[Federal Register Volume 65, Number 91 (Wednesday, May 10, 2000)]
[Proposed Rules]
[Pages 30314-30316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11601]



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Part V





Department of Education





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34 CFR Part 300



Assistance to States for the Education of Children With Disabilities; 
Proposed Rule

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

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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.

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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: [email protected].
    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 Sec. 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 
non-supplanting purposes, up to 20 percent of the amount it receives 
that exceeds the amount it received under Part B during the prior year. 
Under Sec. 300.233 an LEA is able to meet the maintenance of effort 
requirement of Sec. 300.231 and non-supplant requirement of 
Sec. 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., sub-grants 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 Sec. 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 (Sec. 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 Sec. 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 sub-grants to LEAs for capacity-building and 
improvement under section 611(f)(4) (Sec. 300.622); other funds the SEA 
may provide to LEAs under section 611(f) (Sec. 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) (Sec. 300.622) and 
other funds the SEA may provide to LEAs under section

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611(f) (Sec. 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 Sec. 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 Sec. 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 Sec. 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 
Sec. 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

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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:


Sec. 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 Sec. 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 Sec. 300.712.
* * * * *
    (3) For purposes of this section, an LEA is not eligible to receive 
funds that have been withheld under Sec. 300.197 or 300.587 or have 
been reallocated to other LEAs in the State under Sec. 300.714.
* * * * *

[FR Doc. 00-11601 Filed 5-9-00; 8:45 am]
BILLING CODE 4000-01-U