[Federal Register: December 22, 1999 (Volume 64, Number 245)]
[Rules and Regulations]
[Page 71963-71972]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22de99-31]
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Part V
Department of Education
_______________________________________________________________________
34 CFR Part 76
State-administered Programs; Final Rule
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DEPARTMENT OF EDUCATION
34 CFR Part 76
State-administered Programs
AGENCY: Office of Elementary and Secondary Education, Department of
Education.
ACTION: Final regulations.
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SUMMARY: The Secretary amends the Education Department General
Administrative Regulations (EDGAR) governing State-administered
programs. These final regulations are necessary to implement a recent
statutory change that affects all elementary and secondary education
programs administered by the United States Department of Education
(Department) under which the Secretary allocates funds to States on a
formula basis. The regulations will ensure that charter schools opening
for the first time or significantly expanding their enrollment receive
the funds for which they are eligible under these programs.
DATES: These regulations are effective January 21, 2000.
FOR FURTHER INFORMATION CONTACT: Leslie Hankerson, U.S. Department of
Education, 400 Maryland Avenue, SW., room 3C120, Washington, DC 20202-
6140. Telephone: (202) 205-8524. If you use a telecommunications device
for the deaf (TDD), you may call the Federal Information Relay Service
(FIRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed in the preceding
paragraph.
SUPPLEMENTARY INFORMATION: On May 18, 1999, the Secretary published in
the Federal Register (64 FR 27152) a notice of proposed rulemaking
(NPRM) proposing to revise sections in EDGAR governing State-
administered programs. These proposed amendments were designed to
ensure that charter schools opening for the first time or significantly
expanding their enrollment receive the funds for which they are
eligible under these programs.
Prior to publishing the NPRM, the Department took a number of steps
to consult with State and local officials regarding the statutory
provision that these final regulations implement, and the specific
measures the Secretary proposed to undertake to assist States and
localities in meeting their obligations under it. In December 1998, the
Department sent two letters to chief State school officers informing
them of changes to the Public Charter Schools Program (PCSP) as a
result of passage of the Charter School Expansion Act of 1998 (Act).
The second letter specifically highlighted the requirement in section
10306 of the Act that the Secretary and States take measures to ensure
that charter schools receive the Federal-to-State formula funds for
which they are eligible within five months of opening for the first
time or expanding their enrollment. In March 1999, Department officials
discussed the new provision and our plans for implementing it with
State and local officials, as well as charter school operators and
developers, at our national conference on charter schools.
Since publication of the NPRM, we have consulted with State
officials through an SEA chat room on the Department's internet web
site, and at several meetings, including two national Title I meetings.
In addition, we sent two letters to chief State school officers and
State program directors specifically requesting comments on the NPRM.
In the preamble to the NPRM, the Secretary discussed on pages 27152
and 27153 the major provisions in the proposed regulations. These
provisions would amend Part 76 of EDGAR by redesignating subpart H as
subpart I, and adding a new subpart H. The proposed provisions included
the following:
* For covered programs in which States and local educational
agencies (LEAs) allocate funds by formula, a requirement that States
and LEAs implement procedures that ensure that each charter school
opening for the first time or significantly expanding its enrollment on
or before November 1 of an academic year receives the full amount of
funds for which it is eligible within five months of the date the
charter school opens or significantly expands its enrollment.
* For each charter school opening or significantly expanding
its enrollment after November 1 but before February 1 of an academic
year, a requirement that States and LEAs implement procedures that
ensure that the charter school receives at least a pro rata portion of
the funds for which the charter school is eligible within five months
of the date the charter school opens or significantly expands its
enrollment.
* For each charter school opening or significantly expanding
its enrollment on or after February 1, a provision permitting, but not
requiring, States and LEAs to implement procedures to provide the
charter school with a pro rata portion of the funds for which the
charter school is eligible under a covered program.
* For covered programs in which States and LEAs award funds
through a competitive process, a requirement that States and LEAs
implement procedures that ensure that each eligible charter school
scheduled to open during the academic year has a full and fair
opportunity to compete to participate in the program.
* A general prohibition against States and LEAs relying on
enrollment or eligibility data from a prior year in determining a
charter school's eligibility to receive funds under a covered program
during an academic year in which the charter school opens for the first
time or significantly expands its enrollment, even if allocations to
other LEAs or public schools are based on a prior year's data.
* An exemption from the proposed regulations for SEAs and
LEAs that do not allocate funds by formula or hold competitions among
eligible applicants under a covered program.
These final regulations contain several significant changes from
the NPRM. These changes are fully explained in the ``Analysis of
Comments and Changes'' attached as an appendix to these final
regulations. The changes pertain to the meaning of the term significant
expansion of enrollment; the time period within which SEAs and LEAs are
required to make allocations to charter schools that open or expand
between November 1 and February 1; the entities that can provide the
required 120-day notice to an SEA or LEA; and the penalty for a charter
school's failure to comply with the 120-day notice requirement.
Analysis of Comments and Changes
In response to the Secretary's invitation in the NPRM, 14 parties
submitted comments on the proposed regulations. An analysis of the
comments and of the changes in the regulations since publication of the
NPRM is published as an appendix at the end of these final regulations.
We group major issues according to subject, with appropriate
sections of the regulations referenced in parentheses. Generally, we do
not address technical and other minor changes.
Paperwork Reduction Act of 1995
The Paperwork Reduction Act of 1995 does not require you to respond
to a collection of information unless it displays a valid OMB control
number. We display the valid OMB control number assigned to the
collections of information in these final regulations at the end of the
affected sections of the regulations.
[[Page 71965]]
Intergovernmental Review
Some of the programs that are affected by these final regulations
are subject to the requirements of Executive Order 12372 and the
regulations in 34 CFR Part 79. The objective of the Executive order is
to foster an intergovernmental partnership and a strengthened
federalism by relying on processes developed by State and local
governments for coordination and review of proposed Federal financial
assistance.
In accordance with this order, we intend this document to provide
early notification of the Department's specific plans and actions for
these programs.
Assessment of Educational Impact
In the NPRM, we requested comments on whether the proposed
regulations would require transmission of information that any other
agency or authority of the United States gathers or makes available.
Based on the response to the NPRM and on our review, we have determined
that these final regulations do not require transmission of information
that any other agency or authority of the United States gathers or
makes available.
Electronic Access to This Document
You may view this document, as well as all other Department of
Education documents published in the Federal Register, in text or Adobe
Portable Document Format (PDF) on the Internet at either of the
following sites:
http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html
To use the PDF you must have the Adobe Acrobat Reader Program with
Search, which is available free at either of the previous sites. If you
have questions about using the PDF, call the U.S. Government Printing
Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC
area at (202) 512-1530.
Note: The official version of this document is the document
published in the Federal Register. Free Internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at: http://
www.access.gpo.gov/nara/index.html
(Catalog of Federal Domestic Assistance Number does not apply.)
List of Subjects in 34 CFR Part 76
Administrative practice and procedure, Compliance, Eligibility,
Grant administration, Reporting and recordkeeping requirements.
Dated: December 16, 1999.
