[Federal Register Volume 70, Number 81 (Thursday, April 28, 2005)]
[Rules and Regulations]
[Pages 22177-22222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8256]



[[Page 22177]]

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Part II





Department of the Interior





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Bureau of Indian Affairs



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25 CFR Part 30, et al.



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

Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Rules 
and Regulations

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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

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

RIN 1076-AE49


Implementation of the No Child Left Behind Act of 2001

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Final rule.

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SUMMARY: This final rule addresses six areas involving Indian 
education: Defining adequate yearly progress; establishing geographic 
attendance areas for Bureau of Indian Affairs-funded schools (Bureau-
funded schools); establishing a formula for the minimum amount 
necessary to fund Bureau-funded schools; establishing a system of 
uniform direct funding and support for Bureau-operated schools; 
providing guidelines to ensure the Constitutional and civil rights of 
Indian students; and establishing a method for administering grants to 
tribally controlled schools. The rule implements the provisions of the 
No Child Left Behind Act of 2001.

DATES: Effective Date: May 31, 2005.

FOR FURTHER INFORMATION CONTACT: Catherine Freels, DOI Office of the 
Solicitor, 505 Marquette Avenue NW., Suite 1800, Albuquerque, NM 87102, 
phone 505-248-5600.

SUPPLEMENTARY INFORMATION: Contents of the SUPPLEMENTARY INFORMATION 
section:

I. Background
II. Public Comments--General
III. Comments on Part 30--Adequate Yearly Progress
IV. Comments on Part 37--Geographic Attendance Boundaries
V. Comments on Part 39--Indian School Equalization Program
VI. Comments on Part 42--Student Rights
VII. Comments on Part 44--Geographic Boundaries
VIII. Comments on Part 47--Uniform Direct Funding and Support for 
Bureau-funded Schools
IX. Procedural Matters

I. Background

A. What Information Does This Section Address?

    This section addresses:

--Requirements of the Act.
--Overview of Negotiated Rulemaking Process.
--How public comments were handled.

B. What Are the Negotiated Rulemaking Requirements of the No Child Left 
Behind Act of 2001?

    Under 25 U.S.C. 2018 , the Secretary of the Interior (Secretary) 
established the No Child Left Behind Negotiated Rulemaking Committee 
(Committee) to develop proposed rules to implement several sections of 
the Act relating to the Bureau-funded school system. (In this preamble 
and rule we use the term ``the Act'' to refer to the No Child Left 
Behind Act, Pub. L. 107-110, enacted January 8, 2002. The No Child Left 
Behind Act reauthorizes and amends the Elementary and Secondary 
Education Act (ESEA) and amends the Education Amendments of 1978.) The 
Act required that the Committee be comprised only of representatives of 
tribes served by Bureau-funded schools and the Federal government. It 
also 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 requirements of the Act that are the subject of this negotiated 
rulemaking process are:
    (1) 20 U.S.C. 6316(g): Develop a definition of ``Adequate Yearly 
Progress'' for the Bureau-funded school system;
    (2) 25 U.S.C. 2004: Attendance boundaries for Bureau-funded 
schools;
    (3) 25 U.S.C. 2007: A determination of the funds needed to sustain 
Bureau-funded schools and a formula to allocate the current funds;
    (4) 25 U.S.C. 2010: The direct funding and support of Bureau-funded 
schools;
    (5) 25 U.S.C. 2016: The rights of students in the Bureau-funded 
school system; and
    (6) 25 U.S.C. 2501, et seq., the Tribally Controlled Schools Act 
(TCSA) of 1988, as amended by the Act: Discharge of the Secretary's 
responsibilities under this Act through which tribes and tribal school 
boards can operate Bureau-funded schools under the grant mechanism 
established in the Tribally Controlled Schools Act.

C. What Was the Negotiated Rulemaking Process?

    Under the Act, in August and September, 2002, the Secretary 
conducted regional consultation meetings with tribes on the six areas 
of the Act to be negotiated. Following consultation and under the Act 
and the Negotiated Rulemaking Act (subchapter III of chapter 5, title 
5, United States Code), in November, 2002, the Secretary published a 
Notice of Intent To Form a Negotiated Rulemaking Committee (67 FR 
75828, December 10, 2002) and requested nominations for tribal 
representatives for the Committee.
    The Secretary reviewed tribal nominations for tribal 
representatives and announced selection of 19 tribal representatives 
and 6 Federal representatives from the Department of the Interior (68 
FR 23631, May 5, 2003). Tribal membership on the Committee represented, 
to the maximum extent possible, the proportionate share of students 
from tribes served by Bureau-funded schools. The Secretary chartered 
the No Child Left Behind Negotiated Rulemaking Committee under the 
Federal Advisory Committee Act (5 U.S.C. Appendix) on May 1, 2003.
    The Committee held its first meeting in June, 2003. It agreed on 
protocols to govern the meetings and selected three tribal 
representatives and two Federal representatives as co-chairs. A third 
party neutral approved by the Committee served as lead facilitator for 
all Committee meetings. The Committee met five times, from June 2003, 
through October 2003, to develop recommendations for six proposed 
rules. The Committee divided the areas subject to regulation among four 
work groups: funding and funding distribution; student rights and 
geographic boundaries; administration of grants; and adequate yearly 
progress. These work groups prepared written products for review, 
revision, and approval by the full Committee.
    The Committee operated by consensus and recommendations for 
proposed rules were consensus decisions. All Committee and work group 
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. Federal Register notices stating the location 
and dates of the meetings and inviting members of the public to attend 
were published prior to each meeting. In addition, Committee 
information including meeting locations and dates and meeting agendas 
and summaries were provided on the Office of Indian Education Program 
Web site at: http://www.oiep.bia.edu.
    The Department published a proposed rule in the Federal Register on 
February 25, 2004 (69 FR 8752), with a 120-day comment period. (The 
Department subsequently reopened the comment period for an additional 
10 days.) In August 2004, following the public comment period, the 
Committee reconvened to review public comments and make recommendations 
for final rules to the Secretary.

D. How Were Public Comments Handled?

    The Notice of Proposed Rulemaking for parts 30, 37, 39, 42, 44, and 
47, published February 25, 2004, provided

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for a 120-day public comment period. We also reopened the public 
comment period for an additional 10 days at the end of the 120-day 
public comment period. We received 47 comments from individuals, tribal 
leaders, schools, education associations, school boards, and the U.S. 
Department of Education. Because the proposed rules were the result of 
negotiated rulemaking, the Committee reconvened to review public 
comments at the end of the public comment period.
    The Committee was provided the full text of each comment and 
summaries of each comment for review. The Committee operated by 
consensus in reviewing comments to determine whether to accept a 
comment and make suggested changes to a rule, accept a comment and 
modify suggested changes, or acknowledge a comment and make no changes. 
Comments were handled as follows.

--Where comments referred to issues that are beyond the scope of this 
rule, such as inadequate funding or disproportionate allocations, or to 
issues that were not relevant to this rule, such as tribal recognition 
or comments on the Paperwork Reduction Act requirements (the comment 
period ended on PRA items in March, 2004), the Committee acknowledged 
the comments, but took no action on them.
--Where comments agreed with the proposed rules, the Committee 
acknowledged the comments.
--Where comments disagreed with the proposed rules, the Committee 
acknowledged the comments. The disposition of these comments and the 
reasons that they were accepted or not accepted are treated in the 
detailed discussions that follow.
--Where the Committee did not have consensus to reopen a particular 
section to consider comments suggesting changes, the Department 
reviewed the comments and made changes where it deemed necessary. These 
changes are noted in the response to comments section for each part.

    Following receipt of the Committee's recommendations for the final 
rules, the Secretary reviewed the public comments and made changes as 
noted for each part. Changes that are purely grammatical are not 
discussed. Public comments and responses are noted below under the 
applicable part.

E. How Were Oversights in the Proposed Rule Corrected?

    When the proposed rule was published, there was an oversight in the 
wording of the amendatory language for part 39. Rather than stating 
that the entire subpart was proposed for revision, the amendatory 
language should have stated that only subparts A through H were 
proposed for revision. Our intention, and that of the negotiated 
rulemaking Committee, was to leave subparts I through L in place with 
no revisions. This final rule corrects that oversight.

F. How Were Conforming Amendments to Parts 31 and 36 Handled?

    Additional changes are required in order to eliminate conflicts 
between the amendments in these regulations and existing regulations in 
other parts of 25 CFR. In a rule published elsewhere in today's Federal 
Register and identified by the RIN 1076-AE54, the Department is 
deleting provisions in parts 31 and 36 of 25 CFR that conflict with the 
amendments published in this rule.

II. Public Comments--General

    We received the following general comments referring to all parts:
    Comment: The proposed rules may go against tribal culture and 
affect tribal sovereignty and do not ensure fair and equal treatment 
for tribes.
    Response: We noted the comment and did not make any changes to the 
rules based on these comments. Congress mandated that we promulgate 
rules relating to certain sections of the Act.
    Comment: Other provisions of the Act should be included in this 
rulemaking.
    Response: We noted the comment and did not make any changes based 
on this comment. The comment is beyond the scope of these rules. The 
Secretary determined which sections of the Act to include in this 
negotiated rulemaking.
    Comment: The Act provides no additional funding for education. 
Funding is insufficient. Redistribute funding to improve the 
concentration where it is needed.
    Response: We noted the comment and did not make any changes based 
on this comment. The comment is beyond the scope of these rules.

III. Comments on Part 30--Adequate Yearly Progress

    For purposes of adequate yearly progress (AYP), the Bureau of 
Indian Affairs is considered the State Educational Agency (SEA) for the 
Bureau-funded school system.
    20 U.S.C. 6311(b) requires each State to submit a plan to the 
Secretary of Education which demonstrates that the State, through its 
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.
    The Act requires each SEA to define the AYP that schools and local 
educational agencies (LEAs) must attain toward the goal of all students 
reaching the proficient level on reading/language arts and mathematics 
assessments by school year 2013-2014. Each State's AYP definition must 
include a starting point and intermediate goals for student improvement 
in reading/language arts and mathematics; if a school or LEA does not 
meet the intermediate goals for two consecutive years or more, it is 
identified as in need of improvement and must implement an improvement 
plan and take certain other actions under the Act.
    The Act 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 of the 
academic assessments; and
--Includes separate measurable annual goals for continuous and 
substantial improvement in the academic achievement of all students in 
the school; economically disadvantaged students; students from major 
racial and ethnic groups; students with disabilities; and 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 academic indicator applicable to 
elementary and middle schools. 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.
    A detailed procedure for submission of an alternative AYP 
definition by a tribe or school board, and for review/

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approval of that definition by the Secretary of the Interior is 
included in Sec. Sec.  30.106--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 consequences of failing to make AYP are described in Sec.  
30.117. While the remedial statuses of ``school improvement,'' 
``corrective action,'' and ``restructuring'' applicable to public 
schools are also applicable 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.
    Only major, substantive public comments are discussed below. In 
some instances, we have combined several similar or identical comments 
and replied to them in one response. Grammatical changes, minor wording 
revisions, and other purely style-oriented comments are not discussed; 
however, changes to the final rule reflect such public comment. The 
Secretary reviewed the final rule and made the changes as noted below.

A. Comments the Committee Considered That Resulted in No Change to the 
Rule

    Comment: There were several comments supporting the proposed 
definition of adequate yearly progress for Bureau-funded schools. These 
comments included:

--Agreement with the proposed definition of adequate yearly progress 
being that of the State in which a Bureau-funded school is located;
--Agreement with allowance for a tribe's submission of its own set of 
alternatives; and
--Agreement with the language describing the Secretary's trust 
responsibility, the sovereign rights of Indian Tribes, and the State's 
lack of jurisdiction over Bureau-funded schools.

    Response: These comments were considered, appreciated, and, because 
they were in agreement with the rule, no action was taken.
    Comment: Several commenters suggested that:

--The regulations should require that a school's alternative definition 
of adequate yearly progress (AYP) ``identify'' what is from the State's 
definition and what is not; and

--The Department of the Interior should establish a system of rewards 
and sanctions.

    Response: These comments were considered and no action was taken 
because the Committee had already considered this in drafting the 
proposed rule.
    Comment: Change Sec.  30.119(b), to make it more specific and state 
that:

--The school board has the sole authority and responsibility for 
determining the nature and implementation of remedial actions in 
accordance with the Act; and
--In implementing any remedial actions the Board is not subject to an 
approval process from the Bureau, but may request and receive technical 
assistance concerning remedial actions.

    Response: The comment was considered and no action was taken. The 
Committee determined that the suggested change is unnecessary as 
section 20 U.S.C. 6316(g)(4) is clear.
    Comment: There are several references in the rule to various parts 
of section 1116 of the Act, so section 1116 should be included in the 
rule.
    Response: This comment was considered and no action was taken 
because the Committee believed that this would not improve the rule.
    Comment: Language should be added to Sec.  30.122 to say that 
providing funding and technical assistance to schools that fail to make 
AYP is not just a responsibility, but a priority to the Bureau.
    Response: This comment was considered and no action was taken.
    Comment: Section 30.126 should be modified to match section 1116(g) 
and to:

--More clearly state that the Bureau collects information from grant 
and school boards to enable its reporting requirement, but that the 
Bureau does not make the determination of school improvement, 
corrective action or restructuring status for Bureau-funded grant and 
contract schools; and
--Include language implementing section 1116(g) for tribally controlled 
school boards to identify the factors that led to any determination of 
remedial actions for the school and for those factors to be reported to 
the Department of Education.

    Response: This comment was considered and no action was taken 
because the Committee felt the statutory language was clear.
    Comment: Rewards and sanctions should be the responsibility of the 
Bureau.
    Response: This comment was considered and no action was taken.

B. Comments the Committee Considered That Resulted in Changes to the 
Rule

    Comment: Delete the reference to ``curriculum'' since adoption of 
the definition of AYP used by the State in which the school is located 
would not mean a school needs to use the State curriculum. Instead add 
the phrase ``academic content and student achievement'' before 
``standards.''
    Response: This change was made and is reflected in Sec.  30.104(a).
    Comment: Delete the reference to ``curriculum'' and add ``solely 
for the purpose of using the State's academic contents and student 
performance standards, assessments, and definition of AYP.''
    Response: This change was made and is reflected in Sec.  
30.104(a)(2).
    Comment: Insert the term ``trust'' before responsibility for Indian 
education.
    Response: This change was made and is reflected in Sec.  
30.104(a)(3).
    Comment: Insert that the proposal must meet the requirement of 
section 1111(b) of the Act and 34 CFR 200.13-200.20, taking into 
account the unique circumstances and needs of the school or schools and 
students served.
    Response: This change was made in part. The term ``to be consistent 
with section'' was removed and, ``must meet the requirements of 20 
U.S.C. 6311(b), taking into account the unique circumstances and needs 
of the school or schools and the students served'' was added, as 
reflected in Sec.  30.106.
    Comment: The reference to the ``State's definition'' of AYP is in 
error. It should be a reference to the Bureau's definition of AYP.
    Response: The word ``State's'' was changed to ``Secretary's'' as 
reflected in Sec.  30.108.
    Comment: The language should be changed to say ``By the 2005-2006 
school year, a Bureau-funded school must measure the achievement of all 
students enrolled in grades three through eight, and once for all 
students enrolled in grades 10-12. Until that time, the Bureau-funded 
schools must measure the achievement of all students

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at least once during grades three through five, six through nine and 
10-12.''
    Response: Revised Sec.  30.114 states an assessment is required for 
all students in grades three through eight and at least once for all 
students in grades ten through twelve.
    Comment: The rule must be revised to clarify that a school fails to 
meet AYP if it is deficient in any of the measurements in Sec.  
30.107(b)(6)(i) or (ii) as recommended in an earlier comment.
    Response: The change was made and is reflected in Sec.  30.116.

C. Comments the Committee Considered That Resulted in No Consensus With 
No Change to Rule

    Comment: There were several comments suggesting the Department of 
the Interior, Office of Indian Education Programs should develop its 
own definition of AYP based on Bureau-wide standards and assessments.
    Response: The Committee consensus was to define the Secretary of 
the Interior's definition of AYP as each State's definition of AYP, 
since the Department lacks an independent set of standards and 
assessments necessary to establish a definition of AYP. Although the 
Committee received very few comments on this decision, some Committee 
members commented on this issue. When the comments were being reviewed, 
some of the tribal members of the Committee decided to withhold 
consensus on keeping the proposed definition of AYP. Since the 
Committee failed to reach consensus in recommending a final AYP rule, 
it is left for the Secretary to determine the rule.
    The Secretary has decided to keep the definition of AYP as 
published in the Notice of Proposed Rulemaking published on February 
25, 2004 with certain clarifying changes as described in the preceding 
section. Since the Department did not receive comments that had not 
already been considered when the Committee made the difficult choice to 
recommend the definition found in the NPRM, the Secretary decided to 
adopt the NPRM's definition. Thus, the definition of AYP remains that 
of the State in which a school is located until the school has received 
a waiver of that definition from the Secretary of the Interior.
    The AYP workgroup of the negotiated rulemaking Committee 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 
aggregating Bureau-funded school assessment data to make AYP 
determinations is not statistically reliable because each school uses a 
different assessment system and because, collectively, the assessments 
in use do not meet the requirements of the Act in 20 U.S.C. 
6311(b)(3)(C)(ii). Therefore, the Committee needed to develop a uniform 
assessment system. As the Committee discovered, Bureau 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, 
academic content and student achievement standards and assessments; or
--Allowing each Bureau-funded school to follow the definition of the 
State in which it is located.

    After Congress passed the Goals 2000 Act (Pub. L. 103-227), 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 curricula, academic content and student achievement 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.
    In light of this history, the Committee revised its initial plan 
and decided to adopt as the Secretary's definition of AYP the 
definition of the State in which a school is located. However, a tribal 
governing body or school board may develop an alternative AYP 
definition and submit it to the Secretary for approval. This decision 
implements 20 U.S.C. 6316(g) of the Act, which expressly permits a 
tribe or school board to waive the Bureau's AYP definition and develop 
its own, subject to the Secretary's approval in consultation with the 
Secretary of Education.
    During our initial negotiations, Tribal representatives on the 
Committee expressed serious objection to adopting State AYP definitions 
as the Secretary'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.

D. Comments the Committee Considered That Resulted in No Consensus With 
Changes to the Rule

    The Committee also had no consensus regarding comments made by the 
Department of Education on the proposed definition of AYP. The 
Department of Education did not provide these comments during the 
original public comment period.
    Since the Department of Education is a Federal agency, the 
Department of the Interior believed that it could nevertheless consider 
Education's comments. However, to ensure fairness to any member of the 
public who had not yet provided comment, the Department of the Interior 
formally reopened the public comment period for receipt of comments 
from Education and any member of the public. During review of the 
comments, the Federal Committee members believed that some of 
Education's comments should be accepted and the proposed changes be 
made to the rule. Some tribal Committee members objected that the 
Federal Committee members would not negotiate whether to consider 
Education's comments. Therefore, the Committee could not reach 
consensus on whether to accept Education's comments. Since there was no 
Committee recommendation, the Secretary in adopting the final rule has 
accepted certain Department of Education comments.

