[Federal Register Volume 69, Number 37 (Wednesday, February 25, 2004)]
[Proposed Rules]
[Pages 8751-8791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3714]



[[Page 8751]]

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Part II





Department of the Interior





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Bureau of Indian Affairs



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25 CFR Parts 30, 37, 39, 42, 44, and 47



Implementation of the No Child Left Behind Act of 2001; Proposed Rule

Federal Register / Vol. 69, No. 37 / Wednesday, February 25, 2004 / 
Proposed Rules

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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Parts 30, 37, 39, 42, 44, 47

RIN 1076-AE49


Implementation of the No Child Left Behind Act of 2001

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Proposed rule.

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SUMMARY: As required by the No Child Left Behind Act of 2001, the 
Secretary of the Interior has developed proposed regulations using 
negotiated rulemaking that address the following issues: Defining 
adequate yearly progress, which is the measurement for determining that 
schools are providing quality education; establishing separate 
geographic attendance areas for Bureau-funded schools; establishing a 
formula for determining the minimum amount necessary to fund Bureau-
funded schools; establishing a system of direct funding and support of 
all Bureau-funded schools under the formula established in the Act; 
establishing guidelines to ensure the Constitutional and civil rights 
of Indian students; and establishing a method for administering grants 
to tribally controlled schools.

DATES: Comments on the proposed rule must be received on or before June 
24, 2004. Comments on the information collections in the proposed rule 
should be submitted to the Office of Management and Budget by March 26, 
2004.

ADDRESSES: Submit comments to one of the following addresses. Mail: 
Director (630), Bureau of Land Management, Eastern States Office, 7450 
Boston Boulevard, Springfield, Virginia 22153, Attention: RIN 1076-
AE49. Personal or messenger delivery: 1620 L Street, NW., Room 401, 
Washington, DC 20036. Direct Internet response: www.blm.gov/nhp/news/regulatory/index.html, or at http://www.blm.gov, or at regulations.gov 
under Indian Affairs Bureau. Send comments on the information 
collections in the proposal to: Interior Desk Officer (1076-AE49), 
Office of Information and Regulatory Affairs, 202/395-6566 (facsimile); 
e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Catherine Freels, Designated Federal 
Official, PO Box 1430, Albuquerque, NM 87103-1430; Phone: 505-248-7240; 
e-mail: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Overview of Process
II. Part 30--Adequate Yearly Progress
III. Part 37--Geographic Boundaries
IV. Part 39--The Indian School Equalization Program
V. Part 42--Student Rights
VI. Part 44--Grants under the Tribally Controlled Schools Act
VII. Part 47--Uniform Direct Funding and Support
VIII. Procedural Matters

I. Overview of Process

    Pursuant to a directive in the No Child Left Behind Act of 2001 
(Pub. L. 107-110; enacted January 8, 2002, referred to in this preamble 
as ``NCLB'' or ``the Act''), the Department of the Interior established 
a Negotiated Rulemaking Committee to develop proposed rules to 
implement several sections of the Act relating to the Bureau of Indian 
Affairs-funded school system. Negotiated Rulemaking is a process 
sanctioned by Subchapter III, or Chapter 5, Title 5, United States Code 
and the Federal Advisory Committee Act, 5 U.S.C. Appendix (FACA), that 
employs federal representatives and members of the public who will be 
affected by rules to jointly develop proposed rules. In this case, the 
Act required the Secretary of the Interior to select representatives of 
Indian tribes and Bureau-funded schools as well as federal government 
representatives to serve on the Committee.
    The Committee's task was to draft proposed rules to recommend to 
the Secretary. Upon the Secretary's approval, draft rules are published 
in the Federal Register for written public comments within a 120-day 
public comment period. After the close of the public comment period, 
the Committee will reconvene to review these comments and to recommend 
promulgation of final rules to the Secretary.
    The Secretary chartered the Committee under the Federal Advisory 
Committee Act on May 1, 2003. It is comprised of 19 members nominated 
by Indian tribes and tribally operated schools. The law required that, 
to the maximum extent possible, the tribal representative membership 
should reflect the proportionate share of students from tribes served 
by the bureau-funded school system. The Secretary also appointed to the 
Committee six members from within the Department of the Interior. The 
Committee selected three tribal representatives and two federal 
representatives as co-chairs. Six individuals were hired to facilitate 
all Committee meetings.
    The Committee met in five week-long sessions in the months of June 
through October 2003. Each session was preceded by a Federal Register 
notice stating the location and dates of the meetings and inviting 
members of the public to attend. The Committee divided the areas 
subject to regulation among four work groups. These workgroups prepared 
written products for review, revision and approval by the full 
Committee. Committee decisions were made by consensus. All Committee 
and workgroup meetings were open to the public, and members of the 
public were afforded the opportunity to make oral comments at each 
session and to submit written comments.
    The Act provisions for which the Committee prepared proposed rules 
are:
    1. Section 1116(g) of NCLB: Develops a definition of ``Adequate 
Yearly Progress'' for the bureau-funded school system.
    2. Section 1124 of the Education Amendments of 1978, as amended by 
NCLB: Attendance boundaries for bureau-funded schools.
    3. Section 1127 of the Education Amendments of 1978, as amended by 
NCLB: A determination of the funds needed to sustain bureau-funded 
schools and a formula to allocate the current funds.
    4. Section 1130 of the Education Amendments of 1978, as amended by 
NCLB: The direct funding and support of bureau-funded schools.
    5. Section 1136 of the Education Amendments of 1978, as amended by 
NCLB: The rights of students in the bureau-funded school system.
    6. Section 1043 the Tribally Controlled Schools Act (TCSA) of 1988, 
as amended by NCLB: Discharge of the Secretary's responsibilities under 
this law through which tribes and tribal school boards can operate 
bureau-funded schools under the grant mechanism established in the 
Tribally Controlled Schools Act.
    Sections II through VII are of this preamble detailed discussions 
of each of the individual rules listed above.

II. Part 30--Adequate Yearly Progress

    NCLB requires each State to submit a plan to the Secretary of 
Education which demonstrates that the State, through its State 
Educational Agency (SEA), has adopted challenging academic content 
standards and challenging student academic achievement standards 
applicable to all schools in the State, and to develop assessment 
devices through which student achievement will be measured. For 
purposes of adequate yearly progress (AYP), the Bureau of Indian 
Affairs is considered the SEA for the bureau-funded school system.
    The Act requires each SEA to define Adequate Yearly Progress (AYP). 
The

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definition of AYP will establish intermediate (annual) student 
achievement goals in math and reading/language arts. If a school meets 
the intermediate goal, it has made AYP for that year. Failure of a 
school to meet AYP for two or more consecutive years triggers remedial 
actions described in the Act. The Act requires that, by 2014, all 
students must be achieving at the ``proficient'' level, as measured by 
the State's accountability system.
    NCLB requires a State and the Bureau of Indian Affairs to define 
AYP in a manner that achieves the following requirements:

--Applies the same high standards of academic achievement to all 
schools;
--Is statistically valid and reliable;
--Results in continuous and substantial academic improvement for all 
students;
--Measures progress of the SEA (BIA) and schools based primarily on the 
academic assessments; and
--Includes separate measurable annual goals for continuous and 
substantial improvement in the academic achievement of (1) all students 
in the school; (2) economically disadvantaged students; (3) students 
from major racial and ethnic groups; (4) students with disabilities; 
and (5) students with limited English proficiency.

    The AYP definition must also include ``additional indicators.'' For 
high schools, the additional indicator must be graduation rates. The 
SEA must select one additional indicator applicable to schools without 
a graduating class. An SEA may also identify additional optional 
indicators of student progress to include in its definition of AYP.
    To define Adequate Yearly Progress (AYP) for Bureau-funded schools, 
the Committee first had to master an understanding of all of the 
components of Adequate Yearly Progress under the Act and how they 
interrelate with a final definition of AYP. While the workgroup had to 
look at the curriculum, standards, and assessments that Bureau-funded 
schools were using, the Committee did not negotiate these items. The 
negotiation was limited to the definition of AYP.
    The AYP workgroup initially considered a definition that would 
require all Bureau-funded schools to show that a set percentage of 
students (e.g., 11 percent) progressed annually from the ``basic'' 
achievement level to the ``proficient'' or ``advanced'' achievement 
levels. This idea was abandoned, however, because the Department of 
Education, which supplied resource consultants to the Committee, 
advised that this methodology would not be statistically reliable. The 
Department of Education notes that it is not statistically reliable to 
aggregate the Bureau-funded school assessment data to make AYP 
determinations because each school uses a different assessment system 
and also because, collectively, the assessments in use did not meet the 
requirements of NCLB set forth in section 1111(b)(3)(C)(ii). Therefore, 
the committee needed to develop a definition of AYP that was based on a 
uniform assessment system. As the Committee discovered, BIA had 
abandoned requiring uniform curriculum and assessments and had instead 
allowed schools to align their curriculum with the State in which the 
school was located. Thus, the Committee appeared to be left with two 
options:

--Selecting a single State's system with one set of curriculum, 
standards, and assessments; or
--Allowing each Bureau-funded school to follow the definition of the 
State in which it is located.

    After Congress passed Goals 2000, States had to set standards for 
student achievement. The Bureau chose to adopt national standards, but 
most schools chose to align with the standards of the State where they 
were located. The committee found that the Bureau of Indian Affairs has 
traditionally allowed tribes to follow State's curricula, standards, 
and assessments. Originally, the Bureau had attempted to create a 
system in which all of the tribes would follow one set of curriculum, 
standards, and assessments. Some tribes expressed concern over this 
approach. Tribes suggested that the students of Bureau-funded schools 
would be better served by allowing the schools to follow the State's 
curriculum, standards, and assessments because the Bureau-funded school 
students are traditionally more transient and sometimes move between 
Bureau-funded schools and public schools. Therefore, Bureau-funded 
schools began aligning their curriculum, standards, and assessments 
with the State in which they were located.
    The Committee revised its initial plan and decided to adopt as the 
Bureau definition of AYP the definition of the State in which a school 
is located (Sec.  30.104). However, a tribal governing body or school 
board can develop an alternative AYP definition and submit it to the 
Secretary for approval (Sec.  30.105). This decision implements section 
1116(g) of the Act, which expressly permits a tribe or school board to 
waive the Bureau's AYP definition and develop its own. The Secretary is 
required to approve an alternative definition as long as it is 
consistent with section 1111(b) of NCLB, taking into account the unique 
circumstances and needs of the schools and the students served (Sec.  
30.106).
    Tribal representatives on the Committee expressed serious objection 
to adopting State AYP definitions as the Bureau's definition instead of 
establishing a Bureau-specific definition, which some tribes and school 
boards might prefer. There was concern that requiring use of a State's 
definition would imply that Bureau-funded schools were subject to State 
jurisdiction, would signal abandonment of the Federal Government's 
trust responsibility for Indian education, and could diminish tribal 
sovereignty. In recognition of these concerns, the Committee developed 
language for the proposed rules that expressly states that nothing in 
the rules diminishes the Secretary's trust responsibility for Indian 
education or any statutory rights; affects in any way the sovereign 
rights of an Indian tribe, or subjects Bureau-funded schools to State 
jurisdiction (Sec.  30.100).
    A detailed procedure for submission of an alternative AYP 
definition by a tribe or school board, and for review/approval of that 
definition by the Secretary of the Interior is included in Sec. Sec.  
30.106 through 30.108. The Department is required by Sec.  30.109 to 
provide technical assistance for development of an alternative 
definition upon the request of a tribe or school board.
    The Department of Education has expressed concern that Sec.  
30.107(a) does not include any mention of rewards and sanctions. While 
the Department of the Interior feels that the Act leaves responsibility 
for determining rewards and sanctions with the State (which, in this 
case, is the Bureau of Indian Affairs), we invite comments on this 
issue. The Department of Education also expressed concern over the 
inclusion of science in the subjects that an alternate definition of 
AYP must measure. The committee included science based on the 
requirements of section 1111(b)(3)(A) of the Act, but invites comments 
on the appropriateness of including science in the list of subjects to 
be measured.
    The Department of Education feels that, in Sec.  30.115, it is 
inaccurate to say that schools must include performance data for grades 
10 through 12 in AYP. We disagree, based upon the language in section 
1111(b)(3)(C)(v)(I)(cc), which states:


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    Except as otherwise provided for grades 3 through 8 under clause 
vii, measure the proficiency of students in, at a minimum, 
mathematics and reading or language arts, and be administered not 
less than once during grades 10 through 12.

    We invite comments on this issue.
    The consequences of failing to make AYP are described in Sec.  
30.117. While the remedial status of ``school improvement,'' 
``corrective action,'' and ``restructuring'' applicable to public 
schools also apply to Bureau-funded schools, the latter are exempt from 
two requirements--school choice and supplemental educational services--
that apply to public schools (see Sec.  30.120). These exemptions are 
expressly stated in the regulation. The regulation also reiterates in 
Sec.  30.119 the tribally operated school board's responsibility to 
implement remedial actions, while the Bureau is responsible for 
implementing these remedial actions at Bureau-operated schools.
    The rule specifies in Sec.  30.121 the Bureau's responsibilities 
under the Act to provide funding and technical assistance to schools 
who fail to make AYP, and in Sec.  30.122 the Bureau's responsibility 
to provide ongoing support to all schools to assist them in making AYP. 
The proposed regulation also details the Bureau's reporting 
responsibilities in Sec.  30.126.

III. Part 37--Geographic Boundaries

    The No Child Left Behind Act requires that all Bureau-funded 
schools have designated separate geographic boundaries. The statute 
permits tribes to have input in that process. It was the committee's 
opinion that the statute extensively prescribed the input tribes may 
have in establishing school boundaries. The statute left very few gaps 
for the committee to fill with regulations. The workgroup did, however, 
feel that the statute was somewhat confusing with regards to what roles 
Tribes could fill and when. The following section-by-section analysis 
explains the committee's recommendations on geographic boundaries.
    Section 37.100. This part provides guidance for the process of 
creating attendance boundaries. The intent of this part is to clarify 
the role Tribes may have in establishing and revising geographic 
attendance boundaries. Overall, the group wanted to reserve for Tribes 
the opportunity to participate in all decisions regarding attendance 
boundaries and related policies where not statutorily prohibited.
    Section 37.101. This section defines key terms unique to this 
section of the proposed rule. If a term is not defined in this section 
or this part, the definition of the local school board should be 
applied.
    Section 37.102. Much of this section is a restatement of the 
statute, put in clearer organizational structure. This section is 
intended to clarify the structure. The workgroup discussed ways to 
assist readers find the pertinent portions of the regulation applicable 
to their particular type of school. Specifically, the group recognized 
that day on-reservation schools would be subject to some different 
boundary determinations than off-reservation boarding schools (ORBS). 
Subsequently the group started by dividing the rule into two parts. In 
doing this, the group discovered that some areas of potential interest 
applied equally to all schools, whether on-or off-reservation. 
Ultimately the group decided, and the committee approved, a structure 
that answered questions applicable to all schools first. If a school 
does not find answers in the section applicable to all schools, they 
should turn to the section applicable to their particular type of 
school. For this reason, this part is organized as follows:
    Subpart A--All Schools: This paragraph answers questions for any 
Bureau-funded school, including ORBS.
    Subpart B--Day schools, On-Reservation Boarding Schools, and 
Peripheral Dorms: This section answers only questions for the schools 
listed. Nothing in this paragraph addresses ORBS unique situation.
    Subpart C--Off Reservation Boarding Schools: This section addresses 
questions uniquely applicable to ORBS. Nothing in this paragraph 
applies to on-reservation schools of any type.

Subpart A--All Schools

    Section 37.110. This section highlights for tribes their authority 
to participate in the process of establishing school boundaries. 
Additionally, this section serves as a reminder that, if a Tribe 
chooses not to establish their own school boundaries, the Secretary 
must draw the boundaries for them. The Secretary is charged with 
ensuring all schools have boundaries.
    Section 37.111. This section clarifies that Tribes may have a role 
in establishing geographic boundaries. Specifically, the proposed rule 
highlights the Tribe's ability to authorize transportation funding for 
their member-students attending schools outside of their designated 
geographic boundary. A student's designated geographic boundary is the 
geographic attendance area of the school that covers the student's 
primary residence. The Bureau will not automatically provide 
transportation for students who choose to attend a school outside of 
their designated geographic attendance area. The Bureau may only 
provide transportation funding for students attending outside of their 
designated geographic attendance area when the student's Tribe 
authorizes such expenditure.
    This section is of particular importance to tribes that seek to 
control where their students enroll in school. The committee was aware 
of some Tribes seeking to prevent their member-students from attending 
other Tribes' schools. Initially, the group had proposed rule that more 
thoroughly emphasized the Tribe's authority to authorize or withhold 
transportation funding. The group discussed an interpretation of the 
statute that permitted Tribes to pass resolutions restricting parental 
choice. However, a key component of the No Child Left Behind Act is 
parental choice. Though the group tried, they were unable to draft a 
regulation that observed Tribal restrictions on attendance, yet still 
permitted parental choice, as required by statute. Ultimately, the 
committee agreed to a more succinct explanation that emphasized Tribal 
authority to open school boundaries.
    Absent from this section is a prescription on how a tribe 
authorizes transportation funding. Originally the group suggested 
manners in which a Tribe would provide this authorization. In the 
committee-at-large discussion, the group's description of authorization 
was deemed unclear and unnecessary. Additionally, the sentiment was 
expressed that the tribe should determine how to authorize funding.
    Section 37.112. All schools must have boundaries. This section was 
included to serve to further notify tribes that, if they fail to act 
and set their own school boundaries, the Secretary must and will do it 
for them.

Subpart B--Day schools, On-Reservation Boarding Schools, and Peripheral 
Dorms

    Section 37.120. This section was provided to put Tribes on notice 
of the opportunity to establish and revise current school boundaries. 
This section clarifies that the established boundaries currently in use 
will remain in place unless revised by the appropriate Tribal governing 
body. This section is intended to encourage Tribes to review existing 
boundaries and use the processes defined in this Part to make changes 
to meet current needs.
    Section 37.121. Who establishes geographic attendance boundaries 
under this part? This section reiterates the

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statutory prescription for when a Tribe may establish geographic 
attendance boundaries for its schools. The work group felt that the 
statutory language was unclear and may inadvertently preclude Tribes 
from acting to change school boundaries.
    Section 37.122. Tribes have ongoing authority to suggest changes to 
and participate in the revision of geographic attendance boundaries. 
This section explains the process Tribes must use to change geographic 
attendance boundaries, regardless of when the Tribe suggests such 
changes.
    This section is also a restatement of the statutory language. 
Again, the work group felt that the statutory language alone may not 
sufficiently inform Tribes of the process for changing school 
boundaries. Specifically, the group sought to clarify some of the 
limitations on the Secretary's ability to change school boundaries and 
highlight the weight and importance the Tribe's views have in the 
boundary setting process.
    (a) The group restated the limitations placed on the Secretary's 
ability to change existing school geographic attendance boundaries. 
After notice of the Secretary's intention to modify school boundaries, 
Tribes must be given 6 months notice before changes become effective. 
In that time the Tribes have an opportunity to suggest different 
modifications to the Secretary's proposed changes. The restatement of 
this limitation is intended to inform Tribes of their role in boundary 
determinations.
    (b) This paragraph signifies the impact of Tribal views in the 
boundary setting and revision process. If a Tribe determines that the 
geographic attendance boundaries of a school is not meeting the needs 
of the Tribe or the students, the Tribe may request that the Secretary 
modify the boundaries. The group determined that the letter requesting 
the modification should go to the Director of the Office of Education 
Programs. The Office of Indian Education Programs must respond to the 
Tribal requests for a boundary modification after consulting with the 
Secretary of the Interior and the Assistant Secretary-Indian Affairs. 
If the Tribe's suggestion is rejected, a written explanation must be 
provided detailing why the proposed changes do not meet the needs of 
the Indian students to be served and how the proposed changes would 
affect the affected programs. Such requirements will ensure that Tribes 
will have an opportunity to give meaningful input into setting school 
boundaries and the process is transparent.
    Section 37.123. This section highlights the authority of the Tribe 
to create their own processes to develop and revise geographic 
attendance boundaries. The committee wanted to place as few 
prescriptions on Tribes as possible. The group was careful to craft a 
regulation which respected Tribal autonomy and sovereignty concerning 
education. Consequently, the group did not want to tell Tribes who to 
consult when revising school boundaries. It was the intention of this 
section to emphasize coordination among entities involved in the 
education of the student when setting boundaries. The referenced 
``entities'' with which consultation should be made were not 
specifically listed as it was thought the individual Tribes could best 
determining who should be included in the consultation process.
    Section 37.124. At the time of drafting this rule (2003), a 
moratorium existed on construction of new Bureau-funded schools. 
Despite the moratorium, provisions of the No Child Left Behind Act 
could be interpreted to specifically include and apply to new Bureau-
funded schools. In consideration for such an interpretation, this 
section of this Part was included in the regulations. Nothing in this 
rule, however, provides authorization for additional Bureau-funded 
schools to be constructed absent Congressional authorization. Should 
such schools be established in the future, this section would apply.
    Section 37.125. This section explains the authority of Tribes to 
determine whether student tribal members may receive transportation 
funding when such students desire to attend a Bureau-funded school 
outside of the student's designated geographical attendance boundary. 
This section also explains the process by which transportation funding 
may be authorized for students living off the reservation of the Tribe 
in which the student is enrolled. The drafters desired to preserve the 
maximum degree of discretion, within the bounds of tribal jurisdiction, 
for Tribes to exercise in addressing determinations of transportation 
funding.
    Where possible schools should provide services to eligible students 
living near the reservation though such students are not included in 
the schools' geographic attendance boundary. This section recognizes 
prior practices that permitted eligible students who resided near the 
reservation to enroll in Bureau-funded schools.

Subpart C--Off-Reservation Boarding Schools

    Section 37.130. The Secretary of the Interior determines the 
boundaries for ORBS. While the Secretary should consult with all tribes 
that fall within the boundaries of a particular off-reservation 
boarding school, it is the Secretary and not the ORBS or Tribe who 
establish the boundary. The group discussed stating in the regulation 
that the Secretary could not establish overlapping boundaries for ORBS. 
Examination of the map of boundaries currently in use revealed that, 
currently, no ORBS boundaries overlap. Though the group desired to 
mitigate some of the cross-country student recruitment by ORBS, the 
committee felt that the restriction placed on transportation funding 
was a sufficient hindrance. Initially, the group had included a 
specific subsection clarifying that students were only entitled 
transportation funding to attend the student's designated ORBS. That 
section was taken out in the committee-at-large discussion. 
Transportation funding pertains to all students, whether attending 
school on-or off-reservation. The language addressing proper 
authorization of transportation funding was initially discussed in the 
context of all schools. The committee could not reach consensus on who 
was the appropriate entity to authorize transportation funding. The 
work group then suggested only referencing transportation authorization 
in the section on ORBS. The same concerns arose and further discussion 
of transportation was thought to be redundant. The committee resolved 
that a succinct statement addressing transportation funding in the 
section applicable to all schools was sufficient.
    Section 37.131. This section clarifies that any ISEP eligible 
student may elect to attend an ORBS. The group intended that all ORBS 
will have separate, non-overlapping geographic attendance boundaries 
that will cover the entire United States. Students may attend the ORBS 
designated for the student's primary residence with or without Tribal 
permission.

IV. Part 39--The Indian School Equalization Program

    Under the No Child Left Behind Act, Congress required the Committee 
to establish, through negotiated rulemaking, rules regarding a formula 
for the ``minimum annual amount of funds necessary to sustain each 
Bureau-funded school'' and a formula to distribute funding to BIA 
schools. 20 U.S.C. 2007. As with the other rules the

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Committee developed, the Committee established a Funding Workgroup to 
develop draft rules for review by the full Committee.
    The Bureau currently funds its schools through published procedures 
known as the Indian School Equalization Program (ISEP) and a mechanism 
defined in the ISEP known as the Indian School Equalization Formula 
(ISEF). The current equalization formula assigns weighted units to each 
student enrolled in grade levels K-12 and when applicable to homeliving 
programs. Each weight has a different value, and the weight of 1.15 is 
the base weight for all students. In addition to the base weight, 
increased values are assigned to certain grade levels to compensate for 
additional cost. Moreover, supplemental programs providing bilingual 
education, gifted and talented education, and intense residential 
guidance are funded by increased weighted values. The total weights for 
each school are determined by multiplying the student enrollment for 
each program area by the weights. This total of weighted student units 
for each school is then multiplied by the base unit value to determine 
the funding amount for each school. The base unit value is determined 
by dividing the total of all weighted student units generated by each 
school into the total amount appropriated for distribution.
    The Committee reviewed the current BIA funding mechanism and 
distribution practices. The Committee understands that the current 
funding formula at 25 CFR part 39 was developed to provide equity in 
funding across the BIA school system. The Committee identified areas 
where the current formula does not provide equity and uniformity in the 
BIA school system. For example, all funding is currently based on a 
``count week'' in September. This one-week period does not provide a 
complete school year count of all students served by a school or 
residential program. Therefore, any population increase or decrease 
after the September count week is not accounted for under the current 
system. Some Committee members suggested that the concept of a one-week 
count week encourages abuse for the following reasons: (1) There is no 
incentive to retain students after the count week is over, (2) there 
are many opportunities for schools to inflate student enrollment by 
busing children in or sponsoring events to attract students for that 
week, and (3) there are incentives to inflate the number of students 
identified for supplemental services, such as bilingual and gifted and 
talented, because these supplemental programs provide for increased 
funding. The Committee attempted to minimize the opportunities for 
abuse in the proposed rule.
    One of the Committee's primary concerns was accountability, which 
is a critical element of the Act. The Committee tried to build into 
these proposed rules accountability for both BIA-operated and tribally 
operated schools, as well as accountability for those BIA officials 
overseeing the Indian education program. Because accountability is 
critical to implementing ISEP and ISEF, the Committee developed 
provisions in the new rules to hold both BIA and all Bureau-funded 
schools accountable to standards promoting equality and fairness.
    For example, in , the Committee proposed a section to provide for 
increased accountability through reviews of both the school's certified 
count and the education line officer's count verification. The 
Committee recommended that the Director annually conduct random audits, 
and that an outside auditor also conduct annual, random audits to 
ensure the accuracy of ISEP requirements and the ISEF process.
    The Committee believes that all schools funded by BIA must accept 
the responsibility to be accountable in all aspects of their 
operations. Each tribal organization, school board, and administrator 
in the system must accept the challenge to make ISEP work in the best 
interests of all students served by the Bureau-funded school system. 
The proposed rules require each school to maintain individual files and 
certify the accuracy of their contents relating to necessary 
documentation of student eligibility to receive base and supplemental 
services. In addition, the education line officer is held accountable 
to verify that students meet the necessary standards for base and 
supplemental services through the verification process. Each 
verification will be reviewed by either the Director or an outside 
auditing firm.
    The intent of the rules needs to be considered and all parties 
involved should be committed to making ISEP work, rather than trying to 
find ways to give their school an advantage over the other schools in 
the Bureau-funded school system. It is a matter of personal and 
professional integrity and fairness for those organizations and 
individuals charged with administering the rules to find ways to make 
ISEP and ISEF work properly.
    The Committee also feels that accountability must be present at all 
levels of BIA and the Office of Indian Education Programs (OIEP). BIA 
must fulfill its obligation to the students served by the Bureau-funded 
school system so that each child is given equal opportunity to be 
successfully educated. Schools should not be penalized for BIA's 
failure to administer the law and rules fairly. These proposed rules 
were drafted to comply with the section 1120 of the NCLB that states:

    It is the policy of the United States to fulfill the Federal 
Government's unique and continuing trust relationship with and 
responsibility to the Indian people for the education of Indian 
children * * * ensuring that the programs of the Bureau of Indian 
Affairs-funded school system are of the highest quality and provide 
for the basic elementary and secondary educational; needs of Indian 
children, including meeting the unique educational and cultural 
needs of those children.

