(c) "Commissioner" means the U.S. Commissioner of Education.

(d) "Construction" means (1) erection of new or expansion of existing school facilities, and the acquisition and installation of initial equipment therefor; or (2) acquisition of existing school facilities not owned by any agency or institution making application for assistance under Title VI of the Act; or (3) remodeling and alteration (including the acquisition, installation, modernization, or replacement of equipment) of existing school facilities; or (4) a combination of any two or more of the foregoing.

(e) "Elementary school level" means the educational level at which elementary school education is provided under State law.

(f) "Equipment" includes machinery, utilities, and built-in equipment and any necessary enclosures or structures to house them, and includes all other items necessary for the functioning of a particular facility as a facility for the provision of educational and related services, including items such as instructional equipment and necessary furniture, printed, published, and audiovisual instructional materials, and books, periodicals, documents, and other related materials. Equipment does not include supplies which are consumed in use or which may not reasonably be expected to last longer than 1 year.

(g) "Fiscal year" means a period beginning on July 1 and ending on the following June 30. (A fiscal year is designated in accordance with the calendar year in which the ending date of the fiscal year occurs.)

(h) "Handicapped children" includes mentally retarded, hard of hearing, deaf, speech impaired, visually handicapped, seriously emotionally disturbed, crippled or other health impaired children who by reason thereof require special education and related services.

(i) "Local educational agency" means a public board of education or other public authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public elementary or secondary schools in a city, county, township, school district, or other political subdivision of a State, or such combination of school districts or counties as are recognized in a State as an administrative agency for its public elementary or secondary schools. The term also in

cludes any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(j) "Preschool level" means the educational level below that at which elementary education is provided under State law.

(k) "Private elementary or secondary schools" means schools which provide elementary or secondary education as determined under State law, but not including any education provided beyond grade 12, and which are controlled by other than a public authority.

(1) "Public agency" means a legally constituted organization of government under public administrative control and direction.

(m) "School facilities" means classrooms and related facilities (including initial equipment) for the provision of educational services and interests in land (including site grading and improvements) on which such facilities are constructed, except that such term does not mean gymnasiums or similar facilities intended primarily for use for exhibitions for which admission is to be charged to the general public.

(n) "Secondary school level" means the educational level, not beyond grade 12, at which secondary school education is provided under State law.

(o) "State" means, in addition to the several States of the Union, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands.

(p) "State educational agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary and secondary schools, or, if there is no such agency or officer, an agency or officer designated by the Governor or by State law.

Subpart B-State Plan-General
Provisions

local educational agencies pursuant to § 121.22(b) (1), except that not more than 5 percent of the amount allotted to a State for any fiscal year or $75,000 ($25,000 in the case of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands), whichever is greater, may be expended by the State educational agency for planning and for proper and efficient administration of the State plan pursuant to § 121.22 (a) (2) and by local educational agencies for planning at the local level pursuant to § 121.22 (b) (2).

§ 121.22 Allowable expenditures.

(a) Funds under Title VI of the Act may be used by the State educational agency for such expenditures as are reasonably necessary (1) for the conduct by it of programs or projects for the education of handicapped children (including evaluation and dissemination of the results thereof), and (2), subject to the limitations in § 121.21, for administration of the State plan and for planning at the State level, including planning or assisting in the planning of programs or projects for the education of handicapped children; approval, supervision, and evaluation of local programs and projects for the education of handicapped children; technical assistance to local educational agencies with respect to the measurements of educational achievement and evaluation of the effectiveness of programs and projects pursuant to § 121.8; dissemination and utilization of the results of educational research and demonstrations pursuant to § 121.9; and other State leadership activities and consultative services.

(b) Funds made available under Title VI of the Act to local educational agencies may be used by those agencies for such expenditures as are reasonably necessary for activities directly related to (1) the conduct of programs and projects for the education of handicapped children which are approved by the State educational agency (including the evaluation and dissemination of the results thereof), and (2) the planning of such programs and projects.

