29928 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Part 301

RIN 1820–AB47

Preschool Grants for Children with

Disabilities

AGENCY: Office of Special Education and

Rehabilitative Services, Department of

Education.

ACTION: Final Regulations.

SUMMARY: The Secretary amends the

regulations governing the Preschool

Grants for Children with Disabilities

program. These provisions would affect

the allocation of funds to States and

local educational agencies (LEAs).

These amendments are needed to

implement changes recently enacted by

the Individuals with Disabilities

Education Act Amendments of 1997

(IDEA Amendments of 1997).

EFFECTIVE DATE: These regulations will

take effect on July 1, 1998.

FOR FURTHER INFORMATION CONTACT:

Thomas Irvin or JoLeta Reynolds, U.S.

Department of Education, 600

Independence Avenue, SW., Mary E.

Switzer Building, Room 3090,

Washington, DC 20202. Telephone:

(202) 205–5507. Individuals who use a

telecommunications device for the deaf

(TDD) 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 Mincey, Director of the

Alternate Formats Center. Telephone:

(202) 205–8113.

SUPPLEMENTARY INFORMATION: The

Preschool Grants for Children with

Disabilities program under section 619

of Part B of the Individuals with

Disabilities Education Act (Act)

provides additional Federal financial

assistance to States for providing special

education and related services to

children with disabilities aged three

through five years, and, at a State’s

discretion, to two-year-old children

with disabilities who will turn three

during the school year. The Preschool

Grants for Children with Disabilities

regulations in 34 CFR part 301 establish

the administrative procedures for

applying for and distributing Preschool

Grants funds.

The IDEA Amendments of 1997 made

significant changes in how preschool

grant funds are distributed to States and

LEAs. These changes will apply to

preschool grant funds that will become

available on July 1, 1998. Each State

must distribute any funds that it does

not retain for administration and other

State-level activities to LEAs in

accordance with the new formula set

out in § 301.31. Under this formula, the

State must first award each LEA the

amount it would have received under

section 619 of the Act for fiscal year

1997 if the State had distributed 75

percent of its preschool grant. Even if a

State distributed 90 percent of its

preschool grant to LEAs for fiscal year

1997, the base payment must be

calculated as if the State had distributed

75 percent of its preschool grant. The

regulations clarify that States also must

provide new or reconfigured LEAs,

including charter schools that meet the

definition of a LEA in section 602 of the

IDEA, part of this base payment based

on the relative numbers of children with

disabilities ages three through five

currently provided special education by

each of the affected LEAs. Each State

must distribute to LEAs any flowthrough funds remaining after the base

awards are made on the basis of public

and private elementary and secondary

school enrollment (85 percent of the

remaining funds) and the relative

number of children living in poverty (15

percent of the remaining funds). A State

also may choose to distribute funds it

has set aside to LEAs for activities

specified in § 301.26.

In order to calculate the base

payment, the State must know the final

amount of its fiscal year 1997 award.

However, because of potential changes

in funding due to downward revisions

in State child counts resulting in the

redistribution of these funds, the final

fiscal year 1997 grant award may not be

known until September 1998. A State

should calculate the base payments to

LEAs based on the State’s fiscal year

1997 award that became available on

July 1, 1997, plus or minus any

adjustments as of the time of the State’s

allocation to LEAs. States must make

adjustments to the base payments to

LEAs when the State’s final 1997 award

amount is determined, if that amount is

different from the award on which the

initial allocations to the LEAs were

based.

A State may choose to distribute the

funds it has set aside under § 301.24 for

other State-level activities to LEAs for

direct services or other activities

specified in § 301.26. It is important to

note that funds retained under § 301.24

for other State-level activities do not

need to be distributed to LEAs, or if

some funds are distributed to LEAs, the

SEA is not required to do so according

to the formula in § 301.31. States have

the discretion to determine how any set

aside funds allocated to LEAs will be

distributed. States are advised to

separately identify for each LEA the

amount that is the base payment, the

amount distributed based on enrollment

and poverty and, if applicable, any State

set aside money the State may have

distributed to the LEA. This would

enable interested parties to determine

how the subgrant was calculated.

