(r) "Local educational agency" means a public board of education or other public authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public elementary or secondary schools in a city, county, township, school district, or other political subdivision of a State, or such combination of school districts or counties as are recognized in a State as an administrative agency for its public elementary or secondary schools. The term includes any State agency which is directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children. It also includes any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(s) "Low-income factor" means the limit of family annual income which is used in determining families with low annual incomes for the purposes of Title I of the Act. For fiscal year 1967, the low-income factor is $2,000 and, for fiscal year 1968, the low-income factor is $3,000.

(t) "Program" means an overall plan with respect to funds made available under Title I of the Act during a fiscal year which is intended to be put into effect by a State or local educational agency or the Department of the Interior through one or more projects.

(u) "Project" means an activity, or a set of activities, proposed by a State or local educational agency or the Department of the Interior and designed to meet certain of the special educational needs of certain educationally deprived children.

(v) "Project area" means the attendance area, or combination of attendance areas, having a high concentration of children from low-income families which, without regard to the location of the project itself, is designated as the area whose children are to be served by the project. The term does not apply to a project to be carried out by a State agency at a school operated or supported by that agency for handicapped children or for children in institutions for neglected or delinquent children.

(w) "School facilities" means classrooms and related facilities (including initial equipment) for free public education and interests in land (including site grading and improvements) on which such facilities are constructed, but does

not mean gymnasiums or similar facilities intended primarily for use for exhibitions for which admission is to be charged to the general public.

(x) "Secondary school" means a day or residential school which provides secondary education, as determined under State law, but not beyond grade 12.

(y) "Service function" means an educational service which is performed by a legal entity, such as an intermediate agency, whose jurisdiction does not extend to the whole of the State and which is authorized to provide consultative, advisory, or educational program services to public elementary or secondary schools, or which has regulatory functions over agencies having administrative control or direction of public elementary or secondary schools, rather than a service which is performed by a cultural or educational resource.

(z) "State" means a State of the Union, the District of Columbia, Wake Island, Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Trust Territory of the Pacific Islands.

(aa) "State educational agency" means the officer or agency primarily responsible for the State supervision of public elementary and secondary schools.

(bb) "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. Subpart B-Eligibility for and Amount of Grants and Payments

§ 116.2 Eligibility of local educational agencies.

(a) A local educational agency is eligible for a grant under Title I of the Act for a fiscal year if the Commissioner determines on the basis of satisfactory data available to him that the number of children aged 5 to 17, inclusive, in families residing in the school district of that local educational agency and having an annual income of less than the low-income factor, in families residing in that school district and receiving an annual income in excess of the low-income factor from payments under a State plan approved under Title IV of the Social Security Act, living in that school district

in institutions for neglected or delinquent children (other than children for whom a State agency is directly responsible for providing free public education), and living in foster homes in that school district and being supported with public funds, amounts to at least 10.

(b) If the Commissioner does not have available satisfactory data on a school district basis, a local educational agency is eligible for such a grant if the school district served by it is located in whole or in part in a county in which the Commissioner determines that there are 10 or more of such children.

(c) The foregoing provisions of this section are not applicable to a State agency directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children. § 116.3 Determination of maximum grants and payments.

(a) The maximum grant for which a local educational agency (other than a State agency directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) is eligible to receive under Title I of the Act will be determined by the Commissioner, if satisfactory data are available for that purpose, by multiplying the sum of (1) the number of children aged 5 to 17, inclusive, in families residing in the school district of the local educational agency and having an annual income of less than the low-income factor prescribed in § 116.1 (s), (2) the number of children of those ages in families residing in the school district and receiving, from payments under the program of aid to families with dependent children under a State plan approved under Title IV of the Social Security Act, an annual income in excess of the low-income factor prescribed in § 116.1 (s), (3) the number of children of those ages living in the school district in institutions for neglected or delinquent children (other than children for whom a State agency is directly responsible for providing free public education) and (4) the number of children of these ages living in foster homes in the school district and being supported with public funds, by the Federal percentage prescribed in § 116.1 (1) of the average per pupil expenditure in that State or, beginning with fiscal year 1968, the aver

age per pupil expenditure in the United States, if higher.

(b) Unless the Commissioner determines that satisfactory data are available to enable him to determine the maximum grant for which a local educational agency is eligible, he shall determine the aggregate of the maximum grants for which all local educational agencies (other than State agencies directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) in each county of each State of the Union are eligible. Such an aggregate is hereinafter in this part referred to as a county aggregate maximum grant. Such county aggregate maximum grants will be allocated by State educational agencies among the several local educational agencies in each county in accordance with the provisions of §§ 116.4, 116.5, and 116.6.

(c) A county aggregate maximum grant will be determined in the same manner as a maximum grant is computed under paragraph (a) of this section except that the numbers of such children residing in the county, instead of the numbers of such children residing in an individual school district, are to be used in the computation.