[[Page 22182]]

    Comment: The rule should clarify in Sec. Sec.  30.104 and 30.105 
that any Bureau-funded school that uses the Bureau's definition of AYP 
must also use the academic, content, and student achievement standards 
and State assessments of the State in which the school is located. 
Standards and assessments are a necessary part of an accountability 
system.
    Response: The Committee could not reach consensus to change the 
proposed rule based on this comment from the Department of Education. 
Since there was no consensus Committee recommendation, the Secretary 
accepted the Department of Education's comment and changed the rule to 
read: ``Yes. A tribal governing body or school board may waive all or 
part of the Secretary's definition of academic content and student 
achievement standards and assessments and AYP. However, until the 
alternative definition is approved under Sec.  30.113 the school must 
use the Secretary's definition of academic content and student 
achievement standards, assessments, and AYP.''
    Comment: The rule should revise Sec.  30.107 to:

--Use the same language as section 1111(b) of the Act to take into 
account the unique circumstances and needs of the school or schools and 
the students served;
--Add a citation to 34 CFR 200.13-20; and
--State that a waiver request will include an explanation of what 
standards and assessments will be used, as required by section 1111(b).

    Response: Since there was no consensus Committee recommendation on 
whether to accept this comment from the Department of Education, the 
Secretary accepted the comment and made the following changes:

--Changed the term ``curriculum'' as recommended in several comments;
--Removed science from the areas that require a measurement of progress 
as recommended in several comments; and
--Added ``academic contents and achievement standards'' as recommended 
throughout the document.

    The Secretary also added the Department of Education's language 
suggestions to the Department's final rule in Sec.  30.107 to read:


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

    (a) An alternative definition of AYP must meet the requirements 
of 20 U.S.C. 6311(b)(2) and 34 CFR 200.13-200.20, taking into 
account the unique circumstances and needs of the school or schools 
and the students served.
    (b) In accordance with 20 U.S.C. 6311(b) and 34 CFR 200.13-
200.20, an 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 and reading or language arts;
    (5) Measure progress separately for reading or language arts and 
for mathematics;
    (6) Unless disaggregation of data cannot yield statistically 
reliable information or reveals personally identifiable information, 
apply the same annual measurable objectives to each of the 
following:
    (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;
    (7) Establish a starting point;
    (8) Create a timeline to ensure that all students are proficient 
by the 2013-2014 school year;
    (9) Establish annual measurable objectives;
    (10) Establish intermediate goals;
    (11) Include at least one other academic indicator which, for 
any school with a 12th grade, must be graduation rate; and
    (12) Ensure that at least 95 percent of the students enrolled in 
each group under Sec.  30.107(b)(6) are assessed.
    (c) If a Bureau-funded school's alternative definition of AYP 
does not use a State's academic content and student achievement 
standards and academic assessments, the school must include with its 
alternative definition the academic standards and assessment it 
proposes to use. These standards and assessments must meet the 
requirements in 20 U.S.C. 6311(b) and 34 CFR 200.1-200.9.
    (d) 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).

    Comment: There is substantial concern about a regulation that 
requires the Secretary and the Secretary of the Department of 
Education, regardless of the complexity of a particular waiver request, 
to approve or disapprove all alternative definitions of AYP within 90 
days of receiving a completed alternative definition. The suggestion 
was made to include an exception for unusual circumstances that may 
require additional time. A notification provision should also be added 
to inform a school that seeks a waiver what additional time will be 
needed.
    Response: Section 30.113(d) now states that the Secretaries will, 
``review the proposed definition to determine whether it is consistent 
with the requirements of 20 U.S.C. 6311(b) of the Act.'' It does not 
specify a time within which the Secretaries will act. While the 
Secretaries will handle each situation expeditiously, the revised 
wording of the regulation allows flexibility in processing individual 
cases and ensures that extra time can be taken where necessary.
    Comment: Merely providing the Department of Education with 
notification of the Department of the Interior's receipt of a completed 
proposed alternative definition of AYP is insufficient. The last phrase 
in the Elementary and Secondary Education Act (ESEA) section 
1111(g)(1)(B) provides for the Department of Education's Secretary to 
have the information needed to determine whether a request of an 
alternative AYP definition should take into account the unique 
circumstances and needs of school or schools and the students served. 
This statutory sentence makes no sense if interpreted to mean that the 
Secretary of Education may only disapprove an alternative definition 
that the Secretary chooses to make the subject of a consultation with 
the Department of Education--which is all that Sec.  30.113 would 
require. The Act surely did not mean to create opportunities for 
inconsistencies in the Federal government's overall approach to 
approving alternative AYP definitions. Nor should the Executive Branch 
do so as a matter of interpretative choice.
    The words of the statute in 1116(g) state that the Secretary of the 
Interior, ``in consultation with the Secretary if the Secretary of the 
Interior requests the consultation, shall approve such alternative 
definition unless the Secretary determines that the definition does not 
meet the requirements of section 1111(b), that takes into account the 
unique circumstances and needs of such school or schools and the 
students served.'' While this language is admittedly cumbersome, three 
fundamental principles compel the approach we strongly request DOI to 
take:

--The Secretary of the Department of Education expresses statutory 
responsibility for determining that, as a part of consultation with 
DOI, alternative definitions do not meet the statutory requirements (in 
keeping with the Department of Education's overall title I, part A 
statutory responsibility to administer the title I, part A requirements 
governing systems of accountability);

[[Page 22183]]

--The Executive Branch's need to avoid inconsistencies in application 
of section 1111(g)(1)(B); and
--Take into account Interior's and Education's differing expertise in 
assessing whether an alternative AYP definition meets the requirements 
of ESEA section 1111(b) and applicable regulations, taking into account 
the unique circumstances and needs of the school or schools and the 
students served.

    Response: The Committee could not reach consensus to change the 
rule based on this comment. The Notice of Proposed Rulemaking provided 
that the Secretary of the Interior made the final determination on 
whether to grant an AYP waiver. The Committee believed that the statute 
could be read to mean that the Secretary of the Interior has the final 
decision-making power. During the public comment period, the Federal 
team members engaged in discussion within the Department of the 
Interior and with the Department of Education. The Departments tried to 
find a compromise that would provide for consistency in Federal 
decision-making and ensure that the Departments work together, using 
their collective expertise, to make a decision regarding whether an 
alternate definition of AYP meets the requirements of statute and 
regulations. The result of the discussion was the Department of 
Education's comment that the decision on the waiver should be a joint 
decision by the Secretary of the Interior and the Secretary of 
Education.
    When the Committee convened to review the comments, tribal members 
expressed concerns that the Federal members engaged in this dialogue 
with the Department of Education and that the Federal team was prepared 
to withhold consensus for any other result. Consequently, the Committee 
could not reach consensus on whether to consider the Department of 
Education's comments. Thus, the final rule has adopted certain 
Department of Education comments and revised Sec.  30.113(d) through 
(h) to read:

    (d) The Secretaries review the proposed alternative definition 
of AYP to determine whether it is consistent with the requirements 
of 20 U.S.C. 6311(b). This review must take into account the unique 
circumstances and needs of the schools and students.
    (e) The Secretaries shall approve the alternative definition of 
AYP if it is consistent with the requirements of 20 U.S.C. 6311(b), 
taking into consideration the unique circumstances and needs of 
schools and students.
    (f) If the Secretaries approve the alternative definition of 
AYP:
    (1) The Secretary 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.
    (g) The Secretaries will disapprove the alternative definition 
of AYP if it is not consistent with the requirements of 20 U.S.C. 
6311(b). If the alternative definition is disapproved, the tribal 
governing body or school board will be notified of the following:
    (1) That the definition is disapproved; and
    (2) The reasons why the proposed alternative definition does not 
meet the requirements of 20 U.S.C. 6311(b).
    (h) If the Secretaries deny a proposed definition under 
paragraph (g) of this section, they shall provide technical 
assistance to overcome the basis for the denial.

    Comment: The proposed rule needs to be revised to more closely 
reflect the ED-DOI agreement in 20 U.S.C. 7824.
    Response: The Committee did not reach consensus to change the 
proposed rule based on this comment from the Department of Education. 
Since the Committee provided no recommendation on this comment, the 
Secretary has decided to delete this section of the rule, as it is 
specifically provided for in the Act.

IV. Comments on Part 37--Geographic Attendance Boundaries

    The Act requires designated separate geographic boundaries for all 
Bureau-funded schools and provides for tribes to have input into the 
process. This part provides guidance and clarifies what roles tribes 
have in establishing and revising geographic attendance boundaries for 
schools. It also clarifies some of the limitations on the Secretary's 
ability to change school boundaries. It recognizes distinctions for 
different boundary determinations for day schools, on-reservation 
boarding schools, and peripheral dorms and for off-reservation boarding 
schools. The rule provides guidance applicable to both types of 
schools, where appropriate (subpart A) and provides separate guidance 
for each type of school, where appropriate (day schools, on-reservation 
boarding schools, and peripheral dorms--subpart B and off-reservation 
boarding schools B subpart C). This part is intended to give tribes the 
opportunity to meaningfully participate in all decisions regarding 
attendance boundaries and related policies where not statutorily 
prohibited.

General Comments Requesting No Change

    Several commenters approve of provisions of the rule that allow 
tribal entities to work collaboratively with Bureau-funded schools when 
geographic boundaries are determined or revised and that provide for 
assistance from the Department if tribes need assistance. Several 
commenters agree with the rule provision that tribes have ongoing 
authority to suggest changes to and participate in the revision of 
geographic attendance boundaries for schools. Some comments support the 
flexibility for allowing students to attend schools outside their 
geographic attendance boundaries. One commenter noted that rights in 
the rule are rights recognized pursuant to reserved tribal authority 
stemming from treaties between the United States and tribes. Some 
commenters to this part in the NPRM preamble disagree with allowing 
parental choice (which was not included in the final rule). One 
commenter stated that the Bureau can and must withhold payment from a 
school when a student who does not live within the school geographic 
attendance boundary has not received a waiver in accordance with tribal 
law.
    Comment: Funding should not be withheld solely because a student is 
attending a school outside his or her attendance area.
    Response: No change was made because a student is funded at the 
school they are attending.
    Comment: Revise Sec.  37.110 to state that a change of school is 
the decision of the parents and/or the student.
    Response: No change was made because the Act requires the Secretary 
to promulgate regulations for school boundaries.
    Comment: Revise the term ``geographic attendance area'' in Sec.  
37.101 to clarify that it may include off-reservation areas, 
particularly off-reservation boarding schools.
    Response: No change was made because the rule states that 
geographic attendance areas include off-reservation boarding schools.
    Comment: If parental choice is included in the rule, geographic 
boundaries have no meaning.
    Response: No change was made because parental choice is not 
included in the rule.
    Comment: Revise Sec.  37.111 to state that tribes have input on 
authorizing transportation funds for students attending schools outside 
their geographic attendance boundaries.
    Response: The Committee acknowledged this comment, considered it, 
and made no change.
    Comment: Revise Sec.  37.111 to reflect that a Bureau-funded school 
may enroll eligible Indian students who are not members of the tribe.
    Response: We revised Sec.  37.111(b) and added paragraph (c) to 
clarify that a

[[Page 22184]]

Bureau-funded school may enroll eligible Indian students who are not 
members of the tribe. The section authorizes ISEP-eligible students 
residing within the tribe's jurisdiction to receive transportation 
funding to attend schools outside the geographic attendance area in 
which the student lives. The section also authorizes tribal member 
students who are ISEP-eligible and not residing within the tribe's 
jurisdiction to receive transportation funding to attend schools 
outside the geographic attendance area in accordance with a tribal 
resolution issued by the tribe in which the student is enrolled.
    Comment: Revise Sec.  37.122 to include a deadline for the 
Secretary to accept or reject a proposed geographic boundary change; a 
time period for publishing the Federal Register notice of an accepted 
change; and a time frame for informing a tribe why a suggested boundary 
change is not accepted.
    Response: The Committee acknowledged this comment, considered it, 
and made no change.
    Comment: Revise Sec.  37.131 to clarify that all off-reservation 
boarding schools will have separate, non-overlapping boundaries, or, if 
parental choice is applied, delete this section as unnecessary.
    Response: No change was made because the rule does not need 
clarification and the section is necessary to the rule.

V. Comments on Part 39--The Indian School Equalization Program

A. General Comments on the Indian School Equalization Program

    Comment: Several comments stated that data for actual 
transportation costs incurred by Bureau-funded schools should:

--Take into account costs of gas and additional wear and tear that 
vehicles incur in isolated, remote locations; and
--Reflect two school years' worth of transportation information.

    The commenters also felt that, after collecting this data:

--The Committee should reconvene to review the data and develop a 
proposed regulation; and
--The Secretary should then publish a proposed rule for notice and 
comment before a final recommendation is made.

    Response: The Committee acknowledged and considered this comment, 
however no change was made to the funding formula. The Committee agrees 
that it needs more information to develop an improved transportation 
funding formula. It therefore recommended to the Secretary that another 
negotiated rulemaking Committee convene after the Department and the 
Bureau-funded schools have gathered additional transportation 
information in order to develop a more accurate and fair transportation 
funding regulation.
    Comment: In the preamble, the Committee had asked for comments on 
the determination of an isolation factor. Several commenters 
acknowledged the effects of severe isolation that results in expenses 
above and beyond the norm. Some commenters felt that all schools were 
isolated and should qualify for an isolation adjustment and others 
suggested that even schools that have paved highways should be 
considered, as the areas surrounding some Bureau schools are 
underdeveloped.
    Response: The Committee acknowledged and considered these comments; 
however, there was no change made to the rule, as the comments did not 
give any specific indicators or suggestions on how to determine 
isolation factors.
    Comment: Also in the preamble, the Committee had asked if the 
funding formula should be left in the body of the rule or if it should 
be placed in the appendix. Commenters responded that the formula should 
be in the body of the rule.
    Response: The Committee recommends that the ``minimum amount of 
funding to sustain each Bureau-funded school formula'' be placed in the 
body of the rule and not in the appendix.
    Comment: The proposed rules may in practice contravene the culture 
of the Micoosukee Tribe and impinge on Tribal sovereignty. Due to the 
unique cultural aspects of Indian Tribes, the standards applied to non-
Indians cannot be applied to Indians. The result would be to infringe 
on tribal culture, violate laws designed to protect tribes, and take 
away the right of tribes to live according to their customs and 
beliefs. The proposed rules do not ensure fair and equal treatment for 
tribes.
    Response: The comment was acknowledged and considered. No action 
was taken because the Committee's charge was to develop regulations to 
implement the Act and, therefore, the Committee had no authority to 
address this comment.
    Comments: Several commenters discussed the need for additional 
funding. One commenter did not support using general funds to 
redistribute in the base program categories arguing that the proposed 
items could pose a huge financial impact on schools. Several commenters 
suggested more funding is required for general education of students. 
Another comment was that the Act will provide no additional funding but 
merely reallocate current funding.
    Several commenters shared the concern that current Bureau funding 
is insufficient in many areas, and that merely revising the 
distribution method is inadequate. What should have happened was a 
redistribution to concentrate funding where it is needed combined with 
additional funding to support the Act's mandates.
    Another commenter suggested providing recurring funding to support 
educational services to pre-K students. One Commenter suggested that 
special circumstances, such as the therapeutic dormitory pilot project, 
should be included in the ISEP base. These comments also included a 
comment that another funding mechanism is needed to fund non-ISEP 
eligible students for distance and alternative learning and expressed 
disappointment that the funding formula did not take into account 
greater lengths of service of employees. Schools incur increased costs 
with employees who have greater lengths of service. Several commenters 
also were disappointed that the formula does not provide funding for 
after school programs.
    Response: These comments were acknowledged and considered and no 
action was taken because the Committee's charge was to develop 
regulations to implement the Act but it was not authorized to make 
funding recommendations.
    Comment: Several commenters discussed Off-Reservation Boarding 
Schools (ORBS) and suggested that ORBS should not receive an additional 
weighted unit in the funding formula. Others felt that ORBS should 
receive an additional weighted unit in the funding formula because 
their needs are unique as some of their students have legal and 
behavioral problems.
    Response: The Committee acknowledged and considered this comment; 
however, no change was made to the funding formula because the 
commenters did not present any additional arguments that had not 
already been considered by the Committee in drafting the proposed 
rules.
    Comment: Several commenters recommended that the funding formula be 
revised to provide a supplemental weight for students with disabilities 
because the mandatory 15 percent set aside may cause economic hardship 
on

[[Page 22185]]

a school and the part B process is cumbersome.
    Response: The Committee did not have consensus to open this issue 
for discussion. The current regulations and the proposed regulations 
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 Federal team decided that additional information is needed to 
determine if modifications are necessary to the 15 percent set-aside. 
The Committee recommends that additional information be gathered 
regarding the number of ISEP eligible students who are identified as 
disabled and who are receiving special education services, and other 
related information. If the information collected reveals that the 15 
percent set-aside does not accurately reflect the percentage of ISEP 
eligible students with disabilities in the Bureau-funded school system, 
then the Committee recommends that a negotiated rulemaking committee 
negotiate revised special education funding regulations.
    Comment: The proposed rules will allow school districts to use 
Federal funds in a manner more consistent with their own reform 
strategies and priorities. It is important to note that these rules 
allow flexibility in adopting assessment systems composed entirely of 
locally developed and administered tests.
    Response: The comment was acknowledged and considered and no action 
was taken since no change was necessary based on this comment.