The substantive rights and protections

established under Part B of the Act and

its implementing regulations at 34 CFR

part 300 apply to three through five year

old children with disabilities and to

two-year-old children, if they are served

under this program. Therefore these

rights and protections, which include

the right to a free appropriate public

education, placement in the least

restrictive environment, and the

availability of due process procedures,

are not repeated in the part 301

regulations.

These final regulations implement the

changes made to section 619 of part B

of the Act by the IDEA Amendments of

1997.

On October 22, 1997, the Secretary

published a notice of proposed

rulemaking (NPRM) for this program in

the Federal Register. In the preamble to

the NPRM, the Secretary discussed on

pages 55052 and 55053 the changes

proposed in that document to conform

the regulations for the Preschool Grants

for Children with Disabilities program

with the provisions of the IDEA

Amendments of 1997.

Analysis of Comments and Changes

In response to the Secretary’s

invitation in the NPRM several parties

submitted comments on the proposed

regulations. An analysis of the

comments and of the changes in the

regulations since publication of the

NPRM follows.

Substantive issues are discussed

under the section of the regulations to

which they pertain. Technical and other

minor changes—and suggested changes

the Secretary is not legally authorized to

make under the applicable statutory

authority—are not addressed.

General

Section 301.5(a) is removed. The

definitions of Educational service

agency, Local educational agency, and

State educational agency are contained

in 34 CFR part 300. As § 301.4(c) states,

the regulations in 34 CFR part 300 apply

to 34 CFR part 301—Preschool Grants

for Children with Disabilities. The

Department will consider whether these

definitions need further clarification in

the context of developing final

regulations for 34 CFR part 300.
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29929

Use of State Agency Allocations

(§ 301.26)

Comment: A number of commenters

requested that notes be deleted from the

regulations implementing Part B of

IDEA.

Discussion: The note following this

section in the NPRM explains that the

IDEA Amendments of 1997 made a

number of changes to the Act designed

to encourage better coordination of

services among programs, including

flexibility for States to use State

administration funds under section

619(e) of the Act to coordinate activities

with other programs that provide

services to children with disabilities

and to fund administrative costs related

to Part C of the Act. The note indicates

that, consistent with the intent of these

provisions, an example of an authorized

activity under paragraph (a) would be to

plan and develop a statewide

comprehensive delivery system for

children with disabilities aged birth

through five. The activities mentioned

in the note continue to be allowable

expenditures but to eliminate

unnecessary language, the note would

be removed.

Change: The note will be removed.

Allocations to Local Educational

Agencies (§ 301.31)

Comment: A few commenters noted

that § 301.31(a) refers to § 301.27, but

that the proposed regulations do not

include a § 301.27.

Discussion: A typographical error was

made in the NPRM. The reference in

§ 301.31(a) should be to § 301.30, rather

than § 310.27.

Change: The regulatory citation in the

§ 301.31(a) has been changed to

§ 301.30.

Comment: A number of commenters

raised the issue of whether charter

schools or LEAs not in existence during

fiscal year 1997 would be eligible for a

base payment under § 301.31(a) and, if

so, how such payments should be

calculated.

Discussion: The regulations should be

revised to ensure that charter schools

established under State law as LEAs and

LEAs not in existence during fiscal year

1997 are not excluded from receiving a

base payment. In addition, if the

boundaries of LEAs that were in

existence or administrative

responsibility for providing services to

children with disabilities ages 3 through

5 are changed, adjustments to their base

payments of the affected LEAs also

would be made. For example, a change

in administrative responsibility might

encompass a change in the age range for

which an LEA is responsible for

providing services such as where

responsibility for serving 3 and 4 year

olds is transferred from one LEA to

another. These adjustments will ensure

that affected LEAs equitably share in

their base payments. The base amount

for new and previously existing LEAs,

once recalculated, becomes the new

base payment for the LEAs. These base

payments would not change unless the

payments subsequently need to be

recalculated pursuant to § 301.31.

