element thereof, of the reimbursable direct costs incurred.

(b) Accounting for equipment. As used in this section the term "equipment" means an article of property procured or fabricated which is complete in itself, is of a durable nature, and has an expected service life of more than 1 year. Equipment on hand on the date of termination for which accounting is required in accordance with the procedures set forth in chapter 1-410-50 of the Department of Health, Education, and Welfare Grants Administration Manual shall be identified and reported by the grantee in accordance with such procedures, and, accounted for by one or a combination of the following methods, as determined by the Secretary:

(1) Retention of equipment for other lead-based paint poisoning prevention projects. Equipment may be used without adjustment of accounts on other grant supported projects (whether or not federally supported) within the scope of the act, and no other accounting for such equipment shall be required: Provided, however, (i) That during such period of use no charge for depreciation, amortization, or for other use of the equipment shall be made against any existing or future Federal grant or contract, and (ii) if, within the period of its useful life, the equipment is transferred by sale or otherwise for use outside the scope of the act, the Federal portion of the fair market value at the time of transfer shall be refunded to the Federal Government.

(2) Sale or other disposition of equipment, crediting of proceeds or value. The equipment may be sold by the grantee and the net proceeds of the sale credited to the grant account for project use, or they may be used or disposed of in any manner by the grantee by crediting to the grant account the Federal share of the fair market value on the termination date. To the extent equipment purchased from grant funds is used for credit or trade-in on the purchase of new equipment, the accounting obligation shall apply to the same extent to such new equipment.

(3) Return or transfer of equipment. The equipment may be returned to the Federal Government by the grantee or, in accordance with the provisions of chapter 1-410-50B of the Department of Health, Education, and Welfare Grants Administration Manual, may be transferred to another grantee for the pur

pose of continuing the project for which the equipment was purchased.

(c) Accounting for grant related income-(1) Interest. Pursuant to section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4213), a State will not be held accountable for interest earned on grant funds, pending their disbursement for grant purposes. A State, as defined in section 102 of the Intergovernmental Cooperation Act, means any one of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State, but does not include the governments of the political subdivisions of the State. All grantees other than a State, as defined in this subsection, must return all interest earned on grant funds to the Federal Government.

(2) Royalties. Royalties earned from publications or similar material produced from a grant must first be used to reduce the Federal share of the grant to cover the costs of publishing or producing the materials. Royalties in excess of the costs of publishing or producing the materials shall be distributed as in subparagraph (3) of this paragraph.

(3) Other income. Other income earned by the granteee shall be disposed of in accordance with one of the alternatives specified in Chapter 1-420 of the Grants Administration Manual as determined by the Secretary in the grant award.

(d) Grant closeout-(1) Date of final accounting. A grantee shall render, with respect to each approved project, a full accounting, as provided herein, as of date of the termination of grant support. The Secretary may require other special and periodic accounting.

(2) Final settlement. There shall be payable to the Federal Government as final settlement with respect to each approved project the total sum of

(i) Any amount not accounted for pursuant to paragraph (a) of this section; (ii) Any credits for materials on hand as provided in paragraph (b) of this section;

(iii) Any credits for earned interest pursuant to paragraphs (c) (1) of this section; and

(iv) Any other settlements required by paragraph (c) (2) and (3) of this section.

Such total sum shall constitute a debt owed by the grantee to the Federal Government and shall be recovered from the

grantee or its successors or assignees by set off or other action as provided by law.

§ 91.15 Records, reports, inspection, and audit.

(a) Records and reports. Each grant awarded pursuant to this part shall be subject to the condition that the grantee shall maintain such operational and accounting records, identifiable by grant number, and file with the Secretary such operational and fiscal reports relating to the use of grant funds, as the Secretary may find necessary to carry out the purpose of the Act and the regulations. All records shall be retained for 3 years after the close of the budget period. Such records may be destroyed at the end of such 3-year period if the applicant has been notified of the completion of the Federal audit by such time. If the applicant has not been so notified, such records shall be retained (1) for 5 years after the close of the budget period or (2) until the grantee is notified of the completion of the Federal audit, whichever comes first. In all cases where audit questions have arisen before the expiration of such 5-year period, records shall be retained until resolution of all such questions.

(b) Inspection and audit. Any application for a grant under this part shall constitute the consent of the applicant to inspections of the facilities, equipment and other resources of the applicant at reasonable times by persons designated by the Secretary and to interviews with

principal staff members to the extent that such resources and personnel are, or will be, part of the project. In addition, the acceptance of any grant under this part shall constitute the consent of the grantee to inspections and fiscal audit by such persons of the supported activity and of records relating to the use of grant funds.

§ 91.16 Additional conditions.

The Secretary may with respect to any grant award impose additional conditions prior to or at the time of any award when in his judgment such conditions are necessary to assure or protect advancement of the approved project, the interests of public health, or the conservation of grant funds.

§ 91.17

Early termination and withholding of payments.

Whenever the Secretary finds that a grantee has failed in a material respect to comply with the Act, the regulations of this part, or the terms of the grant, he may on reasonable notice to the grantee, withhold further payments, and take such other action, including the termination of the grant, as he finds appropriate to carry out the purposes of the Act and regulations. Noncancellable obligations of the grantee properly incurred prior to the receipt of the notice of termination will be honored. The grantee shall be promptly notified of such termination in writing and given the reasons therefor.

