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U.S. Department of Education: Promoting Educational Excellence for all Americans

Local educational agency high cost fund (Sec. 300.704(c))

Comment: One commenter expressed concern that the regulations for the high cost fund, particularly the reference to the cost of room and board for a residential placement, would discourage educational placements in the LRE. The commenter stated that many children with disabilities are sent out of their school districts for special education and related services and asked that the regulations ensure that this practice does not increase.

Discussion: The language regarding room and board in Sec. 300.704(c)(4)(ii) was included to clarify that the cost of room and board for a necessary residential placement could be supported by the high cost fund. Section Sec. 300.704(c)(4)(ii) clarifies that the cost of room and board for a residential placement must be determined necessary and be consistent with the LRE requirements in Sec. 300.114. We believe this is adequate to ensure that educational placements in the LRE are not discouraged.

Changes: None.

Comment: One commenter stated that reimbursements from a high cost fund would be difficult to compute and requested a template to assist LEAs in their calculations. Another commenter requested a list of specific procedures that would be excluded from coverage by a high cost fund.

Discussion: How States implement the high cost fund is a matter left to the discretion of each State, so long as the State meets the requirements of Part B of the Act. Accordingly, the Department does not believe it would be appropriate to develop a template, prepared at the Federal level, or a list of specific procedures that would be excluded from coverage. Whether a particular expenditure is appropriate will vary with the specific facts and circumstances of the situation.

Changes: None.

Comment: One commenter asked whether high cost funds could be used for court-ordered placements.

Discussion: Nothing in the Act or the regulations prohibits payment for providing special education and related services to high need children with disabilities in court-ordered placements, if a State wishes to fund such placements and the other provisions of Part B of the Act are met.

Changes: None.

Comment: A few commenters requested that the regulations include plans for continuing programs funded by high cost funds should these funds become unavailable.

Discussion: The availability of Federal support for a high cost fund, as described in Sec. 300.704(c) and section 611(e)(3) of the Act, is based on a number of factors, including continued Federal appropriations for the Grants to States program and the continued authorization for such a fund under the Act. Funding of a high cost fund in a particular State is dependent on a State's decision to use a portion of its State-level set-aside for a high cost fund. This is a matter of State discretion and is not appropriate for regulation at the Federal level.

Changes: None.

Comment: A few commenters requested an opportunity for public comment before a State implements a high cost fund.

Discussion: Section 300.704(c)(3)(i), consistent with section 611(e)(3)(C)(ii) of the Act, requires an SEA to develop, annually review, and amend, as necessary, a State plan for a high cost fund. Under Sec. 300.704(c)(3)(i)(A), the State plan must, among other components, establish, in consultation and coordination with representatives from LEAs, a definition of a high need child with a disability that meets certain criteria. This plan must be developed no later than 90 days after the State reserves funds for a high cost fund. Section 300.704(c)(3)(ii), consistent with section 611(e)(3)(C)(iii) of the Act, requires a State to make its final State plan for the high cost fund available to the public not less than 30 days before the beginning of the school year, including dissemination of such information on the State's Web site. Although there is nothing in the Act that requires that the public be given the opportunity to comment on the State's plan, there also is nothing in the Act that would prohibit a State from providing an opportunity for public comment prior to finalizing the State's plan for the high cost fund. We believe the decision to provide opportunity for public comment is best left to each State.

Changes: None.

Comment: A few commenters asked if LEAs are obligated to participate in the State Medicaid program and whether States could limit the types of reimbursement to LEAs from Medicaid.

Discussion: LEAs are not obligated under the Act to participate in a State Medicaid program. Title XIX of the Social Security Act of 1965, as amended, controls Medicaid reimbursement for medical assistance for eligible individuals and families with low incomes and resources. Therefore, it would not be appropriate to address in these regulations whether States, under the Act, could limit the type of Medicaid reimbursement to LEAs.

Changes: None.

Comment: One commenter asked if there was any intent to develop criteria for the development of innovative cost sharing consortia, as stated in Sec. 300.704(c)(1)(i)(B). The commenter stated that there are no regulations for submitting a State plan for innovative cost-sharing consortia, similar or parallel to the requirements associated with the high cost fund.

Discussion: The commenter is correct that the proposed regulations would not require the development of a State plan for the high cost fund that includes information or criteria about the development of innovative cost-sharing consortia. It is important that, if a State elects to reserve funds for supporting innovative and effective ways of cost sharing under Sec. 300.704(c)(1)(i)(B), the State, in its State plan under Sec. 300.704(c)(3)(i), include a description of how those funds will be used. Therefore, a change will be made to make this clear.

Changes: A new paragraph (F) has been added to Sec. 300.704(c)(3)(i) to clarify that, if a State elects to reserve funds for supporting innovative and effective ways of cost sharing, it must describe in its State plan how these funds will be used.

Comment: One commenter asked whether State administrative funds could be used for administering the high cost fund.

Discussion: Section 300.704(c)(2) is clear that a State cannot use any of the funds the State reserves for the high cost fund for costs associated with establishing, supporting, and otherwise administering the fund. However, a State may use funds reserved for State administration under Sec. 300.704(a) for administering the high cost fund.

Changes: None.

Comment: One commenter requested that the regulations require an SEA to describe in its State plan for the high cost fund the ways in which the SEA will work with State child welfare programs.

Discussion: Section 300.704(c)(3) incorporates the language in section 611(e)(3)(C) of the Act, regarding a State plan for the high cost fund. The Act does not require that the State plan include the ways in which the SEA will work with State child welfare agencies. However, there is nothing in the Act or these regulations that would prohibit a State from including such information in its plan if it chooses to do so. We believe that the decision whether to include this information in the State plan for the high cost fund is a matter best left to the State.

Changes: None.

Comment: A few commenters stated that parents, representatives of the State Advisory Panel, and other stakeholders should participate in developing the definition of a high need child for the purposes of the high cost fund.

Discussion: Section 300.704(c)(3)(i)(A), consistent with section 611(e)(3)(C)(i) of the Act, requires the SEA to establish a State definition of a high need child with a disability in consultation with LEAs. The Act does not require the involvement of parents, representatives of the State Advisory panel, or other stakeholders. However, there is nothing in the Act or these regulations that would prohibit a State from consulting with these or other groups, if the State chooses to do so. The Department believes that it would be inappropriate to require SEAs to consult with specific groups, because the appropriate groups for consultation will vary from State to State.

Changes: None.