[Federal Register Volume 64, Number 95 (Tuesday, May 18, 1999)]
[Proposed Rules]
[Pages 27152-27158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12456]



[[Page 27151]]

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Part VI





Department of Education





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34 CFR Part 76



State-Administered Programs; Proposed Rule

  Federal Register / Vol. 64, No. 95 / Tuesday, May 18, 1999 / Proposed 
Rules  

[[Page 27152]]



DEPARTMENT OF EDUCATION

34 CFR Part 76


State-Administered Programs

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Secretary proposes to amend the Education Department 
General Administrative Regulations (EDGAR) governing State-administered 
programs. These proposed regulations are necessary to implement a 
recent statutory change that affects all elementary and secondary 
education programs administered by the United States Department of 
Education (Department) under which the Secretary allocates funds to 
States on a formula basis. The proposed regulations would ensure that 
charter schools opening for the first time or significantly expanding 
their enrollment receive the funds for which they are eligible under 
these programs.

DATES: We must receive your comments on or before July 19, 1999.

ADDRESSES: Address all comments about these proposed regulations to 
Leslie Hankerson, U.S. Department of Education, 400 Maryland Avenue, 
SW., room 3C120, Washington, DC 20202-6140. If you prefer to send your 
comments through the Internet, use the following address: 
[email protected]. You must include the term ``Charter Schools'' in the 
subject line of your electronic message.
    If you want to comment on the information collection requirements, 
you must send your comments to the Office of Management and Budget at 
the address listed in the Paperwork Reduction Act section of this 
preamble. You may also send a copy of these comments to the Department 
representative named in this section.

FOR FURTHER INFORMATION CONTACT: Leslie Hankerson, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3C120, Washington, DC 20202-
6140. Telephone: (202) 205-8524. If you use a telecommunications device 
for the deaf (TDD), you may call the Federal Information Relay Service 
(FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    We invite you to submit comments regarding these proposed 
regulations. The Secretary is particularly interested in public 
comments on whether the Department should regulate on what constitutes 
an expansion of enrollment, or allow States the flexibility to define 
the term within the context of the State procedures established under 
these proposed regulations. The Secretary is also particularly 
interested in public comments on the practical administrative issues 
that States and local educational agencies (LEAs) will need to address 
when allocating funds to charter schools under these proposed 
regulations. One issue that arises under programs that provide for 
formula allocations by State educational agencies (SEAs) to LEAs, such 
as Part B of the Individuals with Disabilities Education Act (IDEA), 
for example, is whether additional guidance is needed on the range of 
permissible options available to SEAs in meeting their obligations 
under these proposed regulations. To ensure that your comments are 
fully considered in developing the final regulations, we urge you to 
identify clearly the specific section or sections of the proposed 
regulations that each of your comments addresses and to arrange your 
comments in the same order as the proposed regulations.
    Under the Department's Principles for Regulating, we regulate only 
if absolutely necessary, and then only in the least burdensome manner 
necessary. These proposed regulations contain some provisions that 
either repeat statutory requirements, give the Department's 
interpretations of the statute, or describe permissible, rather than 
required, ways of implementing the statute. The Secretary particularly 
requests public comment on whether any or all of these provisions 
should be removed from the regulations and issued instead in the form 
of guidance.
    We 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 these proposed 
regulations. 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 these proposed regulations in room 3C120, Federal Office 
Building 6, U.S. Department of Education, 400 Maryland Avenue, SW., 
Washington, DC, between the hours of 8:30 a.m. and 4:00 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 these proposed regulations. 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

    Congress enacted the Charter School Expansion Act of 1998 (Act) on 
October 22, 1998. Among other things, the Act amended title X, part C 
of the Elementary and Secondary Education Act of 1965 (ESEA) and 
reauthorized the Public Charter Schools Program (PCSP) through fiscal 
year 2003. The Act also added a requirement under section 10306 of the 
ESEA that applies to all Department programs under which the Secretary 
allocates funds to States on a formula basis. Section 10306 requires 
the Secretary and States to take measures to ensure that eligible 
charter schools receive their commensurate share of funds under the 
covered programs in their first year of operation and in succeeding 
years when they expand their enrollment (20 U.S.C. 8065a).
    These proposed regulations are necessary to ensure that States 
understand their responsibilities under section 10306 of the ESEA and 
take appropriate steps to fulfill those responsibilities. The Secretary 
encourages States to use these proposed regulations as a guide in 
meeting the requirements of section 10306 of the ESEA pending issuance 
of final regulations.

