made whichever is later, except that a final report shall be made with respect to each fiscal year and submitted to the Commissioner not later than the 30th day of September in the following fiscal year with respect to the cost of providing free public education at a preexisting level (other than the cost of repair, resetoration or replacement of school facilities) and with respect to the leasing or otherwise providing of school and cafeteria facilities as temporary replacements.

(c) Excessive payments. The Commissioner may disallow any portion of the amounts requested which are determined by him not to be necessary for the intended purpose or not to be eligible for benefits under section 7 of the Act. If, after the date for filing a final report, an applicant is found to have received amounts in excess of the amounts necessary to continue to provide free public education at a preexisting level, or to lease or otherwise provide school or cafeteria facilities as temporary replaceiments, for a given fiscal year, an amount equal to the excess will be taken into consideration in determining the amounts to be subsequently certified for payment to the applicant for the current or any subsequent fiscal year. Where no payments are due, the applicant will be required to refund such excess to the United States Treasury through the Commissioner.

§ 113.12

Inadequacy of Federal funds. (a) If appropriated funds are inadequate to pay in full the requests contained in all approvable applications filed within the ninety (90) day filing period, the Commissioner will establish an order of priority for the approval of such applications. In determining the order in which such applications will be approved the Commissioner will consider the relative educational and financial needs of the local educational agencies which have submitted approvable applications.

(b) Priority among approvable applications filed within the 90-day filing period will be determined as follows: A priority will be determined among applications by ascertaining the percentage that the total Federal funds for which each applicant is estimated by the Commissioner to be eligible under the Act is of the total current operating costs of that applicant as estimated by the Com

missioner, including the increased costs due to the major disaster.

§ 113.13 Method of payment.

The Commissioner will pay in advance or by way of reimbursement and in such installments as he may determine the amounts due to a local educational agency pursuant to the provisions of the Act. § 113.14 Prohibition on payment for religious worship or instruction.

Nothing contained in the Act or in this part shall be construed to authorize the use of any payment made thereunder to pay for religious worship or instruction. §§ 113.15-113.17 [Reserved]

Subpart D-Retention of Records § 113.18 Fiscal control and audit.

(a) Each applicant local educational agency shall provide for such fiscal control and fund accounting procedures as may be necessary to assure the proper disbursement and accounting for funds paid to that local educational agency under section 7 of the Act.

(b) All expenditures by a local educational agency of funds paid to it under section 7 of the Act shall be audited under audit standards appropriate for that purpose with due regard to Federal auditing requirements. Federal auditors or reviewers, or both, shall be given access to reports of such audits and to such other documents as may be necessary to verify the results of such audits. § 113.19 Retention of records.

Local educational agencies receiving Federal assistance under the Act are required to keep intact all records supporting claims for such Federal funds until either the completion of the fiscal audit or the regularly conducted Federal administrative review and notification that the case is closed, or for 3 years following the fiscal year to which the claim relates, whichever is later. The records involved in any claims or expenditures which have been questioned must be maintained until necessary adjustments have been made and the adjustments have been reviewed and cleared by the Federal agency making such reviews. The Commissioner will not require that records be maintained beyond this period unless, under special circumstances, the local educational agency is specifically advised that certain record materials should be retained.

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114.1

114.2

114.3

114.4

114.5

114.6

114.7

114.8

114.9

114.10

Definitions.

Procedure if funds are inadequate to make all payments.

Determination of priority indices for applications.

Determination of available and usable school facilities.

Criteria for waiver under section 5(e) of the Act.

Criteria for waiver under section

5(e) of the Act for children residing on Federal property. Criteria for waiver under subsection 14(a) of the Act.

Determination of undue financial burden.

Membership of nonresident pupils. School facilities for children whose membership is of temporary duration only.

114.11 Certification of payments. 114.12 Additional payments under section 8 of the Act.

114.13 Priority and approval of applications; conditioned upon readiness to proceed with construction.

All terms used in this part which are defined in the Act and not defined in this section shall have the meaning given to them in the Act. As used in this part, for purposes of this part and determinations under the Act as hereinafter defined, the following terms shall have the meaning indicated in paragraphs (a) to (u) of this section:

(a) The "Act" means Public Law 815, 81st Congress (64 Stat. 967), as amended.

(b) "Commissioner" means the Commissioner of Education, Department of Health, Education, and Welfare.

(c) "Local educational agency" means a board of education or other legally constituted local school authority (including, where applicable, a State agency which directly operates and maintains facilities for providing free public education) having exclusive administrative control and direction of free public education, or some phase thereof, in a county, township, independent, or other school district located within a State. If the local educational agency so defined does not have responsibility for providing school facilities and such responsibility is vested in a State agency, the term shall include such State agency together with the agency having exclusive administrative control and direction of other phases of free public education.

(d) "Free public education" means education which is provided at public expense, under public supervision and direction, and without tuition charge and which is provided as elementary or secondary school education in the applicable State. Elementary education may include kindergarten education meeting the above criteria.