B. Section-Specific Comments

Section 39.2 What are the Definitions of Terms Used in This Part?
    Comment: There is no need for a definition of ISEP student count 
week.
    Response: The Committee acknowledged and considered this comment 
and made this change.
    Comment: The definition of school bus includes a definition of the 
operator, including the requirement that the driver be State qualified.
    Response: The Committee acknowledged and considered this comment 
and changed the definition of school bus to include ``. . . operated by 
an operator in the employ of, or under contract to, a Bureau-funded 
school, who is qualified to operate such a vehicle under Tribal, State, 
or Federal regulations governing the transportation of students.''
    Comment: Why does the definition of tribally operated contract 
school include grant schools?
    Response: The Committee acknowledged and considered this comment 
and changed the definition to read `` Tribally operated school means an 
elementary school, secondary school, or dormitory that receives 
financial assistance for its operations 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 (25 U.S.C. 450 
et seq.), or under the Tribally Controlled Schools Act of 1988.''
    Comment: Bureau-funded school and Bureau school should be defined.
    Response: The Committee acknowledged and considered this comment 
and added a definition of Bureau-funded school and Bureau school.
    Comment: Is the definition of ISEP count week still needed in view 
of the proposal to convert a 3-year rolling average for identifying the 
student count? The count period used for residential students is not 
the last full week in September. As only the transportation mileage 
count would be taken the last full week of September, the term could be 
changed to ``transportation mileage count week.''
    Response: The Committee acknowledged and considered this comment 
and took out the definition of ISEP count week, but kept the definition 
as part of the definition of transportation.
    Comment: The following corrections are needed in the definition of 
``Limited English Proficient'': ``(1) * * * means a child from a 
language background other than English who needs language assistance in 
his/her language or in English in school,'' (2) ``the child comes from 
an environment [where a language] other than English is dominant.''
    Response: The Committee acknowledged and considered this comment 
and adopted the suggested language changes to the definition of 
``Limited English Proficient.''
    Comment: The terms ``Bureau-operated or -funded schools'' used here 
is redundant. The term should be ``Bureau-funded,'' and that term 
should be defined, as suggested above.
    Response: The Committee acknowledged and considered this comment 
and took out the term ``Bureau-operated'' because it was redundant.
    Comment: The opening sentence of the definition for Special 
Education does not seem broad enough to cover the numbered items 
listed. Some special education students, especially those who are 
physically handicapped, require personal aides and other such 
accommodations that are customarily provided through special education 
programs and paid for with special education funds. Consider using the 
definition of ``special education'' in the IDEA regulations at 34 CFR 
300.26.
    Response: The Committee acknowledged and considered this comment 
and adopted the definition of ``special education'' in the IDEA 
regulations at 34 CFR 300.26.
    Comment: The definition of ``supervisor'' requires clarity. Perhaps 
in a Bureau-operated school the individual in the position of ultimate 
authority is called ``superintendent,'' but that is not the term used 
in all contract and grant schools. Furthermore, the ``ultimate 
authority'' in a contract or grant school is the school board. The 
purpose of this term should be determined and the definition clarified 
accordingly.
    Response: The Committee acknowledged and considered this comment 
and the term ``supervisor'' was removed as a definition.
    Comment: The definition of ``transported student'' does not match 
the term. A ``transported student'' is not ``the average number of 
students.'' Either the term should be revised or the definition should 
be revised.
    Response: The Committee acknowledged and considered this comment 
and removed the definition of ``transported student.''
    Comment: The definition of ``three year rolling average'' should 
expressly state that all supplemental weights should be included in the 
average. That is, the 3-year average should actually be an average of 
WSU count.
    Response: The Committee acknowledged and considered this comment 
and changed the definition to add the current year of operation in 
academic programs and residential programs.
    Comments: There were several comments on this section that did not 
result in a change to the rule. They include comments that:
    (1) The definition of ``agency'' should be changed so it reflects 
what an agency does because it does not always provide services to 
governing bodies;
    (2) The definition of ``agency school board'' is not necessary 
because they have no duties or responsibilities under ISEP;
    (3) The definitions need to clarify whether a school counts non-
ISEP students for ADM;
    (4) The definition of ``Individual Supplemental Services'' should 
include SPED since schools are required to spend ISEP funds for SPED 
services and

[[Page 22186]]

since SPED is a non-base academic service;
    (5) The ``Limited English Proficiency'' definition is too lengthy 
and should consist only of paragraph (3) because ISEP only deals with 
American Indians;
    (6) The definition of ``eligible Indian student'' should be revised 
to establish an upper age limit for eligibility for ISEF funding;
    (7) The ``homebound'' definition should require enrollment in a 
Bureau school, since a homebound student can qualify for ISEF and ADM 
count if he/she received the minimum level of contact hours; Suggested 
definition: ``Homebound'' means a student who is enrolled in a Bureau-
funded school and is educated outside the classroom''; and
    (8) The definition of ``Local School Board'' does not track the 
definition of that term in the Act and should read: ``Local School 
Board,'' when used with respect to a Bureau school, means a body chosen 
in accordance with the laws of the tribe.''
    Response: These comments were acknowledged and considered by the 
Committee, but the Committee determined that the comments did not raise 
concerns that the Committee had not already considered in the proposed 
rule and therefore no action was taken.
Section 39.102 What Is Academic Base Funding?
    Comment: The term ``base funding'' should be clarified to 
distinguish between ``academic base funding'' and ``residential base 
funding.''
    Response: The Committee acknowledged and considered this comment, 
and made this change throughout the funding section.
    Comment: The question should be revised to state, ``What is 
included in base academic funding?''
    Response: The Committee acknowledged and considered this comment, 
and changed the question to read, ``What is academic base funding?''
    Comment: The answer to Sec.  102(a) in the proposed rule is 
incorrect because it states that base funding includes all available 
funding for educational services.
    Response: The Committee acknowledged and considered this comment, 
and changed the answer to more accurately reflect that base funding is 
the average daily membership times the weighted student unit.
Section 39.103 What Are the Factors Used To Determine Base Funding?
    Comment: The answer is inaccurate, as it states, ``base funding 
factors'' when really it is the weighted unit factor for base academic 
and base residential funding.
    Response: The Committee acknowledged and considered this comment, 
and changed the chart (contained in the answer) to more accurately 
illustrate what the base academic and base residential funding is for 
the appropriate grade levels.
    Comment: In the question the words ``use'' and ``must'' are 
transposed.
    Response: The Committee acknowledged and considered this comment, 
and modified the sentence so that these two words are transposed into 
their correct positions.
Section 39.104 How Must a School's Base Funding Provide for Students 
With Disabilities?
    Comment: Is it necessary for a school to comply with the 
Individuals with Disabilities Act (IDEA) if the school does not have 
enough students to qualify for part B funding?
    Response: The Committee did not reach consensus to discuss this 
issue as it is clear that any student identified as disabled must be 
provided special education services under IDEA.
    Comment: This section needs to be revised to select one term to 
refer to the students being described and use it consistently.
    Response: The Committee acknowledged and considered this comment, 
and modified the rule to read ``students with disabilities'' throughout 
the document.
    Comment: This section contains several inaccuracies and needs 
revision. Specifically, the term ``academic base funding'' should be 
used in place of ``ISEP funds.'' What is meant by ``all components'' of 
IDEA?. Also, paragraph (b) should address only the circumstances under 
which a school may use some or all of the 15 percent reserved in 
paragraph (a)(1) for a schoolwide program.
    Response: The Committee acknowledged and considered this comment 
and modified the paragraph to refer to ``academic base funding'' 
instead of ``ISEP funds.'' The Committee rewrote the paragraph to state 
that a school may spend all or part of the 15 percent academic base 
funding reserved under paragraph (a)(1) on school-wide programs to 
benefit all students (including those without disabilities) only if:
    (1) The school can document that it has met all needs of students 
with disabilities with those funds; and
    (2) After having done so, there are unspent funds remaining from 
the funds.
Section 39.105 Are Additional Funds Available for Special Education?
    Comment: In paragraph (a) the term ``base funding'' should be 
``base academic funding'' and a reference to the 15 percent reserve 
should be inserted.
    Response: The Committee acknowledged and considered this comment, 
and changed the paragraph to read, ``a school may supplement the 15 
percent base academic funding reserved under Sec.  39.104, for special 
education with funds available under part B of the Individuals with 
Disabilities Education Act (IDEA).''
    Comment: Revise paragraph (b)(2) to read, ``provide training to 
staff to improve delivery of part B funds.''
    Response: The Committee acknowledged and considered this comment 
and revised the section to read, ``providing training to Bureau staff 
to improve the delivery of part B funds.''
    Comments: A commenter suggested clarification was needed on who 
makes the determination that schools have demonstrated that the 
reserved ISEP funds are inadequate to pay for additional SPED services 
and what criteria are used.
    Response: The comment was acknowledged and considered and no action 
was taken, as the Committee felt the rule was clear.
Section 39.106 Who Is Eligible for Special Education Funding?
    Comments: There were two comments on this section suggesting that 
clarification was needed as to whether the minimum age requirement only 
applies to ISEP SPED and if so why. The answer to the question of who 
is eligible for special education funding is not unique to special 
education. Rather it establishes age limits applicable to all students 
in the Bureau-funded system. It should be moved to the definition 
section.
    Response: The comment was acknowledged and considered and no action 
was taken as this section only refers to who is eligible for Special 
Education Funding.
Section 39.107 Are Schools Allotted Supplemental Funds for Special 
Student and/or School Costs?
    Comment: The Committee should take a serious look at categorical 
funding based on the special and unique educational needs of Indian 
children. The primary consideration seemed to be based on the 
distribution of available funds instead of the needs of children. The 
categorical funding must be based

[[Page 22187]]

on the actual services provided to student through a weighted student 
unit.
    Response: The Committee did not reach consensus on this item. The 
Federal team could not consider going back to a categorical system of 
basing the funding to a student on the type of disability that student 
may have.
    Comment: The answer to this question is inconsistent with the 
definition of the term ``school-wide supplemental funds.'' In that 
definition four conditions applicable to a school generate supplemental 
funds. By contrast, in the Sec.  39.107 chart, a mix of both student 
conditions and school conditions that generate supplemental funding 
appear. The weights shown in the chart are not consistent.
    Response: The Committee acknowledged and considered this comment 
and revised the chart.
    Comments: Several commenters suggested that the Committee missed 
several categories of funding. One comment suggested serious 
consideration be given to allowing all schools to offer early childhood 
programs instead of using discretionary programming such as the FACE 
program. The funding of FACE should be moved to ISEP and each school 
should have a weight of at least .5. Another commenter suggested other 
programs be considered like vocational and technical education, food, 
summer programming, and electric technologies.
    Other commenters suggested that school personnel costs and the cost 
of living should be taken into consideration and that all children 
should be funded equally. No child should be funded less than another 
child. The WSU for K-12 should be the same 1.5 WSU, especially for K's. 
The young children need more supervision, small classes, and therefore 
should not be only 1.15 WSU. This grade needs a teacher and an aide. 
Especially since the proposed WSU for intense bilingual is planned to 
be decreased to .13 WSU and all children will be eligible, this 
decrease will greatly impact our kindergarten program if the intense 
bilingual is decreased and the kindergarten grade WSU is the same. This 
should also apply to residential; the WSU should be the same for all 
grades.
    Response: The comments were acknowledged and considered and no 
action was taken as the Committee does not have authority to provide 
funding to early childhood education and because the commenters did not 
present any additional arguments that had not already been considered 
by the Committee in the draft proposed rules.
Section 39.110 Can ISEF Funds be Distributed for the Use of Gifted and 
Talented Students?
    Comments: There were several comments on the Gifted and Talented 
program. One commenter suggested that, as the rule is written, gifted 
and talented programs, apply only to academic programs. The weight for 
funding is included in ISEP, which is deducted before distribution of 
funds. Under this scenario, the rule creates a deficit for Residential 
Programs in boarding schools and major problems for residential 
dormitories that have absolutely no access to these gifted and talented 
funds. The gifted and talented program funds should be available to 
residential programs.
    Another commenter suggested that it can be predicted that the 
gifted and talented program will grow by anywhere from 10-20 percent 
from current levels and such growth could create an impact in excess of 
$20 million that will affect only residential programs.
    Another commenter suggested that the ``gifted programs have always 
used the idea of giftedness from the dominant culture, the Native ideas 
of giftedness have not been readily considered.'' It is important that 
Bureau schools make the proper assessment of giftedness, but whose 
definition is being used? Tribal leaders, parents, and the community 
should be involved in the process of defining gifted. The idea of 
placing a cap on the number of gifted students is not an option but 
rather an evaluation of what gifted means to the Native person and how 
that differs from the mainstream society. It should not be easy to get 
into the gifted program with the Bureau, but rather the school and 
community should give a clear demonstration of giftedness and how the 
school can support and advance the giftedness of the student in 
whatever ways appropriate.
    Response: The Committee could not reach consensus on these 
comments. These comments were acknowledged and considered by the 
Committee, but the Committee determined that the comments did not raise 
new concerns not already considered in the proposed rule. The Committee 
therefore took no action.
    Comment: Overall, the rules and procedures on Gifted and Talented 
seem cumbersome and administering the program is difficult due to the 
potential for abusing the count.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.112 What Is the Limit on the Number of Students Who Are 
Gifted and Talented?
    Comment: Although the rule states there is no cap on the number of 
gifted and talented students a school can have, there is a cap of 15 
percent in Leadership and Visual and Performing Arts. Critical Thinking 
as a specific category has been eliminated. There should not be a cap 
on Gifted and Talented and the six specific categories should be 
restored.
    Response: The comment was acknowledged and considered and no action 
was taken. This is because the Committee felt they did not limit the 
number of students who can be classified as gifted and talented, but 
limited the number of students that would receive ISEP funding as a 
gifted and talented student.
    Comment: In order to better correspond to the answer provided, this 
question should be revised to read: ``Is there a limit on the number of 
students a school can identify for the gifted and talented program?''
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: The proposed funding formula appears to be very 
cumbersome, complicated and an unrealistic method upon which schools 
would be dependent for funds to operate programs. A simpler formula 
needs to be established that would guarantee some degree of stability 
regarding operating funds for the entire year.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee determined that the comments did not 
raise concerns that the Committee had not already considered in the 
proposed rule and therefore no action was taken.
Section 39.113. What are the Special Accountability Requirements for 
the Gifted and Talented Program?
    Comment: No outcome state is provided for what happens if a school 
does not meet the two requirements in this section.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.114 What Characteristics May Qualify a Student as Gifted and 
Talented for Purposes of Supplemental Funding?
    Comment: This question is awkwardly worded. (The question as 
published in the proposed rule read, ``How does a school receive 
funding for gifted and talented students?'') Consider

[[Page 22188]]

revising the question to read, ``what characteristics may qualify a 
student as gifted and talented for purposes of supplemental funding?''
    Response: The Committee acknowledged and considered this comment 
and revised the question as suggested.
    Comment: In (e) strike ``determined by.''
    Response: The Committee acknowledged and considered this comment 
and struck the term ``determined by.''
    Comments: Several commenters suggested changing the caps on 
specific gifted and talented funding. One commenter suggested that a 
cap of 25 percent of the student body for gifted and talented should be 
used. Another believed that the 15 percent cap on leadership and visual 
and performing arts will have a significant impact on schools as many 
Native American students fall into these categories. Restricting the 
number of Indian students that can be identified as gifted or talented 
in any given school setting can stifle the talents of countless 
students. Indian students who qualify for this program should not be 
left out simply because the quota has been filled. Several commenters 
suggested they would like the rule reconsidered to require 
documentation to identify all students who truly qualify for the gifted 
and talented program.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt they did not limit the number of 
students who can be classified as gifted and talented, but limited the 
number of students that would receive ISEP funding as a gifted and 
talented student.
    Comment: Paragraphs (a) and (b) do not identify the measuring tool, 
and paragraph (c) provides an option of NRT or CRT assessment. One 
commenter suggested that only norm-referenced tests (NRTs) or IQ tests 
be used for gifted and talented categories in Sec.  39.114(a)-(c). 
Schools should develop their own criteria for placement in categories 
(d) and (e).
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language was clear and the 
Committee did not want to limit schools' options.
    Comment: This section does not specify what it is the student has 
to score in the top 5 percent of in order to be eligible. Does it mean 
the top 5 percent of students tested nationwide or just the school or 
some other group of students? ``Intellectual Ability'' is 
differentiated from ``academic aptitude/achievement'' even though it 
would seem that these might identify essentially the same students.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language was clear.
    Comment: Several commenters suggested that the criteria for gifted 
and talented students were overly inclusive. One commenter suggested 
the ``Leadership'' and ``Visual and Performing Arts'' criteria are 
quite subjective and will probably result in the schools simply 
identifying 15 percent of their student body for each category. For 
these students, special services will need to be available that will 
not be available to other students. This may cause implementation 
problems for students and schools alike. Another commenter suggested 
that their agency restrict the school to a maximum of 10 percent of 
enrollment in gifted and talented.
    Other commenters suggested that the weighted student unit (WSU) for 
the gifted and talented program should be the same for all grades K-12 
at .5 or .62 WSU. One commenter suggested that a discrepancy exists 
because of the low cap placed on measurable giftedness and the high cap 
on subjective giftedness. Nationwide, gifted talented student 
identification averages between 10-15 percent. In the recommended 
rules, giftedness can easily run in excess of 50 percent. Anything 
categorized above 50 percent should be considered the base program and 
curriculum should be adjusted accordingly.
    Several commenters also suggested imposing a cap on gifted and 
talented that is no greater than the national average in any given 
year.
    Response: These comments were acknowledged and considered but no 
action was taken, as the 15 percent enrollment number was the result of 
several days of negotiations in which these issues were discussed at 
length.
    Comment: The proposed regulation does not indicate what grade 
levels are eligible for gifted and talented designations. The commenter 
objects to proving gifted and talented services before third grade.
    Response: The Committee acknowledged and considered this comment 
and no change was made as the grade level was left to the discretion of 
the schools.
    Comment: What is the purpose of screening annually and is only 
annual screening permitted?
    Response: The Committee acknowledged and considered this comment 
and no change was made as the Committee felt the language was clear.
Section 39.115 How Are Eligible Gifted and Talented Students Identified 
and Nominated?
    Comment: This question should be revised so that the term ``gifted 
and talented'' appears in the question. (In the proposed rule, the 
question read: How are eligible students identified and nominated?) 
Suggested rewording: ``How may students can be nominated for gifted and 
talented designation?'' Response: The Committee acknowledged and 
considered this comment and changed the question to include the term 
``gifted and talented.''
    Comment: The second sentence of paragraph (a) should be edited as 
follows: ``A student may be nominated for gifted and talented 
designation using the criteria in Sec.  39.114 by any of the following: 
* * * (5) The student himself or herself.''
    Response: Paragraph (a) was changed to read, ``(a) Screening can be 
completed annually to identify potentially eligible students. A student 
may be nominated for gifted and talented designation using the criteria 
in Sec.  39.114 by any of the following: * * * (5) The student himself 
or herself.''
    Comment: In paragraph (b) the word ``child's'' should be changed to 
``student's.''
    Response: The Committee acknowledged and considered this comment 
and changed the term ``child's'' to ``student's.''
    Comment: The school is concerned with the proposed removal of the 
intensive residential guidance program. If the program is eliminated it 
will be easier to eliminate the services and the funding that are 
needed to meet these students' needs.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee intended all students to receive these 
services.
Section 39.117 How Does a School Provide Gifted and Talented Services 
for a Student?
    Comment: Neither the answer to this question nor any other proposed 
gifted and talented regulation describes the level of gifted and 
talented services that must be provided. A provision should be 
developed that includes the level of services requirements.
    Response: The comment was acknowledged and considered and no change 
was made to the rule because the comment did not present any additional 
argument that had not already been

