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Revenue Sharing
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Revenue Sharing
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The original documents are located in Box 5, folder "Revenue Sharing" of the Bradley H.
Patterson Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 5 of the Bradley H. Patterson Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
9 p- - -: - compliment
Reg 50 procedues -
m.
261 Tribes
347 Indian groups recigne &
BIA actifies
FORD is LIBRA RAID
Brad
EMBARGOED FOR RELEASE
UNTIL 9:00 A.M., EDT,
WEDNESDAY, OCTOBER 13, 1976
OCTOBER 12, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
GENERAL REVENUE SHARING
STATE AND LOCAL FISCAL ASSISTANCE AMENDMENTS
OF 1976 (H.R. 13367)
The President today signed H.R. 13367, a three and three-quarters
year extension of the Federal Revenue Sharing program.
The bill provides a total of $25,555,856,277 to be distributed
over the 45-month period (January 1, 1977 through September 30,
1980) to eligible State and local governments.
BACKGROUND
o History - The General Revenue Sharing program was authorized
by Title I of the State and Local Fiscal Assistance Act of 1972,
which was signed into law on October 20, 1972. The present law
expires on December 31, 1976. Under the current program States
and local governments will have received $30.2 billion.
o Use - State and local governments have used these funds to
maintain and expand a wide range of programs and services.
According to the testimony of governors, mayors, and county
officials, failure to extend the General Revenue Sharing pro-
gram would have resulted in increased property taxes, cutbacks
in essential services or more unemployment.
o Provisions - The bill which cleared the Congress on September 30,
1976, closely follows President Ford's legislative recommendations
to preserve the essential concept of the current Act, provide
continued growth in funding, and improve and strengthen the
program.
o Renewal - President Ford recommended renewal of the General
Revenue Sharing program on April 25, 1975, urging "that the
Congress act to continue this highly successful and important
new element of American Federalism well in advance of the ex-
piration date, in order that State and local governments can
make sound fiscal plans."
o Extension and Funding - H.R. 13367 extends the General Revenue
Sharing program through fiscal year 1980, from January 1, 1977,
through September 30, 1980. It authorizes funds to be appropriated
to the State and Local Government Fiscal Assistance Trust Fund
to pay revenue sharing entitlements in the following amounts:
for the period January 1, 1977, to September 30, 1977, $4.99
billion; for each of fiscal years 1978, 1979, and 1980 a maximum
of $6.85 billion. The actual authorization for each of these
more
FORD
GERALDA
years will be determined by multiplying $6.65 billion by the
ratio of individual Federal income tax receipts for the calendar
year ending more than one year before the end of the entitle-
ment period, to 1975 receipts.
This funding compares to the current annual funding rate of
$6.65 billion. The Concurrent Resolution for Fiscal Year
1977 includes outlays of $6.7 billion for the program.
Present law provides for the appropriation of revenue sharing
funds in the authorizing Act which removes them from the annual
appropriations process. H.R. 13367 requires annual appropriation
action.
o Nondiscrimination provisions - H.R. 13367 significantly amends
the nondiscrimination provisions of the existing bill by broad-
ening their coverage and providing new expedited enforcement
mechanisms. Prohibitions against discrimination on the basis
of age, handicapped status, and religion are added to those in
present law of race, color, national origin, and sex in programs
or activities funded in whole or in part with revenue sharing
funds. When an allegation of discrimination is made, the unit
of government will have to meet a new test of "clear and con-
vincing evidence" that the program or activity is not directly
receiving revenue sharing funds.
The bill requires the Secretary of the Treasury to endeavor to
enter into agreements with State and Federal agencies to inves-
tigate noncompliance with the nondiscrimination provisions. It
adds an expedited process for determining noncompliance and
ending payments, including hearings by administrative law judges.
H.R. 13367 authorizes civil suits by private citizens, after
exhaustion of administrative remedies, for redress of any act
or practice prohibited by law, and authorizes the Attorney
General to intervene in private actions "of general public
importance" brought for violation of the nondiscrimination
provisions. Courts are authorized to award reasonable attorney
fees to a prevailing plaintiff or defendant, other than the
United States.
o Other major provisions of H.R. 13367:
-- provides for greater public participation by requiring
at least one public hearing on the possible uses of revenue
sharing funds and at least one public hearing on the proposed
use of revenue sharing funds in relation to the unit of
government's entire budget.
-- requires more detailed reporting by State and local
governments on the use of revenue sharing funds, including
setting forth the amounts and purposes for which the funds
have been appropriated, spent, or obligated and showing their
relationship to functional items in the government's budget
and identifying differences between the actual use of funds
received and their proposed use.
-- requires units of government which expect to receive
revenue sharing funds to have an independent audit of all
their financial statements, in accordance with generally
accepted auditing standards, to determine compliance with
the revenue sharing law, at least once every three years.
This requirement is waived for periods in which a unit of
government receives less than $25,000. Present law does not
require an independent audit, nor does it include waiver
authority.
more
3
-- repeals the provision limiting the use by local govern-
ments of revenue sharing funds to priority expenditure categories
such as maintenance and operating expenses for public safety,
environmental protection, public transportation, health, and
capital expenditures authorized by law. This will give units
of local government more flexibility in deciding how to use
revenue sharing funds.
-- repeals the prohibition on the use of revenue sharing
funds by State or local governments for the matching share
needed to receive other Federal grant funds.
-- requires the Advisory Commission on Intergovernmental
Relations (ACIR), effective February 1, 1977, to study and
evaluate the American Federal fiscal system in terms of the
allocation and coordination of public resources among Federal,
State and local governments and to report within three years
of the first appropriation for the study, to the President and
the Congress on its findings and conclusions together with
recommendations for legislation it deems advisable.
-- amends the provisions on State maintenance of transfers
to local governments to require that States maintain transfers
at or above the average of their intergovernmental transfers to
localities during the immediately preceding two years. Present
law compares the level of transfers to those made in fiscal
year 1972.
-- requires the Secretary of the Treasury to report to
the Congress not later than March 1 of each year on compliance
with requirements on the use of funds by recipients, and to
make proposals to remedy significant problems in the administra-
tion of the Act through appropriate legislation.
# # #
OF THE
E TREASTER
for Brad Patterson
1789
JEANNA D. TULLY
DIRECTOR
OFFICE OF REVENUE SHARING
DEPARTMENT OF THE TREASURY
WASHINGTON, D. C. 20226
202-634-5157
THE WHITE HOUSE
WASHINGTON
October 13, 1976
NOTE TO JEANNA TULLY
Thank you for your phone call
of the other day and for sending me the
materials about Revenue Sharing.
May I suggest, please, that
you send a follow-up note on behalf of both
of us to Mrs. Bellcourt (and send me a copy)
since I hesitate to draft a letter here which
deals so directly with your own regulations
and which bears SO closely on an active
disciplinary case which your office is
handling.
Please advise Mrs. Bellcourt on
what her rights are to get access to the audit
reports, tell her what you can about the
disciplinary proceedings re the Tribal Council.
Sad Patton
FORD &
getting involved
your guide to general revenue sharing
Department
of the Treasury
Office of
PU
Revenue Sharing
&
CCP
GERALD R. FORD
CCP CP
Definitions
ORS-These initials stand for the Office of Revenue Sharing.
This booklet, prepared by the Office of Revenue Sharing, provides members
Preface
of Common
GRS-These initials stand for General Revenue Sharing.
of the public with an understandable presentation of General Revenue Sharing
Appropriation-A budgetary action by a government (a vote of the gov-
and its importance to them. Several public interest groups have reviewed this
Revenue Sharing
erning body such as a city council, a town council, a county commission
publication in draft and have made helpful and useful suggestions. We acknowl-
Terms
or a tribal council) to make available money in its budget for some
edge their assistance and thank them for it. Listed below are the names of those
specific purpose. For example, a county commission votes to appro-
groups which returned their comments to us. However, the Office of Revenue
priate (to make available) $10,000 to its department of recreation.
