Example 2. State B in the prior year had an equalization program which required a 5 mill effort and allowed 5 mills additional leeway. For the required 5 mill effort each LEA was guaranteed $600 per pupil. LEA 2, on a wealth base of $60,000 per pupil, levied the full 10 mills producing $300 per pupil received $300 per pupil of State basic aid, and with the $300 per pupil leeway yield, had revenues of $900 per pupil. LEA #2, on a wealth base of $160,000 per pupil, also levied the full 10 mills producing $800 per pupil from the required 5 mills which exceed the guarantee and thus received no State basic aid. The 5 mill leeway yielded an additional $800 per pupil for a total of $1,600 per pupil. The State has instituted a new program raising the guarantee to $900 per pupil with a 10 percent budget increase limitation. LEA #1, (with 2,000 pupils), now realizes $300 per pupil from its required effort, receives $600 of State basic aid, received $300 per pupil 1.5 mills of local leeway for a yield of $90 per child because of its budget restraint of $990 per child. ($900 per child plus 10 percent), LEA #2 (with 1,000 pupils), realizes $800 per pupil from its required effort, receives $100 per pupil in State equalization aid, levies 5 mills leeway for another $800 per pupil for a total of $1,700 per pupil which is still within its budget increase limitation of $1,760 per pupil.

Assuming that no other LEA is restrained below the $900 per pupil guarantee and that LEA #1 is the most restrained at $90 per pupil leeway then all of the revenues of LEA #2 above that level are not neutral.

The percentage of neutrality for the State is calculated in the same way as in Example 1. Assuming there are no other LEA's, the percentage of wealth neutral revenues is 80.7, and State B does not qualify.

Example 3. State C has an equalization program under which each LEA is guaranteed $900 per weighted pupil or 110 percent of the prior year's per weighted pupil reve

$5,195,000

nue under the program, whichever is less, minus the LEA contribution derived from a required tax which is uniform for all LEA's guaranteed $900 per pupil and proportionately less for those LEA's guaranteed lesser amounts per pupil. No additional local leeway taxes are allowed. LEA #1 received $850 per pupil under the program in the prior year while LEA #2 received $800 per pupil under the program in the prior year. LEA #1 is limited to the $900 guarantee since 110 percent of its prior year's expenditure exceeds the $900 guarantee. LEA #2 qualifies for an $880 guarantee since 110 percent of $800 equals $880. LEA #2's required tax effort is also proportionately less.

Assume that neither LEA realizes revenues in excess of the guarantee. For LEA #1 (with 10,000 pupils), $880 of the $900 per pupil revenue is wealth neutral and for LEA #2 (with 2,000 pupils), all $880 in per pupil revenue is wealth neutral. (See § 222.64(b)(2)(iii)).

The percentage of neutrality for the State would be calculated as in Example 1. The percentage of wealth neutral revenues is 98.2 and the State qualifies under § 222.64(a).

Example 4. State D has an equalization program which permits different local tax efforts from 1 mill to 10 mills and which guarantees $100 per pupil for each mill levied. LEA #1 taxes at 5 mills and realizes $300 per pupil. Since the guarantee level for 5 mills is $500 per pupil, State D gives LEA #1 $200 in equalization aid. LEA #2 also taxes at 5 mills, but realizes $800 per pupil. Since the guarantee for 5 mills is only $500 per pupil, LEA #2 receives no equalization aid. LEA #3 taxes at 8 mills and realizes $400 per pupil. Since the guarantee at 8 mills is $800 per pupil, LEA #3 receives $400 in equalization aid. LEA #4 taxes at 8 mills, and realizes $1,000 per pupil. Since the guarantee for 8 mills is only $800 per pupil, LEA #4 receives no equalization aid. All of the

funds LEA #1 realized under the equalization program are neutral since there is no excess over the guaranteed amount for 5 mills. $300 per pupil of the funds realized by LEA #2 are not neutral, because that is the amount in excess of the amount guaranteed for a 5 mill tax effort under the equalization program, and is attributable to the greater wealth of LEA #2.

All of the funds realized by LEA #3 under the equalization program are neutral since there is no excess over the guaranteed amount for an 8 mill tax effort. $200 per pupil realized by LEA #4 is not neutral, because that is the amount in excess of the guaranteed amount for an 8 mill tax effort under the equalization program and is attributable to the greater wealth of LEA #4. Example 5. State E has a foundation-type equalization program under which each LEA receives funds for a teacher salary, based on a salary schedule, for each 25 pupils in average daily attendance with additional teacher units allocated for small or sparsely populated districts, and special education programs such as handicapped and vocational classes. Each district also receives under the program a set amount of dollars per teacher unit for expenses other than salaries. Each LEA must make a tax effort of 10 mills to qualify for the foundation equalization aid. The yield from the 10 mills tax is deducted from the amount of the equalization guarantee. There are no State restrictions on budget, expenditure or tax effort increases over prior years. No LEA in the State realizes more than the guaranteed amount for the 10 mill effort. All of the funds realized by all LEAs under the foundation equalization program are neutral. Any excess in the amount of revenues realized by any agency over that realized by any other are attributable to differences in the designated needs. (See § 222.61(b)(3)).

