stitute the basis for operation and administration of the programs in which Federal participation under sections 301304 of the Act will be requested and (2) that the program established under section 303 (a) (5) of the Act is either a new program or an expansion or improvement of an existing program within the meaning of § 141.32.

(f) Certificate of the State Attorney General or other appropriate State legal officer. The State plan shall also include, as an attachment, a certificate by the appropriate State legal officer to the effect that the State agency named in the plan is the "State educational agency" as defined in § 141.1(t) which has authority under State law to submit the State plan and to carry out the programs described therein as the sole State agency responsible for administering the plan, and that all the plan provisions are consistent with State law. § 141.3

State agency for administration.

(a) Designation. The State plan shall give the official name of the agency which will be the sole agency for administering the plan. Such agency shall meet the criteria set forth in § 141.1(t) defining "State educational agency."

(b) Organization. The State plan shall describe, by chart or otherwise, the organization of the State staff for the administration of the programs set forth in the plan. The lines of authority within the administrative unit or units responsible for the programs under the plan shall be shown, together with the administrative relationships of such unit or units to the rest of the State educational agency.

§ 141.4 Authority of State agency.

The State plan shall set forth the authority of the State educational agency under State law to submit the plan and to administer and supervise the programs set forth therein, including a description of the functional relationship between the State agency and the local educational agencies. Citations to, or copies of, all directly pertinent statutes and interpretations of law by appropriate State officials, whether by regulation, policy statement, opinion of the appropriate State legal officer or court decision, shall be furnished as part of the plan. All copies shall be certified as correct by an appropriate official.

§ 141.7

State fiscal procedures.

(a) State administration. The State plan shall provide for the fiscal administration of the plan by describing such fiscal control and fund accounting procedures as may be necessary to asure proper disbursement of and accounting for Federal funds paid to the State under the plan, including such funds paid by the State to the local educational agencies. Such administration shall be conducted in accordance with applicable State laws, policies, and procedures, which shall be identified in the plan or set forth in an appendix. Accounts and supporting documents relating to any program involving Federal participation shall be adequate to permit an accurate and expeditious audit of the program.

(b) Audit of local and other participating educational agencies. All expenditures claimed for Federal participation shall be audited either by the State or by appropriate auditors at the local level. The State plan shall indicate how the project accounts of local educational agencies and other agencies participating in the State plan will be audited; and, when the audit is to be caried out at the local level, how the State agency will secure information necessary to assure proper use of funds expended under sections 303 and 304 of the Act by such educational agencies.

§ 141.8 Duties and qualifications of State personnel in professional positions.

(a) Staff. The State plan shall describe the duties of State administrative and supervisory positions, existing and

proposed, under the State plan. The State plan shall also set forth the minimum experience, education, and other related qualifications required of all professional supervisors in the critical subjects. If State statutes or regulations establish such positions and give such information, the plan shall include citation to such statutes, or set forth in an appendix copies of pertinent regulations.

(b) Advisory committee. If a State advisory committe is used with respect to one or more aspects of the State plan, the plan shall describe the general composition and method of establishment of the committee and its duties.

The State plan shall provide that 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 reasonably necessary to enable him to perform his duties under sections 301-304, inclusive, of 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.

§ 141.10 Continuing review of State administration.

In order to assist the State educational agency in adhering to statutory requirements and to the substantive legal and administrative provisions of its approved State plan, the Commissioner will conduct periodic reviews of the administration of programs under Title III of the Act.

$141.11 Fiscal audits.

The State educational agency's program expenditure records are to be audited by the Department to determine whether the State agency has properly accounted for Federal funds.

Subpart C-Federal Financial
Participation

thereto is in effect. For the purposes of this part, the earliest date on which the plan or applicable amendment thereto may be considered in effect is the date on which it is received in substantially approvable form by the Commissioner. § 141.13 Federal participation in general.

(a) Projects under section 303(a) (1) of the Act. The Federal Government will pay from each State's allotment an amount equal to one-half of the sums expended for the purchase of equipment and for minor remodeling, when expended for an approved project under an approved State plan, as provided for in section 303(a)(1) of the Act. There can be no Federal financial participation in the expenditures for a project if the any project, including amendments thereto, has not been approved by the State educational agency prior to the incurrence of the obligation. However, an administrative approval of a project or of the estimated cost of a project does not of itself constitute an expenditure for the purpose of Federal financial participation.

(b) Supervision and administration. The Federal Government will pay from each State's allotment one-half of the total sum expended by the State for supervision, related services, and administration in programs established under the approved State plan in accordance with section 303(a) (5) of the Act.

(c) Equipment from a Communist country. Annual appropriation acts for the Department of Health, Education, and Welfare have provided that no part of the funds appropriated for "Defense Educational Activities" shall be available for the purchase of teaching equipment, or equipment suitable for use for teaching, in certain subjects, which can be identified as originating in or having been exported from a Communist country, unless such equipment is unavailable from any other source. Such a prohibition applies to expenditures with respect to which Federal participation is requested (1) for supervisory services and administration through the use of allotments under section 302(b) or section 1008 of the Act and (2) for the acquisition of equipment through the use of allotments under section 302(a) or section 1008 of the Act.

(d) Public nature of funds. The expenditures to be considered in computing

Federal financial participation must be made from public funds. Public funds do not include contributions by private organizations or individuals unless such contributions are deposited in accordance with State law to the account of a unit or agency of State or local government without such conditions or restrictions as would negate their public character. § 141.14 Proration of costs.

