![](media/image1.wmf){width="1.6965277777777779in"
height="1.4569444444444444in"} UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF ELEMENTARY AND SECONDARY EDUCATION

**WASHINGTON, DC 20202-6132**

###### 

###### Archived Information

##### ESEA, TITLE I

#### PROGRAM DIRECTIVE

+------------------------------------+---------------------------------+
| ### SUBJECT                        | #                               |
|                                    | ## TYPE AND NUMBER OF DIRECTIVE |
| Reallocation of School Year        |                                 |
| **2001-2002** Capital Expense      | FM-36                           |
| Funds                              |                                 |
+------------------------------------+---------------------------------+
|                                    | ### DATE SIGNED                 |
|                                    |                                 |
|                                    | January 16, 2001                |
+------------------------------------+---------------------------------+
|                                    | **ISSUING OFFICE**              |
|                                    |                                 |
|                                    | OESE/CEP                        |
+------------------------------------+---------------------------------+
| **REFERENCE:** Title I, Part A of  |                                 |
| the Elementary and Secondary       |                                 |
| Education Act of 1965, as Amended, |                                 |
| Section 1120(e)                    |                                 |
+------------------------------------+---------------------------------+

> TO : Chief State School Officers
>
> PURPOSE: Reallocation of School Year **2001-2002** Capital Expense
> Funds
>
> This is to request information needed for the Department of Education
> (ED) to carry out the requirement in Section 1120(e)(1)(B) of the
> Title I statute, which provides that capital expense funds allocated
> to States that are not used shall be reallocated among other States
> based on need. While many local educational agencies will continue to
> incur capital expenses, we expect the need for these costs will be
> less in the upcoming school year because local educational agencies
> have had four years to make the transition to service delivery options
> now available as a result of the Supreme Court's decision in [Agostini
> v. Felton]{.underline}.
>
> **The request is being made at this time, as the most recent
> reauthorization of Title I, which becomes effective July 1, 2002, does
> not contain reallocation authority for capital expense funds. This
> office intends to complete the reallocation process before July 1,
> 2002. In considering this matter, please be aware that Congress did
> not include any capital expense funds in the Fiscal Year (FY) 2002
> appropriation and therefore, States will not receive any additional
> capital expense funds on July 1, 2002 from the FY 2002
> appropriation.**
>
> If your State has school year (SY) **2001-2002** capital expense funds
> that were not obligated during that school year and will not be used
> during the carryover period, which extends until September 30, 2003,
> these funds must be returned so they can be reallocated. Please inform
> us not later than May 1, 2002 of any amount that is available for
> reallocation to other States and include a signed statement that your
> State is officially releasing the funds.

Conversely, if your State has a need for additional capital expense
funds, please advise us by May 1, 2002 of the amount requested and
provide a narrative justification describing the need and proposed use
of the funds. Any funds that are released will be reallocated among the
States that demonstrate the greatest need for additional capital expense
funds for local educational agencies to maintain or increase the number
of private school children being served by Title I or, if current needs

for capital expenses have been met, to cover unreimbursed capital
expenses incurred in prior years.

Any reallocated funds a State receives must be used in accordance with
§§200.16 and 200.17 of the Title I regulations. For further information
on the use of capital expense funds, please refer to the section in our
Title I policy guidance on providing services for private school
children (particularly the part on Capital Expenses beginning on page 19
of the private school section) and the Department's July 1997 Guidance
on the Supreme Court's Decision in [Agostini v. Felton]{.underline},
questions and answers 19 and 20.

In your request for additional funds, be sure to include the following
information:

-   A narrative of how the grant award will be used, i.e., for current
    > expenses or expenses to be incurred to maintain or increase the
    > number of private school children being served, or for
    > reimbursement for prior capital expenses;

-   A description of the program to be implemented; and

-   A budget showing how the capital expense funds will be spent.

**ED intends to complete the reallocation process for SY 2001-2002 no
later than June 31, 2002. Therefore, it is imperative that we receive
any notifications of excess funds or requests for additional funds by
May 1, 2002**. This information should be forwarded to:

> Dr. Joseph F. Johnson, Jr., Director
>
> Compensatory Education Programs
>
> U.S. Department of Education
>
> 400 Independence Avenue, SW (Room 3W110)
>
> Washington, DC 20202-6132
>
> Attention: Ms. Virginia Berg

In addition, please notify us if your State is neither returning nor
requesting capital expense funds. If you have any questions, please
contact Ms. Berg at (202) 260-0926 or Virginia.Berg@ed.gov. Thank you
for your assistance in this process.

> Joseph F. Johnson, Jr.
>
> Director
>
> Compensatory Education Programs

cc: State Title I Coordinators

CEP/7/3/2001 0926/BERG/PDFM33.Capital Expense

cc: RF/OF/State