[[Page 22189]]

considered by the Committee in drafting the proposed rules.
Section 39.118 How Does a Student Receive Gifted and Talented Services 
in Subsequent Years?
    Comment: The two sentences of paragraph (a) are contradictory. If a 
student does not have to reapply for a gifted and talented designation, 
why must the student be retested every 3 years? The second sentence 
should be deleted.
    Response: The Committee acknowledged and considered this comment 
and changed the last sentence of paragraph (a) to read, ``However, the 
student must be reevaluated at least every 3 years through the 10th 
grade to verify eligibility for funding.''
    Comment: There were several comments suggesting in paragraph (b), 
the cross-reference to Sec.  39.114 should read ``(d) or (e)'' rather 
than ``(e) or (f).''
    Response: The Committee acknowledged and considered this comment 
and changed the cross reference to read ``(d) or (e).''
Section 39.119 When Must a Student Leave a Gifted and Talented Program?
    Comment: It is recommended that no student be tested out of gifted 
and talented and therefore this section should be revised to the extent 
it calls for testing out. If the section remains, how can a school 
comply with paragraph (b)? Would the student have to be tested and 
found to no longer qualify? If this remains, it should be limited to 
students identified under leadership and visual performing arts only. 
If the purpose of the testing required in paragraph (b) is evaluation 
and testing of gifted and talented students' progress, this is 
acceptable.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language in the proposed rule was 
clear.
Section 39.130 Can ISEF Funds Be Used for Language Development 
Programs?
    Comment: The rules acknowledge the presence of students who are not 
proficient in any language, but do not provide any means for 
identifying them. While there is a test at Sec.  39.134 for testing 
English ability, there is seemingly no measure for identifying the 
skill of students in their Native language.
    Response: The comment was acknowledged and considered and no action 
was taken as the purpose of this section is to determine whether a 
student has limited proficiency in English.
    Comment: Several commenters supported this section of the proposed 
rule. One tribal commenter agrees with the recommended special cost 
factor of .13 for language programs. Not only has that been a concern 
for many years, but it has not always been clear if Bureau schools had 
permission to teach Native languages.
    Another commenter suggested that the tribe supports the proposed 
rule on Language Development programs, particularly the parts that seek 
to ensure the goal of infusing Native language and culture in to school 
curricula. However, the tribe does not agree with using ISEP funds to 
support Language Development programs for Native students who are 
predominantly ELL learners or are limited English language proficient 
as ISEP funds should be used generally for all school programs. 
Instead, funding for Language Development and ELL students should be 
provided for separately and the WSU be appropriated at 0.25 based on 
this new definition. The tribe expects Bureau to seek specific 
appropriations from Congress to support Native Language development 
curricula.
    Response: The comment was acknowledged and considered and no action 
was taken as these regulations have no affect on the amount of current 
or future appropriations.
Section 39.131 What Is a Language Development Program?
    Comment: Paragraphs (d) and (e) of this section seem to describe 
the same student. If there was a different intent, one or both of the 
paragraphs should be revised.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language was clear.
    Comment: The School Board is afraid that the English proficiency 
assessment will remove students from their Native Language program. If 
the intent is to have all Native American students taught their Native 
Language, more funding will be required to sustain the effort as the 
funding will be subtracted from the general pool.
    Response: The comment was acknowledged and considered and no action 
was taken as these regulations have no effect on the amount of current 
or future appropriations.
Section 39.132 Can a School Integrate Language Development Programs 
Into Its Regular Instructional Program?
    Comment: We strongly support the concept of the integration of 
Native language programs into the regular curriculum.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.134 How Does a School Identify a Limited English Proficient 
Student?
    Comment: Since the proposed rules for AYP include using the 
definition from the State Accountability Workbook in which the tribally 
funded school is located, it would be appropriate to provide an option 
for using the LEP assessment instrument approved for use within the 
State in which the tribally funded school operates.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee felt this option was already available 
to tribes.
Section 39.135 What Services Must Be Provided to an LEP Student?
    Comment: The language indicating that services are to assist LEP 
students become proficient in English and to the extent possible their 
Native language seems too vague and ambiguous.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language was clear.
    Comment: We support the .13 weight for the Language Development 
Programs, so as not to adversely impact a school's ISEF allotment that 
would occur if the current .2 weight for intense bilingual were 
retained.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.137 May Schools Operate a Language Development Program 
Without a Specific Appropriation From Congress?
    Comment: The citation regarding Native Language curriculum is 
incorrect. It should read 25 U.S.C. 2007(C)(1)(E).
    Response: The Committee acknowledged and considered this comment 
and the citation was changed to read 25 U.S.C. 2007(C)(1)(E).
    Comments: Several commenters made suggestions on future 
appropriations. One commenter suggested if Congress does not provide 
additional ISEP funding for Native Language curriculum, Native Language 
programs for restoration and enhancement should be funded solely out of 
the new appropriation, and the ``Language Development Program'' 
described in these regulations should be altered accordingly. That is, 
the ``Language

[[Page 22190]]

Development Program'' should be restored to the focus of teaching 
English to students not proficient in that language and the weight for 
these students should be restored to the current level of .2.
    Another commenter suggested this section places a limit on the 
amount of future Congressional appropriations that can be appropriated 
for Native language programs. The statute on which this section is 
based also seems indecipherable. It is not clear that this rule 
captures the meaning of the statutory provision, whatever it may be.
    Response: The comment was acknowledged and considered and no action 
was taken as these regulations have no effect on current or future 
appropriations.
Section 39.141 What Is the Amount of the Small School Adjustment?
    Comment: The definition of small schools in the Proposed Rule needs 
to be expanded slightly to include mores schools not accomplishing 
economies of scale, and funding should take into account costs of 
accreditation.
    Response: The comment was acknowledged and considered and no action 
was taken because the comment did not present any additional argument 
that had not already been considered by the Committee in drafting the 
proposed rules.
    Comment: The school board agrees with the small school and small 
high school adjustment but more funding is required so it does not take 
away from the general pool.
    Response: The comment was acknowledged and considered and no action 
was taken as these regulations have no effect on the amount of current 
or future appropriations.
    Comment: Several commenters agreed with the Committee's 
recommendation to offer an adjustment for schools with smaller school 
populations.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.144 What Is the Small High School Adjustment?
    Comment: The table that accompanies this section should be edited 
for clarity. We recommend that the first column heading be phrased in 
the form of a question because the answers that follow are either 
``yes'' or ``no.'' We suggest, ``Does the school receive a small school 
adjustment under Sec.  39.141?''.
    Response: The Committee acknowledged and considered this comment 
and changed the table to read, ``School receives a small school 
adjustment under Sec.  39.141.''
Section 39.145 Can a School Receive Both a Small School Adjustment and 
a Small High School Adjustment?
    Comment: The first sentence of the answer should read, ``A school 
that meets both of the criteria in Sec.  39.140 can receive both a 
small school adjustment and a small high school adjustment.''
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language was clear.
    Comment: The table that accompanies this section should be revised 
to make it clearer.
    Response: The Committee acknowledged and considered this comment 
and changed the table to read 1-50 and 51-98.
Section 39.156 Is There an Adjustment for Small Residential Programs?
    Comment: We object to this provision and request that it be 
stricken. Residential programs already attract additional weights for 
residential students. Residential programs that use commercial forms of 
transportation receive 100 percent reimbursement for transportation 
costs and therefore receive transportation funding at a higher rate 
than schools that only use surface bus transportation.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments did not raise concerns that the 
Committee had not already considered in the proposed rule and therefore 
no action was taken.
Section 39.200 What Is the Purpose of the Indian School Equalization 
Formula?
    Comment: The tribe would like the ISEP week to be changed to either 
the prior or subsequent week because the current week is American 
Indian Week, which is a short week for the school, and because students 
are allowed to participate in cultural activities taking place outside 
the school and during that week. As a result, many students do not 
attend that week, resulting in a loss of funding for the school.
    Response: The comment was acknowledged and considered and no action 
was taken, as funding under the new regulations will be based on 
Average Daily Membership at schools.
Section 39.203 How Does OIEP Calculate ADM?
    Comment: Paragraph (a) refers to Aperiodic reports' from schools 
but does not indicate when these reports are to be filed. No provision 
in part 39 states when ADM reports for academic programs are to be 
compiled or filed. The frequency must be set out with consideration to 
technological feasibility and administrative efficiency so that schools 
are not forced to perform administrative tasks or incur unreasonable 
expenses that are beyond their resources.
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comments: Several commenters supported the Committee's 
recommendation to use Average Daily Membership to count students for 
the purposes of ISEP academic funding. The Tribe also agrees with the 
3-year rolling average. The proposed mechanism would enable the school 
to better plan and budget for the upcoming school year based primarily 
on a 3-year rolling average of student enrollment.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.204 How Does OIEP Calculate ISEF?
    Comment: Both the question and answer should be edited. OIEP does 
not calculate ISEF. It calculates the value of a WSU and then each 
school's allotment under the ISEF. Paragraph (a) says the 3-year 
average ADM is to be multiplied by ``the weighted student unit that is 
applicable to eligible students.'' At what point is this multiplication 
made? Is the 3-year average ADM multiplied by some weight total for the 
current year? If the latter, how would the 3-year average relate to 
weights assigned to the students for the current year? The terms 
``supplemental units'' and ``supplemental weights'' are used in this 
section. One term should be selected and referred to consistently 
throughout the subpart.
    Response: The Committee acknowledged and considered this comment 
and added a new question before Sec.  39.203 to read: ``When does OIEP 
calculate a school's allotment? OIEP Calculates a school's allotment no 
later than July 1. Schools must submit final ADM enrollment figures no 
later than June 15.'' The rule then goes on to keep Sec.  39.203 and 
then changed Sec.  30.204 to read:

    How does OIEP calculate a school's total WSU for the school 
year? OIEP will add the weights obtained from the calculations in 
paragraphs (1), (2), and (3) of this section to obtain the total 
weighted student units (WSUs) for each school.
    (1) Each year's ADM is multiplied by the applicable weighted 
student unit for each grade level;

[[Page 22191]]

    (2) Calculate any supplemental WSU generated by the students; 
and
    (3) Calculate any supplemental WSU generated by the schools.
    The total WSU for the school year is the sum of (1), (2), and 
(3). The method for calculating the three-year averages WSU is 
illustrated in a table.

    Comment: Funding should be based on prior year student ADM, so 
schools will be better able to plan for the upcoming school year 
regarding calendar days, contract days, and the number of personnel and 
the budgets they can fund. The 3-year average requirement would make 
estimating budgets more complicated and confusing.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: The Tribe recognizes the intent of the Committee to ensure 
that schools are funded up front using the Average Daily Membership 
method; however, the Tribe proposes using both Average Daily Attendance 
and ADM in the funding formula. For example, students are counted on 
the 40th and 100th days, while the ADM formula remains the same.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments did not raise concerns that the 
Committee had not already considered in the proposed rule and therefore 
no action was taken.
Section 39.206 How Does OIEP Determine a School's Funding for the 
Upcoming School Year?
    Comment: The term ``upcoming school year'' should probably read 
``current school year.'' The term ``this year's'' appears in paragraph 
(f).
    Response: The Committee acknowledged and considered this comment 
and deleted the term ``upcoming year's'' from the question and replaced 
it with ``current school year's,'' for clarity.
    Comment: The 7-step process outlined here is incomplete and in some 
places incorrect. A full re-write of the provision is needed. There 
were also several comments on the terms and references used in this 
section.
    Response: The Committee acknowledged and considered this comment 
and changed the process (now located in Sec.  39.207) to read as 
follows:

    To determine a school's funding for the school year, OIEP uses 
the following seven-step process:
    (a) Step 1. Multiply the appropriate base academic and/or 
residential weight from Sec.  39.103 by the number of students in 
each grade level category.
    (b) Step 2. Multiply the number of students eligible for 
supplemental program funding under Sec.  39.107 by the weights for 
the program.
    (c) Step 3. Calculate the school-based supplemental weights 
under Sec.  39.107.
    (d) Step 4. Add together the sums obtained in steps 1 through 3 
to obtain each school's total WSU.
    (e) Step 5. Add together the total WSUs for all Bureau-funded 
schools.
    (f) Step 6. Calculate the value of a WSU by dividing the current 
school year's funds by the average total WSUs as calculated under 
step 5 for the previous 3 years.
    (g) Step 7. Multiply each school's WSU total by the base value 
of one WSU to determine funding for that school.

    Comment: The cross-reference in paragraph (a) should be to Sec.  
39.103.
    Response: The Committee acknowledged and considered this comment 
and changed the cross-reference to Sec.  39.103.
Section 39.207 How Are ISEP Funds Distributed?
    Comment: Paragraph (b) states that the Act requires the second 
payment to be made ``no later than December 1'' and the regulation 
should reflect this command. As written, the sentence could be 
interpreted as allowing the December 21 payment to be made after the 
two recited actions are completed--verification of the school count'' 
and any appeals for the prior year--which could be sometime after 
December 1. If the second payment were delayed to accommodate these 
actions the regulation would conflict with the Act. The confusion 
should be resolved by redrafting. What ``school (student)'' count is to 
be verified? Schools are to receive payments based on the average of 
the prior 3 years' student count, not on the count for the current 
year. Thus, there would be no count to verify for the December 1 
payment.
    Response: The comment was acknowledged and considered, but the 
Committee decided that it had already considered all of the concerns in 
the proposed rule. For this reason, no action was taken.
    Comment: The Tribally Controlled Schools Act requires the first 
payment of funds to be an amount equal to 80 percent of the amount the 
school was entitled to in the preceding academic year. This needs to be 
continued. The integrity of the base academic and residential programs 
should not be eroded by special cost factors.
    Response: The comment was acknowledged and considered, but since 
the Committee had already considered the concerns raised by comment, no 
action was taken.
Section 39.208 When May a School Count a Student for Membership 
Purposes?
    Comment: At the end of the first sentence add ``and shall be 
counted for ADM purposes.''
    Response: The Committee acknowledged and considered this comment 
and changed the first sentence as suggested.
    Comment: The proposed rules for AYP include using the definitions 
from the State Accountability Workbook in which the tribally funded 
school is located. It would be appropriate to provide an option for 
using the State definition of the term ``enrolled student'' for the 
State in which the tribally funded school operates.
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comments: There were several comments regarding the transition from 
count week to ADM. One Commenter suggested that the rule seems to omit 
from the student count students that are enrolled after the 10th day of 
school regardless of their attendance after that point. This would seem 
to include transfer students. Another felt the relationship of ADM to 
being ``counted as enrolled'' is unclear and as stated does not seem to 
make sense. It seems that only students who were present during one of 
the first 10 days of school can be used to calculate ADM no matter how 
often they are in attendance later on in the year. This does not seem 
to be true ADM, but is arbitrarily limited. One of the reasons for 
switching to ADM was to avoid such arbitrary funding calculations.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee did not limit ADM to students enrolled 
the first 10 days of school. The rule allows for a student to be added 
to the membership and counted for ADM throughout the year.
    Comment: The Tribe agrees with the proposal to stop using ``count 
week'' as the way to distribute funding to Bureau schools.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.210 What Other Categories of Students Can a School Count for 
Membership Purposes?
    Comment: The physical attendance requirement for alternative, 
Internet, college, and video courses is not real. Students are in these 
programs because they struggle with attending school regularly. There 
needs to be another

[[Page 22192]]

way of tracking participation, maybe reimbursement for completed 
courses.
    Response: The comment was acknowledged and considered and no action 
was taken because the Bureau of Indian Affairs is not authorized to 
fund satellite schools and because the comment did not present any 
additional argument that had not already been considered by the 
Committee in the draft proposed rules.
Section 39.211 Can a Student Be Counted as Enrolled in More Than One 
School?
    Comment: This section states that a student can be counted in more 
than one school as long as the student meets the criteria of Sec.  
39.208. However, it would seem that the student would be counted as 
being in two different schools at the same time.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee felt the language of the section was 
clear.
Section 39.213 What Are the Minimum Number of Instructional Hours 
Required in Order To Be Considered a Full-time Educational Program?
    Comment: Each accreditation agency requires different instructional 
hours. It would be better to state that if a school is accredited it 
can receive funding.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.215 How Does ISEF Fund Residential Programs?
    Comment: Edit the second sentence to read ``funding for residential 
programs is based on the average of the 3 previous years'' residential 
WSUs.
    Response: The Committee acknowledged and considered this comment 
and changed the second sentence as suggested.
    Comment: Residential programs are smaller and have fewer staff than 
schools. Requiring more documentation and reporting seems overwhelming 
and discriminating in nature.
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: The existing ISEP formula does not provide adequate 
funding to operate a residential and boarding school program. The 
regulations as written will effectively eliminate peripheral 
dormitories and significantly impact the ability of residential 
boarding schools to financially survive. The regulations should be 
revisited to make the necessary corrections to raise the residential 
and boarding school weights to adequately fund the program. The formula 
should be adjusted to fund all residential and boarding school students 
at a base weight of 2.0.
    Response: The Committee acknowledged and considered this comment, 
however no change was made to the funding formula because the 
commenters did not present any additional arguments that had not 
already been considered by the Committee in the draft proposed rules.
Section 39.216 How Are Students Counted for the Purpose of Funding 
Residential Services?
    Comment: Paragraphs (b) and (c) should be revised to refer to the 
``first full week in October'' in order to be consistent with paragraph 
(a).
    Response: The Committee acknowledged and considered this comment 
and changed the paragraphs to refer to the ``first full week in 
October.''
    Comment: While instruction switched to ADM, residential service 
continues to be funded on a count week; however the average of the 
previous 3 years would be the count that is used. This decision was 
probably made due to the wide fluctuations of dormitory attendance due 
to various factors.
    Response: The comment was acknowledged and considered and no action 
was taken because there was no suggested change.
Section 39.217 Are There Different Formulas for Different Levels of 
Residential Services?
    Comment: There were several comments suggesting a discrepancy 
between Sec.  39.217(c) and Sec.  39.218. Section 39.217(c) states that 
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. Section 39.218 states that schools must maintain 25 
percent of its residency each month to avoid severe financial 
sanctions. The tribe request that Sec.  39.217(c) be changed to 25 
percent to retain continuity in the rule.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments did not raise concerns that the 
Committee had not already considered in the proposed rule and therefore 
no action was taken.
    Comment: Section 39.216 establishes a 3-week count period for 
residential programs. Did the Committee intend to add the weekend 
before the 3-week period for the purposes of qualifying for residential 
funding?
    Response: This comment was acknowledged and considered and no 
action was taken.
    Comment: Several commenters suggested changes to the table. One 
suggestion was that the table should be revised to read (in either 
table or sentence form): ``If a residential program operates 4 nights 
per week or fewer, the weight for each residential student shall be 
obtained by multiplying each student's base residential factor for the 
appropriate grade, as set out in Sec.  39.103, by 4/7.'' ``If a 
residential program operates 5, 6 or 7 nights per week, the weight for 
each residential student shall be obtained by multiplying each 
student's base residential factor for the appropriate grades, set out 
in Sec.  39.103 by 7/7.''
    Another suggestion asked this question about paragraph (b): This 
paragraph requires at least 10 percent of the students in a residential 
program to be in the dormitory 3 of the 4 weekends during the count 
period. Is this correctly stated or should it read, ``2 of the 3 
weekends during the count period?''
    Response: These comments were acknowledged and considered and no 
action was taken.
    Comment: There were several comments seeking clarification of the 
weekend services. One commenter suggested if a residential program only 
intends to serve students 4 nights per week and receives funding for 
only 4 nights, is it nonetheless expected to serve 10 percent of its 
students over the weekend?
    Another commenter suggested the different treatment for dormitories 
that are open 5, 6, or 7 days from those open 4 nights a week will 
likely have the effect of more dormitories staying open on weekends or 
at least, being open on Sunday evening for returning students. The 
effect of this change will be a shift of funding from day schools to 
boarding schools. Even within boarding schools, a greater portion of 
costs will shift to residential programs and away from instruction.
    Response: The comment was acknowledged and considered but the 
comments raised concerns that the Committee had already considered in 
the proposed rule and therefore no action was taken.
Section 39.218 What Happens if a Residential Program Does Not Maintain 
Residency Levels Required by This Part?
    Comments: Several commenters had questions pertaining to this 
section of the rule. One commenter asked, ``the penalty stated for 
failing to meet the minimum retention requirement each month is the 
loss of one-tenth of * * *