Change: A new paragraph (b) has been

added to § 301.31 to clarify that, if LEAs

are created, combined, or otherwise

reconfigured subsequent to fiscal year

1997, the State would be required to

provide the LEAs involved with revised

base allocations calculated on the basis

of the relative numbers of children with

disabilities ages three through five

currently provided special education by

each of the affected LEAs.

Comment: One commenter requested

that the language in the note following

this section of the NPRM be

incorporated into the regulations.

Discussion: The language in the note

that States should use the best data

available on the numbers of children

enrolled in public and private

elementary and secondary schools and

the numbers of children living in

poverty has been incorporated into the

regulations. The number of children

enrolled in public and private

elementary and secondary schools

includes the number of disabled and

nondisabled children. If data on

enrollment in private schools are not

available, States or LEAs are not

required to initiate new data collections

to obtain this data. However, States are

encouraged to try to obtain enrollment

data from private schools.

States have discretion in determining

what data to use to allocate funds

among LEAs on the basis of children

living in poverty. States should use the

best data available to them that reflect

the distribution of children living in

poverty. Examples of options include

census poverty data, aggregate data on

children in families receiving assistance

under the State program funded under

Part A of title IV of the Social Security

Act, aggregate data on children

participating in the free or reducedprice meals program under the National

School Lunch Act, and allocations

under title I of the Elementary and

Secondary Education Act.

In order to be fair to all LEAs the data

used by the State to determine

enrollment and numbers of children

living in poverty would need to be the

same across the State.

Change: A new paragraph (c)(3) has

been added to § 301.31 stating that for

the purpose of making grants under this

section, States must apply on a uniform

basis across all LEAs the best data that

are available to them on the numbers of

children enrolled in public and private

elementary and secondary schools and

the numbers of children living in

poverty. The note will be deleted.

Comment: One commenter requested

clarification regarding whether children

who are home schooled are to be

included in determining public and

private school enrollment.

Discussion: If a State recognizes home

schools as private schools, and the State

is collecting data on private school

enrollments, then students educated in

home schools may be included in the

State’s calculation of private school

enrollment.

Change: None.

Major Changes in the Regulations

The following is a summary of the

major substantive changes in these final

regulations:

• A new paragraph (b) has been

added to § 301.31 to clarify that, if LEAs

are created, combined, or otherwise

reconfigured subsequent to fiscal year

1997, the State would be required to

provide the LEAs involved with revised

base payments, that would be calculated

on the basis of the relative numbers of

children with disabilities ages three

through five currently provided special

education by each of the affected LEAs.

• A new paragraph (c)(3) has been

added to § 301.31 stating that for the

purpose of making grants under this

section, States must apply on a uniform

basis across all LEAs the best data that

are available to them on the numbers of

children enrolled in public and private

elementary and secondary schools and

the numbers of children living in

poverty.

Goals 2000: Educate America Act

The Goals 2000: Educate America Act

(Goals 2000) focuses the Nation’s

education reform efforts on the eight

National Education Goals and provides

a framework for meeting them. Goals

2000 promotes new partnerships to

strengthen schools and expands the

Department’s capacities for helping

communities to exchange ideas and

obtain information needed to achieve

the goals.

These final regulations address the

National Education Goal that all

children in America will start school

ready to learn.

Executive Order 12866

These final regulations have been

reviewed in accordance with Executive

Order 12866. Under the terms of the
29930 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

order the Secretary has 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

determined by the Secretary as

necessary for administering this

program effectively and efficiently.

Burdens specifically associated with

information collection requirements, if

any, were identified and explained in

the preamble to the NPRM.

Regulatory Flexibility Act

The Secretary certifies that these final

regulations would not have a significant

economic impact on a substantial

number of small entities and there has

not been public comment challenging

that conclusion or other information

that would change the Department’s

decision.

Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act

of 1995, no persons are required to

respond to a collection of information

unless it displays a valid OMB control

number. The valid OMB Control

number assigned to the collections of

information in these final regulations

are displayed at the end to the affected

sections of the regulations.

