The State agency in its maintenance of program expenditures, accounts, records, and reports shall make promptly any necessary adjustments in its records to reflect refunds, credits, underpayments, or overpayments, as well as any adjustments resulting from Federal or State administrative reviews and audits. Such adjustments shall be set forth in the State agency's financial reports filed with the Commissioner.

§ 117.23 Proration of costs.

Funds under Title II of the Act are available only with respect to that portion of any expenditure which is attributable to an activity under the State plan. The State plan shall specify the basis for identifying and the method to be used in prorating expenditures attributable solely to State plan activities. The State agency shall include in the description of its projected program submitted to the Commissioner for each fiscal year its prorated expenditures for salaries attributable to State plan activities. The State agency must also maintain records (documented on a beforeand after- the fact basis) to substantiate the proration of expenditures for applicable items such as salaries, travel, rent, and equipment.

§ 117.24 Maintenance of level of support.

The State plan shall set forth the policies and procedures designed to assure that funds made available under Title II of the Act for any fiscal year will be so used as to supplement and, to the extent practical, increase the level of State, local, and private school funds that would in the absence of such funds be made available for school library resources, textbooks, and other printed and published instructional materials, and in no case supplant such State, local, and private school funds. Such policies and procedures shall take into consideration the total amount of State, local, and private school funds budgeted for expenditure in the current fiscal year for the acquisition of school library resources, textbooks, and other printed and published instructional materials; as compared with the total amount of State, local, and private school funds actually expended in each of the two most recent fiscal years for which the information is available for the acquisition of school library resources, text

books, and other printed and published instructional materials.

§§ 117.25-117.29 [Reserved] Subpart E-State Administration § 117.30 State agency for administration.

(a) Designation. The State plan shall give the official name of the agency which will be, either directly or through arrangements with State or local public agencies, the sole agency for administering the plan.

(b) Authority and organization. The State plan shall set forth the authority of the State agency under State law to submit the plan and to administer and supervise the programs set forth therein, including a description of both the legal and functional relationships between the State agency and other State and local public agencies for the purpose of carrying out the State plan. Citations to, or copies of, all directly pertinent statutes and interpretations of law made by appropriate State officials, whether done by regulations, policy statement, opinion of an authorized State legal officer, or a court decision, shall be furnished as part of the plan or in the appendix. All copies must be certified as correct by an appropriate official.

State plan. If State statutes or regulations establish such positions and give such information, the plan shall so state.

(b) Advisory committees. If State advisory committees are used with respect to one or more aspects of the State plan, the plan shall describe the membership, method of establishment, and duties, including the procedures for the payment of the committees' expenses, if any.

§ 117.33 Officials not to benefit.

No member of the staff of a State or local educational agency may participate in the administration of a program under Title II of the Act, and no person may serve on an advisory committee established to assist either with planning for such program or with its administration, if such person will receive any benefit or remuneration in the form of a commission, percentage, contingent fee, brokerage fee, or otherwise, as a result of any contract for the acquisition of school library resources, textbooks, or other printed and published instructional materials under such a program or as a result of the granting or withholding of approval of the acquisition or use of any school library resources, textbooks, or other printed and published instructional material under Title II of the Act.

The

State agency administering the State plan shall take such action as is necessary to assure itself that preferential treatment on the basis of authorship or other personal interests will be avoided in relation to the sale or distribution of school library resources, textbooks, and other printed and published instructional materials under Title II of the Act.

§ 117.34 Continuing review by Commissioner of State administration.

In order to assist the State agency in adhering to statutory requirements and to the provisions of its approved State plan, the Commissioner will conduct periodic review of the administration of programs under Title II of the Act.

§ 117.35 Administration and evaluation. Provision shall be made in the State plan and the plans of the Department of the Interior and the Department of Defense for both administrative review and evaluation by the Department or the State agency of the program and operations under the plan at least annually for the purpose of appraising their

scope, status, and administration. Such evaluation will be done in relation to the criteria used for equitable distribution and the identifying and serving of needs and will include the review, redefinition, and refinement of meaningful standards as to adequacy, quality, and quantity of school library resources, textbooks, and other printed and published instructional materials which are selected and distributed, and the effectiveness in making such resources, textbooks, and other materials available for the use of children and teachers in elementary and secondary schools. The State agency shall include a report of such administrative review and evaluation in the annual report of the State agency.