Federal financial participation is 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 State level expenditures to include only those attributable solely to State plan activities. The State educational agency shall include in its annual description of projected activities submitted to the Commissioner for each fiscal year its estimated prorated expenditures for salaries attributable to State plan activities. The State educational agency must also maintain records (documented on a before- and afterthe-fact basis) to substantiate the proration of expenditures for applicable items such as salaries, travel, rent and equipment.

§ 141.15 Accounting basis for expendi

tures.

Subject to the provisions and limitations of the Act and this part. Federal financial participation will be available only for expenditures made under the plan in accordance with applicable State laws, rules, and regulations governing expenditures of State and local funds. Each State shall use the accounting basis (cash, accrual or obligation) applicable to its State or local accounting. The State plan shall specify for State and for local level expenditures the particular accounting basis to be so used and shall set forth or incorporate by reference the applicable State laws, rules, and regulations which constitute the basis for defining and establishing how and when transactions made by the State and other participating agencies are considered to

be expenditures. If the State or local educational agencies utilize other than a cash accounting basis, the State plan shall indicate the time period or other factors governing the liquidation of obligations.

§ 141.16 Use of State rule in determining the fiscal year's allotment to which an expenditure is chargeable. Each allotment to a State under section 302(a), 302(b), or 1008 of the Act is made with respect to a fiscal year commencing on July 1 and ending the following June 30. State and local laws and regulations shall be followed in determining to which fiscal year an expenditure by the State or local educational agency is chargeable for the purpose of earning the allotment.

§ 141.17 Transfer of funds to local agencies.

State plans shall set forth the policies and procedures to be used in the payment of funds to local educational agencies or other school authorities pursuant to an approved project either (a) as a reimbursement for actual expenditures or (b) as an advance prior to expenditures. Advances shall not be eligible for inclusion as expenditures for the purposes of earning Federal financial participation until adequate evidence of actual expenditures for approved projects has been received and verified by the State educational agency. (See §§ 141.13 and 141.15.) Reimbursement or payment need not be uniform to all local agencies (ie., the State plan may provide & method by which the ratio of reimbursement to expenditures in particular cases may be adjusted on the basis of comparative local needs).

§ 141.18 Disposal of records.

(a) General rule. The State educational agency shall provide for keeping accessible and intact all records supporting claims for Federal grants or relating to the accountability of the grantee agency for expenditure of such grants and relating to the expenditure of matching funds: (1) For three 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 of the completion of the Department's fiscal audit, whichever is later.

The

(b) Questioned expenditure. records involved in any claim or expenditure which has been questioned shall be maintained until necessary adjustments have been reviewed and clear by the Department.

(c) Inventories of equipment. Where nonconsumable equipment which costs $50 or more per unit is purchased by the State with Federal financial participation for use in programs for supervisory or related services or administration, inventories and other records supporting accountability shall be maintained until the State agency is notified of the completion of the Department's review and audit covering the disposition of such equipment. (The maintenance of such inventories is not required for equipment acquired under section 303 (a) by local educational agencies.)

The State educational agency in its maintenance of program expenditure 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's financial reports filed with the Commissioner.

Subpart D-Federal Payment
Procedures

§ 141.20 Financial reports.

The State agency shall submit, in accordance with procedures established by the Commissioner:

(a) A description of the activities to be carried on under the plan during the fiscal year;

(b) Following the end of the fiscal year, a report of the total expenditures

made under the plan during the fiscal year; and

(c) Such other reports as may be appropriate.

[32 F.R. 7498, May 20, 1967]

§ 141.21 Federal payments.

Funds allotted to a State under Title III of the Act will be made available to that State in amounts necessary to meet current cash needs for expenditures by a State in carrying out its State plan, in accordance with procedures prescribed by the Commissioner.

[32 F.R. 7498, May 20, 1967]

§ 141.22 Effect of Federal payments and reallotment.

(a) No waiver. 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.

(b) Settlement of accounts. The final amount to which the State is entitled for any period is determined on the basis of expenditures under the State plan with respect to which Federal financial participation is authorized.

(c) Reallotment. In order to provide a basis for reallotments by the Commissioner under section 302 (c) of the Act, each State agency shall, if requested, submit to the Commissioner, by such date or dates as he may specify, a statement 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. No allotment (or reallotment) or funds may be carried over for use during a subsequent fiscal year.

§ 141.24 Interest on Federal grants.

Interest earned on Federal grants 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 during that period. Ordinarily such interest earnings will be considered in the adjustment of the Federal-State account; but for the last year of the program, payment of interest shall be made by the State to the Commissioner.

Subpart E-Acquisition of Equipment and Minor Remodeling

§ 141.25 Description of program.

The State plan shall describe the program for the acquisition of equipment and minor remodeling for the critical subjects to be served.

The State plan shall describe the procedure for giving a timely opportunity to any aggrieved project-applicant to request and receive a hearing before the State educational agency with reference to any project presented to the State agency for approval under the plan. Subpart F-Supervision and Administration

§ 141.31 Programs for supervision and related services.

The State plan shall contain a description of the programs for the expansion or improvement of the State agency's supervisory and related services to public elementary and secondary schools in each of the critical subjects. The description shall clearly show (a) how and to what extent each program provides a new service or is an improvement or expansion of an existing service in the nature of supervision of instruction or a service which effectively contributes to the supervisory service to be rendered; (b) the scope of the agency's activities and arrangements to be undertaken in carrying out such programs; and (c) the present and planned supervisory staff posttions and activities, including related services, in each of the critical subjects. § 141.32 Expansion or improvement.

An expansion or improvement of an existing program of supervisory or related services is a program which involves additional expenditures by the State educational agency for such services to public elementary or secondary schools in the critical subjects over and above those hitherto expended for like services and does one or more of the follow