[Federal Register Volume 70, Number 244 (Wednesday, December 21, 2005)]
[Rules and Regulations]
[Pages 75908-75911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24321]



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Part III





Department of Education





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34 CFR Part 226



State Charter School Facilities Incentive Program; Final Rule

  Federal Register / Vol. 70, No. 244 / Wednesday, December 21, 2005 / 
Rules and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Part 226


State Charter School Facilities Incentive Program

AGENCY: Office of Innovation and Improvement, Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary issues regulations to administer the State 
Charter School Facilities Incentive program. Under this program, the 
Department of Education (``Department'') provides competitive grants to 
States to help charter schools meet their need for facilities.

DATES: These regulations are effective January 20, 2006.

FOR FURTHER INFORMATION CONTACT: Ann Margaret Galiatsos or Jim Houser, 
U.S. Department of Education, 400 Maryland Avenue, SW., Washington, DC 
20202-6140. Telephone: (202) 205-9765 or via Internet: 
[email protected].
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Relay Service (FRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: These regulations implement title V, part B, 
subpart 1 of the Elementary and Secondary Education Act of 1965, as 
amended by the No Child Left Behind Act of 2001 (Pub. L. 107-110, 
enacted January 8, 2002) (''Act''). Subpart 1, Charter School Programs, 
of Part B of the Act authorizes the State Charter School Facilities 
Incentive program. These regulations apply to the State Charter School 
Facilities Incentive program, which assists charter schools in meeting 
their facilities needs. Under this program, funds are provided on a 
competitive basis to States to create new or enhance existing per-pupil 
facilities aid programs on behalf of charter schools.
    On August 26, 2005, the Secretary published a notice of proposed 
rulemaking (NPRM) for this program in the Federal Register (70 FR 
50257). The NPRM proposed selection criteria to implement section 
5205(b) of the Act, which authorizes the program. The NPRM also 
proposed regulations to clarify that construction and the purchase of 
real property are allowable expenditures under this program. In 
addition, it proposed a description of expenditures that are subject to 
the five percent cap on administrative costs.
    Except for minor editorial revisions, there are no differences 
between the NPRM and these final regulations.

Public Comment

    In response to the Secretary's invitation in the NPRM, one person 
submitted comments on the proposed regulations. An analysis of the 
comments follows.
    Comment: The commenter thought charter schools that bus students 
should receive an incentive under the selection criteria. The commenter 
recognized that the grant funds cannot be used for buses since they are 
not facilities. However, the commenter noted that the percentage of 
minority and at-risk students is lower in some charter schools than it 
is in their communities. In addition, minority and at-risk students are 
less likely to be able to afford their own transportation, which may be 
necessary to attend a charter school. The commenter thought that 
providing an incentive for busing could rectify this problem.
    Discussion: The Secretary shares the commenter's concern that 
charter schools should serve minority and at-risk students. It is our 
understanding that charter schools in general are more likely to serve 
these students than regular public schools; however, the Secretary 
wants to focus the Department's efforts on those charter schools that 
serve particularly high levels of economically disadvantaged students. 
These students have a greater level of need for the public school 
choice that charter schools offer, since economically disadvantaged 
students tend to lack the resources to attend private schools.
    The regulations are designed to reward States that target funds to 
economically disadvantaged students. The selection criterion under 
Sec.  226.11(b) awards points to States that target charter schools 
with the greatest need and the highest proportions of students in 
poverty. Furthermore, the competitive preference priority under Sec.  
226.14(a) would award points to applications that target services to 
communities with large proportions of low-income students.
    While the Secretary supports the concept of making buses available 
to students in order to increase the accessibility of school choice, 
the more important issue is whether economically disadvantaged students 
are adequately represented in charter schools. A State applicant may 
provide buses for charter schools or give an incentive for charter 
schools to provide buses using their own funds. If the State applicant 
demonstrated that doing so increased the representation of economically 
disadvantaged students in charter schools, its grant application might 
be more competitive than other applications that do not include that 
type of demonstration.
    Change: None.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those we have determined to 
be necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, we have determined that 
the benefits of the regulations justify the costs.
    We have also determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.
    We summarized the potential costs and benefits of these final 
regulations in the preamble to the NPRM (70 FR 50258). We include 
additional discussion of potential costs and benefits in the section of 
this preamble titled Public Comment.

