trol and fund accounting procedures as specified in these regulations.

(b) Effect of State plan. The plan, I when approved by the Commissioner, shall constitute the basis on which Federal grants will be made, as well as a basis for determining the propriety of State and local expenditures in which Federal participation is requested.

(c) Submission. The State plan and all amendments thereto shall be submitted to the Commissioner by a duly authorized officer of the State educational agency. The plan shall indicate the official or officials authorized to submit plan material.

(d) Amendments. The administration of the programs shall be kept in conformity with the approved State plan. Whenever there is any material change in the content or administration of a program, or when there has been a change in pertinent State law or in the organization, policies, or operations of the State educational agency affecting a program under the plan, the State plan shall be appropriately amended.

(e) Certificate of the State educational agency. The State plan and all amendments thereto shall include as an attachment a certificate of the officer of the State educational agency authorized to submit the State plan to the effect that the plan or amendment has been adopted by the State agency and that the plan, or plan as amended, will constitute the basis for operation and administration of the program in which Federal participation under sections 501-504 (a), inclusive, will be requested.

(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 § 143.1(k) 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 of the plan provisions are consistent with State law. =§ 143.3

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 § 143.1(k) 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 and to other related agencies.

§ 143.4 Authority of State agency.

The State plan shall set forth the authority of the State educational agency under State law to submit the State plan and to administer and supervise the programs set forth therein, including a description of the functional relationship between the State agency and (a) local educational agencies, and (b) junior colleges and technical institutes. 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. If the agency is not authorized under State law to expend funds for testing students in any one or more elementary or secondary schools, or junior colleges or technical institutes, in the State, the authorized officer of the agency shall so certify, indicating the institutions or types of institutions thus excluded and giving the legal basis for his conclusion. In such cases, the Commissioner will arrange for testing such students under the authority contained in section 504(b) of the Act.

§ 143.5 Custody of funds.

The State plan shall designate the officer who will receive and provide for the custody of all funds to be expended under applicable State laws and regulations on requisition or order of the State agency.

§ 143.6 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 assure 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 and other participating 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 accounts of local educational agencies and other agencies participating in the State plan will be audited; and, when the audit is to be carried out at the local level, how the State agency will secure information necessary to assure proper use of funds expended under sections 503 and 504(a) of the Act by such educational agencies.

§ 143.7

Duties and qualifications of State personnel in professional positions.

(a) Staff. The State plan shall describe the duties of State administrative and supervisory positions under the plan. The State plan shall also set forth the minimum experience, education and other related qualifications required of all State personnel to be engaged in professional administration and supervision of guidance and counseling, and testing, programs. 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 committee on guidance and counseling, or testing, is established, the plan shall describe the general composition and method of establishment of the committee and its duties.

§ 143.8 State agency program activities. The plan shall set forth the program of the State agency for the administration and supervision of all plan programs, including standards and pro

cedures for the initial and succeeding State approvals of local programs of guidance and counseling, and testing. Program reviews should be conducted by the State agency at least annually for the purpose of appraising the status of plan programs and their administration in terms of plan provisions and program objectives, which shall be stated in the plan.

§ 143.9 Reports.

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 Part A, Title V, 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.

§ 143.10 Continuing review of State ad

ministration.

§ 143.13 Federal participation in general.

(a) Nature. The Federal Government will pay from each State's allotment, as - reduced by expenditures required pursuant to section 504(b) of the Act, onehalf of the total amount expended under the approved State plan: (1) By the State and local agencies in the establishment, maintenance, or extension of guidance and counseling, and testing, programs approved under the State plan; (2) for State agency supervisory or related services in the fields of guidance and counseling, and testing; and (3) for administration of the State plan. There can be no Federal financial participation in the expenditures made by local agencies for a guidance and counseling, or testing, program if the program has not been approved by the State agency prior to the incurrence of the obligation.

(b) 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 c 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 from allotments under section 502 or section 1008 of the Act.

(c) 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.

§ 143.14 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.

§ 143.15 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, regulations, and standards 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 other participating agencies utilize other than a cash accounting basis, the State plan shall indicate the time period or other factors governing the liquidation of obligations.

§ 143.16 Use of State rule in determining the fiscal year's allotment to which an expenditure is chargeable. Each allotment to a State under section 502 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 agency is chargeable for the purpose of earning the allotment.