Section 301.10 contains information

collection requirements. As required by

the Paperwork Reduction Act of 1995

(44 U.S.C. 3507(d)), the Department of

Education has submitted a copy of this

section to the Office of Management and

Budget for its review. OMB has

approved this submission with OMB

control no. 1820–0030.

Intergovernmental Review

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, this

document is intended to provide early

notification of the Department’s specific

plans and actions for this program.

Assessment of Educational Impact

In the NPRM the Secretary requested

comments on whether the proposed

regulations would require transmission

of information that is being gathered by

or is available from any other agency or

authority of the United States.

Based on the response to the NPRM

and on its own review, the Department

has determined that the regulations in

this document do not require

transmission of information that is being

gathered by or is available from any

other agency or authority of the United

States.

Electronic Access to This Document

Anyone may view this document, as

well as all other Department of

Education documents published in the

Federal Register, in text or portable

document format (pdf) on the World

Wide Web 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 the

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 at (202)

512–1530 or, toll free at 1–888–293–

6498.

Anyone may also view these

documents in text copy only on an

electronic bulletin board of the

Department. Telephone: (202) 219–1511

or, toll free, 1–800–222–4922. The

documents are located under Option

G—Files/Announcements, Bulletins and

Press Releases.

Note: The official version of this document

is the document published in the Federal

Register.

List of Subjects in 34 CFR part 301

Education of individuals with

disabilities, Elementary and Secondary

education, Grant programs—education,

Infants and children, Reporting and

recordkeeping requirements.

Dated: May 20, 1998.

Richard W. Riley,

Secretary of Education.

(Catalog of Federal Domestic Assistance

Number: 84.173 Preschool Grants for

Children with Disabilities)

The Secretary amends Title 34 of the

Code of Federal Regulations by revising

part 301 as follows:

PART 301—PRESCHOOL GRANTS

FOR CHILDREN WITH DISABILITIES

Subpart A—General

Sec.

301.1 Purpose of the Preschool Grants for

Children With Disabilities Program.

301.2—301.3 [Reserved]

301.4 Applicable regulations.

301.5 Applicable definitions.

301.6 Applicability of Part C of the Act to

two-year-old children with disabilities.

Subpart B—State Eligibility for a Grant.

301.10 Eligibility of a State to receive a

grant.

301.11 [Reserved]

301.12 Sanctions if a State does not make

a free appropriate public education

available to all preschool children with

disabilities.

Subpart C—Allocation of Funds to a State.

301.20 Allocation to States.

301.21 Increase in funds.

301.22 Limitation.

301.23 Decrease in funds.

301.24 State-level activities.

301.25 Use of funds for State

administration.

301.26 Use of State agency allocations.

Subpart D—Allocation of Funds to Local

Educational Agencies.

301.30 Subgrants to local educational

agencies.

301.31 Allocations to local educational

agencies.

301.32 Reallocation of local educational

agency funds.

Authority: 20 U.S.C. 1419, unless

otherwise noted.

Subpart A—General

§ 301.1 Purpose of the Preschool Grants

for Children With Disabilities Program.

The purpose of the Preschool Grants

for Children With Disabilities program

(Preschool Grants program) is to provide

grants to States to assist them in

providing special education and related

services—

(a) To children with disabilities aged

three through five years; and

(b) At a State’s discretion, to two-yearold children with disabilities who will

turn three during the school year.

(Authority: 20 U.S.C. 1419(a))

§§ 301.2—301.3 [Reserved]

§ 301.4 Applicable regulations.

The following regulations apply to the

Preschool Grants program:

(a) The Education Department General

Administrative Regulations (EDGAR) in

title 34 of the Code of Federal

Regulations—

(1) Part 76 (State-Administered

Programs) except §§ 76.125–76.137 and

76.650–76.662;

(2) Part 77 (Definitions that Apply to

Department Regulations);

(3) Part 79 (Intergovernmental Review

of Department of Education Programs

and Activities);

(4) Part 80 (Uniform Administrative

Requirements for Grants and

Cooperative Agreements to State and

Local Governments);

(5) Part 81 (General Education

Provision Act—Enforcement);

(6) Part 82 (New Restrictions on

Lobbying); and
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29931

(7) Part 85 (Governmentwide

Debarment and Suspension

(Nonprocurement) and

Governmentwide Requirements for a

Drug-Free Workplace (Grants)).