Section 1127 Funding Formula

    Under NCLB Congress required the Secretary, through this Committee, 
to undertake three specific tasks: (1) To establish a formula for 
determining the minimum annual amount of funds necessary to sustain 
each Bureau-funded school; (2) to consider the cost of providing 
academic services which are at least equivalent to those provided by 
public schools in the State in which the school is located; and (3) the 
development of a pro rata formula to distribute funding under the ISEF.
    Minimum Amount of Funding to Sustain Each Bureau-Funded School. The 
Committee discussed various options for determining the minimum amount 
of funding needed to sustain each bureau-funded school. Most options 
required BIA to have data regarding the actual costs associated with 
Bureau-funded schools. Consequently, the Committee is proposing a 
formula based on the dollar value of a student unit nationally as 
reported by the National Center for Education Statistics (NCES). By 
looking at the NCES and comparing Bureau-funded schools with Department 
of Defense schools and District of Columbia public schools, the 
Committee is proposing a formula that would be based on an accurate 
cost estimate of operating Bureau-funded academic schools. A similar 
formula would also more accurately determine the cost of housing a 
residential student. Moreover, the Committee recognizes that on 
average, the actual cost for a residential student is two times or more 
than that of an academic student. However, this formula cannot be fully 
implemented until the Bureau can collect the data necessary to develop 
an accurate summary of the amount of funding needed to provide the 
minimum amount of funding necessary to sustain each Bureau-funded 
school.

[[Page 8757]]

    Upon receipt of adequate education cost data, the Committee would 
hope that the Department could present this data to Congress so that it 
could review whether it provides sufficient funding to all Bureau-
funded schools and residential programs.
    The formula establishing the minimum amount of funding to sustain 
each Bureau-funded school is located in subpart H of the proposed rule. 
The Department seeks comments on whether the material explaining the 
derivation of the formula should be included as an appendix, rather 
than in the body of the rule.
    The Cost of Providing Equivalent Academic Services. One of the 
responsibilities imposed upon BIA by the NCLB is to determine the level 
of funding necessary to finance Bureau-funded schools and residential 
programs at a level at least equal to that provided by the public 
schools in the states in which the schools are located. One recent 
report from the General Accounting Office indicates that the data 
available is not adequate to allow for a comprehensive and accurate 
comparison between similarly situated state public schools and Bureau-
funded schools. Due to time constraints the Committee did not develop a 
proposal for a data reporting system that would capture specific data 
for a comparison between state and BIA-funded schools. However, the 
Committee did develop a formula to develop the minimum amount of 
funding to sustain each Bureau-funded school which looks at other 
similarly situated school and residential programs.
    Pro Rata Formula. The Committee was also required to develop a 
formula to distribute funding appropriated by Congress. To develop a 
distribution formula, the Committee reviewed the existing distribution 
formula and developed a recommended formula that would better meet the 
needs of Bureau-funded schools and provide a more equitable 
distribution of ISEP funding. The Committee took its responsibility 
very seriously and made a conscientious effort to consider all issues 
relevant to the rules being developed. The following issues were 
matters that the Committee discussed at great lengths as they developed 
the ISEF in order to distribute appropriated funds:
    Student Count. In Subpart C, the Committee is proposing new rules 
for undertaking a count of the student population served by BIA school 
system. These rules provide for the use of an average daily membership 
for academic purposes and the use of a three-week count period for 
residential programs.
    The Committee decided against the continuation of a count week for 
academic programs. The Committee determined that the concept of using 
one week in the entire school year to determine student attendance in 
academic programs did not provide an accurate reflection of the 
program's population for the entire school year. A concern that the 
Committee considered when deciding not to continue an academic count 
week was the issue of Spring enrollment. Because the current ``count 
week'' is the last week in September, school funding is not reflective 
of a school's enrollment and attendance for an entire academic year. 
Academic and residential programs may experience sharp increases or 
decreases in enrollment during the spring semesters, and a one-week 
count period does not take these fluctuations into account. The 
Committee also considered using a count period with varying lengths of 
time for academic funding, however this was also rejected.
    The Committee did decide to retain a count period for residential 
programs. The Committee recommends that the count period for 
residential programs be the first full week in October. Moreover, the 
Committee recommends that a student must also be in attendance in a 
residence program the week preceding and the week following the October 
count week. Thus, the residential period is a three week period.
    The Committee also decided to fund the residential program on the 
number of nights of service provided. The current funding mechanism 
funds all residential programs seven-night programs. There seem to be 
an inequity as some residential programs only offer three or four 
nights of service, while others operate for seven full nights of 
service. Therefore, the Committee recommends that a residential program 
that offers five nights or more of service shall receive full 
residential funding, the equivalent of 7/7 weighted student unit. Any 
residential program offering less than five nights of service shall be 
apportioned a prorated share of funding at 4/7 weighted student unit.
    In addition, the Committee recommends that at least 50 percent of 
the residency levels established during the count period be maintained 
and residency attendance also be reported to OIEP monthly. If a 
residential program does not maintain at least 50 percent of its count 
period enrollment, then the residential program will lose one-tenth of 
its current year funding allocation. The justification for this 
recommendation was to encourage residential programs to retain students 
throughout the entire school year.
    Average Daily Attendance (ADA) versus Average Daily Membership 
(ADM). The Committee recommends the use of Average Daily Membership 
(ADM) to count students for purposes of ISEP academic funding. Before 
deciding to base the student count on ADM, the Committee considered the 
merits of both Average Daily Attendance (ADA) and ADM. The Committee 
adopted ADM for purposes of a student count because it was decided that 
ADM was a more reasonable and fair mechanism for counting student 
enrollment and attendance. Unlike ADA, ADM takes into consideration a 
grace period when students are sick or absent from school. The 
Committee feels that ADM is more accurate and equitable than a ``count 
week'' because it provides a comprehensive look at student enrollment 
and attendance throughout the entire academic year. In addition, the 
Committee believes that ADM would help prevent some of the abuses that 
are inherent in the current funding mechanism and also encourage 
greater accountability in the academic program. Because ADM is based on 
the entire school year, there is now a financial incentive for student 
retention and maintaining student attendance throughout the school 
year, which the Committee believes will result in higher graduation 
rates.
    Three-Year Rolling Average. The proposed rules in Sec.  39.205 
provide for funding to be based on a 3-year rolling average. A 3-year 
rolling average is the mechanism used to determine the amount of money 
allocated for a school year based on the average of the three previous 
years' allocations. The Committee felt that the rolling 3-year average 
would provide a more stable funding base. Thus, enabling a school to 
better plan and budget for the upcoming school year.
    For example, if a school experiences a drastic enrollment decrease 
beginning in the 2006 school year, the 3-year rolling average would 
allow the school a 2-year window to adjust its staff and other related 
costs. The Committee believes that schools and the OIEP should provide 
timely information related to ADM, in order to promote accuracy of the 
3-year rolling average.
    Payment Dates. The Committee is recommending that BIA distribute 80 
percent of a school's funding for the upcoming school year by July 1. 
This 80 percent would be based on the 3-year rolling average of ADM 
(base and supplemental programs). The Committee also recommends that 
BIA distribute the remaining twenty percent of funding by December 1. 
This 20 percent would reflect any adjustments

[[Page 8758]]

made by the verification, audit or appeals processes.
    In reviewing the Committee's proposed rule, the Federal team has 
serious concerns regarding the provisions that states that, ``No school 
will receive less than 80 percent of the amount received the previous 
year.'' The concern is that the purpose of the 3-year rolling average 
is to protect a school against any sharp increases or decreases in 
student enrollment. Therefore, this mandated 80 percent seems 
duplicative. The Federal team is also concern that if a school with 
decreasing enrollment were automatically given 80 percent of their 
funding in July, the school would then be responsible to refund BIA for 
any overpayment in funding.
    Contingency Fund. BIA has existing rules regarding the use of the 
contingency fund. The current rules at 25 CFR 39.70-39.78 authorize the 
awarding of contingency funds to replace items in the event of their 
destruction by earthquake, fire, flood storm, or other ``Acts of God.'' 
The Committee reviewed these rules and is proposing revisions.
    The Committee determined that the Director's Contingency Fund 
should only be used to provide for unforeseen, unpredictable, and 
emergency circumstances. In order to promote transparency in the 
allocation of contingency funds, the Committee required that the 
Director annually notify all Bureau-funded schools and appropriate 
tribal governing bodies of contingency fund allocations.
    Ten percent enrollment increases. The Committee also discussed 
whether to include an adjustment for schools whose student population 
increased by more than 10 percent over the previous 3-year average. 
However, due to time constraints, the workgroup did not present this 
issue to the Committee. The Committee would like to seek comments as to 
the necessity of a provision providing adjustment funding for schools 
that experience a 10 percent increase in student population from the 
previous school year's ISEP count. Once again, the purpose of the 3-
year rolling average would be to protect against these types of 
significant enrollment increases. The Committee also discussed that 
this provision would favor small schools, as a 10 percent increase 
would be more readily available to a school with a small population.
    Special cost factors. NCLB required the Committee to consider the 
following special cost factors:

    ``The isolation of the school; the need for special staffing, 
transportation, or education programs; food and housing costs, 
maintenance and repair costs associated with the physical condition 
of the educational facilities; special transportation and other 
costs of isolated and small schools; the costs of home-living 
(dormitory) arrangements, where determined necessary by a tribal 
governing body or designated school board; costs associated with 
greater lengths of service by education personnel; the costs of 
therapeutic programs for students requiring such programs; and 
special costs for gifted and talented students.''

    As a rule, the Committee considered ``special cost'' factors to be 
those factors that only affected a discreet number of schools and were 
not prevalent in the Bureau-funded school system. The Committee 
identified the following special cost factors: Language development, 
isolation factors, gifted and talented, school board training, and 
small school adjustment. Other special cost factors were considered, 
but did not receive an additional weighted student unit.
    The Committee evaluated the impact that special cost factors have 
on the ISEF, as special cost factors re-allocate the available funding 
and provide more funding for these ``special costs'' at the expense of 
a more general distribution. The Committee was also concerned about how 
special cost factors impact residential programs, dorm programs, and 
schools that do not place an emphasis on these types of programs. By 
allocating more funding to ``special programs,'' the Committee was 
choosing to make less money available in the general pool. The 
Committee is seeking comments on the priority of these choices.
    Language Development. In Sec.  39.130, the Committee recommends a 
special cost factor of .13 for language programs. The Committee 
believes that the need to restore and maintain Native Languages is 
important. Historically, the government made a concerted effort to 
eliminate the Native Languages in an attempt to force the assimilation 
of Indian people. Now there is a desire to maintain and restore those 
Native Languages and the culture tied to them. Research has indicated 
that students who are proficient in their Native Language will also 
achieve better academically. The Committee believes a Native Language 
Development Program is an important pathway to appropriate cultural 
knowledge and expression.
    The Committee also recognizes BIA's obligation to provide English 
language development services to students who are limited English 
proficient. Therefore, any student who is identified as limited English 
proficient is required to receive limited English proficiency services.
    Isolation factors. Isolation factors were discussed at length and 
the Committee did not have sufficient data to rate the isolation factor 
of each school in the bureau-funded school system. Historically, most 
Bureau-funded schools are isolated by the placement of Indians on 
reservation lands. In general, the Committee felt that special weights 
for isolation factors were better addressed as a transportation issue.
    However, the Committee did determine that there are some 
exceptional circumstances that did warrant additional funding due to 
the severe isolation and remoteness of a particular school. The 
Committee agreed that Havasupai Elementary School, which is located in 
the Grand Canyon, had isolation factors beyond those experienced by 
most schools. Havasupai Elementary School has food and other important 
items delivered by mule and/or helicopter. The Committee seeks comments 
as to whether Black Mesa Community School is also a school that has an 
extreme isolation factor that is unique and is not generally 
experienced by a majority of the Bureau-funded schools.
    The Committee seeks comments on the following chart and the 
definition of ``established community.'' This chart was not adopted by 
the Committee and did not receive consensus from the Committee. The 
Committee could not reach agreement on whether there is sufficient 
documentation to clearly identify that certain isolation factors were 
not experienced by a majority of Bureau-funded schools. The Committee 
encourages tribes and schools to submit public comment on the following 
chart so those comments may be given consideration by the Committee 
before final recommendations for rules are made. The purpose of these 
comment will be to determine whether other less extreme isolation 
factors should be given an additional weight under the ISEF.
    A school which demonstrates that it meets one or more of the 
following criteria will be awarded. An isolations cost factor will 
equal the value of the total number of WSU identified for the 
applicable criteria, provided, however, that no school will be awarded 
an isolation factor of more than 12.5 WSU.

1. The school is located at least 60      1.5 WSU
 road miles (one way) from the nearest
 established community.
2. The school is dependent upon animal    12.5 WSU
 or light aircraft for transportation of
 persons, services, and supplies for the
 operation of the school.

[[Page 8759]]

 
3. The school's primary access route is   2.0 WSU
 an unpaved road of 10 miles or more.
4. The school's primary access route is   2.0 WSU
 dependent upon a bridge or road that is
 routinely subject to unavailability
 during periods of severe weather or
 floods.
 

    For the purposes of this section, the term ``established 
community'' means a population center (Metropolitan Statistical Area or 
an incorporated city or town) having a year-round population of 1,500 
or more, provided that it has minimal essential medical facilities (at 
least one physician and one dentist) available to all students and 
employees of the school on a non-emergency basis, 24 hour law 
enforcement services, a post office, retail grocery store and retail 
motor fuel station.
    Gifted and Talented. The Community discussed Gifted and Talented 
considerations at length. Some members of the Committee are concerned 
that schools that claim a disproportionate number of students for 
gifted and talented services ultimately reduce the amount of money 
available to all students in the ISEF base. The reduction in this base 
could adversely affect residential programs (which are not eligible for 
the gifted and talented weighted unit) and other schools who either do 
not have a gifted and talented program or who have very few students 
who meet the gifted and talented requirements. The Committee would like 
to seek specific comments on the potential impact on base funding of 
residential programs if the number of students identified as gifted and 
talented increase significantly.
    The Committee considered, but did not adopt the establishment of a 
ceiling on the number of students each school could claim for a gifted 
and talented weighted unit. This ceiling or cap was considered in order 
to ensure that ISEP funding was evenly distributed throughout the 
Bureau-funded school system. Some members of the Committee, and members 
of the public who commented, did not support a cap on gifted and 
talented. One of the concerns regarding the imposition of a cap is that 
a cap not only limits the percentage of students who can be counted as 
gifted and talented, but may also establish a minimum threshold to 
which every school may feel obligated to meet. Ultimately, the 
Committee decided not to impose a cap on Gifted and Talented. However, 
the Committee did place emphasis of the importance of a process for 
identification of gifted and talented students as well as documentation 
that gifted and talented services were provided to identified students.
    The proposed rules at Sec.  39.106 provide for the eligibility 
standards and oversight of gifted and talented funding. These rules 
require that a student can be identified as gifted and talented in five 
specific categories: intellectual ability, creative/divergent thinking, 
academic aptitude, leadership and visual and performing arts. However, 
a school cannot identify more than 15 percent of its student population 
as gifted and talented in either the leadership or visual and 
performing arts categories. The proposed rules outline how students are 
to be identified, nominated, and assessed as gifted and talented. In 
addition, the rules provide that a student who is identified as gifted 
and talented must receive services not ordinarily provided by the 
school which meet the goals and objectives specified in the student's 
education plan.
    School Board Expenses and Training. The current rules at Sec.  
39.90 govern how funding is set aside for school board training, 
eligible training activities, and the approval process for training 
expenditures. NCLB requires a minimum of 40 hours of school board 
training for new school board members. School board training issues 
will vary from year to year and with each school. There will be some 
schools where there is no need for training since all board members are 
returning and have already been trained. In other cases, there will be 
a need for training as required by law. Thus, the Committee included a 
provision at Sec.  39.600 to address this issue.
    The Committee also recommends an amount equal to a total of a 1.2 
weight to assist Bureau-operated schools in paying for school board 
training. Unlike contract or grant schools, Bureau-operated schools are 
unable to pay for school board training through Administrative Cost 
Grants. Instead, Bureau-operated schools must pay for school board 
training from ISEP funding.
    Small School and Small High School Adjustment. The Committee 
determined that a factor for a Small School Adjustments was important 
because these schools do not have economies of scale to provide 
adequate educational opportunities for their students. The proposed 
rules at Sec.  39.140 provide for this adjustment. By offering an 
adjustment (additional weighted units) for schools characterized by 
smaller populations, these schools should have increased opportunity to 
offer more or better academic services to their students. This is 
especially true for small high schools that are required to offer 
departmentalized programs.
    Residential Programs. Current BIA rules at Sec.  36.71 provide for 
a cost factor for a program entitled ``Intensive Residential Guidance 
(IRG).'' This factor is available after the establishment of specific 
activity programs, individual student diagnostic procedures, and the 
development of individual student treatment plans and measurements of 
student progress. The Committee recommended that the current additional 
weight for the IRG program be eliminated and be added to the 
residential base. The result of removing IRG to the base is an overall 
increase in the residential base of about .35.
    The Committee heard many comments that the IRG program was 
cumbersome and did not guarantee that supplemental services were 
provided to students with extra ordinary needs. However, the Committee 
did decide that when the Committee undertakes negotiated rulemaking for 
home living standards that certain standards be included to aid 
students with special needs, such as, mental health, substance abuse 
and other needs. The Committee discussed that there is a high 
probability that the actual cost for a residential student is two times 
that of an academic student, however, time restraints did not allow for 
further Committee discussion. The therapeutic dorms program was also 
discussed and the Committee decided not to include this program in the 
ISEF because this program is not funded under ISEP.
    Off-Reservation Boarding Schools. The Committee determined that the 
Off-Reservation Boarding Schools (ORBS) population represents a unique 
population of students. Specifically, the Committee was concerned about 
those ORBS schools that receive a large number of students as a result 
of a tribal court mandate or extreme disciplinary problems. The 
Committee is seeking comments as to whether ORBS schools should receive 
an additional weighted unit to fund special costs that are not equally 
shared throughout the system.
    Accreditation. The Committee recognized that accreditation may 
produce some special cost factors, but decided that an additional 
weighted unit was not necessary for those schools seeking 
accreditation.
    Distance and Other Alternative Learning. The Committee discussed 
the impacts of Distance Education, Vocational Education, Pre-school 
early childhood-education, and the education of non-ISEP eligible 
students. The Committee decided that these issues should be covered by 
the base program

[[Page 8760]]

or other related programs. For example, pre-school early childhood-
education might be funded by a program such as Head Start. The 
Committee also seeks public comment to determine if ISEP or another 
funding mechanism might be necessary to fund the education of non-ISEP 
eligible students who attend Bureau-funded schools.
    Costs Associated with Greater Lengths of Service. The Committee 
discussed the costs associated with greater lengths of service by 
educational personnel. It was recognized that there is a difference 
between bureau-operated schools required to use the DOD salary 
schedules and grant/contract schools which use their own salary scale. 
The Committee decided not to include this factor in the formula since 
many tribes made the decision to become grant or contract schools in 
order to have more flexibility and discretion.
    Facility Maintenance Costs. The Committee discussed maintenance and 
repair costs related to Bureau-funded facilities. However, the 
Committee decided that these costs were funded separately from the ISEP 
and not relevant to ISEF.
    Special Education. The Committee discussed whether students 
identified as in need of special education services should be allocated 
an additional weighted unit. Some members of the Committee believed 
that having an additional weighted unit for special education would be 
desirable. After considering the issue in depth, the Committee decided 
to keep special education funding in accordance with the current rules 
which mandate that each school set aside 15 percent of their basic 
instruction allotment to meet the needs of students with disabilities. 
If the 15 percent is inadequate to fund services necessary for eligible 
students with disabilities, schools may still apply for Part B funding. 
The Committee did agree that the OIEP's administration of Part B 
special education funding needs to be improved. Many expressed concerns 
that access to Part B funding was cumbersome and difficult. Therefore, 
the Committee recommends that OIEP provide training and technical 
assistance to better serve the Bureau-funded schools in applying for 
Part B funding.
    Transition/Phase-In Provisions. At Sec.  39.220, the Committee 
recommended a phase-in provision to implement the proposed rules. For 
the first year after the effective date of publication of a final rule, 
OIEP will calculate ADM based on the prior 3 years' count period to 
create an average membership for funding purposes. For the second year 
and third years, the school will use a combination of ADM count(s) and 
applicable ISEP count(s) under the existing rules. Within three years 
of implementation of the final rules, OIEP will calculate funding on a 
3-year rolling average of each school's ADM.
    Transportation. Although the Committee would like to establish a 
formula that reflects the actual transportation costs of Bureau-funded 
schools, the Committee determined that there was insufficient 
information to develop this actual cost formula at this time. To 
address this issue, the Committee is proposing new rules for data 
collection and is proposing an advance notice of proposed rulemaking so 
that the public can comment on the formula the committee would consider 
once the data is available. In the meantime, the Committee is proposing 
that the current OIEP transportation policy be the proposed 
transportation rule.
    In addition to the current transportation policy, the proposed 
rules would require Bureau-funded academic and residential programs to 
report their actual transportation expenditures. This information is 
critical to develop an actual cost transportation formula. One reason 
the Committee wanted to develop an actual cost formula was to better 
reflect a school's transportation costs to avoid situations where these 
costs take away from the instructional funding of the schools.

Conclusion

    The Committee recognizes that adoption of new formula for 
distribution will impact each school differently. It is possible that 
some boarding schools may be heavily impacted by the new formula. The 
Committee feels strongly that the ISEF should distribute funds in a 
fair and equitable manner that gives all students equal opportunities 
to receive a quality education. The Committee believes that certain 
administrative changes are necessary at the local school and Bureau of 
Indian Affairs level to provide more educational opportunity to the 
students served by the Bureau-funded school system.
    The Committee cannot emphasize strongly enough the importance of 
careful consideration of these proposed rules by Bureau-funded schools, 
tribes with members who attend Bureau-funded schools, and parents and 
students served by Bureau-funded schools. The Committee strongly 
encourages anyone who has an interest in these proposed rules to submit 
public comments that the Committee may consider when finalizing the 
rules.