[[Page 22193]]

current year allocations. Since the school year runs for ten months, 
the penalty is a full month's worth of funding. How can such a program 
stay in operation for the month if it loses full funding for that 
month? Does the Committee intend that the dormitory would close? If 
that occurs, it is unlikely the dorm would reopen in the following 
month. How is the loss of funding to be implemented? Since the Act 
requires contract and grant schools to be paid in advance, does the 
Committee contemplate that the Bureau would send a bill for 
collection?''
    Response: The comment was acknowledged and considered, but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: The requirement that monthly residential reports be filed 
on the last school day of a month will likely pose an administrative 
difficulty for OIEP at the end of each year. Many schools do not 
complete their school year until sometime in June. Even if all 
residential programs file timely reports for the month of June, it is 
possible that OIEP will have only a few business days left in June to 
make the calculations needed to distribute the July 1 payment for the 
next academic year.
    Response: The comment was acknowledged and considered and no action 
was taken because OIEP felt they would be able to make the calculations 
based on these timeframes.
    Comment: Provisions should be made for circumstances that might 
temporarily close all or part of a dorm and prevent that program from 
meeting the 10 nights/students/month minimum. Examples of these 
circumstances are: (1) students absent due to an illness or injury and 
(2) unforeseen circumstances, such as a flu epidemic or health/safety 
situations.
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt this issue was addressed in Sec.  
39.217(d).
    Comment: When referencing the use of counts obtained from the 
current system in the table, the term ``count weeks'' should be used to 
differentiate from the proposed new system for residential counts, 
which will occur over a 3-week period. In row (c) of the table 
``systems or'' should be replaced with ``residential and academic 
programs are.''
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.219 What Reports Must Residential Programs Submit To Comply 
With This Rule?
    Comment: A student must be in residence at least 10 nights during 
each full school month in order to be counted. Does this mean that 
months such as August, December, and June are not considered a ``full 
school month'' and would not have to achieve the 10-night minimum? It 
would be helpful to expressly list in the regulation the calendar 
months that are considered ``full school months'' for the purpose of 
the 10-night minimum.
    Response: The Committee acknowledged and considered this comment 
and added a new question after Sec.  39.219. The new question reads, 
``What is a full school month?'' The answer is ``Each 30-day period 
following the first day residential services are provided to students 
based on the school residential calendar.''
Section 39.220 How Will the Provisions of This Subpart Be Phased In?
    Comment: The answer should be reworded to read ``The calculation of 
the 3-year rolling average of ADM (WSU) for each school and for the 
entire Bureau-funded school system will be phased in as shown in the 
following table.''
    Response: The Committee acknowledged and considered this comment 
and changed the answer to the language in the comment.
Section 39.400 What Is the Purpose of This Subpart?
    Comment: This section, combined with Sec.  39.409, adds more 
bureaucracy and additional expenses to OIEP. It is not necessary to 
hire independent auditors because it creates mistrust. Funds are wasted 
by implementing an external audit on the certified count.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: This provision should be edited to read: `` The purpose of 
this subpart is to establish systematic verification and random 
independent outside auditing procedures to hold administrative 
officials and the school board, or tribal officials having 
responsibility for student count and student transportation 
expenditures reporting, accountable for accurate and reliable 
performance of these duties. The subpart establishes systematic 
verification and random independent outside auditing procedures to 
accomplish this goal.''
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: The School Board wants to know how the Bureau would get a 
refund from a grant school if the school was overfunded.
    Response: The comment was acknowledged and considered and no action 
was taken as the statute clearly outlines how the Bureau is to collect 
overpayments.
Section 39.403 What Certification Is Required?
    Comments: Several commenters asked what teacher certification and 
school accreditation have to do with individual student records. This 
is not an ISEP requirement.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: As written, paragraph (c) is meaningless. It should 
identify precisely the certifications required for ELO, specialists, 
and school superintendents so that a competent review of compliance 
with the requirement to maintain such certifications can be made. In 
addition, the provision should require that the certifications of 
personnel be maintained and available for inspection at the office in 
which they work as well as in a ``central location.''
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: It should be clarified that for the purposes of 
confidentiality that Special Education files may be maintained in a 
separate location per IDEA and FERPA.
    Response: The comment was acknowledged and considered and no action 
was taken because these regulations are subject to IDEA and FERPA, 
which have their own regulations addressing such issues.
    Comment: The change in accountability of student eligibility and 
attendance is a good step. The commenter agrees that all schools should 
maintain files and certify their accuracy relating to documentation of 
student eligibility to receive base and supplemental services. The 
concept of holding each Bureau education line officer accountable for 
this shows an attempt to improve Bureau's level of service.

[[Page 22194]]

    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: Paragraphs (a) and (b) should specify when the required 
certifications must be made and submitted. Is this a one-time-per-
academic-year requirement? If so, when must the requirement be 
satisfied? If this certification is a periodic requirement, state the 
frequency.
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: When will the ELOs annual reviews be conducted? At the 
beginning or end of the academic year? Periodically throughout the 
year?
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee felt that Sec.  39.405 answered this 
question.
    Comment: Clarification is needed as to who will pay for the outside 
audits the Director is to conduct.
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee felt the regulation was clear.
Section 39.405 How Will Verifications Be Conducted?
    Comments: There were several comments on the timing of 
verification. One commenter suggested the first two sentences seem to 
address verification of the academic count, and require a minimum of 
one day per grading period to be included in the verification survey. 
Does this mean that the verifications cannot be made until the end of 
the year when all the grading periods have been completed?
    Another commented that the last sentence relates to verification of 
the residential count. Verification of the count for the count period 
makes sense, but there is no statement when that verification will 
occur. Since the regulations do not establish a time for submitting the 
residential count, it is impossible to tell when the verification will 
take place. Also, what method and frequency will the ELO use to verify 
residence during the remainder of the year?
    Response: The comment was acknowledged and considered and no action 
was taken because the Committee felt that the regulation clarified that 
this was an ongoing process.
Section 39.406 What Documentation Must the School Maintain for 
Additional Services It Provides?
    Comment: Services from certified education personnel should not be 
required.
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: The requirement of physical attendance at the school for 
at least 3 hours per day may restrict students from fully participating 
in college-based advanced placement opportunities for more than half of 
an ordinary school day. This would impede the ability of some highly 
capable students to receive full dual high school and college credit 
from the many State programs. An arbitrary restriction of 3 hours per 
day in physical attendance is not consistent with the Bureau's post-
secondary placement goals.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
Section 39.407 How Long Must a School Maintain Records?
    Comment: Records retention should be for only 3 years.
    Response: The comment was acknowledged and considered and no action 
was taken because all records are subject to Federal records retention 
timeframes.
Section 39.409 How Does the OIEP Director Ensure Accountability?
    Comment: In paragraph (a)(1), the purpose of the audit is clearly 
intended to be an audit of education line officer performance. But in 
(b)(1) and (2), the auditor tasks relate to the accuracy of the 
school's reports, rather than to the integrity of the ELO's review. 
Paragraph (b) should be revised to make it clear that it is the ELO's 
performance that is under review.
    Response: The Committee acknowledged and considered this comment 
and changed the answer to reflect the language in the comment.
    Comment: This section, read in conjunction with Sec.  39.400, adds 
more bureaucracy and additional expenses to OIEP. It is not necessary 
to hire independent auditors because it creates mistrust. Funds are 
wasted by implementing an external audit on the certified count.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: Paragraph (a)(1): Who will decide which school in each 
OIEP line office is selected for the random filed audit each year? 
There should be a method to ensure that contract, grant, and Bureau-
operated schools in a line office are selected over time, and that the 
same school is not ``randomly'' selected for repeated audit. If such 
were to be permitted, a line offer's model school could be routinely 
selected.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
    Comment: This section calls for an independent audit of at least 
one school per line officer per year. This would be over 20 audits per 
year to be done at Central Office expense. This could become an 
unfunded mandate, as there has been little or no interest in increasing 
funding for Bureau education administration. If this is the key to 
accountability, then it needs to be in the FY 2005 or 2006 budget 
request.
    Response: The comment was acknowledged and considered and no action 
was taken as this regulation has no impact on budget requests.
    Comment: This section establishes criteria for auditing firms and 
calls for licensed CPAs who audit under Single Audit Act. This does not 
seem appropriate since this is not an audit of accounting procedures. 
This is an audit of student counting and should call for consulting 
firms that are expert in such procedures and familiar with the 
classifications that result in student weights.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
Section 39.412 What Sanctions Apply for Failure To Comply With This 
Part?
    Comment: Paragraph (b) is intended to ensure that Bureau and school 
administrative officials are held to account for actions described in 
paragraph (a), but the phrase ``unless prohibited by law'' could defeat 
the sunlight the provision seeks to ensure. Bureau should provide the 
Committee with a legal opinion on the question whether Federal law 
permits or prohibits performance deficiency personnel actions involving 
Federal employees to be reported to the affected tribal governing body. 
If Federal law would prohibit such reporting, this provision is 
meaningless with regard to Federal employees and would apply only to 
contract and grant school employees. The Committee should determine if 
such an outcome is supportable.

[[Page 22195]]

    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.413 Can a School Appeal the Verification of the Count?
    Comment: This provision does not state when disallowances would be 
made nor when they will be communicated to the affected school. Nor 
does it set out a time period for the appeal.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.500 What Emergency and Contingency Funds Are Available?
    Comment: Paragraph (a) says the reserved amount is to be ``1 
percent of funds from the allotment formula.'' This is not a precise 
description of the funds involved. It should be re-written to reflect 
the Act (25 U.S.C. 2007).
    Response: The comment was acknowledged and considered and no action 
was taken as the Committee felt the language in the proposed rule was 
sufficient.
Section 39.501 What Is an Emergency or Unforeseen Contingency?
    Comment: This section requires that all criteria in paragraphs (a) 
through (e) be met to qualify for contingency funds. Paragraphs (c) and 
(e) should be revisited by the Committee. Paragraph (c) would eliminate 
any event that could have been covered by an insurance policy. This is 
objectionable, as in theory; nearly any event could be covered by an 
insurance policy if one is willing to pay the premium for the coverage. 
Paragraph (e) requires someone (OIEP Director) to make a very 
subjective judgment as to whether the event could have or have not been 
prevented by prudent action by officials responsible for the education 
program. The presence of these two provisions in the regulation could 
prevent any event from qualifying for contingency funds.
    Response: The Committee acknowledged and considered this comment 
and changed paragraph (c) to read ``It is not covered by an insurance 
policy in force at the time of the event.''
    Comment: The section states the criteria for identifying what the 
contingency fund can be used for and indicates that the fund cannot be 
used in cases of mismanagement, malfeasance, or willful neglect. While 
it is clearly not the intent of the fund to cover such costs, the 
Bureau needs to be ready for situations where a school has been grossly 
mismanaged and there has been a resumption or other change in 
management late in the year and little or no funding remains in the 
school's budget. There is probably no other source of funds in such a 
situation.
    Response: The comment was acknowledged and considered and no action 
was taken as the comment did not suggest a change to the rule.
Section 39.502 How Does a School Apply for Contingency Funds?
    Comment: The final sentence must be revised to provide that the 
Director will respond to the request for contingency funds ``within 30 
days or receipt of request.'' The provision should also allow a school 
to send a request for contingency funds directly to the Director, with 
a copy to the ELO. This is needed to ensure that a school's request 
reaches the Director even if the ELO fails to forward it to the 
Director within 48 hours as required by this section.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments did not raise concerns that the 
Committee had not already considered in the proposed rule and therefore 
no action was taken.
Section 39.504 May Contingency Funds be Carried Over to a Subsequent 
Fiscal Year?
    Comment: Add a second sentence: ``Contingency funds provided to a 
contract or grant school shall be available for expenditures without 
fiscal year limitations.''
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: This states that Bureau operated schools may carry over 
contingency funds to the next fiscal year. Has it been researched and 
verified that this is possible?
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
Section 39.600 Are Bureau-Operated School Board Expenses Funded by ISEP 
Limited?
    Comment: The school board does not believe money should be used for 
school board expenses and training because it will take away from 
student funding.
    Response: The comment was acknowledged and considered and no action 
was taken as the school board is authorized by statute to use these 
funds.
    Comment: The Tribe agrees with proposed rules on school board 
training.
    Response: The comment was acknowledged and considered and no action 
was taken.
Section 39.602 Can Grant and Contract Schools Spend ISEP Funds for 
School Board Expenses, Including Training?
    Comment: There were several comments discussing which funds should 
be used for school board training.
    Response: The Committee acknowledged and considered this comment 
and deleted Sec.  39.602 after determining it was unnecessary.
Section 39.603 Is School Board Training Required for All Bureau-Funded 
Schools?
    Comment: The answer to this question is incomplete as it does not 
reflect the statutory provision at 25 U.S.C. 2007(c)(2)(B)(iii) which 
recommends, but does not require, training for a tribal council that 
serves as a school board. The provision should be revised as follows: 
``Yes. Any new member of a local board or an agency school board must 
complete 40 hours to training within one year of appointment, provided 
that such training is recommended, but is not required, for a tribal 
governing body that serves in the capacity of a school board.''
    Response: The Committee acknowledged and considered this comment 
and changed the answer to read, ``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, provided that such training is 
recommended but is not required, for a tribal governing body that 
serves in the capacity of a school board.''
Section 39.700 What Is the Purpose of This Part?
    Comment: Subpart G should be revised to read ``Student 
Transportation.''
    Response: The Committee acknowledged and considered this comment 
and made the suggested change.
    Comment: This question should be revised to read ``What is the 
purpose of this subpart?''
    Response: The Committee acknowledged and considered this comment 
and made the suggested change.
    Comment: Paragraph (a) does not expressly state that a school will 
receive funding for student transportation. Proposed revision: ``(a) 
The purposes of this subpart are to provide funds to each school for 
the round trip transportation

[[Page 22196]]

of students between home and school, and to describe how transportation 
mileage and expenses are to be calculated and reported.''
    Response: The comment was acknowledged and considered and no action 
was taken.
    Comment: The tribe supports the proposed rules regarding 
transportation but recommends that schools be funded for two curricular 
enrichment activities as a part of the outdoor education programs.
    Response: The comment was acknowledged and considered but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
Section 39.701 What Definitions Apply to Terms Used in This Subpart?
    Comment: ISEP count week is defined but that method for counting 
students would be replaced with the 3-year rolling average. Perhaps the 
term and its definition should be changed to ``transportation mileage 
count week'' since the last full week in September would be used to 
count mileage only. If this revision is made, the new term must be 
reflected elsewhere in the subpart.
    Response: The Committee acknowledged and considered this comment 
and made the suggested changes.
    Comment: Is the definition of ``unimproved roads'' consistent with 
the current usage where ``unimproved roads'' generate additional weight 
for mileage count? If a road has a drainage ditch but is unpaved, it 
would not meet the stated definition.
    Response: The comment was acknowledged and considered, but the 
Committee decided that the comments raised concerns that the Committee 
had already considered in the proposed rule and therefore no action was 
taken.
Section 39.704 Are Schools Eligible for Other Funds To Transport 
Residential Students?
    Comment: If this provision is intended to apply only to expenses 
incurred in transporting residential students by commercial carriers, 
the question and answer should be revised to so state.
    Response: The Committee acknowledged and considered this comment 
changed the question to read, ``Are schools eligible to receive 
chaperone expenses to transport residential students?''
Section 39.705 Are Schools Eligible for Other Funds To Transport 
Special Education Students?
    Comment: The term ``other funds'' in the question is misleading. 
Suggested rephrase: ``Under what circumstances may a school count 
mileage incurred in transporting special education students?'' The 
answer seems to be contradicted with Sec.  39.707(a)(3).
    Response: The Committee acknowledged and considered this comment 
and changed the question to read ``Are schools eligible for 
transportation funds to transport special education students?''
    Comment: It would be better to identify what school bus 
transportation is allowable and count all of it and then request 
appropriations. If you say these are not fundable then Congress will 
never fund them.
    Response: The Committee acknowledged and considered this comment 
and changed the question to read ``Which student transportation 
expenses are currently not eligible for Student Transportation 
Funding?'' The answer was also changed to read ``The following 
transportation expenses are currently not eligible for transportation 
funding, although the funding will be collected under the provisions in 
this subpart.''
Section 39.708 Are Non-ISEP Eligible Children Eligible for 
Transportation Funding?
    Comment: There were several comments suggesting changing the 
language of this section to reflect the fact that transportation 
funding is based on miles, not students. There were also comments on 
the language referring to the transport of non-ISEP eligible students.
    Response: The Committee acknowledged and considered these comments 
and changed this section to read, ``Are miles generated by non-ISEP 
eligible students eligible for transportation funding? No. Only miles 
generated by ISEP eligible students enrolled in and attending a school 
are eligible for student transportation funding.''
Section 39.710 How Does a School Calculate Annual Bus Transportation 
Miles for Day Students?
    Comment: When is ISEP count week?
    Response: The Committee acknowledged and considered this comment 
and changed this section to refer to ``student transportation count 
week''.
Sections 39.720-722 [Various Titles]
    Comment: There were several comments on the limitations of trips 
outlined in the chart.
    Response: The Committee acknowledged and considered this comment 
and deleted the chart.
Section 39.721 What Transportation Information Must Off-reservation 
Boarding Schools Report?
    Comment: There were several comments on the need for additional 
clarity in this section.
    Response: The Committee acknowledged and considered this comment 
and changed this section to read as follows:

    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 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 
busses, 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 sites of special services, and to extra-curricular 
activities;
    (4) Medical trips;
    (5) Maintenance and Service costs;
    (6) Driver costs; and
    (7) All expenses referred to in Sec.  39.707.

