Section 8003 establishes several broad categories of federally connected school children who may generate payments for their school districts. Following are brief descriptions of the categories:

• Child resides on federal property with a parent employed on federal property situated in whole or in part within the boundaries of the school district.
• Child resides on federal property with a parent who is both an accredited official of a foreign government and a foreign military officer.
• Child resides on federal property and has a parent on active duty in the uniformed services of the United States.
• Child resides on eligible Indian lands (no employment requirement).
• Child has a parent on active duty in the uniformed services of the United States.
• Child has a parent who is both an accredited official of a foreign government and a foreign military officer.
• Child resides in eligible low-rent housing.
• Child resides on federal property.
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• Child resides with a parent employed on federal property.
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To qualify for section 8003 funding, an LEA must meet one of the following threshold eligibility requirements:

1. The LEA must be serving eligible federally connected children numbering at least 400 in ADA; or
2. At least 3 percent of the total number of children in ADA must be such children.

A new hold harmless provision for FYs 2001 and 2002 replaces the hold harmless at section 8003(e). The new hold harmless only applies to FY 2001 and FY 2002 payments and can only pertain to LEAs that received a section 8003(b) payment in FY 2000. Applicants can receive a hold harmless payment in both FY 2001 and FY 2002 or in either of the two fiscal years.

LEAs that serve federally connected children with disabilities may receive an additional payment to assist with the excess costs of providing educational services to these children. An LEA must provide services for all children with disabilities claimed on its application in accordance with the Individuals with Disabilities Education Act (IDEA).

School districts that enroll certain percentages of federally connected children and meet other statutory requirements receive increased formula payments under section 8003(b)(2).

1. Boundaries are same as federal military installation; or
2. Federally connected ADA at least 35 percent of total ADA; PPE below greater of State or National PPE (Exception: enrollments below 350, have no PPE requirement); tax rate for general fund at least 95 percent of comparable districts or all LEAs in the state; or
3. Federally connected ADA at least percent of total ADA; tax rate for general fund at least 125 percent of comparable districts or all LEAs in the state; or
4. Total enrollment not less than 25,000, at least 50 percent federally connected, and at least 6,000 civilian or military students who live on and whose parents work on Federal property.

1. Boundaries are same as federal military installation; or
2. Federally connected ADA not less than 50 percent of total ADA (or 40 percent if there are ineligible civilian dependents); tax rate for general fund at least 95 percent of comparable districts or all LEAs in the state; or
3. Total enrollment at least 350, PPE less than the State average; tax rate for general fund as least 95 percent of comparable LEAs or all LEAs in the state; or
4. Enrollment fewer than 350, PPE less than one comparable LEA; tax rate 95 percent of comparable LEAs in state.

This section authorizes payments for capital expenditure assistance to LEAs that receive a Basic Support Payment under section 8003 and that meet one of the following criteria:

• The number of children in average daily attendance in the schools of the LEA who reside on Indian lands equals at least 50 percent of the total student enrollment in the schools of the LEA.
• The number of children in average daily attendance in the schools of the LEA who have a parent on active duty in the uniformed services of the United States equals at least 50 percent of the total student enrollment in the schools of the LEA.
• The LEA receives a payment under section 8003(b)(2).

LEAs must use these funds for construction activities, which may include:

1. preparing drawings and specifications for school facilities
2. erecting, building, acquiring, altering, remodeling, repairing or extending school facilities
3. inspecting and supervising the construction of school facilities
4. debt services for construction activities