ities is denied will be given an opportunity for a fair hearing before the State agency.

(c) Davis-Bacon Act and Contract Work Hours Standards Act. The State plan shall contain the State agency's assurance as required by section 203 (a) (4) of the Act.

Subpart E-Interlibrary Cooperation § 130.38 State plan requirementsTitle III.

(a) Policies and objectives. The State plan shall contain a statement describing the policies and objectives for the systematic and effective coordination of the resources of school, public, academic, and special libraries and special information centers for improved services of a supplementary nature to the special clientele served by each type of library or center. This statement shall identify the kinds of libraries, if any, which are ineligible under State law to participate in local, regional, State or interstate cooperative systems or networks of libraries and shall include the kinds of activities to be undertaken by eligible participants.

(b) Interstate library cooperation. The State plan may provide that the State enter into a cooperative arrangement with one or more other States for the conduct and administration of interstate cooperative systems or networks of libraries. If such interstate arrangements are to be entered into, the State plan shall describe the policies and procedures of the State for approval of and participation in such arrangements. Copies of such cooperative arrangements (including applicable fiscal arrangements) shall be forwarded by each participating State agency to the U.S. Office of Education for filing with the State eplan.

(c) Allocation of costs and accounting. The State plan shall describe the methods which the State agency will follow in providing appropriate allocation by participating agencies of the total costs of the library system (s) or network (s). In addition, the State plan shall indicate whether the State agency will assume, on behalf of all participating agencies, responsibility for accounting for expenditures made or whether it will delegate under its supervision such fund accounting responsibility. If the responsibility is delegated, the State agency shall set forth in the State plan the name of the

agency responsible to it for such accounting.

The

(d) Criter i a—participation. State plan shall include a statement of the criteria which the State agency shall use in evaluating applications for funds under this Title and in assigning priority to project proposals and shall describe the method(s) by which information, including the criteria, will be generally made known. The State plan shall provide an assurance that every appropriate local or other public agency in the State is accorded an opportunity to participate in cooperative library systems or networks.

(e) Statewide council. The State plan shall provide for the establishment of a statewide council which shall be broadly representative of professional library interests and of library users which shall act in an advisory capacity to the State agency.

Subpart F-State Institutional Library

Services

§ 130.48 State plan requirements—— Title IV, Part A.

(a) Policies and objectives. The State plan shall contain a statement describing the policies and objectives for the establishment or improvement of library services in residential training schools, reformatories, penal institutions, orphanages, or general or special institutions or hospitals operated or substantially supported by the State. This statement shall describe the immediate and long-range plans of the State agency in establishing or improving these services. The State agency shall set forth its standard for determining whether an institution is "substantially supported by the State," as required by the Act. (b) Criteria-participation. State plan shall include a statement of the criteria which the State agency shall use in evaluating applications for funds and in assigning priority to project proposals and shall describe the method by which information, including the criteria, will be generally made known. The State plan shall provide assurance that all eligible State institutions will be accorded an opportunity to participate in the program pursuant to Part A of Title IV of the Act.

The

(c) Maintenance of effort. The State plan shall contain assurances satisfactory to the Commissioner that expenditures made by the State in any fiscal

ments, pamphlets, photographs, reproductions, microforms, pictorial or graphic works, musical scores, maps, charts, globes, sound recordings, slides, films, filmstrips, video and magnetic tapes, printed, published, and audiovisual and other materials of a similar nature; and (2) Necessary binding or rebinding of library materials.

(c) Title II-Construction projects. (1) Administrative costs by local public library agencies in carrying out approved construction projects.

(2) Costs for a project under an approved State plan incurred subsequent to the State agency's approval of the project except that costs for purposes described in subparagraphs (3) and (4) are allowable if they were incurred after the State plan, approved under Public Law 88-269, Title II, became effective but within 3 fiscal years preceding the fiscal year in which the project was approved by the State agency.

(3) Architectural, engineering, and inspection expenses.