§ 143.17 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 agencies or other school authorities pursuant to an ap

proved plan program, 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 programs has been received and verified by the State educational agency. (See §§ 143.13 and 143.15.) Reimbursement or payment need not be uniform to all local agencies (1.e., the State plan may provide a method by which the ratio of reimbursement to total expenditures may be adjusted on an individual basis to meet local needs).

§ 143.18 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.

(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.

(c) Records of equipment. Where nonconsumable equipment which costs $50 or more per unit is purchased with Federal financial participation, 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.

§ 143.19 Adjustments.

The State educational agency in its maintenance of program expenditure accounts, records, and reports shall promptly make 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

§ 143.20 Estimates and financial reports.

(a) Reports. The State agency shall submit, in accordance with procedures established by the Commissioner:

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

(2) Reports of estimated total expenditures for activities under the plan during the fiscal year, and the amount of funds available to pay the non-Federal share of such expenditures;

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

(4) Such other estimates and reports as are periodically needed to account properly for funds.

(b) Effect of estimates. Expenditures will not be precluded from Federal financial participation because of minor deviations from the information submitted pursuant to paragraph (a) of this section if they are otherwise made in accordance with the approved plan and the regulations.

§ 143.21 Federal payments.

In

Payments will be made in advance to States with approved plans on the basis of estimates and reports referred to in §§ 143.20 and 143.22(c), with appropriate adjustments for underpayments or overpayments for any prior period. settling accounts upon the termination of Title V-A of the Act, or the termination of the State plan, the State shall refund to the Commissioner any overpayment which might have been made under section 504 (a) of the Act.

§ 143.22 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 502(b) of the Act, each State agency shall, if requested, submit to the Commission, 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) of funds may be carried over for use during a subsequent fiscal year.

§ 143.23 Certifying payments.

Payments will be certified periodically after: (a) The State has on file in the Office of Education a plan approved by the Commissioner; (b) the pertinent estimates and reports required by §§ 143.20 and 143.22 (c) have been reviewed; and (c) the Commissioner is satisfied that the State needs the funds and will be able to carry out the plan during the current fiscal year.

§ 143.24 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 by made by the State to the Commissioner.

Subpart E-State Supervisory Services and Administration $143.25 Programs for supervisory services and administration.

The State plan shall describe the programs of the State agency for supervisory and related services in public elementary and secondary schools in the fields of guidance and counseling, and testing; and administration of all plan operations. There may be Federal participation in State agency expenditures for such programs to the extent that they are directly related to the establish

ment, maintenance, and improvement of guidance and counseling, and testing, programs developed under the plan.

(a) Categories of activities. Such programs may include the following activities: (1) The organization, general direction and coordination of the guidance and counseling, and testing, programs established under the plan; (2) planning State programs and assisting in the planning of local programs; (3) assisting local guidance personnel in establishing, maintaining, or improving programs; (4) planning and preparation of materials and information for State and local programs; (5) demonstrating through pilot programs, or otherwise, guidance and counseling, and testing, procedures and techniques; (6) evaluating the results of guidance and counseling, and testing, programs; and (7) such other related activities as may be necessary for the organization, maintenance, and improvement of programs established under the plan.

The cost

(b) Categories of expense. of administration and of supervisory and related services, in guidance and counseling, and testing, programs in which Federal participation may be claimed includes such categories of expense as the following, to the extent that the items of cost are attributable to the programs approved under the State plan: (1) Salaries of the staff, both clerical and professional; (2) consultants' fees; (3) expenses of committees, workshops and conferences, including the travel of those representing the State agency or acting in an advisory capacity to it; (4) contractual services consistent with State laws and regulations and the State plan, provided such services do not result in the relinquishing by the State agency of any part of its responsibility for supervisory and related services; (5) office equipment and equipment necessary for State programs of guidance and counseling, and testing; (6) communication; (7) supplies, printing, and printed materials, including reference books; (8) purchase or rental of tests, answer sheets, profile sheets, cumulative record forms, and such other materials as may be necessary under the plan; (9) rental of equipment for scoring, processing, and reporting the results of tests administered under the plan or, if such equipment is owned by State or local agencies, the pro rata share of the cost of maintaining and operating such equipment;