Sharing takes full responsibility for this publication and does not imply endorse-
ment by any organization listed in this preface.
Capital Expenditures-Costs to a government which are usually non-
recurring, from year to year such as the acquisition of land; construction
American Federation of State, County and Municipal Employees
or major alterations or replacement of buildings; improvements to
American Library Association
existing facilities; the purchase of machinery and equipment.
Cabinet Committee on Opportunity for Spanish Speaking People
Chief Executive Officer-The elected or legally designated official or offi-
Center for Community Change
cials who have primary responsibility for the conduct of that unit's
Center for National Policy Review
governmental affairs. Examples are mayor, city manager, county execu-
Common Cause
tive or chairman of county board, governor, chief or president.
Federalism Seventy-Six
International City Management Association
Entitlement Funds-The amount of money state and local governments
Joint Center for Political Studies
receive for any entitlement period.
Leadership Conference on Civil Rights
Entitlement Period-Any of seven pay periods from January 1, 1972 to
League of Women Voters
December 31, 1976, designating various sums of general revenue shar-
Municipal Finance Officers Association
ing money to be distributed and varying in length from 6 months to
National Association for the Advancement of Colored People
one year.
National Association of Counties
Fiscal Year-A twelve-month accounting period. It may be the same as
National Center for Voluntary Action
the calendar year or it may be different. In many places the fiscal year
National Clearinghouse on Revenue Sharing
National Council of La Raza
begins July 1 and ends on June 30.
National Easter Seal Society for Crippled Children and Adults, The
Local Government-For purposes of this program, a unit of general gov-
National Governors' Conference
ernment below the state government level, such as a city, county, town,
National League of Cities/U.S. Conference of Mayors
township, Indian tribe, Alaskan native village, borough, or parish.
National Urban League, Inc.
"Matching" Funds-A financial agreement between the Federal govern-
Office of Government Liaison, United States Catholic Conference
ment and a state or local government in which the Federal government
will provide a specific amount of money if a state or local government
will put up a specific amount of money for a program, activity or a
In the right hand margin of this booklet, reference to sections of the general
construction project. For example, new equipment for a city's voca-
revenue sharing act (Title I of the State and Local Fiscal Assistance Act of 1972)
are abbreviated as "Sec." Reference to the Office of Revenue Sharing's regula-
tional rehabilitation center is going to cost $100,000. The Federal gov-
tions is abbreviated as "Reg." For more detailed information concerning the Act
ernment agrees to pay part of this cost by giving the city $75,000 only
or Regulations, consult these references.
if the city will pay $25,000 of the cost. Also contributions by a state or
We welcome your suggestions which would make this booklet more useful in
local government in the form of personnel, equipment or facilities may
subsequent editions.
qualify as matching contributions (called "in-kind matching").
Graham W. Watt
Obligation (Encumbrance)-Any contractual or binding financial agree-
Director
ment entered into by a government to pay for services, equipment, or
Office of Revenue Sharing
March, 1974
construction projects. In other words, a binding financial agreement
for a government is 1) a contract, 2) a purchasing order issued to a
company or organization to buy equipment or material or 3) payment
of employee salaries for services rendered.
Operating and Maintenance Expenditures-Recurring expenses to a gov-
ernment such as salaries.
Recipient Government-Any general government including Indian tribes
and Alaskan native villages eligible to receive General Revenue Sharing
money.
Your Government's General Revenue Sharing Trust Fund-Either a sep-
arate bank account in which your government must deposit its GRS
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington. D.C. 20402
money or a separate set of GRS accounts maintained in your govern-
ment's financial records or books.
ii
1
Introduction
On October 20, 1972, the State and Local Fiscal Assistance Act, better known
as general revenue sharing, was signed into law. The program's basic purpose is
Your
to provide state and local governments with the opportunity and the money to
deal with community problems at a local level. Traditionally, federal categorical
Involvement
grants have been made for very specific purposes, legislated by Congress and
administered by federal agencies. Under the general revenue sharing program,
This section discusses your government's general revenue
governors and state legislatures, mayors and city councils, county executives and
sharing reporting responsibilities to the public and pre-
county councils, tribal chiefs and tribal councils, and the people of all of these
sents suggestions for your participation in local govern-
ment decision making.
communities are determining how this money is to be used.
In each state, it will be local officials, responding to local conditions and local
constituencies who will decide what should happen; and more importantly,
individual citizens can now hold their own elected officials directly accountable
Reporting Responsibilities
for the expenditure of revenue sharing funds.
Reports are published in local newspapers for the public's information. This is
Community members may become involved in the decision-making for this
where you get involved! Each government receiving GRS money must file
money by talking with local officials, attending council or commission meetings,
reports each year with ORS:
serving on community advisory groups, writing letters to the editor, encouraging
1) The Planned Use Report shows a government's proposals for the use of its
GRS money for a specific entitlement period.
community awareness and discussion. The purpose of this booklet is to provide
2) The Actual Use Report indicates a government's actual expenditure of GRS
information about the general revenue sharing program, especially about its
money.
aspects which directly encourage public involvement in decision-making. Further
Look for the publication
information may be obtained from:
The Planned Use Report
Sec. 121 (b) & (c)
of your government's reports.
Office of Revenue Sharing
Department of the Treasury
The Act requires that Planned Use Reports be filed with the U. S. Treasury
Washington, D.C. 20226
Department and published in a newspaper of general circulation within the
geographic area of your government.
Table
Your Involvement
The purpose of this publication requirement is to provide you with information
See the Public Participation
about how your government proposes to use its general revenue sharing money.
Planning Calendar.
1 Reporting Responsibilities
of Contents
The published report will inform you of the whole range of funding choices
3
Revenue Sharing and Your Government's Budget
available to your government under the general revenue sharing program.
6 Information Sources in Your Community
7 Examples of Public Participation
Your government is not legally obligated to carry out the proposed uses of GRS
9 Public Participation Planning Calendar
money which are reported on the published Planned Use Report. Therefore,
9 Citizens' Check List
after surveying your community's needs and reading the Planned Use Report,
give your suggestions for "priority uses" of this money. The reporting mecha-
The Act
nism gives you an opportunity to react to your government's views of local spend-
13 Somę Specifics of the General Revenue Sharing Program
ing priorities and to suggest alternatives!
14 Use of General Revenue Sharing Money
15 Restrictions on the Use of General Revenue Sharing Money for Local and
ORS supplies the report form to each government.
State Governments
Planned Use Reports must be published in a local newspaper and filed with the
Supplementary Information
ORS before the beginning of an entitlement period. Units of government failing
to file the report are not in compliance with the law, and their GRS payments
17 Filing a Complaint
will be delayed until the report is filed.
Allow yourselves enough time to
17 ORS Action After Receipt of Complaint
organize, comment, and suggest
18 ORS Action After Receipt of Discrimination Allegation
The report must show the amounts and purposes for which your government
alternative proposals for
18 Discriminatory Actions Prohibited
proposes to use the GRS money it expects to receive for an entitlement period
GRS money.
based on an estimate supplied by the ORS.
19 Capital Expenditures for Local Governments
19 General Revenue Sharing Money Used for Social Services for Poor or
Each government receives its Planned Use Report about 60 days before it must
Aged
be returned to the ORS.