Summary of Proposed Provisions

    The proposed provisions would amend Part 76 of EDGAR by 
redesignating subpart H as subpart I, and adding a new subpart H. For 
covered programs in which States and LEAs allocate funds by formula, 
this subpart would require States and LEAs to implement procedures that 
ensure that each charter school opening for the first time or 
significantly expanding its enrollment on or before November 1 of an 
academic year receives the full amount of funds for which it is 
eligible within five months of the date the charter school opens or 
significantly expands its enrollment. For each charter

[[Page 27153]]

school opening or significantly expanding its enrollment after November 
1 but before February 1 of an academic year, this subpart would require 
States and LEAs to implement procedures that ensure that the charter 
school receives at least a pro rata portion of the funds for which the 
charter school is eligible within five months of the date the charter 
school opens or significantly expands its enrollment. For each charter 
school opening or significantly expanding its enrollment on or after 
February 1, this subpart would permit, but not require, States and LEAs 
to implement procedures to provide the charter school with a pro rata 
portion of the funds for which the charter school is eligible under a 
covered program. For covered programs in which States and LEAs award 
funds through a competitive process, this subpart would require States 
and LEAs to implement procedures that ensure that each eligible charter 
school scheduled to open during the academic year has a full and fair 
opportunity to compete to participate in the program.
    In determining a charter school's eligibility to receive funds 
under a covered program during an academic year in which the charter 
school opens for the first time or significantly expands its 
enrollment, States and LEAs could not, under this subpart, rely on 
enrollment or eligibility data from a prior year, even if allocations 
to other LEAs or public schools are based on a prior year's data. These 
proposed regulations are based on statutory provisions that require 
eligibility to be determined based on current enrollment data of newly 
opened or expanded charter schools. This subpart would not apply to 
SEAs or LEAs that do not allocate funds or hold competitions among 
eligible applicants under an applicable covered program. Nor would this 
subpart have any effect on a charter school's eligibility to receive 
funds under a covered program during years in which the charter school 
is neither opening for the first time nor significantly expanding its 
enrollment. In those years, SEAs and LEAs should provide funds to 
charter schools meeting the statutory requirements for eligibility 
under the applicable program on the same basis as they provide funds to 
other LEAs and public schools. This subpart would override other 
Federal regulations to the extent that they are inconsistent with the 
provisions of this subpart.

General

    Sections 76.785 through 76.787 describe the purpose of, define 
several key terms, and identify the entities that would be governed by 
this subpart. This subpart would apply to all SEAs and LEAs that fund 
charter schools under a covered program, even if the State does not 
participate in the PCSP. Any State agency that is not an SEA but 
administers a covered program would also be required to comply with the 
provisions of this subpart that apply to SEAs. Examples of these State 
agencies include, but are not limited to, State vocational education 
agencies (Vocational Education Basic Grants and Tech-Prep Education), 
State agencies for higher education (Eisenhower Professional 
Development Grants), and the State agency that administers the 
Governor's Programs under the Department's Safe and Drug-Free Schools 
Program. Charter schools that are scheduled to open for the first time 
or significantly expand their enrollment during a given academic year, 
and wish to participate in a covered program in accordance with this 
subpart, would have to meet certain requirements.
    The Secretary considers an expansion in enrollment to be 
significant when a charter school experiences a substantial increase in 
the number of eligible students under a covered program due to a 
significant event that is unlikely to occur on a regular basis, such as 
the addition of one or more grades or educational programs at the 
charter school.
    Section 76.787 defines several key terms that are used in this 
subpart. Charter school has the same meaning as provided in the 
authorizing statute for the PCSP, title X, part C of the ESEA. A 
charter school that meets this definition and meets the eligibility 
requirements of the applicable covered program could receive funds 
under the program in accordance with the requirements of this subpart, 
regardless of whether the charter school receives funds under the PCSP. 
In order for a charter school to meet the ESEA definition, the charter 
school, among other things, would have to be located in a State with a 
law specifically authorizing the establishment of charter schools. This 
subpart defines charter school LEA as a charter school that is treated 
as an LEA for purposes of the applicable covered program. Under this 
definition, a charter school could be treated as an LEA for purposes of 
some covered programs but not others.
    This subpart defines a covered program as any elementary or 
secondary education program administered by the Department in which the 
Secretary allocates funds to States on a formula basis. This definition 
includes the Department's major formula grant programs under which 
States sub-allocate funds to LEAs by formula, such as Title I, Part A 
(Basic Grants to LEAs) of the ESEA; Part B (Grants to States and 
Preschool Grants) of IDEA; and Titles I and II (Basic Grants and Tech-
Prep, respectively) of the Carl D. Perkins Vocational and Technical 
Education Act of 1998. The covered programs also include programs such 
as Safe and Drug-Free Schools, Even Start Family Literacy, Goals 2000, 
and Adult Education and Family Literacy, under which the Secretary 
allocates funds to States by formula but States award some or all 
subgrants to LEAs and other eligible applicants through a competition. 
The term covered program does not include formula grant programs, such 
as Impact Aid or Indian Education, under which the Secretary allocates 
funds directly to LEAs.
    Local educational agency would have the same meaning in this 
subpart as it has in the authorizing statute for the applicable covered 
program. For covered programs authorized under the ESEA, for example, 
the Title XIV definition of LEA would apply; for covered programs 
authorized under Part B of IDEA, LEA would have the same meaning as 
provided in section 602 of IDEA and 34 CFR 300.18. Because both the 
ESEA and IDEA definitions of LEA rely heavily on State law, the 
Secretary generally defers to States in determining whether a charter 
school is an LEA for purposes of a covered program. The State 
determination must be consistent with Federal and State law, however, 
and may not violate any established State policies or practices. The 
Secretary urges States to develop clear policies for determining 
whether charter schools in the State are LEAs or public schools within 
an LEA for purposes of a covered program.

