[Federal Register Volume 60, Number 189 (Friday, September 29, 1995)]
[Rules and Regulations]
[Pages 50413-50414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24381]



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DEPARTMENT OF EDUCATION

34 CFR Part 80


Education Department General Administrative Regulations; Cost 
Principles for State, Local and Indian Tribal Governments

AGENCY: Department of Education.

ACTION: Announcement regarding the revision of certain cost principles.

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SUMMARY: The Secretary announces the applicability of revised Office of 
Management and Budget (OMB) Circular A-87, ``Cost Principles for State, 
Local and Indian Tribal Governments,'' as revised by OMB in the Federal 
Register of May 17, 1995 (60 FR 26484). This Circular establishes 
principles for determining allowable costs incurred by State, local, 
and Indian tribal governments under certain agreements with the Federal 
Government.
    While the Department has decided to make this circular apply to 
grants and subgrants made on or after October 1, 1995, this notice also 
permits flexibility for costs incurred after July 1, 1995.

DATES: This notice takes effect for grants and subgrants awarded on or 
after on October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Richard T. Mueller, U.S. Department of 
Education, Grants and Contracts Service, Room 3652 ROB, 600 
Independence Ave., SW. Washington, DC 20202-4201. Telephone: (202) 708-
8787. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-
877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION: On March 11, 1988, the Secretary published 
34 

[[Page 50414]]
CFR Part 80--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments (53 FR 8071). 
This regulatory action was the result of the Department's participation 
in the common rule developed by Federal agencies for administering 
grants and cooperative agreements awarded to State, local, and Indian 
tribal governments. Part 80 established Circular A-87 as the cost 
principles used by the Secretary of Education for determining allowable 
costs of State, local, and Indian tribal governments under grants and 
cooperative agreements with the Department. (34 CFR 80.22.)
    When Part 80 was published, it was the practice of the Department 
to adopt circulars in the regulations by citing a specific circular 
publication date (See 34 CFR 80.22(b)). Now, the Department makes OMB 
circulars applicable through notices such as this one. Thus, the 
Department will make conforming amendments to 34 CFR 80.22 to eliminate 
the obsolete publication date for Circular A-87.
    On May 17, 1995, OMB published a revision of Circular A-87 (60 FR 
26484). This notice announces the applicability for 34 CFR Part 80 of 
the revision made by OMB, binding recipients of Department of Education 
grants and cooperative agreements to the requirements of Circular A-87 
as revised on May 17, 1995. These cost principles apply to State, 
local, and Indian tribal governments, except to the extent that the 
principles are inconsistent with specific statutes or Departmental 
program or administrative regulations. The revised Circular is 
effective for grants and cooperative agreements made by ED on or after 
October 1, 1995 and for subgrants made under those awards on or after 
that date. The cost principles in Circular A-87 are also cross-
referenced in the Department's administrative regulations applicable to 
institutions of higher education, hospitals, and nonprofit 
organizations, at 34 CFR 74.27(b).
    The Secretary is aware that the revised circular contains areas of 
flexibility which were not contained in the prior cost principles and 
that could be beneficial to State, local and Indian tribal governments. 
The Department has made substantial grant awards, primarily to States, 
since July 1, 1995, and the recipients of these awards may desire to 
benefit from the more flexible rules in the revised A-87. Considering 
this, the Department has determined that it will permit recipients for 
which the Department has cognizance to charge direct costs which are 
consistent with the revised Circular for the period July 1, 1995 
through the end of the 1996 fiscal year. However, States and other 
governmental authorities that have State-wide cost allocation plans and 
indirect cost rates in effect for parts of fiscal year 1996 based on 
costs allowable under the prior A-87 may not amend those agreements 
prior to their expiration.

Waiver of Proposed Rulemaking

    It is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed rules in accordance with the 
Administrative Procedure Act (5 U.S.C. 553). However, since OMB 
previously provided the public an opportunity for comment on the 
revision of Circular A-87 on October 12, 1988 (53 FR 40352) and August 
19, 1993 (58 FR 44212), the Secretary finds that soliciting further 
public comment with respect to adopting the revised circular is 
unnecessary and contrary to the public interest under 5 U.S. C. 
553(b)(B). For the same reason, the Secretary finds good cause under 5 
U.S.C. 553(d) to waive the thirty-day delayed effective date.
    Nonetheless, in light of recently enacted legislation--the 
Improving America's School Act, the Goals 2000: Educate America Act, 
and the School-to-Work Opportunities Act--the Secretary is interested 
in receiving suggestions or ideas from the States and local and Indian 
tribal governments and other interested parties about improving the 
application of the Circular based on the flexibility provided in these 
new laws.
    The Secretary has already received and is reviewing letters from 
several States since the Circular's publication, concerning such areas 
as time distribution and the determination of reasonable and necessary 
expenditures of program funds.
    The Secretary encourages States, local and Indian tribal 
governments, and other interested parties, as partners in Federal 
program management, to maintain an open dialogue with Department 
officials about matters covered in Circular A-87, including accounting 
practices that promote efficient administrative practices, support 
effective delivery of program services, and conserve resources.

(Catalog of Federal Domestic Assistance Number does not apply.)

    Dated: September 26, 1995.
Donald R. Wurtz,
Chief Financial Officer.
[FR Doc. 95-24381 Filed 9-28-95; 8:45 am]
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