21 Indian Tribes and Alaskan Native Villages
21 Restrictions on Use of General Revenue Sharing Money by Secondary
Recipients
Your government must:
22 Your Government's Responsibilities to the Federal Government
23 Other Office of Revenue Sharing Publications Available at the Govern-
Publish an exact copy (it may be reduced in size but not abbreviated) of the
ment Printing Office
Planned Use Report in a newspaper of general circulation within its geographic
area.
2
3
The Rules and Regulations for general revenue sharing do specify
the filing date of the report with ORS but not the date of publication
The Actual Use Report
in your local newspapers. Ask your government when these reports
The Act requires that an Actual Use Report be filed with the U. S. Department
are ordinarily published.
of Treasury and be published in a newspaper of general circulation within the
geographic area of your government. Sec. 121 (a) & (c)
Advise all other local news media, including minority and bilingual news media,
The information on the Planned
about the publication of the report.
Use Report hopefully will stimulate
The report form is supplied by ORS.
See the Public Participation
public discussion of state and local
Have the chief executive officer sign a statement of assurances (see "Your
Planning Calendar.
spending priorities for general
Government's Responsibilities to the Federal Government" in the Supplementary
The Actual Use Report must be filed after the end of each entitlement period.
revenue sharing money.
Information section).
Discussion, in turn, will lead to
The report shows the amount and purposes for which GRS money was actually
increased public participation in
Make available for public inspection during normal working hours a copy of
spent or obligated (encumbered).
the decision-making process at
the report and any documents which explain and support the information
the state and local levels.
submitted on the report.
The report shows any interest earned and any unexpended balance in the trust
fund.
A Sample Planned Use Report
Your government must comply with the same publication and pub-
Form For Local Governments
licity requirements for the Actual Use Report as are required for the
Planned Use Report.
Check your newspapers between
May 1 and June 30 for the publi-
The Actual Use Report may differ from your government's published Planned
cation of this form.
Use Report. The Actual Use Report is providing information about actual ex-
This is where you get involved!
penditures, not proposed expenditures. For example, your government may have
changed its proposed use of its GRS money because of an unanticipated
emergency or because citizens organized and requested GRS money for a
community need that had not been considered a priority need in your govern-
Your government's
Amount of available
ment's original proposals. Such changes do not require that a new Planned Use
name is printed
GRS money is printed
here.
Report be filled out and published. Therefore, in order to be aware of changes
Compare your government's Actual
here.
in your government's proposed uses, the public should monitor actual expendi-
Use Report with its Planned Use
GENERAL REVENUE SHARING REPORT OF PLANNED USE
tures of GRS money.
Report for the same period of time.
General Revenue Sharing provides federal funds directly to local and state governments. The law requires each government to publish
a report of its plans for the use of these funds to inform its citizens and to encourage their participatic in deciding how the money
ought to be spent. Your government may spend its General Revenue Sharing money for the purposes listed below.
General Revenue Sharing
PLANNED EXPENDITURES
THE GOVERNMENT OF
PRIORITY
OPERATING/
and Your Government's
CAPITAL (B)
CATEGORIES (A)
MAINTENANCE (C)
ANTICIPATING A GENERAL REVENUE SHARING PAY-
1 PUBLIC SAFETY
$
$
MENT OF
DURING THE FIFTH ENTITLEMENT PERIOD, JULY 1, 1974
Budget
2 ENVIRONMENTAL
PROTECTION
$
$
THROUGH JUNE 30, 1975, PLANS TO SPEND THESE
FUNDS FOR THE PURPOSES SHOWN.
The general revenue sharing law states that governments receiving GRS money
3 PUBLIC
TRANSPORTATION
$
$
ACCOUNT NO.
must use it in accordance with the same rules and procedures that regulate the
4 HEALTH
$
$
expenditure of the government's own money, Sec. 123 (a) (4)
Citizens should learn their government's procedure for preparing and approv-
5 RECREATION
$
$
ing its budget and discover where their involvement and assistance may be most
6 LIBRARIES
$
$
effective. This is where you get involved!
7 SOCIAL SERVICES
$
$
The general revenue sharing money that your government receives is new
(D) The news media have been advised that a complete copy of
FOR AGED POOR
this report has been published in a local newspaper of general
uncommitted money which makes it different from much of your government's
8 FINANCIAL
ADMINISTRATION
$
$
circulation. have records documenting the contents of this
report and they are open for public scrutiny at
budget which is already committed from year to year for such expenses as
9 MULTIPURPOSE AND
GENERAL GOVT.
$
salaries, ongoing projects, pensions, repayment of debts and paying interest on
bonds and notes. Your involvement in the local decision-making process can
10 EDUCATION
$
(E) ASSURANCES (Refer to instruction E)
I assure the Secretary of the Treasury that the non-discrimina-
determine how this "new money" is to be spent.
11 SOCIAL
$
tion and other statutory requirements in Part E of the
DEVELOPMENT
instructions accompanying this report will be complied with
12 HOUSING COM-
UNITY DEVELOPMENT
$
by this recipient government with respect to the entitlement
funds reported hereon.
The Budget
13 ECONOMIC
DEVELOPMENT
$
Your government's budget consists of legislatively approved appropriations
14 OTHER (Specify)
$
Signature of Chief Executive Officer
Date
(the state assembly, city council, county commission, tribal council votes approval
15 TOTALS
$
Name & Title-Please Print
of the budget.)
The steps in your government's
Expenditure Categories
The statement of assurances (See "Your Government's
Supporting informa-
Each state and local government receiving GRS money has its own procedural
regular budgetary procedure are
(See "Use of GRS Money"
Responsibilities
in Supplement Information section)
tion is located
laws for preparing and approving its budget. Inquire about them! The diagram
followed when it determines the
in The Act section)
here.
shows the basic aspects of this procedure.
uses of GRS money.
4
5
-current expenses (operating and maintenance costs such as salaries, sup-
plies, contractual services)
-capital expenditures (nonrecurring expenses such as the purchase of equip-
Preparing Budget
Review of
Presentation
ment or the construction of a building)
-debt service
Requests
Requests
of the Budget
This proposed budget is the government's financial plan of income and expenses
for one or more fiscal years.
The Public
Legislative Review
copies of this budget document are made available to the media,
libraries, civic groups, other public interest groups and to individual citizens.
and Public Hearings
Extra copies of the document are on file for public inspection in the Office of
the Chief Executive.
4. Legislative Review and Public Hearings
Legislative
The Adopted
The Government
The government's legislative body meets to discuss and
Action
Budget
study the budget proposed by the Chief Executive Officer and his staff. Legisla-
tive committees may study specific parts of the budget document and make
recommendations to the legislature as a whole.
PUBLIC
HEARING
The Public
the legislative body usually holds public hearings on the various
parts of the proposed budget. Community groups and individuals now have the
opportunity to formally express their opinions about the budget and can make
1. Preparing Budget Requests
sound requests and recommendations about any part or proposal.
The Government
several months before the government's legislative body
5. Legislative Action
the full legislature votes on the budget after con-
will meet to discuss the budget, agencies and departments within the govern-
sidering testimony at the public hearings and the recommendations of its
ment begin to figure out how much money they will need in the next fiscal year.
committees. At this point the vote generally is whether to adopt the entire
They consider present operating costs and the expense of proposed new or
budget as presented by the executive, to change certain parts, add new provisions
expanded programs, and prepare budget requests which are forwarded to the
or to "cut out" some programs.
Chief Executive Officer and his Budget Committee.