Responsibilities for Notice and Information

    Sections 76.788 and 76.789 describe the responsibilities of the 
entities that would be governed by this subpart to provide notice and 
information. A charter school that is scheduled to open for the first 
time or significantly expand its enrollment during the academic year 
and wishes to receive funds under a covered program in accordance with 
this subpart would be required to provide its SEA (or other responsible 
State agency) or LEA, as appropriate, with at least 120 days' written 
notice of the date the charter school is scheduled to open or 
significantly expand its enrollment. An eligible charter school that 
fails to comply with this notice requirement still would receive its 
allocation under the applicable covered

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program, but the responsible SEA or LEA would not necessarily be bound 
by the time periods specified in Sec. 76.793. Unless the SEA or LEA 
receives actual notice of the date the charter school is scheduled to 
open or significantly expand its enrollment from another source (e.g., 
an authorized chartering agency) at least 120 days before that date, 
the SEA or LEA would be required only to make allocations to the 
eligible charter school within a reasonable period of time after the 
charter school opens or significantly expands its enrollment.
    In order to receive funds under a covered program, a charter school 
must establish its compliance with all applicable program requirements 
on the same basis as other LEAs. Upon request, a charter school must 
also provide its SEA or LEA with any data or information that is 
readily available to the charter school and that the SEA or LEA 
believes will assist it in estimating the amount of funds the charter 
school may be eligible to receive under a covered program when the 
charter school actually opens or significantly expands its enrollment. 
An SEA or LEA might request, for example, pre-registration lists or 
enrollment data from the prior academic year. While an SEA or LEA could 
not require a charter school to create any new data or information 
prior to opening or significantly expanding its enrollment, once the 
charter school has opened or significantly expanded its enrollment, it 
would be required to provide the SEA or LEA with actual enrollment and 
eligibility data at a time reasonably required by the SEA or LEA. If a 
charter school fails to provide any required enrollment or eligibility 
data to its SEA or LEA, the SEA or LEA could withhold funds from the 
charter school until the charter school provides the data.
    While enrollment or eligibility data from a prior year may be used 
to estimate a charter school's projected enrollment on or after the 
date the charter school opens or significantly expands its enrollment, 
in accordance with Secs. 76.791(a) and 76.796(b), an SEA or LEA could 
not use a prior year's data to determine the charter school's 
eligibility to participate in a covered program or to make any required 
adjustments to allocations under a covered program. This subpart would 
not preclude an SEA or LEA, however, from relying on data from a prior 
year to determine the amount of funds a charter school that is not 
opening for the first time or significantly expanding its enrollment is 
eligible to receive under a covered program.
    Once an SEA or LEA has received notice of the date a charter school 
is scheduled to open or significantly expand its enrollment, 
Sec. 76.789 of this subpart would require the SEA or LEA to provide the 
charter school with timely and meaningful information about each 
covered program in which the charter school may be eligible to apply to 
participate. The SEA or LEA would be required to provide this 
information to the charter school, regardless of whether the charter 
school complies with the notice requirement in Sec. 76.788(a), if the 
SEA or LEA receives actual notice of the date the charter school is 
scheduled to open or significantly expand its enrollment through some 
other means or source. In cases where the responsible SEA or LEA also 
serves as the authorized chartering agency, for example, the SEA or LEA 
is likely to have actual notice of the date the charter school is 
scheduled to open or significantly expand its enrollment, even if the 
charter school does not provide official notice in accordance with 
Sec. 76.788(a).
    Under this subpart, an SEA or LEA would be considered to have 
provided timely information to a charter school if the charter school 
receives the information well enough in advance to be able to take the 
necessary steps to apply to participate in the program, but not so far 
in advance that the information is of little or no use to the charter 
school. An SEA or LEA would be considered to have provided meaningful 
information to a charter school if the information is complete and in a 
format that is clear and understandable.