(d) The amount of the grants to Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands, and the amount of the payments to the Department of the Interior to meet the special educational needs of educationally deprived children on reservations serviced by elementary and secondary schools operated for Indian children by that Department, are the amounts allotted to them by the Commissioner according to their respective needs from the sums appropriated for the purposes of Title I of the Act.

(e) The maximum grant for which a State agency directly responsible for providing free public education for handicapped children, or for children in institutions for neglected or delinquent children, is eligible will be determined by multiplying the number of children in average daily attendance, and receiving free public education, at schools for such children which are operated or supported by that State agency by the Federal percentage prescribed in § 116.1 (1) of the average per pupil expenditure in that State or, beginning with fiscal year 1968 in the case of handicapped children, in

the United States, if higher. The provisions of this paragraph (e) do not apply to Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Trust Territory of the Pacific Islands.

(f) The maximum grant for which a State educational agency is eligible for establishing or improving programs for migratory children of migratory agricultural workers is the sum of the estimated number of such migratory children aged 5 to 17, inclusive, who reside in the State full time and the full-time equivalent of the estimated number of such migratory children aged 5 to 17, inclusive, who reside in the State part time, multiplied by the Federal percentage of the average per pupil expenditure in the States of the Union and the District of Columbia. The estimate of the number of such migratory children will be derived by the Commissioner from the best data available to him of the number of intrastate migratory workers, and of the average number of interstate migratory workers, in the several States. § 116.4 Allocation of county aggregate maximum grants by State educational agencies.

(a) To the extent that a county aggregate maximum grant is based on children aged 5 to 17, inclusive, living in institutions for neglected or delinquent children, the county aggregate maximum grant shall be allocated among those local educational agencies in whose districts those institutions are located on the basis of the number of such children living in those institutions.

(b) The remainder of the county aggregate maximum grant shall be allocated by the State educational agency among the several local educational agencies whose school districts lie within the county as provided in paragraphs (c) and (d) on the basis of those available data which it deems best to reflect the current distribution in the county of children aged 5 to 17, inclusive, from lowincome families, including families receiving payments under the program of aid to families with dependent children under a State plan approved under Title IV of the Social Security Act, without regard to the amount of such payments, and children in foster homes.

(c) If the State educational agency has available data showing the distribution among the several school districts in the county of the children aged 5 to 17, inclusive, from families receiving any

aid for dependent children and if it deems that such data reflect the current distribution in the county of all children aged 5 to 17, inclusive, from low-income families and in foster homes, then the allocation among local educational agencies of such remainder of the county aggregate maximum grant shall be made solely on the basis of such data.

(d) If the available data referred to in paragraph (c) of this section are not deemed to reflect the current distribution in a county of all children aged 5 to 17, inclusive, from low-income families and in foster homes, then the State educational agency may combine those data with other available data on such weighted basis as it deems appropriate and best to reflect the current distribution in the county of such children or use such other method as it deems appropriate for that purpose.

(e) If the total allocation to a local educational agency as otherwise computed pursuant to this section would be less than an entitlement to a grant computed on the basis of 10 children, that local educational agency may be disregarded in the allocation of a county aggregate maximum grant among the local educational agencies in that county.

(f) If the allocation of entitlement to a maximum grant to a local educational agency as otherwise computed pursuant to this section would, without regard to any pro rata reduction, reduce the entitlement of that agency to an amount which is less than its maximum grant for the previous year, the State educational agency may modify that allocation of entitlement to a maximum grant to the extent necessary to make an orderly adjustment in the program of the local educational agency.

§ 116.5 Local educational agencies in more than one county.

The allocation to a local educational agency pursuant to § 116.4 shall be made separately for each county in which a part of the school district served by that local educational agency is located. The maximum grant for such a local educational agency shall be the sum of its allocations from county aggregate maximum grants.

§ 116.6 Local educational agencies with overlapping jurisdictions or serving children from another school district.

In any case in which two or more local educational agencies (other than State

agencies directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) have responsibility for different groups of children in a district, or serve school districts which overlap, or in any case in which a local educational agency provides free public education for a substantial number of children residing in the school district of another local educational agency, the State educational agency may allocate the amount of the maximum grants among such local educational agencies in such manner as it determines will best carry out the purposes for which the grants under Title I of the Act are respectively made available.

§ 116.7 Changes in local educational agencies.

(a) In any case in which there is a merger or consolidation of local educational agencies during the school year, the maximum grant which each was eligible to receive shall become available to the surviving or consolidated agency. The surviving or consolidated agency shall be responsible for projects previously approved for each of the agencies participating in the merger or consolidation.

