---
kind: "range"
citation: "34 C.F.R. §§ 300.162–300.163"
title: "34"
from: "300.162"
to: "300.163"
count: 2
url: "https://uscodex.org/cfr/34/300.162..300.163"
---

# §300.162. Supplementation of State, local, and other Federal funds.

- (a) **Expenditures.** Funds paid to a State under this part must be expended in accordance with all the provisions of this part.
- (b) **Prohibition against commingling.**
  - (1) Funds paid to a State under this part must not be commingled with State funds.
  - (2) The requirement in [paragraph (b)(1)](#b-1) of this section is satisfied by the use of a separate accounting system that includes an audit trail of the expenditure of funds paid to a State under this part. Separate bank accounts are not required. (See [34 CFR 76.702](/cfr/34/76.702.md) (Fiscal control and fund accounting procedures).)
- (c) **State-level nonsupplanting.**
  - (1) Except as provided in [§ 300.203](/cfr/34/300.203.md), funds paid to a State under Part B of the Act must be used to supplement the level of Federal, State, and local funds (including funds that are not under the direct control of the SEA or LEAs) expended for special education and related services provided to children with disabilities under Part B of the Act, and in no case to supplant those Federal, State, and local funds.
  - (2) If the State provides clear and convincing evidence that all children with disabilities have available to them FAPE, the Secretary may waive, in whole or in part, the requirements of [paragraph (c)(1)](#c-1) of this section if the Secretary concurs with the evidence provided by the State under [§ 300.164](/cfr/34/300.164.md).

# §300.163. Maintenance of State financial support.

- (a) **General.** A State must not reduce the amount of State financial support for special education and related services for children with disabilities, or otherwise made available because of the excess costs of educating those children, below the amount of that support for the preceding fiscal year.
- (b) **Reduction of funds for failure to maintain support.** The Secretary reduces the allocation of funds under section 611 of the Act for any fiscal year following the fiscal year in which the State fails to comply with the requirement of [paragraph (a)](#a) of this section by the same amount by which the State fails to meet the requirement.
- (c) **Waivers for exceptional or uncontrollable circumstances.** The Secretary may waive the requirement of [paragraph (a)](#a) of this section for a State, for one fiscal year at a time, if the Secretary determines that—
  - (1) Granting a waiver would be equitable due to exceptional or uncontrollable circumstances such as a natural disaster or a precipitous and unforeseen decline in the financial resources of the State; or
  - (2) The State meets the standard in [§ 300.164](/cfr/34/300.164.md) for a waiver of the requirement to supplement, and not to supplant, funds received under Part B of the Act.
- (d) **Subsequent years.** If, for any fiscal year, a State fails to meet the requirement of [paragraph (a)](#a) of this section, including any year for which the State is granted a waiver under [paragraph (c)](#c) of this section, the financial support required of the State in future years under [paragraph (a)](#a) of this section shall be the amount that would have been required in the absence of that failure and not the reduced level of the State's support.