30314 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Proposed Rules

DEPARTMENT OF EDUCATION

34 CFR Part 300

RIN 1820–AB51

Assistance to States for the Education

of Children With Disabilities

AGENCY: Office of Special Education and

Rehabilitative Services, Department of

Education.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Secretary proposes to

amend the regulations governing the

Assistance to States for the Education of

Children with Disabilities program

under Part B of the Individuals with

Disabilities Education Act (IDEA). This

amendment is needed to implement the

statutory provision that for any fiscal

year in which the appropriation for

section 611 of part B of IDEA exceeds

$4.1 billion, a local educational agency

(LEA) may treat as local funds up to 20

percent of the amount it receives under

that part that exceeds the amount it

received during the prior fiscal year.

The proposed regulation would ensure

effective implementation of this

statutory provision by providing clarity

about the funds that can be included in

this calculation, and would reduce the

potential for audit exceptions.

DATES: We must receive your comments

on or before August 8, 2000.

ADDRESSES: Address all comments about

these proposed regulations to Thomas B.

Irvin, Office of Special Education and

Rehabilitative Services, U.S. Department

of Education, Room 3090, Mary E.

Switzer Building, 330 C Street, SW.,

Washington, DC 20202–2570.

If you prefer to send your comments

through the internet, use the following

address: Comments@ed.gov.

You must use the term ‘‘4.1 billion

provision’’ in the subject line of your

electronic message.

FOR FURTHER INFORMATION CONTACT:

JoLeta Reynolds (202) 205–5507. If you

use a telecommunication device for the

deaf (TDD), you may call the TDD

number at (202) 205–5465.

Individuals with disabilities may

obtain this document in an alternate

format (e.g., Braille, large print,

audiotape, or computer diskette) on

request to Katie Mimcey, Director of the

Alternate Formats Center. Telephone:

(202) 205–8113.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

We invite you to submit comments

regarding this proposed regulation.

We also invite you to assist us in

complying with the specific

requirements of Executive Order 12866

and its overall requirement of reducing

regulatory burden that might result from

the proposed regulation. Please let us

know of any further opportunities we

should take to reduce potential costs or

increase potential benefits while

preserving the effective and efficient

administration of the program.

During and after the comment period,

you may inspect all public comments

about this proposed regulation in Room

3090, Mary E. Switzer Building, 330 C

Street SW., Washington, DC, between

the hours of 8:30 a.m. and 4 p.m.,

Eastern time, Monday through Friday of

each week except Federal holidays.

Assistance to Individuals With

Disabilities in Reviewing the

Rulemaking Record

On request, we will supply an

appropriate aid, such as a reader or

print magnifier, to an individual with a

disability who needs assistance to

review the comments or other

documents in the public rulemaking

record for this proposed regulation. If

you want to schedule an appointment

for this type of aid, you may call (202)

205–8113 or (202) 260–9895. If you use

a TDD, you may call the Federal

Information Relay Service at 1–800–

877–8339.

Background

The IDEA Amendments of 1997 (Pub.

L. 105–17) added a provision related to

the permissive treatment of a portion of

Part B funds by LEAs for maintenance

of effort and non-supplanting purposes

in certain fiscal years (see section

613(a)(2)(C) of the Act and § 300.233 of

the current regulations). Under that

provision, for any fiscal year (FY) for

which the appropriation for section 611

of IDEA exceeds $4.1 billion, an LEA

may treat as local funds, for

maintenance of effort and nonsupplanting purposes, up to 20 percent

of the amount it receives that exceeds

the amount it received under Part B

during the prior year. Under § 300.233

an LEA is able to meet the maintenance

of effort requirement of § 300.231 and

non-supplant requirement of

§ 300.230(c) even though it reduces the

amount of local or local and State funds

that it spends on the Part B program, by

an amount equal to the amount of

Federal funds that may be treated as

local funds. The Federal fiscal year 1999

was the first year that section 611

appropriation exceeded $4.1 billion.

