§7709 State consideration of payments in providing State aid

Summary

States must not count federal payments under this program when deciding which local school districts get state aid or how much aid they get, and they must not cut a district’s state aid because the district receives those payments. A State can make an exception and reduce state aid for districts that get payments under sections 7702 or 7703(b) only if the U.S. Secretary of Education certifies that the State has a program that evens out school spending across districts. The Secretary will ignore the top 5% and bottom 5% of districts when checking fairness, and the highest-spending district may not spend more than 25 percent above the lowest-spending district (based on data from the second fiscal year before the year in question). The Secretary also must consider extra costs for isolated areas or for students with special needs. Certain excess amounts are excluded from any reduction (for example, amounts over 1.0 under section 7703(a)(2)(B), and specified excesses under section 7703(b)(2)). A State that wants to count these federal payments must tell the Secretary in writing at least 120 days before the State’s fiscal year starts, and must show it told each district. The Secretary must let the State and districts speak before deciding, must certify or deny the program, and must allow hearings for affected parties. Once certified, a State may use the federal payments to compare districts’ resources and needs, but may count those federal funds as local money only in proportion to how much local tax revenue the State’s equalization program covers. A State may not consider the payments before the Secretary’s certification. If the Secretary or an affected district faces an unresolved adverse decision, they may sue the State in federal court no sooner than 150 days after that decision; the State cannot claim 11th Amendment immunity, and the court can order appropriate relief.