Section 39.722 What Transportation Information Must Day Schools or On-
reservation Boarding Schools Report?

    Comment: The question should be edited to read ``What 
transportation program information must day schools, on reservation 
boarding schools, and peripheral dormitories report?''
    Response: The Committee acknowledged and considered this comment 
and changed the question as suggested.
    Comment: Paragraph (b) should be edited for clarity. For 
example, all of the information requested in paragraph (b)(1) is 
useful, but all elements do not constitute ``fixed vehicle costs.'' 
Some of the information sought is descriptive of the vehicles used 
not their costs.
    Response: The Committee acknowledged and considered this comment 
and changed paragraph (b) to add the term ``and other costs.''
    Comment: Paragraph (b)(4) should be revised to read ``mileage 
driven to student medical trips'' and (b)(5) should be revised to 
read ``costs of vehicle maintenance and

[[Page 22197]]

service, including cost of miles driven to obtain maintenance and 
service.''
    Response: The Committee acknowledged and considered this comment 
and changed these sections to read (b)(4) ``Mileage driven for 
student medical trips'' and paragraph (b)(5) to read, ``Costs of 
vehicles maintenance and service costs including cost of miles 
driven to obtain maintenance and service.''

Section 39.730 Which Standards Must Student Transportation Vehicles 
Meet?

    Comment: There were two comments suggesting tribal standards be 
incorporated into this section.
    Response: The Committee acknowledged and considered this comment 
and changed this section to include ``State or tribal motor vehicle 
safety standards.''

Section 39.732 How Does OIEP Allocate Transportation Funds to Schools?

    Comment: Change ``OIEP allocates transportation miles'' to 
``OIEP allocates transportation funds.''
    Response: The Committee acknowledged and considered this comment 
and changed the section to read ``OIEP allocates transportation 
funds.''

Section 39.801 What Is the Formula to Determine the Amount Necessary to 
Sustain a School's Academic or Residential Program?

    Comment: Paragraph (a), ``minimal annual amount'' should read 
``minimum annual amount.'' The formula should read ``Student Unit 
Value x weighted Student Unit = Annual Minimum amount per student.''
    Response: The Committee acknowledged and considered this comment 
and changed the sections as suggested.
    Comment: This would provide useless information for a useless 
report and should be eliminated.
    Response: The comment was acknowledged and considered and no 
action was taken.

Section 39.802 What Is the Student Unit Value in the Formula?

    Comment: The first sentence should be revised to read ``The 
student unit value is the dollar value applied to each student in an 
academic or residential program.''
    Response: The Committee acknowledged and considered this comment 
and changed the section as suggested.
    Comment: Revise to read ``(a) The student unit instructional 
value (SUIV) applies to a student enrolled in an instructional 
program. It is an annually established ratio of 1.0 that represents 
a student in grades 4-6 of an instructional program.''
    Response: The Committee acknowledged and considered this comment 
and changed the section as suggested.

Section 39.804 How Is the SUIV Calculated?

    Comment: Additional instructions are needed to describe the 
calculation in this part.
    Response: The Committee acknowledged and considered this comment 
and made the following changes:

    (b) Step 2. Subtract the average specific Federal share per 
student (title I part A and IDEA, part B) of the total revenue for 
Bureau-funded elementary schools for the last school year for which 
data is available as reported by NCES (15 percent)
    (c) Step 3. Subtract the administrative cost grant/agency area 
technical services revenue per student as a percentage of the total 
revenue and current expenditures of Bureau-funded schools from the 
last year data that is available
    (d) Step 4. Subtract the day transportation revenue per student 
as a percentage of the total revenue (current revenue) Bureau-funded 
schools for the last school year, for which the date is available.
Section 39.805 What Was the Student Unit for Instruction Value (SUIV) 
for the School Year 1999-2000?
    Comment: What was the student unit for instruction value (SUIV) for 
the school year 1999-2000? Revise the first sentence to read: ``The 
process described in Sec.  39.804 looks like this, produces the 
following results using figures for the 1999-2000 school year: $8,030 
ANACE 1205 Average per student specific Federal share of total revenue 
for Bureau of Indian Affairs-funded schools, 993 Administrative Cost 
grant/technical services revenue as a percentage of total revenue, 658 
Transportation revenue as a percentage of the total revenue, 85 Johnson 
O'Malley funding 5259 SUIV.''
    Response: The Committee acknowledged and considered this comment 
and changed the section to read:
Section 39.805 What Was the Student Unit for Instruction Value (SUIV) 
for the School Year 1999-2000?
    The process described in Sec.  39.804 is illustrated in the table 
below, using figures for the 1999-2000 school year:

Step 1: $8,030 ANACE
Step 2: -1205 Average specific Federal share of total revenue for 
Bureau-funded schools
Step 3: -993 Cost grant/technical services revenue as a percentage 
total revenue
Step 4: -658 Transportation revenue as a percentage of the total 
revenue
Step 5: 85 Johnson O'Malley funding
Total: $5,259 SUIV
Section 39.806 How Is the SURV Calculated?
    Comments: There were several comments on this section. Paragraph 
(b) refers to a procedure but no procedure is set out.
    Response: The comments were acknowledged and considered and no 
action was taken.

VI. Comments on Part 42--Student Rights

    25 U.S.C. 2016 requires 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. As was the case with the proposed 
rule, the intent of this final rule is to provide minimum requirements 
for fulfilling due process and student rights obligations owed to 
students while allowing schools to provide for higher requirements and 
to develop their own processes for handling violations of school 
policies, including alternative dispute resolution where appropriate. 
The final rule changes the proposed rule by including a new section on 
when a formal disciplinary hearing is required.
    General Comments: Some commenters agreed with the proposed rules in 
part 42 and one commenter noted with approval the alternative dispute 
resolution provisions.
    Comment: Revise part 42.2 to set a threshold for disciplinary 
actions that require a due process hearing. Limit the hearing 
requirement to cases where potential disciplinary action is suspension 
for more than 10 days or expulsion and expressly state it in the rules.
    Response: We deleted in Sec.  42.2(c) ``for alleged violation of 
school regulations for which the student may be subjected to 
penalties'' after ``disciplinary actions.'' In order to set a threshold 
for requiring disciplinary hearings and to provide for local school 
policies and procedures, we added a new section: ``When does due 
process require a formal disciplinary hearing? Unless local school 
policies and procedures provide for less, at a minimum, a formal 
disciplinary hearing is required prior to a suspension in excess of 10 
days or expulsion.''
    Comment: Include in part 42.2 information from the Notice of 
Proposed Rulemaking Preamble to part 42 to provide more information on 
the purpose of Sec.  42.2.
    Response: We added a new question and answer setting a threshold 
for requiring disciplinary hearings and providing for local school 
policies and procedures which may require more than the minimum set out 
in Sec.  42.2. (see response above)
    Comment: Add to part 42 a provision addressing notices of 
disciplinary action in Native languages and providing for an 
interpreter at hearings.

[[Page 22198]]

    Response: We did not add a provision addressing notices in Native 
languages or interpreters at hearings because these issues can be 
addressed at the local school level as needed.
    Comment: Revise part 42 to allow schools to set due process 
procedures that address both tribal and legal precedents and provide 
for legal counsel only after these processes are completed.
    Response: We did not make the suggested changes because Sec.  42.7 
(now Sec.  42.8) provides for the right to legal counsel only at the 
formal disciplinary hearing stage, not before it. In addition, Sec.  
42.2 provides for use of applicable tribal constitutional and statutory 
protections and does not preclude use of tribal precedents.

VII. Comments on Part 44--Grants Under the Tribally Controlled Schools 
Act

    Part 44 provides rules to comply with 25 U.S.C. 2501 et seq., the 
Tribally-Controlled Schools Act of 1988 (TCSA). The Act included a new 
section 25 U.S.C. 2509 which provides that, ``the Secretary is 
authorized to issue rules relating to the discharge of duties 
specifically assigned to the Secretary in this part.'' This rule 
provides that Bureau of Indian Affairs manuals, guidelines, and policy 
directives apply only if the grantee agrees. This rule provides 
eligibility requirements and methods for termination. It incorporates 
subpart E, part 900, 25 CFR for standards on financial, property, and 
procurement management. The final rule amends the proposed rule 
provision for method for payment to an annual payment. We said in 
preamble to NPRM we were changing payments to once a year.
    General Comments: One commenter states that this part is under-
funded. A commenter agrees that the TCSA needs little or no adjustment. 
A commenter agrees with grant payments in July and December.
    Comment: Provide for holding grant schools accountable after the 
annual payment is issued.
    Response: The Tribally-Controlled Schools Act covers this. We made 
no changes.
    Comment: Provide guidance for the Bureau for its role as the 
responsible Federal agency under the Single Audit Act.
    Response: No change is necessary. The comment is based on a 
misunderstanding of the rule.
    Comment: Clarify the Bureau's significant role with Bureau-funded 
schools and the Memorandum of Agreement between Bureau and the 
Department of Education (DOE) for Bureau's administering of funds that 
come through DOE.
    Response: No change was made. The comment is based on a 
misunderstanding of the rule.
    Comment: Revise Sec.  44.101 to add a new (a): ``The Tribally 
Controlled Schools Act'' and reformat the remaining paragraphs as (b) 
and (c).
    Response: The change was made for clarity.
    Comment: Revise Sec.  44.101 because the Secretary is bound also by 
Public Law 100-297 and appropriations laws.
    Response: No change is necessary. The comment is based on a 
misunderstanding of the rule.
    Comment: Revise Sec.  44.104 to change ``resumption'' to 
``reassumption'', change ``BIA'' to ``the Secretary'', and change 
``tribe'' to ``the tribal governing body.''
    Response: We changed Sec.  44.104(c) to read as follows:

Sec.  44.104 How Can a Grant Be Terminated?

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

    Comment: Revise duplicative portions of Sec.  44.106 and revise to 
complete statement of requirements of 25 U.S.C. 2505(c).
    Response: No change is necessary because 25 U.S.C. 2001 covers this 
issue.
    Comment: In Sec.  44.106 add a new section to add the conditions 
for corrective action for a grant school that fails to become 
accredited by January 8, 2005.
    Response: No change is necessary because 25 U.S.C. 2001 covers this 
issue.
    Comment: In Sec. Sec.  44.106 and 44.107 include guidance for the 
Bureau and tribes for dealing with problems grant schools have had 
regarding eligibility.
    Response: The comment suggests discussions that are not relevant to 
this rule. No change was necessary.
    Comment: Revise the question in Sec.  44.107 to read: ``Under what 
circumstances may the Secretary reassume a program?''
    Response: The change was made for clarity.
    Comment: Revise the answer in Sec.  44.107 to read: ``The Secretary 
may only reassume a program in compliance with 25 U.S.C. 450m and 25 
CFR part 900, subpart P. The tribe or school board shall have a right 
to appeal the reassumption pursuant to 25 CFR part 900, subpart L.''
    Response: The answer was revised as suggested for clarity.
    Comment: In Sec.  44.108 the citation to the Prompt Payment Act 
needs legal review.
    Response: No change was made. The comment is based on a 
misunderstanding of this section.
    Comment: Revise Sec.  44.108 to include funding available under 
continuing resolutions.
    Response: No change was made. The comment is not relevant to the 
rule.
    Comment: Revise Sec. Sec.  44.108 and 47.3 for consistency on date 
for notification of funding.
    Response: This cannot be done because the Act includes two 
different dates.
    Comment: Revise Sec.  44.109 to include that the grantee should 
have the right to appeal the assertion that an overpayment occurred and 
appeal the amount of overpayment claimed.
    Response: Section 44.109 was revised to delete that the grantee 
must return the overpayment within 30 days of notification of an 
overpayment. The grant recipient has 30 days after the final 
determination that an overpayment occurred to return the amount of the 
overpayment.
    Comment: In Sec.  44.109 clarify whether it is procedurally 
possible for the Bureau to receive the overpayments to grant schools 
and redistribute them.
    Response: No change was made. The comment is based on a 
misunderstanding of the rule.
    Comment: In Sec.  44.110(a) add a new ``(6)'' to read: ``Subpart L: 
Appeals.''
    Response: This change was not made because it was not needed. In 
(b)(5) ``our'' was changed to ``the Secretary's'' for clarity.

VIII. Comments on Part 47--Uniform Direct Funding and Support for 
Bureau-Funded Schools

    25 U.S.C. 2010 requires the Secretary to establish by regulation a 
system for the direct funding and support of all Bureau-funded schools 
that allots funds under 25 U.S.C. 2007. The existing rule in 25 CFR 
39.50 adequately covered this issue and it was edited for plain 
language with no substantive changes for the proposed rule. There are 
no substantive changes to the final rule.
    General Comments: Some commenters agreed with the proposed rules at 
part 47. One commenter questioned the allocation percentage mentioned 
in the Preamble to the proposed part 47.
    Comment: Standardize use of terms ``local financial plan'' and 
``local educational financial plan'' throughout part 47 by using 
``local financial plan'' as in 25 U.S.C. 2010(b).

[[Page 22199]]

    Response: We changed ``local financial plans'' to ``local 
educational financial plans'' in part 47 for clarity.
    Comment: Delete part 47 as unnecessary because part 47 ignores 
grant schools, referring only to Bureau-operated and contract schools.
    Response: We did not delete part 47 because part 47 is necessary to 
describe uniform direct funding and support for Bureau-funded schools. 
We changed the title of this part to add ``for Bureau-funded Schools.''
    Comment: Change ``schools'' in part 47 to ``Bureau-operated 
schools'' because Bureau-operated schools are the only schools required 
to prepare local financial plans under the relevant statute, 25 U.S.C. 
2010(b).
    Response: We changed the title of part 47 to ``Uniform Direct 
Funding and Support for Bureau-Operated Schools'' and changed all 
references to schools in part 47 to ``Bureau-operated schools'' for 
clarity. We deleted the definition of ``school'' in the definitions in 
Sec.  47.2.
    Comment: Change the October 1 date in Sec.  47.12 because 25 U.S.C. 
2010(a)(2)(A)(i) states that funds shall become available July 1 of the 
fiscal year for which funds are appropriated.
    Response: We deleted in its entirety Sec.  47.12 on how funds are 
obligated because it is unnecessary. 25 U.S.C. 2010(a)(2)(A)(i), the 
Indian Affairs Manual, and 25 CFR part 900 cover the issue.
    Comment: Change ``school boards'' to ``Bureau-operated school 
boards'' in the definition of ``Consultation'' in part 47 because 
Bureau-operated school boards are the only school boards required to 
prepare local financial plans.
    Response: We made the suggested change to add ``Bureau-operated'' 
before ``school boards.''
    Comment: Add a definition of ``school board'' to refer only to 
``Bureau-operated school board'' because only Bureau-operated school 
boards are the only schools required to prepare local financial plans.
    Response: We did not add a definition of ``school board'' because 
we changed references to ``school board'' to ``Bureau-operated school 
board'' for clarity.
    Comment: Make dates consistent in Sec.  47.3 and Sec.  44.108 on 
notification of funding.
    Response: We made no change because there is no inconsistency.
    Comment: Change ``all funds'' to ``80 per cent of the funds'' in 
Sec.  47.4 to comply with 25 U.S.C. and change the reference to which 
fiscal year funding is available from ``that fiscal year that begins on 
the following October 1st'' to, ``for the fiscal year that began on the 
preceding October 1'' because as written it implies that OIEP will 
distribute funds before they are appropriated.
    Response: We made the suggested change.
    Comment: Change the question in Sec.  47.6 to refer to ``records of 
local financial plans.''
    Response: We did not make the suggested change because it was not 
necessary for clarity.
    Comment: Strike the reference to ``contract schools'' because 
contract schools are not required to prepare local educational 
financial plans.
    Response: We deleted the reference to ``contract schools.'' We also 
changed the requirement for certification from the ``Agency 
Superintendent of Education'' to ``Education Line Officer'' to reflect 
the current designation for that position.

IX. 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 this 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 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 Act, 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, Bureau 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.

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

[[Page 22200]]

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 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 tribes on a government-to-
government basis. The consultations have been open and candid to allow 
the affected tribes to fully evaluate the potential effect of the rule 
on trust resources.
    (2) We have fully considered tribal views.
    (3) We have consulted with the Office of Indian Education Programs 
and the Office of the Assistant Secretary--Indian Affairs have been 
consulted about the political effects of this rule on Indian tribes.

Paperwork Reduction Act

    This rulemaking requires information collection from 10 or more 
parties and a submission under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501 et seq.) is required. Accordingly, the Department prepared 
submissions on these collections for review and approval by OMB. Having 
reviewed the Department's submissions, along with any comments that 
were submitted by the reviewing public, OMB has approved the 
information collection requirements contained in this rulemaking and 
has assigned the OMB control number 1076-0163. In addition to this 
number, the information collections in part 39 are also covered by OMB 
control numbers 1076-0134 and 1076-0122.
    The information collected will be used to enable the Bureau to 
better administer Bureau-funded schools subject to this rulemaking. In 
all instances, the Department has striven to lessen the burden on the 
public and ask for only information essential to administering the 
programs affected and to carrying out the Department's fiduciary 
responsibility to federally recognized tribes. The public may make 
additional comments on the accuracy of our burden estimates (which are 
explained in detail in the preamble to the proposed rule published on 
February 25, 2004, at 69 FR 8752) and any suggestions for reducing this 
burden to the OMB Interior Desk Officer, Docket Number 1076-AE49, 
Office of Information and Regulatory Affairs, 202/395-6566 (facsimile); 
e-mail: [email protected].

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.

List of Subjects

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

    Elementary and secondary education programs, Government programs--
education, Grant programs--Indians, Indians--education, Schools.

25 CFR Part 42

    Elementary and secondary education programs, Indians--education, 
Schools, Students.

    Dated: April 20, 2005.
Michael D. Olsen,
Acting Principal Deputy Assistant Secretary--Indian Affairs.

0
For the reasons given in the preamble, the Bureau of Indian Affairs 
amends parts 30, 37, 39, 42, 44, and 47 of title 25 of the Code of 
Federal Regulations as follows:
0
1. New part 30 is added to subchapter E 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 Act require the Secretary of the 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 AYP?

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 the 
Secretary'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?

[[Page 22201]]

Approval of Alternative Definition

30.113 How does the Secretary 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 annual measurable 
objectives, what other methods may it use to determine whether it 
made AYP?
Subpart C--Failure To Make Adequate Yearly Progress
30.117 What happens if a Bureau-funded school fails to make AYP?
30.118 May a Bureau-funded school present evidence of errors in 
identification 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 Bureau-funded 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 it 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 is required for the Bureau to meet its reporting 
responsibilities?
30.150 Information Collection.

    Authority: Public Law 107-110, 115 Stat. 1425.


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?

