ment or facilities rendered or performed, by a State educational agency prior to the effective date of the State plan.

(e) Obligations entered into by State and local educational agencies and payable out of funds under Title VI of the Act shall be liquidated during the fiscal year following the fiscal year in which such funds are appropriated unless prior to the end of that following fiscal year the State educational agency reports to the Commissioner the reasons why certain obligations cannot be timely liquidated and, on the basis thereof, the Commissioner extends the time for so liquidating those obligations.

§ 121.27 State fiscal control and audit. (a) Each State plan shall provide that the State educational agency will, for that agency and local educational agencies, provide for such fiscal control and fund accounting procedures as may be necessary for the proper disbursement of funds paid to the State, and by the State to local educational agencies, under Title VI of the Act.

(b) All expenditures by State and local educational agencies of Federal funds under Title VI of the Act shall be audited either by State auditors or by other appropriate auditors. The State educational agency shall, with due regard for Federal auditing requirements, provide for appropriate audit standards for that purpose. The results of such audits will be used to substantiate State agency records and shall be made available to Federal auditors. Federal auditors shall be given access to such records or other documents as may be necessary to substantiate the results of such audits. § 121.28 Custody and expenditures of funds.

Each State plan shall designate the officer or officers who will receive and have custody of funds granted to the State under Title VI of the Act, who will pay to State and local educational agencies the amounts due them, and who will pay out the amounts expended by the State educational agency for the performance of its duties.

§ 121.29 Transfer of funds to local agencies.

Each State plan shall set forth the policies and procedures to be used in the payment of funds by the State educational agency to local educational agencies, either as reimbursement for actual

expenditures or as an advance prior to expenditures, for programs and projects for the education of handicapped children or for planning at the local level. § 121.30 Proration of costs.

Funds under Title VI 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 in determining those attributable solely to State plan activities. The State agency shall include in the description of its projected program activities submitted to the Commissioner for each fiscal year its projected expenditures for salaries attributable to State plan activities. The State agency must also maintain records (documented on an after-the-fact basis) to substantiate the proration of expenditures for applicable items such as salaries, travel, rent, and equipment.

§ 121.31 Maintenance of level of support.

The State plan shall set forth policies and procedures which provide satisfactory assurance that funds made available under Title VI 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 funds expended for the education of handicapped children, and in no case supplant such State, local, and private funds. In developing such policies and procedures, the State educational agency shall take into consideration the total or per capita amount of State, local, and private school funds budgeted for expenditures in the current fiscal year for the education of handicapped children as compared with the total or per capita average amount of State, local, and private school funds actually expended for the education of handicapped children in the two most recent fiscal years for which the information is available, with allowances made for decreases in enrollment of handicapped children, contributions of large sums of money from outside sources on a short-term basis, and unusually large amounts of funds expended for such long-term purposes as the acquisition of equipment and the construction of school facilities.

§ 121.32 Retention of records.

(a) General rule. Each State and local educational agency receiving funds un

§ 120.3 Assignments of personnel.

Assignments of personnel between the Office and a State agency may include (a) assignments to the State agency of one or more officers or employees of the Office either on detail to a regular work assignment of the Office or on leave without pay from positions in the Office, (b) assignments to the Office of one or more officers or employees of the State agency either with or without appointment in the Office, or (c) interchanges of personnel involving any combination of paragraphs (a) and (b) of this section. § 120.4 Initiation of proposals.

A proposal for an assignment of personnel between the Office and a State agency may be made by either the Commissioner or the State agency.

(a) Office proposals. When the Commissioner desires to effect with a State agency the assignment of personnel under section 507 of the Act, he will propose an arrangement for that purpose to the appropriate State agency. Upon acceptance of the proposal by the State agency, the Commissioner and the State agency will enter into an agreement which meets the requirements of section 507 of the Act and the regulations in this part.

(b) State proposals. A State agency desiring the assignment of personnel under section 507 of the Act shall submit a proposal for an arrangement for that purpose in such manner as may be prescribed by the Commissioner. Information on making such proposals may be obtained from the Office. The Commissioner will notify the State agency in writing of his acceptance or rejection of the proposal. If he rejects the proposal submitted by the State agency, he will provide reasons for his action, and, if modifications would make the proposal acceptable, he may suggest such modifications. If the proposal is accepted by the Office, the Commissioner and the State agency will enter into an agreement which meets the requirements of section 507 of the Act and the regulations in this part.

§ 120.6 Nature and type of assignment.

Each agreement between the Office and a State agency for assignment of personnel shall indicate the type and describe the nature of the assignment of each officer or employee covered under the

the arrangement. Specifically,

agreement shall (a) indicate whether the officer or employee of the Office will be on detail to a regular work assignment of the Office or on leave without pay from his position in the Office, or whether the officer or employee of the State agency will be given an appointment in the Office or assigned to the Office without appointment; (b) describe the duties and responsibilities of the officer or employee while on his assignment; and (c) include the name and position title of the person responsible for the supervision of the officer or employee while on the assignment.

§ 120.7

Personnel provisions.

