How is State aid treated under section 8009 of the Act?
(a) General rules.
A State may take into consideration payments under sections 8002 and 8003(b) of the Act (including hold harmless payments calculated under section 8003(e)) in allocating State aid if that State has a State aid program that qualifies under § 222.162, except as follows:
Those payments may be taken into consideration for each affected local educational agency (LEA) only in the proportion described in § 222.163.
A State may not take into consideration that portion of an LEA's payment that is generated by the portion of a weight in excess of one under section 8003(a)(2)(B) of the Act (children residing on Indian lands) or payments under section 8003(d) of the Act (children with disabilities), section 8003(f) of the Act (heavily impacted LEAs) and section 8003(g) of the Act (LEAs with high concentrations of children with severe disabilities).
A State may not take into consideration increases in payment under the following subsections of section 3(d) of Pub. L. 81-874:
Section 3(d)(2)(B) (increase for heavily impacted LEAs).
Section 3(d)(2)(C) (increase for children with disabilities and children with specific learning disabilities).
Section 3(d)(2)(D) (increase for children residing on Indian lands).
Section 3(d)(3)(B)(ii) (increase for unusual geographical factors).
No State aid program may qualify under this subpart if a court of that State has determined by final order, not under appeal, that the program fails to equalize expenditures for free public education among LEAs within the State or otherwise violates law, and if the court's order provides that the program is no longer in effect.
No State, whether or not it has an equalization program that qualifies under § 222.162, may, in allocating State aid, take into consideration an LEA's eligibility for payments under the Act if that LEA does not apply for and receive those payments.
Any State that takes into consideration payments under the Act in accordance with the provisions of section 8009 in allocating State aid to LEAs must reimburse any LEA for any amounts taken into consideration for any fiscal year to the extent that the LEA did not in fact receive payments in those amounts during that fiscal year.
A State may not take into consideration payments under the Act or under Public Law 874 before the State's State aid program has been certified by the Secretary.
(b) Data for determinations.
Except as provided in paragraph (b)(2) of this section, determinations under this subpart requiring the submission of financial or school population data must be made on the basis of final data for the second fiscal year preceding the fiscal year for which the determination is made if substantially the same program was then in effect.
If the Secretary determines that the State has substantially revised its State aid program, the Secretary may certify that program for any fiscal year only if—
The Secretary determines, on the basis of projected data, that the State's program will meet the disparity standard described in § 222.162 for the fiscal year for which the determination is made; and
The State provides an assurance to the Secretary that, if final data do not demonstrate that the State's program met that standard for the fiscal year for which the determination is made, the State will pay to each affected LEA the amount by which the State reduced State aid to the LEA.
Data projections submitted by a State must set forth the assumptions upon which the data projections are founded, be accompanied by an assurance as to their accuracy, and be adjusted by actual data for the fiscal year of determination that must be submitted to the Secretary as soon as these data are available.
The following definitions apply to this subpart:
Current expenditures means the total charges incurred for the benefit of the school year in an elementary (including pre-kindergarten) or secondary school program. “Current expenditures” does not include—
Expenditures for capital outlay;
Expenditures for debt service for capital outlay;
Expenditures from State sources for special cost differentials of the type specified in § 222.162(c)(2) ;
Expenditures of revenues from local or intermediate sources that are designated for special cost differentials of the type specified in § 222.162(c)(2) ;
Expenditures of funds received by the agency under sections 8002 and 8003(b) (including hold harmless payments calculated under section 8003(e)) or under Pub. L. 81-874 that are not taken into consideration under the State aid program and exceed the proportion of those funds that the State would be allowed to take into consideration under § 222.163; or
Expenditures of funds received by the agency under Pub. L. 81-874 that were not taken into consideration under the State aid program and exceed the proportion of funds the State was permitted to take into consideration under that law.
Equalize expenditures means to meet the standard set forth in § 222.162.
Local tax revenues means compulsory charges levied by an LEA or by an intermediate school district or other local governmental entity on behalf of an LEA for current expenditures for educational services. “Local tax revenues” include the proceeds of ad valorem taxes, sales and use taxes, income taxes and other taxes. Where a State funding formula requires a local contribution equivalent to a specified mill tax levy on taxable real or personal property or both, “local tax revenues” include any revenues recognized by the State as satisfying that local contribution requirement.
Local tax revenues covered under a State equalization program means “local tax revenues” as defined in paragraph (c) of this section contributed to or taken into consideration in a State aid program subject to a determination under this subpart, but excluding all revenues from State and Federal sources.
Revenue means an addition to assets that does not increase any liability, does not represent the recovery of an expenditure, does not represent the cancellation of certain liabilities without a corresponding increase in other liabilities or a decrease in assets, and does not represent a contribution of fund capital in food service or pupil activity funds. Furthermore, the term “revenue” includes only revenue for current expenditures.
State aid means any contribution, no repayment for which is expected, made by a State to or on behalf of LEAs within the State for current expenditures for the provision of free public education.
Total local tax revenues means all “local tax revenues” as defined in paragraph (c) of this section, including tax revenues for education programs for children needing special services, vocational education, transportation, and the like during the period in question but excluding all revenues from State and Federal sources.
20 U.S.C. 7709
[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]