(e) An “applicant" is a local educational agency which has filed a complete application for assistance in school construction under the Act and this part.

(f) A "complete application" in the case where an applicant submits only one project by a filing date, consists of both Part I (Maximum Grant) and Part II (Project) of the application Form RSF-2 prescribed by the Commissioner for use under this Act, properly completed and executed, together with all documents, amendments, and communications in support thereof. Where applicant submits more than one project by a filing date, the Part I form and all Part II forms, properly executed and completed, together with all documents, amendments, and communications in support thereof on file at that time, shall be considered as the "complete application." Where more than one Part II aplication is submitted by an applicant, the applicant shall indicate the order in which its project applications are to be considered by the Commissioner. Only applications meeting the conditions for approval under the Act shall be considered complete applications.

(g) "Project application" means Form RSF-2, Part II, properly completed and executed, making application for Federal assistance for constructing or providing school facilities under the Act.

(h) "Filed" means that all necessary parts of the complete application, bearing the required certifications and verifications by the State educational agency, are received by the Commissioner, or enclosed in a cover addressed to the Commissioner and postmarked, on or before the applicable filing date.

(i) "Minimum school facilities" means those instructional and auxiliary rooms and initial equipment necessary to operate a program of free public education for the school members of the applicant at normal capacity in accordance with the laws and customs of the State. They do not include athletic stadiums, or structures, or facilities intended primarily for athletic exhibitions, contests, or games or other events for which admission is to be charged to the general public.

(j) "Available and usable school facilities" means those facilities containing pupil stations counted in ascertaining children who are "unhoused" or without "minimum school facilities."

(k) The "normal capacity" of a school room is the number of pupil stations which the room accommodates under ordinary conditions in accordance with

the laws and customs of the State governing free public education. Where kindergartens may be conducted on a two-sessions-per-day basis the number of pupil stations of the rooms used for that purpose shall be doubled in determining kindergarten needs.

(1) Children who are "unhoused" or without "minimum school facilities" are those children in excess of the normal capacity of available and usable minimum school facilities.

(m) Unless governed by State law or State regulation, a "member" of a class is a child who presents himself at school and is placed on the current roll. Such a child shall be considered a "member" from the date of enrollment until he permanently leaves the class or school for one of the causes recognized as sufficient by the State. The date of permanent withdrawal should be the date on which it is officially known that the pupil has left school, and not necessarily the first day after the date of last attendance.

(n) "Average daily membership" for a given school in a given school year is the aggregate days of membership of individual children in the school divided by the number of days school was actually in session. Only days on which pupils were under the guidance and direction of teachers in the teaching process may be considered as days in session. The average daily membership for groups of schools having varying lengths of terms is the sum of the average daily memberships obtained for the individual schools.

(o) "Membership of children of temporary duration only" means the school membership of children whose residence in the school area the Commissioner determines probably will be for less than six years beyond the date of the approval of the complete applications and whose number is required to be excluded from computation of maximum payments under section 5 of the Act.

(p) The "priority indices" are the indices established pursuant to this part based on relative urgency of need for the purpose of determining, under the Act, the order of approval of applications, and the order of payments.

(q) The "substantial percentage" requirement under section 14(a) (1) of the Act is satisfied if the total number of children who reside on Federal property (for whom the applicant is providing or,

upon completion of the school facilities for which provision is made in section 14(a), will provide free public education, and whose membership in the schools of such applicant has not formed and will not form the basis for payments under other provisions of the Act) is in excess of 15 and represents at least 10 percent of the total number of children for whom the applicant is providing free public education, unless the percentage requirement is waived by the Commissioner under the provisions of section 14(a).

(r) The term "base year" means the third or fourth school year preceding the fiscal year in which an application was filed under the Act, as may be designated in the application, except that in the case of an application based on children referred to in paragraphs (2) or (3) of section 5(a), the base year shall in no event be later than the regular school year 1962-63.

(s) The term "increase period" means the period of four consecutive regular school years immediately following such base year.

(t) For the purpose of eligibility and entitlement under section 5(a) (3) of the Act, the estimated number of children in average daily membership during the base year shall be 97 percent of the difference between (1) the total number of children in membership whose parents are employed (as determined by a parent-pupil survey made as of any specific date during the increase period) in establishments with respect to which a responsible official thereof certifies that there has been an increase in employment subsequent to the base year in order to fulfill Federal contracts or subcontracts, and (2) the number of such children whose parents moved into the applicant school district subsequent to such a base year.

(u) "Works of art" means those items, which may be in the nature of fixtures, that are incorporated in school facilities primarily because of their esthetic value. The cost of a work of art that is in the nature of a fixture shall be the estimated additional cost of incorporating those special esthetic features which exceed the general requirement of excellence of architecture and design.

§ 114.2 Procedure if funds are inadequate to make all payments.