V. Part 42--Student Rights

    Section 1136 of Title IX of the Act required the Secretary to 
prescribe rules to ensure the constitutional and civil rights of Indian 
students attending Bureau-funded schools, including rights to privacy, 
freedom of religion and expression, and due process in connection with 
disciplinary actions, suspension, and expulsion.
    Section 42.1. This section provides objectives and guidance for 
school boards when determining how to apply student rights and due 
process. It lists only the minimal considerations a school should make 
to fulfill the due process and student rights obligation owed to 
students. The following objectives may also be considered: Providing 
students with a safe learning environment, the opportunity to observe 
Native customs and practices (consistent with health, safety, and 
welfare), and an education provided by educators trained in Native 
pedagogies. The absence of these objectives from the regulation was due 
to an understanding that in some circumstances consideration of the 
objective could not be made or would be inappropriate. Wherever 
possible to the extent practicable school boards should aspire to give 
consideration to the aforementioned objectives omitted from the 
regulation.
    Section 42.2. This section prescribes the minimum rights to which 
all students at Bureau-funded schools are entitled. Where possible or 
applicable, a school may provide more rights than required by this 
rule. Nothing in this section limits existing student rights provided 
in the Constitution, school board policies, or elsewhere. This section 
should be read in conjunction with the stated purpose for the rule and 
the preamble explaining that purpose.
    Section 42.3. This section prescribes how schools are to apply the 
due process obligations. It was the group's desire that the rule be 
interpreted so that a school board would apply Alternative Dispute 
Resolution (ADR) first whenever possible. It was realized that some 
situations would arise where use of ADR processes would not be 
permitted under school board policies (i.e., offenses that merit 
immediate suspension under school board policy or law). It was 
understood that in some situations ADR would yield a ``consequence'' 
other than traditional forms of formal punitive actions (i.e., 
detention, suspension, expulsion).
    It was the committee's desire that the school board work with the 
student to ensure reintegration of the student into the school 
community after using ADR

[[Page 8761]]

processes. The group understood reintegration to mean returning the 
student to regular student status after the student allegedly or 
actually committed a violation. Where ADR and subsequent reintegration 
of a student are not possible, the school could then apply traditional 
formal disciplinary procedures.
    The committee wants schools to be permitted to craft their own 
processes for dealing with violations of school policies. It was also 
recognized that some of the processes schools used to address student 
violations were not formal disciplinary actions. Often schools wish to 
apply ADR processes first or instead of more formal proceedings.
    In circumstances where ADR cannot be used, a school may immediately 
apply formal disciplinary proceedings. The goal of any process used to 
address violations of school policies should be returning the student 
to active student status as quickly as possible.
    Section 42.4. In this section the group attempted to provide 
guidance on what was meant by ADR processes. The objective of this 
section was to present examples of alternatives to traditional forms of 
formal punitive actions typically applied to violations of school 
policies. Specifically, tribal forms of dispute resolution could be 
used in place of formal disciplinary processes. It was realized that 
ADR processes would not always result in traditional forms of formal 
punitive actions (i.e., detention, suspension, expulsion). Outcomes of 
ADR processes were not to be discredited merely due to a resolution 
that applied alternative ``consequences.''
    Section 42.5. In this section the group provided guidance on when 
it was appropriate to apply ADR techniques in place of more formal 
disciplinary proceedings. Ultimately, the school board has the 
discretion to determine what process to apply and when. This section 
provides points schools should consider in making their determinations.
    (a) A school may decide whether use of ADR is appropriate under the 
circumstances. Where possible, ADR should be used before formal 
disciplinary proceedings.
    (b) Where articulated policy or law clearly defines immediate 
consequences, a school may not discretionarily apply ADR processes.
    (c) Although the committee prefers that school boards apply ADR 
processes first, use of ADR procedures in every circumstance is not 
required.
    Section 42.6. This section prescribes the rights to which all 
students are entitled in disciplinary proceedings. School boards should 
strive to provide students as much information and time as is necessary 
to defend themselves against allegations of disciplinary violations. 
School boards may not limit the amount of due process provided to a 
student in disciplinary actions. The group felt it essential that the 
accused student be provided the maximum due process available. Due 
process demands that all students be provided a fair and impartial 
hearing for all alleged violations of school policies. In certain 
situations immediate punishment may be applied, but due process must 
not be diminished merely because punishment has already begun.
    (a) Schools must give students written notice of charges within a 
reasonable time. Reasonable time is notice provided promptly after the 
charges have been made.
    (1) The copy of the regulation that the student is charged with 
violating must be the same language provided in the most recent copy of 
student policies and guidelines issued to students by the school.
    (2) The school must inform the student of sufficient facts that 
constitute the alleged violation so the student may defend the 
allegation.
    (3) Any information the school obtains leading to or arising from 
any charge must be made available to the accused student.
    (4) A student must be informed if the school intends to consider 
any portion of the student's record in disciplinary decisions.
    (b) Generally, the school must provide a student a full due process 
hearing before the student is punished.
    (1) There exist certain offenses for which school policy or law 
requires immediate punishment. In these circumstances, this rule is not 
intended to prevent those school policies or laws from applying. 
Rather, the punishment may be effective immediately in a temporary 
manner pending full hearing.
    (2) In rare cases of emergency situations not addressed by school 
policy or law, immediate removal of the student may be necessary for 
the protection of the accused student, student body, or school faculty. 
In such rare instances the school should not be prevented from removing 
the student posing the emergency risk.
    (3) A student may always elect to waive all or a part of the due 
process hearing rights to which the student is entitled.
    (c) It was recognized that emergency situations will arise that 
merit immediate action by the school board.
    (1) Any emergency removal of the student from the active student 
body will be deemed temporary until provision of a hearing affording a 
student all due process rights.
    (2) All actions taken by a school against a student accused of 
violating school policy must be documented in writing for the student's 
record immediately after the action is taken.
    (3) A school must provide a student a hearing proving the student 
full due process rights within 10 days of any disciplinary action. The 
time may be delayed only upon motion of the student and upon showing of 
good cause.
    Section 42.7. This section outlines the minimum due process 
procedures a school must provide to a student accused of school policy 
violations. Nothing in this section should be read as precluding a 
school board from providing additional protections to those enumerated 
in the proposed rule. If possible, the rules should be interpreted in a 
manner favoring the accused student.
    (a) All students have the right to have a parent or guardian 
present during hearings for disciplinary violations. If the student is 
the age of majority, the student may waive the right to have a parent 
present. ``Parent or guardian'' should be read broadly to include any 
adult, other than boarding school personnel, who is the equivalent to a 
parental authority over the student, or any adult who is head of the 
household where the accused student primarily resides.
    (b) Students have the right to be represented by an adult in 
addition to their parent at disciplinary proceedings. It was not 
intended that a student should be entitled to receive funding from the 
school board or the Federal government to pay for this representation. 
``Counsel'' as used in the rule is not limited to legal counsel. 
Generally the person selected as ``counsel'' must act as a 
representative of the student in the disciplinary proceeding and should 
generally be familiar with the disciplinary process of the school 
board.
    (c) Accused students have the right to produce and have produced 
witnesses and confront and examine all witnesses.
    (d) A student must be provided all information concerning hearings 
addressing violations of school policies. While this rule does not 
specifically require additional school record development, the student 
is entitled to any records or documents that the school board makes in 
conjunction with the disciplinary proceeding. The right to certain 
records does not require

[[Page 8762]]

disclosure of documents otherwise privileged under attorney client 
privilege.
    (e) A student must be given the opportunity to appeal any decision 
concerning violations of school possible. The group hearing the appeal 
must not be the group that issued the original decision.
    (f) A school may not require that the student testify against 
himself for the purpose of finding him guilty. If, however, the student 
elects to so testify, then the student's statements may be used to 
affirm allegations of school policy violations.
    (g) When a student is not found guilty of alleged violations of 
school policy, the student's record must not reflect the allegation. 
Prior allegations of school policies for which a student is not found 
guilty should not be used against the student in future proceedings.
    Section 42.8. This section provides objectives for consideration of 
victims' rights. Where possible and appropriate, the rights of the 
victim should be afforded consideration in hearings addressing 
violations of school policies. While consideration of victims' rights 
is an aspiration and creates no enforceable right for the victim, it 
was desired that schools make every effort possible to afford victims 
rights in disciplinary proceedings.
    Section 42.9. A school must develop a handbook and make that 
handbook available to students annually. Changes in school policy do 
not become effective for the purpose of disciplining a student under 
the changed policy until the student body is notified of the change in 
writing.
    (a) The handbook must clearly explain all school policies to place 
all students on notice of expected conduct and actions which constitute 
violations of school policy.
    (b) All staff must be informed of school policies to ensure that 
violations are properly reported and proper conduct does not subject 
students to unnecessary charges.
    (c) Students and parents, guardians, or other persons providing 
primary care for students shall be given copies of the student handbook 
for their reference. In the case of students attending boarding 
schools, it is not sufficient to provide only dorm staff with the 
handbook; parents or other caregivers must also be provided copies.
    (d) To the extent possible, students, school staff, and parents or 
guardians should confirm in writing receipt of the student handbook. 
Such practices will ensure both that schools strive to keep students, 
staff and others informed of school policies as well as assist the 
school in establishing that the student was aware of the policy 
allegedly violated.

VI. Part 44--Grants Under the Tribally Controlled Schools Act

    In section 1127 of the Act, Congress authorized the Secretary to 
promulgate only rules that: (1) Are necessary to ensure compliance with 
the Act and (2) Comply with section 5211 of the Tribally Controlled 
Schools Act of 1988. The Act amended the Tribally Controlled Schools 
Act of 1988 by striking sections 5202 through 5212 and inserting new 
sections. New section 5210 specifically provides that:

    The Secretary is authorized to issue rules relating to the 
discharge of duties specifically assigned to the Secretary in this 
part. For all other matters relating to the details of planning, 
developing, implementing, and evaluating grants under this part, the 
Secretary shall not issue rules.

    In developing proposed rules, the Committee reviewed each section 
of the Tribally Controlled Schools Act to determine whether the section 
pertained to the discharge of the Secretary's duties. If it did, then 
the Committee considered whether the statutory provision was clear 
without the need for rules. If so, then the Committee chose not to 
draft rules.
    At the outset, the Committee was especially mindful of Congress' 
Declaration of Policy found in section 5202 of The Act. The Committee 
used the declaration, including the recognition of the importance of 
self-determination, the commitment to Indian education, and the 
national goal and education needs.
    Specifically, the Committee considered the declaration at section 
5202(a), where Congress:

    Recognizes that the Indian Self-Determination and Education 
Assistance Act was the product of the legitimate aspirations and a 
recognition of the inherent authority of Indian nations, was and is 
a crucial step positive step toward tribal and community control and 
that the United States has an obligation to assure maximum 
participation in the direction of education services so as to render 
the persons administering such services and the services themselves 
more responsive to the needs and the desires of Indian communities.

    The Committee also specifically considered that Congress made the 
following commitment in section 5202(b) of The Act:

    Congress declares its commitment to the maintenance of the 
Federal Government's unique and continuing trust relationship with 
and responsibility to the Indian people for the education of Indian 
children through the establishment of a meaningful Indian self-
determination policy for education that will deter further 
perpetuation of Federal bureaucratic domination of programs.

    The Committee also used Congress' declaration of a national goal of 
the United States in section 5202(c):

    Congress declares that a national goal of the United States is 
to provide the resources, processes, and structure that will enable 
tribes and local communities to obtain the quantity and quality of 
educational services and opportunities that will permit Indian 
children (1) to compete and excel in the areas of their choices; and 
(2) to achieve the measure of self-determination essential to their 
social and economic well-being.

    The Committee considered that Congress also affirmed the 
educational needs of Indian students in section 5202(d) of The Act when 
it stated:

    Congress affirms (1) true self-determination in any society of 
people is dependent upon an education process that will ensure the 
development of qualified people to fulfill meaningful leadership 
roles; and (2) that Indian people have special and unique 
educational needs, including the need for programs to meet the 
linguistic and cultural aspirations of Indian tribes and 
communities; and (3) that those needs may be best met through a 
grant process.

    Fully considering the directives of Congress, the Committee turned 
to each section of the Tribally Controlled Schools Act, to determine 
which sections needed rules.
    In section 101, the Committee re-affirmed that the statute and 
rules principally applied to the grantee and that guidelines, manuals, 
and policy directives of the Bureau only applied if agreed to by the 
grantee. Section 102, re-affirmed that the rules do not affect existing 
tribal rights. Section 103 provides the eligibility requirements found 
in section 5203 and 5205 of the The Act.
    Section 104 provides for the three methods by which a grant can be 
terminated. These methods are found in section 5203(f) B retrocession; 
5206(c) B revocation of eligibility; and 5208(12) reassumption. Section 
105 implements section 5203(f), section 106 implements section 5206(c), 
and section 107 implements section 5208(12).
    Section 108 implements section 5207, which requires that payments 
be made to the grantee in two annual payments. However, the Committee 
is recommending that annual payments be made to all Bureau-funded 
schools. This section will be amended in the final rule to reflect the 
final rule for payments. This section also reiterates the statutory 
requirement that the Prompt Payment Act applies to grant payments. 
Section 109 implements section 5207(a)(2) regarding excess funding.

[[Page 8763]]

    In section 5208 of the The Act, Congress specifically incorporated 
into the Tribally Controlled Schools Act certain sections of the Indian 
Self-Determination and Education Assistance Act (ISDEAA), as amended. 
Section 110 incorporates those sections of the 25 CFR part 900 that 
implement the incorporate sections of the ISDEAA. In addition, the 
Committee considered whether the ``common-rule,'' 43 CFR part 12, 
applied to grantees except in the construction context. The Committee 
examined 25 U.S.C. 2503(b)(4)(B), section 5204 of The Act, and believed 
that the 43 CFR part 12 does not apply to grantees. However, some 
members of the Committee raised concerns that without the common rule, 
there were no standards for financial, property, or procurement 
management. To address these concerns, the Committee incorporated 
subpart E of part 900, ``Standards for Tribal or Tribal Organization 
Management Systems.''
    Finally, section 111 reiterates that the Federal Torts Claims Act 
applies to grant schools.
    Overall, the Committee felt that the Tribally Controlled Schools 
Act of 1988, as amended by the The Act, needed very few rules. The 
Committee was true to Congress' directive that the rules only pertain 
to the discharge of the Secretary's duties. Moreover, the Committee 
believed that if the statute was clear, no implementing rules were 
necessary.

VII. Part 47--Uniform Direct Funding and Support

    Section 1130 of the Act specifically requires the Secretary to 
establish by regulation a system for the direct funding and support of 
all Bureau-funded schools. This system must allot funds in accordance 
with section 1127 of the Act. A subgroup of the committee reviewed the 
current rules in 25 CFR 39.50 and determined that the rules did not 
need any substantive changes. The subgroup put the current regulation 
in plain language and presented it to the committee as a whole. The 
committee as a whole accepted the plain language version of the uniform 
direct funding rules with little discussion.

VIII. Procedural Matters

Regulatory Planning and Review (E.O. 12866)

    This document is a significant rule and the Office of Management 
and Budget (OMB) has reviewed the rule under Executive Order 12866.
    (1) This rule will not have an effect of $100 million or more on 
the economy. It will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The rule deals exclusively with student rights, does not 
pertain to funding, and is not expected to have an effect on budgets.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. This rule 
has been prepared in consultation with the U.S. Department of 
Education.
    (3) This rule does not alter the budgetary effects of entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients. This rule spells out student rights, the procedures 
for their dissemination, and the procedures for implementing them. The 
rule does not pertain to funding and is not expected to have an effect 
on budgets.
    (4) This rule raises novel legal or policy issues. The rule 
proposes entirely new procedures related to determining adequate yearly 
progress, school boundaries, funding, and other issues. It also updates 
existing procedures addressing student rights and adapts the existing 
rules to comply with current law and policy.

Regulatory Flexibility Act

    The Department of the Interior certifies that this document will 
not have a significant economic effect on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
Funding for Indian education programs has averaged about $350 million 
in grants annually over the last ten years. The ``No Child Left 
Behind'' legislation, which these proposed rules are designed to 
implement, will provide no additional funding, but merely reallocates 
current funding. Since grants redistribute wealth, they have no impact 
on aggregate employment and prices unless the allocation of the grant 
money produces incentives that result in an employment, income, or 
price effect in excess of $100 million annually. Although the purpose 
of this rule is to change the formula for distributing grant money, BIA 
does not have sufficient information to evaluate the extent to which 
the proposed regulation may change the incentives associated with new 
proposed formula. However, based on the new proposed formula, school 
districts may face incentives to report or count students differently 
than under the existing formula. Regardless of the extent to which 
incentives may shift, the Secretary believes that the changes would not 
result in changes in employment, income, or prices in the economy.

Costs and Benefits

    The proposed formula for distributing the grant money was 
determined in negotiation with the grant recipients to ensure that 
maximum benefits are obtained at the local level. The approximate 
distribution of grants by instructional programs under the current 
distribution formula and under the proposed new formula is shown in 
Table 1. Although the distribution of grants under the new formula is 
not precisely known, the expected distribution is also shown in Table 
1. Table 2 shows the effect on grants allocated by State under the 
current and proposed formula.

             Table 1.--Effect on Grant Allocation by Program
                                [Percent]
------------------------------------------------------------------------
                                            Approximate      Proposed
                 Program                      current         formula
                                            allocation      allocation
------------------------------------------------------------------------
Instructional Programs:
    Basic...............................            68.2            59.0
    Exceptional Child...................             2.5            10.4
    Bilingual...........................             6.2             6.8
    Gifted & Talented...................             5.6             5.5
                                         -----------------
        Total Instructional.............            82.6            81.6
                                         =================
Residential Programs Basic..............            11.6            18.4

[[Page 8764]]

 
    Intensive Residential Guidance......             2.9             0.0
    Exceptional Child...................              .1             0.0
                                         -----------------
        Total Residential...............            17.6            18.4
                                         =================
            Total.......................           100.0           100.0
------------------------------------------------------------------------


              Table 2.--Effect on Grant Allocation by State
                                [Percent]
------------------------------------------------------------------------
                                            Approximate      Proposed
                  State                       current         formula
                                            allocation      allocation
------------------------------------------------------------------------
Arizona.................................            27.4            27.8
California..............................             2.6             2.6
Florida.................................              .4              .4
Iowa....................................              .3              .2
Idaho...................................              .2              .4
Kansas..................................              .2              .2
Louisiana...............................              .1              .1
Maine...................................              .5              .5
Michigan................................              .5              .5
Minnesota...............................             1.5             1.5
Mississippi.............................             3.6             3.4
Montana.................................              .8              .8
North Carolina..........................             2.2             2.1
North Dakota............................             8.0             7.8
New Mexico..............................            24.2            24.3
Nevada..................................              .2              .3
Oklahoma................................             3.8             3.8
Oregon..................................             1.6             1.6
South Dakota............................            16.7            16.5
Utah....................................              .9              .9
Washington..............................             2.4             2.5
Wisconsin...............................             1.5             1.5
Wyoming.................................              .4              .4
                                         -----------------
    Total...............................           100.0           100.0
------------------------------------------------------------------------

    These provisions will allow school districts to use Federal funds 
in a manner more consistent with their own reform strategies and 
priorities. While most of the benefits of the new law are conveyed by 
the statute, the regulations proposed through this notice could also 
result in cost savings, by allowing flexibility in adopting assessment 
systems composed entirely of locally developed and administered tests. 
Data limitations make it difficult to estimate the magnitude and timing 
of any potential cost savings. However, given the new flexibilities 
associated with the proposed regulation, the Secretary has concluded 
that these regulations are likely to have positive net benefits.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This rule:
    (1) Does not have an annual effect on the economy of $100 million 
or more on budgets.
    (2) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State or local government 
agencies, or geographic regions. The rule proposes new procedures 
related to determining adequate yearly progress, school boundaries, 
funding, and other issues. It also updates existing procedures 
addressing student rights and adapts the existing rules to comply with 
current law and policy. The rule does not pertain to funding and is not 
expected to have an effect on budgets. The rule is not expected to have 
a perceptible effect on costs or prices.
    (3) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. The 
rule proposes new procedures related to determining adequate yearly 
progress, school boundaries, funding, and other issues. It also updates 
existing procedures addressing student rights and adapts the existing 
rules to comply with current law and policy. The rule does not pertain 
to funding and is not expected to have an effect on budgets.

Unfunded Mandates Reform Act

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule proposes new procedures related to determining adequate 
yearly progress, school boundaries, funding, and other issues. It also 
updates existing procedures addressing student rights

[[Page 8765]]

and adapts the existing rules to comply with current law and policy. 
The procedures for dissemination of student rights through student 
handbooks are consistent with current practices. The procedures for 
implementing student rights through hearings and alternative dispute 
resolution processes are consistent with current practices. The rule is 
not expected to mandate additional costs on tribal governments.

Takings (E.O. 12630)

    In accordance with Executive Order 12630, the rule does not have 
significant takings implications. Nothing in the rule proposes rules of 
private property rights, constitutional or otherwise, or invokes the 
Federal condemnation power or alters any use of Federal land held in 
trust. The focus of this rule is civil rights and due process rights. A 
takings implication assessment is not required.

Federalism (E.O. 13132)

    In accordance with Executive Order 13132, the rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Assessment. Nothing in this rule has substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. This rule does 
not implicate State government. Similar to federalist concepts, this 
rule leaves to local school board discretion those issues of student 
civil rights and due process that can be left for local school boards 
to address. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    In accordance with Executive Order 12988, the Office of the 
Solicitor has determined that this rule does not unduly burden the 
judicial system and meets the requirements of sections 3(a) and 3(b)(2) 
of the Order.

Consultation With Indian Tribes (E.O. 13175)

    In accordance with Executive Order 13175, we have identified 
potential effects on federally recognized Indian tribes that will 
result from this rule. This rule will require Tribally operated schools 
to observe student rights and procedures spelled out in the rule. 
Accordingly:
    (1) We have consulted with the affected tribe(s) on a government-
to-government basis. The consultations have been open and candid to 
allow the affected tribe(s) to fully evaluate the potential effect of 
the rule on trust resources.
    (2) We will fully consider tribal views in the final rule.
    (3) We have consulted with the appropriate bureaus and offices of 
the Department about the political effects of this rule on Indian 
tribes. The Office of Indian Education Programs and the Office of the 
Assistant Secretary--Indian Affairs have been consulted.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), the Department is requesting comments on the information 
collection incorporated in this proposed rule. Comments on this 
information must be received by March 26, 2004, via facsimile or e-mail 
transmittal to: Desk Officer for the Department of the Interior, Office 
of Information and Regulatory Affairs, 202/395-6566 (facsimile) or 
[email protected]
    Comments are invited on: (1) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (2) the 
accuracy of the agency's estimate of the burden including the validity 
of the methodology and assumption used; (3) ways to enhance the 
quality, utility, and clarity of the information collected; and (4) 
ways to minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology. The information collection will 
be used to enable BIA to better administer the No Child Left Behind 
program subject to this rulemaking. In all instances, the Department 
has strived to lessen the burden on the public and ask for only 
information that is absolutely essential to the administration of the 
programs affected and in keeping with the Department's fiduciary 
responsibility to federally recognized tribes.
    Under 25 CFR part 39, OMB clearance has already been given under 
OMB Control Number 1076-0122 for the information required of Indian 
schools to document student attendance and classification for 
participation in certain special programs. In addition, OMB has 
approved certain transportation information in reporting off-
reservation school mileage estimates, also in 25 CFR part 39, under 
Control Number 1076-0134.
    A synopsis of the new information collection burdens for parts 30, 
37, 39, 42, 44 and 47 is provided below. Burden is defined as the total 
time, effort, or financial resources expended (including any filing 
fees) by persons to generate, maintain, retain, or disclose or provide 
information to or for a Federal agency.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Burden per
                  CFR section                       Number       Responses per   response  (in                  Total annual burden/cost
                                                  Respondents     respondent        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
30.104(a)(1), Submit Notification.............               6               1               1  6 hours/$72.00
30.104(b), Submit Waiver......................               7               1              11  77 hours/$924.00
30.106, Submit proposal for alternative AYP...              20               1               1  20 hours/$240.00
30.107, Form Requirements.....................              20               1             480  9,600 hours/$115,200.00
30.110, Submit Request for technical                        20               1               2  40 hours/$480.00
 assistance.
30.118, Submit Evidence.......................              85               1              40  3,400 hours/$40,800.00
                                               -----------------
    Totals....................................  ..............  ..............  ..............  13,143/$157,716.00
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note: For purposes of this part, we recognize 184 bureau- and 
tribally-operated schools and peripheral dormitories. From this 
number we have extrapolated the number of likely respondents per 
information collection requirement. The cost of reporting and 
recordkeeping by the public is estimated to be approximately $12/
hour. We have used this figure as a medium figure that would 
indicate the cost of having a form (or form requirements) completed, 
the cost of taking an hour's time off work, the cost of using one's 
vehicle, time spent on the activity, and other miscellaneous costs 
that may be associated with obtaining the information needed to 
fulfill this part's information collection requirements.]


[[Page 8766]]



Summary

Section 30.104(a)(1) What Is the Secretary's Definition of Adequate 
Yearly Progress?

    Where the tribal school is in more than one State, because of 
reservation geographic boundaries, the tribal governing body or school 
board may choose the State definition it desires for ``Adequate Yearly 
Progress.'' This is realized through a written communication to the 
Secretary. It is estimated that there are only 6 schools within 2 
tribes that would have this option to choose between or among State 
definitions for AYP. It is estimated that it would take the tribal 
governing body or school board 1 hour to complete this notification 
through a letter to the Secretary.

    Burden hours = number of schools with this option (6) x 1 hour to 
send letter to the Secretary = 6 total annual burden hours at a cost of 
$72.00 to the public.

Section 30.104(b) What is the Secretary's Definition of Adequate Yearly 
Progress?

    The tribal governing body or school board may seek a waiver that 
may include developing their own definition of AYP, or adopting or 
modifying an existing definition of AYP that has been accepted by the 
U.S. Department of Education. The average number of schools that would 
ask for this waiver is estimated to be not more than 7 schools. To 
submit this waiver request for an alternative definition of AYP, the 
school would take approximately 11 hours to complete.

Burden hours = 7 schools x 11 burden hours = 77 total annual burden 
hours at a cost of $924.00 to the public.

Section 30.106 How Does a Tribal Governing Body or School Board Propose 
an Alternative Definition of AYP?

    The tribal governing body or the school board may decide that the 
Secretary's definition of AYP is otherwise inappropriate. It may then 
propose an alternative definition of AYP by submitting a proposal to 
the Secretary. The physical act of submitting the proposal would only 
entail a hour's time. It is estimated that only 20 schools, on average, 
would propose an alternative definition of AYP.

    Burden hours = 20 schools x 1 burden hour = 20 total annual burden 
hours at a cost of $240.00 to the public.

Section 30.107 What Must a Tribal Governing Body or School Board 
Include in Its Alternative Definition of AYP?

    This section illustrates the form requirements that a tribal 
governing body or school board must fulfill in completing its proposal 
for an alternative definition of AYP. It is estimated that it would 
take an average of 20 schools making such a proposal approximately 480 
hours or 3 months to complete the requirements of this section.

    Burden hours = 20 schools x 480 burden hours = 9,600 total annual 
hours at a cost of $115,200 to the public.

Section 30.110 What Is the Process for Requesting Technical Assistance 
To Develop an Alternative Definition of AYP?