Allocation of Funds

    Section 76.790 describes the circumstances under which SEAs and 
LEAs would have to comply with this subpart. In order for a charter 
school to receive funds from an SEA or LEA in accordance with this 
subpart, the charter school would have to (1) open for the first time 
or significantly expand its enrollment during the academic year; (2) 
meet the eligibility requirements of the applicable covered program; 
and (3) comply with Sec. 76.788(a) (notice). In order to ensure that 
charter schools receive the funds for which they are eligible in 
accordance with this subpart, paragraph (b) of Sec. 76.790 would permit 
SEAs and LEAs to reserve funds or make initial allocations to eligible 
charter schools based on estimates of the projected enrollment at the 
charter school on or after the date the charter school opens or 
significantly expands its enrollment.
    Under Sec. 76.791, the determination of whether a charter school is 
eligible to receive funds under a covered program must be based on 
actual enrollment or other eligibility data for the charter school on 
or after the date the charter school first opens or significantly 
expands its enrollment. For the year a charter school is opening or 
significantly expanding its enrollment, an SEA or LEA would be 
precluded from determining the charter school's eligibility to 
participate in a covered program on the basis of enrollment or 
eligibility data from a prior year, even if eligibility determinations 
for other LEAs and public schools under the program normally are based 
on data from a prior year. Thus, an SEA or LEA could not deny funding 
to an otherwise eligible charter school merely because the amount of 
funds LEAs or public schools are eligible to receive under the program 
is based on data from a prior year. Nor could an SEA or LEA deny 
funding to an otherwise eligible charter school merely because the 
charter school is not open or has not significantly expanded its 
enrollment as of the date the SEA or LEA makes allocations to other 
LEAs or public schools under the applicable covered program.
    Section 76.792 would require SEAs and LEAs to implement procedures 
to ensure that eligible charter schools receive their commensurate 
share of funds under a covered program. Eligible charter schools that 
first open or significantly expand their enrollment on or before 
November 1 of an academic year would receive their full allocations 
under a covered program, and eligible charter schools that first open 
or significantly expand their enrollment between November 1 and 
February 1 would receive a pro rata share of funds. The pro rata amount 
would be based on the number of months during the academic year that 
the charter school will participate in the applicable program compared 
to the total number of months in the academic year. Although eligible 
charter schools that open on or after February 1 would not necessarily 
receive any funds under a covered program, this subpart would give 
States discretion to implement procedures to provide eligible charter 
schools in this category with a pro rata portion of funds.
    The Secretary recognizes the potential administrative burden that 
the new statutory requirement may place on States and localities and, 
accordingly, intends to allow SEAs and LEAs maximum flexibility to 
develop procedures under this subpart that will enable them to comply 
with section