(a) The Commissioner will from time to time set dates by which applications for payments under the Act with respect

to construction projects must be filed, except that the last such date with respect to applications for payments on account of children referred to in paragraph (2) or (3) of section 5(a) shall be not later than June 30, 1967. Section 3 of the Act provides in part as follows:

The Commissioner shall by regulation prescribe an order of priority, based on relative urgency of need, to be followed in approving applications in the event the funds appropriated under this Act and remaining available on any such date for payment to local educational agencies are less than the Federal share of the cost of the projects with respect to which applications have been filed prior to such date (and for which funds under this Act have not already been obligated). Only applications meeting the conditions for approval under this Act (other than section 6(b)(2)(c)) shall be considered applications for purposes of the preceding sentence.

(b) With respect to applications made under section 14 of the Act, section 14(c) provides in part as follows:

In determining the order in which such applications shall be approved, the Commissioner shall consider the relative educational and financial needs of the local educational agencies which have submitted approvable applications and the nature and extent of the Federal responsibility.

§ 114.3

Determination of priority indices for applications.

When the Commissioner has set a date by which complete applications must be filed, the priority indices for approval of such applications shall be determined as follows:

(a) A priority index will be determined for the first construction project for each applicant under section 6 or section 14 of the Act by adding (1) the percentage that the estimated number of federally connected children countable for payment in the school district (or in the approved attendance area except under section 14) is of the total estimated membership of all children in such an area at the close of the applicable 4-year increase period to (2) the percentage of the estimated school membership within the school district (or in the approved attendance area except under section 14) which at the same time is without minimum school facilities. However, in no case shall the amount used in determining the priority index exceed twice the percentage in subparagraph (1) of this paragraph. No priority, except under section 14, shall be established for any applicant having less

than 20 unhoused children in the school district (or in the approved attendance area).

(b) In those cases where an applicant has filed more than one project application, the priority index for the second project will be determined by: (1) Dividing the normal capacity of the first project by the total estimated membership at the close of the 4-year increase period and (2) reducing the applicar.t's priority index by twice the percentage so obtained. Where more than two project applications have been filed, the applicant's priority index for each succeeding project shall be reduced by the cumulative total capacity, as provided in the first sentence of this paragraph, of all the approved projects of the applicant. § 114.4 Determination of available and usable school facilities.

The following school facilities shall be counted as usable and available in determining "unhoused children" or "children without school facilities":

(a) All school facilities which were constructed for school use and which have been used continuously for classroom purposes, unless such facilities have become unsafe or otherwise unusable to the extent that use of such facilities or partial use of such facilities has been abandoned or must be abandoned, for section 14 of the Act, by the end of the increase period for which the application is filed under section 5 of the Act, and for section 5, by the end of the second year following the increase period for which the application is filed. Basement rooms, hallways, or other space the use of which for classroom purposes, in view of their character, inaccessibility, or other equally cogent reason, seriously prejudices educational objectives or has impaired or will impair the health or safety of the schoolchildren, will not be considered to be available and usable. These criteria shall apply to all facilities owned by other Federal agencies which are available or which may be made available for the education of children counted by applicants.

(b) All school facilities which are "under contract as of the date on which the Commissioner set, under section 3, the earliest date on or before which the application for such project is filed." Thus, facilities for which contracts are entered into after the date on which the Commissioner set the earliest cutoff date

under the Act on or before which the application was first filed, shall not be counted as available. The date on which the Commissioner set the cutoff date shall be the date on which the notice setting such date was filed with the Office of the Federal Register.

(c) All school facilities projects which, as of the date of approval of the application, have been approved for the applicant school district under the Act.

(d) With resect to section 14 of the Act, all minimum school facilities which with full utilization of practically available financial resources could be provided from local, State, or other Federal sources shall be considered as available and usable in making determinations. The capacity of school facilities which could be so provided shall be determined by dividing the sum of such resources by the cost per pupil of providing minimum school facilities in the applicant's school district.

§ 114.5

Criteria for waiver under section 5(e) of the Act.

(a) The Commissioner's authority in section 5(e) of the Act to waive or reduce the percentage requirement or requirements in section 5(c), to waive the requirement contained in the first sentence of subsection 5(d) thereof, or to reduce the percentage specified in clause (2) of such sentence will not be exercised unless the conditions set forth in subparagraphs (1) through (5), inclusive, of this paragraph, or in subparagraph (6) of this paragraph, are met:

(1) The applicant meets all conditions of eligibility under the Act other than section 14 thereof or, on the basis of the authorized waiver or reduction of one or more of the requirements, would meet such conditions.

(2) The applicant specifically states the extent to which it desires the Commissioner to exercise his authority to waive or reduce one or more of such requirements and makes appropriate requests therefor, agreeing that if such a request is granted in whole or in part in computing maximum payment under the Act, only membership of children within the federally impacted attendance area shall be considered.

(3) The applicant has two or more attendance centers, and its jurisdictional area is countywide or is sufficiently extensive as to be reasonably analogous to a countywide school system.