    The tribal governing body or the school board must submit a written 
request to the Director of OIEP if it desires to have technical 
assistance in developing an alternative definition of AYP. It is 
estimated that an average of 20 schools would be making this request, 
the same average of schools requesting an alternative definition of 
AYP, since this assistance is available. In submitting this written 
request, it is estimated that, at a minimum, a meeting of the tribal 
governing body or the school board would have to take place to discuss 
the request and then qualify the parameters of this assistance in a 
letter then sent to the Director of OIEP. It would take up to 2 hours 
to complete this administrative task.

Burden hours = 20 schools x 2 burden hours = 40 total annual burden 
hours at a cost of $480 to the public.

Section 30.118 Can a Bureau-Funded School Present Evidence Before It Is 
Identified for School Improvement, Corrective Action, or Restructuring?

    The tribal governing body or school board may present evidence that 
it should not be identified for school improvement, corrective action, 
or restructuring. There are 184 bureau-funded schools and peripheral 
dormitories. Only 170 have academic programs subject to school 
improvement, corrective action, or restructuring. Out of the 170 
bureau-operated schools, it is estimated that approximately half (85) 
would seek to present such evidence. To compile the evidence necessary 
to make its case, it is further estimated that it would take 
approximately 40 hours (a good work week) to fulfill this requirement.

Burden hours = 85 schools x 40 hours = 3,400 total annual burden hours 
for a cost of $40,800 to the public.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Burden per
                  CFR section                           Responses per   response  (in                  Total annual burden/cost
                                                  Respondents     respondent        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
37.122(b), Propose Change in geographic                      2               1               1  2 hours/$24.00
 boundaries.
37.123(c), Submit tribal approval to change                  2               1               1  2 hours/$24.00
 geographic boundaries.
                                               -----------------
    Totals....................................  ..............  ..............  ..............  4/$48.00
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note: For purposes of this part, we recognize 184 bureau- and 
tribally-operated schools and peripheral dormitories. From this 
number we have extrapolated the number of likely respondents per 
information collection requirement. The cost of reporting and 
recordkeeping by the public is estimated to be approximately $12/
hour. We have used this figure as a medium figure that would 
indicate the cost of having a form (or form requirements) completed, 
the cost of taking an hour's time off work, the cost of using one's 
vehicle, time spent on the activity, and other miscellaneous costs 
that may be associated with obtaining the information needed to 
fulfill this part's information collection requirements.]

Summary

Section 37.122(b) Once Geographic Attendance Boundaries Are 
Established, How Can They Be Changed?

    Tribal governing bodies and school boards may change their 
attendance boundaries now. This rulemaking does not otherwise impact on 
this ability. We

[[Page 8767]]

have estimated, for purposes of information collection authority, that 
there can be approximately two such requests per year. Submitting a 
letter to the Secretary for this consideration would entail only 1 
hour's time to effectively transmit such a letter.

Burden hours = 2 schools x 1 burden hours = 2 total annual burden hours 
at a cost of $24.00 to the public.

Section 37.123 How Does a Tribe Develop Proposed Geographic Attendance 
Boundaries or Boundary Changes?

    A tribal governing body establishes its own process for developing 
proposed geographic attendance boundary or boundary changes. Once this 
has been accomplished, it must submit a document which represents that 
body's approval to the Secretary for consideration of such change. No 
tribe has ever attempted to change its attendance boundary and, 
consequently, no tribe has developed these in-house processes. However, 
for purposes of information collection authority, we have estimated 
that approximately two tribes could make such a request each year. This 
administrative activity would not entail more than 1 hour's time.

Burden hours = 2 tribes x 1 burden hour = 2 total annual burden hours 
at a cost of $24.00 to the public.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Burden per
                  CFR section                       Number       Responses per   Response  (in                  Total annual burden/cost
                                                  respondents     respondent        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
39.410, Submit Certification of conflict of                 10               1             1.5  15 hours/$180.00
 interests review.
39.502, Submit request for contingency funds                30               1               1  30 hours/$360.00
 to ELO.
                                               -----------------
    Totals....................................  ..............  ..............  ..............  45/$540.00
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note:  For purposes of this part, we recognize 184 bureau- and 
tribally-operated schools and peripheral dormitories. From this 
number we have extrapolated the number of likely respondents per 
information collection requirement. The cost of reporting and 
recordkeeping by the public is estimated to be approximately $12/
hour. We have used this figure as a medium figure that would 
indicate the cost of having a form (or form requirements) completed, 
the cost of taking an hour's time off work, the cost of using one's 
vehicle, plus time spent on the activity, and other miscellaneous 
costs that may be associated with obtaining the information needed 
to fulfill this part's information collection requirements.]

Summary

Section 39.410 What Qualifications Must an Audit Firm Meet To Be 
Considered for Auditing ISEP Administration?

    It is estimated that only 10 firms would be required to submit a 
conflict of interest certification during any given school year for 
purposes of general audit. It is further estimated that this 
administrative task would take approximately 1.5 hours to complete.

Burden hours = 10 certified public accountant firms x 1.5 hours = 15 
hours at a cost of $180.00 to the public.

Section 39.502 How Does a School Apply for Contingency Funds?

    A school must submit a request to the ELO for contingency funds. 
From past experience, it is estimated that approximately 30 schools 
would make such a request. Since there is nothing more involved than 
submitting a written request to the ELO, it is further estimated that 
it would take only 1 hour to complete this administrative task.
Burden hours = 30 schools x 1 burden hour = 30 total annual burden 
hours at a cost of $360 to the public.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Burden per
                  CFR section                      Number of     Responses per   response  (in                   Total anual burden/cost
                                                  respondents     respondent        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
42.6, Form Requirement. Provide written notice             120               3             .5   180 hours/$2,160.00.
 of charges.
42.7, Provide copy of hearing of record.......             120               3            3     1,080 hours/$12,960.00.
42.9, Provide student handbook................             120               1             .25  30 hours/$360.00.
                                               -----------------
    Totals....................................  ..............  ..............  ..............  1,290/$15,480.00.
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note:
    For purposes of this part, we recognize 184 bureau- and 
tribally-operated schools and peripheral dormitories. From this 
number we have extrapolated the number of likely respondents per 
information collection requirement. The cost of reporting and 
recordkeeping by the public is estimated to be approximately $12/
hour. We have used this figure as a medium figure that would 
indicate the cost of having a form (or form requirements) completed, 
the cost of taking an hour's time off work, the cost of using one's 
vehicle, plus time spent on the activity, and other miscellaneous 
costs that may be associated with obtaining the information needed 
to fulfill this part's information collection requirements.]

Summary

Section 42.6 What Does Due Process in a Formal Disciplinary Proceeding 
Include?

    The student charged with any infraction of the school code which 
would lead to a disciplinary proceeding must receive a formal statement 
of such charges. This a burden accruing to tribally-operated schools. 
Since every school may have one infraction (some have no reported 
disciplinary events and some may have several events), we have used the 
number of tribally-operated Indian schools (120) as the number of 
respondents. Providing the student with charges is an administrative 
task that should not take longer than one-half hour to successfully 
complete.

Burden hours = 120 schools x 3 responses x \1/2\ burden hour = 180 
total annual burden hours for a cost

[[Page 8768]]

to the government and/or tribal governing body or school board of 
$2,160.

Section 42.7 What Are a Student's Due Process Rights in a Formal 
Disciplinary Proceeding?

    The student is entitled to a copy of the hearing of record. For 
transcription, photo-copying, and delivery, it is estimated that this 
administrative task could take as long as 3 hours to successfully 
complete.

Burden hours = 120 schools x 3 responses x 3 burden hours = 1,080 total 
annual burden hours for a cost to the government and/or tribal 
government body or school board of $12,960.

Section 42.9 How Must the School Communicate Individual Student Rights 
to Students, Parents or Guardians, and Staff?

    The school must provide a handbook to the affected entities setting 
out the school's code of conduct. All of the existing bureau- and 
tribal-operated schools have such handbooks, so this information 
distribution concerns making the handbook available to all concerned, a 
relatively simple task of \1/4\ hour to make copies available at a 
site-specific location.

Burden hours = 120 schools x .25 burden hours = 30 total annual burden 
hours for a cost to the government and/or tribal governing body or 
school board of $360.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Burden per
                 CFR section                      Number of      Responses per    response  (in                  Total annual burden/cost
                                                 respondents       respondent         hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
44.105, Provide written notice of                           1                1                1   1 hour/$12.00
 retrocession.
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note:
    For purposes of this part, we recognize 184 bureau- and 
tribally-operated schools and peripheral dormitories. From this 
number we have extrapolated the number of likely respondents per 
information collection requirement. The cost of reporting and 
recordkeeping by the public is estimated to be approximately $12/
hour. We have used this figure as a medium figure that would 
indicate the cost of having a form (or form requirements) completed, 
the cost of taking an hour's time off work, the cost of using one's 
vehicle, plus time spent on the activity, and other miscellaneous 
costs that may be associated with obtaining the information needed 
to fulfill this part's information collection requirements.]

Summary

Section 44.105 How Does a Tribal Governing Body Retrocede a Program to 
the Secretary?

    The tribal governing body must provide written notice to BIA that 
it wishes to retrocede a program. This happens rarely, so we have used 
one respondent tribe per year as an example for information collection 
authority. A simple written notice, in letter or memorandum form, would 
only take approximately 1 hour to transmit to BIA.

Burden hours = 1 governing body x 1 burden hour = 1 total annual burden 
or a cost of $12.00 to the public.

                                                                 Estimated Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Burden per
                  CFR Section                      Number of     Responses per   response  (in                  Total annual burden/cost
                                                  respondents     respondent        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
47.5, Submit quarterly report to school board.             120               4            3     1,440 hours/$17,280
47.7, Notice of appeal........................             120               1            1     120 hours/$1,440
47.9, Form Requirements, Financial Plan.......             120               1            2     240 hours/$2,880
47.10, Notice of Action on Financial Plan.....             120               1            1     120 hours/$1,440
                                               -----------------
    Totals....................................  ..............  ..............  ..............  1920/$23,040
--------------------------------------------------------------------------------------------------------------------------------------------------------


    [Note:
    For purposes of this part, we recognize 120 bureau- and tribal-
operated Indian schools. From this number we have extrapolated the 
number of likely respondents per information collection requirement. 
The cost of reporting and recordkeeping by the public is estimated 
to be approximately $12/hour. We have used this figure as a medium 
figure that would indicate the cost of having a form (or form 
requirements) completed, the cost of taking an hour's time off work, 
the cost of using one's vehicle, plus time spent on the activity, 
and other miscellaneous costs that may be associated with obtaining 
the information needed to fulfill this part's information collection 
requirements. For purposes of this part only, we have used the 
number of tribally operated schools (120) as the number of 
respondents.]

Summary

Section 47.5 What Is the School Supervisor Responsible For?

    The school supervisor must report at least quarterly (4 responses 
per year) to the local school board on the amounts spent, obligated, 
and currently remaining in funds budgeted for each program in the local 
financial plan. In addition, he must maintain expenditure records in 
accordance with financial planning system procedures. It is estimated 
that this would take approximately 3 hours to complete successfully.

Burden hours = 120 schools x 1 supervisor x 4 responses x 3 burden 
hours = 1,440 total annual burden hours or a cost to the public of 
$17,280.00.

Section 47.7 What Are the Expenditures Limitations for Bureau-Operated 
Schools?

    If a Bureau-operated school and OIEP region or Agency support 
services staff disagree over expenditures, the Bureau-operated school 
must appeal to the Director for a decision. This appeal would take the 
form of a memorandum and would take approximately 1 hour to complete 
successfully.

Burden hours = 120 schools x 1 burden hour = 120 total annual burden or 
a cost of $1,440.00 to the public.

[[Page 8769]]

Section 47.9 What Are the Minimum Requirements for the Local 
Educational Financial Plan?

    This is a form requirement for meeting the minimum standards of a 
educational financial plan. All schools would have to comply with this 
standard and it is estimated that it would take approximately 2 hours 
to complete this planning document.

Burden hours = 120 schools x 2 burden hours = 240 total annual burden 
hours at a cost of $2,880.00 to the public.

Section 47.10 How Is the Local Educational Financial Plan Developed?

    The supervisor of each school must supervise the disposition of the 
tentative allotment and express acceptance or otherwise to the ELO in a 
timely fashion. This administrative task would take approximately 1 
hour to convey such disposition.

Burden hours = 120 schools x 2 burden hours = 240 total annual burden 
hours or a cost of $1,440.00 to the public.

National Environmental Policy Act

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. A detailed statement 
under the National Environmental Policy Act of 1969 is not required.

Clarity of This Regulation

    Executive Order 12866 requires each agency to write rules that are 
easy to understand. We invite your comments on how to make this rule 
easier to understand, including answers to questions such as the 
following:
    (1) Are the requirements in the rule clearly stated?
    (2) Does the rule contain technical language or jargon that 
interferes with its clarity?
    (3) Does the format of the rule (grouping and order of sections, 
use of headings, paragraphing, etc.) aid or reduce its clarity?
    (4) Would the rule be easier to understand if it were divided into 
more (but shorter) sections? (A ``section'' appears in bold type and is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example: 
Sec.  42.2 What rights do individual students have?)
    (5) Is the description of the rule in the SUPPLEMENTARY INFORMATION 
section of the preamble helpful in understanding the proposed rule?
    (6) What else could we do to make the rule easier to understand? 
Send a copy of any comments that concern how we could make this rule 
easier to understand to: Office of Regulatory Affairs, Department of 
the Interior, Room 7229, 1849 C Street, NW., Washington, DC 20240. You 
may also e-mail the comments to this address: [email protected].

Public Comment Solicitation

    Although this rule is published by the Bureau of Indian Affairs, 
the Bureau of Land Management is processing comments under agreement 
with BIA. If you wish to comment on this proposed rule, you may submit 
your comments by any one of several methods.
    (1) You may mail comments to Director (630), Bureau of Land 
Management, Eastern States Office, 7450 Boston Boulevard, Springfield, 
Virginia 22153, Attention: RIN 1076-AE49.
    (2) You may submit comments electronically by direct Internet 
response to either www.blm.gov/nhp/news/regulatory/index.html, or 
http://www.blm.gov.
    (3) You may hand-deliver comments to 1620 L Street, NW., Room 401, 
Washington, DC 20036.
    Our practice is to make comments, including names and home 
addresses of respondents, available for public review during regular 
business hours. Individual respondents may request that we withhold 
their home address from the rulemaking record. We will honor the 
request to the extent allowable by law. There may be circumstances in 
which we would withhold from the rulemaking record a respondent's 
identity, as allowable by law. If you wish us to withhold your name 
and/or address, you must state this prominently at the beginning of 
your comment. However, we will not consider anonymous comments. We will 
make all submissions from organizations or businesses, and from 
individuals identifying themselves as representatives or officials of 
organizations or businesses, available for public inspection in their 
entirety. You should submit comments on the information collections in 
the proposed rule to: Interior Desk Officer (1076-AE49), Office of 
Information and Regulatory Affairs, 202/395-6566 (facsimile); e-mail: 
[email protected]. You may submit comments until April 26, 2004, 
but should submit them by March 26, 2004, in order to be assured of 
consideration, because OMB may approve the information collections 
after 30 days.

List of Subjects

25 CFR Parts 30, 37, 39, 44, and 47

    Indians--Education, Schools, Elementary and Secondary education 
programs, grant programs--Indians, Government programs--education.

25 CFR Part 42

    Indians--Education, Schools, Students, Elementary and Secondary 
education programs.

    Dated: February 4, 2004.
David W. Anderson,
Assistant Secretary--Indian Affairs.
    For the reasons given in the preamble, the Bureau of Indian Affairs 
proposes to amend parts 30, 37, 39, 42, 44, 47 of title 25 of the Code 
of Federal Regulations as follows:
    1. New part 30 is added to read as follows:

PART 30--ADEQUATE YEARLY PROGRESS

Sec.
30.100 What is the purpose of this part?
30.101 What definitions apply to terms in this part?
Subpart A--Defining Adequate Yearly Progress
30.102 Does the law require the Secretary of Interior to develop a 
definition of AYP for bureau-funded schools?
30.103 Did the Committee consider a separate Bureau definition of 
AYP?
30.104 What is the Secretary's definition of Adequate Yearly 
Progress?

Alternative Definition of AYP

30.105 Can a tribal governing body or school board use another 
definition of AYP?
30.106 How does a tribal governing body or school board propose an 
alternative definition of AYP?
30.107 What must a tribal governing body or school board include in 
its alternative definition of AYP?
30.108 May an alternative definition of AYP use parts of a State's 
definition?

Technical Assistance

30.109 Will the Secretary provide assistance in developing an 
alternative AYP definition?
30.110 What is the process for requesting technical assistance to 
develop an alternative definition of AYP?
30.111 When should the tribal governing body or school board request 
technical assistance?

Approval of Alternative Definition

30.112 How long does the Secretary have to review an alternative 
definition?
30.113 What is the process the Secretary uses to review and approve 
an alternative definition of AYP?
Subpart B--Assessing Adequate Yearly Progress
30.114 Which students must be assessed?
30.115 Which students' performance data must be included for 
purposes of AYP?
30.116 If a school fails to achieve its objectives, what other 
methods may it use to determine whether it made AYP?

[[Page 8770]]

Subpart C--Failure To Make Adequate Yearly Progress
30.117 What happens if a bureau-funded school fails to make AYP?
30.118 Can a bureau-funded school present evidence before it is 
identified for school improvement, corrective action or 
restructuring?
30.119 Who is responsible for implementing required remedial actions 
at a bureau-funded school identified for school improvement, 
corrective action or restructuring?
30.120 Are schools exempt from school choice and supplemental 
services when identified for school improvement, corrective action, 
and restructuring?
30.121 What funds are available to assist schools identified for 
school improvement, corrective action, or restructuring?
30.122 Must the Bureau assist a school identified for school 
improvement, corrective action, or restructuring?
30.123 What is the Bureau's role in assisting bureau-funded schools 
to make AYP?
30.124 Will the Department of Education provide funds for schools 
that fail to meet AYP?
30.125 What happens if a State refuses to allow a school access to 
the State assessment?
Subpart D--Responsibilities and Accountability
30.126 What are the Bureau's reporting responsibilities?
30.127 How is the Bureau accountable to the Department of Education 
for education funds and performance?
30.150 Information collection.

    Authority: Pub. L. 107-11.


Sec.  30.100  What is the purpose of this part?

    This part establishes for schools receiving Bureau funding a 
definition of ``Adequate Yearly Progress'' (AYP). Nothing in this part:
    (a) Diminishes the Secretary's trust responsibility for Indian 
education or any statutory rights in law;
    (b) Affects in any way the sovereign rights of tribes; or
    (c) Terminates or changes the trust responsibility of the United 
States to Indian tribes or individual Indians.


Sec.  30.101  What definitions apply to terms in this part?

    OIEP means the Office of Indian Education Programs in the Bureau of 
Indian Affairs.
    School means a school funded by the Bureau of Indian Affairs.
    Secretary means the Secretary of the Interior or a designated 
representative.

Subpart A--Defining Adequate Yearly Progress


Sec.  30.102  Does the law require the Secretary of the Interior to 
develop a definition of AYP for bureau-funded schools?

    Yes, through negotiated rulemaking. In developing the Secretary's 
definition of adequate yearly progress (AYP), the No Child Left Behind 
Negotiated Rulemaking Committee (Committee) considered a variety of 
options. In choosing the definition in Sec.  30.103, the Committee in 
no way intended to diminish the Secretary's trust responsibility for 
Indian education or any statutory rights in law. Nothing in this part:
    (a) Affects in any way the sovereign rights of tribes; or
    (b) Terminates or changes the trust responsibility of the United 
States to Indian tribes or individual Indians.


Sec.  30.103  Did the Committee consider a separate Bureau definition 
of AYP?

    Yes, the Committee considered having the Bureau of Indian Affairs 
develop a separate Bureau definition of AYP. For a variety of reasons, 
the Committee reached consensus on the definition in Sec.  30.104. This 
is in no way intended to diminish the United States' trust 
responsibility for Indian education nor is it intended to give states 
authority over Bureau-Funded schools.


Sec.  30.104  What is the Secretary's definition of Adequate Yearly 
Progress?

    The Secretary defines Adequate Yearly Progress as follows. The 
definition meets the requirements in section 1111(b) of the Act.
    (a) Until an alternative definition of AYP is proposed by the 
tribal governing body or school board and approved by the Secretary, 
the definition of AYP is that of the State where the school is located.
    (1) If the geographic boundaries of the school include more than 
one State, the tribal governing body or school board may choose the 
State definition it desires. Such decision shall be communicated to the 
Secretary in writing.
    (2) This section does not mean that the school is under the 
jurisdiction of the State for any purpose, rather a reference to the 
State is solely for the purpose of using the State's assessment, 
curriculum, academic standards, and definition of AYP.
    (3) The use of the State's definition of AYP does not diminish or 
alter the Federal Government's responsibility for Indian education.
    (b) School boards or tribal governing bodies may seek a waiver that 
may include developing their own definition of AYP, or adopting or 
modifying an existing definition of AYP that has been accepted by the 
Department of Education. The Secretary is committed to providing 
technical assistance to a school, or a group of schools, to develop an 
alternative definition of AYP.

Alternative Definition of AYP


Sec.  30.105  Can a tribal governing body or school board use another 
definition of AYP?

    Yes. A tribal governing body or school board may waive all or part 
of the Secretary's definition of AYP and propose an alternative 
definition under Sec.  30.106.


Sec.  30.106  How does a tribal governing body or school board propose 
an alternative definition of AYP?

    If a tribal governing body or school board decides that the 
definition of AYP in Sec.  30.104 is inappropriate, it may decide to 
waive all or part of the definition. Within 60 days of the decision to 
waive, the tribal governing body or school board must submit to the 
Secretary a proposal for an alternative definition of AYP. The proposal 
must be consistent with section 1111(b) of the Act.


Sec.  30.107  What must a tribal governing body or school board include 
in its alternative definition of AYP?

    (a) The alternative definition of AYP must comply with the 
requirements of section 1111(b) of the Act, which include the 
following:
    (1) Demonstrate that the school has adopted challenging academic 
standards;
    (2) Demonstrate that the school has an effective accountability 
system that ensures that the school or schools will make adequate 
yearly progress.
    (b) The alternative definition of AYP must:
    (1) Apply the same high standards of academic achievement to all 
students;
    (2) Be statistically valid and reliable;
    (3) Result in continuous and substantial academic improvement for 
all students;
    (4) Measure the progress of all students based on a high-quality 
assessment system that includes, at a minimum, academic assessments in 
mathematics, reading or language arts and science and that meets the 
requirements of paragraph (c) of this section;
    (5) Establish a starting point;
    (6) Create timelines for adequate yearly progress;
    (7) Establish measurable objectives;
    (8) Include intermediate goals for annual measurable progress; and

[[Page 8771]]

    (9) Ensure annual improvement for the school.
    (c) The measurement required by paragraph (b)(4) of this section 
must meet both of the following criteria.
    (1) The measurement must include separate measurable annual 
objectives for continuous and substantial improvement for (unless 
disaggregation of data cannot yield statistically reliable 
information):
    (i) The achievement of all students; and
    (ii) The achievement of economically disadvantaged students; 
students from major racial or ethnic groups, students with 
disabilities, and students with limited English proficiency.
    (2) The measurement must include graduation rates and at least one 
other academic indicator for schools that do not have a 12th grade (but 
may include more than one other academic indicator).


Sec.  30.108  May an alternative definition of AYP use parts of a 
State's definition?

    Yes, a tribal governing body or school board may take part of the 
State's definition and propose to waive the remainder. The proposed 
alternative definition of AYP must, however, include both the parts of 
the State's AYP adopted and those parts the tribal governing body or 
school board is proposing to change.

Technical Assistance


Sec.  30.109  Will the Secretary provide assistance in developing an 
alternative AYP definition?

    Yes, the Secretary through the Bureau, shall provide technical 
assistance either directly or through contract to the tribal governing 
body or the school board in developing an alternative AYP definition. A 
tribal governing body or school board needing assistance must submit a 
request to the Director of OIEP under Sec.  30.110. In providing 
assistance, the Secretary may consult with the Secretary of Education 
and may use funds supplied by the Secretary of Education in accordance 
with section 6111 of the Act.


Sec.  30.110  What is the process for requesting technical assistance 
to develop an alternative definition of AYP?

    (a) The tribal governing body or school board requesting technical 
assistance to develop an alternative definition of AYP must submit a 
written request to the Director of OIEP, specifying the form of 
assistance it requires.
    (b) The Director of OIEP must acknowledge receipt of the request 
for technical assistance within 10 days of receiving the request.
    (c) No later than 30 days after receiving the original request, the 
Director of OIEP will identify a point of contact. This contact will 
immediately begin working with the tribal governing body or school 
board to jointly develop the specifics of the technical assistance, 
including identifying the form, substance, and timeline for the 
assistance.


Sec.  30.111  When should the tribal governing body or school board 
request technical assistance?

    In order to maximize the time the tribal governing body or school 
board has to develop an alternative definition of AYP and to provide 
full opportunity for technical assistance, it is recommended that the 
tribal governing body or school board request technical assistance 
before formally notifying the Secretary of its intention to waive the 
Secretary's definition of AYP.

Approval of Alternative Definition


Sec.  30.112  How long does the Secretary have to review an alternative 
definition?

    After receiving a completed proposed alternative definition of AYP, 
the Secretary has 90 days to review and approve or disapprove the 
definition.


Sec.  30.113  How does the Secretary review and approve an alternative 
definition of AYP?

