funds that would, in the
absence of these grant funds, be available to a grantee from non-Federal
funds for these purposes.

[Example of supplanting]{.underline}: An LEA signs a contract for a
\$300,000 roof replacement and plans to use its capital expenditure fund
to pay for the renovation. Since the LEA already has non-Federal funds
available for the roof project, it may not now use a grant from this
program to pay for the project or replace its own funds in order to
conserve its capital fund.

[Example of non-supplanting]{.underline}: The LEA from the example of
supplanting that has the \$300,000 roof commitment has also received a
\$400,000 estimate for the replacement of its facility's heating,
ventilation, and air conditioning (HVAC) system. The LEA has not made
any commitments for the HVAC system because it has no remaining funds
available to pay for that work. Since other funds are not available, it
would not be supplanting if the LEA received an emergency grant under
this program to pay for the HVAC system.

(Authority: 20 U.S.C. 7707(b))

[§222.175 What regulations apply to recipients of funds under this
program?]{.underline}

The following regulations apply to the Impact Aid Discretionary
Construction program:

\(a\) The Education Department General Administrative Regulations
(EDGAR) as follows:

\(1\) 34 CFR part 75 (Direct Grant Programs) except for 34 CFR §§75.600
through 75.617.

\(2\) 34 CFR part 77 (Definitions that Apply to Department Regulations).

\(3\) 34 CFR part 79 (Intergovernmental Review of Department of
Education Programs and Activities).

\(4\) 34 CFR part 80 (Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments).

\(5\) 34 CFR part 81 (General Education Provisions Act\--Enforcement).

\(6\) 34 CFR part 82 (New Restrictions on Lobbying).

(7) 34 CFR part 84 (Governmentwide Requirements for Drug-Free Workplace
    (Financial Assistance).

(8) 34 CFR part 85 (Governmentwide Debarment and Suspension
    (Nonprocurement)).

\(b\) The regulations in 34 CFR part 222.

(Authority: 20 U.S.C. 1221e-3)

[§222.176 What definitions apply to this program?]{.underline}

\(a\) In addition to the terms referenced in 34 CFR §222.2, the
following definitions apply to this program:

[Bond limit]{.underline} means the cap or limit that a State may impose
on an LEA's capacity for bonded indebtedness. For applicants in States
that place no limit on an LEA's capacity for bonded indebtedness, the
Secretary shall consider the LEA's bond limit to be 10 percent of its
total assessed valuation.

[Construction]{.underline} means (1) preparing drawings and
specifications for school facilities; (2) repairing, renovating, or
altering school facilities; (3) extending school facilities as described
in §222.172(b); (4) erecting or building school facilities, as described
in §222.172(c); and (5) inspections or supervision related to school
facilities projects.

[Emergency]{.underline} means a school facility condition that is so
injurious or hazardous that it either poses an immediate threat to the
health and safety of the facility's students and staff or can be
reasonably expected to pose such a threat in the near future. These
conditions can include deficiencies in the following building features:
a roof; electrical wiring; a plumbing or sewage system; heating,
ventilation, or air conditioning; the need to bring a school facility
into compliance with fire and safety codes, or providing accessibility
for the disabled as part of a larger project.

[Level of bonded indebtedness]{.underline} means the amount of long-term
debt issued by an LEA divided by the LEA's bonding capacity.

[Minimal capacity to issue bonds]{.underline} means that the total
assessed value of real property in an LEA that may be taxed for school
purposes is at least \$25,000,000 but not more than \$50,000,000.

[Modernization]{.underline} means the repair, renovation, alteration, or
extension of a public elementary or secondary school facility in order
to support a contemporary educational program for an LEA's students in
normal capacity, and in accordance with the laws, standards, or common
practices in the LEA's State.

[No practical capacity to issue bonds]{.underline} means that the total
assessed value of real property in an LEA that may be taxed for school
purposes is less than \$25,000,000.