(4) Costs related to the acquisition of land for the construction of a public library but excluding the cost of acquisition of buildings thereon, when actual cash disbursements are required under State law to be made to effectuate the transfer of title.

(5) Site grading and improvement of land on which such facilities are located.

(6) Cost of public library equipment, such as: Library shelving and filing equipment, card catalog cabinets, circulation desks, reading tables and study carrels, furniture, booklifts, elevators, and information retrieval devices.

(d) Title III. (1) The costs listed in § 130.86 (a) in the State agency's administration of the State plan and as they are related to the establishment, operation and administration of local, regional, State, or interstate cooperative networks of libraries, including the following at the discretion of the State agency:

(i) Cost of planning, establishing, and operating centralized purchasing, cataloging, processing, information, and other related service centers, including the acquisition, rental, installation, operation, and maintenance of specialized equipment to facilitate interlibrary use of library materials and services. Such equipment may include, but is not limited to, interconnecting communications equipment, information storage and retrieval equipment, specialized reproduction equipment, and microfilm readers.

(ii) Personnel services costs associated with the efficient operation of the cooperative networks of libraries.

(e) Title IV, Part B. In addition to the costs listed in § 130.86(a) of this part, the following are also eligible at the discretion of the State agency:

(1) Library materials, other than conventional printed materials, not available from Federal programs such as Library of Congress books for the blind and physically handicapped and Office of Education captioned films for the deaf, including commercially produced recordings, tapes, books in oversize print and microfilms.

(2) Specially designed program equipment for the use of library materials including sound reproduction devices. projectors, magnifiers, page turners, and book holders.

§ 130.87

Condition precedent to receiv ing Federal funds.

Before a State may receive a payment from its allotment under Title I, the Commissioner must find, pursuant to section 104 (a) of the Act, that

(a) There will be available for expenditure under the plan from State or local sources during the fiscal year for which the allotment is made

(1) Sums sufficient to enable the State to receive under section 104(a) of the Act payments in an amount not less than $25,000 in the case of the Virgin Islands, American Samoa, the Trust Territory of the Facific Islands, or Guam and $100,000 in the case of any other State, and

(2) Not less than the total amount actually expended, in the geographic and program service areas covered by the plan for such year, for public library services from State or local sources in the second preceding fiscal year, and

(b) There will be available for expenditure for all public library services from State sources during the fiscal year for which the allotment is made not less than the total amount actually expended for such public library services from State sources in the second preceding fiscal year.

Such findings need not be made with respect to the Trust Territory of the Pacific Islands. § 130.88

funds.

Special limitations on

use of

No portion of the funds allotted to a State under any Title of the Act may be used, directly or indirectly, to pur

chase buildings. No portion of any funds allotted to a State under Title I, Title III, or Title IV of the Act may be used, directly or indirectly, to purchase land or to erect any building.

§ 130.89

Submission of reports.

The State agency shall submit to the Commissioner the following described A reports, and shall maintain such records, afford such access thereto, and comply with such other requirements as the Commissioner may find necessary. See paragraph (g) with regard to fiscal year 1967 exceptions.

(a) With respect to Title I, information regarding level of participation and maintenance of effort so that the Commissioner may make the findings referred to in § 130.87;

(b) With respect to Title IV, information regarding the maintenance of effort required by sections 404(a) (5) and 414 (a) (5) of the Act;

(c) With respect to Titles I, II, III, and Parts A and B of Title IV, a detailed statement describing the proposed program;

(d) With respect to Titles I, II, III, and Parts A and B of Title IV, an estimated budget itemizing the amount of funds which will be required by the State agency for administering or supervising the administration of the State plan;

(e) With respect to Titles I, III, and Parts A and B of Title IV, an estimated budget, by area, activity, category of expenditure and sources of funds with respect to activities to be carried out under the State plan;

(f) With respect to Titles I, II, III, and Parts A and B of Title IV, reports of expenditures by categories;

(g) The reports referred to in paragraphs (b), (c), (d), (e), and (f) of this section will not be required for programs - under Titles III and IV, Parts A and B, for fiscal year 1967 inasmuch as funds are available during that year only for developing State plans under those titles. However, the State agency shall submit to the Commissioner for fiscal year 1967 State planning grant estimates for developing State plans and reports of expenditures therefor with regard to programs under Titles III and IV, Parts A and B.