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10306 of the ESEA in a manner that minimizes any disruption in State 
and local administration of covered programs. Examples of procedures 
SEAs and LEAs could implement include reserving an appropriate amount 
of funds from their total allocation under a covered program; reserving 
an appropriate amount of funds from the allocation to a particular LEA 
or public school based on the number of students from that LEA or 
public school who are expected to attend the charter school; and using, 
for charter school allocations, any carryover, reallocation, State or 
local administration, or other discretionary funds that may be 
available at the State and local levels.
    Section 76.793 specifies the time periods within which SEAs and 
LEAs would be required to make allocations to eligible charter schools 
under this subpart. SEAs and LEAs with at least 120 days' notice of the 
date an eligible charter school is scheduled to open or significantly 
expand its enrollment would be required to make allocations to a 
charter school that first opens or significantly expands its enrollment 
on or before November 1 of an academic year within five months. SEAs 
and LEAs would also be required to make allocations to eligible charter 
schools that first open or significantly expand their enrollment 
between November 1 and February 1 of an academic year within five 
months. In accordance with Sec. 76.788(a)(2), SEAs and LEAs would not 
be required to meet these deadlines if they do not receive actual 
notice of the date an eligible charter school is opening or 
significantly expanding its enrollment at least 120 days before the 
opening or expansion.
    Section 76.794 addresses the applicability of this subpart to 
covered programs in which SEAs and LEAs award funds on a competitive 
basis. Because the ultimate decision on whether to fund an eligible 
applicant under a discretionary covered program lies within the 
discretion of the SEA or LEA, a charter school could be eligible to 
participate in a discretionary covered program and still not receive 
funding under the program. Accordingly, Sec. 76.794(a) applies to 
competitive discretionary programs and would require SEAs and LEAs to 
provide charter schools that are scheduled to open for the first time 
or significantly expand their enrollment on or before the closing date 
of any competition with a full and fair opportunity to apply to 
participate in the program.
    An SEA or LEA generally provides a charter school with a full and 
fair opportunity to participate in a discretionary covered program if 
it provides the charter school with timely and meaningful information 
about the program, including notice of the dates of any upcoming 
competitions. When awarding funds under competitive discretionary 
programs, an SEA would not be required to provide a full and fair 
opportunity to apply to participate to any charter school LEA that is 
scheduled to open after the closing date of a subgrant competition. Nor 
would the SEA be required to delay a subgrant competition in order to 
allow a charter school LEA that has not yet opened to compete for funds 
under a covered program. Paragraph (b) of Sec. 76.794 would specify 
that SEAs and LEAs would not be required to comply with the 
requirements of this subpart when distributing funds under 
discretionary covered programs in which the SEA or LEA does not hold a 
competition. When distributing funds under noncompetitive discretionary 
programs, however, SEAs and LEAs are encouraged to consider charter 
schools on an equitable basis with other LEAs and public schools.

Adjustments

    Under Sec. 76.796, an SEA or LEA that allocates more or fewer funds 
to a charter school than the amount for which the charter school is 
eligible to receive under a covered program would be required to make 
appropriate adjustments. While SEAs and LEAs would have the flexibility 
to make the adjustments during the same year if they choose, they would 
not be required to make any adjustments until the succeeding year when 
they make allocations under the applicable covered program.
    Any required adjustments to allocations for a given academic year 
must be based on actual enrollment or eligibility data for the charter 
school on or after the date the charter school opens or significantly 
expands its enrollment. The adjustments may not be based on enrollment 
or eligibility data from a prior year, even if allocations to other 
LEAs and public schools under the applicable covered program are based 
on a prior year's data.

Applicability of This Subpart to LEAs

    Section 76.799 clarifies that this subpart would apply to LEAs that 
are responsible for funding charter schools under covered programs on 
the same basis as the subpart would apply to SEAs. In accordance with 
existing Federal regulations applicable to the covered programs, the 
State would be directly responsible for ensuring that LEAs meet the 
requirements of section 10306 of the ESEA as well as this subpart.

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.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:

     Are the requirements in the proposed regulations 
clearly stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping 
and order of sections, use of headings, paragraphing, etc.) aid or 
reduce their clarity?
     Would the proposed regulations be easier to understand 
if we divided them into more (but shorter) sections? (A ``section'' 
is preceded by the symbol ``Sec. ''and a numbered heading; for 
example, Sec. 76.785 What is the purpose of this subpart?)
     Could the description of the proposed regulations in 
the SUPPLEMENTARY INFORMATION section of this preamble be more 
helpful in making the proposed regulations easier to understand? If 
so, how?
     What else could we do to make the proposed regulations 
easier to understand?

    Send any comments that concern how the Department could make these 
proposed regulations 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 a significant economic impact on a substantial number of small 
entities. The small entities affected would be small LEAs and charter 
schools. The requirements in these proposed regulations would benefit 
charter schools by ensuring that they receive the Federal-to-State 
formula funds for which they are eligible within their first year of 
operation and in subsequent years when they significantly expand their 
enrollment. The flexibility in these proposed regulations would benefit 
charter schools by improving customer service, and States by easing the 
increased administrative burden that is anticipated as a result of the 
statutory requirement.

Paperwork Reduction Act of 1995

    Sections 76.788, 76.789, 76.792, and 76.794 contain information 
collection requirements. Under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Department of Education has submitted copies of 
these sections to

[[Page 27156]]

the Office of Management and Budget (OMB) for its review.