See the Public Participation
The Public
citizens actively studying community needs may submit factual
Small Governments (5,000 or less population)
Planning Calendar.
budgetary requests to their government's agencies and departments. Moreover,
interested groups may assist officials in researching community needs for services
The budgetary process for governments of this size is usually less formal and
and in evaluating existing services during this phase of preparing the budget.
less complex. Generally, citizens living in these smaller communities are much
closer to their government's day-to-day operations, having many informal dis-
2. Review of Budget Requests
cussions of community needs and governmental expenditures. Citizens have
more opportunity for personal contact with their government officials and can
The Government
the Chief Executive Officer, budget officials, and depart-
easily discuss budgetary requests with them.
mental administrators meet to review and coordinate the requests from all the
The budget is usually prepared, presented to the legislative body for review
parts of the government. They ask the government's financial officers (Comp-
and approved at two or three meetings.
troller, Department of Revenue, Finance or Assessment) for information about
how much money the government will receive in the next year. The requests
usually exceed the estimate of funds to be available. Requests are confirmed,
Amending the "Adopted Budget"
denied, or altered to fit within the government's projected income.
A local government's and even a state's budget can be amended during the
fiscal year, and the process for amendment is very similar to the process of
The Public
informed and well-researched budget requests made by citizens
approving a budget. The legislative body votes on all amendments to the budget.
can assist officials as they justify agency and departmental budget requests.
Citizens may suggest amendments to the budget during the year.
3. Presentation of the Budget
The Budget Calendar
The Government
the Chief Executive Officer presents the budget to the
Most governments have a budget calendar which determines the beginning
legislative body. This document proposes how much money is going to be spent,
date of their fiscal year, the date for presenting the budget to the legislative body,
for what, by whom, (department, agency, committee, etc.) and from where the
the date by which the budget must be approved, the general scope of the
money will come (property tax, federal grants, license and permit fees, death
budget, and the responsibility and authority for budget preparation and execu-
and gift tax, sales tax from gasoline, liquor, tobacco and general revenue
tion. The deadline dates of a government's budget calendar are set by state law,
Inquire about your
sharing money). It also divides expenditures into three broad categories:
city charter, county resolution, ordinance, etc.
government's budget calendar
6
7
Annual Financial Report
Problems Involving Discrimination
Generally, governments publish an annual financial report which provides
Director of Personnel
information about their financial condition, organization of the government,
Equal Employment Opportunity Office
tabulations and other statistics. This report is usually filed after the close of the
Affirmative Action Office
fiscal year and is available for public inspection in the Office of the Chief
Human Relations Commission
Executive.
Interested members of the public may find this report helpful in researching
the spending trends of their government, determining what money is already
An Organized Citizen Group and Public Hearings
"committed" for the coming year (salaries, pensions) and in establishing justi-
fication for budget requests.
The City Council of Phoenix, Arizona, conducted a public hearing on a staff-
prepared list of projects to be funded by GRS money. Citizens urged Phoenix
Information Sources
officials to place higher priorities on human needs and social services. Nearly
90% of the staff-proposed GRS budget was for one-time, nonrecurring expenses,
in Your Community
with most of the emphasis placed on capital expenditures. Representatives of the
Southwestern Indian Development had met with City officials soon after the
COMMUNITY
CENTER
The following officials, departments and organizations should be helpful in
general revenue sharing program passed Congress and asked that funds be
finding out more about your local government, your government's budget, and
included for Indian requests. The staff did not accept their original request, but
how revenue sharing decisions are made. The size and type of your government
included $50,000 for social services after the group renewed their request at the
will determine who performs these functions. This is where you get involved!
public hearing.
The Budget
Citizen Reaction to Government's Spending Recommendation
Director of Finance
Approximately $4 million in general revenue sharing money was received
Treasurer
by New Castle County, Delaware, during the first year of the program. The
Comptroller
majority of this money was planned for one-time expenditures (capital expendi-
Tax Commissioner/Commissioner of Revenue
tures). The County Executive recommended that $485,000 be spent on "human
Auditor
and social needs." An organization called the "Human Resources Coalition"
Tribal Clerk or Treasurer
requested that more of the county's revenue sharing money be spent for social
Budget Director
services. A compromise was reached and the county agreed to spend $705,000
Independent CPA firm responsible for auditing government's funds
for social services.
General Administration
Examples of the Public Participating
City Manager or Mayor
in the Local Decision Making Process for
Board of Supervisors
Board of Trustees
General Revenue Sharing
The Governor's Office
The county council set up a screening committee to distribute this money.
Secretary/Treasurer
The committee was composed of two representatives of the County Executive,
City, County or Township Clerk
two representatives of the county council, two representatives of the Human
County Administrative Officer
Resources Coalition and one representative of the United Fund.
Councilmen
The original $705,000 was increased by $50,000 in accumulated interest making
Aldermen
the total $755,000. Of this amount, $255,000 was given to the Housing Authority,
Selectmen
$50,000 for aging programs, $15,000 for salary and expenses of the revenue
Public Information Officer
sharing planner and the remaining $435,000 was divided among 18 other social
Commissioners
service programs.
Tribal Chief
Background Information and Assistance
Citizen Requests at Public Hearings
Jefferson County, which encompasses the Birmingham, Alabama area, received
Reference Librarian of local public library
over $4 million in general revenue sharing during the First Entitlement
Local Newspaper Files
Period. The County Board of Commissioners immediately decided to convene
State Library Agency
public hearings to discuss how the money should be allocated. The commission-
Regional Federal Agency Library and Information Center
ers advertised the time, place and nature of the hearings in several Birmingham
Legal Assistance-For help in interpreting revenue sharing laws and local govern-
newspapers. Social service groups were the main attendees of the hearings.
ment laws
Therefore, when the Commissioners decided how the funds would be spent,
City Attorney
it was not surprising that over one third of the total allocation went for social
State Attorney General or State's Attorney
services and social development programs. The county spent $1,247,500 to
Corporation Counsel
enlarge the home for the aged and the poor. Part of this money paid for hospital
District Attorney
beds and other furnishings, and $47,500 was used to pay for a substantial part
Legal Counsel (independent legal firm retained by the government)
of the new quarters for the mental health center.
8
9
A Community Organization
"Street Sign Program" of a local PTA to purchase street signs and develop cross-
walks that will help to control the flow of traffic around schools.
The San Francisco Study Center reports that in the City of San Francisco,
during November of 1972, just before the first general revenue sharing money
was to be received, the Mayor and the Board of Supervisors held a joint public
Public Participation Planning Calendar
hearing to ascertain citizen views on how the money should be spent. In
January, the Mayor's office released a Preliminary Revenue Sharing Program,
Use this chart to help plan the times at which you can participate in your
followed by a series of three neighborhood hearings to get citizen reactions.
government's decision making process on the uses of GRS money. This is where
Finally, in April, the Mayor released his revised Program and forwarded it to the
you get involved!
Board for review and approval.
PUR=Planned Use Report
Response to some of the citizens' requests included $250,000 for the Haight
AUR=Actual Use Report
Ashbury neighborhood, to be used in whatever manner the residents might
ORS=Office of Revenue Sharing
agree upon; $100,000 for a consumer fraud division within the District Attorney's
Office; and $100,000 for a child care services coordination program.
Of particular interest was the approval of $100,000 for recreation and park
Post PUR
improvement in Visitacion Valley, a mixed ethnic and income neighborhood in
When Does Your
southern San Francisco., During the summer of 1972, a group of residents active
Entitlement
Government's Gov-
Period Covered
Date PUR
Meetings,
Date PUR is
Period
erning Body Meet
Was
Hearings Etc.
to Discuss Uses
By PUR
Due at ORS
Period Covered
Date AUR is
in the affairs of that neighborhood secured a grant from a local foundation to
Published
Held to Discuss
By AUR*
Due at ORS
hire a professional community organizer to put together a democratic organiza-
of GRS Money?
