(a) General. Amounts provided to the LEA under Part B of the Act—

1. (1) Must be expended in accordance with the applicable provisions of this part;
2. (2) Must be used only to pay the excess costs of providing special education and related services to children with disabilities, consistent with paragraph (b) of this section; and
3. (3) Must be used to supplement State, local, and other Federal funds and not to supplant those funds.

(b) Excess cost requirement—(1) General.

1. (i) The excess cost requirement prevents an LEA from using funds provided under Part B of the Act to pay for all of the costs directly attributable to the education of a child with a disability, subject to paragraph (b)(1)(ii) of this section.
2. (ii) The excess cost requirement does not prevent an LEA from using Part B funds to pay for all of the costs directly attributable to the education of a child with a disability in any of the ages 3, 4, 5, 18, 19, 20, or 21, if no local or State funds are available for nondisabled children of these ages. However, the LEA must comply with the nonsupplanting and other requirements of this part in providing the education and services for these children.

3. (2)

   1. (i) An LEA meets the excess cost requirement if it has spent at least a minimum average amount for the education of its children with disabilities before funds under Part B of the Act are used.
   2. (ii) The amount described in paragraph (b)(2)(i) of this section is determined in accordance with the definition of excess costs in § 300.16. That amount may not include capital outlay or debt service.

4. (3) If two or more LEAs jointly establish eligibility in accordance with § 300.223, the minimum average amount is the average of the combined minimum average amounts determined in accordance with the definition of excess costs in § 300.16 in those agencies for elementary or secondary school students, as the case may be.

   (Approved by the Office of Management and Budget under control number 1820-0600)

   (Authority: 20 U.S.C. 1413(a)(2)(A))