Collection of Information: State-Administered Programs--Allocation of 
Funds to Charter Schools

    These regulations would affect charter schools, LEAs, and SEAs (and 
other State agencies that administer covered programs). SEAs and LEAs 
will need and use the information to determine whether a charter school 
is eligible to receive funds under a covered program, to estimate the 
amount of funds the charter school is eligible to receive, and to 
ensure that the charter school receives that amount.
    The Department estimates that SEAs will incur approximately 48.5 
burden hours in the first year, and approximately 30.5 burden hours in 
subsequent years. The Department estimates the annual burden for 
charter schools and LEAs to be approximately 2.5 hours. The total 
annual reporting and recordkeeping burden for charter schools, SEAs, 
and LEAs after the first year will be determined by the number of 
eligible charter schools that open or significantly expand their 
enrollment each academic year.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the ADDRESSES section of this preamble.
    We consider your comments on these proposed collections of 
information in--

     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden 
of the proposed collections, including the validity of our 
methodology and assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other 
forms of information technology; e.g., permitting electronic 
submission of responses.

    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    Some of the programs that would be affected by these regulations 
are 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 
these programs.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
proposed regulations 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 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 (GPO), toll free, at 1-888-293-6498; or in the Washington, DC 
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 does not apply)

List of Subjects in 34 CFR Part 76

    Administrative practice and procedure, Compliance, Eligibility, 
Grant administration, Reporting and recordkeeping requirements.

    Dated: May 12, 1999.
Richard W. Riley,
Secretary of Education.

    The Secretary proposes to amend part 76 of title 34 of the Code of 
Federal Regulations as follows:

PART 76--STATE-ADMINISTERED PROGRAMS

    1. The authority citation for part 76 is revised to read as 
follows:

    Authority: 20 U.S.C. 1221e-3, 3474, 6511(a), and 8065a, unless 
otherwise noted.

    2. Subpart H of part 76 is redesignated as subpart I.
    3. A new subpart H is added to part 76 to read as follows:

Subpart H--Allocation of Funds to Charter Schools

General

Sec.
76.785  What is the purpose of this subpart?
76.786  What entities are governed by this subpart?
76.787  What definitions apply to this subpart?

Responsibilities for Notice and Information

76.788  What are a charter school LEA's responsibilities under this 
subpart?
76.789  What are an SEA's responsibilities under this subpart?

Allocation of Funds by State Educational Agencies

76.790  Under what circumstances must an SEA comply with the 
requirements of this subpart?
76.791  On what basis does an SEA determine whether a charter school 
LEA that opens or significantly expands its enrollment is eligible 
to receive funds under a covered program?
76.792  How does an SEA allocate funds to eligible charter school 
LEAs under a covered program in which the SEA awards subgrants on a 
formula basis?
76.793  When is an SEA required to allocate funds to a charter 
school LEA under this subpart?
76.794  How does an SEA allocate funds to charter school LEAs under 
a covered program in which the SEA awards subgrants on a 
discretionary basis?

Adjustments

76.796  What are the consequences of an SEA allocating more or fewer 
funds to a charter school LEA under a covered program than the 
amount for which the charter school LEA is eligible when the charter 
school LEA actually opens or significantly expands its enrollment?
76.797  When is an SEA required to make adjustments to allocations 
under this subpart?

Applicability of This Subpart to Local Educational Agencies

76.799  Do the requirements in this subpart apply to LEAs?

[[Page 27157]]

Subpart H--Allocation of Funds to Charter Schools

General


Sec. 76.785  What is the purpose of this subpart?

    The regulations in this subpart implement section 10306 of the 
Elementary and Secondary Education Act of 1965 (ESEA), which requires 
States to take measures to ensure that each charter school in the State 
receives the funds under a covered program for which the charter school 
is eligible during its first year of operation and during subsequent 
years in which the charter school expands its enrollment.

(Authority: 20 U.S.C. 8065a)


Sec. 76.786  What entities are governed by this subpart?

    The regulations in this subpart apply to--
    (a) State educational agencies (SEAs) and local educational 
agencies (LEAs) that fund charter schools under a covered program, 
including SEAs and LEAs located in States that do not participate in 
the United States Department of Education's (Department) Public Charter 
Schools Program;
    (b) State agencies that are not SEAs, if they are responsible for 
administering a covered program. State agencies that are not SEAs must 
comply with the provisions in this subpart that are applicable to SEAs; 
and
    (c) Charter schools that are scheduled to open or significantly 
expand their enrollment during the academic year and wish to 
participate in a covered program.