(a) Office personnel on detail to State agency. Each agreement for assignment to a State agency of an officer or employee of the Office on detail to a regular work assignment of the Office shall contain provisions with respect to compensation and allowances, travel and transportation expenses, and employee benefits which are consistent with his remaining an officer or employee of the Office. Such an agreement may provide that the compensation, travel and transportation expenses, and allowances (or any part thereof) of the officer or employee will be reimbursed by the State. (b) Office personnel on leave without pay. Each agreement for assignment to a State agency of an officer or employee of the Office on leave without pay from his position in the Office shall, in accordance with section 507 of the Act, contain provisions with respect to the following matters:

(1) Payment by the State of compensation (including allowances) of the officer or employee during the period of assignment, which may include provisions for supplementary salary payments from the Office not in excess of the amount by which the Office rate of compensation (including allowances) exceeds the State rate of compensation (including allowances) and provisions for reimbursement by the State for such supplementary compensation;

(2) Payment by the Office of the expenses of travel of the officer or em

ployee and transportation of his immediate family, household goods and personal effects to and from his initial place of assignment, which may include provisions for reimbursement by the State for such expenses;

(3) Entitlement to annual and sick leave to the extent authorized by Federal law if that officer or employee were not on leave without pay, but only in circumstances considered by the Commissioner to justify approval of such leave;

(4) Coverage under the Federal Employees' Group Life Insurance Act of 1954, the Federal Employees' Health Benefits Act of 1959, and the Civil Service Retirement Act, including the collection and deposit into the respective Federal funds of all necessary contributions and the election of either benefits available under those Acts or similar benefits available through employment in the State agency;

(5) Coverage under the Federal Employees' Compensation Act, except that the officer or employee so assigned (or his dependents in case of death) may elect either benefits available under that Act or benefits available through employment in the State agency for injury or death; and

(6) Crediting of the period of assignment toward eligibility for periodic or longevity step increases under the Classification Act of 1949.

(c) State personnel without appointment to Office. Each agreement for the assignment to the Office of an officer or employee of the State agency without appointment shall contain provisions with respect to compensation and allowances, travel and transportation expenses, and employee benefits which are consistent with his remaining an officer or employee of the State agency, except that, in accordance with section 507 of the Act, provisions shall be contained in the agreement with respect to the following matters:

(1) Payment by the Office of expenses of travel of the officer or employee (but not expenses of transportation of his immediate family, household goods, and personal effects) to and from the place of assignment or during the period of assignment;

(2) Coverage under the Federal Employees' Compensation Act, except that the officer or employee so assigned (or his dependents in case of death) may elect

either the benefits under that Act or benefits available through employment in the State agency for injury or death.

(d) State personnel with appointment to Office. Each agreement for appointment to the Office of an officer or employee of the State agency for the period of assignment shall, in accordance with section 507 of the Act, contain provisions with respect to the following matters:

(1) Payment by the Office of compensation in accordance with the Classification Act of 1949 and allowances as authorized by Federal law;

(2) Payment by the Office of expenses of travel of the officer or employee (but not expenses of transportation of his immediate family, household goods, and personal effects) to and from the place of assignment and during the period of assignment.

(3) Coverage under the Federal Employees' Compensation Act, except that the officer or employee so appointed (or his dependents in case of death) may elect either the benefits under that Act or benefits available through employment in the State agency for injury or death;

(4) Exclusion of the officer or employee from coverage under the Federal Civil Service Retirement Act and the Federal Employees' Group Life Insurance Act of 1954; and

(5) Coverage under the Federal Employees' Health Benefits Act of 1959, but only if appointment to the Office results in the loss of coverage in a group health benefits plans whose premium has been paid in whole or in part by a contribution of the State agency.

(e) General provisions. (1) Notwithstanding any other provision in this section, sections 203, 205, 207, 208, and 209 of Title 18 of the United States Code, relating to conflicts of interest, shall apply to all officers or employees on assignment pursuant to section 507 of the Act.

(2) Each agreement for the assignment of an officer or employee shall provide that the policies of both the Office and the State agency governing the standards of conduct of their personnel shall apply to the officer or employee assigned under the agreement; and, if any such policies conflict, the agreement shall include mutually acceptable provisions indicating which policies in the areas of conflict will prevail.

(3) Each agreement for the assignment of an officer or employee shall provide that the rules and policies of the

quality of programs and projects conducted in the State under Title VI of the Act and shall provide that all such programs and projects meet those standards.

§ 121.7 Provision of services to handicapped children enrolled in private schools.

(a) Each State plan shall contain an assurance that, to the extent consistent with the number and location of handicapped children in the State who are enrolled in private elementary and secondary schools, provision will be made for participation by such children in programs and projects assisted or carried out under Title VI of the Act.

(b) The special educational and related needs of handicapped children enrolled in private elementary and secondary schools, the number of such children who will participate in the programs and projects, and the types of services which will be provided for them shall be determined, after consultation with persons knowledgeable of the needs of those children, on a basis comparable to that used in providing for the participation in programs and projects assisted or carried out under Title VI of the Act by handicapped children enrolled in public elementary and secondary schools.