(b) The regulations in this part 301.

(c) The regulations in 34 CFR part

300.

(Authority: 20 U.S.C. 1419)

§ 301.5 Applicable definitions.

(a) Definitions in EDGAR. The

following terms used in this part are

defined in 34 CFR 77.1:

Applicant

Application

Award

EDGAR

Fiscal year

Grant period

Secretary

Subgrant

(b) Other definitions. The following

definitions also apply to this part:

Act means the Individuals with

Disabilities Education Act, as amended.

Part B child count means the child

count required by section 611(d)(2) of

the Act.

Preschool means the age range of 3

through 5 years.

State means each of the 50 States, the

District of Columbia, and the

Commonwealth of Puerto Rico.

(Authority: 20 U.S.C. 1402, 1419)

§ 301.6 Applicability of Part C of the Act to

two-year-old children with disabilities.

Part C of the Act does not apply to

any child with disabilities receiving a

free appropriate public education, in

accordance with part B of the Act, with

funds received under the Preschool

Grants program.

(Authority: 20 U.S.C. 1419(h))

Subpart B—State Eligibility for a Grant.

§ 301.10 Eligibility of a State to receive a

grant.

A State is eligible to receive a grant

if—

(a) The State is eligible under 34 CFR

part 300; and

(b) The State demonstrates to the

satisfaction of the Secretary that it has

in effect policies and procedures that

assure the provision of a free

appropriate public education—

(1) For all children with disabilities

aged three through five years in

accordance with the requirements in 34

CFR part 300; and

(2) For any two-year-old children,

provided services by the SEA or by an

LEA or ESA under § 301.1.

(Authority: 20 U.S.C. 1419 (a), (b))

(Approved by the Office of Management and

Budget under control number 1820–0030)

§ 301.11 [Reserved]

§ 301.12 Sanctions if a State does not

make a free appropriate public education

available to all preschool children with

disabilities.

If a State does not meet the

requirements in section 619(b) of the

Act—

(a) The State is not eligible for a grant

under the Preschool Grant program;

(b) The State is not eligible for funds

under 34 CFR part 300 for children with

disabilities aged 3 through 5 years; and

(c) No SEA, LEA, ESA, or other public

institution or agency within the State is

eligible for a grant under Subpart 2 of

part D of the Act if the grant relates

exclusively to programs, projects, and

activities pertaining to children with

disabilities aged 3 through 5 years.

(Authority: 20 U.S.C. 1411(d)(2) and (e)(2)(B);

1419(b); 1461(j))

Subpart C—Allocation of Funds to

States.

§ 301.20 Allocations to States.

After reserving funds for studies and

evaluations under section 674(e) of the

Act, the Secretary allocates the

remaining amount among the States in

accordance with §§ 301.21–301.23.

(Authority: 20 U.S.C. 1419(c)(1))

§ 301.21 Increase in funds.

If the amount available for allocation

to States under § 301.20 is equal to or

greater than the amount allocated to the

States under section 619 of the Act for

the preceding fiscal year, those

allocations are calculated as follows:

(a) Except as provided in § 301.22, the

Secretary—

(1) Allocates to each State the amount

it received for fiscal year 1997;

(2) Allocates 85 percent of any

remaining funds to States on the basis

of their relative populations of children

aged 3 through 5; and

(3) Allocates 15 percent of those

remaining funds to States on the basis

of their relative populations of children

described in paragraph (a)(2) of this

section who are living in poverty.

(b) For the purpose of making grants

under this section, the Secretary uses

the most recent population data,

including data on children living in

poverty, that are available and

satisfactory to the Secretary.

(Authority: 20 U.S.C. 1419(c)(2)(A))

§ 301.22 Limitation.

