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Confused State Officials Ask for Help In Adjusting to Federal

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Washington--State education officials, faced with new responsibilities for federally supported programs, appear to be losing their zeal for the flexibility they have gained under Chapter II of the Education Consolidation and Improvement Act of 1981, the law that merged 29 categorical programs into block grants.

Repeatedly during a conference here last week, representatives of state education agencies pleaded with federal officials to provide more guidance on how the funds should be allocated, spent, and accounted for.

"I think they're having trouble severing that umbilical cord that existed when we were the administering agent," observed Allen J. King, who, as deputy director of the Education Department's division of educational support, is helping to guide the states through the new procedures.

Perhaps reflecting that confusion--and the fact that neither the regulations nor the appropriation for Chapter II are yet final--only 10 states have submitted their Chapter II spending plans to the Education Department (ed) for approval.

And the uncertainties may be an even larger problem for local school districts, which in many states must complete their 1982-83 budgets this month.

"Does anyone really know what records are to be maintained?" asked Jay D. Jacobs of the Fairfax County, Va., public schools. "What are the audit guidelines?"

'Somewhat Gun-Shy'

"Until we know these things, I don't see how [school districts] can spend the money. We're somewhat gun-shy about putting Chapter II money into local budgets."

Many of the questions remaining about block grants, federal officials said, will be covered in the final Chapter II regulations, which are due by the end of May, and in an accompanying set of questions and answers prepared by ed to provide "non-regulatory guidance" to the states and school districts. The comment period for the regulations is to end on April 13.

A major concern of the state officials meeting here was Chapter II's provision for "equitable" participation by private-school students. The law requires that local education agencies consult private-school officials in formulating their spending plans, and that students in nonpublic schools receive a fair share of the funds.

But several state officials said they were unsure just what "equitable" means. Others wanted to know what kinds of private schools--including home schools--might qualify for the money. And some wondered, as one put it, "who wins if the private schools and the lea [local education agency] disagree on priorities?"

'Level of Services'

"The per-pupil expenditures don't have to be exactly the same," Mr. King said, "but you do have to look at the level of services.

"I would emphasize that there are no dollars flowing to private schools," he added. "There are only services going to private-school children."

Mr. King said later that he was "puzzled" by the number of questions about the private-school provisions. Private schools have for several years received library and in-structional materials from Title IV-B of the Elementary and Secondary Education Act of 1965, he noted, and Chapter II's provisions are almost identical to Title IV.

"The dollar amount is not that much more," he said. "The range of services, though, is so much greater that there could be an impact on the administrative burden for the locals."

Private schools, in order to be eligible for Chapter II services, must meet the state definition of a school, Mr. King said. Because of the diversity of state definitions, added Charles O'Malley, Secretary of Education Terrel H. Bell's executive assistant for private schools, ed "is working with the Education Commission of the States to develop a uniform definition--not a federal definition, but a uniform definition."

Nonpublic schools participating in Chapter II must also comply with Title VI of the Civil Rights Act of 1964, which bars racial discrimination, Mr. O'Malley added. But because they are not considered direct recipients of federal funds, they will not be bound by regulations governing Title IX of the Education Amendments of 1972 (prohibiting sex discrimination) or by Section 504 of the Rehabilitation Act of 1973 (guaranteeing equal access for handicapped students).

Fiscal Requirements

Chapter II, like some other federal education laws, stipulates that federal funds must "supplement, not supplant" state and local efforts--meaning that federally supported services may not be used as substitutes for what states and districts would ordinarily provide.

But the breadth of services allowed under Chapter II, and the fiscal condition of many states and districts, will make the so-called "non-supplant provision" difficult to define and enforce, Mr. King conceded.

For example, he said, Wisconsin's school districts are experiencing a 5-to-10-percent cut in state funds, making it difficult to determine whether federal funds are being used to fill a budget gap or to provide supplemental services.

"That's one area in which we need to give a lot more guidance," he said.

State officials also raised questions about carry-over funds--money that will be left over in districts' categorical-program accounts at the end of the current fiscal year. Carry-over funds may continue to be spent for the categorical purposes for which they were received, federal officials said. And districts might elect to use these funds for any of the purposes outlined in Chapter II, they added, but probably should keep track of them separately until they are used up.

States will be required to prepare financial and compliance audits of Chapter II funds every two years, beginning with the two-year period that starts on July 1, 1982. ed officials suggested that state education agencies use one set of audit standards--contained in Attachment P of the Office of Management and Budget's Circular A-102--which meets the requirements for audits of all federal education and child-nutrition programs. This way, they said, states can perform one audit, rather than separate audits of several programs. The Chapter II audit may be paid for out of the state's Chapter II funds.

State Applications

In submitting applications for Chapter II funds, several states have omitted crucial information about administrative costs and private-school participation, said A. Bruce Gaarder, chief of the ed branch that reviews applications. And several have failed to document participation by state advisory committees in drawing up the formulas, he added.

All must be included for an application to be approved, he said. The state document should also specify the period covered; an application can be for one, two, or three years.

"The very easiest way to handle the assurances is to take the statute, turn the verb around, and say, 'We're going to do that.' You can't go wrong," Mr. Gaarder said.

At least two states have included "hold-harmless" provisions in their formulas, guaranteeing districts at least a percentage of the amount they received under categorical programs. This is acceptable, Mr. King said, if it can be justified as support for a high-cost program.

States should include information about enrollment, how many children are in each high-cost category included in the allocation formula, and how those figures were determined.

"No one's going to tell you what those figures should be," Mr. Gaarder said. "As far as equitableness, we would accept your judgment. ... We accept at face value the statements that you make in your application. If you said it, you mean it."

So long as the state formula makes some provision for high-cost children, it is likely to be approved, he said. One possible exception might be designating a wealthy suburban district a "high-cost" program because it spends more money than other districts. "I would have to be overruled before I would recommend that," he said.

One state participant asked whether ed would accept a state formula that distributes 95 percent of the money based on enrollment, reserving only 5 percent to support high-cost programs.

"We're not throwing out any numbers, because then people start migrating toward those numbers," responded Shirley A. Jackson, ed's director of state and local educational programs. "If it seems at all reasonable, and if you can get it through your steering committees, your state boards, your public hearings, your constituencies, we will be extremely inclined to go along with it."

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