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 does not require you to respond 
to a collection of information unless it displays a valid OMB control 
number. We display the valid OMB control number assigned to the 
collection of information in these final regulations at the end of the 
affected sections of the regulations.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. The objective of the 
Executive order is to foster an intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance.
    In accordance with the order, we intend this document to provide 
early notification of the Department's specific plans and actions for 
this program.

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Electronic Access to This Document

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    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.


(Catalog of Federal Domestic Assistance Number 84.282D State Charter 
School Facilities Incentive Program)

    The Secretary of Education has delegated authority to the Assistant 
Deputy Secretary for Innovation and Improvement to issue these 
amendments to 34 CFR Chapter II.

List of Subjects in 34 CFR Part 226

    Charter Schools, Education, Educational facilities, Elementary and 
secondary education, Grant programs-education, Report and recordkeeping 
requirements, Schools.

    Dated: December 16, 2005.
Nina Shokraii Rees,
Assistant Deputy Secretary for Innovation and Improvement.


0
For the reasons discussed in the preamble, the Secretary amends title 
34 of the Code of Federal Regulations by adding a new part 226 to read 
as follows:

PART 226--STATE CHARTER SCHOOL FACILITIES INCENTIVE PROGRAM

Subpart A--General
Sec.
226.1 What is the State Charter School Facilities Incentive program?
226.2 Who is eligible to receive a grant?
226.3 What regulations apply to the State Charter School Facilities 
Incentive program?
226.4 What definitions apply to the State Charter School Facilities 
Incentive program?
Subpart B--How Does the Secretary Award a Grant?
226.11 How does the Secretary evaluate an application?
226.12 What selection criteria does the Secretary use in evaluating 
an application for a State Charter School Facilities Incentive 
program grant?
226.13 What statutory funding priority does the Secretary use in 
making a grant award?
226.14 What other funding priorities may the Secretary use in making 
a grant award?
Subpart C--What Conditions Must Be Met by a Grantee?
226.21 How may charter schools use these funds?
226.22 May grantees use grant funds for administrative costs?
226.23 May charter schools use grant funds for administrative costs?

    Authority: 20 U.S.C. 1221e-3; 7221d(b), unless otherwise noted.

Subpart A--General


Sec.  226.1  What is the State Charter School Facilities Incentive 
program?

    (a) The State Charter School Facilities Incentive program provides 
grants to States to help charter schools pay for facilities.
    (b) Grantees must use these grants to--
    (1) Establish new per-pupil facilities aid programs for charter 
schools;
    (2) Enhance existing per-pupil facilities aid programs for charter 
schools; or
    (3) Administer programs described under paragraphs (b)(1) and (2) 
of this section.

(Authority: 20 U.S.C. 7221d(b))


Sec.  226.2  Who is eligible to receive a grant?

    States are eligible to receive grants under this program.

(Authority: 20 U.S.C. 7221(b))


Sec.  226.3  What regulations apply to the State Charter School 
Facilities Incentive program?

    The following regulations apply to the State Charter School 
Facilities Incentive program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 74 (Administration of Grants and Agreements with 
Institutions of Higher Education, Hospitals, and other Non-Profit 
Organizations).
    (2) 34 CFR part 75 (Direct Grant Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments).
    (6) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (7) 34 CFR part 82 (New Restrictions on Lobbying).
    (8) 34 CFR part 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (9) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement)).
    (10) 34 CFR part 97 (Protection of Human Subjects).
    (11) 34 CFR part 98 (Student Rights in Research, Experimental 
Programs, and Testing).
    (12) 34 CFR part 99 (Family Educational Rights and Privacy).
    (b) The regulations in this part 226.