(a) Notwithstanding § 301.21,

allocations under that section are

subject to the following:

(1) No State’s allocation may be less

than its allocation for the preceding

fiscal year.

(2) No State’s allocation may be less

than the greatest of—

(i) The sum of—

(A) The amount it received for fiscal

year 1997; and

(B) One-third of one percent of the

amount by which the amount

appropriated under section 619(j) of the

Act exceeds the amount appropriated

under section 619 of the Act for fiscal

year 1997;

(ii) The sum of—

(A) The amount it received for the

preceding fiscal year; and

(B) That amount multiplied by the

percentage by which the increase in the

funds appropriated from the preceding

fiscal year exceeds 1.5 percent; or

(iii) The sum of—

(A) The amount it received for the

preceding fiscal year; and

(B) That amount multiplied by 90

percent of the percentage increase in the

amount appropriated from the

preceding fiscal year.

(b) Notwithstanding paragraph (a)(2)

of this section, no State’s allocation

under § 301.21 may exceed the sum of—

(1) The amount it received for the

preceding fiscal year; and

(2) That amount multiplied by the

sum of 1.5 percent and the percentage

increase in the amount appropriated.

(c) If the amount available for

allocation to States under § 301.21 and

paragraphs (a) and (b) of this section is

insufficient to pay those allocations in

full, the Secretary ratably reduces those

allocations, subject to paragraph (a)(1) of

this section.

(Authority: 20 U.S.C. 1419(c)(2)(B) and (C))

§ 301.23 Decrease in funds.

If the amount available for allocations

to States under § 301.20 is less than the

amount allocated to the States under

section 619 of the Act for the preceding

fiscal year, those allocations are

calculated as follows:

(a) If the amount available for

allocations is greater than the amount

allocated to the States for fiscal year

1997, each State is allocated the sum

of—

(1) The amount it received for fiscal

year 1997; and

(2) An amount that bears the same

relation to any remaining funds as the

increase the State received for the

preceding fiscal year over fiscal year

1997 bears to the total of those increases

for all States.

(b)(1) If the amount available for

allocations is equal to the amount

allocated to the States for fiscal year

1997, each State is allocated the amount

it received for that year.

(2) If the amount available is less than

the amount allocated to States for fiscal
29932 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

year 1997, the Secretary allocates

amounts equal to the allocations for

fiscal year 1997, ratably reduced.

(Authority: 20 U.S.C. 1419(c)(3))

§ 301.24 State-level activities.

(a) Each State may retain not more

than the amount described in paragraph

(b) of this section for administration and

other State-level activities in accordance

with §§ 301.25 and 301.26.

(b) For each fiscal year, the Secretary

determines and reports to the SEA an

amount that is 25 percent of the amount

the State received under section 619 of

the Act for fiscal year 1997,

cumulatively adjusted by the Secretary

for each succeeding fiscal year by the

lesser of—

(1) The percentage increase, if any,

from the preceding fiscal year in the

State’s allocation under section 619 of

the Act; or

(2) The rate of inflation, as measured

by the percentage increase, if any, from

the preceding fiscal year in the

Consumer Price Index For All Urban

Consumers, published by the Bureau of

Labor Statistics of the Department of

Labor.

(Authority: 20 U.S.C. 1419(d))

§ 301.25 Use of funds for State

administration.

(a) For the purpose of administering

section 619 of the Act (including the

coordination of activities under Part B

of the Act with, and providing technical

assistance to, other programs that

provide services to children with

disabilities), each State may use not

more than twenty percent of the

maximum amount it may retain under

§ 301.24 for any fiscal year.

(b) Funds described in paragraph (a)

of this section may also be used for the

administration of Part C of the Act, if

the SEA is the lead agency for the State

under that part.

(Authority: 20 U.S.C. 1419(e))

§ 301.26 Use of State agency allocations.

Each State shall use any funds it

retains under § 301.24 and does not use

for administration under § 301.25 for

any of the following:

(a) Support services (including

establishing and implementing the

mediation process required by section

615(e) of the Act), which may benefit

children with disabilities younger than

3 or older than 5 as long as those

services also benefit children with

disabilities aged 3 through 5.