[School facility]{.underline} means a building used to provide free
public education, including instructional, resource, food service, and
general or administrative support areas, so long as they are a part of
the facility.

[Total assessed value per student]{.underline} means the assessed
valuation of real property per pupil (AVPP), unless otherwise defined by
an LEA's State.

\(b\) The following terms used in this subpart are defined or referenced
in 34 CFR 77.1:

Applicant

Application

Award

Contract

Department

EDGAR

Equipment

Fiscal year

Grant

Grantee

Project

Public

Real property

Recipient

(Authority: 20 U.S.C. 7707(b) and 1221e-3)

# Eligibility

[§222.177 What eligibility requirements must an LEA meet to apply for an
emergency grant under the first priority?]{.underline}

An LEA is eligible to apply for an emergency grant under the first
priority of section 8007(b) of the Act if it\--

\(a\) Is eligible to receive formula construction funds for the fiscal
year under section 8007(a) of the Act;

(b)(1) Has no practical capacity to issue bonds;

\(2\) Has minimal capacity to issue bonds and has used at least 75
percent of its bond limit; or

\(3\) Is eligible to receive funds for the fiscal year for heavily
impacted districts under section 8003(b)(2) of the Act; and

\(c\) Has a school facility emergency that the Secretary has determined
poses a health or safety hazard to students and school personnel.

(Authority: 20 U.S.C. 7707(b))

[§222.178 What eligibility requirements must an LEA meet to apply for an
emergency grant under the second priority?]{.underline}

Except as provided in §222.179, an LEA is eligible to apply for an
emergency grant under the second priority of section 8007(b) of the Act
if it\--

\(a\) Is eligible to receive funds for the fiscal year under section
8003(b) of the Act;

(b)(1) Enrolls federally connected children living on Indian lands equal
to at least 40 percent of the total number of children in average daily
attendance (ADA) in its schools; or

\(2\) Enrolls federally connected children with a parent in the U.S.
uniformed services equal to at least 40 percent of the total number of
children in ADA in its schools;

\(c\) Has used at least 75 percent of its bond limit;

\(d\) Has an average per-student assessed value of real property
available to be taxed for school purposes that is below its State
average; and

\(e\) Has a school facility emergency that the Secretary has determined
poses a health or safety hazard to students and school personnel.

(Authority: 20 U.S.C. 7707(b))

[§222.179 Under what circumstances may an ineligible LEA apply on behalf
of a school for an emergency grant under the second
priority?]{.underline}

An LEA that is eligible to receive section 8003(b) assistance for the
fiscal year but that does not meet the other eligibility criteria
described in §222.178(a) or (b) may apply on behalf of a school located
within its geographic boundaries for an emergency grant under the second
priority of section 8007(b) of the Act if---

\(a\) The school\--

\(1\) Enrolls children living on Indian lands equal to at least 40
percent of the total number of children in ADA; or

\(2\) Enrolls children with a parent in the U.S. uniformed services
equal to at least 40 percent of the total number of children in ADA;

\(b\) The school has a school facility emergency that the Secretary has
determined poses a health or safety hazard to students and school
personnel;

\(c\) The LEA has used at least 75 percent of its bond limit; and

\(d\) The LEA has an average per-student assessed value of real property
available to be taxed for school purposes that is below its State
average.

(Authority: 20 U.S.C. 7707(b))

[§222.180 What eligibility requirements must an LEA meet to apply for a
modernization grant under the third priority?]{.underline}

An LEA is eligible to apply for a modernization grant under the third
priority of section 8007(b) of the Act if it\--

\(a\) Is eligible to receive funds for the fiscal year under section
8002 or 8003(b) of the Act;

> (b)(1) Has no practical capacity to issue bonds;

\(2\) Has minimal capacity to issue bonds and has used at least 75
percent of its bond limit; or

\(3\) Is eligible to receive funds for the fiscal year for heavily
impacted districts under section 8003(b)(2) of the Act; and

\(c\) Has facility needs resulting from the presence of the Federal
Government, such as the enrollment of federally connected children, the
presence of Federal property, or an increase in enrollment due to
expanded Federal activities, housing privatization, or the acquisition
of Federal property.