Richard W. Riley,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary amends
part 76 of title 34 of the Code of Federal Regulations as follows:
PART 76--STATE-ADMINISTERED PROGRAMS
1. The authority citation for part 76 is revised to read as
follows:
Authority: 20 U.S.C. 1221e-3, 3474, 6511(a), and 8065a, unless
otherwise noted.
2. Subpart H of part 76 is redesignated as subpart I.
3. A new subpart H is added to part 76 to read as follows:
Subpart H--How Does a State or Local Educational Agency Allocate
Funds to Charter Schools?
General
76.785 What is the purpose of this subpart?
76.786 What entities are governed by this subpart?
76.787 What definitions apply to this subpart?
Responsibilities for Notice and Information
76.788 What are a charter school LEA's responsibilities under this
subpart?
76.789 What are an SEA's responsibilities under this subpart?
Allocation of Funds by State Educational Agencies
76.791 On what basis does an SEA determine whether a charter school
LEA that opens or significantly expands its enrollment is eligible
to receive funds under a covered program?
76.792 How does an SEA allocate funds to eligible charter school
LEAs under a covered program in which the SEA awards subgrants on a
formula basis?
76.793 When is an SEA required to allocate funds to a charter
school LEA under this subpart?
76.794 How does an SEA allocate funds to charter school LEAs under
a covered program in which the SEA awards subgrants on a
discretionary basis?
Adjustments
76.796 What are the consequences of an SEA allocating more or fewer
funds to a charter school LEA under a covered program than the
amount for which the charter school LEA is eligible when the charter
school LEA actually opens or significantly expands its enrollment?
76.797 When is an SEA required to make adjustments to allocations
under this subpart?
Applicability of This Subpart to Local Educational Agencies
76.799 Do the requirements in this subpart apply to LEAs?
Subpart H--How Does a State or Local Educational Agency Allocate
Funds to Charter Schools?
General
Sec. 76.785 What is the purpose of this subpart?
The regulations in this subpart implement section 10306 of the
Elementary and Secondary Education Act of 1965 (ESEA), which requires
States to take measures to ensure that each charter school in the State
receives the funds for which it is eligible under a covered program
during its first year of operation and during subsequent years in which
the charter school expands its enrollment.
(Authority: 20 U.S.C. 8065a)
Sec. 76.786 What entities are governed by this subpart?
The regulations in this subpart apply to--
(a) State educational agencies (SEAs) and local educational
agencies (LEAs) that fund charter schools under a covered program,
including SEAs and LEAs located in States that do not participate in
the Department's Public Charter Schools Program;
(b) State agencies that are not SEAs, if they are responsible for
administering a covered program. State agencies that are not SEAs must
comply with the provisions in this subpart that are applicable to SEAs;
and
(c) Charter schools that are scheduled to open or significantly
expand their enrollment during the academic year and wish to
participate in a covered program.
(Authority: 20 U.S.C. 8065a)
Sec. 76.787 What definitions apply to this subpart?
For purposes of this subpart--
Academic year means the regular school year (as defined by State
law, policy, or practice) and for which the State allocates funds under
a covered program.
Charter school has the same meaning as provided in title X, part C
of the ESEA.
Charter school LEA means a charter school that is treated as a
local educational agency for purposes of the applicable covered
program.
Covered program means an elementary or secondary education program
administered by the Department under which the Secretary allocates
funds to States on a formula basis, except that the term does not
include a program or portion of a program under which an SEA awards
subgrants on a discretionary, noncompetitive basis.
[[Page 71966]]
Local educational agency has the same meaning for each covered
program as provided in the authorizing statute for the program.
Significant expansion of enrollment means a substantial increase in
the number of students attending a charter school due to a significant
event that is unlikely to occur on a regular basis, such as the
addition of one or more grades or educational programs in major
curriculum areas. The term also includes any other expansion of
enrollment that the SEA determines to be significant.
(Authority: 20 U.S.C. 8065a)
Reponsibilities for Notice and Information
Sec. 76.788 What are a charter school LEA's responsibilities under
this subpart?
(a) Notice. At least 120 days before the date a charter school LEA
is scheduled to open or significantly expand its enrollment, the
charter school LEA or its authorized public chartering agency must
provide its SEA with written notification of that date.
(b) Information. (1) In order to receive funds, a charter school
LEA must provide to the SEA any available data or information that the
SEA may reasonably require to assist the SEA in estimating the amount
of funds the charter school LEA may be eligible to receive under a
covered program.
(2)(i) Once a charter school LEA has opened or significantly
expanded its enrollment, the charter school LEA must provide actual
enrollment and eligibility data to the SEA at a time the SEA may
reasonably require.
(ii) An SEA is not required to provide funds to a charter school
LEA until the charter school LEA provides the SEA with the required
actual enrollment and eligibility data.
(c) Compliance. Except as provided in Sec. 76.791(a), or the
authorizing statute or implementing regulations for the applicable
covered program, a charter school LEA must establish its eligibility
and comply with all applicable program requirements on the same basis
as other LEAs.
(Approved by the Office of Management and Budget under control
number 1810-0623)
(Authority: 20 U.S.C. 8065a)
Sec. 76.789 What are an SEA's responsibilities under this subpart?
(a) Information. Upon receiving notice under Sec. 76.788(a) of the
date a charter school LEA is scheduled to open or significantly expand
its enrollment, an SEA must provide the charter school LEA with timely
and meaningful information about each covered program in which the
charter school LEA may be eligible to participate, including notice of
any upcoming competitions under the program.
(b) Allocation of Funds. (1) An SEA must allocate funds under a
covered program in accordance with this subpart to any charter school
LEA that--
(i) Opens for the first time or significantly expands its
enrollment during an academic year for which the State awards funds by
formula or through a competition under the program;
(ii) In accordance with Sec. 76.791(a), establishes its eligibility
and complies with all applicable program requirements; and
(iii) Meets the requirements of Sec. 76.788(a).
(2) In order to meet the requirements of this subpart, an SEA may
allocate funds to, or reserve funds for, an eligible charter school LEA
based on reasonable estimates of projected enrollment at the charter
school LEA.
(3)(i) The failure of an eligible charter school LEA or its
authorized public chartering agency to provide notice to its SEA in
accordance with Sec. 76.788(a) relieves the SEA of any obligation to
allocate funds to the charter school within five months.
(ii) Except as provided in Sec. 76.792(c), an SEA that receives
less than 120 days' actual notice of the date an eligible charter
school LEA is scheduled to open or significantly expand its enrollment
must allocate funds to the charter school LEA on or before the date the
SEA allocates funds to LEAs under the applicable covered program for
the succeeding academic year.
(iii) The SEA may provide funds to the charter school LEA from the
SEA's allocation under the applicable covered program for the academic
year in which the charter school LEA opened or significantly expanded
its enrollment, or from the SEA's allocation under the program for the
succeeding academic year.
(Approved by the Office of Management and Budget under control
number 1810-0623)
(Authority: 20 U.S.C. 8065a)
Allocation of Funds by State Educational Agencies
Sec. 76.791 On what basis does an SEA determine whether a charter
school LEA that opens or significantly expands its enrollment is
eligible to receive funds under a covered program?