4. Determination under § 222.66 as to maximum proportion of Pub. L. 81-874 payments that may be taken into consideration by a State under an equalization program.

[40 FR 16032, Apr. 8, 1975, as amended at 42 FR 65526, Dec. 30, 1977. Redesignated at 45 FR 77368, Nov. 21, 1980]

Sec.

223.40 The Assistant Secretary's final determination.

223.41 Judicial review of the Assistant Secretary's final determination.

223.42 Effects of noncompliance with the Assistant Secretary's final determination.

AUTHORITY: Sec. 5(b)(3) of Title I of the Act of September 30, 1950, Pub. L. 81-874, as amended by the Education Amendments of 1978, Pub. L. 95-561 (20 U.S.C. 240(b)(3)), unless otherwise noted.

SOURCE: 46 FR 7199, Jan. 22, 1981, unless otherwise noted.

Subpart A-General

§ 223.1 Purpose.

The purpose of this part is to:

(a) Clarify the requirements which local educational agencies (LEAs) must meet to receive an entitlement under Section 3(d)(2)(D) of the Act and § 223.5 of these regulations;

(b) Establish minimum standards for formulating policies and procedures to ensure the participation of Indian parents and tribes in the education process;

(c) Describe the process that a tribe or its designee shall follow to file a complaint regarding those policies and procedures; and

(d) Establish hearing procedures to resolve complaints.

(Authority: 20 U.S.C. 240(b)(3))

§ 223.2 Applicability of regulations in this part.

(a) The regulations in this part apply to LEAS that claim entitlements under § 223.5.

(b)(1) Except as provided in paragraph (b)(2) of this section, these regulations are designed to ensure participation in the LEA's education program by Indian tribes and parents of Indian children residing on Indian lands.

(2) For purposes of computing the entitlement only, the LEA shall count all children, including any non-Indian children, residing on Indian lands.

(Authority: 20 U.S.C. 238(d)(2)(D); 20 U.S.C. 240(b)(3))

§ 223.3 Applicability of other statutes and regulations.

In addition to the regulations in this part, the following statutes and regulations apply to LEAs that claim entitlements under § 223.5:

(a) Title I (Financial assistance for LEAS in areas affected by Federal activity) of the Act of September 30, 1950, Pub. L. 81-874, as amended in 20 U.S.C. 236 et seq. particularly 240(b)(3).

(b) The Impact Aid regulations in 34 CFR part 222 pertaining to LEAS in areas affected by Federal activity.

(c) The General Education Provisions Act (GEPA) in 20 U.S.C. 1221 et seq.

(Authority: 20 U.S.C. 240(b)(3); 20 U.S.C. 1221 et seq., 34 CFR part 222)

For purposes of this part, the following definitions apply:

"Act" means Title I (Financial assistance for LEAs in areas affected by Federal activity) of the Act of September 30, 1950, Pub. L. 81-874, as amended. Significant amendments pertinent to this part were made by the Education Amendments of 1978, Pub. L. 95– 561.

"Assistant Secretary" means the Assistant Secretary for Elementary and Secondary Education or the Assistant Secretary's designee.

"Child" means any child who is within the age limits for which the applicable State provides free public education.

"Department" means the U.S. Department of Education.

"Entitlement" means, for purposes of this part, the amount of funds (or whatever portion of those funds that is provided by an appropriation) determined by the number of children residing on Indian lands in average daily attendance at the LEA multiplied by the local contribution rate multiplied by 125 percent.

"Indian children” means children residing on Indian lands who are recognized by an Indian tribe as being affiliated with that tribe.

"Indian lands" means:

(a) Real property held in trust by the United States for individual Indians or Indian tribes; and

(b) Real property held by individual Indians or Indian tribes that is subject to restrictions on alienation imposed by the United States.

"Indian tribe" means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established under the Alaska Native Claims Settlement Act (85 Stat. 688), which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.

"Local educational agency (LEA)" means a board of education or other legally constituted local authority having administrative control and direction of free public education in a county, township, independent, or other school district located within a State. This term includes any State agency which directly operates and maintains facilities for providing free public education.

"Parent" includes a legal guardian or other person standing in loco parentis.

"Preliminary payment" means a payment equal to 75 percent (or the percentage permitted by an appropriation) of the total impact aid payment received by the LEA for the preceding year.