(h) Notification of construction project approval and completion: With respect to Title II, the State agency shall notify the Commissioner of its approval

and of the completion of library construction projects under Subpart D. Such notification shall include the project name and number, location, population served, type of library, type of construction, size of facility, the funds budgeted by source and major category, construction schedule, and completion date. Information shall be forwarded by the State agency, within 30 days after such approval and again within 30 days after project completion. Forms for such purposes will be furnished by the Commissioner.

(i) Any other reports containing such information in such form as the Commission may, from time to time, require in order to carry out his functions under the Act.

If the Commissioner finds, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of a State plan approved under the Act, that the State plan has been so changed that it no longer complies with the applicable requirements of the Act or that in the administration of the plan there is a failure to comply substantially with the provisions required to be included in the plan, he will notify such State agency that further payments will not be made to the State under the Act (or, in his discretion, that further payments will not be made with respect to portions of or projects under the State plan affected by such failure) until he is satisfied that there is no longer any such failure to comply. Until he is so satisfied, no further payments shall be made to such State for carrying out such State plan (or further payments will be limited to parts of or projects under the plan not affected by such failure).

proved under the State plan shall include provision for:

(a) Wage rates and overtime compensation. The payment of wage rates and overtime compensation as required by section 203 (a) (4) of the Act; and

(b) Equal opportunity. Equal opportunity in employment pursuant to Executive Order 11246 or any subsequent executive orders or statutes pertaining thereto and any regulations issued thereunder.

§ 130.77 Special construction considerations-Evaluation of flood hazards.

The State agency shall comply with Executive Order 11296 and with the requirements of Departmental regulations which may be issued from time to time pursuant thereto relating to the evaluation of flood hazards in locating federally financed construction projects. § 130.78 Special construction considerations Physically handicapped per

sons.

The State agency shall insure that facilities constructed with the use of Federal funds under this Act shall, to the extent appropriate in view of the uses to be made of the facilities, be accessible to and usable by handicapped persons. § 130.79

Competitive bidding and equipment procurement.

All contracts for public library construction (as defined in § 130.1(i)) shall be awarded to the lowest qualified bidder on the basis of open competitive bidding: Provided, however, That if one or more items of construction are covered by an established alternative procedure, consistent with State and local laws and regulations, which is approved by the State agency as designed to assure construction in an economical manner consistent with sound business practice, such alternative procedure may be followed. § 130.80 Disposition of facilities, equipment or land.

(a) Whenever public library facilities, or items of equipment, or land, each initially costing $100 or more, in which cost the Federal Government has participated (with funds derived from Federal grants and State or local matching funds), are sold or no longer used for the purpose authorized by the applicable Title of the Act, the Federal Government shall be credited with its proportionate share of the value of such facilities, equipment, or land, the value being de

termined on the basis of the sale price in the case of a bona fide sale or on the fair market value in the case of discontinuance of use or diversion for other than State plan purposes.

(b) Inventories and records are required to be kept for all items of equipment referred to in paragraph (a) of this section. Although the title to such facilities or equipment may be vested in either the State agency or a local participating entity, the State agency is responsible for having available in the State agency's office information sufficient for a determination of whether such facilities or equipment continues to be used for a purpose provided for under the Act.