(a) For purposes of this subpart, an SEA must determine whether a
charter school LEA is eligible to receive funds under a covered program
based on actual enrollment or other eligibility data for the charter
school LEA on or after the date the charter school LEA opens or
significantly expands its enrollment.
(b) For the year the charter school LEA opens or significantly
expands its enrollment, the eligibility determination may not be based
on enrollment or eligibility data from a prior year, even if the SEA
makes eligibility determinations for other LEAs under the program based
on enrollment or eligibility data from a prior year.
(Authority: 20 U.S.C. 8065a)
Sec. 76.792 How does an SEA allocate funds to eligible charter school
LEAs under a covered program in which the SEA awards subgrants on a
formula basis?
(a) For each eligible charter school LEA that opens or
significantly expands its enrollment on or before November 1 of an
academic year, the SEA must implement procedures that ensure that the
charter school LEA receives the proportionate amount of funds for which
the charter school LEA is eligible under each covered program.
(b) For each eligible charter school LEA that opens or
significantly expands its enrollment after November 1 but before
February 1 of an academic year, the SEA must implement procedures that
ensure that the charter school LEA receives at least a pro rata portion
of the proportionate amount of funds for which the charter school LEA
is eligible under each covered program. The pro rata amount must be
based on the number of months or days during the academic year the
charter school LEA will participate in the program as compared to the
total number of months or days in the academic year.
(c) For each eligible charter school LEA that opens or
significantly expands its enrollment on or after February 1 of an
academic year, the SEA may implement procedures to provide the charter
school LEA with a pro rata portion of the proportionate amount of funds
for which the charter school LEA is eligible under each covered
program.
(Authority: 20 U.S.C. 8065a)
Sec. 76.793 When is an SEA required to allocate funds to a charter
school LEA under this subpart?
Except as provided in Secs. 76.788(b) and 76.789(b)(3):
(a) For each eligible charter school LEA that opens or
significantly expands its enrollment on or before November 1 of an
academic year, the SEA must allocate funds to the charter school LEA
within five months of the date the charter school LEA opens or
significantly expands its enrollment; and
[[Page 71967]]
(b)(1) For each eligible charter school LEA that opens or
significantly expands its enrollment after November 1, but before
February 1 of an academic year, the SEA must allocate funds to the
charter school LEA on or before the date the SEA allocates funds to
LEAs under the applicable covered program for the succeeding academic
year.
(2) The SEA may provide funds to the charter school LEA from the
SEA's allocation under the program for the academic year in which the
charter school LEA opened or significantly expanded its enrollment, or
from the SEA's allocation under the program for the succeeding academic
year.
(Authority: 20 U.S.C. 8065a)
Sec. 76.794 How does an SEA allocate funds to charter school LEAs
under a covered program in which the SEA awards subgrants on a
discretionary basis?
(a) Competitive programs. (1) For covered programs in which the SEA
awards subgrants on a competitive basis, the SEA must provide each
eligible charter school LEA in the State that is scheduled to open on
or before the closing date of any competition under the program a full
and fair opportunity to apply to participate in the program.
(2) An SEA is not required to delay the competitive process in
order to allow a charter school LEA that has not yet opened or
significantly expanded its enrollment to compete for funds under a
covered program.
(b) Noncompetitive discretionary programs. The requirements in this
subpart do not apply to discretionary programs or portions of programs
under which the SEA does not award subgrants through a competition.
(Authority: 20 U.S.C. 8065a)
Adjustments
Sec. 76.796 What are the consequences of an SEA allocating more or
fewer funds to a charter school LEA under a covered program than the
amount for which the charter school LEA is eligible when the charter
school LEA actually opens or significantly expands its enrollment?
(a) An SEA that allocates more or fewer funds to a charter school
LEA than the amount for which the charter school LEA is eligible, based
on actual enrollment or eligibility data when the charter school LEA
opens or significantly expands its enrollment, must make appropriate
adjustments to the amount of funds allocated to the charter school LEA
as well as to other LEAs under the applicable program.
(b) Any adjustments to allocations to charter school LEAs under
this subpart must be based on actual enrollment or other eligibility
data for the charter school LEA on or after the date the charter school
LEA first opens or significantly expands its enrollment, even if
allocations or adjustments to allocations to other LEAs in the State
are based on enrollment or eligibility data from a prior year.
(Authority: 20 U.S.C. 8065a)
Sec. 76.797 When is an SEA required to make adjustments to allocations
under this subpart?
(a) The SEA must make any necessary adjustments to allocations
under a covered program on or before the date the SEA allocates funds
to LEAs under the program for the succeeding academic year.
(b) In allocating funds to a charter school LEA based on
adjustments made in accordance with paragraph (a) of this section, the
SEA may use funds from the SEA's allocation under the applicable
covered program for the academic year in which the charter school LEA
opened or significantly expanded its enrollment, or from the SEA's
allocation under the program for the succeeding academic year.
(Authority: 20 U.S.C. 8065a)
Applicability of This Subpart to Local Educational Agencies
Sec. 76.799 Do the requirements in this subpart apply to LEAs?
(a) Each LEA that is responsible for funding a charter school under
a covered program must comply with the requirements in this subpart on
the same basis as SEAs are required to comply with the requirements in
this subpart.
(b) In applying the requirements in this subpart (except for
Secs. 76.785, 76.786, and 76.787) to LEAs, references to SEA (or
State), charter school LEA, and LEA must be read as references to LEA,
charter school, and public school, respectively.
(Authority: 20 U.S.C. 8065a)
Appendix to the Preamble--Analysis of Comments and Changes
Note: The following appendix will not appear in the Code of
Federal Regulations.
Need for Final Regulations
Comments: Five commenters expressed strong support for the
issuance of final regulations in order to ensure that charter
schools opening for the first time or significantly expanding their
enrollment receive the Federal-to-State formula funds for which they
are eligible in a timely fashion. Two commenters objected to the
issuance of final regulations as premature and inconsistent with the
Department's regulatory principles. These commenters recommended
that the Secretary issue the proposed regulations as nonregulatory
guidance to determine whether final regulations are absolutely
necessary.
Discussion: The Secretary believes that these final regulations
are necessary to ensure that charter schools opening for the first
time or significantly expanding their enrollment receive the funds
for which they are eligible under the covered programs in accordance
with the requirements of section 10306 of the Act. A number of State
and local officials as well as charter school operators have raised
questions about the proper interpretation of section 10306 of the
Act, and have requested guidance from the Department regarding
implementation of the provision. Due to a number of factors,
including the importance of the statutory requirement and the high
level of uncertainty regarding its interpretation, the Secretary
believes that final regulations are necessary to ensure a uniform
interpretation of the law among States. Also, consistent with the
Department's Principles for Regulating, the provisions in these
final regulations are intended to allow SEAs and LEAs maximum
flexibility to develop procedures that will enable them to comply
with the statutory requirement in a manner that minimizes any
disruption in State and local administration of the covered
programs.
Changes: None.
Need for Nonregulatory Guidance
Comments: Six commenters recommended that the Secretary issue
nonregulatory guidance to assist States in implementing these final
regulations. Three commenters specifically requested guidance on the
effect of the regulations on State administration of funds under
Part B of the Individuals with Disabilities Education Act (IDEA),
including the funding formulas in the Grants to States Program and
the Preschool Grants Program.