"Secretary" means the Secretary of the U.S. Department of Education. (Authority: 20 U.S.C. 240(b)(3); 20 U.S.C. 244)

§ 223.5 Entitlement based on the number of children residing on Indian lands. (a) To be eligible for an entitlement under this part, an LEA that serves children who reside on Indian lands shall meet:

(1) The eligibility requirements in Section 3(c) of the Act; and

(2) The requirements in § 223.7. (b) If an LEA meets the requirements in paragraph (a) of this section, the Secretary pays the LEA the entitlement defined in § 223.4.

(c) Except as provided in § 223.8, if an LEA that serves children who reside on Indian lands does not meet

§ 223.6 Use of entitlement.

An LEA that receives the entitlement referred to in § 223.5 is not required to spend that entitlement exclusively for Indian children or for special programs for Indian children. (Authority: 20 U.S.C. 240(b)(3); H. Rept. 1137, 95th Cong., 2d Sess. 114 (1978))

§ 223.7 Requirements to receive entitlement.

To receive the entitlement referred to in § 223.5:

(a) An LEA formed before November 1, 1978 shall have complied with the requirements under Section 5(b)(3) of the Act for establishing policies and procedures by the end of the 19791980 school year; or

(b) An LEA formed after November 1, 1978 shall:

(1) Establish the policies and procedures described in §§ 223.10-223.11, in consultation with and based on information from tribal officials and parents of Indian children, within one year of its formation; and

(2) Include in its application for payments under the Act:

(i) An assurance that the LEA established these policies and procedures in consultation with and based on information from tribal officials and parents of Indian children; and

(ii) A copy of the policies and procedures.

(Authority: 20 U.S.C. 240(b)(3)(A))

§ 223.8 Waiver of deadline for establishing policies and procedures.

(a)(1) If an LEA cannot meet its deadline in § 223.7 for establishing policies and procedures, the LEA may request the Secretary to waive that deadline and set a new one.

(2) The LEA's request for a waiver must:

(i) Be in writing;

(ii) Provide a full justification of the need for a waiver;

(iii) Indicate when policies and procedures can be established; and

(iv) Include any supporting information the Secretary may require.

(b)(1) The Secretary may waive the deadline in § 223.7 for establishing policies and procedures and set a new one if the LEA shows good cause.

(2) In determining whether the LEA has shown good cause, the Secretary considers the following factors:

(i) The progress of the LEA in establishing its policies and procedures.

(ii) Administrative obstacles faced by the LEA in establishing its policies and procedures.

(iii) Exceptional or unforeseen circumstances.

(c) If the Secretary decides to grant the LEA's request for a waiver, the Secretary may vary the method for paying the LEA's entitlement under § 223.5, depending on the circumstances underlying the waiver request. The methods available to the Secretary include the following:

(1) Pay the LEA the full entitlement for the current year in which the Secretary grants the waiver.

(2) Grant the waiver but pay the LEA the full entitlements for past years retroactively when the LEA establishes it policies and procedures.

(3) Grant the waiver but only pay the entitlement prospectively from the year in which the LEA establishes policies and procedures.

(d) If the Secretary denies the LEA's request for a waiver, the Secretary may not pay either:

(1) The entitlement referred to in § 223.5; or

(2) The preliminary payment defined in 8 223.4.

(Authority: 20 U.S.C. 240(b)(3)(A))

8 223.9 [Reserved]

Subpart B-Policies and Procedures

§ 223.10 Required policies and procedures. The policies and procedures required under 8223.7 must ensure that an LEA that serves children residing on Indian lands:

(a) Gives tribal officials and parents of Indian children the opportunity to comment on the participation of Indian children on an equal basis in the school program with all other children educated by the LEA;

(b) Disseminates to tribal officials and parents of Indian children:

(1) The Pub. L. 81-874 application; (2) Any evaluations of education programs assisted with funds provided under the Act; and

(3) Any program plans for education programs that the LEA plans to initiate or eliminate;

(c) Consults actively and involves regularly tribal officials and parents of Indian children in the planning and development of education programs assisted with funds provided under the Act; and

(d) Affords tribal officials and parents of Indian children an opportunity to:

(1) Make recommendations concern

ing:

(i) The needs of their children; and

(ii) The ways by which they can assist their children in realizing the benefits to be derived from the education programs assisted with funds provided under the Act; and

(2) Present their overall views on the education program in the LEA, including:

(i) The operation of the LEA's education program; and

(ii) The degree of parental participation allowed.

(Authority: 20 U.S.C. 240(b)(3)(B))

§ 223.11 Minimum standards for establishing policies and procedures.

To accomplish the objectives in § 223.10, an LEA's policies and procedures must include, at a minimum:

(a) Specific procedures for how the LEA will:

(1) Give tribal officials and parents of Indian children the opportunity to comment on the participation of Indian children on an equal basis in the education program;

(2) Assess the extent to which Indian children do participate on an equal basis; and