(c) Categories of allowable expenditures referred to in paragraphs (a) and (b) of this section include the following:

(1) Salaries, wages, and other personal service costs of permanent and temporary staff employees and consultants for the performance of services reasonably

necessary for the program under Title VI of the Act, including the costs of regular contributions of employers to retirement, workmen's compensation, and welfare funds, and payments for leave earned with respect to time so spent; (2) Communications;

(3) Utilities;

(4) The purchase of consumable supplies, including stationery;

(5) Printing and acquisition of printed and published materials;

(6) Travel and transportation expenses;

(7) Acquisition (by purchase, lease or lease-purchase) and maintenance and repair of necessary equipment;

(8) Minor alterations in previously completed building space used or to be used in the program under Title VI of the Act when such alterations are needed to make effective use of equipment;

(9) The rental of space in privately and publicly owned buildings to the extent such space is in fact used for activities under Title VI of the Act, subject to the following provisions:

(i) The expenditures for the space are necessary and properly related to the activities of the programs;

(ii) The State or local educational agency will, during the period of occupancy, receive the benefits of the expenditures commensurate with such expenditures;

(iii) The amounts paid are not in excess of comparable rental in the particular locality;

(iv) Expenditures represent a current cost;

(v) In the case of publicly owned buildings, like charges are made to other State or local agencies occupying similar space for similar purposes;

(10) Subject to the limitations in § 121.24, the construction of school facilities essential to the successful carrying out of approved programs or projects.

(d) None of the funds under Title VI of the Act may be used for religious worship or instruction.

§ 121.23 Title to and control over property and funds.

(a) The State plan shall provide that control over the use of funds provided under Title VI of the Act, and title to and administrative control over property acquired with such funds, shall be in a public agency which will exercise such control. Such funds and property shall

be used for the purposes of Title VI of the Act, and such a use shall not inure to the benefit of any private school. The incidental use of such property for other purposes is permitted only for related educational purposes on public premises and only so long as such a use does not interfere with the carrying out of a program or project under Title VI of the Act.

(b) The State plan shall provide that equipment acquired with funds under Title VI of the Act may be placed on private school premises for a limited period of time, but the title to and administrative control over such equipment must be retained and exercised by a public agency. In exercising that administrative control, the public agency shall not only keep records of, and account for, the equipment but shall also assure itself that the equipment is being used solely for the purposes of the proIgram or project, and remove the equipment from the private school premises when necessary to avoid its being used for other purposes or when it is no longer needed for the purposes of the program or project.

(c) The State plan shall provide that the State educational agency will obtain from a local educational agency administering a program or project under Title VI of the Act a satisfactory assurance that the funds provided under Title VI of the Act, and property derived therefrom, will at all times be under the control of, and be administered by, a public agency in accordance with the provisions of the Act and the regulations in this part.

§ 121.24 Construction.

(a) General. Each State plan shall provide that a program or project for the education of handicapped children may I not include the construction of school # facilities unless such construction is demonstrated as being essential in order to assure the success of that program or project. If the construction of school facilities is so demonstrated as being essential for a program or project, that program or project must nevertheless comply with other requirements of Title VI of the Act and the regulations in this part, such as the requirements in this section with regard to labor standards and overall State construction planning and, in relation to the overall program, the requirements in § 121.7 with regard

to participation by children enrolled in private schools.

(b) Manner of construction. Each State plan shall provide that the State educational agency will not approve or carry out a program or project involving the construction of school facilities unless the construction is functional, undertaken in an economical manner, and not elaborate in design or extravagant in the use of materials in comparison with school facilities of a similar type constructed in the State within recent years.

(c) Consistency with overall State construction. Each State plan shall provide that the State educational agency will not approve or carry out a program or project involving the construction of school facilities unless it determines that the construction is consistent with overall State plans for construction. It shall not approve such a program or project involving construction, other than minor remodeling, altering, or improving of school facilities, unless the approval is conditioned upon approval of the construction plans and specifications by the State educational agency, and further conditioned upon the award of a construction contract within a reasonable period of time taking into consideration the nature of the program or project to be served by the construction of the school facilities and the magnitude of the construction to be undertaken, which date shall in no event be later than June 30 of the following fiscal year. Such plans and specifications shall be approved only after due consideration has been given to the accessibility of the facilities to, and the usability of them by, handicapped persons and of their compliance with the minimum standards contained in "American Standard Specifications for Making Buildings and Facilities Accessible to, and Usable by, the Physically Handicapped" approved by the American Standards Association, Inc., with appropriate usable segments of "Building Standards of the University of Illinois Rehabilitation Center" and "Occupancy Guide-Department of Veterans Benefits, Regional Offices, Veterans Administration," and with such other standards in that regard as the Secretary of Health, Education, and Welfare may prescribe or approve.

(d) Labor standards. Each State plan shall provide that the State educational agency shall not approve a program or project involving the construction of

will be promptly notified and given the reasons for the Commissioner's action in writing. A special project grant may also be voluntarily terminated by the State educational agency by written notice to the Commissioner.

Subpart D-General Provisions

§ 119.40 Arrangements with individuals or other organizations.