Discussion: The Secretary agrees that the issuance of
nonregulatory guidance would be useful to assist States in
implementing these final regulations. Accordingly, within the next
several months, we intend to issue guidance that will address
specific implementation issues relating to the various covered
programs, including allocation issues under Part B of IDEA and Title
I, Part A (Title I) of the Elementary and Secondary Education Act of
1965 (ESEA). For a discussion of the effect of these final
regulations on Part B of IDEA, see ``Allocation of Funds'' in this
``Analysis of Comments and Changes.''
Changes: None.
Information Collection Requirements
Comments: One commenter requested that the Secretary describe in
the final regulations the specific types of information SEAs and
LEAs will be expected to collect under the regulations.
Discussion: The two provisions in these regulations that impose
information collection requirements on SEAs, LEAs, and charter
schools are Secs. 76.788 and 76.789(a). Section 76.788 requires new
and expanding charter schools to notify their SEA or LEA of the date
the charter school is scheduled to open or expand, and to provide
the SEA or LEA with eligibility and enrollment data.
[[Page 71968]]
Under Sec. 76.789(a), SEAs and LEAs must provide timely and
meaningful information to new and expanding charter schools.
In light of the potential administrative burden that compliance
with the statutory requirement may place on States and localities,
we believe it is important to allow States and LEAs as much
flexibility as possible in determining the specific information they
will need to collect from and provide to charter schools, and in
developing the necessary procedures for transferring that
information. We believe it would be counterproductive to include any
additional specifications for the collection of information in these
final regulations.
Changes: None.
Definition of Academic Year (Sec. 76.787)
Comment: One commenter recommended that the Secretary define
academic year in the final regulations.
Discussion: We agree that defining academic year in these final
regulations is useful, and considered several factors in crafting
the definition. First, while all State laws require a minimum number
of days that school districts must provide academic instruction,
most States give their districts discretion to establish the actual
opening dates and calendar of the school year. In a few cases,
States establish the school calendar year for its LEAs. In either
case, the opening dates of the school or academic year typically
range from mid-August to mid-September. Another important factor
that is incorporated into the definition is the use of the term
academic year as a placeholder reference for the fiscal year or
budget period for which a State allocates funds under a covered
program.
Changes: We have revised Sec. 76.787 to add a definition for the
term academic year. The definition preserves State and local
flexibility in establishing an academic year calendar, but
references the fiscal period for which the State allocates funds
under a covered program.
Definition of Charter School LEA (Sec. 76.787)
Comments: Two commenters objected to the definition of charter
school LEA set forth in the proposed regulations because it would
allow charter schools to be treated as an LEA for purposes of some
covered programs but not others. These commenters expressed concern
that charter schools will manipulate the system by claiming to be an
LEA or a public school within an LEA for different programs,
depending on whether the charter school deems it to be convenient.
One commenter recommended that the definition of charter school LEA
be based on State law.
Discussion: We disagree that allowing a charter school to be
treated as an LEA for purposes of some covered programs and a public
school within an LEA for purposes of other covered programs will
lead to widespread manipulation of the system by charter schools.
Each of the Federal statutes governing the covered programs defines
LEA for purposes of the programs authorized under the statute.
Because these definitions are broad and rely heavily on State law,
the Secretary generally will defer to the State on the question of
whether a charter school is an LEA or a public school within an LEA.
As a general rule, however, a charter school cannot be an LEA
and a public school within an LEA under the same Federal definition.
Title XIV of the ESEA defines LEA for purposes of programs
authorized under the ESEA. Because both the Title I Program and the
Safe and Drug-Free Schools and Communities Program are authorized
under the ESEA, for example, a charter school could not be an LEA
for purposes of Title I and a school within an LEA for purposes of
Safe and Drug-Free Schools. Likewise, because the Carl D. Perkins
Vocational and Technical Education Act of 1998 (Perkins III) adopts
the ESEA definition of LEA, a charter school could not be treated
differently for purposes of ESEA programs and programs authorized
under Perkins III.
IDEA, on the other hand, contains its own definition of LEA.
Therefore, it is conceivable that a charter school could be treated
as an LEA for purposes of ESEA and Perkins III programs, and a
public school within an LEA for purposes of programs authorized
under Part B of IDEA. The charter school would have to be treated
consistently, however, under the Preschool Grants Program and the
Grants to States Program, since both of these programs are
authorized under Part B of IDEA.
One possible exception to the general rule that a charter school
cannot be treated as an LEA and a public school within an LEA under
different covered programs that rely on the same Federal definition
of LEA, is where a State law provision specifically authorizes
charter schools to elect to be treated as an LEA or a public school
within an LEA for purposes of a particular program. In such a case,
the Secretary generally will defer to State law.
Changes: None.
Definition of Significant Expansion of Enrollment (Sec. 76.787)
Comments: Six commenters requested that the Secretary include in
the final regulations a definition for significant expansion of
enrollment in order to avoid unnecessary conflict between States and
charter schools. Two of these commenters recommended that the term
be defined based on congressional intent and the Secretary's
considerations in the preamble to the proposed regulations. One
commenter opposed defining the term in the final regulations but
suggested, instead, that the final regulations include a provision
specifically authorizing States to define the term.
Discussion: We agree that defining significant expansion of
enrollment in these final regulations is necessary to clarify a
major component of the regulations. Consistent with the overall
intent of these final regulations, however, we believe that the term
should be defined in a manner that gives meaning to the statutory
provision upon which these regulations are based, while allowing
States maximum flexibility in implementing the statutory and
regulatory requirements. The requirements in these final regulations
are not triggered by minor increases in enrollment caused by normal
turnover. Rather, these regulations apply to substantial increases
in enrollment that are caused by significant, or abnormal, events.
A charter school for the performing arts, for example, may offer
two educational programs that focus on music and art. If the charter
school were to add a third educational program in dance, and the
addition of that educational program resulted in a substantial
increase in the number of students attending the charter school,
then the SEA or LEA serving the charter school would be required to
comply with these final regulations when providing funds to the
charter school under a covered program. It is not enough for a
charter school to experience a significant event, but the event must
also result in a substantial increase in the number of students
attending the charter school.
Changes: We have revised Sec. 76.787 to define the term
significant expansion of enrollment. The definition is similar to
the definition set forth in the preamble to the proposed
regulations, but is broader in that it focuses on substantial
increases in a charter school's overall enrollment without regard to
student eligibility for program funds. In addition, SEAs are given
flexibility to treat any expansion of enrollment as significant.
120-Day Notice Requirement (Sec. 76.788(a))
Comments: One commenter supported the 120-day notice
requirement, but recommended that charter schools also be required
to provide auditable enrollment information to the State or LEA at
the time the charter school provides the notice. Another commenter
opposed the 120-day notice requirement because of the delay that
many charter schools encounter in receiving approval of their
charters. This commenter recommended that the regulations be revised
to require charter schools to notify the State or LEA of the date
the charter school is scheduled to open or expand 60 days before the
charter school opens or expands, or within 30 days of the date the
charter school receives its charter.