(Authority: 20 U.S.C. 1221e-3; 7221d(b))


Sec.  226.4  What definitions apply to the State Charter School 
Facilities Incentive program?

    (a) Definitions in the statute. The following term used in this 
part is defined in section 5210 of the Elementary and Secondary 
Education Act of 1965, as amended (ESEA):

Charter school

    (b) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1:

Applicant
Application
Award
Department
EDGAR
Facilities
Grant
Grantee
Project
Public
Secretary

    (c) Other definition. The following definition also applies to this 
part:
    Construction means--
    (1) Preparing drawings and specifications for school facilities 
projects;
    (2) Repairing, renovating, or altering school facilities;
    (3) Extending school facilities;
    (4) Erecting or building school facilities; and
    (5) Inspections or supervision related to school facilities.

(Authority: 20 U.S.C. 7221d(b); 7221i(1))

Subpart B--How Does the Secretary Award a Grant?


Sec.  226.11  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec.  226.12 and the competitive preference priorities in 
Sec.  226.13 and Sec.  226.14.
    (b) The Secretary informs applicants of the maximum possible score 
for each

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criterion and competitive preference priority in the application 
package or in a notice published in the Federal Register.

(Authority: 20 U.S.C. 7221d(b))


Sec.  226.12  What selection criteria does the Secretary use in 
evaluating an application for a State Charter School Facilities 
Incentive program grant?

    The selection criteria for this program are as follows:
    (a) Need for facility funding. (1) The need for per-pupil charter 
school facility funding in the State.
    (2) The extent to which the proposal meets the need to fund charter 
school facilities on a per-pupil basis.
    (b) Quality of plan. (1) The likelihood that the proposed grant 
project will result in the State either retaining a new per-pupil 
facilities aid program or continuing to enhance such a program without 
the total amount of assistance (State and Federal) declining over a 
five-year period.
    (2) The flexibility charter schools have in their use of facility 
funds for the various authorized purposes.
    (3) The quality of the plan for identifying charter schools and 
determining their eligibility to receive funds.
    (4) The per-pupil facilities aid formula's ability to target 
resources to charter schools with the greatest need and the highest 
proportions of students in poverty.
    (5) For projects that plan to reserve funds for evaluation, the 
quality of the applicant's plan to use grant funds for this purpose.
    (6) For projects that plan to reserve funds for technical 
assistance, dissemination, or personnel, the quality of the applicant's 
plan to use grant funds for these purposes.
    (c) The grant project team. (1) The qualifications, including 
relevant training and experience, of the project manager and other 
members of the grant project team, including employees not paid with 
grant funds, consultants, and subcontractors.
    (2) The adequacy and appropriateness of the applicant's staffing 
plan for the grant project.
    (d) The budget. (1) The extent to which the requested grant amount 
and the project costs are reasonable in relation to the objectives, 
design, and potential significance of the proposed grant project.
    (2) The extent to which the costs are reasonable in relation to the 
number of students served and to the anticipated results and benefits.
    (3) The extent to which the non-Federal share exceeds the minimum 
percentages (which are based on the percentages under section 
5205(b)(2)(C) of the ESEA), particularly in the initial years of the 
program.
    (e) State experience. The experience of the State in addressing the 
facility needs of charter schools through various means, including 
providing per-pupil aid, access to State loan or bonding pools, and the 
use of Qualified Zone Academy Bonds.

(Approved by the Office of Management and Budget under control 
number 1855-0012)

(Authority: 20 U.S.C. 7221d(b))


Sec.  226.13  What statutory funding priority does the Secretary use in 
making a grant award?