§ 117.36 Reports and records.

The State plan and the plans of the Department of the Interior and the Department of Defense shall provide that the Department or the State agency will participate in such periodic consultations and will make such reports to the Commissioner at such time, in such form, and containing such information as the Commissioner may consider necessary to enable him to perform his duties under the Act and will keep such records and afford such access thereto, and will comply with such other requirements, as the Commissioner may find necessary to assure the correctness and verification of such reports.

§ 117.37 Retention of records.

(a) General rule. The State agency shall provide for keeping accessible and intact all records supporting claims for funds under Title II of the Act or relating to the accountability of the grantee or funded agency for expenditure of such funds.

(1) For 3 years after the close of the fiscal year in which the expenditure was made;

(2) Until the State agency is notified that such records are not needed for program administration review; or

(3) Until the State agency is notified by the Department of Health, Education, and Welfare of a completion of the fiscal audit, whichever is latest.

(b) Questioned expenditure. The records involved in any claim or expenditure which has been questioned shall be maintained until necessary adjustments have been reviewed and cleared by the Department of Health, Education, and Welfare.

(c) Inventories of equipment for administration of the State plan. Where equipment which costs $100 or more per unit is purchased by the State with Federal funds for use in administration of the State plan, inventories and other records supporting accountability shall be maintained for the useful life of such equipment or until the State agency is notified of the completion of the review and audit of the Department of Health, Education, and Welfare covering the disposition of such equipment, whichever is sooner. Records supporting accountability of school library resources, textbooks, and other printed and published instructional materials shall be maintained in accordance with § 117.5. §§ 117.38-117.42 [Reserved]

Subpart F-Payment Procedures

§ 117.43 Financial reports.

Reports. Each State agency shall submit, in accordance with procedures established by the Commissioner:

(a) Following the end of the fiscal year, a report of the total expenditures made under the plan during the fiscal : year; and

(b) Such other reports as are periodically needed to account properly for funds.

§ 117.44 Payment of funds under Title II of the Act.

Funds under Title II of the Act to pay for amounts expended by a State in carrying out its State plan will be limited to the amount necessary to meet current needs.

§ 117.45 Withholding of funds.

Neither the approval of the State plan nor any payment to the State pursuant thereto shall be deemed to waive the right or duty of the Commissioner to withhold funds by reason of the failure of the State to observe, before or after such administrative action, any Federal requirements.

§ 117.46 Reallotment.

(a) In general. The amount of any State allotment under Title II of the Act for any fiscal year which the Commissioner determines will not be required for such fiscal year shall be available for reallotment, from time to time, on such dates during such year as the Commissioner may fix, to other States in

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proportion to the original allotments to such States under Title II of the Act for that year but with such proportionate amount for any of such other States being reduced to the extent it exceeds the sum the Commissioner estimates such State needs and will be able to use for such year; and the total of such reductions shall be similarly reallotted among the States whose proportionate amounts were not so reduced.

(b) Statements of anticipated need. In order to provide a basis for reallotment by the Commissioner under Title II of the Act, each State agency administering a program under Title II of the Act, shall if requested, submit to the Commissioner, by such date or dates as he may specify, a statement or statements showing the anticipated need during the current fiscal year for the amount previously allotted, or any amount needed to be added thereto. Such further information as the Commissioner may request for the purpose of making reallotments shall be reflected in such statements.

(c) Lack of carryover. No allotment (or reallotment) of the funds may be carried over for use during the subsequent fiscal year.

118. 49

Subpart F-Review Provisions

State educational agency review and recommendations.

118.50 Continuing administrative review and program evaluation.

AUTHORITY: The provisions of this Part 118 issued under sec. 703, 79 Stat. 57, as renumbered by sec. 161, 80 Stat. 1204, 20 U.S.C. 883. Interpret or apply secs. 301-308, 79 Stat. 39-44, and secs. 701, 703-705, 79 Stat. 55, 5758, as renumbered by sec. 161, 80 Stat. 1204, 20 U.S.C. 841-848, 881, 883-885.