Plan for Maternal and Child Health or Crippled Children's Services;

(c) "Act" means the Social Security Act as amended (42 U.S.C. Ch. 7);

(d) "Service" means the Social and Rehabilitation Service in the Department of Health, Education, and Welfare;

(e) "Administrator" means the Administrator of the Social and Rehabilitation Service;

(f) "Bureau" means the Children's Bureau in the Social and Rehabilitation Service;

(g) "Chief" means the Chief of the Children's Bureau in the Social and Rehabilitation Service;

(h) "Obligation" means a debt properly incurred by a State agency in carrying out the provisions of an approved State Plan;

(i) "Official forms" means forms supplied by the Bureau to State agencies for requesting funds and for submitting State budgets or reports under title V of the Act;

(j) "Crippled child” means an individual below the age of 21 who has an organic disease, defect, or condition which may hinder the achievement of normal growth and development;

means

(k) "Facilitating services" transportation, subsistence away from home, drugs, biologicals, communications, supplies, and equipment as may be necessary for the provision of maternal and child health or crippled children's services;

(1) "Health" means a state of physical and mental well-being, not merely the absence of disease or infirmity;

(m) "Medical care" means services, including services in hospitals, convalescent homes, and clinics, and home health services, by physicians and the allied services of dentists, nurses, medical social workers, nutritionists, dietitians, physical therapists, occupational therapists, speech and hearing specialists, optometrists, technicians, and other personnel whose services are needed in the maternal and child health and crippled children's programs;

(n) "Maternal and child health services" means (1) the provision of educational, preventative, diagnostic, and treatment services, including medical care, hospitalization, and other institutional care and aftercare, appliances and facilitating services directed toward reducing infant mortality and improving the health of mothers and children; (2)

the development, strengthening, and improvement of standards and techniques relating to such services and care; (3) the training of personnel engaged in the provision, development, strengthening, or improvement of such services and care; and, (4) necessary administrative services in connection with the foregoing;

(o) "Crippled children's services" means (1) the early location of crippled children; (2) the provision for such children of preventive, diagnostic, and treatment services, including medical care, hospitalization, and other institutional care and aftercare, appliances and facilitating services directed toward the diagnosis of the condition of such children or toward the restoration of such children to maximum physical and mental health; (3) the development, strengthening, and improvement of standards and techniques relating to the provision of such care and services; (4) the training of personnel engaged in the provision, development, strengthening, or improvement of such care and services; and (5) necessary administrative services in connection with the foregoing;

(p) "Demonstration services" means either (1) the provision in a county, district, or community of more and better health services than are available in any comparable area in the State, utilizing facilities meeting acceptable standards and personnel who are especially well qualified, for the purpose of establishing standards of care and service that can be shown to be practical, effective and adequate to improve the health of mothers and children, or (2) the provision of a special type of health service for the purpose of proving its value in improving the health of mothers and children and in providing information on cost, methods of development, techniques of provision and the administration of a given type of health service not generally available to mothers and children;

(q) "Specialized expenditures for Maternal and Child Health Services," "Specialized expenditures for Crippled Children's Services," "Supporting expenditures for Maternal and Child Health Services," and "Supporting expenditures for Crippled Children's Services," shall have such meaning as may be ascribed to them in policies issued by the Administrator in order to best achieve the objectives of the Act.

§ 200.2 State Plans; general requirement; form, contents, and amend

ment.

(a) The basic condition to the certification of Federal funds is a State Plan for Maternal and Child Health and Crippled Children's Services, approved as meeting requirements of title V of the Act and regulations established thereunder.

(b) The State Plan shall follow the instructions as to form and content indicated in the Plan Instructions to be released by the Bureau pursuant to these regulations and shall contain descriptions of all material phases of the Maternal and Child Health and Crippled Children's Programs, including (1) their legal bases, (2) the manner in which their purposes, as contemplated by section 501 of the Act, will be carried out, (3) their scope and content, and (4) the policies, standards, methods, and procedures relative to (i) their administration, (ii) the supervision of their administration, (iii) their operation, and (iv) their compliance with the requirements of the Act.

(c) The State Plan and Budget shall be revised, in accordance with instructions from the Bureau, whenever there are significant changes.

The State Plan shall:

(a) Provide for its administration in local communities,

(1) Directly by the State agency; or

(2) By local public agencies which are, with respect to their administration locally of such plan, supervised by the State agency; or,

(3) By a combination of the foregoing methods of administration; and

(b) Set forth the manner in which the State agency will exercise and make effective its supervision over the operations of the local public agencies with respect to their administration locally of such plan.

and coordinating of maternal and child health services and the administration of the unit and its staff as provided under the State Plan;

(2) With respect to the crippled children's services program for the establishment, in the State agency, of a separate organizational unit charged primarily with responsibilities in the field of health services for crippled children and including, at least, the planning, promoting and coordinating of crippled children's services and the administration of the unit and its staff as provided under the State Plan: Provided, That, where the major functions of the State agency relate to the provision of health services to children, as in the case of a Crippled Children's Commission, such commission shall itself be considered as the separate organizational unit required.

(b) The State Plan may provide for combining the Crippled Children's Program Unit and the Maternal and Child Health Program Unit into one organizational unit under the direction of a single program director.

The State Plan shall provide that the Maternal and Child Health and Crippled Children's Program Unit or Units, will both or each be under the direction of a program director who will be (a) a Doctor of Medicine; (b) a full-time employee of the State agency; (c) devoting his full time, during the hours of his employment by the State agency, to the work of the Program Unit of which he is the director: Provided, That the Administrator may approve a plan provision providing for the part-time employment of such Doctor of Medicine where satisfactory evidence is submitted justifying such a provision.

§ 200.6 Information on services available.

The State Plan shall describe how the public throughout the State will be fully informed as to the maternal and child health and crippled children's services available under the State Plan.

§ 200.7 Limitations on provision of services.

The State Plan for maternal and child health and crippled children's services shall provide that hospital, rehabilitation, convalescent or foster home care, or appliances provided to individuals under the plan will be made available only