    The Secretary shall award additional points under a competitive 
preference priority regarding:
    (a) Periodic Review and Evaluation. The State provides for periodic 
review and evaluation by the authorized public chartering agency of 
each charter school at least once every five years unless required more 
frequently by State law, to determine whether the charter school is 
meeting the terms of the school's charter and is meeting or exceeding 
the student academic performance requirements and goals for charter 
schools as set forth under State law or the school's charter.
    (b) Number of High-Quality Charter Schools. The State has 
demonstrated progress in increasing the number of high-quality charter 
schools that are held accountable in the terms of the schools' charters 
for meeting clear and measurable objectives for the educational 
progress of the students attending the schools, in the period prior to 
the period for which the State applies for a grant under this 
competition.
    (c) One Authorized Public Chartering Agency Other than an LEA, or 
an Appeals Process. The State--
    (1) Provides for one authorized public chartering agency that is 
not a local educational agency (LEA), such as a State chartering board, 
for each individual or entity seeking to operate a charter school 
pursuant to State law; or
    (2) In the case of a State in which LEAs are the only authorized 
public chartering agencies, allows for an appeals process for the 
denial of an application for a charter school.
    (d) High Degree of Autonomy. The State ensures that each charter 
school has a high degree of autonomy over the charter school's budgets 
and expenditures.

(Approved by the Office of Management and Budget under control 
number 1855-0012)

(Authority: 20 U.S.C. 7221b; 7221d(b))


Sec.  226.14  What other funding priorities may the Secretary use in 
making a grant award?

    (a) The Secretary may award points to an application under a 
competitive preference priority regarding the capacity of charter 
schools to offer public school choice in those communities with the 
greatest need for this choice based on--
    (1) The extent to which the applicant would target services to 
geographic areas in which a large proportion or number of public 
schools have been identified for improvement, corrective action, or 
restructuring under title I of the ESEA;
    (2) The extent to which the applicant would target services to 
geographic areas in which a large proportion of students perform poorly 
on State academic assessments; and
    (3) The extent to which the applicant would target services to 
communities with large proportions of low-income students.
    (b) The Secretary may award points to an application under a 
competitive preference priority for applicants that have not previously 
received a grant under the program.
    (c) The Secretary may elect to consider the points awarded under 
these priorities only for proposals that exhibit sufficient quality to 
warrant funding under the selection criteria in Sec.  226.12 of this 
part.

(Approved by the Office of Management and Budget under control 
number 1855-0012)

(Authority: 20 U.S.C. 7221d(b))

Subpart C--What Conditions Must Be Met by a Grantee?


Sec.  226.21  How may charter schools use these funds?

    (a) Charter schools that receive grant funds through their State 
must use the funds for facilities. Except as provided in paragraph (b) 
of this section, allowable expenditures include:
    (1) Rent.
    (2) Purchase of building or land.
    (3) Construction.
    (4) Renovation of an existing school facility.
    (5) Leasehold improvements.
    (6) Debt service on a school facility.
    (b) Charter schools may not use these grant funds for purchasing 
land when they have no immediate plans to construct a building on that 
land.

(Authority: 20 U.S.C. 7221d(b))


Sec.  226.22  May grantees use grant funds for administrative costs?

    State grantees may use up to five percent of their grant award for 
administrative expenses that include: indirect costs, evaluation, 
technical

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assistance, dissemination, personnel costs, and any other costs 
involved in administering the State's per-pupil facilities aid program.

(Authority: 20 U.S.C. 7221d(b))


Sec.  226.23  May charter schools use grant funds for administrative 
costs?

    (a) Except as provided in paragraph (b) of this section, charter 
school subgrantees may use grant funds for administrative costs that 
are necessary and reasonable for the proper and efficient performance 
and administration of this Federal grant. This use of funds, as well as 
indirect costs and rates, must comply with EDGAR and the Office of 
Management and Budget Circular A-87 (Cost Principles for State, Local, 
and Indian Tribal Governments).
    (b) Consistent with the requirements in 34 CFR 75.564(c)(2), any 
charter school subgrantees that use grant funds for construction 
activities may not be reimbursed for indirect costs for those 
activities.

(Authority: 20 U.S.C. 1221e-3; 7221d(b))

[FR Doc. 05-24321 Filed 12-20-05; 8:45 am]
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