Only costs attributable to the carrying out of the provisions of the State plan under each title of the Act are allowable costs. To cover situations where an expenditure is only partly attributable to an eligible purpose or activity under the State plan or where an expenditure is attributable to two or more eligible purposes or activities, such expenditures shall be prorated between the eligible and noneligible purposes or activities or among the various eligible and noneligible activities as the case may be. The State shall maintain records documented on an after-the-fact basis to substantiate the proration of expenditures for applicable items such as salaries, travel, rental, supplies, and equipment. § 130.82 Adjustments.

The State agency shall adjust its accounts, records, and reports 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's financial reports filed with the Commissioner.

§ 130.83 Interest on Federal funds.

In the event that any interest is earned on Federal funds, it shall be credited to the United States. The State agency shall submit as a part of each annual financial report a statement showing the amount of interest earned on Federal funds by the State and participating entities during that fiscal year. Such interest earnings shall be refunded to the U.S. Office of Education.

§ 130.84 Fiscal audits.

Audit agencies representing the Department will audit the program records available at the State agency to determine whether the Federal program funds have been properly accounted for and administered. Audit reports of the participating organizations and State review and other control procedures will be evaluated to determine the adequacy of information upon which to base the audit findings. Only where the available information is deemed to be inadequate will the auditor arrange, through the State agency, to audit the records of the participating organizations or entities of the State.

§ 130.85 Retention of records.

(a) General rule. The State agency shall provide for keeping accessible and intact all records, identified as to individual program allotments to which they relate, supporting claims for Federal grants or relating to the accountability of the State agency or any other entity participating under the plan for the expenditure of such grants, expenditure of matching funds, and records supporting maintenance of effort. Such records shall be kept until the State agency is notified (1) that they are not needed for program administration review and (2) that the Department's fiscal audit is completed.

(b) Questioned expenditures. 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.

§ 130.86 Eligible costs.

(a) To the extent that they are attributable to administration or supervision of the administration of the State plan and to the carrying out of the separately identified programs under Titles I, II, and IV of the Act (see §§ 130.71 and 130.81), the eligible costs may at the discretion of the State agency include the following:

(1) Salaries of the professional and clerical staff engaged in activities under the State plan, including (i) fringe benefits regularly provided for such employees and (ii) that part of the salaries paid for time spent by nonclerical employees on educational leave to obtain additional education or training of benefit to the programs: Provided, That such leave is approved in advance by the State agency

and is in conformity with the policy of the State. The fact that funds are used for the salary of an employee on such leave does not preclude Federal financial participation in the salary of the person employed to replace him, as long as the replacement is otherwise eligible.

(2) Fees or tuition charges or other payments in accordance with the State plan provisions described in § 130.3(d) for the education or training of nonclerical personnel, whether or not on educational leave, while attending courses, workshops, conferences, or seminars, approved in advance by the State agency for the benefit of the State plan programs.

(3) Fees and approved expenses of consultants, advisory councils, and other persons or groups acting in an advisory capacity;

(4) Expenses connected with committees, workshops, and conferences;

(5) Travel expenses of staff and consultants thereto, including advisory council members, in accordance with applicable State travel regulations;

(6) Communications costs;

(7) Supplies, printing, and printed materials;

(8) Rental of, or, where economically justified, purchase of office and program equipment;

(9) Rental of space (including the cost of utilities and custodial services) if: The cost does not exceed comparable rental on a square foot basis in the particular locality for the period of occupancy; the expenditures represent an actual cost; and, in the case of publicly owned buildings, like charges are made to other agencies occupying similar space for similar purposes. Rental for space in any building to the extent constructed with funds obtained from the Federal Government or with funds expended for matching purposes under any Federal program is not an allowable cost beyond the cost of utilities and custodial services;

(10) Minor remodeling of space in publicly owned buildings to the extent that such costs are not included in rental; and

(11) Utilities and custodial services to the extent not included in any other item of this section.

(b) Titles I and IV, Part A. In addition to the costs listed in § 130.86(a) of this part, the following are also eligible at the discretion of the State agency:

(1) "Library materials" including books, periodicals, newspapers, docu