(c) Programs and projects assisted or carried out under Title VI of the Act shall be designed to include, to the extent consistent with the number of eligible handicapped children enrolled in private elementary and secondary schools in the geographical area served by the program or project, services which will aid in meeting the special educational and related needs of such children; those services may be provided through such arrangements as dual enrollment, educational radio and television, and mobile equipment, and may include professional and subprofessional services.

(d) Public school personnel may be made available in other than public school facilities only to the extent necessary to provide the special educational and related services required by the handicapped children for whose needs such services were designed, and only when such services are not normally provided at the private school. The State or local educational agency providing educational and related services to children in private schools shall maintain administrative control and direction over such services. The special educational and re

lated services provided with funds under Title VI of the Act for eligible handicapped children enrolled in private schools shall not include the payment of salaries of teachers or other employees of private schools, except for services performed outside their regular hours of duty and under public supervision and control, nor shall they include the use of equipment, other than mobile or portable equipment, on private school premises or the construction of private school facilities. Subject to the provisions of § 121.23, mobile or portable equipment may be used on private school premises for such period of time within the life of the current program or project for which the equipment is intended to be used as is necessary for the successful participation in that program or project by eligible handicapped children enrolled in private schools.

(e) Any program or project to be carried out in public facilities and involving joint participation by eligible handicapped children enrolled in private schools and handicapped children enrolled in public schools shall include such provisions as are necessary to avoid classes that are separated by the school enrollment or religious affiliations of such children.

§ 121.8 Measurement of educational achievement and evaluation of programs.

(a) General. Each State plan shall describe the procedures and techniques to be used in making at least annually an evaluation of the effectiveness of programs carried out under the State plan in meeting the special educational and related needs of handicapped children, including appropriate measurements of educational achievement.

(b) Measurement of educational achievement and improvement. The annual evaluation of the effectiveness of programs shall be made by measuring or estimating the educational achievement of the children who participated in the programs or projects. The type of measurement used should be based on some objective standard or norm and should give particular regard to the requirement that each State report to the Commissioner on the effectiveness of the programs in improving the educational achievement of handicapped children. This means that objective measurements shall be used wherever such measurements are appropriate. Where such

measurements are not appropriate with respect to the specific goals of a given program, estimates of achievement and improvement shall be made.

(c) Evaluation of effectiveness of programs. The evaluation of the effectiveness of a program shall include an evaluation at the State level, as well as at the local level, of the increase in educational opportunities afforded handicapped children throughout the State, and shall, consistent with the nature and extent of participation by children enrolled in private schools, be extended to such children.

§ 121.9 Dissemination and utilization of results of educational research and demonstrations.

Each State plan shall describe the methods to be used by State and local educational agencies in reviewing, selecting, and disseminating to teachers and administrators of handicapped children significant information derived from educational research, demonstration, and similar projects, and for adopting, where appropriate, promising educational practices developed through such projects. 2 $ § 121.10 Coordination with other public and private programs and projects.

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(a) State level coordination: Each State plan shall demonstrate that it was of developed by the State educational agency so as to be in coordination with other public and private programs for the education of handicapped children or for similar purposes; and shall assure that the State educational agency will continue to coordinate its activities under the State plan with such other programs. Such other programs shall include, but not be limited to, those of State agencies which are directly responsible for providing free public education for handicapped children and, to the extent praceticable, other programs such as community action programs under Title II of the Economic Opportunity Act of 1964.

(b) Local level coordination: Each State plan shall assure that the State educational agency will, before approving programs and projects of local educational agencies under Title VI of the Act, (1) determine that the local educational agency has developed its program or project in coordination with other public and private programs for the education of handicapped children or for similar purposes in the areas served by such local

educational agencies, and (2) require that local educational agencies will, in the conduct of approved programs and projects, coordinate their activities under the State plan with such other programs.

(c) Interagency cooperation: Each State plan may provide that State and local educational agencies may enter into cooperative arrangements with other State and local educational agencies, including those in another State, to carry out joint programs, projects, or activities necessary and appropriate to carrying out the purposes of Title VI of the Act.

(d) In the coordination with other programs the commingling of funds under Title VI of the Act with funds under such other programs is not authorized, but the simultaneous use of funds under those programs to finance identifiable portions of a single project is permitted.

§ 121.11 Reports and records.

(a) Each State plan shall provide that the State educational agency will make such reports, in such form, and containing such information, as the Commissioner may reasonably require to carry out his functions under Title VI of the Act. Such reports shall include, but not necessarily be limited to, reports of the objective measurements required in § 121.8, the annual description of the projected activities of the State educational agency and local educational agencies required in § 121.2(a), and the financial reports required in § 121.41.

(b) Each State plan shall provide that the State educational agency and the local educational agencies will keep such records and afford such access thereto as the Commissioner may find necessary to assure the correctness and verification of such reports. Such records shall include, but not necessarily be limited to, those required in §§ 121.33, 121.27, 121.31, 121.33, and 121.34.

Subpart C-Federal Financial
Participation