(Authority: 20 U.S.C. 8065a)


Sec. 76.787  What definitions apply to this subpart?

    For purposes of this subpart--
    Charter school has the same meaning as provided in title X, part C 
of the ESEA.
    Charter school LEA means a charter school that is treated as a 
local educational agency for purposes of the applicable covered 
program.
    Covered program means an elementary or secondary education program 
administered by the Department under which the Secretary allocates 
funds to States on a formula basis.
    Local educational agency has the same meaning for each covered 
program as provided in the authorizing statute for the program.

(Authority: 20 U.S.C. 8065a)

Responsibilities for Notice and Information


Sec. 76.788  What are a charter school LEA's responsibilities under 
this subpart?

    (a) Notice. (1) At least 120 days before the date a charter school 
LEA is scheduled to open or significantly expand its enrollment, the 
charter school LEA must provide its SEA with written notification of 
that date. (2)(i) The failure of an eligible charter school LEA to 
comply with paragraph (a)(1) of this section relieves the SEA of its 
obligation to comply with Sec. 76.793, unless the SEA receives actual 
notice of the date the charter school LEA is scheduled to open or 
significantly expand its enrollment from another source at least 120 
days before that date.
    (ii) An SEA that does not receive at least 120 days' actual notice 
of the date an eligible charter school LEA is scheduled to open or 
significantly expand its enrollment must provide funds to the charter 
school LEA within a reasonable period of time after the charter school 
LEA opens or significantly expands its enrollment, consistent with the 
requirements of this subpart.
    (b) Information. (1) In order to receive funds, a charter school 
LEA must--
    (i) Provide to the SEA any available data or information that the 
SEA may reasonably require to assist the SEA in estimating the amount 
of funds the charter school LEA may be eligible to receive under a 
covered program; and
    (ii) Establish its compliance with all applicable program 
requirements on the same basis as other LEAs.
    (2) Once a charter school LEA has opened or significantly expanded 
its enrollment, the charter school LEA must provide actual enrollment 
and eligibility data to the SEA at a time the SEA may reasonably 
require. An SEA may withhold funds from a charter school LEA until the 
charter school LEA provides the SEA with the required actual enrollment 
and eligibility data.

(Authority: 20 U.S.C. 8065a)


Sec. 76.789  What are an SEA's responsibilities under this subpart?

    Upon receiving notice, under Sec. 76.788(a)(1) or otherwise, of the 
date a charter school LEA is scheduled to open or significantly expand 
its enrollment, an SEA must provide the charter school LEA with timely 
and meaningful information about each covered program in which the 
charter school LEA may be eligible to participate, including notice of 
any upcoming competitions under the program.

(Authority: 20 U.S.C. 8065a)

Allocation of Funds by State Educational Agencies


Sec. 76.790  Under what circumstances must an SEA comply with the 
requirements of this subpart?

    (a) An SEA must comply with the requirements of this subpart with 
respect to any charter school LEA that--
    (1) Opens for the first time or significantly expands its 
enrollment during an academic year for which the State awards funds by 
formula or through a competition under a covered program;
    (2) Meets the eligibility requirements of the applicable covered 
program; and
    (3) Meets the requirements of Sec. 76.788(a).
    (b) In order to meet the requirements of this subpart, an SEA may 
allocate funds to, or reserve funds for, an eligible charter school LEA 
based on estimates of projected enrollment at the charter school LEA on 
or after the date the charter school LEA actually opens or 
significantly expands its enrollment.

(Authority: 20 U.S.C. 8065a)


Sec. 76.791  On what basis does an SEA determine whether a charter 
school LEA that opens or significantly expands its enrollment is 
eligible to receive funds under a covered program?

    (a) For purposes of this subpart, an SEA must determine whether a 
charter school LEA is eligible to receive funds under a covered program 
based on actual enrollment or other eligibility data for the charter 
school LEA on or after the date the charter school LEA opens or 
significantly expands its enrollment. For the year the charter school 
LEA opens or significantly expands its enrollment, the eligibility 
determination may not be based on enrollment or eligibility data from a 
prior year, even if the SEA makes eligibility determinations for other 
LEAs under the program based on enrollment or eligibility data from a 
prior year.
    (b) Except as provided in Sec. 76.788(b)(2), a charter school LEA 
must receive the funds for which it is eligible in accordance with this 
subpart, even if the charter school LEA opens or significantly expands 
its enrollment after the date the SEA makes allocations to other LEAs 
under an applicable covered program.