Discussion: We believe that it is unreasonable to expect a
charter school that has not yet opened or expanded to be able to
provide auditable enrollment information to its SEA or LEA. It is
not unreasonable, however, to expect a charter school to know, at
least 120 days in advance, the date the charter school anticipates
opening or expanding. Most successful charter schools will spend at
least 120 days planning prior to opening for the first time or
significantly expanding their enrollment. Because SEAs and LEAs may
be required to reserve a portion of funds under each covered program
for eligible charter schools that open or expand during the academic
year, SEAs and LEAs will need to know as early as possible the
number of charter schools that are scheduled to open or expand.
Moreover, these final regulations do not preclude a prospective
charter school from notifying its SEA or LEA of the date the charter
school is scheduled to open, pending final approval of its charter.
Changes: None.
[[Page 71969]]
Penalty for Charter School's Failure to Provide Notice
(Sec. 76.789(b)(3))
Comments: One commenter objected to the language in the proposed
regulations that would allow an entity other than the charter school
to notify the State or LEA of the date the charter school is
scheduled to open or expand. A second commenter recommended that the
regulations be revised to require a charter school that fails to
meet the 120-day notice requirement to wait for the next grant cycle
to receive funds under the applicable covered program.
Discussion: We agree that the charter school should bear primary
responsibility for notifying the SEA or LEA of the date the charter
school is scheduled to open or expand. Allowing an unspecified
number of entities other than the charter school to place the SEA or
LEA on notice could lead to unnecessary conflict between SEAs and
LEAs and charter schools. In some cases, however, it may be more
efficient for the responsible authorized public chartering agency to
notify the SEA or LEA of the scheduled opening or expansion dates
for its charter schools, rather than require each charter school to
provide the notice individually.
We also agree that SEAs and LEAs should not be required to meet
the five-month funding requirement with respect to charter schools
that open or expand on or before November 1, if the charter school
fails to comply with the 120-day notice requirement. As stated
above, SEAs and LEAs will need to know as early as possible the
number of charter schools that may be eligible to receive funds
under a covered program in order to ensure that the funds are
available for the charter school when it actually opens or expands.
Changes: We have revised Sec. 76.788(a) to specify that a
charter school or its authorized public chartering agency must
notify the SEA or LEA of the date the charter school is scheduled to
open or expand. We have revised proposed Sec. 76.788(a)(2)
(Sec. 76.789(b)(3) in these final regulations) further to specify
the time period within which SEAs and LEAs must provide funds to
charter schools that open or expand before November 1, but fail to
provide 120 days' notice. Finally, we have revised Sec. 76.789 to
delete the reference to notice provided through some means other
than Sec. 76.788(a).
Estimates of Projected Enrollment (Secs. 76.788(b)(1) and 76.789(b)(2))
Comments: One commenter recommended that the regulations require
States and LEAs to rely on reasonable and objective data in
estimating the amount of funds to reserve for charter schools under
a covered program, and specifically authorize SEAs and LEAs to
gather the data or require the charter school to provide it. Another
commenter proposed that the final regulations include a new
provision requiring estimates of projected enrollment to be based on
the characteristics of the currently enrolled population, previous
year enrolled population, or existing applications for enrollment at
the charter school. Several commenters expressed opposition to the
use of assumed proportionality (i.e., surrounding LEAs'
proportionate demographic characteristics) in projecting enrollment
at a charter school that is scheduled to open or expand. Another
commenter objected to the use of the term ``available'' in the
provision requiring charter schools to provide to the SEA or LEA any
available data or information that the SEA or LEA may reasonably
require to assist it in estimating the amount of funds to reserve
for the charter school. This commenter stated that SEAs and LEAs
should be able to collect any data that they may reasonably require.
Discussion: Section 76.789(b)(2) authorizes an SEA or LEA to
reserve an appropriate amount of funds or make an initial allocation
to eligible charter schools based on projected data. Accordingly,
Sec. 76.788(b)(1) requires a charter school to provide its SEA or
LEA with any ``available'' data or information that the SEA may
reasonably require to make these projections.
We agree that any data upon which an SEA or LEA relies to
estimate the amount of funds to reserve for a new or expanding
charter school should be reasonable. We believe that adoption of the
remaining suggestions in the comments, however, would add
unnecessary prescription to these final regulations. It is important
to understand that these provisions concern only projected data that
would be used until actual data are available. Under Sec. 76.796,
any allocations based on projected data that are inaccurate must be
adjusted. Obviously, an SEA or LEA would want any projected data it
uses to be as accurate as possible in order to reduce the need to
make adjustments. Although these provisions require the new or
expanding charter school to provide any available data to its SEA or
LEA, there is nothing in these final regulations that would preclude
an SEA or LEA from collecting the data itself.
It should also be noted that SEAs and LEAs are not required to
use projected data. Rather, the SEA or LEA could reserve funds off
the top of its total allocation and wait until actual data are
available before making any allocations to charter schools.
Changes: We have revised Sec. 76.789(b)(2) to require any
estimates of a charter school's projected enrollment to be
reasonable.
Actual Enrollment and Eligibility Data (Sec. 76.788(b)(2))
Comments: One commenter recommended that charter schools be
required to provide the SEA or LEA with actual enrollment and
eligibility data within 60 days of opening or expanding.
Discussion: Section 76.788(b)(2) requires a charter school to
provide actual enrollment and eligibility data to the SEA or LEA at
a time the SEA or LEA may reasonably require. We do not believe it
would be appropriate to prescribe a specific period in the
regulations for submitting the data. In many instances, 60 days
would be unnecessarily long and might create difficulties for SEAs
and LEAs in making funds available to eligible charter schools
within five months. In other instances, depending on the specific
circumstances, 60 days may not be sufficiently long. We believe
these final regulations appropriately provide flexibility to each
SEA and LEA to set a reasonable timeframe for collecting actual
enrollment and eligibility data from charter schools.
Changes: None.
Timely and Meaningful Information (Sec. 76.789)
Comments: One commenter recommended that the Secretary define
timely and meaningful information in the final regulations, while
another commenter requested clarification of the meaning of the term
in either the regulations or nonregulatory guidance.
Discussion: Section 76.789 requires SEAs and LEAs to provide
charter schools with timely and meaningful information about each
covered program in which the charter school may be eligible to
participate, including notice of any upcoming competitions. We have
refrained from defining timely and meaningful information in these
final regulations because we do not believe that a single definition
can comprehensively address all covered programs. Essentially, this
provision requires SEAs and LEAs to provide charter schools with the
information they reasonably need to know in order to make an
informed decision about whether to apply to participate in a
particular covered program, and the steps they need to take to do
so. For example, for each covered program, we would expect an SEA to
provide basic program information, such as the program's purpose,
target population, eligibility requirements, application packages,
dates of any competitions, copies of the statute, relevant
regulations and guidance, etc. In terms of timing, the SEA should
provide the information as early as possible to afford the charter
school a genuine opportunity to apply to participate in the
applicable covered program.
Changes: None.
