§ 300.605 Withholding funds.

Plain English summary

This section establishes the process by which the Secretary of Education may withhold Part B funds from a State Educational Agency (SEA). Before withholding funds, the Secretary must provide reasonable notice and a hearing opportunity to the SEA; funds may also be suspended pending the hearing outcome. The nature and scope of any withholding may be limited to specific programs or agencies responsible for the violation, and withholding continues until the Secretary is satisfied the underlying condition has been substantially rectified.

Key requirements

• Prior to withholding any funds under Part B of the Act, the Secretary provides reasonable notice and an opportunity for a hearing to the SEA involved, pursuant to the procedures in §§ 300.180 through 300.183.
• Pending the outcome of any hearing to withhold payments under paragraph (a) of this section, the Secretary may suspend payments to a recipient, suspend the authority of the recipient to obligate funds under Part B of the Act, or both, after the recipient has been given reasonable notice and an opportunity to show cause why future payments or authority to obligate funds under Part B of the Act should not be suspended.
• The withholding will be limited to programs or projects, or portions of programs or projects, that affected the Secretary's determination under § 300.603(b)(1); or the SEA must not make further payments under Part B of the Act to specified State agencies or LEAs that caused or were involved in the Secretary's determination under § 300.603(b)(1).
• Until the Secretary is satisfied that the condition that caused the initial withholding has been substantially rectified, payments to the State under Part B of the Act must be withheld in whole or in part.
• Until the Secretary is satisfied that the condition that caused the initial withholding has been substantially rectified, payments by the SEA under Part B of the Act must be limited to State agencies and LEAs whose actions did not cause or were not involved in the Secretary's determination under § 300.603(b)(1).

Affected parties

• Secretary of Education
• State Educational Agencies (SEAs)
• Local Educational Agencies (LEAs)
• State agencies receiving Part B funds

Official source

https://www.ecfr.gov/current/title-34/part-300/section-300.605