(b) Direct services for children eligible

for services under section 619 of the

Act.

(c) Developing a State improvement

plan under subpart 1 of Part D of the

Act.

(d) Activities at the State and local

levels to meet the performance goals

established by the State under section

612(a)(16) of the Act and to support

implementation of the State

improvement plan under subpart 1 of

Part D of the Act if the State receives

funds under that subpart.

(e) Supplementing other funds used to

develop and implement a Statewide

coordinated services system designed to

improve results for children and

families, including children with

disabilities and their families, but not to

exceed one percent of the amount

received by the State under section 619

of the Act for a fiscal year.

(Authority: 20 U.S.C. 1419(f))

Subpart D—Allocation of funds to local

educational agencies.

§ 301.30 Subgrants to local educational

agencies.

Each State that receives a grant under

section 619 of the Act for any fiscal year

shall distribute any funds it does not

retain under § 301.24 to local

educational agencies in the State that

have established their eligibility under

section 613 of the Act.

(Authority: 20 U.S.C. 1419(g)(1))

§ 301.31 Allocations to local educational

agencies.

(a) Base payments. The State shall

first award each agency described in

§ 301.30 the amount that agency would

have received under section 619 of the

Act for fiscal year 1997 if the State had

distributed 75 percent of its grant for

that year under section 619(c)(3), as

then in effect.

(b) Base payment adjustments. For

fiscal year 1998 and beyond—

(1) If a new LEA is created, the State

shall divide the base allocation

determined under paragraph (a) of this

section for the LEAs that would have

been responsible for serving children

with disabilities now being served by

the new LEA, among the new LEA and

affected LEAs based on the relative

numbers of children with disabilities

ages 3 through 5 currently provided

special education by each of the LEAs;

(2) If one or more LEAs are combined

into a single new LEA, the State shall

combine the base allocations of the

merged LEAs; and

(3) If for two or more LEAs,

geographic boundaries or administrative

responsibility for providing services to

children with disabilities ages 3 through

5 changes, the base allocations of

affected LEAs shall be redistributed

among affected LEAs based on the

relative numbers of children with

disabilities ages 3 through 5 currently

provided special education by each

affected LEA.

(c) Allocation of remaining funds.

After making allocations under

paragraph (a) of this section, the State

shall—

(1) Allocate 85 percent of any

remaining funds to those agencies on

the basis of the relative numbers of

children enrolled in public and private

elementary and secondary schools

within the agency’s jurisdiction; and

(2) Allocate 15 percent of those

remaining funds to those agencies in

accordance with their relative numbers

of children living in poverty, as

determined by the SEA.

(3) For the purpose of making grants

under this section, States must apply on

a uniform basis across all LEAs the best

data that are available to them on the

numbers of children enrolled in public

and private elementary and secondary

schools and the numbers of children

living in poverty.

(Authority: 20 U.S.C. 1419(g)(1))

§ 301.32 Reallocation of local education

agency funds.

(a) If a SEA determines that an LEA

is adequately providing a free

appropriate public education to all

children with disabilities aged 3

through 5 residing in the area served by

that agency with State and local funds,

the SEA may reallocate any portion of

the funds under section 619 of the Act

that are not needed by that local agency

to provide a free appropriate public

education to other local educational

agencies in the State that are not

adequately providing special education

and related services to all children with

disabilities aged 3 through 5 residing in

the areas they serve.

(b) If a State provides services to

preschool children with disabilities

because some or all LEAs and ESAs are

unable or unwilling to provide

appropriate programs, the SEA may use

payments that would have been

available to those LEAs or ESAs to

provide special education and related

services to children with disabilities

aged 3 through 5 years, and to two-yearold children with disabilities receiving

services consistent with § 301.1 who are

residing in the area served by those

LEAs and ESAs.

(Authority: 20 U.S.C. 1414(d), 1419(g)(2))

[FR Doc. 98–14508 Filed 5–29–98; 8:45 am]

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