    (a) The tribal governing body or school board submits a proposed 
alternative definition of AYP to the Director, OIEP within 60 days of 
its decision to waive the Secretary's definition.
    (b) Within 30 days of receiving a proposed alternative definition 
of AYP, OIEP notifies the tribal governing body or the school board 
whether the proposed alternative definition is complete.
    (c) If the proposed alternative definition is incomplete, OIEP 
provides the tribal governing body or school board with technical 
assistance to complete the proposed alternative definition of AYP, 
including identifying what additional items are necessary.
    (d) If the proposed alternative definition of AYP is determined to 
be complete, the Department of Interior may notify the Department of 
Education that it has received a proposed alternative definition of 
AYP.
    (e) The Secretary has 90 days from the date OIEP receives a 
completed proposed alternative definition of AYP to determine whether 
the alternative definition meets the requirements of section 1111(b) of 
the Act.
    (f) The Secretary reviews the proposed alternative definition of 
AYP to determine whether it is consistent with the requirements of 
section 1111(b) of the Act. This review must take into account the 
unique circumstances and needs of the schools and students.
    (g) The Secretary shall approve the alternative definition of AYP 
if it is consistent with the requirements of section 1111(b) of the 
Act, taking into consideration the unique circumstances and needs of 
schools and students.
    (h) If the Secretary approves the alternative definition of AYP:
    (1) The Department shall promptly notify the tribal governing body 
or school board; and
    (2) The alternate definition of AYP will become effective at the 
start of the following school year.
    (i) The Department will disapprove the alternative definition of 
AYP if it is not consistent with the requirements of section 1111(b) of 
the Act. If the Department disapproves the definition, it shall, within 
90 days of receiving the completed proposed alternative definition, 
notify the tribal governing body or school board of the following:
    (1) That the definition is disapproved; and
    (2) The reasons why the proposed alternative definition does not 
meet the requirements of section 1111(b) of the Act.
    (j) If the Department denies a proposed definition under paragraph 
(i) of this section, it shall provide technical assistance to overcome 
the basis for the denial.

Subpart B--Assessing Adequate Yearly Progress


Sec.  30.114  Which students must be assessed?

    All students in grades three through eight and one grade in high 
school who are enrolled in a bureau-funded school must be assessed.


Sec.  30.115  Which students' performance data must be included for 
purposes of AYP?

    The performance data of all students in grades three through eight 
and one grade in grades ten through twelve who are enrolled in a 
bureau-funded school for a full academic year must be included for 
purposes of AYP. ``Full academic year'' must be defined by the 
Secretary or by an approved alternative definition of AYP.


Sec.  30.116  If a school fails to achieve its academic performance 
objectives, what other methods may it use to determine whether it made 
AYP?

    If a school fails to achieve its academic performance objectives, 
there are two other methods it may use to determine whether it made AYP

[[Page 8772]]

    (a) Method A--``Safe Harbor.'' Under ``safe harbor,'' the following 
requirements must be met:
    (1) In each group that does not achieve the school's academic 
performance objectives, the percentage of students who were below the 
``proficient'' level of academic achievement decreased by 10 percent 
from the proceeding school year; and
    (2) The students in that group made progress on one or more of the 
academic indicators; and
    (3) The 95 percent assessment participation rate requirement is 
met.
    (b) Method B--Uniform Averaging Procedure. A school may use uniform 
averaging. Under this procedure, the school may average data from the 
school year with data from one or two school years immediately 
preceding that school year and determine if the resulting average makes 
AYP.

Subpart C--Failure To Make Adequate Yearly Progress


Sec.  30.117  What happens if a bureau-funded school fails to make AYP?

------------------------------------------------------------------------
 Consecutive yrs of failing to                       Action required by
   make AYP in same academic          Status          entity operating
            subject                                        school
------------------------------------------------------------------------
1st year of failing AYP.......  No status change.  Analyze AYP Data and
                                                    consider
                                                    consultation with
                                                    outside experts.
2nd consecutive year of         School             For the next academic
 failing AYP.                    improvement.       year, develop a plan
                                                    or revise an
                                                    existing plan for
                                                    school improvement
                                                    in consultation with
                                                    parents, school
                                                    staff and outside
                                                    experts.
3rd consecutive year of         School             Continue revising or
 failing AYP.                    Improvement,       modifying the plan
                                 year two.          for school
                                                    improvement in
                                                    consultation with
                                                    parents, school
                                                    staff and outside
                                                    experts.
4th consecutive year of         Corrective         Implement at least
 failing AYP.                    Action, year one.  one of the six
                                                    corrective actions
                                                    steps found in
                                                    section
                                                    1116(b)(7)(c)(iv) of
                                                    the Act.
5th consecutive year of         Planning to        Prepare a
 failing AYP.                    Restructure.       restructuring plan
                                                    and make
                                                    arrangements to
                                                    implement the plan.
6th consecutive year of         Restructuring....  Implement the
 failing AYP.                                       restructuring plan
                                                    no later than the
                                                    beginning of the
                                                    school year
                                                    following the year
                                                    in which it
                                                    developed the plan.
7th consecutive year (and       Restructuring....  Continue
 beyond) of failing AYP.                            restructuring until
                                                    AYP is met for two
                                                    consecutive years.
------------------------------------------------------------------------

Sec.  30.118  Can a bureau-funded school present evidence before it is 
identified for school improvement, corrective action, or restructuring?

    Yes. The Bureau must give such a school the opportunity to review 
the data and present evidence as set out in section 1116(b)(2) of the 
Act.


Sec.  30.119  Who is responsible for implementing required remedial 
actions at a bureau-funded school identified for school improvement, 
corrective action or restructuring?

    (a) For a Bureau-operated school, implementation of remedial 
actions is the responsibility of the Bureau of Indian Affairs.
    (b) For a tribally-operated contract school or grant school, 
implementation of remedial actions is the responsibility of the school 
board of the school.


Sec.  30.120  Are Bureau-funded schools exempt from school choice and 
supplemental services when identified for school improvement, 
corrective action, and restructuring?

    Yes, bureau-funded schools are exempt from public school choice and 
supplemental services when identified for school improvement, 
corrective action, and restructuring


Sec.  30.121  What funds are available to assist schools identified for 
school improvement, corrective action, or restructuring?

    From fiscal year 2004 to fiscal year 2007, the bureau will reserve 
4 percent of its Title I allocation to assist Bureau-funded schools 
identified for school improvement, corrective action, and 
restructuring.
    (a) The bureau will allocate at least 95 percent of funds under 
this section to bureau-funded schools identified for school 
improvement, corrective action, and restructuring to carry out those 
schools' responsibility under section 1116(b) of the Act. With the 
approval of the school board the bureau may directly provide for the 
remedial activities or arrange for their provision through other 
entities such as school support teams or educational service agencies.
    (b) In allocating funds under this section, the Bureau will give 
priority to schools that:
    (1) Are the lowest-achieving schools;
    (2) Demonstrate the greatest need for funds; and
    (3) Demonstrate the strongest commitment to ensuring that the funds 
enable the lowest-achieving schools to meet progress goals in the 
school improvement plans.
    (c) Funds reserved under this section must not decrease total 
funding for all schools below the level for the preceding fiscal year.
    (d) The Bureau will publish in the Federal Register a list of 
schools receiving funds under this section.


Sec.  30.122  Must the Bureau assist a school it identified for school 
improvement, corrective action, or restructuring?

    Yes, if a bureau-funded school is identified for school 
improvement, corrective action, or restructuring, the Bureau must 
provide technical or other assistance described in sections 1116(b)(4) 
and 1116(g)(3) of the No Child Left Behind Act.


Sec.  30.123  What is the Bureau's role in assisting bureau-funded 
schools to make AYP?

    The Bureau must provide support to all bureau-funded schools to 
assist them in achieving AYP. This includes technical assistance and 
other forms of support.


Sec.  30.124  Will the Department of Education provide funds for 
schools that fail to meet AYP?

    To the extent that Congress appropriates other funds to assist 
schools not meeting AYP, the Bureau will apply to the Department of 
Education for these funds.


Sec.  30.125  What happens if a State refuses to allow a school access 
to the State assessment?

    (a) The Department will work directly with State officials to 
assist schools in obtaining access to the State's assessment. This can 
include direct communication with the Governor of the State. A bureau-
funded school may,

[[Page 8773]]

if necessary, pay a State for access to its assessment tools and 
scoring services.
    (b) If a State does not provide access to the State's assessment, 
the bureau-funded school must submit a waiver for an alternative 
definition of AYP.

Subpart D--Responsibilities and Accountability


Sec.  30.126  What are the Bureau's reporting responsibilities?

    The Bureau has the following reporting responsibilities to the 
Department of Education, appropriate committees of Congress, and the 
public.
    (a) In order to provide information about annual progress, the 
Bureau must obtain from all bureau-funded schools the results of 
assessments administered for all tested students, special education 
students, students with limited English proficiency, and disseminate 
such results in an annual report.
    (b) The Bureau must identify each school that did not meet AYP in 
accordance with the school's AYP definition.
    (c) Within its annual report to Congress, the Secretary shall 
include all of the reporting requirements of section 1116 (g)(5) of the 
Act.


Sec.  30.127  How is the Bureau accountable to the Department of 
Education for education funds and performance?

    The Bureau is accountable for the funds it receives from the 
Department of Education under Title I, Part A of the Act and its 
performance through an agreement with the Department of Education 
developed in consultation with Indian tribes.


Sec.  30.150  Information collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part involves 
collections of information subject to the PRA in Sec. Sec.  
30.104(a)(1), 30.104(b), 30.106, 30.107, 30.110, and 30.118. These 
collections have been approved by OMB under control number [to be 
determined].
    2. New part 37 is added to read as follows:

PART 37--GEOGRAPHIC BOUNDARIES

Sec.
37.100 What is the purpose of this part?
37.101 What do the terms used in this part mean?
37.102 How is this part organized?
37.103 Information collection.
Subpart A--All Schools
37.110 Who determines geographic attendance areas?
37.111 What role does a tribe have in issues relating to school 
boundaries?
37.112 Must each school have a geographic attendance boundary?
Subpart B--Day Schools, On-Reservation Boarding Schools, and Peripheral 
Dorms
37.120 How does this part affect current geographic attendance 
boundaries?
37.121 Who establishes geographic attendance boundaries under this 
part?
37.122 Once geographic attendance boundaries are established, how 
can they be changed?
37.123 How does a tribe develop proposed geographic attendance 
boundaries or boundary changes?
37.124 How are boundaries established for a new school or dorm?
37.125 Can an eligible student living off a reservation attend a 
school or dorm?
Subpart C--Off-Reservation Boarding Schools
37.130 Who establishes boundaries for Off-Reservation Boarding 
Schools?
37.131 Who may attend an ORBS?

    Authority: Pub. L. 107-110.


Sec.  37.100  What is the purpose of this part?

    (a) This part:
    (1) Establishes procedures for confirming, establishing, or 
revising attendance areas for each Bureau-funded school;
    (2) Encourages consultation with and coordination between and among 
all agencies (school boards, tribes, and others) involved with a 
student's education; and
    (3) Defines how tribes may develop policies regarding setting or 
revising geographic attendance boundaries, attendance, and 
transportation funding for their area of jurisdiction.
    (b) The goals of the procedures in this part are to:
    (1) Provide stability for schools;
    (2) Assist schools to project and to track current and future 
student enrollment figures for planning their budget, transportation, 
and facilities construction needs;
    (3) Adjust for geographic changes in enrollment, changes in school 
capacities, and improvement of day school opportunities; and
    (4) Avoid overcrowding or stress on limited resources.


Sec.  37.101  What do the terms used in this part mean?

    Geographic attendance area means a physical land area that is 
served by a Bureau-funded school.
    Geographic attendance boundary means a line of demarcation that 
clearly delineates and describes the limits of the physical land area 
that is served by a Bureau-funded school.
    Secretary means the Secretary of the Interior or a designated 
representative.


Sec.  37.102  How is this part organized?

    This part is divided into three subparts. Subpart A applies to all 
bureau-funded schools. Subpart B applies only to day schools, on-
reservation boarding schools, and peripheral dorms--in other words, to 
all bureau-funded schools except off-reservation boarding schools. 
Subpart C applies only to off-reservation boarding schools (ORBS).


Sec.  37.103  Information collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part involves 
collections of information subject to the PRA in Sec. Sec.  37.122(b), 
and 37.123(c). These collections have been approved by OMB under 
control number [to be determined].

Subpart A--All Schools


Sec.  37.110  Who determines geographic attendance areas?

    The Tribal governing body or the Secretary determines geographic 
attendance areas.


Sec.  37.111  What role does a tribe have in issues relating to school 
boundaries?

    A tribal governing body may:
    (a) Establish and revise geographical attendance boundaries for all 
but ORB schools,
    (b) Authorize a school to provide transportation for students who 
are members of the tribe attending schools outside the geographic 
attendance area in which they live.


Sec.  37.112  Must each school have a geographic attendance boundary?

    Yes. The Secretary must ensure that each school has a geographic 
area boundary.

[[Page 8774]]

Subpart B--Day Schools, On-Reservation Boarding Schools, and 
Peripheral Dorms


Sec.  37.120  How does this part affect current geographic attendance 
boundaries?

    The currently established geographic attendance boundaries of day 
schools, on-reservation boarding schools, and peripheral dorms remain 
in place unless the tribal governing body revises them.


Sec.  37.121  Who establishes geographic attendance boundaries under 
this part?

    (a) If there is only one day school, on-reservation boarding 
school, or peripheral dorm within a reservation's boundaries, the 
Secretary will establish the reservation boundary as the geographic 
attendance boundary;
    (b) When there is more than one day school, on-reservation boarding 
school, or peripheral dorm within a reservation boundary, the Tribe may 
choose to establish boundaries for each;
    (c) If a Tribe does not establish boundaries under paragraph (b) of 
this section, the Secretary will do so.


Sec.  37.122  Once geographic attendance boundaries are established, 
how can they be changed?

    (a) The Secretary can change the geographic attendance boundaries 
of a day school, on-reservation boarding school, or peripheral dorm 
only after:
    (1) Notifying the Tribe at least 6 months in advance; and
    (2) Giving the Tribe an opportunity to suggest different 
geographical attendance boundaries.
    (b) A tribe may ask the Secretary to change geographical attendance 
boundaries by writing a letter to the Director of the Office of Indian 
Education Programs, explaining the tribe's suggested changes. The 
Secretary must consult with the affected tribes before deciding whether 
to accept or reject a suggested geographic attendance boundary change.
    (1) If the Secretary accepts the Tribe's suggested change, the 
Secretary must publish the change in the Federal Register.
    (2) If the Secretary rejects the Tribe's suggestion, the Secretary 
will explain in writing to the Tribe why the suggestion either:
    (i) Does not meet the needs of Indian students to be served; or
    (ii) Does not provide adequate stability to all affected programs.


Sec.  37.123  How does a tribe develop proposed geographic attendance 
boundaries or boundary changes?

    (a) The Tribal governing body establishes a process for developing 
proposed boundaries or boundary changes. This process may include 
consultation and coordination with all entities involved in student 
education.
    (b) The Tribal governing body may delegate the development of 
proposed boundaries to the relevant school boards. The boundaries set 
by the school boards must be approved by the Tribal governing body.
    (c) The Tribal governing body must send the proposed boundaries and 
a copy of its approval to the Secretary.


Sec.  37.124  How are boundaries established for a new school or dorm?

    Geographic attendance boundaries for a new day school, on-
reservation boarding school, or peripheral dorm must be established by 
either:
    (a) The tribe; or
    (b) If the tribe chooses not to establish boundaries, the 
Secretary.


Sec.  37.125  Can an eligible student living off a reservation attend a 
school or dorm?

    Yes. An eligible student living off a reservation can attend a day 
school, on-reservation boarding school, or peripheral dorm.

Subpart C--Off-Reservation Boarding Schools


Sec.  37.130  Who establishes boundaries for Off-Reservation Boarding 
Schools?

    The Secretary or the Secretary's designee, in consultation with the 
affected Tribes, establishes the boundaries for off-reservation 
boarding schools (ORBS).


Sec.  37.131  Who may attend an ORBS?

    Any student is eligible to attend an ORBS.
    3. Part 39 is revised to read as follows:

PART 39--THE INDIAN SCHOOL EQUALIZATION PROGRAM

Subpart A--General
Sec.
39.1 What is the purpose of this part?
39.2 What are the definitions of terms used in this part?
39.3 Information collection.
Subpart B--Indian School Equalization Formula
39.100 What is the Indian School Equalization Formula?
39.101 Does ISEF assess the actual cost of school operations?

Base and Supplemental Funding

39.102 What is included in base funding?
39.103 What are the factors used to determine base funding?
39.104 How must a school's base funding provide for students with 
special needs?
39.105 Are additional funds available for special education?
39.106 Who is eligible for special education funding?
39.107 Are schools allotted supplemental funds for special costs?

Gifted and Talented Programs

39.110 Can ISEF funds be distributed for the use of gifted and 
talented students?
39.111 What does the term gifted and talented mean?
39.112 What is the limit on the number of students who are gifted 
and talented?
39.113 What are the special accountability requirements for the 
gifted and talented program?
39.114 How does a school receive funding for gifted and talented 
students?
39.115 How are eligible students identified and nominated?
39.116 How does a school determine who receives gifted and talented 
services?
39.117 How does a school provide gifted and talented services for a 
student?
39.118 How does a student receive talented and gifted services in 
subsequent years?
39.119 When must a student leave a gifted and talented program?
39.120 How are gifted and talented services provided?
39.121 What is the WSU for gifted and talented students?

Language Development Programs

39.130 Can ISEF funds be used for Language Development Programs?
39.131 What is a Language Development Program?
39.132 Can a school integrate Language Development Programs into its 
regular instructional program?
39.133 Who decides how Language Development funds can be used?
39.134 How does a school identify a Limited English Proficient 
student?
39.135 What services must be provided to an LEP student?
39.136 What is the WSU for Language Development programs?
39.137 May schools operate a language development program without a 
specific appropriation from Congress?

Small School Adjustment

39.140 How does a school qualify for a Small School Adjustment?
39.141 What is the amount of the Small School Adjustment?
39.143 What is a small high school?
39.144 What is the small high school adjustment?
39.155 Can a school receive both a small school adjustment and a 
small high school adjustment?
39.156 Is there an adjustment for small residential programs?

Geographic Isolation Adjustment

39.160 Does ISEF provide supplemental funding for extraordinary 
costs related to a school's geographic isolation?
Subpart C--Administrative Procedures, Student Counts and Verifications
39.200 What is the purpose of the Indian School Equalization 
Formula?
39.201 Does ISEF reflect the actual cost of school operations?
39.202 What are the definitions of terms used in this subpart?

[[Page 8775]]

39.203 How does OIEP calculate ADM?
39.204 How does OIEP calculate ISEF?
39.205 How does OIEP calculate the value of one WSU?
39.206 How does OIEP determine a school's funding for the upcoming 
school year?
39.207 How are ISEP funds distributed?
39.208 When may a school count a student for membership purposes?
39.209 When must a school drop a student from its membership?
39.210 What other categories of students can a school count for 
membership purposes?
39.211 Can a student be counted as enrolled in more than one school?
39.212 Will the Bureau fund children being home schooled?
39.213 What are the minimum number of instructional hours required 
in order to be considered a full-time educational program?
39.214 Can a school receive funding for any part-time students?

Residential Programs

39.215 How does ISEF fund residential programs?
39.216 How are students counted for the purpose of funding 
residential services?
39.217 Are there different formulas for different levels of 
residential services?
39.218 What happens if a residential program does not maintain 
residency levels required by this part?
39.219 What reports must residential programs submit to comply with 
this rule?

Phase-In Period

39.220 How will the provisions of this subpart be phased in?
Subpart D--Accountability
39.400 What is the purpose of this subpart?
39.401 What definitions apply to terms used in this subpart?
39.402 What are the accountability measures under ISEP?
39.403 What certification is required?
39.404 What is the certification and verification process?
39.405 How will verifications be conducted?
39.406 What documentation must the school maintain for additional 
services it provides?
39.407 How long must a school maintain records?
39.408 What are the responsibilities of administrative officials?
39.409 How does the OIEP Director ensure accountability?
39.410 What qualifications must an audit firm meet to be considered 
for auditing ISEP administration?
39.411 How will the auditor report its findings?
39.412 What sanctions apply for failure to comply with this part?
39.413 Can a school appeal the verification of the count?
Subpart E--Contingency Fund
39.500 What emergency and contingency funds are available?
39.501 What is an emergency or unforeseen contingency?
39.502 How does a school apply for contingency funds?
39.503 How can a school use contingency funds?
39.504 May Contingency Funds be carried over to a subsequent fiscal 
year?
39.505 What are the reporting requirements for the use of the 
contingency fund?
Subpart F--School Board Training
39.600 Are Bureau-operated school board expenses funded by ISEP 
limited?
39.601 Is school board training for Bureau-operated schools 
considered a school board expense subject to the limitation?
39.602 Can Grant and Contract schools spend ISEP funds for school 
board expenses, including training?
39.603 Is school board training required for all Bureau-funded 
schools?
39.604 Is there a separate weight for school board training at 
Bureau-operated schools?
Subpart G--Transportation
39.700 What is the purpose of this part?
39.701 What definitions apply to terms used in this subpart?

Eligibility for Funds

39.702 Can a school receive funds to transport residential students 
using commercial transportation?
39.703 What ground transportation costs are covered for students 
traveling by commercial transportation?
39.704 Are schools eligible for other funds to transport residential 
students?
39.705 Are schools eligible for other funds to transport special 
education students?
39.706 Are peripheral dormitories eligible for day transportation 
funds?
39.707 Which student transportation miles are not eligible for ISEP 
transportation funding?
39.708 Are non-ISEP eligible children eligible for transportation 
funding?

Calculating Transportation Miles

39.710 How does a school calculate annual bus transportation miles 
for day students?
39.711 How does a school calculate annual bus transportation miles 
for residential students?

Reporting Requirements

39.720 Why are there different reporting requirements for 
transportation data?
39.721 What transportation information must off-reservation boarding 
schools report?
39.722 What transportation information must day schools or on-
reservation boarding schools report?

Miscellaneous Provisions

39.730 Which standards must student transportation vehicles meet?
39.731 Can transportation time be used as instruction time for day 
school students?
39.732 How does OIEP allocate transportation funds to schools?
Subpart H--Determining the Amount Necessary To Sustain an Academic or 
Residential Program
39.801 What is the formula to determine the amount necessary to 
sustain a school's academic or residential program?
39.802 What is the Student Unit value in the formula?
39.803 What is a Weighted Student Unit in the formula?
39.804 How is the SUIV calculated?
39.805 What was the student unit for Instruction value for the 
school year 1999-2000?
39.806 How is the SURV calculated?
39.807 How will the Student Unit Value be adjusted annually?
39.808 What definitions apply?

    Authority: 25 U.S.C. 13; 25 U.S.C. 2008; Pub. L. 107-110.


Sec.  39.1  What is the purpose of this part?

    This part provides for the uniform direct funding of BIA-operated 
and tribally operated day schools, boarding schools, and dormitories. 
This part applies to all schools, dormitories, and administrative units 
that are funded through the Indian School Equalization Program of the 
Bureau of Indian Affairs.


Sec.  39.2  What are the definitions of terms used in this part?

    Agency means an organizational unit of the Bureau which provides 
direct services to the governing body or bodies and members of one or 
more specified Indian Tribes. The term includes Bureau Area Offices 
only with respect to off-reservation boarding schools administered 
directly by such Offices.
    Agency school board means a body, the members of which are 
appointed by the school boards of the schools located within such 
agency, and the number of such members shall be determined by the 
Director in consultation with the affected tribes, except that, in 
Agencies serving a single school, the school board of such school shall 
fulfill these duties.
    Assistant Secretary means the Assistant Secretary of Indian 
Affairs, Department of the Interior, or his or her designee.
    Average Daily Membership (ADM) means the aggregated ISEP-eligible 
membership of a school for a school year, divided by the number of 
school days in the school's submitted calendar.
    Base or base unit means both the weight or ratio of 1.0 and the 
dollar value annually established for that weight or ratio which 
represents students in grades 4 through 8 in a typical instructional 
program.
    Basic program means the instructional program provided all students 
at any age level exclusive of any supplemental programs which are not 
provided to all students in day or boarding schools.