Alternative Uses
of GRS Money
tion. They began moving on small issues of immediate interest to large numbers
of residents in order to gain credibility, experience and wide participation.
1) Jan. 1, 1972
to
?
Not required
?
I
?
Jan. 1, 1972
Within seven months they were able to hold a Community Congress (attended
Jun. 30, 1972
by over 300 people) to elect officers, adopt a Constitution and Platform, and
select a name: The All Peoples' Coalition.
2) Jul. 1, 1972
to
?
Not required
?
-
?
-
One of the key issues concerned the inadequate recreation and park facilities
Dec. 31, 1972
and programs in the area. The All Peoples' Coalition sought out concerned
3) Jan. 1, 1973
Jan. 1, 1973
persons, organized them into committees, researched and decided upon desirable
to
?
to
?
Jun. 20, 1973
?
Jun. 30, 1973
Sept. 1, 1973
solutions, and began negotiating with the Recreation and Parks Department for
Jun. 30, 1973
Jun. 30, 1973
implementation. The Department was clearly impressed by their display of being
4) Jul. 1, 1973
Jul. 1, 1973
Jul. 1, 1973
an informed, assertive organization, and when the Mayor's Office requested
to
?
to
?
Sept. 14, 1973
?
to
Sept. 1, 1974
suggestions from the Department for possible revenue sharing projects, the All
Jun. 30, 1974
Jun. 30, 1974
Jun. 30, 1974
Peoples' Coalition proposals were immediately included.
5) Jul. 1, 1974
Jul. 1, 1974
Jul. 1, 1974
to
?
to
?
Jun. 30, 1974
?
to
Sept. 1, 1975
Citizens Advisory Committee
Jun. 30, 1975
Jun. 30, 1975
Jun. 30, 1975
6) Jul. 1, 1975
Jul. 1, 1975
Jul. 1, 1975
Concurrent with the passage of the general revenue sharing legislation, the
to
?
to
?
Jun. 30, 1975
?
to
Sept. 1, 1976
City Board of Directors (City Council) of Texarkana, Arkansas, (population over
Jun. 30, 1976
Jun. 30, 1976
Jun. 30, 1976
21,000) began to re-examine the citizen participation process and management
7) Jul. 1, 1976
Jul. 1, 1976
Jul. 1, 1976
systems that were being used for community development planning. After
to
?
to
?
Jun. 30, 1976
?
to
Jan., 1977
careful examination and reflection, it was decided to enlist the support of the
Dec. 31, 1976
Dec. 31, 1976
Dec. 31, 1976
citizens in setting community goals through the vehicle of a citizens advisory
committee.
*The Planned and Actual Use Reports may be returned on or before the listed due dates.
These reports must be published (see section on reports for publication requirements)
On May 17, 1973, a general citizens meeting was held to explain the general
prior to returning them to the Office of Revenue Sharing. However, there is no specified
revenue sharing process to the residents of Texarkana. As a result of the support
publication date.
shown at this meeting, a Citizen, Advisory Committee for Revenue Sharing was
Each Actual Use Report will show the actual amount of money received and spent by your
appointed by the Directors on May 21, 1973.
government during each Federal fiscal year (July 1 - June 30).
The committee, composed of 33 members, was selected through proportional
representation from the City's nine planning districts. This was done to insure
the greatest possible representation from the city at large.
The City Board of Directors assembled this committee for the purpose of
proposing five-year goals, determining priorities and formulating one-year
objectives that could aid the City Council in allocating general revenue sharing
Citizens' Check List (Are You Informed?)
funds.
The Advisory Committee also meets to receive applications and supporting
Since GRS money becomes a part of a local or state government's regular
testimony from city agencies, community groups, and private non-profit organi-
budget, citizens' opportunities to participate in the decision-making process
zations desiring general revenue sharing money. From these applications and
concerning their government's expenditures are increased if they understand
requests, projects are selected to be funded with general revenue sharing money.
their government's entire budget and its use in determining local priorities.
Among the community requests funded with general revenue sharing money
Listed below are check points which will help you to understand and to
were a private non-profit halfway house for mentally retarded and emotionally
evaluate the impact of general revenue sharing money in your community.
disturbed males which received $10,000 for a housing facility; the Texarkana
It is important to note that most citizens are served by more than one level
Historical Museum received $4,500 for cultural and historical exhibits to be
of government. For example, a person residing within a city might also receive
developed and displayed in the community; and $18,000 was given to the
services from county and state governments.
10
11
Amount Received
What community groups became involved in determining GRS expenditures?
How much GRS money has been received by your local and county govern-
ments?
What was the community's reaction to the Planned Use Reports?
How much GRS money has been received by your state government?
What was the process for community involvement:
Use of GRS Money
Public Hearings?
Select Committees?
What proposals did your government announce for the use of GRS money?
Appointed Advisory Groups?
Solicitation of requests for funding projects?
Citizens attending regular council meetings?
Citizen groups organizing, studying community needs and problems and
Did you see your government's Planned Use Report published in the newspaper?
suggesting uses of GRS money?
Citizens expressing their reaction to their government's use of GRS money at
the voting booth?
How has GRS money been spent?
Role of Media
To what extent do GRS expenditures coincide with published proposed uses?
What was the editorial reaction to GRS proposed and actual uses?
How much GRS money was spent for capital improvements?
Were there news stories about the publication of Planned Use and Actual Use
Reports?
How much GRS money was spent for current expenses (such as salaries, and
Were the minority and bilingual press in your community (if any) advised of
supplies)?
the publication of the Planned and Actual Use Reports?
How much GRS money was spent for programs or projects in each of the
Did the media encourage public discussion of priority uses of your community's
permitted expenditure areas (public safety, environmental protection, public
GRS money?
transportation, recreation, health, libraries, social services for the poor or aged,
capital expenditures, and financial administration)?
GRS and Civil Rights
Your Government's Process for Setting Spending Priorities
Do your government's departments and agencies practice fair hiring and non-
discriminatory promotion policies?
What departments, agencies and individuals are responsible for determining and
coordinating the spending priority process in your government?
If your government is purchasing land or building public facilities with revenue
sharing funds, will they provide service to all segments of the community?
Does your government's charter require that public hearings be held before the
budget is adopted?
If your government is improving streets, alleys, roads, recreation and health
facilities or libraries with GRS money in some areas, will all neighborhood areas
What is your government's timetable for preparing and adopting its budget?
be receiving comparable service because of these expenditures?
Do departments normally consider community group requests prior to submitting
If your government is selling or leasing facilities funded by GRS to private groups,
their annual budget requests?
are these groups open to all segments of the community?
Is public discussion and debate of spending priorities encouraged by your
If your government is paying contracts for construction projects, goods and/or
government?
services with GRS money, do the contractors and unions involved have non-
discriminatory hiring and personnel policies?
Does your government survey the community's needs each year as part of its
Public Participation Impact on General Revenue Sharing Money
budget preparations?
Do members of the public have an impact on their government's decisions for
use of GRS money?
The Community's Involvement in Decision-Making
Was there information and publicity about establishing spending priorities for
Are members of the public learning how to influence the budget-making and
use of GRS money?
priority-şetting processes in your community?
12
13
Do any community groups join together to suggest alternative spending priorities
to their government?
The Act
This section outlines the uses of general revenue sharing
Do members of the public better understand their government's own laws and
money and the restrictions and prohibitions on its use.
procedures for determining local spending priorities?
Some Specifics of The General Revenue
Do members of the public realize that GRS money is a part of their community's
Sharing Program
regular budget?
