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U.S. Department of Education: Promoting Educational Excellence for all Americans
Regulations: Part 300 / B / 300.114 / b / 1 / ii

(ii) A State must not use a funding mechanism by which the State distributes funds on the basis of the type of setting in which a child is served that will result in the failure to provide a child with a disability FAPE according to the unique needs of the child, as described in the child's IEP.