State and local educational agency

officials have told the Department that

they believe it is not clear from the

provision whether the funds affected are

only those that an LEA receives through

statutory subgrants under section 611(g),

or whether the provision also applies to

other Part B funding sources (i.e., subgrants to LEAs for capacity-building and

improvement under section 611(f)(4);

other funds the SEA may provide to

LEAs under section 611(f); or funds

provided under section 619 (Preschool

Grants program)). Further, because

section 613(a)(2)(C) refers to an amount

of funds that an LEA ‘‘receives’’ in one

fiscal year compared to the amount it

‘‘received’’ in the prior fiscal year, and

because agencies may, at any one point

in time, be using funds appropriated in

several Federal fiscal years, agency

officials are uncertain as to how to

determine that an LEA has ‘‘received’’

Federal funds.

Because section 613(a)(2)(C) of IDEA

and § 300.233(a)(1) (which tracks the

statutory language) may not be

sufficiently clear with respect to which

precise funds are affected, this could

result in the provision being interpreted

and applied differently from LEA to

LEA. If that situation were to occur, it

could result in a significant increase in

the number of audit exceptions against

LEAs. Thus, it is important to set out in

the regulations a clear interpretation of

section 613(a)(2)(C) to support its

consistent application across LEAs and

States, and to reduce the potential for

audit exceptions.

In light of the statutory structure for

distribution of Federal funds to LEAs,

we believe that the most reasonable

interpretation is to apply that provision

only to subgrants to LEAs under section

611(g) of the Act (§ 300.712 of the

regulations) from funds appropriated for

one Federal fiscal year compared to

funds appropriated for the prior Federal

fiscal year. This interpretation (as

reflected in the proposed regulation)

would ensure that an LEA could treat as

local funds up to 20 percent of the

increase in the amount it is entitled to

receive as a subgrant under § 300.712 for

any fiscal year for which the Federal

appropriation to carry out section 611 of

the IDEA exceeds $4,100,000,000.

Excluded from the Federal funds that

can be treated as local funds will be subgrants to LEAs for capacity-building and

improvement under section 611(f)(4)

(§ 300.622); other funds the SEA may

provide to LEAs under section 611(f)

(§ 300.602); and funds provided under

section 619 (Preschool Grants program)

(34 CFR Part 301).

First, if IDEA funds that States have

the authority to provide to LEAs on a

discretionary basis, such as subgrants to

LEAs for capacity building and

improvement under section 611(f)(4)

(§ 300.622) and other funds the SEA

may provide to LEAs under section

Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Proposed Rules 30315

611(f) (§ 300.602), are included in this

calculation, it would result in some

LEAs receiving a proportionately greater

benefit from this provision than other

LEAs based on receipt of funds that may

be earmarked for a specific, time-limited

purpose. This would lead to inequitable

results of the § 300.233 exception across

LEAs in a State. In addition, including

section 619 formula grant funds (34 CFR

Part 301) in the calculation does not

appear to be justified as the ‘trigger’

appropriation is the amount

appropriated under section 611.

The proposed regulation also would

provide that if funds are being withheld

from an LEA or have been reallocated to

other LEAs, those funds would not be

included in this calculation, as they

would not be available to the LEA for

the provision of special education and

related services to children with

disabilities.

Below are examples showing how this

proposed regulation would apply under

several situations:

• Example 1: An LEA receives

$100,000 in Federal LEA Subgrant funds

under section 611(g) of the Act in one

fiscal year (FY–1), and $120,000 in

section 611(g) funds in the following

fiscal year (FY–2). The LEA may treat as

local funds up to 20 percent of the

$20,000 in section 611(g) funds it

receives in FY–2 (i.e., up to $4,000),

since this is the amount that exceeds the

amount it received in the prior year.