SOURCE: The provisions of this Part 118 appear at 32 F.R. 2758, Feb. 9, 1967, unless otherwise noted.

(a) "Act" means the Elementary and Secondary Education Act of 1965, Public Law 89-10, as amended.

(b) "Base period" means the 3-year period immediately preceding the period covered by a project proposal.

(c) "Commissioner" means the U.S. Commissioner of Education.

(d) "Construction" means (1) the erection of new or expansion of existing structures, and the acquisition and installation of fixed or built-in equipment therefor; (2) the acquisition of existing

structures not owned by the agency making application for assistance under Title III of the Act; (3) the remodeling or alteration (including the acquisition, installation, modernization, or replacement of fixed or built-in equipment) of existing structures; or (4) a combination of any two or more of the foregoing. (e) "Cultural and educational resources" includes State educational agencies, institutions of higher education, nonprofit private schools, public and nonprofit private agencies such as libraries, museums, musical and artistic organizations, philanthropic organizations, and educational radio and television.

(f) "Department" means the U.S. Department of Health, Education, and Welfare.

(g) "Elementary school" means a day or residential school which provides elementary education, as determined under State law.

(h) "Equipment" includes machinery, utilities, and built-in equipment and any necessary enclosures or structures to house them, and includes all other items necessary for the functioning of a particular facility as a facility for the provision of educational services, including items such as instructional equipment and necessary furniture, printed, published, and audiovisual instructional materials, and books, periodicals, documents, and other related materials. Equipment does not include supplies, which is defined in paragraph (q) of this section.

(i) "Exemplary educational programs" means educational programs or activities designed to serve as models for regular school programs.

(j) "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, as defined in paragraph (n) of this section, 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 is recognized in a State as an administrative agency for its public elementary or secondary schools. That term also includes any other public institution or agency of any State or political subdivision thereof having administrative control and direction of a public elementary or secondary school.

(k) "Nonprofit," as applied to a school, agency, organization, or institution, he means a school, agency, organization, or institution owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder of individual.

(1) "Project proposal" means an application for a grant or payment for the E planning, establishing, operating or maintaining of, a supplementary educational center or service submitted to the Commissioner for his approval under Title III of the Act.

E

(m) "Secondary school" means a day or residential school which provides secondary education, as determined under State law, except that it does not include education beyond grade 12.

(n) "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.

(o) "State" includes, in addition to the several States of the Union, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands.

(p) "State educational agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary and secondary schools, or, if there is no such officer or agency, an officer or agency designated by the Governor or by State law.

(q) "Supplies" means those nonequipment items which are consumed in use or which may not reasonably be expected to last longer than 1 year.

(r) "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 which is in the nature of a fixture shall be the estimated additional cost of incorporating those special esthetic features which exceed the

A grant under Title III of the Act will be made to a local educational agency or agencies, or payment will be made to the Department of the Interior or the Department of Defense, only upon submission of an application (in the form of a project proposal) for such a grant or payment on such forms as the Commissioner provides and upon approval of the application by the Commissioner. § 118.3 Designation and certification of agency for administration.

(a) Designation. Each project proposal and amendment thereto shall give the official name of the applicant, which shall be the agency responsible for carrying out the project.

(b) Certification. Each such proposal or amendment shall include as an attachment a certificate by the officer authorized to make and submit the proposal, or amendment, on behalf of the applicant to the effect that the proposal or amendment has been adopted by the applicant.

§ 118.4 Purposes.

(a) In order to stimulate and promote the acceptance of innovative and exemplary educational programs into educational practices, grants, and payments will be made under Title III of the Act for supplementary educational centers and services through which such programs may be carried out. Grants and payments may also be made for planning and taking other steps leading to the development of such programs. Priority will be given to assisting those programs which are exemplary and demonstrate educational innovation and which may serve as models for adoption as regular school programs. The provision of such programs may include, if necessary for the success of the project, the acquisition of equipment and supplies, and, in the case of local educational agencies if essential to the success of the project, the leasing or construction of facilities.

(b) Grants and payments may be made for innovative and exemplary programs in the following categories:

(1) Comprehensive guidance and counseling, remedial instruction, and school health, physical education, recreation, psychological, and social work