Eligibility (Secs. 76.788(c) and 76.789(b)(1)(ii))
Comments: Several commenters recommended that the Secretary
clarify that charter schools must meet the same program and
eligibility requirements as other LEAs and public schools in order
to receive funds under an applicable covered program, and that the
proposed regulations would not require a State or LEA to provide
funds to charter schools if the State or LEA does not provide funds
to other LEAs and public schools under the program. Two of these
comments were made with specific reference to Title I and Part B of
IDEA.
Discussion: Based on section 10306 of the Act, which these
regulations implement, and its legislative history, it is clear that
charter schools must receive the proportionate amount of funds for
which they are eligible under the covered programs. In the absence
of statutory or other regulatory language to the contrary, these
final regulations should not be interpreted to afford any special
rights or privileges to charter schools with regard to program
eligibility. Thus, an SEA or LEA is not required to comply with
these final regulations with respect to a new or expanding charter
school that does not meet the eligibility and other program
requirements of the applicable covered program. In determining a
charter school's eligibility to receive funds under a covered
program during an academic year in which
[[Page 71970]]
the charter school opens for the first time or significantly expands
its enrollment, however, SEAs and LEAs may not rely on enrollment or
eligibility data from a prior year, even if allocations to other
LEAs or public schools are based on a prior year's data.
Nor do these final regulations require an SEA or LEA to provide
funds to an eligible charter school if the SEA or LEA does not
provide funds to other eligible LEAs or public schools under the
program. Under Title I, for example, an LEA may choose to provide
funds or services to eligible public schools in its district. If the
LEA opts to provide services, rather than funds, to the Title I-
eligible public schools in its district, these regulations would not
require the LEA to provide funds to new or expanding charter
schools. For a discussion of whether these final regulations require
LEAs to provide funds to new and expanding charter schools under
Part B of IDEA if the LEA does not provide funds to other eligible
public schools, see ``Allocation of Funds'' in this ``Analysis of
Comments and Changes.''
Changes: We have revised proposed Secs. 76.788(b)(1)(ii) and
76.790(a)(2) (Secs. 76.788(c) and 76.789(b)(1)(ii), respectively, in
these final regulations) to clarify that a charter school must
establish its eligibility and comply with all applicable program
requirements in order to receive funds under these final
regulations.
Date on Which a Charter School Opens or Expands (Secs. 76.792-76.793)
Comments: Two commenters expressed support for the provisions in
the regulations that require States and LEAs to provide funds to
charter schools that open or expand prior to February 1. One of
these commenters noted that its State law requires charter schools
to open between August 15 and September 15. Another commenter
recommended that the regulations be revised either to eliminate any
requirement that States provide funding to charter schools that open
after November 1, or to give States more flexibility in providing
funds to charter schools that open after that date. Another
commenter stated that the pro rata calculation should be flexible
enough to allow States to use days rather than months.
Discussion: We agree that February 1 is a reasonable cut-off
date for States to be required to provide some funding to eligible
charter schools under the covered programs. Because these final
regulations require States to provide only a pro rata portion of
funds to eligible charter schools that open or expand between
November 1 and February 1, charter schools will have an incentive to
open or expand before November 1, thereby easing the potential
administrative burden on States.
On the other hand, some charter schools may be unable to open or
expand prior to November 1. While it would be unfair to require
these charter schools to forgo entirely the funds for which they are
otherwise eligible under a covered program, States should be given
additional flexibility in providing funds to the charter schools.
Such flexibility will ease further the potential administrative
burden that funding charter schools opening or expanding late in the
academic year poses for States and local school districts.
Changes: We have revised Sec. 76.792(b) to allow States to use
days to calculate the pro rata allocation for charter schools that
open or expand between November 1 and February 1 of an academic
year. We have also revised Sec. 76.793 to require SEAs and LEAs to
provide funds to charter schools that open or expand on or before
November 1 within five months, and to give SEAs and LEAs additional
flexibility in providing funds to charter schools that open after
November 1. Specifically, for charter schools that open or expand
between November 1 and February 1, we have added a new paragraph
requiring SEAs and LEAs to provide funds to those charter schools on
or before the date the SEA or LEA provides funds to LEAs and public
schools under the program for the succeeding academic year.
Comments: One commenter stated that the final regulations should
apply only to charter schools that have actually opened or
significantly expanded their enrollment, rather than to charter
schools that are scheduled to open or expand.
Discussion: Many States and LEAs make allocations under the
covered programs, particularly Title I and Part B of IDEA, in the
spring or summer preceding the academic year for which the
allocations are made. Therefore, in order to give meaning to section
10306 of the Act, which these final regulations implement, and
ensure that funds are available for charter schools that open or
expand during the academic year, it may be necessary for SEAs and
LEAs to reserve a portion of funds under a particular covered
program. In the absence of some advance notification to the SEA or
LEA of a charter school's plans to open or expand, the SEA or LEA
would have no way of knowing whether to reserve funds, or the amount
of funds to reserve, for a charter school. Likewise, while it may be
appropriate in some cases, a charter school should not be required
to wait until after it opens to receive information about upcoming
application deadlines or ongoing competitions under the covered
programs in which the charter school is eligible to apply to
participate.
On the other hand, it is important to note that these final
regulations do not require SEAs or LEAs to provide any funds to
charter schools before the charter school actually opens or
significantly expands its enrollment. Under Sec. 76.789(b)(2), for
example, SEAs and LEAs may either allocate funds to or reserve funds
for charter schools based on estimates of projected enrollment.
Moreover, Sec. 76.788(b)(2)(ii) specifically states that an SEA or
LEA is not required to provide funds to a charter school that fails
to provide the enrollment or eligibility data the SEA or LEA
reasonably requires. Thus, although an SEA or LEA may provide funds
to a charter school before the charter school actually opens or
expands, nothing in these final regulations requires them to do so.
Changes: We have revised Sec. 76.792 to clarify further that
SEAs and LEAs are not required to provide any funds to a charter
school that has not yet opened or expanded.
Use of Term Full Amount of Funds (Sec. 76.792)
Comments: One commenter recommended that the Secretary replace
the term full amount of funds in Sec. 76.792(a) of the regulations
with the term commensurate share of funds in order to eliminate any
ambiguity that use of the former term may cause. This commenter and
a second commenter also stated that the Secretary should define or
clarify the meaning of the term commensurate share.
Discussion: The intent of these final regulations is to require
SEAs and LEAs to provide to each eligible charter school the amount
of funds the charter school would receive under each program's
statutory allocation formula if the charter school is included in
the SEA or LEA's initial allocation. Under many of the covered
programs, LEAs and public schools receive the proportionate amount
of funds for which they are eligible, based on the total amount of
funds that are available under the program and the program's
statutory allocation formula.
These regulations are not intended to guarantee each charter
school a particular funding level, or entitlement, that may be
conditional based upon the appropriation level for any covered
program. We agree that use of the term full amount does not convey
this intent clearly, but are concerned that the term commensurate
share may lack clarity as well. We believe that the term
proportionate amount best conveys the intent of these final
regulations. Changes: We have replaced the term full amount of funds
in Sec. 76.792(a) with the term proportionate amount of funds. We
have also inserted the term proportionate amount of funds in
Secs. 76.792(b) and 76.792(c) to clarify further the purpose of
these final regulations as discussed above.