[[Page 8776]]

    Basic transportation miles means the daily average of all bus miles 
logged for round trip home-to-school transportation of day students.
    Director means the Director of the Office of Indian Education 
Programs in the Bureau of Indian Affairs or a designee.
    Education Line Officer means the Bureau official in charge of 
Bureau education programs and functions in an Agency who reports to the 
Director.
    Eligible Indian student means a student who:
    (1) Is a member of, or is at least one-fourth degree Indian blood 
descendant of a member of, a tribe that is eligible for the special 
programs and services provided by the United States through the Bureau 
of Indian Affairs to Indians because of their status as Indians;
    (2) Resides on or near a reservation or meets the criteria for 
attendance at a Bureau off-reservation home-living school; and
    (3) Is enrolled in a Bureau-funded school.
    Home schooled means a student who is not enrolled in a school and 
is receiving educational services at home at the parent's or guardian's 
initiative.
    Homebound means a student who is educated outside the classroom.
    Individual supplemental services means non-base academic services 
provided to eligible students. Individual supplemental services that 
are funded by additional WSUs are gifted and talented or language 
development services.
    ISEP means the Indian School Equalization Program.
    ISEP student count week means the last full week in September 
during which schools count their student enrollment for ISEP purposes.
    Limited English Proficient (LEP) means a child from a language 
background other than English who needs language assistance in their 
own language or in English in the schools. This child has sufficient 
difficulty speaking, writing, or understanding English to deny him/her 
the opportunity to learn successfully in English-only classrooms and 
meets one or more of the following conditions:
    (1) The child was born outside of the United States or the child's 
native language is not English;
    (2) The child comes from an environment where a language other than 
English is not dominant; or
    (3) The child is an American Indian or Alaska native and comes from 
an environment where a language other than English has had a 
significant impact on the child's level of English language 
proficiency.
    Local School Board means a body chosen in accordance with the laws 
of the tribe to be served or, in the absence of such laws, elected by 
the parents of the Indian children attending the school. For a school 
serving a substantial number of students from different tribes:
    (1) The members of the local school board shall be appointed by the 
tribal governing bodies affected; and
    (2) The Secretary shall determine number of members in consultation 
with the affected tribes.
    OIEP means the Office of Indian Education Programs in the Bureau of 
Indian Affairs.
    Resident means a student who is residing at a boarding school or 
dormitory during the weeks when student membership counts are conducted 
and is either:
    (1) A member of the instructional program in the same boarding 
school in which the student is counted as a resident; or
    (2) Enrolled in and a current member of a public school in the 
community in which the student resides.
    Residential program means a program that provides room and board in 
a boarding school or dormitory to residents who are either:
    (1) Enrolled in and are current members of a public school in the 
community in which they reside; or
    (2) Members of the instructional program in the same boarding 
school in which they are counted as residents and:
    (i) Are officially enrolled in the residential program of a Bureau-
operated or -funded school; and
    (ii) Are actually receiving supplemental services provided to all 
students who are provided room and board in a boarding school or a 
dormitory.
    School means a school funded by the Bureau of Indian Affairs. The 
term ``school'' does not include public, charter, or private schools.
    School day means a day as defined by the submitted school calendar, 
as long as annual instructional hours are as they are reflected in 
Sec.  39.213, excluding passing time, lunch, recess, and breaks.
    School bus means a passenger vehicle, operated by an operator in 
the employ of, or under contract to, a Bureau operated or funded 
school, who is qualified to operate such a vehicle under State or 
Federal regulations governing the transportation of students; which 
vehicle is used to transport day students to and/or from home and the 
school.
    School-wide supplemental funds means non-base academic funding for 
schools with unique characteristics. The school-wide supplemental funds 
are funded by additional WSUs and are as follows:
    (1) Geographic isolation;
    (2) Small school adjustment;
    (3) Small high school adjustment;
    (5) School board training for Bureau-operated schools.
    Special education means specially designed instruction or speech-
language therapy to meet the unique needs of a child with a disability. 
Therapies covered by this definition include:
    (1) Instruction in the home, classroom, institution, hospital, and 
other settings;
    (2) Instruction in physical education and speech therapy;
    (3) Transition services;
    (4) Travel training;
    (5) Assistive technology services; and
    (6) Vocational education.
    Supervisor means the individual in the position of ultimate 
authority at a Bureau-funded school.
    Tribally operated contract school means an elementary school, 
secondary school, or dormitory that receives financial assistant for 
its operation under a contract, grant, or agreement with the Bureau 
under section 102, 103(a), or 208 of the Indian Self-Determination and 
Education Assistance Act, or under the Tribally Controlled Schools Act 
of 1988.
    Three-year average means:
    (1) For academic programs, the average daily membership of the 3 
years before the year of operation; and
    (2) For the residential programs, the count period membership of 
the 3 years before the year of operations.
    Transported student means the average number of students 
transported to school on a daily basis.
    Unimproved roads means unengineered earth roads that do not have 
adequate gravel or other aggregate surface materials applied and do not 
have drainage ditches or shoulders.
    Weighted Student Unit means:
    (1) The measure of student membership adjusted by the weights or 
ratios used as factors in the Indian School Equalization Formula; and
    (2) The factor used to adjust the weighted student count at any 
school as the result of other adjustments made under this part.


Sec.  39.3  Information collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501

[[Page 8777]]

et seq.) (PRA), unless that collection of information displays a 
currently valid Office of Management and Budget (OMB) Control Number. 
This part involves collections of information subject to the PRA. These 
collections have been approved by OMB under control number [to be 
determined].

Subpart B--Indian School Equalization Formula


Sec.  39.100  What is the Indian School Equalization Formula?

    The Indian School Equalization Formula (ISEF) was established to 
allocate Indian School Equalization Program (ISEP) funds. OIEP applies 
ISEF to determine funding allocation for Bureau-funded schools as 
described in Sec. Sec.  39.204 through 39.206.


Sec.  39.101  Does ISEF assess the actual cost of school operations?

    No. ISEF does not attempt to assess the actual cost of school 
operations either at the local level or in the aggregate at the 
national level. ISEF provides a method of distribution of funds 
appropriated by Congress for all schools.

Base and Supplemental Funding


Sec.  39.102  What is included in base funding?

    (a) Academic base funding includes all available funding for 
educational services to students enrolled in a Bureau-funded school.
    (b) Residential base funding includes all available funding for 
residential services to students enrolled in a Bureau-funded school or 
an eligible public school who live in a Bureau-funded residential 
setting.


Sec.  39.103  What are the factors used to determine base funding?

    To determine base funding, schools use must the factors shown in 
the following table. The school must apply the appropriate factor 
(called the base academic weight) to each student for funding purposes.

------------------------------------------------------------------------
                                                            Base funding
                                              Base funding   factor for
                 Grade level                   factor for    residential
                                               day student     student
------------------------------------------------------------------------
Kindergarten................................          1.15         NA
Grades 1-3..................................          1.38          1.75
Grades 4-6..................................          1.15          1.6
Grades 7-8..................................          1.38          1.6
Grades 9-12.................................          1.5           1.6
------------------------------------------------------------------------

Sec.  39.104  How must a school's base funding provide for students 
with special needs?

    (a) Each school must provide for students with special needs by:
    (1) Reserving 15 percent of academic base funding to support 
special education programs; and
    (2) Providing resources through residential base funding to meet 
the special needs of students under the National Criteria for Home-
Living Situations.
    (b) A school may spend ISEP funds on school-wide programs to 
benefit all students (including those without disabilities) only if all 
of the following conditions are met:
    (1) The school sets aside 15 percent of the basic instructional 
allotment to meet the needs of students with disabilities;
    (2) The school can document that it has met all needs of students 
with disabilities and addressed all components of the Individuals with 
Disabilities Education Act (IDEA); and
    (3) There are unspent funds after the conditions in paragraphs 
(b)(1) and (b)(2) of this section are met.


Sec.  39.105  Are additional funds available for special education?

    (a) Schools may supplement base funding for special education with 
funds available under Part B of the Individuals with Disabilities 
Education Act (IDEA). To obtain Part B funds, the school must submit an 
application to OIEP. IDEA funds are available only if the school 
demonstrates that funds reserved under Sec.  39.103(a) are inadequate 
to pay for services needed by all eligible ISEP students with 
disabilities.
    (b) The Bureau will facilitate the delivery of IDEA Part B funding 
by:
    (1) Providing technical assistance to schools in completing the 
application for the funds; and
    (2) Providing training to Bureau to improve the delivery of Part B 
funds.


Sec.  39.106  Who is eligible for special education funding?

    To receive ISEP special education funding, a student must be under 
22 years old and must not have received a high school diploma or its 
equivalent on the first day of eligible attendance. The following 
minimum age requirements also apply:
    (a) To be counted as a kindergarten student, a child must be at 
least 5 years old by December 31; and
    (b) To be counted as a first grade student; a child must be at 
least 6 years old by December 31.


Sec.  39.107  Are schools allotted supplemental funds for special 
costs?

    Yes, schools are allotted supplemental funds for special costs. 
ISEF provides additional funds to schools through add-on weights 
(called special cost factors) that add value to the base weighted 
student unit. ISEF adds special cost factors as shown in the following 
table.

----------------------------------------------------------------------------------------------------------------
                Cost factor                     Weight                    For more information see
----------------------------------------------------------------------------------------------------------------
Gifted and talented students..............            2.0   Sec.  Sec.   39.110 through 39.121.
Students with language development needs..            0.13  Sec.  Sec.   39.130 through 39.137.
Small school size.........................        (\1\)     Sec.  Sec.   39.140 through 39.156.
Geographic isolation of the school........           12.5   Sec.   39.160.
----------------------------------------------------------------------------------------------------------------
\1\ Varies.

Gifted and Talented Programs


Sec.  39.110  Can ISEF funds be distributed for the use of gifted and 
talented students?

    Yes, ISEF funds can be distributed for the provision of services 
for gifted and talented students.


Sec.  39.111  What does the term gifted and talented mean?

    The term gifted and talented means students, children, or youth 
who:
    (a) Give evidence of high achievement capability in areas such as 
intellectual, creative, artistic, or leadership capacity, or in 
specific academic fields; and
    (b) Need services or activities not ordinarily provided by the 
school in order to fully develop those capabilities.


Sec.  39.112  What is the limit on the number of students who are 
gifted and talented?

    There is no limit on the number of students that a school can 
classify as gifted and talented.


Sec.  39.113  What are the special accountability requirements for the 
gifted and talented program?

    If a school identifies more than 13 percent of its student 
population as

[[Page 8778]]

gifted and talented the Bureau will immediately audit the school's 
gifted and talented program to ensure that all identified students:
    (a) Meet the gifted and talented requirement in the regulations; 
and
    (b) Are receiving gifted and talented services.


Sec.  39.114  How does a school receive funding for gifted and talented 
students?

    To be funded as gifted and talented under this part, a student must 
be identified as talented and gifted in at least one of the following 
areas.
    (a) Intellectual Ability means scoring in the top 5 percent on a 
statistically valid and reliable measurement tool of intellectual 
ability.
    (b) Creativity/Divergent Thinking means scoring in the top 5 
percent of performance on a statistically valid and reliable 
measurement tool of creativity/divergent thinking.
    (c) Academic Aptitude/Achievement means scoring in the top 15 
percent of academic performance in a total subject area score on a 
statistically valid and reliable measurement tool of academic 
achievement/aptitude, or a standardized assessment, such as an NRT or 
CRT.
    (d) Leadership means the student is recognized as possessing the 
ability to lead, guide, or influence the actions of others as measured 
by objective standards that a reasonable person of the community would 
believe demonstrates that the student possess leadership skills. These 
standards include evidence from surveys, supportive documentation 
portfolios, elected or appointed positions in school, community, clubs 
and organization, awards documenting leadership capabilities. No school 
can identify more than 15 percent of its student population as gifted 
and talented through the leadership category.
    (e) Visual and Performing Arts means outstanding ability to excel 
in any imaginative art form; including, but not limited to, drawing, 
printing, sculpture, jewelry making, music, dance, speech, debate, or 
drama determined by as documented from surveys, supportive 
documentation portfolios, awards from judged or juried competitions. No 
school can identify more than 15 percent of its student population as 
gifted and talented through the visual and performing arts category.


Sec.  39.115  How are eligible students identified and nominated?

    (a) Screening can be completed annually to identify potentially 
eligible students. Students meeting the criteria in Sec.  39.114 for 
gifted and talented services can be nominated by any of the following:
    (1) A teacher or other school staff;
    (2) Another student;
    (3) A community member;
    (4) A parent or legal guardian; or
    (5) A student can nominate himself or herself.
    (b) Students can be nominated based on information regarding the 
student's abilities from any of the following sources:
    (1) Collections of work;
    (2) Audio/visual tapes;
    (3) School grades;
    (4) Judgment of work by qualified individuals knowledgeable about 
the child's performances (e.g., artists, musicians, poets, historians, 
etc.);
    (5) Interviews, or observations; or
    (6) Information from other sources.
    (c) The school must have written parental consent to collect 
documentation of gifts and talents under paragraph (b) of this section.


Sec.  39.116  How does a school determine who receives gifted and 
talented services?

    (a) To determine who receives gifted and talented funding, the 
school must use qualified professionals to perform a multi-disciplinary 
assessment. The assessment may include the examination of work samples 
or performance appropriate to the area under consideration. The school 
must have the parent or guardian's written permission to conduct 
individual assessments or evaluations. Assessments under this section 
must meet the following standards:
    (1) The assessment must use assessment instruments specified in 
Sec.  39.114 for each of the five criteria for which the student is 
nominated;
    (2) If the assessment uses a multi-criteria evaluation, that 
evaluation must be an unbiased evaluation based on student needs and 
abilities;
    (3) Indicators for visual and performing arts and leadership may be 
determined based on national, regional, or local criteria; and
    (4) The assessment may use student portfolios.
    (b) A multi-disciplinary team will review the assessment results to 
determine eligibility for gifted and talented services. The purpose of 
the team is to determine eligibility and placement to receive gifted 
and talented services.
    (1) Team members may include nominator, classroom teacher, 
qualified professional who conducted the assessment, local experts as 
needed, and other appropriate personnel such as the principal and or a 
counselor.
    (2) A minimum of three team members is required to determine 
eligibility.
    (3) The team will design a specific education plan to provide 
gifted and talented services related in the areas identified.


Sec.  39.117  How does a school provide gifted and talented services 
for a student?

    Gifted and talented services are provided through or under the 
supervision of highly qualified professional teachers. To provide 
gifted and talented services for a student, a school must take the 
steps in this section.
    (a) The multi-disciplinary team formed under Sec.  39.116 (b) will 
sign a statement of agreement for placement of services based on 
documentation reviewed.
    (b) The student's parent or guardian must give written permission 
for the student to participate.
    (c) The school must develop a specific education plan that 
contains:
    (1) The date of placement;
    (2) The date services will begin;
    (3) The criterion from Sec.  39.114 for which the student is 
receiving services and the student's performance level;
    (4) Measurable goals and objectives; and
    (5) A list of staff responsible for each service that the school is 
providing.


Sec.  39.118  How does a student receive gifted and talented services 
in subsequent years?

    For each student receiving gifted and talented services, the school 
must conduct a yearly evaluation of progress, file timely progress 
reports, and update the specific education plan.
    (a) If a school identifies a student as gifted and talented based 
on Sec.  39.114 (a), (b), or (c), then the student does not need to 
reapply for the gifted and talented program. However, the student must 
be retested at in the least every 3 years through the 10th grade to 
verify eligibility.
    (b) If a school identifies a student as gifted and talented based 
on Sec.  39.114 (e) or (f), the student must be reevaluated annually 
for the gifted and talented program.


Sec.  39.119  When must a student leave a gifted and talented program?

    A student must leave the gifted and talented program when either:
    (a) The student has received all of the available services that can 
meet the student's needs;
    (b) The student no longer meets the criteria that have qualified 
him or her for the program; or
    (c) The parent or guardian removes the student from the program.

[[Page 8779]]

Sec.  39.120  How are gifted and talented services provided?

    In providing services under this section, the school must:
    (a) Provide a variety of programming services to meet the needs of 
the students;
    (b) Provide the type and duration of services identified in the 
Individual Education Plan established for each student; and
    (c) Maintain individual student files to provide documentation of 
process and services; and
    (d) Maintain confidentiality of student records under the Family 
Educational Rights and Privacy Act (FERPA).


Sec.  39.121  What is the WSU for gifted and talented students?

    The WSU for a gifted and talented student is the base academic 
weight (see Sec.  39.103) subtracted from 2.0. The following table 
shows the gifted and talented weights obtained using this procedure.

------------------------------------------------------------------------
                                                              Gifted and
                        Grade level                            talented
                                                                 WSU
------------------------------------------------------------------------
Kindergarten...............................................         0.85
Grades 1 to 3..............................................         0.62
Grades 4 to 6..............................................         0.85
Grades 7 to 8..............................................         0.62
Grades 9 to 12.............................................         0.50
------------------------------------------------------------------------

Language Development Programs


Sec.  39.130  Can ISEF funds be used for Language Development Programs?

    Yes, schools can use ISEF funds to implement Language Development 
programs that demonstrate the positive effects of native language 
programs on students' academic success and English proficiency. Funds 
can be distributed to a total aggregate instructional weight of 0.13 
for each eligible student.


Sec.  39.131  What is a Language Development Program?

    A Language Development program is one that serves students who 
either:
    (a) Are not proficient in spoken or written English;
    (b) Are not proficient in any language;
    (c) Are learning their native language for the purpose of 
maintenance or language restoration and enhancement;
    (d) Are being instructed in their native language; or
    (e) Are learning non-language subjects in their native language.


Sec.  39.132  Can a school integrate Language Development Programs into 
its regular instructional program?

    A school may offer Language Development programs to students as 
part of its regular academic program. Language Development does not 
have to be offered as a stand-alone program.


Sec.  39.133  Who decides how Language Development funds can be used?

    Tribal governing bodies or local school boards decide how their 
funds for Language Development programs will be used in the 
instructional program to meet the needs of their students.


Sec.  39.134  How does a school identify a Limited English Proficient 
student?

    A student is identified as Limited English Proficient (LEP) by 
using a nationally recognized scientifically research-based test.


Sec.  39.135  What services must be provided to an LEP student?

    A school must provide services that assist each LEP student to:
    (a) Become proficient in English, and to the extent possible 
proficient in their native language; and
    (b) Meet the same challenging academic content and student academic 
achievement standards that all students are expected to meet under 
section 1111(b)(1) of the Act.


Sec.  39.136  What is the WSU for Language Development programs?

    Language Development programs are funded at 0.13 WSUs per student.


Sec.  39.137  May schools operate a language development program 
without a specific appropriation from Congress?

    Yes, a school may operate a language development program without a 
specific appropriation from Congress, but any funds used for such a 
program must come from existing ISEP funds. When Congress specifically 
appropriates funds for the Indian or native languages, the factor to 
support the language development program will be no more than 0.25 WSU. 
[25 U.S.C. 2007 (c)(i)(e)].

Small School Adjustment


Sec.  39.140  How does a school qualify for a Small School Adjustment?

    A school will receive a small school adjustment if either:
    (a) Its average daily membership (ADM) is less than 100 students; 
or
    (b) It serves lower grades and has a diploma-awarding high school 
component with an average instructional daily membership of less than 
100 students.


Sec.  39.141  What is the amount of the Small School Adjustment?

    (a) A school with a 3-year ADM of 50 or fewer students will receive 
an adjustment equivalent to an additional 12.5 base WSU; or
    (b) A school with a 3-year ADM of 51 to 99 students will use the 
following formula to determine the number of WSU for its adjustment. 
With X being the ADM, the formula is as follows:

WSU adjustment = ((100-X)/200)*X


Sec.  39.143  What is a small high school?

    For purposes of this part, a small high school:
    (a) Is accredited under 25 U.S.C. 2001(b);
    (b) Is staffed with highly qualified teachers;
    (c) Operates any combination of grades 9 through 12;
    (d) Offers high school diplomas; and
    (e) Has an ADM of fewer than100 students.


Sec.  39.144  What is the small high school adjustment?

    (a) The small high school adjustment is a WSU adjustment given to a 
small high school that meets both of the following criteria:
    (1) It has a 3-year average daily membership (ADM) of less than 100 
students; and
    (2) It operates as part of a school that during the 2003-04 school 
year also included lower grades.
    (b) The following table shows the WSU adjustment given to small 
high schools. In the table, ``X'' stands for the ADM.

------------------------------------------------------------------------
School receives a small school     ADM of high      Amount of small high
adjustment under Sec.   39.141   school component    school adjustment
------------------------------------------------------------------------
Yes...........................  50 or fewer        6.25 base WSU
                                 students.
Yes...........................  51 to 99.........  Determined using the
                                                    following formula:
                                                    WSU = ((100-X)/
                                                    200)*X/2
No............................  50 or fewer        12.5 base WSU
                                 students.
No............................  51 to 99 students  Determined using the
                                                    following formula:
                                                    ((100-X)/200)*X
------------------------------------------------------------------------


[[Page 8780]]

Sec.  39.155  Can a school receive both a small school adjustment and a 
small high school adjustment?

    A school that meets the criteria in Sec.  39.140 can receive both a 
small school adjustment and a small high school adjustment. The 
following table shows the total amount of adjustments for eligible 
schools by average daily membership (ADM) category.

----------------------------------------------------------------------------------------------------------------
                          ADM--high school         Small school        Small high school
  ADM--entire school         component              adjustment             adjustment         Total adjustment
----------------------------------------------------------------------------------------------------------------
              0-50                     NA               12.5                    NA                  12.5
              0-50                   0-50               12.5                  6.25                 18.75
             51-99                   0-50              *12.5-0.5              6.25                 18.75-6.75
             51-99                  51-99              *12.5-0.5            **6.25-0.25            18.75-0.7
             99                      0-50                  0                  12.5                  12.5
             99                     51-98                  0                **12.5-0.5              12.5-0.5
----------------------------------------------------------------------------------------------------------------
* The amount of the adjustment is within this range. The exact figure depends upon the results obtained using
  the formula in Sec.   39.141.
** The amount of the adjustment is within this range. The exact figure depends upon the results obtained using
  the formula in Sec.   39.144.

Sec.  39.156  Is there an adjustment for small residential programs?

    In order to compensate for the additional costs of operating a 
small residential program, OIEP will add to the total WSUs of each 
qualifying school as shown in the following table:

------------------------------------------------------------------------
        Type of residential program             Number of WSUs added
------------------------------------------------------------------------
Residential student count of 50 or fewer    12.5
 ISEP-eligible students.
Residential student count of between 51     Determined by the formula
 and 99 ISEP-eligible students.              ((100-X)/200))X, where X
                                             equals the residential
                                             student count.
------------------------------------------------------------------------

Geographic Isolation Adjustment


Sec.  39.160  Does ISEF provide supplemental funding for extraordinary 
costs related to a school's geographic isolation?

    Yes. Havasupai Elementary School, for as long as it remains in its 
present location, will be awarded an additional cost factor of 12.5 
WSU.

Subpart C--Administrative Procedures, Student Counts, and 
Verifications


Sec.  39.200  What is the purpose of the Indian School Equalization 
Formula?

    OIEP uses the Indian School Equalization Formula (ISEF) to 
distribute Indian School Equalization Program (ISEP) appropriations 
equitably to Bureau-funded schools.


Sec.  39.201  Does ISEF reflect the actual cost of school operations?

    ISEF does not attempt to assess the actual cost of school 
operations either at the local school level or in the aggregate 
nationally. ISEF is a relative distribution of available funds at the 
local school level by comparison with all other Bureau-funded schools.


Sec.  39.202  What are the definitions of terms used in this subpart?

    Homebound means a student who is educated outside the classroom.
    Home schooled means a student who is not enrolled in a school and 
is receiving educational services at home at the parent's or guardian's 
initiative.
    School day means a day as defined by the submitted school calendar, 
as long as annual instructional hours are as they are reflected in 
Sec.  39.213, excluding passing time, lunch, recess, and breaks.
    Three-year average means:
    (1) For academic programs, the average daily membership of the 3 
years before the year of operation; and
    (2) For the residential programs, the count period membership of 
the 3 years before the year of operations.


Sec.  39.203  How does OIEP calculate ADM?

    OIEP calculates ADM by:
    (a) Adding the total enrollment figures from periodic reports 
received from each Bureau-funded school; and
    (b) Dividing the total enrollment for each school by the number of 
days in the school's reporting period.


Sec.  39.204  How does OIEP calculate ISEF?

    To calculate ISEF for a school, OIEP will add the weights from 
paragraphs (a), (b), and (c) of this section to come up with a total of 
weighted student units (WSUs).
    (a) The 3-year average of ADM multiplied by the weighted student 
unit that is applicable to eligible students;
    (b) Any supplemental units generated by the students; and
    (c) Any supplemental weights generated by the schools.


Sec.  39.205  How does OIEP calculate the value of one WSU?

    To calculate the appropriated dollar value of one WSU, OIEP divides 
the systemwide average number of WSUs for the previous 3 years into the 
current year's appropriation.


Sec.  39.206  How does OIEP determine a school's funding for the 
upcoming school year?

    To determine a school's funding for the upcoming school year, OIEP 
uses the following six-step process:
    (a) Step one. Multiply the appropriate base academic weight from 
Sec.  39.121 by the number of students in each grade level category.
    (b) Step two. Multiply the number of students eligible for 
supplemental program funding under Sec.  39.107 by the WSU for the 
program.
    (c) Step three. Calculate all school enrollment weights and 
residential weights to which the school is entitled.
    (d) Step four. Add together the sums obtained in steps one through 
three to obtain each school's total WSU
    (e) Step five. Add together the total WSUs for all Bureau-funded 
schools.
    (f) Step six. Calculate the value of a WSU by dividing this year's 
funds by the average total WSUs (calculated under step five) for the 
previous 3 years.
    (g) Step seven. Multiply each school's WSU total by the base value 
of one WSU to determine funding for that school.


Sec.  39.207  How are ISEP funds distributed?

    (a) On July 1, schools will receive funding based on 80 percent of 
the WSU value as determined by dividing available funds by the total 
average WSU for the previous three years.
    (b) On December 1, the balance will be distributed to all schools 
after verification of the school count and any adjustments made through 
the appeals process for the third year.


Sec.  39.208  When may a school count a student for membership 
purposes?

    If a student is enrolled, is in attendance during any of the first 
10 days of school, and receives at least 5 days' instruction, the 
student is deemed to be enrolled all 10 days. The first 10 days of 
school, for purposes of this section, are determined by the calendar 
that the school submits to OIEP.

[[Page 8781]]

    (a) For ISEP purposes, a school can add a student to the membership 
when he or she has been enrolled and has received a full day of 
instruction from the school.
    (b) Except as provided in Sec.  39.210, to be counted for ADM, a 
student dropped under Sec.  39.209 must:
    (1) Be re-enrolled; and
    (2) Receive a full day of instruction from the school.


Sec.  39.209  When must a school drop a student from its membership?

    If a student is absent for 10 consecutive school days, the school 
must drop that student from the membership for ISEP purposes of that 
school on the 11th day.


Sec.  39.210  What other categories of students can a school count for 
membership purposes?

    A school can count other categories of students for membership 
purposes as shown in the following table.