• Example 2: An LEA, in one fiscal

year (FY–1), receives $100,000 in

section 611(g) funds, and $20,000 in

LEA discretionary funds under section

611(f) of the Act; and in the following

fiscal year (FY–2), the LEA receives

$120,000 in section 611(g) funds, but

does not receive any funds under

section 611(f). The LEA may treat as

local funds up to 20 percent of the

$20,000 in section 611(g) funds it

receives in FY–2 (i.e., up to $4,000),

since this is the amount of section

611(g) funds that exceeds the amount it

received in FY–1.

• Example 3: An LEA had all of its

section 611(g) funds ($100,000)

withheld in one fiscal year (FY–1); but

in the next fiscal year (FY–2), the LEA

received a total of $220,000 in section

611(g) funds (i.e., $100,000 for FY–1,

plus $120,000 for FY–2). Because the

LEA would have been entitled to

$100,000 in FY–1, the LEA may treat as

local funds up 20 percent of the $20,000

in FY–2 that exceeded its FY–1

allotment, or up to $4,000.

• Example 4: An LEA received

$100,000 under section 611(g) in one

fiscal year (FY–1), and would have

received $120,000 in section 611(g)

funds for the next fiscal year (FY–2); but

the LEA has all of its section 611(g)

funds withheld in FY–2. The LEA

would have no section 611(g) funds that

could be treated as local funds in FY–

2.

By clearly articulating that the

standard refers to funds that an LEA is

eligible to receive from a particular

Federal appropriation, the proposed

regulation would provide for consistent

application from year to year across

LEAs. It also would provide necessary

clarity to budget officials and auditors,

and ensure that each LEA receives a

comparable benefit from this statutory

provision.

It is important to note that

§ 303.233(b) of the existing regulation

(which tracks the statutory language

under section 613(a)(2)(C)(ii)) provides

that ‘‘If an SEA determines that an LEA

is not meeting the requirements of this

part, the SEA may prohibit the LEA

from treating funds received under Part

B of the Act as local funds under

paragraph (a)(1) of this section for any

fiscal year, but only if it is authorized

to do so by the State constitution or a

State statute.’’

Federal fiscal year 1999 was the first

year that the section 611 appropriation

exceeded $4.1 billion. However, since

awards for fiscal year 1999 have already

been made, these proposed regulations

would be effective only for fiscal year

2000 and later appropriations. Thus,

under the proposed regulation, FY 1999

would be the ‘‘previous fiscal year’’ for

purposes of determining the amount of

an LEA’s FY 2000 grant under § 300.712

that it may treat as local funds. The

amount of increase from FY 1999 to FY

2000 for purposes of this calculation

would be based on the amount of funds

the LEA was eligible to receive under

§ 300.712 in each of those years, rather

than the amount it received during a

particular year, or some other amount.

Funds that were withheld from the LEA

could not be considered.

Executive Order 12866

1. Potential Cost and Benefits

Under Executive Order 12866, we

have assessed the potential costs and

benefits of this regulatory action.

The potential costs associated with

the proposed regulations are those

resulting from statutory requirements

and those we have determined as

necessary for administering this

program effectively and efficiently.

In assessing the potential costs and

benefits—both quantitative and

qualitative—of this regulatory action,

we have determined that the benefits

would justify the costs.

We have also determined that this

regulatory action would not unduly

interfere with State, local, and tribal

governments in the exercise of their

governmental functions.

Summary of Potential Costs and

Benefits

The potential costs and benefits of

this proposed regulation are discussed

elsewhere in this document under the

Supplementary Information section.

2. Clarity of the Regulations

Executive Order 12866 and the

President’s Memorandum of June 1,

1998 on ‘‘Plain Language in Government

Writing’’ require each agency to write

regulations that are easy to understand.

We invite comments on how to make

this proposed regulation easier to

understand, including answers to

questions such as the following:

• Are the requirements in the

proposed regulation clearly stated?

• Does the proposed regulation

contain technical terms or other

wording that interferes with its clarity?