    Act means the No Child Left Behind Act, Public Law 107-110, enacted 
January 8, 2002. The No Child Left Behind Act reauthorizes and amends 
the Elementary and Secondary Education Act (ESEA) and amends the 
Education Amendments of 1978.
    Bureau means the Bureau of Indian Affairs in the Department of the 
Interior.
    Department means the Department of the Interior.
    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.
    Secretaries means the Secretary of the Interior and the Secretary 
of Education.

Subpart A--Defining Adequate Yearly Progress


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

    Yes, the Act requires the Secretary to develop a definition of AYP 
through negotiated rulemaking. In developing the Secretary's definition 
of AYP, the No Child Left Behind Negotiated Rulemaking Committee 
(Committee) considered a variety of options. In choosing the definition 
in Sec.  30.104, 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 
definition 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 AYP?

    The Secretary defines AYP as follows. The definition meets the 
requirements in 20 U.S.C. 6311(b).
    (a) Effective in the 2005-2006 school year, the academic content 
and student achievement standards, assessments, and the definition of 
AYP are those of the State where the school is located, unless an 
alternative definition of AYP is proposed by the tribal governing body 
or school board and approved by the Secretary.
    (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, 
academic content and student achievement standards, and definition of 
AYP.
    (3) The use of the State's definition of AYP does not diminish or 
alter the Federal Government's trust 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  May 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 academic content and achievement 
standards, assessments, and AYP. However, unless an alternative 
definition is approved under Sec.  30.113, the school must use the 
Secretary's definition of academic content and achievement standards, 
assessments, and AYP.


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 meet the requirements of 20 U.S.C. 6311(b) and 34 CFR 200.13-
200.20, taking into account the unique circumstances and needs of the 
school or schools and the students served.

[[Page 22202]]

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

    (a) An alternative definition of AYP must meet the requirements of 
20 U.S.C. 6311(b)(2) of the Act and 34 CFR 200.13-200.20, taking into 
account the unique circumstances and needs of the school or schools and 
the students served.
    (b) In accordance with 20 U.S.C. 6311(b) of the Act and 34 CFR 
200.13-200.20, an 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 and reading or language arts;
    (5) Measure progress separately for reading or language arts and 
for mathematics;
    (6) Unless disaggregation of data cannot yield statistically 
reliable information or reveals personally identifiable information, 
apply the same annual measurable objectives to each of the following:
    (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;
    (7) Establish a starting point;
    (8) Create a timeline to ensure that all students are proficient by 
the 2013-2014 school year;
    (9) Establish annual measurable objectives;
    (10) Establish intermediate goals;
    (11) Include at least one other academic indicator which, for any 
school with a 12th grade, must be graduation rate; and
    (12) Ensure that at least 95 percent of the students enrolled in 
each group under Sec.  30.107(b)(6) are assessed.
    (c) If a Bureau-funded school's alternative definition of AYP does 
not use a State's academic content and student achievement standards 
and academic assessments, the school must include with its alternative 
definition the academic standards and assessment it proposes to use. 
These standards and assessments must meet the requirements in 20 U.S.C. 
6311(b) and 34 CFR 200.1-200.9.


Sec.  30.108  May an alternative definition of AYP use parts of the 
Secretary's definition?

    Yes, a tribal governing body or school board may take part of the 
Secretary's definition and propose to waive the remainder. The proposed 
alternative definition of AYP must, however, include both the parts of 
the Secretary's AYP definition the tribal governing body or school 
board is adopting 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 20 U.S.C. 7301.


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, the tribal governing body or 
school board should request technical assistance before formally 
notifying the Secretary of its intention to waive the Secretary's 
definition of AYP.

Approval of Alternative Definition


Sec.  30.113  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 60 days of receiving a proposed alternative definition 
of AYP, OIEP will notify the tribal governing body or the school board 
of:
    (1) Whether the proposed alternative definition is complete; and
    (2) If the definition is complete, an estimated timetable for the 
final decision.
    (c) If the proposed alternative definition is incomplete, OIEP will 
provide 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) The Secretaries will review the proposed alternative definition 
of AYP to determine whether it is consistent with the requirements of 
20 U.S.C. 6311(b). This review must take into account the unique 
circumstances and needs of the schools and students.
    (e) The Secretaries shall approve the alternative definition of AYP 
if it is consistent with the requirements of 20 U.S.C. 6311(b), taking 
into consideration the unique circumstances and needs of the school or 
schools and the students served.
    (f) If the Secretaries approve the alternative definition of AYP:
    (1) The Secretary 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.
    (g) The Secretaries will disapprove the alternative definition of 
AYP if it is not consistent with the requirements of 20 U.S.C. 6311(b). 
If the alternative definition is disapproved, the tribal governing body 
or school board will be notified of the following:
    (1) That the definition is disapproved; and
    (2) The reasons why the proposed alternative definition does not 
meet the requirements of 20 U.S.C. 6311(b).
    (h) If the Secretaries deny a proposed definition under paragraph 
(g) of this section, they shall provide technical assistance to 
overcome the basis for the denial.

[[Page 22203]]

Subpart B--Assessing Adequate Yearly Progress


Sec.  30.114  Which students must be assessed?

    All students in grades three through eight and at least once in 
grades ten through twelve 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 assessed pursuant to Sec.  
30.114 must be included for purposes of AYP if the student is enrolled 
in a Bureau-funded school for a full academic year as defined by the 
Secretary or by an approved alternative definition of AYP.


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

    A school makes AYP if each group of students identified in Sec.  
30.107(b)(6) meets or exceeds the annual measurable objectives and 
participation rate identified in Sec. Sec.  30.107(b)(9) and 
30.107(b)(12) respectively, and the school meets the other academic 
indicators identified in Sec.  30.107(b)(11). If a school fails to 
achieve its annual measurable objectives for any group identified in 
Sec.  30.107(b)(6), there are two other methods it may use to determine 
whether it made AYP:
    (a) Method A--``Safe Harbor.'' Under ``safe harbor,'' the following 
requirements must be met for each group referenced under Sec.  
30.107(b)(6) that does not achieve the school's annual measurable 
objectives:
    (1) In each group that does not achieve the school's annual 
measurable objectives, the percentage of students who were below the 
``proficient'' level of academic achievement decreased by at least 10 
percent from the preceding school year; and
    (2) The students in that group made progress on one or more of the 
other academic indicators; and
    (3) Not less than 95 percent of the students in that group 
participated in the assessment.
    (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?

------------------------------------------------------------------------
                                                     Action required by
  Number of yrs of failing to                         entity operating
   make AYP in same academic          Status           school for the
            subject                                following school year
------------------------------------------------------------------------
1st year of failing AYP.......  No status change.  Analyze AYP data and
                                                    consider
                                                    consultation with
                                                    outside experts.
2nd year of failing AYP.......  School             Develop a plan or
                                 improvement,       revise an existing
                                 year one.          plan for school
                                                    improvement in
                                                    consultation with
                                                    parents, school
                                                    staff and outside
                                                    experts.
3rd year of failing AYP.......  School             Continue revising or
                                 Improvement,       modifying the plan
                                 year two.          for school
                                                    improvement in
                                                    consultation with
                                                    parents, school
                                                    staff and outside
                                                    experts.
4th year of failing AYP.......  Corrective Action  Implement at least
                                                    one of the six
                                                    corrective actions
                                                    steps found in 20
                                                    U.S.C.
                                                    6316(b)(7)(C)(iv).
5th year of failing AYP.......  Planning to        Prepare a
                                 Restructure.       restructuring plan
                                                    and make
                                                    arrangements to
                                                    implement the plan.
6th year of failing AYP.......  Restructuring....  Implement the
                                                    restructuring plan
                                                    no later than the
                                                    beginning of the
                                                    school year
                                                    following the year
                                                    in which it
                                                    developed the plan.
7th year (and beyond) of        Restructuring....  Continue
 failing AYP.                                       implementation of
                                                    the restructuring
                                                    plan until AYP is
                                                    met for two
                                                    consecutive years.
------------------------------------------------------------------------

Sec.  30.118  May a Bureau-funded school present evidence of errors in 
identification 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 on which the bureau would identify a school for improvement, 
and present evidence as set out in 20 U.S.C. 6316(b)(2).


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.
    (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 offering school 
choice and supplemental educational services when identified for school 
improvement, corrective action, and restructuring?

    Yes, Bureau-funded schools are exempt from offering public school 
choice and supplemental educational 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' responsibilities under 20 U.S.C. 6316(b). 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 under title I, part A of the Act, for any school below the 
level for the preceding year. To the extent that reserving funds under 
this section would reduce the title I, part A dollar amount of any 
school

[[Page 22204]]

below the amount of title I, part A dollars the school received the 
previous year, the Secretary is authorized to reduce the title I, part 
A allocations of those schools receiving an increase in the title I, 
part A funds over the previous year to create the 4 percent reserve. 
This section does not authorize a school to receive title I, part A 
dollars it is not otherwise eligible to receive.
    (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 20 U.S.C. 6316(b)(4) 
and 20 U.S.C. 6316(g)(3) .


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 Bureau apply for funds that are available to 
help schools that fail to meet AYP?

    Yes, 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, 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 is required for the Bureau to meet its 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 20 U.S.C. 6316(g)(5).


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 1076-0163.
0
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 definitions apply to the terms in this part?
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: Public Law 107-110, 115 Stat. 1425.


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 definitions apply to the terms in this part?

    Act means the No Child Left Behind Act, Public Law 107-110, enacted 
January 8, 2002. The No Child Left Behind Act reauthorizes and amends 
the Elementary and Secondary Education Act (ESEA) and the amended 
Education Amendments of 1978.
    Bureau means the Bureau of Indian Affairs in the Department of the 
Interior.
    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).

[[Page 22205]]

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 1076-0163.

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 ISEP-eligible students, residing within the tribe's 
jurisdiction, to receive transportation funding to attend schools 
outside the geographic attendance area in which the student lives; and
    (c) Authorize tribal member students who are ISEP-eligible and are 
not residing within the tribe's jurisdiction to receive transportation 
funding to attend schools outside the student's geographic attendance 
area.


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

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

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.

PART 39--THE INDIAN SCHOOL EQUALIZATION PROGRAM

0
3. The authority citation for part 39 is revised to read as follows:

    Authority: 25 U.S.C. 13, 2008; Public Law 107-110, 115 Stat. 
1425.

0
4. In part 39, subparts A through H are revised to read as follows:
Subpart A--General
Sec.
39.1 What is the purpose of this part?>
39.2 What definitions apply to terms 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 academic 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 
disabilities?
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 student 
and/or school 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?

[[Page 22206]]

39.114 What characteristics may qualify a student as gifted and 
talented for purposes of supplemental funding?
39.115 How are eligible gifted and talented 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 gifted and talented 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?
39.145 Can a school receive both a small school adjustment and a 
small high school adjustment?
39.146 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?
39.203 When does OIEP calculate a school's allotment?
39.204 How does OIEP calculate ADM?
39.205 How does OIEP calculate a school's total WSUs for the school 
year?
39.206 How does OIEP calculate the value of one WSU?
39.207 How does OIEP determine a school's funding for the school 
year?
39.208 How are ISEP funds distributed?
39.209 When may a school count a student for membership purposes?
39.210 When must a school drop a student from its membership?
39.211 What other categories of students can a school count for 
membership purposes?
39.212 Can a student be counted as enrolled in more than one school?
39.213 Will the Bureau fund children being home schooled?
39.214 What is the minimum number of instructional hours required in 
order to be considered a full-time educational program?
39.215 Can a school receive funding for any part-time students?

Residential Programs

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

Phase-in Period

39.230 How will the provisions of this subpart be phased in?
Subpart D--Accountability
39.401 What is the purpose of this subpart?
39.402 What definitions apply to terms used in this subpart?
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 subpart?
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 schools carry over contingency funds to a subsequent 
fiscal year?
39.505 What are the reporting requirements for the use of the 
contingency fund?
Subpart F--School Board Training Expenses
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?
39.603 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--Student Transportation
39.700 What is the purpose of this subpart?
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 to receive chaperone expenses to 
transport residential students?
39.705 Are schools eligible for transportation funds to transport 
special education students?
39.706 Are peripheral dormitories eligible for day transportation 
funds?
39.707 Which student transportation expenses are currently not 
eligible for Student Transportation Funding?
39.708 Are miles generated by non-ISEP eligible students 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, on-
reservation boarding schools and peripheral dormitory 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?

[[Page 22207]]

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 (SUIV) 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 to this subpart?
39.809 Information collection.

Subpart A--General


Sec.  39.1  What is the purpose of this part?

    This part provides for the uniform direct funding of Bureau-
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 definitions apply to terms in this part?

    Act means the No Child Left Behind Act, Public Law 107-110, enacted 
January 8, 2002. The No Child Left Behind Act reauthorizes and amends 
the Elementary and Secondary Education Act (ESEA) and the amended 
Education Amendments of 1978.
    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.
    At no cost means provided without charge, but does not preclude 
incidental fees normally charged to non-disabled students or their 
parents as a part of the regular education program.
    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.
    Basic program means the instructional program provided to all 
students at any age level exclusive of any supplemental programs that 
are not provided to all students in day or boarding schools.
    Basic transportation miles means the daily average of all bus miles 
logged for round trip home-to-school transportation of day students.
    Bureau means the Bureau of Indian Affairs in the Department of the 
Interior.
    Bureau-funded school means
    (1) Bureau school;
    (2) A contract or grant school; or
    (3) A school for which assistance is provided under the Tribally 
Controlled Schools Act of 1988.
    Bureau school means a Bureau-operated elementary or secondary day 
or boarding school or a Bureau-operated dormitory for students 
attending a school other than a Bureau school.
    Count Week means the last full week in September during which 
schools count their student enrollment for ISEP purposes.
    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.
    Limited English Proficient (LEP) means a child from a language 
background other than English who needs language assistance in his/her 
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 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.
    Physical education means the development of physical and motor 
fitness, fundamental motor skills and patterns, and skills in aquatics, 
dance, and individual and group games and sports (including intramural 
and lifetime sports). The term includes special physical education, 
adapted physical education, movement education, and motor development.
    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 or another 
Bureau-funded school.
    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 or 
Bureau-funded school; 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

[[Page 22208]]

board in a boarding school or a dormitory.
    Secretary means the Secretary of the Interior or a designated 
representative.
    School means a school funded by the Bureau of Indian Affairs. The 
term ``school'' does not include public, charter, or private schools.
    School bus means a passenger vehicle that is:
    (1) Used to transport day students to and/or from home and the 
school; and
    (2) Operated by an operator in the employ of, or under contract to, 
a Bureau-funded school, who is qualified to operate such a vehicle 
under Tribal, State or Federal regulations governing the transportation 
of students.
    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.
    Special education means:
    (1) Specially designed instruction, at no cost to the parents, to 
meet the unique needs of a child with a disability, including:
    (i) Instruction conducted in the classroom, in the home, in 
hospitals and institutions, and in other settings; and
    (ii) Instruction in physical education.
    (2) The term includes each of the following, if it meets the 
requirements of paragraph (1) of this definition:
    (i) Speech-language pathology services, or any other related 
service, if the service is considered special education rather than a 
related service under State standards;
    (1) Travel training; and
    (2) Vocational education.
    Specially designed instruction means adapting, as appropriate, to 
the needs of an eligible child under this part, the content, 
methodology, or delivery or instruction:
    (1) To address the unique needs of the child that result from the 
child's disability; and
    (2) To ensure access of the child to the general curriculum, so 
that he or she can meet the educational standards within the 
jurisdiction of the public agency that apply to all children
    Three-year average means:
    (1) For academic programs, the average daily membership of the 3 
years before the current year of operation; and
    (2) For the residential programs, the count period membership of 
the 3 years before the current year of operation.
    Travel training means providing instruction, as appropriate, to 
children with significant cognitive disabilities, and any other 
children with disabilities who require this instruction, to enable them 
to:
    (1) Develop an awareness of the environment in which they live; and
    (2) Learn the skills necessary to move efficiently and safely from 
place to place within that environment (e.g., in school, in the home, 
at work, and in the community).
    Tribally operated school means an elementary school, secondary 
school, or dormitory that receives financial assistance for its 
operation under a contract, grant, or agreement with the Bureau under 
section 102, 103(a), or 208 of 25 U.S.C. 450 et seq., or under the 
Tribally Controlled Schools Act of 1988.
    Vocational education means organized educational programs that are 
directly related to the preparation of individuals for paid or unpaid 
employment, or for additional preparation for a career requiring other 
than a baccalaureate or advanced degree.
    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 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This part contains in 
Sec. Sec.  39.410 and 39.502 collections of information subject to the 
PRA. These collections have been approved by OMB under control number 
1076-0163.

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 academic base funding?

    Academic base funding is the ADM times the weighted student unit.


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

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

------------------------------------------------------------------------
                                                   Base          Base
                                                 academic    residential
                 Grade level                      funding      funding
                                                  factor        factor
------------------------------------------------------------------------
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 disabilities?

    (a) Each school must provide for students with disabilities 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 needs of students with disabilities under the National Criteria for 
Home-Living Situations.
    (b) A school may spend all or part of the 15 percent academic base 
funding reserved under paragraph (a)(1) of this section on school-wide 
programs to benefit all students (including those without disabilities) 
only if the school can document that it has met all needs of students 
with disabilities with such funds, and after having done so, there are 
unspent funds remaining from such funds.


Sec.  39.105  Are additional funds available for special education?

    (a) Schools may supplement the 15 percent base academic funding 
reserved under Sec.  39.104 for special education with funds available 
under part B of the Individuals with Disabilities Education Act (IDEA). 
To obtain part B funds, the

[[Page 22209]]

school must submit an application to OIEP. IDEA funds are available 
only if the school demonstrates that funds reserved under Sec.  
39.104(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 staff 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 
student and/or school costs?

    Yes, schools are allotted supplemental funds for special student 
and/or school costs. ISEF provides additional funds to schools through 
add-on weights (called special cost factors). ISEF adds special cost 
factors as shown in the following table.

------------------------------------------------------------------------
                Cost Factor                   For more information see
------------------------------------------------------------------------
Gifted and talented students..............  Sec.  Sec.   39.110 through
                                             39.121
Students with language development needs..  Sec.  Sec.   39.130 through
                                             39.137
Small school size.........................  Sec.  Sec.   39.140 through
                                             39.156
Geographic isolation of the school........  Sec.   39.160
------------------------------------------------------------------------

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 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  What characteristics may qualify a student as gifted and 
talented for purposes of supplemental funding?

    To be funded as gifted and talented under this part, a student must 
be identified as gifted and talented 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 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 gifted and talented students identified 
and nominated?

    (a) Screening can be completed annually to identify potentially 
eligible students. A student may be nominated for gifted and talented 
designation using the criteria in Sec.  39.114 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) The student 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 student'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.

[[Page 22210]]

    (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 reevaluated at least every 3 years through the 10th grade to verify 
eligibility for funding.
    (b) If a school identifies a student as gifted and talented based 
on Sec.  39.114 (d) or (e), 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.