------------------------------------------------------------------------
                                      Circumstances under which student
          Type of student              can be included in the school's
                                                 membership
------------------------------------------------------------------------
(a) Homebound.....................  (1) The student is temporarily
                                     confined to the home for some or
                                     all of the school day for medical,
                                     family emergency, or other reasons
                                     required by law or regulation;
                                    (2) The student is being provided by
                                     the school with at least 5
                                     documented contact hours each week
                                     of academic services by certified
                                     educational personnel; and
                                    (3) Appropriate documentation is on
                                     file at the school.
(b) Located in an institutional     The school is either:
 setting outside of the school.     (1) Paying for the student to
                                     receive educational services from
                                     the facility; or
                                    (2) Providing educational services
                                     by certified school staff for at
                                     least 5 documented contact hours
                                     each week.
(c) Taking college courses during   (1) The student is concurrently
 the school day.                     enrolled in, and receiving credits
                                     for both the school's courses and
                                     college courses; and
                                    (2) The student is in physical
                                     attendance at the school at least 3
                                     documented contact hours per day.
(d) Taking distance learning        The student is both:
 courses.                           (1) Receiving high school credit for
                                     grades; and
                                    (2) In physical attendance at the
                                     school at least 3 documented
                                     contact hours per day.
(e) Taking internet courses.......  The student is both:
                                    (1) Receiving high school credit for
                                     grades; and
                                    (2) Is taking the courses at the
                                     school site under a teacher's
                                     supervision.
------------------------------------------------------------------------

Sec.  39.211  Can a student be counted as enrolled in more than one 
school?

    Yes, if a student attends more than one school during an academic 
year, each school may count the student as enrolled once the student 
meets the criteria in Sec.  39.208.


Sec.  39.212  Will the Bureau fund children being home schooled?

    No, the Bureau will not fund any child that is being home schooled.


Sec.  39.213  What are the minimum number of instructional hours 
required in order to be considered a full-time educational program?

    A full time program provides the following number of instructional/
student hours to the corresponding grade level:

------------------------------------------------------------------------
                             Grade                                Hours
------------------------------------------------------------------------
K..............................................................      720
1-3............................................................      810
4-8............................................................      900
9-12...........................................................      970
------------------------------------------------------------------------

Sec.  39.214  Can a school receive funding for any part-time students?

    (a) A school can receive funding for the following part-time 
students:
    (1) Kindergarten students enrolled in a 2-hour program; and
    (2) Grade 7-12 students enrolled in at least half but less than a 
full instructional day.
    (b) The school must count students classified as part-time at 50 
percent of their basic instructional WSU value.

Residential Programs


Sec.  39.215  How does ISEF fund residential programs?

    Residential programs are funded on a WSU basis using a formula that 
takes into account the number of nights of service per week. Funding 
for residential programs is based on the average of the 3 previous 
years' WSUs.


Sec.  39.216  How are students counted for the purpose of funding 
residential services?

    For a student to be considered in residence for purposes of this 
subpart, the school must be able to document that the student:
    (a) Was in residence at least one night during the first full week 
of October;
    (b) Was in residence at least one night during the week preceding 
the first week in October;
    (c) Was in residence at least one night during the week following 
the first week in October; and
    (d) Was present for both the after school count and the midnight 
count at least one night during each week specified in this section.


Sec.  39.217  Are there different formulas for different levels of 
residential services?

    (a) Residential services are funded as shown in the following 
table:

------------------------------------------------------------------------
If a residential program operates * *    Each student is funded at the
                  *                              level of * * *
------------------------------------------------------------------------
(1) 4 nights per week or less........  Total WSU x 4/7
(2) 5, 6 or 7 nights per week........  Total WSU x 7/7
------------------------------------------------------------------------

    (b) In order to qualify for residential services funding under 
paragraph (a)(2) of this section, a school must document that at least 
10 percent of residents are present on 3 of the 4 weekends during the 
count period.
    (c) At least 50 percent of the residency levels established during 
the count period must be maintained every month for the remainder of 
the school year.
    (d) A school may obtain waivers from the requirements of this 
section if there are health or safety justifications.


Sec.  39.218  What happens if a residential program does not maintain 
residency levels required by this part?

    Each school must maintain its declared nights of service per week 
as certified in its submitted school calendar. For each month that a 
school does not maintain 25 percent of the residency shown in its 
submitted calendar, the school will lose one-tenth of its current year 
allocation.


Sec.  39.219  What reports must residential programs submit to comply 
with this rule?

    Residential programs must report their monthly counts to the 
Director on the last school day of the month. To be

[[Page 8782]]

counted, a student must have been in residence at least 10 nights 
during each full school month.

Phase-In Period


Sec.  39.220  How will the provisions of this subpart be phased in?

    In calculating ADM for purposes of this subpart, a school must 
phase in the provisions of this subpart as shown in the following 
table.

------------------------------------------------------------------------
            Time period                  How OIEP must calculate ADM
------------------------------------------------------------------------
(a) First year after the effective  Use the prior 3 years' count period
 date of this part.                  to create an average membership for
                                     funding purposes.
(b) Second year after the           (1) The academic program will use
 effective date of this part.        the previous year's ADM and the 2
                                     prior years' count periods;
                                    (2) The residential program will use
                                     the previous year's count period
                                     and the 2 prior years' count weeks.
(c) Each succeeding year after the  Add one year of ADM or count period
 effective date of this part.        and drop one year of prior count
                                     weeks until both systems or
                                     operating on a 3-year rolling
                                     average using the previous 3 years'
                                     count period or ADM, respectively.
------------------------------------------------------------------------

Subpart D--Accountability


Sec.  39.400  What is the purpose of this subpart?

    The purpose of this subpart is to ensure that this subpart 
establishes systematic verification and random independent outside 
auditing procedures to hold administrative the school, school board, or 
tribal officials having responsibility for student count and student 
transportation expenditure reporting are held accountable for the 
accurate and reliable performance of these duties. The subpart 
establishes systematic verification and random independent outside 
auditing procedures to accomplish this goal.


Sec.  39.401  What definitions apply to terms used in this subpart?

    Administrative officials means any persons responsible for managing 
and operating a school, including the school supervisor, the chief 
school administrator, tribal officials, Education Line Officers, and 
the Director, OIEP.
    Director means the Director of the Office of Indian Education 
Programs of the Bureau of Indian Affairs.
    Education Line Officer means the Bureau official in charge of 
Bureau education programs and functions in an Agency who reports to the 
Director.


Sec.  39.402  What are the accountability measures under ISEP?

    There are strict accountability measures under ISEP for misapplying 
or evading the processes in this part for classifying, counting, and 
serving students and for accurately reporting student transportation 
expenditures. These measure will ensure the equitable distribution of 
funds among schools. The accountability measures in the subpart apply 
to officials who are responsible under this part for:
    (a) Classifying and counting students for funding under ISEF;
    (b) Overseeing, certifying, and verifying the student count 
process; and
    (c) Overseeing, certifying, and verifying transportation 
expenditure accounting and reporting.


Sec.  39.403  What certification is required?

    (a) Each school must maintain an individual file on each student 
receiving basic educational and supplemental services. The file must 
contain written documentation of the following:
    (1) Each student's eligibility and attendance records;
    (2) A complete listing of all supplemental services provided, 
including all necessary documentation required by statute and 
regulations (e.g., a current and complete Individual Education Plan for 
each student receiving supplemental services); and
    (3) Documentation of expenditures and program delivery for student 
transportation to and from school provided by commercial carriers.
    (b) The School must maintain the following files in a central 
location:
    (1) The school's ADM and supplemental program counts and 
residential count;
    (2) Transportation related documentation, such as school bus 
mileage, bus routes;
    (3) A list of students transported to and from school;
    (4) An electronic student count program or database;
    (5) Class record books;
    (6) Supplemental program class record books;
    (7) For residential programs, residential student attendance 
documentation;
    (8) Evidence of teacher certification; and
    (9) The school's accreditation certificate.
    (c) The Director must maintain a record of required certifications 
for ELOs, specialists, and school superintendents in a central 
location.


Sec.  39.404  What is the certification and verification process?

    (a) Each school must:
    (1) Certify that the files required by Sec.  39.403 are complete 
and accurate; and
    (2) Compile a student roster that includes a complete list of all 
students by grade, days of attendance, and supplemental services.
    (b) The chief school administrator and the president of the school 
board are responsible for certifying the school's ADM and residential 
count is true and accurate to the best of their knowledge or belief and 
is supported by appropriate documentation.
    (c) OIEP's education line officer (ELO) will annually review the 
following to verify that the information is true and accurate and is 
supported by program documentation:
    (1) The eligibility of every student;
    (2) The school's ADM and supplemental program counts and 
residential count;
    (3) Evidence of accreditation;
    (4) Documentation for all provided basic and supplemental services, 
including all necessary documentation required by statute and 
regulations (e.g., a current and complete Individual Education Plan for 
each student receiving supplemental services); and
    (5) Documentation of required by subpart G for student 
transportation to and from school provided by commercial carriers.


Sec.  39.405  How will verifications be conducted?

    The eligibility of every student shall be verified. The ELO will 
take a random sampling of five days with a minimum of one day per 
grading period to verify the information in Sec.  39.404(c) The ELO 
will verify the count for the count period and verify residency during 
the remainder of the year.


Sec.  39.406  What documentation must the school maintain for 
additional services it provides?

    Every school must maintain a file on each student receiving 
additional services. (Additional services include for homebound 
services, institutional

[[Page 8783]]

services, distance courses, internet courses or college services.) The 
school must certify, and its records must show, that:
    (a) Each homebound or institutionalized student is receiving 5 
contact hours each week by certified educational personnel;
    (b) Each student taking college, distance or internet courses is in 
physical attendance at the school for at least 3 certified contact 
hours per day.


Sec.  39.407  How long must a school maintain records?

    The responsible administrative official for each school must 
maintain records relating to ISEP, supplemental services, and 
transportation-related expenditures. The official must maintain these 
records in appropriate retrievable storage for at least the four years 
prior to the current school year, unless Federal records retention 
schedules require a longer period.


Sec.  39.408  What are the responsibilities of administrative 
officials?

    Administrative officials have the following responsibilities:
    (a) Applying the appropriate standards in this part for classifying 
and counting ISEP eligible Indian students at the school for formula 
funding purposes;
    (b) Accounting for and reporting student transportation 
expenditures;
    (c) Providing training and supervision to ensure that appropriate 
standards are adhered to in counting students and accounting for 
student transportation expenditures;
    (d) Submitting all reports and data on a timely basis; and
    (e) Taking appropriate disciplinary action for failure to comply 
with requirements of this part.


Sec.  39.409  How does the OIEP Director ensure accountability?

    (a) The Director of OIEP must ensure accountability in student 
counts and student transportation by doing all of the following:
    (1) Conducting annual independent and random field audits of the 
processes and reports of at least one school per OIEP line office to 
ascertain the accuracy of Bureau line officers' reviews;
    (2) Hearing and making decisions on appeals from school officials;
    (3) Reviewing reports to ensure that standards and policies are 
applied consistently, education line officers treat schools fairly and 
equitably, and the bureau takes appropriate administrative action for 
failure to follow this part; and
    (4) Reporting the results of the findings and determinations under 
this section to the appropriate tribal governing body.
    (b) The purpose of the audit required by paragraph (a)(1) of this 
section is to ensure that the procedures outlined in these regulations 
are implemented by responsible administrative officials. To conduct the 
audit required by paragraph (a)(1) of this section, OIEP will select an 
independent audit firm that will:
    (1) Select a statistically valid audit sample of recent student 
counts and student transportation reports; and
    (2) Analyze these reports to determine adherence to the 
requirements of this part and accuracy in reporting.


Sec.  39.410  What qualifications must an audit firm meet to be 
considered for auditing ISEP administration?

    To be considered for auditing ISEP administration under this 
subpart, an independent audit firm must:
    (a) Be a licensed Certified Public Accountant Firm that meets all 
requirements for conducting audits under the federal Single Audit Act;
    (b) Not be under investigation or sanction for violation of 
professional audit standards or ethics;
    (c) Certify that it has conducted a conflict of interests check and 
that no conflict exists; and
    (d) Be selected through a competitive bidding process.


Sec.  39.411  How will the auditor report its findings?

    (a) The auditor selected under Sec.  39.410 must:
    (1) Provide an initial draft report of its findings to the 
governing board or responsible Federal official for the school(s) 
involved; and
    (2) Solicit, consider, and incorporate a response to the findings, 
where submitted, in the final audit report.
    (b) The auditor must submit a final report to the Assistant 
Secretary--Indian Affairs and all tribes served by each school 
involved. The report must include all documented exceptions to the 
requirements of this part, including those exceptions that:
    (1) The auditor regards as negligible;
    (2) The auditor regards as significant, or as evidence of 
incompetence on the part of responsible officials, and that must be 
resolved in a manner similar to significant audit exceptions in a 
fiscal audit; or
    (3) Involve fraud and abuse.
    (c) The auditor must immediately report exceptions involving fraud 
and abuse directly to the Department of the Interior Inspector 
General's office.


Sec.  39.412  What sanctions apply for failure to comply with this 
part?

    (a) The employer of a responsible administrative official must take 
appropriate personnel action if the official:
    (1) Submits false or fraudulent ISEP-related counts;
    (2) Submits willfully inaccurate counts of student participation in 
weighted program areas; or
    (3) Certifies or verifies submissions described in paragraphs 
(a)(1) or (a)(2) of this section.
    (b) Unless prohibited by law, the employer must report:
    (1) Notice of final Federal personnel action to the tribal 
governing body and tribal school board; and
    (2) Notice of final tribal or school board personnel action to the 
Director of OIEP.


Sec.  39.413  Can a school appeal the verification of the count?

    Yes, a school may appeal to the Director any administrative action 
disallowing any academic, transportation, supplemental program or 
residential count. In this appeal, the school may provide evidence to 
indicate the student's eligibility, membership or residency or adequacy 
of a program for all or a portion of school year. The school must 
follow the appeals process in 25 CFR part 2.

Subpart E--Contingency Fund


Sec.  39.500  What emergency and contingency funds are available?

    (a) The Secretary must reserve 1 percent of funds from the 
allotment formula to meet emergencies and unforeseen contingencies 
affecting educational programs.
    (b) At the end of each fiscal year the Secretary:
    (1) Can carry over to the next fiscal year a maximum of 1 percent 
the current year funds; and
    (2) Must distribute all funds in excess of 1 percent equally to all 
schools.


Sec.  39.501  What is an emergency or unforeseen contingency?

    An emergency or unforeseen contingency is an event that meets all 
of the following criteria:
    (a) It could not be planned for;
    (b) It is not the result of mismanagement, malfeasance, or willful 
neglect;
    (c) It could not have been covered by an insurance policy in force 
at the time of the event;
    (d) The Assistant Secretary determines that BIA cannot reimburse 
the emergency from the facilities emergency repair fund; and

[[Page 8784]]

    (e) It could not have been prevented by prudent action by officials 
responsible for the educational program.


Sec.  39.502  How does a school apply for contingency funds?

    To apply for contingency funds, a school must send a request to the 
ELO. The ELO must send the request to the Director for consideration 
within 48 hours of receipt. The Director will consider the severity of 
the event and will attempt to respond to the request as soon as 
possible, but in any event within 30 days.


Sec.  39.503  How can a school use contingency funds?

    Contingency funds can be used only for education services and 
programs, including repair of educational facilities.


Sec.  39.504  May Contingency Funds be carried over to a subsequent 
fiscal year?

    Bureau-operated schools may carry over funds to the next fiscal 
year.


Sec.  39.505  What are the reporting requirements for the use of the 
contingency fund?

    (a) At the end of each fiscal year, BIA/OIEP shall send an annual 
report to Congress detailing how the Contingency Funds were used during 
the previous fiscal year.
    (b) In conjunction with the distribution of unused contingency 
funds, by October 1 of each year, the Bureau must send a letter to each 
school and each tribe operating a school listing the allotments from 
the Contingency Fund.

Subpart F--School Board Training Expenses


Sec.  39.600  Are Bureau-operated school board expenses funded by ISEP 
limited?

    Yes. Bureau-operated schools are limited to $8,000 or one percent 
(1%) of ISEP allotted funds (not to exceed $15,000).


Sec.  39.601  Is school board training for Bureau-operated schools 
considered a school board expense subject to the limitation?

    No. School board training for Bureau-operated schools is not 
considered a school board expense subject to the limitation.


Sec.  39.602  Can Grant and Contract schools spend ISEP funds for 
school board expenses, including training?

    No. Grant and Contract school board expenses and training are 
funded with their administrative cost grant funds.


Sec.  39.603  Is school board training required for all Bureau-funded 
schools?

    Yes. Any new member of a local school board or an agency school 
board must complete 40 hours of training within one year of 
appointment.


Sec.  39.604  Is there a separate weight for school board training at 
Bureau-operated schools?

    Yes. There is an ISEP weight not to exceed 1.2 WSUs to cover school 
board training and expenses at Bureau-operated schools.

Subpart G--Transportation


Sec.  39.700  What is the purpose of this part?

    (a) This part covers how transportation mileage and funds for 
schools are calculated under the ISEP transportation program. The 
program funds transportation of students from home to school and 
return.
    (b) To use this part effectively, a school should:
    (1) Determine its eligibility for funds using the provisions of 
Sec. Sec.  39.702 through 39.708;
    (2) Calculate its transportation miles using the provisions of 
Sec. Sec.  39.710 and 39.711; and
    (3) Submit the required reports as required by Sec. Sec.  39.721 
and 39.722.


Sec.  39.701  What definitions apply to terms used in this subpart?

    ISEP means the Indian School Equalization Program.
    ISEP student count week means the last full week in September 
during which schools count their student enrollment for ISEP purposes.
    Unimproved roads means unengineered earth roads that do not have 
adequate gravel or other aggregate surface materials applied and do not 
have drainage ditches or shoulders.

Eligibility for Funds


Sec.  39.702  Can a school receive funds to transport residential 
students using commercial transportation?

    A school transporting students by commercial bus, train, airplane, 
or other commercial modes of transportation will be funded at the cost 
of the commercial ticket for:
    (a) The trip from home to school in the Fall;
    (b) The round-trip return home at Christmas; and
    (c) The return trip home at the end of the school year.


Sec.  39.703  What ground transportation costs are covered for students 
traveling by commercial transportation?

    This section applies only if a school transports residential 
students by commercial bus, train or airplane from home to school. The 
school may receive funds for the ground miles that the school has to 
drive to deliver the students or their luggage from the bus, train, or 
plane terminal to the school.


Sec.  39.704  Are schools eligible for other funds to transport 
residential students?

    Schools may receive funds for actual chaperone expenses, excluding 
salaries, during the transportation of students to and from home at the 
beginning and end of the school year and at Christmas.


Sec.  39.705  Are schools eligible for other funds to transport special 
education students?

    A school that transports a special education student from home to a 
treatment center and back to home on a daily basis as required by the 
student's Individual Education Plan may count those miles for day 
student funding.


Sec.  39.706  Are peripheral dormitories eligible for day 
transportation funds?

    Yes. If the peripheral dormitory is required to transport dormitory 
students to the public school, the dormitory may count those miles 
driven transporting students to the public school for day 
transportation funding.


Sec.  39.707  Which student transportation miles are not eligible for 
ISEP transportation funding?

    (a) The following transportation uses are part of the instructional 
program and are not eligible for transportation funding:
    (1) Fuel and maintenance runs;
    (2) Transportation home for medical or other emergencies;
    (3) Transportation to treatment or special services programs;
    (4) Transportation to after-school programs; and
    (5) Transportation for day and boarding school students to attend 
instructional programs less than full-time at locations other than the 
school reporting the mileage.
    (b) Examples of after-school programs covered by paragraph (a)(4) 
of this section include:
    (1) Athletics;
    (2) Band;
    (3) Detention;
    (4) Tutoring, study hall and special classes; and
    (5) Extra-curricular activities such as arts and crafts.


Sec.  39.708  Are non-ISEP eligible children eligible for 
transportation funding?

    Only ISEP-eligible children enrolled in and attending a school are 
eligible for ISEP transportation funding. Public, charter, and 
alternative school students

[[Page 8785]]

and children participating in preschool programs such as Head Start and 
FACE are not eligible for ISEP transportation funding and should not be 
transported on buses.

Calculating Transportation Miles


Sec.  39.710  How does a school calculate annual bus transportation 
miles for day students?

    To calculate the total annual bus transportation miles for day 
students, a school must use the appropriate formula from this section. 
In the formulas, Tu = Miles driven on Tuesday of the ISEP student count 
week, W= Miles driven on Wednesday of the ISEP student count week, and 
Th = Miles driven on Thursday of the ISEP student count week.
    (a) For ISEP-eligible day students whose route is entirely over 
improved roads, calculate miles using the following formula:
[GRAPHIC] [TIFF OMITTED] TP25FE04.000

    (b) For ISEP-eligible day students whose route is partly over 
unimproved roads, calculate miles using the following three steps.
    (1) Step 1. Apply the following formula to miles driven over 
improved roads only:
[GRAPHIC] [TIFF OMITTED] TP25FE04.001

    (2) Step 2. Apply the following formula to miles driven over 
unimproved roads only:
[GRAPHIC] [TIFF OMITTED] TP25FE04.002

    (3) Step 3. Add together the sums from steps 1 and 2 to obtain the 
total annual transportation miles.


Sec.  39.711  How does a school calculate annual bus transportation 
miles for residential students?

    To calculate the total annual transportation miles for residential 
students, a school must use the procedures in paragraph (b) of this 
section.
    (a) The school can receive funds for the following trips:
    (1) Transportation to the school at the start of the school year;
    (2) Round trip home at Christmas; and
    (3) Return trip to home at the end of the school year.
    (b) To calculate the actual miles driven to transport students from 
home to school at the start of the school year add together the miles 
driven for all buses in the fall. If a school transports students over 
unimproved roads, the school must separate the number of miles driven 
for each bus into improved miles and unimproved miles. The number of 
miles driven is the sum of:
    (1) The number of miles driven on improved roads; and
    (2) The number of miles driven on unimproved roads multiplied by 
1.2.
    (c) The annual miles driven for each school is the sums of the 
mileage from paragraph (b)(1) and (b)(2) of this section multiplied by 
4.

Reporting Requirements


Sec.  39.720  Why are there different reporting requirements for 
transportation data?

    In order to construct an actual cost data base, residential and day 
schools must report data required by Sec. Sec.  39.721 and .722.


Sec.  39.721  What transportation information must off-reservation 
boarding schools report?

    (a) Each off-reservation boarding school that provides 
transportation must report annually the information required by this 
section. The report must:
    (1) Be submitted to OIEP by August 1 and cover the preceding school 
year;
    (2) Include a Charter/Commercial and Air Transportation Form signed 
and certified as complete and accurate by the School Principal and the 
appropriate ELO; and
    (3) Include the information required by paragraph (b) of this 
section.
    (b) Each annual transportation report must include the information 
required by the following table.

------------------------------------------------------------------------
                                       Information required for annual
         Type of transport                         report
------------------------------------------------------------------------
(1) Bus...........................  Actual number of miles traveled by
                                     all buses or other vehicles to
                                     transport students to school at the
                                     beginning of the year multiplied by
                                     the number of trips that students
                                     take during the year, up to a
                                     maximum of four.
(2) Aircraft......................  The following information for each
                                     student traveling by air:
                                    (i) A maximum of four one-way fares;
                                    (ii) Roundtrip fare paid for
                                     transportation home due to an
                                     immediate family emergency;
                                    (iii) Ground mileage from airport
                                     arrival to school; and
                                    (iv) If applicable, chaperone travel
                                     costs (excluding salary) for school-
                                     to-home travel.
------------------------------------------------------------------------

Sec.  39.722  What transportation information must day schools or on-
reservation boarding schools report?

    (a) Each day school or on-reservation boarding school that provides 
transportation must report annually the information required by this 
section. The report must:
    (1) Be submitted to OIEP by August 1 and cover the preceding school 
year;
    (2) Include a Day Student Transportation Form signed and certified 
as complete and accurate by the School Principal and the appropriate 
ELO; and
    (3) Include the information required by paragraph (b) of this 
section.
    (b) Each annual transportation report must include the following 
information:
    (1) Fixed vehicle costs, including: the number and type of buses, 
passenger size, and local GSA rental rate and duration of GSA contract;
    (2) Variable vehicle costs;
    (3) Mileage traveled to transport students to and from school on 
school days, to cites of special services, and to extra-curricular 
activities;
    (4) Medical trips;
    (5) Maintenance and Service costs; and
    (6) Driver costs.

Miscellaneous Provisions


Sec.  39.730  Which standards must student transportation vehicles 
meet?

    All vehicles used by schools to transport students must meet or 
exceed all appropriate Federal Motor Vehicle Safety Standards (FMVSS) 
and State motor vehicle safety standards. The Bureau will not fund 
transportation mileage and costs incurred transporting students in 
vehicles that do not meet these standards.


Sec.  39.731  Can transportation time be used as instruction time for 
day school students?

    No. Transportation time cannot be used as instruction time for day 
school students in meeting the minimum required hours for academic 
funding.


Sec.  39.732  How does OIEP allocate transportation funds to schools?

    OIEP allocates transportation miles based on the types of 
transportation

[[Page 8786]]

programs that the school provides. To allocate transportation funds 
OIEP:
    (a) Multiplies the one-way commercial costs for all schools by four 
to identify the total commercial costs for all schools;
    (b) Subtracts the commercial cost total from the appropriated 
transportation funds and allocates the balance of the transportation 
funds to each school with a per-mile rate;
    (c) Divides the balance of funds by the sum of the annual day miles 
and the annual residential miles to identify a per-mile rate;
    (d) For day transportation, multiplies the per-mile rate times the 
annual day miles for each school; and
    (e) For residential transportation, multiplies the per mile rate 
times the annual transportation miles for each school.

Subpart H--Determining the Amount Necessary To Sustain an Academic 
or Residential Program


Sec.  39.801  What is the formula to determine the amount necessary to 
sustain a school's academic or residential program?

    (a) The Secretary's formula to determine the minimal annual amount 
necessary to sustain a bureau-funded school's academic or residential 
program is as follows:

Student Unit Value x Weighted Student Unit = Annual Minimum Amount

    (b) Sections 39.802 through 39.807 explain the derivation of the 
formula in paragraph (a) of this section.
    (c) If the annual minimum amount calculated under this section and 
Sec. Sec.  39.802 through 39.807 is not fully funded, OIEP will use the 
Indian School Equalization Formula to distribute funds to schools.