(Authority: 20 U.S.C. 7707(b))

[§222.181 What eligibility requirements must an LEA meet to apply for a
modernization grant under the fourth priority?]{.underline}

An LEA is eligible to apply for a modernization grant under the fourth
priority of section 8007(b) of the Act if it\--

(a)(1) Is eligible to receive funds for the fiscal year under section
8003(b) of the Act; and

\(i\) Enrolls children living on Indian lands equal to at least 40
percent of the total number of children in ADA in its schools; or

\(ii\) Enrolls children with a parent in the U.S. uniformed services
equal to at least 40 percent of the total number of children in ADA in
its schools; or

\(2\) Is eligible to receive assistance for the fiscal year under
section 8002 of the Act;

\(b\) Has used at least 75 percent of its bond limit;

\(c\) Has an average per-student assessed value of real property
available to be taxed for school purposes that is below its State
average; and

\(d\) Has facility needs resulting from the presence of the Federal
Government, such as the enrollment of federally connected children, the
presence of Federal property, or an increase in enrollment due to
expanded Federal activities, housing privatization, or the acquisition
of Federal property.

(Authority: 20 U.S.C. 7707(b))

[§222.182 Under what circumstances may an ineligible LEA apply on behalf
of a school for a modernization grant under the fourth
priority?]{.underline}

An LEA that is eligible to receive a payment under Title VIII for the
fiscal year but that does not meet the other eligibility criteria
described in §222.181 may apply on behalf of a school located within its
geographic boundaries for a modernization grant under the fourth
priority of section 8007(b) of the Act if \--