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 20 
U.S.C. 6311(b)(1).


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 Indian or Native languages, the factor to 
support the language development program will be no more than 0.25 WSU.

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:

[[Page 22211]]

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

Sec.  39.145  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                      Small high
               ADM--entire school                     school       Small school       school           Total
                                                     component      adjustment      adjustment      adjustment
----------------------------------------------------------------------------------------------------------------
1-50............................................              NA            12.5              NA            12.5
1-50............................................            1-50            12.5            6.25           18.75
51-99...........................................            1-50    \2\ 12.5-0.5            6.25      18.75-6.75
51-99...........................................           51-99    \1\ 12.5-0.5   \2\ 6.25-0.25       18.75-0.7
99..............................................            1-50             0.5            12.5            12.5
99..............................................           51-99             0.5    \2\ 12.5-0.5       12.5-0.5
----------------------------------------------------------------------------------------------------------------
\1\ The amount of the adjustment is within this range. The exact figure depends upon the results obtained using
  the formula in Sec.   39.141.
\2\ 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.  39.146  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       12.5.
 fewer ISEP-eligible students.
Residential student count of between 51  Determined by the formula ((100-
 and 99 ISEP-eligible students.           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

[[Page 22212]]

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 current year of operation; and
    (2) For the residential programs, the count period membership of 
the 3 years before the current year of operation.


Sec.  39.203  When does OIEP calculate a school's allotment?

    OIEP calculates a school's allotment no later than July 1. Schools 
must submit final ADM enrollment figures no later than June 15.


Sec.  39.204  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.  39.205  How does OIEP calculate a school's total WSUs for the 
school year?

    (a) OIEP will add the weights obtained from the calculations in 
paragraphs (a)(1), (a)(2), and (a)(3) of this section to obtain the 
total weighted student units (WSUs) for each school.
    (1) Each year's ADM is multiplied by the applicable weighted 
student unit for each grade level;
    (2) Calculate any supplemental WSUs generated by the students; and
    (3) Calculate any supplemental WSUs generated by the schools.
    (b) The total WSU for the school year is the sum of paragraphs 
(a)(1), (a)(2), and (a)(3) of this section.


Sec.  39.206  How does OIEP calculate the value of one WSU?

    (a) 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.
    (b) To calculate the average WSU for a 3-year period:
    (1) Step 1. Add together each year's total WSU (calculated under 
paragraph (b) of this section); and
    (2) Step 2. Divide the sum obtained in step 1 by 3.


Sec.  39.207  How does OIEP determine a school's funding for the school 
year?

    To determine a school's funding for the school year, OIEP uses the 
following seven-step process:
    (a) Step 1. Multiply the appropriate base academic and/or 
residential weight from Sec.  39.103 by the number of students in each 
grade level category.
    (b) Step 2. Multiply the number of students eligible for 
supplemental program funding under Sec.  39.107 by the weights for the 
program.
    (c) Step 3. Calculate the school-based supplemental weights under 
Sec.  639.107.
    (d) Step 4. Add together the sums obtained in steps 1 through 3 to 
obtain each school's total WSU.
    (e) Step 5. Add together the total WSUs for all Bureau-funded 
schools.
    (f) Step 6. Calculate the value of a WSU by dividing the current 
school year's funds by the average total WSUs as calculated under step 
5 for the previous 3 years.
    (g) Step 7. Multiply each school's WSU total by the base value of 
one WSU to determine funding for that school.


Sec.  39.208  How are ISEP funds distributed?

    (a) On July 1, schools will receive 80 percent of their funds as 
determined in Sec.  39.207.
    (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.  39.209  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 and shall be counted for 
ADM purposes. The first 10 days of school, for purposes of this 
section, are determined by the calendar that the school submits to 
OIEP.
    (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.  39.210  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.  39.211  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
            Type of  student              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 documentations
                                          is on file at the school.
(b) Located in an institutional setting  The school is either:
 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 the    The student is both:
 school day.                             (1) Concurrently enrolled in,
                                          and receiving credits for both
                                          the school's courses and
                                          college courses; and
                                         (2) In physical attendance at
                                          the school at least 3
                                          documented contact hours per
                                          day.
(d) Taking distance learning courses...  The student is both:
                                         (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) Taking the courses at the
                                          school site under a teacher's
                                          supervision.
------------------------------------------------------------------------


[[Page 22213]]

Sec.  39.212  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 39.209.


Sec.  39.213  Will the Bureau fund children being home schooled?

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


Sec.  39.214  What is 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.  39.215  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.  39.216  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' residential WSUs.


Sec.  39.217  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 was:
    (a) In residence at least one night during the first full week of 
October;
    (b) In residence at least one night during the week preceding the 
first full week in October;
    (c) In residence at least one night during the week following the 
first full week in October; and
    (d) Present for both the after school count and the midnight count 
at least one night during each week specified in this section.


Sec.  39.218  Are there different formulas for different levels of 
residential services?

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

------------------------------------------------------------------------
                                              Each student is funded at
  If a residential program operates . . .        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.  39.219  What happens if a residential program does not maintain 
residency levels required by this subpart?

    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.  39.220  What reports must residential programs submit to comply 
with this subpart?

    Residential programs must report their monthly counts to the 
Director on the last school day of the month. To be counted, a student 
must have been in residence at least 10 nights during each full school 
month.


Sec.  39.221  What is a full school month?

    A full school month is each 30-day period following the first day 
that residential services are provided to students based on the school 
residential calendar.

Phase-in Period


Sec.  39.230  How will the provisions of this subpart be phased in?

    The calculation of the three-year rolling average of ADM for each 
school and for the entire Bureau-funded school system will be phased-in 
as shown in the following table.

------------------------------------------------------------------------
              Time period                  How OIEP must calculate ADM
------------------------------------------------------------------------
(a) First school year after May 31,      Use the prior 3 years' count
 2005.                                    period to create membership
                                          for funding purposes
(b) Second school year after May 31,     (1) The academic program will
 2005.                                    use the previous year's ADM
                                          school year and the 2 prior
                                          years' count periods; and
                                         (2) The residential program
                                          will use the previous year's
                                          count period and the 2 prior
                                          years' count weeks
(c) Each succeeding school year after    Add one year of ADM or count
 May 31, 2005.                            period and drop one year of
                                          prior count weeks until both
                                          systems are operating on a 3-
                                          year rolling average using the
                                          previous 3 years' count after
                                          period or ADM, respectively.
------------------------------------------------------------------------

Subpart D--Accountability


Sec.  39.401  What is the purpose of this subpart?

    The purpose of this subpart is to ensure accountability of 
administrative officials by creating procedures that are systematic and 
can be verified by a random independent outside auditing procedures. 
These procedures will ensure the equitable distribution of funds among 
schools.


Sec.  39.402  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.

[[Page 22214]]

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 required by subpart G of this part 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 homebound services, 
institutional 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. 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.

[[Page 22215]]

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 
subpart?

    (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 applicable appeals process in 25 CFR part 2 or 25 CFR part 
900, subpart L.

Subpart E--Contingency Fund


Sec.  39.500  What emergency and contingency funds are available?

    The Secretary:
    (a) Must reserve 1 percent of funds from the allotment formula to 
meet emergencies and unforeseen contingencies affecting educational 
programs;
    (b) Can carry over to the next fiscal year a maximum of 1 percent 
the current year funds; and
    (c) May distribute all funds in excess of 1 percent equally to all 
schools or distribute excess as a part of ISEP.


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 is not covered by an insurance policy in force at the time 
of the event;
    (d) The Assistant Secretary determines that Bureau cannot reimburse 
the emergency from the facilities emergency repair fund; and
    (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 schools carry over contingency funds 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, Bureau/OIEP shall send an 
annual report to Congress detailing how the Contingency Funds were used 
during the previous fiscal year.
    (b) 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 in Sec.  
39.600.


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, provided that such training is recommended, but is not 
required, for a tribal governing body that serves in the capacity of a 
school board.


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--Student Transportation


Sec.  39.700   What is the purpose of this subpart?

    (a) This subpart 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.
    Transportation mileage count week means the last full week in 
September.
    Unimproved roads means unengineered earth roads that do not

[[Page 22216]]

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 to receive chaperone expenses to 
transport residential students?

    Yes. 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 transportation funds to 
transport special education students?

    Yes. 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 expenses are currently not 
eligible for Student Transportation Funding?

    (a) The following transportation expenses are currently not 
eligible for transportation funding, however the data will be collected 
under the provisions in this subpart:
    (1) Fuel and maintenance runs;
    (2) Transportation home for medical or other emergencies;
    (3) Transportation from school 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 miles generated by non-ISEP eligible students 
eligible for transportation funding?

    No. Only miles generated by ISEP-eligible students enrolled in and 
attending a school are eligible for student transportation funding.

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 transportation 
mileage count week, W = Miles driven on Wednesday of the transportation 
mileage count week, and Th = Miles driven on Thursday of the 
transportation mileage count week.
    (a) For ISEP-eligible day students whose route is entirely over 
improved roads, calculate miles using the following formula:
[GRAPHIC] [TIFF OMITTED] TR28AP05.087

    (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] TR28AP05.088

    (2) Step 2. Apply the following formula to miles driven over 
unimproved roads only:
[GRAPHIC] [TIFF OMITTED] TR28AP05.089

    (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 used to transport students from their homes to the 
school. 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 sum of the 
mileage from paragraphs (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 39.722.


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 following 
information:
    (1) Fixed vehicle costs, including: the number and type of buses, 
passenger

[[Page 22217]]

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 sites of special services, and to extra-curricular 
activities;
    (4) Medical trips;
    (5) Maintenance and Service costs; and
    (6) Driver costs;
    (7) All expenses referred to in Sec.  39.707.


Sec.  39.722  What transportation information must day schools, on-
reservation boarding schools and peripheral dormitory schools report?

    (a) By August 1 of each year, all schools and peripheral dorms that 
provide transportation must submit a report that covers the preceding 
year. This report must include:
    (1) Fixed vehicle costs and other 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 sites of special services, and to extra-curricular 
activities;
    (4) Mileage driven for student medical trips;
    (5) Costs of vehicle maintenance and service cost, including cost 
of miles driven to obtain maintenance and service;
    (6) Driver costs; and
    (7) All expenses referred to in Sec.  39.707.
    (b) In addition, all day schools and on-reservation boarding 
schools must include in their report a Day Student Transportation Form 
signed and certified as complete and accurate by the School Principal 
and the appropriate ELO.

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 and State 
or Tribal 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 funds based on the types of 
transportation 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 minimum 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 per 
student.

    (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 pro 
rate funds distributed to schools using the Indian School Equalization 
Formula.


Sec.  39.802  What is the student unit value in the formula?

    The student unit value is the dollar 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 
student enrolled in an instructional program. 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 grades 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. 
Department of Education-National Center of Education Statistics (NCES) 
for the last school year for which data is available.
    (b) Step 2. Subtract the average specific Federal share per student 
(title I part A 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 per student as a percentage of the total 
revenue (current expenditures) of Bureau-funded schools from the last 
year data is available.
    (d) Step 4. Subtract the day transportation revenue per student as 
a percentage of the total revenue (current revenue) Bureau-funded 
schools for the last school year for which data is available.
    (e) Step 5. Add Johnson O'Malley funding. (See the table, in Sec.  
39.805)


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

    The process described in Sec.  39.804 is illustrated in the table 
below, using figures for the 1999-2000 school year:

[[Page 22218]]



Step 1..........................................       $8,030  ANACE.
Step 2..........................................        -1205  Average specific Federal share of total revenue
                                                                for Bureau-funded schools.
Step 3..........................................         -993  Cost grant/technical services revenue as a
                                                                percentage total revenue.
Step 4..........................................         -658  Transportation revenue as a percentage of the
                                                                total revenue.
Step 5..........................................           85  Johnson O'Malley funding.
�������������������������������������������������
 

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 the Association of 
Boarding Schools.
    (b) Applying 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 instructional value (SUIV) and the student 
unit residential value (SURV) will be adjusted annually to derive the 
current year Student Unit Value (SUV) by dividing the calculated SUIV 
and the SURV into two parts and adjusting each one as shown in this 
section.
    (1) The first part consists of 85 percent of the calculated SUIV 
and the SURV. OIEP will adjust this portion using the personnel cost of 
living increase of the Department of Defense schools for each year.
    (2) The second part consists of 15 percent the calculated SUIV and 
the SURV. 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 to this subpart?

    Adjusted National Average Current Expenditure [ANACE] means the 
actual current expenditures for pupils in fall enrollment in public 
elementary and secondary schools for the last school year for which 
data is available. These expenditures are adjusted annually to reflect 
current year expenditures of federally financed schools' cost of day 
and residential programs.
    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.


Sec.  39.809  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.  39.410 and 
39.502. These collections have been approved by OMB under control 
numbers 1076-0122, 1076-0134, and 1076-0163.

0
5. 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 When does due process require a formal disciplinary hearing?
42.7 What does due process in a formal disciplinary proceeding 
include?
42.8 What are a student's due process rights in a formal 
disciplinary proceeding?
42.9 What are victims' rights in formal disciplinary proceedings?
42.10 How must the school communicate individual student rights to 
students, parents or guardians, and staff?
42.11 Information collection.

    Authority: 5 U.S.C. 301, Pub. L. 107-110, 115 Stat. 1425.


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.


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.  42.4 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.  42.7 consistent with the due 
process rights described in Sec.  42.7.


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:

[[Page 22219]]

    (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 Act 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.  42.8.


Sec.  42.6  When does due process require a formal disciplinary 
hearing?

    Unless local school policies and procedures provide for less, a 
formal disciplinary hearing is required before a suspension in excess 
of 10 days or expulsion.


Sec.  42.7  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 related to the alleged 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 Act 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;
    (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.  42.8  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 the record of the disciplinary action, including 
written findings of fact and conclusions;
    (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.  42.9  What are victims' rights in formal disciplinary 
proceedings?

    In formal disciplinary proceedings, each school must consider 
victims' rights when appropriate.
    (a) The victim's rights may include a right to:
    (1) Participate in disciplinary proceedings 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, 
not his or her parents or guardians.


Sec.  42.10  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.  42.11  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 in Sec. Sec.  
42.6, 42.7, and 42.9 contains collections of information subject to the 
PRA. These collections have been approved by OMB under control number 
1076-0163.

0
6. 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 can a grant be terminated?
44.105 How does a tribal governing body retrocede a program to the 
Secretary?
44.106 How can the Secretary revoke an eligibility determination?
44.107 Under what circumstances may the Secretary reassume a 
program?
44.108 How must the Secretary make grant payments?
44.109 What happens if the grant recipient is overpaid?

[[Page 22220]]

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?
44.112 Information Collection

    Authority: Public Law 107-110, Title 10, Part D, the Native 
American Education Improvement Act, 115 Stat. 2007; Part B, Section 
1138, Regional Meetings and Negotiated Rulemaking, 115 Stat. 2057.


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 Tribally Controlled Schools Act;
    (b) The regulations in this part; and
    (c) 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 25 U.S.C. 450 et seq.;
    (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;
    (b) Revocation of eligibility by the Secretary; or
    (c) Reassumption by the Secretary.


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 notifies 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 25 U.S.C. 450 et seq.; and
    (2) If the tribal 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:
    (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; and
    (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 25 U.S.C. 450 et seq. or operate the program 
directly.


Sec.  44.107  Under what circumstances may the Secretary reassume a 
program?

    The Secretary may only reassume a program in compliance with 25 
U.S.C. 450m and 25 CFR part 900, subpart P. The tribe or school board 
shall have a right to appeal the reassumption pursuant to 25 CFR part 
900, subpart L.


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 
the final determination that overpayment occurred.
    (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 25 CFR part 900 apply to grants 
under the Tribally Controlled Schools Act.
    (1) Subpart F; Standards for Tribal or Tribal Organization 
Management Systems, Sec.  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 the Secretary's denial or failure to act 
on a request for facilities funds.

[[Page 22221]]

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

    Yes, the Federal Tort Claims Act applies to grantees.


Sec.  44.112  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 in Sec.  
44.105 contains collections of information subject to the PRA. These 
collections have been approved by OMB under control number 1076-0163.

0
7. New Part 47 is added to subchapter E to read as follows:

PART 47--UNIFORM DIRECT FUNDING AND SUPPORT FOR BUREAU-OPERATED 
SCHOOLS

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 Bureau-operated 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 Information collection.

    Authority: Pub. L. 107-110, 115 Stat. 1425.


Sec.  47.1  What is the purpose of this part?

    This part contains the requirements for developing local 
educational financial plans that Bureau-operated schools need in order 
to receive direct funding from the Bureau of Indian Affairs under 
section 1127 of the Act.


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

    Act means the No Child Left Behind Act, Public Law 107-110, enacted 
January 8, 2002. The No Child Left Behind Act reauthorizes and amends 
the Elementary and Secondary Education Act (ESEA) and the amended 
Education Amendments of 1978.
    Budget means that element in the local educational financial plan 
which shows all costs of the plan by discrete programs and sub-cost 
categories.
    Bureau means the Bureau of Indian Affairs in the Department of the 
Interior.
    Consultation means soliciting and recording the opinions of Bureau-
operated 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.
    Secretary means the Secretary of the Interior or a designated 
representative.


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

    The Office of Indian Education Programs (OIEP) will notify each 
Bureau-operated school in writing of the annual funding amount it will 
receive as follows:
    (a) No later than July 1 OIEP will let the Bureau-operated school 
know the amount that is 80 percent of its funding; and
    (b) No later than September 30 OIEP will let the Bureau-operated 
school know the amount of the remaining 20 percent.


Sec.  47.4  When does OIEP provide funding?

    By July 1 of each year OIEP will make available for obligation 80 
percent of the funds for the fiscal year that begins on the following 
October 1.


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 Bureau-operated school spends funds in 
accordance with the local educational 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 educational financial plan;
    (d) Recommend changes in budget amounts to carry out the local 
educational 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 Bureau-operated 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:
    (1) Certification by the chairman of the school board that the plan 
has been ratified in an action of record by the board; and
    (2) Certification by the Education Line Officer that he or she has 
approved the plan as shown in an action overturning

[[Page 22222]]

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 
educational financial plan:
    (1) Within 15 days after receiving the tentative allotment, the 
school supervisor must consult with the local school board on the local 
educational financial plan.
    (2) Within 30 days of receiving the tentative allotment, the school 
board must review the local educational 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 educational 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 Bureau-operated 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 Bureau-operated school may use funds that it receives under this 
part as matching funds for other Federal programs.


Sec.  47.12  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 contains 
collections of information subject to the PRA in Sec. Sec.  47.5, 47.7, 
47.9, and 47.10. These collections have been approved by OMB under 
control number 1076-1063.

[FR Doc. 05-8256 Filed 4-27-05; 8:45 am]
BILLING CODE 4310-02-P