Sec.  39.802  What is the Student Unit value in the formula?

    The student unit value is the value applied to each student in an 
academic or residential program. There are two types of student unit 
values: the student unit instructional value (SUIV) and the student 
unit residential value (SURV).
    (a) The student unit instructional value (SUIV) applies to a day 
student. It is an annually established ratio of 1.0 that represents a 
student in grades 4 through 6 of a typical non-residential program.
    (b) The student unit residential value (SURV) applies to a 
residential student. It is an annually established ratio of 1.0 that 
represents a student in grades 4 through 6 of a typical residential 
program.


Sec.  39.803  What is a Weighted Student Unit in the formula?

    A weighted student unit is an adjusted ratio using factors in the 
Indian School Equalization Formula to establish educational priorities 
and to provide for the unique needs of specific students, such as:
    (a) Students in grades kindergarten through 3 or 7 through 12;
    (b) Special education students;
    (c) Gifted and talented students;
    (d) Distance education students;
    (e) Vocational and industrial education students;
    (f) Native Language Instruction students;
    (g) Small schools;
    (h) Personnel costs;
    (i) Alternative schooling; and
    (j) Early Childhood Education programs.


Sec.  39.804  How is the SUIV calculated?

    The SUIV is calculated by the following 5-step process:
    (a) Step 1. Use the adjusted national average current expenditures 
(ANACE) of public and private schools determined by data from the U.S. 
Dept. of Education-National Center of Education Statistics (NCES), the 
Department of Defense Schools, the District of Columbia Schools, and 
the Association of Boarding Schools for the last two school years for 
which data is available.
    (b) Step 2. Subtract the average specific Federal share (title I 
and IDEA Part B) of the total revenue for bureau-funded elementary and 
secondary schools for the last school year for which data is available 
as reported by NCES (15%).
    (c) Step 3. Subtract the administrative cost grant/agency area 
technical services revenue as a percentage of the total revenue 
(current expenditures) of BIA-funded schools for school year 1999-2000.
    (d) Step 4. Subtract the transportation revenue as a percentage of 
the total revenue (current revenue) BIA-funded schools for the last 
school year for which data is available.
    (e) Step 5. Add Johnson O'Malley funding.


Sec.  39.805  What was the student unit for Instruction value (SUIV) 
for the school year 1999-2000?

    The process in Sec.  39.804 looks like this, using figures for the 
1999-2000 school year:

     $8,030  ANACE
      -1205  Average specific Federal share of total revenue for bureau-
              funded schools.
       -993  Cost grant/technical services revenue as a percentage total
              revenue.
       -658  Transportation revenue as a percentage of the total
              revenue.
        +85  Johnson O'Malley funding.
------------
     $5,259  SUIV.
 

Sec.  39.806  How is the SURV calculated?

    (a) The SURV is the adjusted national average current expenditures 
for residential schools (ANACER) of public and private residential 
schools. This average is determined using data from:
    (1) The U.S. Department of Education-National Center of Education 
Statistics (NCES);
    (2) The U.S. Department of Defense schools;
    (3) Elementary and secondary schools at Gallaudet University; and
    (4) The Association of Boarding Schools' residential cost range for 
the school year.
    (b) Following the procedure in paragraph (a) of this section, the 
SURV for school year 1999-2000 was $ 11,000.


Sec.  39.807  How will the Student Unit Value be adjusted annually?

    (a) The Student Unit Value (SUV) will be adjusted annually by 
dividing the previous year's Student Value into two parts and adjusting 
each one as shown in this section.
    (1) The first part consists of 85 percent of the previous year's 
SUV. OIEP will adjust this portion using the personnel cost of living 
increase of the Department of Defense.
    (2) The second part consists of 15 percent the previous year's SUV. 
OIEP will adjust this portion using the Consumer Price Index-Urban of 
the Department of Labor.
    (b) If the student unit value amount is not fully funded, the 
schools will receive their pro rata share using the Indian School 
Equalization Formula.


Sec.  39.808  What definitions apply?

    The definitions in this section apply to the provisions in this 
subpart.
    Adjusted National Average Current Expenditure [ANACE] means the 
actual current expenditures for pupils in fall

[[Page 8787]]

enrollment in public elementary and secondary schools for the last 
school year for which data is available. These expenditures are 
adjusted to reflect current expenditures of federally financed schools' 
cost of day and residential programs financed by:
    (1) The Department of Defense;
    (2) The Department of Education; and
    (3) The District of Columbia.
    Current expenditures means expenses related to classroom 
instruction, classroom supplies, administration, support services-
students and other support services and operations. Current 
expenditures do not include facility operations and maintenance, 
buildings and improvements, furniture, equipment, vehicles, student 
activities and debt retirement.
    4. Part 42 is revised to read as follows:

PART 42--STUDENT RIGHTS

Sec.
42.1 What general principles apply to this part?
42.2 What rights do individual students have?
42.3 How should a school address alleged violations of school 
policies?
42.4 What are alternative dispute resolution processes?
42.5 When can a school use ADR processes to address an alleged 
violation?
42.6 What does due process in a formal disciplinary proceeding 
include?
42.7 What are a student's due process rights in a formal 
disciplinary proceeding?
42.8 What are victims' rights in due process?
42.9 How must the school communicate individual student rights to 
students, parents or guardians, and staff?
42.99 Information collection.

    Authority: 5 U.S.C. 301, Pub. L. 107-110.


Sec.  42.1  What general principles apply to this part?

    (a) This part applies to every Bureau-funded school. The 
regulations in this part govern student rights and due process 
procedures in disciplinary proceedings in all Bureau-funded schools. To 
comply with this part, each school must:
    (1) Respect the constitutional, statutory, civil and human rights 
of individual students; and
    (2) Respect the role of Tribal judicial systems where appropriate.
    (b) All student rights, due process procedures, and educational 
practices should, where appropriate or possible, afford students 
consideration of and rights equal to the student's traditional Native 
customs and practices.


Sec.  42.2  What rights do individual students have?

    Individual students at Bureau-funded schools have, and must be 
accorded, at least the following rights:
    (a) The right to an education that may take into consideration 
Native American or Alaska Native values;
    (b) The right to an education that incorporates applicable Federal 
and Tribal constitutional and statutory protections for individuals; 
and
    (c) The right to due process in instances of disciplinary actions 
for alleged violation of school regulations for which the student may 
be subjected to penalties.


Sec.  42.3  How should a school address alleged violations of school 
policies?

    (a) In addressing alleged violations of school policies, each 
school must consider, to the extent appropriate, the reintegration of 
the student into the school community.
    (b) The school may address a student violation using alternative 
dispute resolution (ADR) processes or the formal disciplinary process.
    (1) When appropriate, the school should first attempt to use the 
ADR processes described in Sec.  42.5 that may allow resolution of the 
alleged violation without recourse to punitive action.
    (2) Where ADR processes do not resolve matters or cannot be used, 
the school must address the alleged violation through a formal 
disciplinary proceeding under Sec.  42.6 consistent with the due 
process rights described in Sec.  42.6.


Sec.  42.4  What are alternative dispute resolution processes?

    Alternative dispute resolution (ADR) processes are formal or 
informal processes that may allow resolution of the violation without 
recourse to punitive action.
    (a) ADR processes may:
    (1) Include peer adjudication, mediation, and conciliation; and
    (2) Involve appropriate customs and practices of the Indian Tribes 
or Alaska Native Villages to the extent that these practices are 
readily identifiable.
    (b) For further information on ADR processes and how to use them, 
contact the Office of Collaborative Action and Dispute Resolution by:
    (1) Sending an e-mail to: [email protected]; or
    (2) Writing to: Office of Collaborative Action and Dispute 
Resolution, Department of the Interior, 1849 C Street, NW., MS 5258, 
Washington, DC 20240.


Sec.  42.5  When can a school use ADR processes to address an alleged 
violation?

    (a) The school may address an alleged violation through the ADR 
processes described in Sec.  42.4, unless one of the conditions in 
paragraph (b) of this section applies.
    (b) The school must not use ADR processes in any of the following 
circumstances:
    (1) Where the law requires immediate expulsion (``zero tolerance'' 
laws);
    (2) For a special education disciplinary proceeding where use of 
ADR would not be compatible with the Individuals with Disabilities 
Education Act (Pub. L. 105-17); or
    (3) When all parties do not agree to using alternative dispute 
resolution processes.
    (c) If ADR processes do not resolve matters or cannot be used, the 
school must address alleged violations through the formal disciplinary 
proceeding described in Sec.  42.7.


Sec.  42.6  What does due process in a formal disciplinary proceeding 
include?

    Due process must include written notice of the charges and a fair 
and impartial hearing as required by this section.
    (a) The school must give the student written notice of charges 
within a reasonable time before the hearing required by paragraph (b) 
of this section. Notice of the charges includes:
    (1) A copy of the school policy allegedly violated;
    (2) The facts that allegedly constitute the violation;
    (3) Information about any statements that the school has received 
relating to the charge and instructions on how to obtain copies of 
those statements; and
    (4) Information regarding those parts of the student's record that 
the school will consider in rendering a disciplinary decision.
    (b) The school must hold a fair and impartial hearing before 
imposing disciplinary action, except under the following circumstances:
    (1) If the law requires immediate removal (such as, if the student 
brought a firearm to school) or if there is some other statutory basis 
for removal;
    (2) In an emergency situation that seriously and immediately 
endangers the health or safety of the student or others; or
    (3) If the student (or the student's parent or guardian if the 
student is less than 18 years old) chooses to waive entitlement to a 
hearing.
    (c) In an emergency situation under paragraph (b)(2) of this 
section, the school:
    (1) May temporarily remove the student;

[[Page 8788]]

    (2) Must immediately document for the record the facts giving rise 
to the emergency; and
    (3) Must afford the student a hearing that follows due process, as 
set forth in this part, within ten days.


Sec.  42.7  What are a student's due process rights in a formal 
disciplinary proceeding?

    A student has the following due process rights in a formal 
disciplinary proceeding:
    (a) The right to have present at the hearing the student's parents 
or guardians (or their designee);
    (b) The right to be represented by counsel (Legal counsel will not 
be paid for by the Bureau-funded school or the Secretary);
    (c) The right to produce, and have produced, witnesses on the 
student's behalf and to confront and examine all witnesses;
    (d) The right to a record of hearings of disciplinary actions, 
including written findings of fact and conclusions in cases of 
disciplinary action;
    (e) The right to administrative review and appeal under school 
policy;
    (f) The right not to be compelled to testify against himself or 
herself; and
    (g) The right to have an allegation of misconduct and related 
information expunged from the student's school record if the student is 
found not guilty of the charges.


Sec.  42.8  What are victims' rights in due process?

    In due process, each school must consider victims' rights when 
appropriate.
    (a) The victim's rights may include a right to:
    (1) Participate in due process either in writing or in person;
    (2) Provide a statement concerning the impact of the incident on 
the victim; and
    (3) Have the outcome explained to the victim and to his or her 
parents or guardian by a school official, consistent with 
confidentiality.
    (b) For the purposes of this part, the victim is the actual victim, 
and not his or her parents.


Sec.  42.9  How must the school communicate individual student rights 
to students, parents or guardians, and staff?

    Each school must:
    (a) Develop a student handbook that includes local school policies, 
definitions of suspension, expulsion, zero tolerance, and other 
appropriate terms, and a copy of the regulations in this part;
    (b) Provide all school staff a current and updated copy of student 
rights and responsibilities before the first day of each school year;
    (c) Provide all students and their parents or guardians a current 
and updated copy of student rights and responsibilities every school 
year upon enrollment; and
    (d) Require students, school staff, and to the extent possible, 
parents and guardians, to confirm in writing that they have received a 
copy and understand the student rights and responsibilities.


Sec.  42.99  Information Collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part involves 
collections of information subject to the PRA. These collections have 
been approved by OMB under control number [to be determined].
    5. New part 44 is added to read as follows:

PART 44--GRANTS UNDER THE TRIBALLY CONTROLLED SCHOOLS ACT

Sec.
44.101 What directives apply to a grantee under this part?
44.102 Does this part affect existing tribal rights?
44.103 Who is eligible for a grant?
44.104 How a grant can be terminated?
44.105 How does a tribe or tribal organization retrocede a program 
to the Secretary?
44.106 How can the Secretary revoke an eligibility determination?
44.107 How does the Secretary reassume a program?
44.108 How must the Secretary make grant payments?
44.109 What happens if the grant recipient is overpaid?
44.110 What Indian Self-Determination Act provisions apply to grants 
under the Tribally Controlled Schools Act?
44.111 Does the federal tort claims act apply to grantees?
44.200 Information collection.

    Authority: Pub. L. 107-110, title 10, part D, the Native 
American Education Improvement Act, part B, section 1138, Regional 
Meetings and Negotiated Rulemaking.


Sec.  44.101  What directives apply to a grantee under this part?

    In making a grant under this part the Secretary will use only:
    (a) The regulations in this part; and
    (b) Guidelines, manuals, and policy directives agreed to by the 
grantee.


Sec.  44.102  Does this part affect existing tribal rights?

    This part does not:
    (a) Affect in any way the sovereign immunity from suit enjoyed by 
Indian tribes;
    (b) Terminate or change the trust responsibility of the United 
States to any Indian tribe or individual Indian;
    (c) Require an Indian tribe to apply for a grant; or
    (d) Impede awards by any other Federal agency to any Indian tribe 
or tribal organization to administer any Indian program under any other 
law.


Sec.  44.103  Who is eligible for a grant?

    The Secretary can make grants to Indian tribes and tribal 
organizations that operate:
    (a) A school under the provisions of Pub. L. 93-638;
    (b) A tribally-controlled school (including a charter school, 
community-generated school or other type of school) approved by tribal 
governing body; or
    (c) A bureau-funded school approved by tribal governing body.


Sec.  44.104  How can a grant be terminated?

    A grant can be terminated only by one of the following methods:
    (a) Retrocession by the tribe;
    (b) Revocation of eligibility by the Secretary; or
    (c) Reassumption by BIA.


Sec.  44.105  How does a tribal governing body retrocede a program to 
the Secretary?

    (a) To retrocede a program, the tribal governing body must:
    (1) Notify the Bureau in writing, by formal action of the tribal 
governing body; and
    (2) Consult with the Bureau to establish a mutually agreeable 
effective date. If no date is agreed upon, the retrocession is 
effective 120 days after the tribal governing body notified the Bureau.
    (b) The Bureau must accept any request for retrocession that meets 
the criteria in paragraph (a) of this section.
    (c) After the tribal governing body retrocedes a program:
    (1) The tribal governing body decides whether the school becomes 
Bureau-operated or contracted under the Indian Self-Determination Act; 
and
    (2) If the governing body decides that the school is to be Bureau-
operated, the Bureau must provide education-related services in at 
least the same quantity and quality as those that were previously 
provided.


Sec.  44.106  How can the Secretary revoke an eligibility 
determination?

    (a) In order to revoke eligibility, the Secretary must:

[[Page 8789]]

    (1) Provide the tribe or tribal organization with a written notice;
    (2) Furnish the tribe or tribal organization with technical 
assistance to take remedial action; and
    (3) Provide an appeal process.
    (b) The Secretary cannot revoke an eligibility determination if the 
tribe or tribal organization is in compliance with 25 U.S.C. 2505(C).
    (c) The Secretary can take corrective action if the school fails to 
be accredited by January 8, 2005.
    (d) In order to revoke eligibility for a grant, the Secretary must 
send the tribe or tribal organization a written notice that:
    (1) States the specific deficiencies that are the basis of the 
revocation or reassumption;
    (2) Explains what actions the tribe or tribal organization must 
take to remedy the deficiencies.
    (e) The tribe or tribal organization may appeal a notice of 
revocation or reassumption by requesting a hearing under 25 CFR part 
900, subpart L or P.
    (f) After revoking eligibility, the Secretary will either contract 
the program under 638 or operate the program directly.


Sec.  44.107  How does the Secretary reassume a program?

    To reassume a program, the Secretary must comply with 25 U.S.C. 
450m and 25 CFR part 900, subpart P.


Sec.  44.108  How must the Secretary make grant payments?

    (a) The Secretary makes two annual grant payments.
    (1) The first payment, consisting of 80 per cent of the amount that 
the grantee was entitled to receive during the previous academic year, 
must be made no later than July 1 of each year; and
    (2) The second payment, consisting of the remainder to which the 
grantee is entitled for the academic year, must be made no later than 
December 1 of each year.
    (b) For funds that become available for obligation on October 1, 
the Secretary must make payments no later than December 1.
    (c) If the Secretary does not make grant payments by the deadlines 
stated in this section, the Secretary must pay interest under the 
Prompt Payment Act. If the Secretary does not pay this interest, the 
grantee may pursue the remedies provided under the Prompt Payment Act.


Sec.  44.109  What happens if the grant recipient is overpaid?

    (a) If the Secretary has mistakenly overpaid the grant recipient, 
then the Secretary will notify the grant recipient of the overpayment. 
The grant recipient must return the overpayment within 30 days after it 
receives the notification.
    (b) When the grant recipient returns the money to the Secretary, 
the Secretary will distribute the money equally to all schools in the 
system.


Sec.  44.110  What Indian Self-Determination Act provisions apply to 
grants under the Tribally Controlled Schools Act?

    (a) The following provisions of part 900 apply to any grant to a 
school administered under an ISDEAA contract or agreement.
    (1) Subpart F; Standards for Tribal or Tribal Organization 
Management Systems, Section 900.45.
    (2) Subpart H; Lease of Tribally-owned Buildings by the Secretary.
    (3) Subpart I; Property Donation Procedures.
    (4) Subpart N; Post-award Contract Disputes.
    (5) Subpart P; Retrocession and Reassumption Procedures.
    (b) To resolve any disputes arising from the Secretary's 
administration of the requirements of this part, the procedures in 
subpart N of part 900 apply if the dispute involves any of the 
following:
    (1) Any exception or problem cited in an audit;
    (2) Any dispute regarding the grant authorized;
    (3) Any dispute involving an administrative cost grant;
    (4) Any dispute regarding new construction or facility improvement 
or repair, or
    (5) Any dispute regarding our denial or failure to act on a request 
for facilities funds.


Sec.  44.111  Does the Federal Tort Claims Act apply to grantees?

    Yes, the Federal Tort Claims Act applies to grantees.


Sec.  44.200  Information collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with a collection of information, subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)(PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part involves 
collections of information subject to the PRA. These collections have 
been approved by OMB under control number [to be determined].
    6. New Part 47 is added to read as follows:

PART 47--UNIFORM DIRECT FUNDING AND SUPPORT

Sec.
47.1 What is the purpose of this part?
47.2 What definitions apply to terms in this part?
47.3 How does a school find out how much funding it will receive?
47.4 When does OIEP provide funding?
47.5 What is the school supervisor responsible for?
47.6 Who has access to local education financial records?
47.7 What are the expenditure limitations for Bureau-operated 
schools?
47.8 Who develops the local educational financial plans?
47.9 What are the minimum requirements for the local educational 
financial plan?
47.10 How is the local educational financial plan developed?
47.11 Can these funds be used as matching funds for other Federal 
programs?
47.12 How are funds obligated?
47.99 Information collection.

    Authority: Pub. L. 107-110.


Sec.  47.1  What is the purpose of this part?

    This part contains the requirements for developing local financial 
plans that schools need in order to receive direct funding from the 
Bureau of Indian Affairs.


Sec.  47.2  What definitions apply to terms in this part?

    Budget means that element in the local educational financial plan 
which shows all costs of the plan by discrete programs and sub-cost 
categories.
    Consultation means soliciting and recording the opinions of school 
boards regarding each element of the local educational financial plan 
and incorporating these opinions to the greatest degree feasible in the 
development of the local educational financial plan at each stage.
    Director means the Director, Office of Indian Education Programs.
    Local educational financial plan means the plan that:
    (1) Programs dollars for educational services for a particular 
Bureau-operated school; and
    (2) Has been ratified in an action of record by the local school 
board or determined by the superintendent under the appeals process in 
25 CFR part 2.
    OIEP means the Office of Indian Education Programs in the Bureau of 
Indian Affairs of the Department of the Interior.
    School means a Bureau-funded school.


Sec.  47.3  How does a school find out how much funding it will 
receive?

    The Office of Indian Education Programs (OIEP) will notify each 
school

[[Page 8790]]

in writing of the annual funding amount it will receive as follows:
    (a) No later than July 1st OIEP will let the school know the amount 
that is 80 percent of its funding; and
    (b) No later than September 30 OIEP will let the school know the 
amount of the remaining 20 percent.


Sec.  47.4  When does OIEP provide funding?

    By July 1st of each year OIEP will make available for obligation 
all funds for that fiscal year that begins on the following October 
1st.


Sec.  47.5  What is the school supervisor responsible for?

    Each Bureau-operated school's school supervisor has the 
responsibilities in this section. The school supervisor must do all of 
the following:
    (a) Ensure that the school spend funds in accordance with the local 
financial plan, as ratified or amended by the school board;
    (b) Sign all documents required to obligate or pay funds or to 
record receipt of goods and services;
    (c) Report at least quarterly to the local school board on the 
amounts spent, obligated, and currently remaining in funds budgeted for 
each program in the local financial plan;
    (d) Recommend changes in budget amounts to carry out the local 
financial plan, and incorporate these changes in the budget as ratified 
by the local school board, subject to provisions for appeal and 
overturn; and
    (e) Maintain expenditure records in accordance with financial 
planning system procedures.


Sec.  47.6  Who has access to local education financial records?

    The Comptroller General, the Assistant Secretary, the Director, or 
any of their duly authorized representatives have access for audit and 
explanation purposes to any of the local school's accounts, documents, 
papers, and records which are related to the schools' operation.


Sec.  47.7  What are the expenditure limitations for Bureau-operated 
schools?

    Each Bureau-operated school must spend all allotted funds in 
accordance with applicable Federal regulations and local education 
financial plans. If a Bureau-operated school and OIEP region or Agency 
support services staff disagree over expenditures, the Bureau-operated 
school must appeal to the Director for a decision.


Sec.  47.8  Who develops the local educational financial plans?

    The local Bureau-operated school supervisor develops the local 
educational financial plan in active consultation with the local school 
board, based on the tentative allotment received.


Sec.  47.9  What are the minimum requirements for the local educational 
financial plan?

    (a) The local educational financial plan must include:
    (1) Separate funds for each group receiving a discrete program of 
services is to be provided, including each program funded through the 
Indian School Equalization Program;
    (2) A budget showing the costs projected for each program; and
    (3) A certification provision meeting the requirements of paragraph 
(b) of this section.
    (b) The certification required by paragraph (a)(3) of this section 
must provide for either:
    (1) Certification by the chairman of the school board that the plan 
has been ratified in an action of record by the board; or
    (2) Except in the case of contract schools, certification by the 
Agency Superintendent of Education that he or she has approved the plan 
as shown in an action overturning the school board's rejection or 
amendment of the plan.


Sec.  47.10  How is the local educational financial plan developed?

    (a) The following deadlines apply to development of the local 
financial plan:
    (1) Within 15 days after receiving the tentative allotment, the 
school supervisor must consult with the local school board on the local 
financial plan.
    (2) Within 30 days of receiving the tentative allotment, the school 
board must review the local financial plan and, by a quorum vote, 
ratify, reject, or amend, the plan.
    (3) Within one week of the school board action under paragraph 
(a)(2) of this section, the supervisor must either:
    (i) Send the plan to the education line officer (ELO), along with 
the official documentation of the school board action; or
    (ii) Appeal the school board's decision to the ELO.
    (4) The ELO will review the local financial plan for compliance 
with laws and regulations and may refer the plan to the Solicitor's 
Office for legal review. If the ELO notes any problem with the plan, he 
or she must:
    (i) Notify the local board and local supervisor of the problem 
within two weeks of receiving the plan;
    (ii) Make arrangements to assist the local school supervisor and 
board to correct the problem; and
    (iii) Refer the problem to the Director of the Office of Indian 
Education if it cannot be solved locally.
    (b) When consulting with the school board under paragraph (a)(1) of 
this section, the school supervisor must:
    (1) Discuss the present program of the school and any proposed 
changes he or she wishes to recommend;
    (2) Give the school board members every opportunity to express 
their own ideas and views on the supervisor recommendations; and
    (3) After the discussions required by paragraphs (b)(1) and (b)(2) 
of this section, present a draft plan to the school board with 
recommendations concerning each of the elements.
    (c) If the school board does not act within the deadline in 
paragraph (a)(2) of this section, the supervisor must send the plan to 
the ELO for ratification. The school board may later amend the plan by 
a quorum vote; the supervisor must transmit this amendment in 
accordance with paragraph (a)(3) of this section.


Sec.  47.11  Can these funds be used as matching funds for other 
Federal programs?

    A school may use funds that it receives under this part as matching 
funds for other Federal programs.


Sec.  47.12  How are funds obligated?

    (a) Authority to obligate funds in the Bureau operated schools is 
governed by provisions of the Bureau Manual (42 BIAM).
    (b) Authority to obligate funds in tribally operated contract 
schools is governed by contracting procedures of 25 CFR part 900.
    (c) Authority to obligate funds in all Bureau funded and operated 
schools is based upon the tentative allotment (Sec. Sec.  47.3 and 
47.4) for the period beginning October 1 of any fiscal year. The 
tentative allotment as restricted by a continuing resolution, if 
applicable, would govern until computation and notification of initial 
allotments as described in this subpart, as adjusted by the Director in 
accordance with Sec. Sec.  39.501 through 39.503.


Sec.  47.99  Information collection.

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)(PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part involves 
collections of information subject to the PRA in Sec. Sec.  47.5, 47.7, 
47.9, and 47.10. These collections have been

[[Page 8791]]

approved by OMB under control number [to be determined].

[FR Doc. 04-3714 Filed 2-24-04; 8:45 am]
BILLING CODE 4310-02-P