(a) The school \--

```{=html}
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(1) Enrolls children living on Indian lands equal to at least 40 percent
    of the total number of children in ADA; or

\(2\) Enrolls children with a parent in the U.S. uniformed services
equal to at least 40 percent of the total number of children in ADA;

\(b\) The LEA has used at least 75 percent of its bond limit;

\(c\) The LEA has an average per-student assessed value of real property
available to be taxed for school purposes that is below its State
average; and

\(d\) The school has facility needs resulting from the presence of the
Federal Government, such as the enrollment of federally connected
children, the presence of Federal property, or an increase in enrollment
due to expanded Federal activities, housing privatization, or the
acquisition of Federal property.

(Authority: 20 U.S.C. 7707(b))

How to Apply for a Grant

[§222.183 How does an LEA apply for a grant?]{.underline}

\(a\) To apply for funds under this program, an LEA may submit more than
one application in a fiscal year.

[Examples:]{.underline} 1. An LEA wants to receive both an emergency and
a modernization grant for one school that has a failing roof and that
also needs significant classroom modernization. The LEA would submit an
emergency repair grant application to address the roof issues and a
separate modernization application to request funds to renovate
classroom space.

2\. An LEA has five schools and seeks emergency grants to replace a roof
and a boiler in one school and to replace windows in a second school. It
should submit two applications \-- one for each of the two school
facilities.

3\. An LEA has one school that has several conditions that need to be
corrected \-- a failing roof, aging windows that impair the efficiency
of the heating system, and asbestos in floor tiles. The LEA may submit a
single application for all of these conditions or separate emergency
repair grant applications for each condition, if the LEA judges that
they present varying degrees of urgency.

> \(b\) An application must\--

\(1\) Contain the information required in §§222.184 through 222.186, as
applicable, and in any application notice that the Secretary may publish
in the [Federal]{.underline} [Register]{.underline}; and

(2) Be timely filed in accordance with the provisions of the Secretary's
    application notice.

(Approved by the Office of Management and Budget under

control number 1810-0657)

(Authority: 20 U.S.C. 7707(b))

[§222.184 What information must an application contain?]{.underline}

An application for an emergency or modernization grant must contain the
following information:

\(a\) The name of the school facility the LEA is proposing to repair,
construct, or modernize.

(b)(1) For an applicant under section 8003(b) of the Act, the number of
federally connected children described in section 8003(a)(1) enrolled in
the school facility, as well as the total enrollment in the facility,
for which the LEA is seeking a grant; or

\(2\) For an applicant under section 8002 of the Act, the total
enrollment, for the preceding year, in the LEA and in the school
facility for which the LEA is seeking a grant, based on the fall State
count date.

\(c\) The identification of the LEA's interest in, or authority over,
the school facility involved, such as an ownership interest or a lease
arrangement.

\(d\) The original construction date of the school facility that the LEA
proposes to renovate or modernize.

\(e\) The dates of any major renovations of that school facility and the
areas of the school covered by the renovations.

\(f\) The proportion of Federal acreage within the geographic boundaries
of the LEA.

\(g\) Fiscal data including the LEA's\--

> \(1\) Maximum bonding capacity;
>
> \(2\) Amount of bonded debt;

\(3\) Total assessed value of real property available to be taxed for
school purposes;

\(4\) State average assessed value per pupil of real property available
to be taxed for school purposes;

\(5\) Local real property tax levy, in mills or dollars, used to
generate funds for capital expenditures; and

\(6\) Sources and amounts of funds available for the proposed project.

\(h\) A description of the need for funds and the proposed project for
which a grant under subpart L of this part would be used, including a
cost estimate for the project.

\(i\) Applicable assurances and certifications identified in the
approved grant application package.

(Approved by the Office of Management and Budget under

control number 1810-0657)

(Authority: 20 U.S.C. 7707(b))

[§222.185 What additional information must be included in an emergency
grant application?]{.underline}

In addition to the information specified in §222.184, an application for
an emergency grant must contain the following:

\(a\) A description of the deficiency that poses a health or safety
hazard to occupants of the facility.

\(b\) A description of how the deficiency adversely affects the
occupants and how it will be repaired.

\(c\) A statement signed by an appropriate local official, as defined
below, that the deficiency threatens the health and safety of occupants
of the facility or prevents the use of the facility. An appropriate
local official may include a local building inspector, a licensed
architect, or a licensed structural engineer. An appropriate local
official may not include a member of the applicant LEA's staff.