(Authority: 20 U.S.C. 8065a)


Sec. 76.792  How does an SEA allocate funds to eligible charter school 
LEAs under a covered program in which the SEA awards subgrants on a 
formula basis?

    (a) For each eligible charter school LEA that is scheduled to open 
or significantly expand its enrollment on or before November 1 of an 
academic

[[Page 27158]]

year, the SEA must implement procedures that ensure that the charter 
school LEA receives the full amount of funds for which the charter 
school LEA is eligible under each covered program.
    (b) For each eligible charter school LEA that is scheduled to open 
or significantly expand its enrollment after November 1 but before 
February 1 of an academic year, the SEA must implement procedures that 
ensure that the charter school LEA receives at least a pro rata portion 
of the funds for which the charter school LEA is eligible under each 
covered program. The pro rata amount must be based on the number of 
months during the academic year the charter school LEA will participate 
in the program as compared to the total number of months in the 
academic year.
    (c) For each eligible charter school LEA that is scheduled to open 
or significantly expand its enrollment on or after February 1 of an 
academic year, the SEA may implement procedures to provide the charter 
school LEA with a pro rata portion of the funds for which the charter 
school LEA is eligible under each covered program.

(Authority: 20 U.S.C. 8065a)


Sec. 76.793  When is an SEA required to allocate funds to a charter 
school LEA under this subpart?

    Except as provided in Secs. 76.788(a)(2) and 76.788(b)(2), for 
eligible charter school LEAs that open or significantly expand their 
enrollment before February 1 of an academic year, the SEA must allocate 
funds to the charter school LEA within five months of the date the 
charter school LEA opens or significantly expands its enrollment.

(Authority: 20 U.S.C. 8065a)


Sec. 76.794  How does an SEA award funds to charter school LEAs under a 
covered program in which the SEA awards subgrants on a discretionary 
basis?

    (a) Competitive programs. (1) For covered programs in which the SEA 
awards subgrants on a competitive basis, the SEA must provide each 
eligible charter school LEA in the State that is scheduled to open on 
or before the closing date of any competition under the program a full 
and fair opportunity to apply to participate in the program.
    (2) An SEA is not required to delay the competitive process in 
order to allow a charter school LEA that has not yet opened or 
significantly expanded its enrollment to compete for funds under a 
covered program.
    (b) Noncompetitive discretionary programs. The requirements in this 
subpart do not apply to discretionary covered programs under which the 
SEA does not award subgrants through a competition.

(Authority: 20 U.S.C. 8065a)

Adjustments


Sec. 76.796  What are the consequences of an SEA allocating more or 
fewer funds to a charter school LEA under a covered program than the 
amount for which the charter school LEA is eligible when the charter 
school LEA actually opens or significantly expands its enrollment?

    (a) An SEA that allocates more or fewer funds to a charter school 
LEA than the amount for which the charter school LEA is eligible, based 
on actual enrollment or eligibility data when the charter school LEA 
opens or significantly expands its enrollment, must make appropriate 
adjustments to the amount of funds allocated to the charter school LEA 
as well as to other LEAs under the applicable program.
    (b) Any adjustments to allocations to charter school LEAs under 
this subpart must be based on actual enrollment or other eligibility 
data for the charter school LEA on or after the date the charter school 
LEA first opens or significantly expands its enrollment, even if 
allocations or adjustments to allocations to other LEAs in the State 
are based on enrollment or eligibility data from a prior year.

(Authority: 20 U.S.C. 8065a)


Sec. 76.797  When is an SEA required to make adjustments to allocations 
under this subpart?

    The SEA must make any necessary adjustments to allocations under a 
covered program on or before the date the SEA allocates funds to LEAs 
under the program for the succeeding academic year.

(Authority: 20 U.S.C. 8065a)

Applicability of This Subpart to Local Educational Agencies


Sec. 76.799  Do the requirements in this subpart apply to LEAs?

    (a) Each LEA that is responsible for funding a charter school under 
a covered program must comply with the requirements in this subpart on 
the same basis as SEAs are required to comply with the requirements in 
this subpart.
    (b) In applying the requirements in this subpart (except for 
Secs. 76.785, 76.786, and 76.787) to LEAs, references to SEA (and State 
in Secs. 76.794(a) and 76.796(b)), charter school LEA, and LEA must be 
read as references to LEA, charter school, and public school, 
respectively.

(Authority: 20 U.S.C. 8065a)

[FR Doc. 99-12456 Filed 5-17-99; 8:45 am]
BILLING CODE 4000-01-U