Eligibility
Are your government's officials responsive to citizen requests and suggestions
for the use of GRS money?
All general governments as classified by the U.S. Census Bureau are eligible
to receive GRS moneys. These governments include:
50 State Governments and the District of Columbia
Are members of the public and public interest groups evaluating the use of GRS
money in the community?
Cities, Counties, Towns, Villages, Boroughs and Townships
Indian Tribes and Alaskan Native Villages
Are there public interest groups that will continuously monitor their govern-
ment's use of GRS money?
General
Do members of the public organize into committees to study community issues
and needs?
Revenue
Is the GRS money used for priority needs of the community?
Sharing
Trust
Is GRS money used to provide new services in your community?
1/3
Fund
Department
Are existing services already provided by your government improved or expanded
because of citizen requests?
2/3
of the Treasury
to State
Governments
to Local
Governments
City Hall
State
Capitol
Tribal
Council
County
Commission
14
15
Amount of Money Each Unit of Government Receives
Health (including prevention, diagnosis, evaluation and treatment of med-
ical and mental health conditions, physical rehabilitation services and edu-
cational programs in public health)
Determined by formulas rather than applications.
Libraries (including the operation of a bookmobile, purchasing of new books
No applications for GRS money
Formulas designed by the U. S. Congress which use data to measure a govern-
or development of specialized educational programs for the blind and
are required.
ment's size (population), its need (per capita income), its effort to meet its
handicapped, and the upgrading of the general book collection)
need (taxes) and to determine the amount of GRS money to be received by a
Public Safety (including law enforcement; fire protection and building code
government.
inspection; police academy; civil defense; inspection of buildings, plumb-
ing, electrical facilities, gas lines, boilers and elevators)
Population, income and tax data used in the formulas are surveyed, collected
and compiled from your government by the Bureau of the Census for the
Public Transportation (including highways; transit systems; streets; grade
Office of Revenue Sharing.
crossings; snow and ice removal and training public transportation drivers)
Recreation (including participation and spectator sports programs; art, music
Distribution of GRS Money
and dance exhibitions; arts and crafts and other cultural activities; museums
and zoos; park and playground activities)
Moneys are distributed during seven entitlement periods (pay periods). The
Social Services for the poor or aged (including food; clothing; shelter; day
entitlement periods, dates and amounts of money distributed nationally are:
care; job training) (see Section on Supplementary Information for examples
1. January 1, 1972-June 30, 1972-$2,650,000,000
of social service expenditures.)
2. July 1, 1972-December 31, 1972-$2,650,000,000
3. January 1, 1973-June 30, 1973-$2,987,500,000
Secondary Recipients
4. July 1, 1973-June 30, 1974-$6,050,000,000
OIIIIIO
5. July 1, 1974-June 30, 1975-$6,200,000,000
Private organizations, nongovernmental agencies or other governmental units
$30.2 billion to be distributed
6. July 1, 1975-June 30, 1976-$6,350,000,000
such as a fire district may request and receive GRS money from state and/or
over 5 year period.
7. July 1, 1976-December 31, 1976-$3,325,000,000
local governments if the government's financial laws permit such transfers of
money.
The Use of General Revenue Sharing Money
Your government may decide to fund a secondary recipient with its GRS money.
However, the GRS law does not require such expenditures.
General Revenue Sharing is financial assistance to meet local needs at the
local level. Therefore, it is important that you know your community needs and
know how GRS money may be used for these needs.
Restrictions on the Use of General Revenue
State Governments (receive 1/3 of all GRS money)
Sharing Money for Local and State Gov'ts
No Matching
Sec. 104
May spend GRS money for anything that is legal under state law and does not
Reg. 51.30
violate the restrictions of the GRS legislation.
No state or local government may use, directly or indirectly, any revenue sharing
funds to obtain federal funds under any program which requires a government
Local Governments (receive 2/3 of all GRS money)
to make a contribution in order to receive the federal funds.
Unlike state governments, local governments are required to spend GRS within
Nondiscrimination
Sec. 122
broad categories of permissible expenditures.*
Reg. 51.32
1. Any capital expenditures permitted by your state and local law. (See Sup-
Any program or activity funded by GRS money cannot exclude persons from
participation in it, deny persons its benefits or subject them to discrimination on
plementary Information section for examples of capital expenditures.)
the basis of race, color, sex or national origin. (See Discriminatory Actions Pro-
2. Operating and Maintenance expenses for:
hibited in the Supplementary Information section)
Environmental Protection (including sewage disposal; sanitation and pollu-
State and Local Laws
Sec. 123 (a) (4)
tion abatement; smoke regulation; inspection of water supply; sanitary engi-
neering; street cleaning and waste collection; disposal or recycling activities
and educational programs in such areas as water treatment and soil erosion)
Governments receiving GRS money must use it only in accordance with the same
rules and procedures that regulate the expenditure of their government's own
GRS money may be spent in any
Financial Administration (including expenses for accounting, auditing, budget-
money.
or all of these categories; the
ing, investing, tax collection, fiscal affairs, as distinguished from general ad-
ministrative costs like the chief executive's salary, voter registration and
Rules Example. If state and local laws prohibit your government from using its
categories are not listed in order
own moneys to operate an ambulance service, it could not use revenue sharing
of importance.
legislative expenses)
funds to run an ambulance service even though such a project would fall into
*Debts created by bonds or loans may be repaid with GRS money if:
the priority category of "health."
1. Only the principal is repaid from GRS (no GRS money may be used to pay
interest on the debt);
Procedures Example. If state and local law require public hearings for your
2. The debt was incurred for a permitted expenditure;
government's proposed budget before its own moneys can be appropriated, then
3. The money raised by going into debt was spent after January 1, 1972 and
it was not spent in violation of the restrictions of the Act.
revenue sharing moneys also must be included in public hearings.
16
17
2 Year Limitation
Sec. 123 (a) (2)
Reg. 51.33
Supplementary
Recipient governments must use, obligate or appropriate their revenue sharing
funds within 24 months of the end of the entitlement period for which each
Information
check was issued.
This section presents more detailed explanations about
Davis-Bacon Act
Sec. 123 (a) (6) and (7)
various aspects of the general revenue sharing program.
Reg. 51.33
When a recipient government pays with GRS money 25% or more of the total
costs of any contracted or subcontracted construction project (costing over
Filing A Complaint
$2,000), the government must include in its contracts prevailing wage determina-
tions for laborers and skilled workers and labor practices as established under
Citizen Complaint
the Davis-Bacon Act. This Act is administered by the U.S. Department of Labor.
There are no forms and there are no formal procedures for submitting a com-
Prevailing Rates of Pay
plaint alleging a violation of the use of general revenue sharing money. If you
believe that there has been a violation of the State and Local Fiscal Assistance
When a recipient government pays its own employees 25% or more of the total
Act of 1972, provide the Office of Revenue Sharing with a written explanation
state
wages in any employment category with GRS money, then each of the workers
detailing the nature of the alleged violation. Included with this explanation
code
in the category (such as firemen, policemen) receiving a portion of his or her
should be supporting documentation of the alleged misuse.
wages in revenue sharing funds must be paid at least the prevailing rate of pay
which persons receive who are employed in similar occupations by that govern-
Complaints should be filed in writing and sent to:
ment. All employees of the government who are not within an employment
Compliance Manager
category (such as the fire chief, the police chief) and who receive any portion of
Office of Revenue Sharing
their pay in revenue sharing funds must also be paid at least the prevailing rate.