Allocation of Funds (Secs. 76.792-76.794)
Comments: One commenter stated that the final regulations should
clarify that SEAs and LEAs are not required to send 100 percent of
the funds for which a charter school is eligible to the charter
school within the time periods specified in the regulations, but
that they are required only to ensure that the appropriate amount of
funds flow to the charter school. We believe the commenter meant
that the SEA or LEA is not required to make one lump sum payment to
the charter school at the beginning of the grant period.
Discussion: The commenter is correct in that these final
regulations do not require SEAs and LEAs to send 100 percent of the
funds for which a charter school is eligible to the charter school
within the prescribed time periods. Department regulations prohibit
recipients of Federal funds from earning excess interest on those
funds. Therefore, when awarding subgrants under the covered
programs, SEAs and LEAs are generally required only to ensure that
the appropriate amount of grant funds are made available for draw
down by the subgrant recipient--in this case, the charter school.
The subgrant recipient, in turn, draws down funds on an as needed
basis. Thus, while SEAs and LEAs are not actually required to send
funds to the charter school, they are required to ensure that the
proportionate
[[Page 71971]]
amount of funds for which the charter school is eligible is made
available to the charter school within the time periods specified in
these final regulations.
Changes: None.
Comments: One commenter requested that language be included in
the final regulations specifically authorizing States to use non-
Federal funds to supplement allocations to LEAs. Although this
comment was made with specific reference to Part B of IDEA, the
discussion that follows is applicable to all of the covered
programs.
Discussion: States must follow applicable program requirements
when allocating funds to LEAs under a covered program. While an SEA
may use non-Federal funds to supplement LEA allocations that are
reduced as a result of the SEA's compliance with section 10306 of
the Act and these final regulations, the State may not substitute
non-Federal funds for Federal funds when awarding subgrants under a
covered program.
Changes: None.
Comments: One commenter requested that the Secretary revise the
regulations to make the provisions governing competitive
discretionary grant programs applicable to noncompetitive
discretionary grant programs, so that prospective charter school
applicants that fail to meet the application deadline for either
type of discretionary grant program would be required to wait for
the next grant cycle in order to receive funds under the program.
Discussion: Under Sec. 76.794(b), SEAs and LEAs are completely
exempt from the requirements of these final regulations when
allocating funds under noncompetitive discretionary programs.
Therefore, as a practical matter, SEAs and LEAs could require any
school, including new and expanding charter schools, that fail to
meet the application deadline to wait until the next grant cycle to
apply for funds under these programs. Two of the covered programs
under which SEAs or LEAs have total discretion either to provide
services directly or award funds to subgrantees on a noncompetitive
basis are Migrant Education and Neglected and Delinquent Children.
In addition, a number of programs, such as Part B of IDEA and Safe
and Drug-Free Schools, require SEAs to allocate a majority of funds
on a formula basis, but also allow a portion of funds to be
distributed on a discretionary basis. For these programs, the SEA
would not be required to comply with these final regulations when
distributing the discretionary portion of the funds on a
noncompetitive basis. If the SEA distributes the discretionary
portion of the funds on a competitive basis, Sec. 76.794(a) would
apply.
As stated in the preamble to the NPRM, the Secretary encourages
SEAs and LEAs to consider charter schools on the same basis as other
LEAs and public schools when providing funds on a discretionary, but
noncompetitive, basis. Nevertheless, it is not the intent of these
regulations to restrict in any way the discretionary authority of
SEAs and LEAs with respect to these funds.
Changes: We have revised the definition of covered program in
Sec. 76.787 to clarify that noncompetitive discretionary programs
are not covered by these final regulations, even though funds are
allocated to the State on a formula basis. We have also revised
Sec. 76.794(b) accordingly.
Comments: One commenter requested guidance on how LEAs can meet
the requirements of these final regulations when allocating funds to
new or expanded charter schools under Part B of IDEA.
Discussion: There is nothing in section 10306 of the Act, these
final regulations, or the IDEA Amendments of 1997 that would compel
an LEA to make allocations of Part B funds to charter schools that
are public schools of that LEA, if the LEA does not make allocations
of such funds to its other schools. Under section 613(a)(5) of IDEA,
if an LEA provides Part B funds or services to public schools of the
LEA, it must provide those funds or services in the same manner to
charter schools that are public schools of the LEA. Likewise, if the
LEA has eligibility criteria that its public schools must meet in
order to receive Part B funds and the charter school meets those
criteria, the LEA must provide Part B funds to the new or expanded
charter school in the same manner that the LEA provides such funds
to its other public schools. If an LEA allocates Part B funds to its
public schools on a formula basis, in accordance with Sec. 76.791 of
these final regulations, the eligibility determination for the new
or expanded charter school may not be based on enrollment or
eligibility data from a prior year. In addition, funding allocations
made on a formula basis must be made within the time periods
specified in Sec. 76.793 of these final regulations.
As stated in the Office of Special Education Programs (OSEP)
Memorandum 99-12, if an LEA provides Part B funds to charter schools
that are public schools within the LEA, a State can require that
allocations of Part B funds be transferred from the LEA where the
child was previously served and counted, or would have been served,
to the LEA that distributes Part B funds to the charter school where
the child is attending. In addition, the State can require that the
funds be transferred from the public school of the LEA where the
child was previously served and counted, or would have been served,
to the charter school of the same LEA where the child is attending.
Changes: None.
Comments: One commenter requested guidance on how SEAs can meet
the requirements of these final regulations when providing funds to
new or expanded charter school LEAs under the current formula in the
IDEA Preschool Grants Program and the permanent formula that will
become effective for the IDEA Grants to States program when the
appropriation for that program exceeds $4,924,672,200.
Discussion: Under the formula at sections 611(g)(2)(B) and
619(g)(1) of Part B of IDEA, the State allocation to each eligible
LEA is the total of three amounts--the base payment, the population
payment, and the poverty payment. The base payment is the amount the
LEA would have received for the base year had the State allocated 75
percent of its award to the local level (for the Grants to States
Program, the base year is the fiscal year preceding the first fiscal
year in which the amount appropriated for the program is more than
$4,924,672,200; for the Preschool Grants Program, the base year is
Federal fiscal year 1997). Therefore, the amount of Part B funds
that a State must use to make base payments is set at 75 percent of
the State's base year grant, and remains the same for each
subsequent fiscal year. Federal regulations at 34 CFR 300.712(b)(2)
and 34 CFR 301.31(b) provide information on when base payments must
be adjusted. Because of section 10306 of the Act and these final
regulations, base payments must also be adjusted when a charter
school experiences a significant expansion of enrollment as defined
in Sec. 76.787 of these final regulations.