(Approved by the Office of Management and Budget under

control number 1810-0657)

(Authority: 20 U.S.C. 7707(b))

[§222.186 What additional information must be included in a
modernization grant application]{.underline}?

In addition to the information specified in §222.184, an application for
a modernization grant must contain a description of\--

\(a\) The need for modernization; and

\(b\) How the applicant will use funds received under this program to
address the need referenced in paragraph (a) of this section.

(Approved by the Office of Management and Budget under

control number 1810-0657)

(Authority: 20 U.S.C. 7707(b))

[§222.187 Which year's data must an SEA or LEA provide?]{.underline}

\(a\) Except as provided in paragraph (b) of this section, the Secretary
will determine eligibility under this discretionary program based on
student and fiscal data for each LEA from the fiscal year preceding the
fiscal year for which the applicant is applying for funds.

\(b\) If satisfactory fiscal data are not available from the preceding
fiscal year, the Secretary will use data from the most recent fiscal
year for which data that are satisfactory to the Secretary are
available.

(Authority: 20 U.S.C. 7707(b))

# How Grants Are Made

[§222.188 What priorities may the Secretary establish?]{.underline}

In any given year, the Secretary may assign extra weight for certain
facilities systems or emergency and modernization conditions by
identifying the systems or conditions and their assigned weights in a
notice published in the [Federal Register]{.underline}.

(Authority: 20 U.S.C. 7707(b))

[§222.189 What funding priority does the Secretary give to
applications?]{.underline}

\(a\) Except as provided in paragraph (b) of this section, the Secretary
gives funding priority to applications in the following order:

\(1\) First priority is given to applications described under §222.177
and, among those applicants for emergency grants, priority is given to
applications based on a rank order of the application quality factors
referenced in §222.190, including the severity of the emergency.

\(2\) After all eligible first-priority applications are funded, second
priority is given to applications described under §§222.178 and 222.179
and, among those applicants for emergency grants, priority is given to
applications based on a rank order of the application quality factors
referenced in §222.190, including the severity of the emergency.

\(3\) Third priority is given to applications described under §222.180
and, among those applicants for modernization grants, priority is given
to applications based on a rank order of the application quality factors
referenced in §222.190, including the severity of the need for
modernization.

\(4\) Fourth priority is given to applications described under §§222.181
and 222.182 and, among those applicants for modernization grants,
priority is given to applications based on a rank order of the
application quality factors referenced in §222.190, including the
severity of the need for modernization.

(b)(1) The Secretary makes awards in each priority described above until
the Secretary is unable to make an approvable award in that priority.

\(2\) If the Secretary is unable to fund a full project or a viable
portion of a project, the Secretary may continue to fund down the list
of high-ranking applicants within a priority.

\(3\) The Secretary applies any remaining funds to awards in the next
priority.

\(4\) If an applicant does not receive an emergency or modernization
grant in a fiscal year, the Secretary will, subject to the availability
of funds and to the priority and award criteria, consider that
application in the following year along with the next fiscal year's pool
of applications.

[Example]{.underline}: The first five applicants in priority one have
been funded. Three hundred thousand dollars remain available. Three
unfunded applications remain in that priority. Application #6 requires a
minimum of \$500,000, application #7 requires \$400,000, and application
#8 requires \$300,000 for a new roof and \$150,000 for related wall and
ceiling repairs. Applicant #8 agrees to accept the remaining \$300,000
since the roof upgrade can be separated into a viable portion of
applicant #8's total project. Applications #6 and #7 will be retained
for consideration in the next fiscal year and will compete again with
that fiscal year's pool of applicants. Applicant #8 will have to submit
a new application in the next fiscal year if it wishes to be considered
for the unfunded portion of the current year's application.

(Authority: 20 U.S.C. 7707(b))

[§222.190 How does the Secretary rank and select
applicants?]{.underline}

\(a\) To the extent that they are consistent with these regulations and
section 8007(b) of the Act, the Secretary will follow grant selection
procedures that are specified in 34 CFR 75.215 through 75.222. In
general these procedures are based on the authorizing statute, the
selection criteria, and any priorities or other applicable requirements
that have been published in the [Federal Register]{.underline}.

\(b\) In the event of ties in numeric ranking, the Secretary may
consider as tie-breaking factors: the severity of the emergency or the
need for modernization; for applicants under section 8003 of the Act,
the numbers of federally connected children who will benefit from the
project; or for applicants under section 8002 of the Act, the numbers of