U.S. Department of the Treasury
1900 Pennsylvania Avenue, N. W.
Revenue Sharing Trust Fund
Sec. 123 (a) (1)
Washington, D. C. 20226
Reg. 51.40 (a)
Phone: (202) 634-5187
A government receiving GRS money must put it into a trust fund. This may be
done by opening a separate bank account or by establishing a separate set of
accounts on the government's books.
By including the following information in any written complaint you will be
assisting the ORS:
Auditing and Fiscal Procedures
Reg. 51.40 (d)
Name, address and phone number of person and/or organization filing the com-
plaint (complainant).
The GRS regulations require a recipient government to maintain its fiscal accounts
in such a manner as to:
Names of other individuals having knowledge of alleged misuse of GRS money
who may be contacted by ORS.
permit the preparation of Planned and Actual Use Reports required by the
Secretary of the Treasury;
Name of Chief Executive Officer of your government.
document compliance with the matching funds prohibition;
Specific use of GRS money that is being or has been allegedly misused.
The fiscal records must be
allow the tracing of GRS moneys to a level of expenditure that would indicate
available for public inspection
whether the funds were used in violation of the restrictions and prohibitions of
The reason why complainant believes that GRS money is being misused.
during normal working hours.
the Act.
Newspaper clippings about use of GRS money, if available, and as much other
Additional Restrictions for Local Governments Only
supporting documentation as can be obtained.
Direct welfare payments are not permitted; however, payment for services to
No complaint will be investigated concerning the allegation that GRS money
welfare recipients are allowable.
could have been used better by your government, as long as the money was
used in accordance with the restrictions on the use of the GRS money. This is a
Operating expenses for general education are not permitted; however, capital
problem which should be dealt with at the local level.
expenditures for education such as construction of a school facility or the pur-
chase of educational equipment are permissible.
Operating expenses for general government such as paying the chief executive's
ORS Action After Receipt of Complaint
salary, and voter registration are not permitted.
1. Complaint will be acknowledged and examined.
2. If the examination of the complaint indicates a possible violation of the law,
the ORS will:
a. notify the Chief Executive of the receipt of the complaint;
b. in the case of a local government, the Governor also will be notified;
18
19
C. conduct an investigation into the alleged violation, or;
1. deny any person a service or a benefit;
d. refer the complaint to the federal agency which has legal jurisdiction.
2. provide any service or benefit which is different from that provided to others;
3. The affected government will have the opportunity to respond to the com-
3. subject a person to segregated treatment in any facility;
plaint, and should possible evidence of noncompliance be gathered in the
4. subject a person to segregated treatment in any matter related to receiving
See "GRS and Civil Rights" in
investigation, the government will be given every opportunity to comply
service or benefits;
the Citizens Check List.
voluntarily.
5. deny any person an opportunity to participate as an employee;
6. treat an individual differently from others in determining admission, enroll-
4. If the affected government does not comply voluntarily then ORS will begin
ment, eligibility, membership or other requirements that a person must meet
formal legal action.
to be provided any service or benefit;
7. use any methods of discriminatory program administration (such as promo-
5. Upon conclusion of the legal action (a hearing has been held, proposed
tion test, hindering access to information, etc.)
findings and conclusions have been submitted, the administrative law judge
8. limit access to or use of any facility through site selection.
has issued an order and any appeals have been resolved), if any government
is judged to be in violation of the law, it will be given 60 days to correct
the situation in which the violation has occurred. For any government failing
The revenue sharing regulations state that a recipient government may use GRS
to take such corrective action, the Office of Revenue Sharing will:
money in a specific geographic area or for a specific group of persons within
its jurisdiction, if the purpose of the expenditure is to eliminate a prior imbalance
a. not only recover the illegally spent GRS money
in facilities or services which resulted from previous discriminatory actions.
b. but will also withhold all future GRS money until the Secretary of the
Treasury is satisfied that full compliance with the GRS law is achieved.
Capital Expenditures for Local Governments
ORS Action After Receipt of
Reg. 51.32
The general revenue sharing law lists "ordinary and necessary capital expendi-
Discrimination Allegation
(d)-(h)
tures authorized by law" as permissible expenditures of GRS money (Section
103 (a) (2)).
Complaints alleging discrimination are handled in the same manner as other
The Office of Revenue Sharing defines ordinary and necessary capital expendi-
complaints.
tures as those expenditures which result in the acquisition of, or the addition to,
fixed assets.
It is important that possible discriminatory actions or situations involving GRS
money be reported as soon as possible, preferably before the money has been
spent.
Here are some examples; they are not meant to be all-inclusive.
1) The purchase of cars, trucks, fire trucks, tractors, library bookmobiles, grass-
Please note.
mowers, snowplows for trucks, sanders or highway maintenance equipment is
1. If an ORS investigation results in possible evidence of discrimination, the ORS
permissible.
will notify the recipient government and the State Governor in an attempt to
2) Expenditures for heating plants, restrooms, garages, cafeterias, libraries or any
secure voluntary compliance.
other type of building or improvement to a building has been allowed as have
the cost of temporary repairs to already existing structures.
2. If the affected government does not comply voluntarily, then ORS will begin
3) A capital expenditure may relate to any area of governmental activity, not just
formal legal action.
permitted categories listed in Section 103 (a) (1) (See Use of GRS money). For
example, the cost of constructing or equipping a school building or library is
3. Upon conclusion of such legal actions (a hearing has been held, proposed
permitted, even though the cost of operating and maintaining a school may
findings and conclusions have been submitted, an administrative law judge
not be paid with a local government's GRS money.
has-issued an order and appeals have been resolved), if the government is
4) Various supplementary costs to capital improvements which include but are
judged to be in violation of the law and has not demonstrated in 60 days
not limited to, attorney's fees for a title search, architects' fees, court costs
that it will comply, then ORS may:
incurred to acquire property or defend title to property and property surveys
a. refer the case to the Attorney General of the U.S.
are permissible GRS expenditures.
b. issue an order in accordance with Title IV of the Civil Rights Act of 1964 to
5) Broad areas of capital outlay include acquisition of land; construction or
withhold or to terminate or demand forfeiture of all of the government's
renovation of buildings; improvement to existing facilities; and the purchase
GRS money.
of machinery and equipment.
C. take any other legal action to achieve the government's compliance with
the law.
Remember, definitions of permissible capital expenditures are determined by
your state and local law. Should state or local law define capital expenditure in a
narrower or stricter way than the Office of Revenue Sharing does, the state and
Sec. 122
local law must be followed.
Discriminatory Actions Prohibited
Reg. 51.32
Insuring civil rights of persons (noncitizens as well as citizens) is emphasized
in the general revenue sharing law. In this section, the civil rights regulations of
General Revenue Sharing Money Used
the general revenue sharing law are outlined. The public's understanding of
these regulations is important to community involvement in local government
for Social Services for Poor or Aged
decision making and in the monitoring of the use of GRS money.
Any aspect of a program or activity which receives an appropriation of GRS
The Office of Revenue Sharing has established criteria to aid local govern-
money may not directly or through contractual or other arrangements on the
ments in determining uses of their GRS money for social services for the poor
basis of race, color, national origin or sex:
or aged.
20
21
Here are some examples which will serve as illustrations. This list is not meant
Indian Tribes and Alaskan Native Villages
to be all-inclusive.
1) Administrative expenses incurred in the operation of programs for the poor
Many Indian tribes and Alaskan native villages qualify as units of local govern-
or aged have been allowed as ordinary and necessary operating expenses.
ment eligible to receive general revenue sharing funds. The program takes into
For example, the cost of administering a Food Stamp Program is considered
consideration the rather unique status and structure of such governments in the
an ordinary and necessary expense of providing social services to the poor.
following ways:
GRS money can also be used for administrative expenses incurred in programs
1. A population ratio formula is used to compute the tribe's/Alaskan native
for the poor or aged conducted by community organizations such as a
government's amount of GRS money.