• Does the format of the proposed

regulation (use of headings,

paragraphing, etc.) aid or reduce it’s

clarity?

• Could the description of the

proposed regulation in the

SUPPLEMENTARY INFORMATION section of

this preamble be more helpful in

making the proposed regulation easier

to understand? If so, how?

• What else could we do to make the

proposed regulation easier to

understand?

Send any comments that concern how

the Department could make this

proposed regulation easier to

understand to the person listed in the

ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

The Secretary certifies that these

proposed regulations would not have

significant economic impact on a

substantial number of small entities.

The small entities affected would be

small LEAs. The regulations would

benefit the small entities affected by

clarifying the statutory requirements

and reducing the possibility of audit

exceptions. By ensuring consistency, the

regulations would promote more

effective and efficient program

administration.

Paperwork Reduction Act of 1995

This proposed regulation does not

contain any information collection

requirements.

Intergovernmental Review

This program is subject to Executive

Order 12372 and the regulations in 34

30316 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Proposed Rules

CFR part 79. One of the objectives of the

Executive order is to foster an

intergovernmental partnership and a

strengthened federalism. The Executive

order relies on processes developed by

State and local governments for

coordination and review of proposed

Federal financial assistance.

This document provides early

notification of our specific plans and

actions for this program.

Assessment of Educational Impact

The Secretary particularly requests

comments on whether this proposed

regulation would require transmission

of information that any other agency or

authority of the United States gathers or

makes available.

Electronic Access to This Document

You may view this document, as well

as all other Department of Education

documents published in the Federal

Register, in text or Adobe Portable

Document Format (PDF) on the Internet

at either of the following sites:

http://ocfo.ed.gov/fedreg.htm 

http://www.ed.gov/news.html 

To use the PDF you must have Adobe

Acrobat Reader Program with Search,

which is available free at either of the

previous sites. If you have questions

about using the PDF, call the U.S.

Government Printing Office (GPO), toll

free, at 1–800–293–6498; or in the

Washington, D.C., area at (202) 512–

1530.

Note: The official version of this document

is the document published in the Federal

Register. Free Internet access to the official

edition of the Federal Register and the Code

of Federal Regulations is available on GPO

Access at:

http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance

Number: 84.027 Assistance to States for the

Education of Children with Disabilities)

List of Subjects in 34 CFR Part 300

Administrative practice and

procedure, Education of individuals

with disabilities, Elementary and

secondary education, Equal educational

opportunity, Grant programs—

education, Privacy, Private schools,

Reporting and recordkeeping

requirements.

Dated: February 29, 2000.

Richard W. Riley,

Secretary of Education.

For the reasons described in the

preamble, the Secretary proposes to

amend title 34 of the Code of Federal

Regulations as follows:

PART 300—ASSISTANCE TO STATES

FOR THE EDUCATION OF CHILDREN

WITH DISABILITIES PROGRAM

1. The authority citation for part 300

continues to read as follows:

Authority: 20 U.S.C. 1411–1420, unless

otherwise noted.

2. Section 300.233 is amended by

revising paragraph (a)(1), and by adding

a new paragraph (a)(3), to read as

follows:

§ 300.233 Treatment of Federal funds in

certain fiscal years.

(a)(1) Subject to paragraphs (a)(2),

(a)(3), and (b) of this section, for any

fiscal year for which amounts

appropriated to carry out section 611 of

the Act exceed $4,100,000,000, an LEA

may treat as local funds up to 20 percent

of the amount of funds it is eligible to

receive under § 300.712 from that

appropriation that exceeds the amount

from funds appropriated for the

previous fiscal year that the LEA was

eligible to receive under § 300.712.

* * * * *

(3) For purposes of this section, an

LEA is not eligible to receive funds that

have been withheld under § 300.197 or

300.587 or have been reallocated to

other LEAs in the State under § 300.714.

* * * * *

[FR Doc. 00–11601 Filed 5–9–00; 8:45 am]

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