When calculating base payments for new or expanded charter
school LEAs, States must use the method described in 34 CFR
300.712(b)(2)(i) and 34 CFR 301.31(b)(1). Thus, if a charter school
LEA opens for the first time or significantly expands its
enrollment, the State must divide the base allocation for LEAs that
would have been responsible for serving children with disabilities
now being served by the charter school LEA, among the charter school
LEA and affected LEAs based on the relative numbers of children with
disabilities currently provided special education by each of the
LEAs. Once the base payment for affected LEAs and the charter school
LEA is calculated using the method described above, the State may
use its State set-aside funds to supplement the subgrant of an LEA
whose base payment is decreased as a result of having its base
allocation divided. However, supplements provided for this purpose
do not change the amount of the base payment the LEA is entitled to
receive, and the SEA is not required to continue to provide these
supplemental funds in future years.
The population payment (85 percent of the remaining flow-through
funds after the base payments are made) is an amount based on the
eligible agency's relative numbers of children enrolled in public
and private elementary and secondary schools within the LEA's
jurisdiction. The population payment should be allocated to new or
expanded charter schools based on the number of elementary and
secondary school children enrolled in the charter school. Under
Sec. 76.791 of these final regulations, the State may not rely on
enrollment data from a prior year in calculating the new or expanded
charter school's population payment, even if population payments to
other LEAs are based on a prior year's enrollment data.
The poverty payment (15 percent of the remaining flow through
funds after the base payments are made) is an amount based on the
eligible agency's relative numbers of children living in poverty, as
determined by the SEA. The poverty factor chosen must be applied
uniformly to all eligible subgrantees. For example, if the State
uses aggregate data on children who are eligible for free or
reduced-price meals under the United States Department of
Agriculture's National School Lunch Program, this data must be
applied to the new or expanded charter school LEA to determine its
poverty payment. Under Sec. 76.791, the State may not rely on
enrollment or eligibility data from a prior year in calculating the
new or expanded charter school LEA's poverty payment, even
[[Page 71972]]
if poverty payments to other LEAs are based on data from a prior
year.
Section 76.790(b)(2) of these final regulations provides the SEA
with flexibility to allocate funds to eligible charter school LEAs
based on reasonable estimates of projected enrollment at the charter
school LEA. Under Sec. 76.796, the SEA would be required to make
appropriate adjustments to the subgrants of the new or expanded
charter school LEA and affected LEAs based on actual enrollment and
eligibility data. Under Sec. 76.797(a), any required adjustments
would have to be made on or before the date the SEA allocates funds
to LEAs for the succeeding academic year.
The requirements in section 10306 of the Act and these final
regulations apply only when a State or LEA allocates funds under a
covered program to a charter school during its first year of
operation or during subsequent years when the charter school
significantly expands its enrollment. In all other years, an SEA or
LEA allocates Part B funds to charter schools in the same manner as
it allocates funds to other eligible LEAs and public schools. The
only entities that are eligible to receive Part B funds under IDEA
are entities that are established as LEAs under State law and those
charter schools that are public schools of an LEA where that LEA
distributes Part B funds to its other public schools.
Changes: None.
Comments: One commenter requested guidance on how an SEA or LEA
reallocates funds if a charter school closes. Although this comment
was made with specific reference to Part B of IDEA, the discussion
that follows is applicable to all of the covered programs.
Discussion: Neither section 10306 of the Act nor these final
regulations prescribe closeout or reallocation procedures for SEAs
or LEAs to follow if and when a charter school closes. Therefore, as
a general rule, if a charter school that has received funds in
accordance with these final regulations closes, SEAs and LEAs should
follow the same procedures that are used to close out subgrants and
reallocate funds for other eligible entities under the applicable
program.
Changes: None.
Adjustments (Secs. 76.796-76.797)
Comments: Three commenters expressed support for the requirement
in the proposed regulations that States and LEAs make adjustments to
allocations to charter schools based on actual enrollment and
eligibility data. One of these commenters recommended that the
regulations include a provision specifically authorizing charter
schools to challenge the amount of the SEA or LEA's allocation,
while another commenter recommended that the regulations prescribe
additional remedies for States to recover overpayments. A fourth
commenter opposed any requirement that States make adjustments for
underpayments to charter schools, and a fifth commenter recommended
that the Secretary delete the provision authorizing States and LEAs
to make adjustments to allocations in the succeeding year. The fifth
commenter questioned the usefulness of Sec. 76.797, in light of the
ability of States to recover overpayments from charter schools
through offset of subsequent allocations.
Discussion: If an SEA or LEA has allocated more or fewer funds
to a charter school than the amount for which the charter school is
eligible based on actual enrollment or eligibility data, Sec. 76.796
requires the SEA or LEA to make appropriate adjustments. The purpose
of this provision is to ensure that charter schools receive the
amount of funds they are eligible to receive--no more and no less.
Accordingly, it requires SEAs and LEAs to make adjustments to
charter school allocations for both overpayments and underpayments,
as well as appropriate adjustments to the allocations of other LEAs
and public schools. For example, if projected enrollment data result
in an SEA allocating too few funds to a charter school LEA, the SEA
would be required to adjust upward the charter school LEA's
allocation when actual enrollment data are available. Similarly, if
the SEA reserves more funds off the top of its total allocation than
are needed to make allocations to eligible charter school LEAs, the
SEA must return the excess funds to its other LEAs in proportion to
their initial allocations. Our nonregulatory guidance will provide
program-specific examples of how adjustments can be made.
If a charter school LEA believes its allocation under a covered
program is inaccurate, it, like any other LEA, may appeal to the SEA
under section 432(a) of the General Education Provisions Act.
Moreover, nothing in Sec. 76.796 is intended to limit the remedies
otherwise available by law to SEAs or LEAs to recoup overpayments of
funds.
Section 76.797 requires SEAs and LEAs to make any necessary
adjustments on or before the date the SEA or LEA allocates funds to
LEAs for the succeeding academic year. In other words, an SEA may
make adjustments immediately, when it makes the next year's
allocations, or anytime in between. This provision affords SEAs and
LEAs flexibility to make adjustments when it is most convenient,
provided those adjustments are made no later than when the SEA or
LEA provides funds to LEAs and public schools for the succeeding
academic year.
Changes: None.
Applicability of Provisions to LEAs (Sec. 76.799)
Comments: One commenter stated that the regulations should be
expanded to address LEA-specific circumstances.
Discussion: Section 76.799(a) specifies that LEAs that are
responsible for funding charter schools under a covered program are
subject to the same requirements as SEAs. In Sec. 76.799(b), we also
explain that the terms LEA, charter school, and public school should
be read in place of the terms SEA (or State), charter school LEA,
and LEA, respectively, in these regulations to accomplish the
requirement. When these substitute references are applied, these
regulations already instruct LEAs on their responsibilities to new
and expanding charter schools when allocating funds under the
covered programs. Within the next several months, the Department
also expects to issue nonregulatory guidance that will provide
additional program-specific guidance for SEAs, LEAs, and charter
schools.
Finally, as noted in the preamble to the NPRM, States are
directly responsible for ensuring that LEAs meet the requirements of
section 10306 of the Act and these final regulations. Accordingly,
the Department expects that some SEAs may also provide guidance to
LEAs on these matters. The Secretary believes that all of these
measures are a satisfactory means of providing the expanded LEA-
specific guidance that the commenter seeks, and that further
regulations on this issue are unnecessary at this time.
Changes: None.
[FR Doc. 99-33119 Filed 12-21-99; 8:45 am]
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