October 25, 2004

Honorable Johnny V. Rullan,

Secretary

Commonwealth of Puerto Rico Department of Health

P.O. Box 70184

San Juan, Puerto Rico 00936-8184

Dear Secretary Rullan:

We have determined that the Commonwealth of Puerto Rico's application
for Federal Fiscal Year (FFY) 2004, under Part C of the Individuals with
Disabilities Education Act (IDEA), can be conditionally approved.
Therefore, I am enclosing your Commonwealth's Part C grant award. The
effective date of the FFY 2004 Part C grant is September 14, 2004.

The conditional approval is based upon our review and acceptance of the
following:

1.  The Commonwealth of Puerto Rico's Part C FFY 2004 Part C application
    submitted by Commonwealth of Puerto Rico Department of Health
    (PRDOH) on April 16, 2004.

2.  The assurance from PRDOH that the statewide system of early
    intervention services required by Part C and its implementing
    regulations is in effect.

3.  The October 11, 2004 letter (sent by fax on October 15, 2004) from
    PRDOH to the Office of Special Education Programs (OSEP), in which
    PRDOH assures that it will:

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a.  No later than May 31, 2005, submit documentation to OSEP that it has
    made the changes to its application as set forth in OSEP's July 1,
    2004 memorandum to ensure consistency with Part C regulations
    including specifically: 34 CFR §§303.12(b); 303.12(c)(8);
    303.12(c)(9)(i); 303.12(c)(9)(iii); 303.12 (c)(12)(iv);
    303.13(c)(2); 303.16; 303.140 (b); 303.321(c)(1); 303.322(b)(1);
    303.322(d)(1); 303.460 (b); 303.520(b) and (d); and 303.600 through
    303.654 and submit the revised documentation to OSEP no later than
    May 30, 2005;

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b.  Ensure compliance in the interim throughout the FFY 2004 year with
    the requirements of Part C of the IDEA and its implementing
    regulations at 34 CFR 303 (including 34 CFR §§303.12(b);
    303.12(c)(8); 303.12(c)(9)(i); 303.12(c)(9)(iii); 303.12
    (c)(12)(iv); 303.13(c)(2); 303.16; 303.140 (b); 303.321(c)(1);
    303.322(b)(1); 303.322(d)(1); 303.460 (b); 303.520(b) and (d); and
    303.600 through 303.654) (including sending a memorandum to all
    agencies and providers that are part of the State's Part C early
    intervention system to inform them of the changes that impact on the
    provision of early intervention services in the State with respect
    to the above-identified Part C requirements);

c.  Make all changes necessary by May 30, 2005 to the State's
    Interagency Agreements under Part C (Appendix M of the Application)
    that will be identified by OSEP by December 31, 2005; and

d.  No later than May 30, 2005, provide OSEP with a copy of a memorandum
    notifying all public agencies and early intervention providers of
    changes that impact their provision of early intervention services
    required by OSEP as a result of its review of the Commonwealth's
    Part C Application.

This year, a number of States have either established systems of
payments or are considering establishing or revising their systems of
payments. Under 34 CFR §303.173(a), each State's Part C application must
include the State's policies and procedures that identify: (1) how it
will pay for early intervention services (under 34 CFR §303.520(a)); (2)
any system of payments that the State chooses to establish (under 34 CFR
§303.521(a)); and (3) all funding sources (under 34 CFR §303.522).
Although a State is not required under Part C to access public and
private insurance available to a family, if a State requires parents
under Part C to access their public and/or private insurance, the State
must include this information in its Part C application as well as an
assurance, under 34 CFR §303.520(b)(3)(ii), that the inability of a
parent to pay will not result in the denial of any service under Part C.

States must ensure that all of the functions and early intervention
services under 34 CFR §303.521(b) are carried out at public expense
(i.e., no cost to the family). Additionally, under 34 CFR §303.521(c),
States that provide children with disabilities under age 3 with a free
appropriate public education (FAPE) under State law (i.e., birth-mandate
States) must ensure that no fees are charged for the FAPE services
provided to these children and their families. If a State has a system
of payments under 34 CFR §303.521(a), any parent fees collected (for
co-payments or other fees for services charged and received by the
State's Part C program) are "program income" under 34 CFR §80.25.
Program income is not included as part of total "State and local
expenditures" for purposes of a State's meeting the non-supplanting
requirements under Part C at 20 U.S.C. §1437(b)(5)(B) and 34 CFR
§303.124.

Section I.C. of the FFY 2004 application for Part C funds requested
updated information about each State's restricted indirect cost rate.
Our records indicate that PRDOH has a restricted indirect cost rate
agreement of five percent (5%) that has been approved by PRDOH's
cognizant agency, the U.S. Department of Health and Human Services, and
is effective until amended. Part III of your State's Part C Application
indicates that your agency will continue to apply the currently approved
restricted indirect cost rate throughout the FFY 2004 grant period until
a new restricted indirect cost rate is negotiated and approved by
PRDOH's cognizant Federal agency. Please forward to us any revisions to
your restricted indirect cost rate once it is approved by your cognizant
agency.

The enclosed grant award for FFY 2004 is made with the continued
understanding that this Office may, from time to time, require
clarification of information within your application and appendices, if
necessary. These inquiries are needed to allow us to appropriately carry
out our administrative responsibilities related to Part C.

Section 604 of the IDEA provides that "\[a\] State shall not be immune
under the eleventh amendment to the Constitution of the United States
from suit in Federal court for a violation of this Act." Therefore, by
accepting this grant a State is expressly agreeing to a waiver of
Eleventh Amendment immunity as a condition of IDEA funding.

We appreciate your ongoing commitment to the provision of quality early
intervention services to infants and toddlers with disabilities and
their families.

> Sincerely,

/s/Patricia J. Guard

> Stephanie Smith Lee
>
> Director
>
> Office of Special Education Programs

Enclosure

cc: Naydamar Perez Otero, M.D.

Part C Coordinator