children who will benefit from the project; the AVPP compared to the
LEA's State average; and available resources or non-Federal funds
available for the grant project.

(Authority: 20 U.S.C. 7707(b))

[§222.191 What is the maximum award amount?]{.underline}

\(a\) Subject to any applicable contribution requirements as described
in §§222.192 and 222.193, the procedures in §§75.231 through 75.236, and
the provisions in paragraph (b) of this section, the Secretary may fund
up to 100 percent of the allowable costs in an approved grantee's
proposed project.

## (b) An award amount may not exceed the difference between\--

## (1) The cost of the proposed project; and 

## (2) The amount the grantee has available or will have available for this purpose from other sources, including local, State, and other Federal funds. 

(Authority: 20 U.S.C. 7707(b))

[§222.192 What local funds may be considered as available for this
project?]{.underline}

To determine the amount of local funds that an LEA has available under
§222.191(b)(2) for a project under this program, the Secretary will
consider as available all LEA funds that may be used for capital
expenditures except \$100,000 or 10 percent of the average annual
capital expenditures of the applicant for the three previous fiscal
years, whichever is greater. The Secretary will not consider capital
funds that an LEA can demonstrate have been committed through signed
contracts or other written binding agreements but have not yet been
expended.

(Authority: 20 U.S.C. 7707(b))

[§222.193 What other limitations on grant amounts apply?]{.underline}

\(a\) Except as provided in paragraph (b) of this section and §222.191,
the amount of funds provided under an emergency grant or a modernization
grant awarded to an eligible LEA is subject to the following
limitations:

\(1\) The award amount may not be more than 50 percent of the total cost
of an approved project.

\(2\) The total amount of grant funds may not exceed four million
dollars during any four-year period.

[Example]{.underline}: An LEA that is awarded four million dollars in
the first year may not receive any additional funds for the following
three years.

\(b\) Emergency or modernization grants to LEAs with no practical
capacity to issue bonds as defined in §222.176 are not subject to the
award limitations described in paragraph (a) of this section.

(Authority: 20 U.S.C. 7707(b))

[§222.194 Are "in-kind" contributions permissible?]{.underline}

\(a\) LEAs that are subject to the applicable matching requirement
described in §222.193(a) may use allowable third party in-kind
contributions as defined below to meet the requirements.

\(b\) Third party in-kind contributions mean property or services that
benefit this grant program and are contributed by non-Federal third
parties without charge to the grantee or by a cost-type contractor under
the grant agreement.

\(c\) The provisions of 34 CFR 80.24 govern the allowability and
valuation of in-kind contributions, except that it is permissible for a
third party to contribute real property to a grantee for a project under
this program, so long as no Federal funds are spent for the acquisition
of real property.

(Authority: 20 U.S.C. 7707(b))

# Conditions and Requirements Grantees Must Meet

[§222.195 How does the Secretary make funds available to
grantees?]{.underline}

The Secretary makes funds available to a grantee during a project period
using the following procedure:

\(a\) Upon final approval of the grant proposal, the Secretary
authorizes a project period of up to 60 months based upon the nature of
the grant proposal and the time needed to complete the project.

\(b\) The Secretary then initially makes available to the grantee 10
percent of the total award amount.

\(c\) After the grantee submits a copy of the emergency or modernization
contract approved by the grantee's governing board, the Secretary makes
available 80 percent of the total award amount to a grantee.

\(d\) The Secretary makes available up to the remaining 10 percent of
the total award amount to the grantee after the grantee submits a
statement that---

\(1\) Details any earnings, savings, or interest;

> \(2\) Certifies that---
>
> \(i\) The project is fully completed; and

\(ii\) All the awarded funds have been spent for grant purposes; and

> \(3\) Is signed by the---
>
> \(i\) Chairperson of the governing board;
>
> \(ii\) Superintendent of schools; and
>
> \(iii\) Architect of the project.

(Authority: 20 U.S.C. 7707(b))

[§222.196 What additional construction and legal requirements
apply?]{.underline}

\(a\) Except as provided in paragraph (b) of this section, a grantee
under this program must comply with\--

\(1\) The general construction legal requirements identified in the
grant application assurances;

\(2\) The prevailing wage standards in the grantee's locality that are
established by the Secretary of Labor in accordance with the Davis-Bacon
Act (40 U.S.C. 276a, [et]{.underline} [seq]{.underline}.); and

\(3\) All relevant Federal, State, and local environmental laws and
regulations.

\(b\) A grantee that qualifies for a grant because it enrolls a high
proportion of federally connected children who reside on Indian lands is
considered to receive a grant award primarily for the benefit of Indians
and must therefore comply with the Indian preference requirements of
section 7(b) of the Indian Self-Determination Act.

(Authority: 20 U.S.C. 7707(b) and 1221e-3)