(b) In any case in which the geographical area of a school district served by a local educational agency is diminished, or divided with another local educational agency, during the school year, the State educational agency shall redetermine the maximum grants by using the same method used in making the original determination. However, nothing herein shall preclude the completion, where appropriate, of previously approved projects by the agency originally submitting the projects by itself or through a cooperative undertaking. § 116.8

Limitation on grants for fiscal

year 1967.

(a) The total amount approved for grants to any local educational agency (other than a State agency directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) for fiscal year 1967 shall be limited to 50 percent of the sum budgeted by that agency for current expeditures (see paragraph (h) of § 116.1) for that year.

(b) The determination of the budgeted sum shall be made on the basis of the budget as finally approved by the public authority responsible for such an approval. Until such time as the budget for that fiscal year shall have been finally approved, the grant to the local educational agency shall be tentatively limited to 40 percent of current expenditures for fiscal year 1966, subject to such upward adjustment as may be occasioned by the final approval of the budget for fiscal year 1967. The limitation on the grant to a local educational agency will be determined by the State educational agency at the time of the initial application of the educational agency except that where necessary the final determination of that limitation shall be deferred until the time of the first such application after final budget approval.

(a) If the sums appropriated for any fiscal year are not sufficient to pay in full the amounts which all local and State educational agencies and the Department of the Interior are eligible to receive under Title I of the Act for that year, the amounts available to State and local educational agencies (other than those in Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands) will, subject to such limitations as may be applied by statute to funds appropriated under Title I of the Act, be ratably reduced, except that the amounts made available to State educational agencies for administration and technical assistance with respect to the measurement of educational achievement and evaluation of projects will not be reduced below $75,000. Inasmuch as the amounts available for allotment among Puerto Rico, Guam, American Samoa, the Virgin Islands, the Trust Territory of the Pacific Islands, and the Department of the Interior for grants and payments are, in the first instance, based on the sums appropriated, such amounts are not subject to pro rata reduction under this paragraph.

(b) The Commissioner may set dates by which State educational agencies (other than those in Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands) must certify to him the amounts for which applications of State and local

educational agencies (including State agencies directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) have been or will, during that fiscal year, be approved by such agencies and by which such State educational agencies must file applications with the Commissioner for establishing or improving programs for migratory children of migratory agricultural workers. Subject to such limitations as may be applied by statute to funds appropriated under Title I of the Act, the excess of the amounts made available to such State and local educational agencies in accordance with paragraph (a) of this section over the amounts necessary to fund such approved or approvable applications (including amounts necessary to fund such special arrangements as may be made by the Commissioner for education of migratory children of migratory agricultural workers) shall be made available, first by State educational agencies to other educational agencies in the particular State and then by the Commissioner for educational agencies in other such States to offset ratable reductions made pursuant to paragraph (a) of this section but not to make available to an agency more than the maximum grant to which that agency is entitled. The amounts so made available under this paragraph shall be distributed among the State and local educational agencies applying for additional funds in amounts as nearly proportionate to the amounts of the ratable reductions applied to those agencies as is practicable for approvable new projects or enlargements or extensions of existing projects.

(c) The Commissioner may set dates by which State educational agencies in Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands must certify to him the amounts for which applications have been or will, during that fiscal year, be approved by such agencies, and by which the Department of the Interior will report to the Commissioner the amount needed by that Department for Title I projects. The excess of the amounts made available to any of such agencies or the Department of the Interior over the amounts which the Commissioner determines are needed by them will be redistributed among other such

agencies and the Department of the Interior according to their respective needs for such amounts as redetermined by the Commissioner at that time.

(d) In the event that additional funds are made available for making payments under Title I of the Act for that year, such additional funds will be applied to increase ratably the amounts available under paragraphs (a) and (b) of this section to State and local educational agencies in States other than Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands and, to the extent called for by the Act appropriating such additional funds, the amounts available for allotment for grants and payments among the Department of the Interior and, together with appropriate additional amounts for administration and technical assistance, Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands. The amounts available to State educational agencies for administration and technical assistance will be ratably increased pursuant to this paragraph only to the extent that the amounts made available for grants, in the case of Puerto Rico, Wake Island, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands, are increased above $2,500,000 or, in the case of any other State, above $7,500,000. In no event, however, will the total amount made available to an agency exceed the maximum grant to which that agency is entitled. §§ 116.10-116.15

[Reserved]

Subpart C-Project Applications § 116.16 Project applications.

(a) Grants under Title I of the Act to a local educational agency (including a State agency directly responsible for providing free public education for handicapped children or for children in institutions for neglected or delinquent children) will be made on the basis of applications therefor which are submitted to the State educational agency and approved by it in an aggregate amount not in excess of the amount of the funds made available for that local educational agency.

(b) Grants under Title I of the Act to a State educational agency for establishing or improving programs for migratory children of migratory agricul