(a) In carrying out programs of projects under Title V of the Act, the State educational agency receiving such grants may not transfer to others responsibility in whole or in part for the use of such grants or the conduct of such programs or special projects, but may enter into contracts or arrangements with others for carrying out a portion of any such program or special project. Such contracts or arrangements shall (1) be in writing, (2) incorporate by reference all requirements of the Act, the regulations in this part, the applications of the State educational agency, and the grant conditions, (3) be made for a period not exceeding the period for which the grant is available, (4) constitute a reasoanble and prudent use of grant funds, (5) provide that funds paid by the State educational agency to the other party of the contract or arrangement will be used only for costs incurred by such other party in carrying out its portion of a program or special project, and (6) provide that such other party will account to the State educational agency for any funds which are not expended in accordance with the contract or arrangement.

(b) In applying for a grant under Title V of the Act, the State educational agency shall indicate in the application for such grant any intention it may have of entering into contracts or other arrangements with in dividuals or organizations to conduct a portion of any program or special project proposed in the application. The State agency shall not enter into any such contract or arrangement unless the intention to do so is included in an approved application, or an amendment thereto. The State agency shall submit to the Commissioner two (2) copies of any such contract or arrangement immediately upon execu

ments and to the substantive legal and administrative provisions of an approved application, the Commissioner will conduct periodic reviews of the administration of the State's programs or special projects under Title V of the Act. In addition, all records covering expenditures for programs and projects of the State educational agency will be audited by the Department to determine whether the State agency has properly accounted for Federal funds.

§ 119.42 Records management.

(a) Records maintenance and disposition. The State educational agency shall maintain and keep intact and accessible all records supporting claims for Federal grants or relating to the accountability of such State agency for expenditure of such grants and relating to the expenditure of any non-Federal funds necessary for matching or supplementing the Federal share of such grants (1) for 3 years after the close of the fiscal year in which the expenditure was made by the State educational agency; or (2) until the State agency is notified that such records are not needed for administrative 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 further maintained until necessary adjustments have been made and such adjustments have been reviewed and approved by the Department.

(c) Records of equipment. Where equipment which costs $100 or more per unit is purchased by the State 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.

§ 119.43 Grantee accountability.

A State educational agency receiving grants under Title V of the Act shall, in accordance with procedures established by the Commissioner, render a full accounting of all grant funds paid to it upon the expiration of Title V of the Act or upon the termination of such grants, and refund to the Commissioner any overpayment which might have been

made, as determined by such an accounting.

§ 119.44 Allowable expenditures.

Federal funds granted to State educational agencies under Title V of the Act may be used for such expenditures as are necessary to carry out the programs and special projects for which the grants are made. Such expenditures may include (a) salaries, travel and other expenses of professional personnel and supporting staff for time spent on activities reasonably related to such programs or special projects, including payments for leave and employers' contributions to retirement, workmen's compensation, and other welfare funds, which are available under State law to one or more general classes of State agency employees; (b) fees and approved expenses of consultants, advisory committees, and other persons or groups acting in an advisory capacity to the State educational agency in carrying out such programs or special projects; (c) acquisition, maintenance and repair of equipment (including minor remodeling), supplies, and materials, to the extent directly used or consumed in carrying out such programs or special projccts; and (d) other expenses (except those for the acquisition of land or the acquisition, construction, or alteration of buildings) to the extent that they are directly attributable to such programs or special projects.

(b) "Commissioner" means the United States Commissioner of Education.

(c) "Local educational agency" means a public board of education or other public authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public elementary or secondary schools in a city, county, township, school district, or other political subdivision of a State, or such combination of school districts or counties as is recognized in a State as an administrative agency for its public elementary or secondary schools. The term also includes any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(d) "Office" means the U.S. Office of Education.

(e) "State" includes, in addition to the several States of the Union, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, and the Virgin Islands.

(f) "State agency" means a State or an agency of the State engaged in activities in the field of education, other than a local educational agency, including, for example, the State educational agency or a State college or university.

(g) "State educational agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary and secondary schools, or, if there is no such officer or agency, an officer or agency designated by the Governor or by State law. § 120.2

Purpose.

Under section 507 of the Act, the Commissioner is authorized, through agreements or otherwise, to arrange for assignment of officers and employees of States to the Office and assignment of officers and employees of the Office to States, for work which the Commissioner determines will aid the Office in more effectively discharging its responsibilities as authorized by law, including cooperation with States and the provision of technical or other assistance. Such arrangements will be made by the Commissioner in accordance with the provisions of section 507 of the Act, the regulations in this part, and any conditions and procedures which the Commissioner finds necessary to carry out the purpose of the Act and the regulations in this part.