Sec. 108 (b) (4)
neighborhood council.
Example: if 1/3 of the county area* is populated by eligible tribal/Alaskan
2) The cost of operating a Community Action Program providing services for
native persons then 1/3 of the GRS funds allocated to the county area are
the poor or aged has been held to be a valid expenditure of GRS money.
paid to the tribal/Alaskan native government.
3) The funding of an agency which administers a number of subagencies, only
2. Only the Indian/Alaskan native population residing on land under the juris-
one of which provides social services, was ruled not to constitute a priority
diction of the Indian/Alaskan native government is counted in this population
expenditure, since the GRS money would not be used exclusively on social
figure.
services for the poor or aged. However, GRS money used to fund the sub-
3. GRS money received by tribal or Alaskan native governments must be ex-
agency which provides social services for the poor or aged would be per-
pended for the benefit of tribal/Alaskan native persons living in each county
area.
mitted.
Reg. 51.34
4) Salaries of social workers, case workers, librarians working with the blind
4. This section of the regulations (51.34) is not meant to exclude non-
and handicapped, and others working in programs with the poor or aged
residents and non-Indian/non-Alaskan natives from any service or facility
may be paid from GRS money.
supported through revenue sharing funds. However, the tribal/Alaskan native
persons residing on the lands must at least have a reasonable opportunity to
5) The operating expenses of neighborhood social centers, libraries and other
derive benefits of the tribal/Alaskan native government's GRS money.
neighborhood facilities which are of benefit to the poor or aged may be
partially funded with general revenue sharing money to the extent that such
Example: an Indian//Alaskan native government uses GRS money to initiate
funding reflects the use made of those facilities for the benefit of the poor
a noon lunch program which provides a hot midday meal to the elderly
or aged.
persons of the tribe/Alaskan native village. All elderly tribal/Alaskan native
6) Direct welfare payments to the poor or aged are not permitted by the Act,
persons and any elderly non-Indian/non-Alaskan natives (at the discretion of
but the payment of a portion of a poor tenant's rent is a permissible expendi-
the tribal/Alaskan native governments) in any of the counties* covered by
ture if the money goes to the landlord and not to the tenant.
jurisdiction of the Indian/Alaskan native government may participate in this
7) General revenue sharing money may also be used to operate and maintain
program. The regulations merely require that tribal/Alaskan native persons
public housing.
be assured of the opportunity to participate.
8) A day care center and day care services may be funded through general
revenue sharing. The local unit of government must determine eligibility for
Restrictions on Use of General Revenue
the use of a day care center, as families with working mothers may well
exceed the Bureau of the Census definition of a low income family.
Sharing Money by Secondary Recipients
9) Nursing homes for the poor or homes for the aged may be funded with
Governments receiving shared revenues directly may transfer some or all of
general revenue sharing money.
their GRS money to nonprofit organizations, private associations or other gov-
10) Local governments may contract with nongovernmental agencies (nonprofit
ernmental units. These secondary recipients must comply with the following
organizations, community agencies) for numerous social services as long as
restrictions on the use of GRS money:
such contractual arrangements with these agencies are legal under state or
1. GRS money must be used only in accordance with the laws and procedures
local law.
(including state and local law) that regulate the use and expenditure of a
secondary recipient's money;
Other examples of social service uses on which general revenue sharing money
2. GRS money may not be used to "match;" that is, to obtain other federal
money;
may be expended include:
3. GRS money cannot be used to cause, to initiate or have the effect of dis-
Interest-free loans to aid welfare recipients in securing jobs
crimination on the basis of race, color, national origin, or sex;
4. When 25% or more of GRS money is used to pay the total cost of a sub-
Adult education programs which benefit the poor or aged
contracted or contracted construction project (costing $2,000 or more), then
the Davis-Bacon Act wage determinations and labor standards must be
followed.
Youth development programs which aid poor or disadvantaged young persons
5. In the case of local (not state) governments transferring GRS money to sec-
ondary recipients, secondary recipients must:
Youth employment programs which either directly hire poor or disadvantaged
a) use the GRS money in the permitted expenditure areas (see Uses of GRS
youths or assist them to secure jobs in the private sector
Money in The Act section);
b) not use GRS money for direct welfare payments;
Library activities which serve the aged, homebound, and handicapped citizen
c) not use GRS money to pay operating expenses for general education.
As can be seen from these examples, any activity which can reasonably be
classified a social service for the poor or aged may be funded with general
*There are no counties in Alaska. However, for the allocation and use of GRS
money, the Bureau of the Census' enumeration districts are used.
revenue sharing.
22
23
Your government is not required by the general revenue sharing law to transfer
1) to obtain federal matching funds or
its GRS money to secondary recipients, but the law does give it such an oppor-
2) in a category of expenditures not covered by the broad categories of Section
tunity.
103. These certifications are part of each Actual Use Report and become effec-
tive when the chief executive officer signs the report.
Your Governments' Responsibilities to the
Federal Government
Other Office of Revenue Sharing Publications
As your government reports to you the planned and actual uses of GRS
Available at the Government Printing Office
moneys, it must also indicate to the Federal government its agreement to comply
with certain administrative requirements of the law. Knowledge of these re-
What is General Revenue Sharing?
quirements will facilitate the public's scrutiny of the use of general revenue
A publication answering questions most frequently asked by government
sharing money.
officials about the general revenue sharing program.
Catalogue Number-T 1.2: R 32/6
Assurances
Price-40c
In order to participate in the general revenue sharing program, each govern-
ment must assure the Secretary of the Treasury of its intention to comply with
Audit Guide and Standards for Revenue Sharing Recipients
the following requirements which are found in the legislation:
A publication to aid state and local government auditors and public account-
ants to understand the audit requirements for GRS money.
It will-
Catalgoue Number-T 1. 10/2: AU 2
Price-90c
Sec. 123 (a) (1)
1. establish trust fund and deposit all GRS money into it;
Regulations Governing the Payment of Entitlements Under Title I of the State and
Sec. 123 (a) (2)
2. use, appropriate, or obligate GRS money within 24 months from the end of
Local Fiscal Assistance Act of 1972
the entitlement period for which each check was issued;
A publication containing indexed Regulations and the text of the General
Revenue Sharing Act.
Sec. 123 (a) (3)
3. use GRS money only for priority expenditures listed in Section 103 of the
Catalogue Number-T1.10:IN5
Act (local governments only);
Price-15c
Sec. 123 (a) (4)
4. expend GRS money only in accordance with the laws and procedures which
These publications are for sale by the Superintendent of Documents, U. S.
apply to the use of the state and local government's own moneys;
Government Printing Office, Washington, D. C. 20402.
Sec. 123 (a) (5)
5. keep records adequate to establish compliance with the restrictions and
Payment must accompany your orders.
prohibitions of the program, provide access to these records for the purpose
of reviewing compliance with the Act, and submit whatever reports which
may be required by the Secretary of the Treasury;
Sec. 123 (a) (6)
6. comply with the provisions of the Davis-Bacon Act when 25% or more of
the costs of a contracted construction project are paid with GRS money;
Sec. 123 (a) (7)
7. pay prevailing wage rates to government employees (See Section on Re-
strictions of GRS money);
Sec. 123 (a) (8)
8. in the case of an Indian tribe or Alaskan native government, spend GRS
money for the benefit of the tribe or village members living in each county;
Sec. 122
9. not discriminate in any program or activity funded in whole or in part with
GRS money on the basis of race, color, national origin or sex;
Sec. 104
10. not use GRS money to participate either directly or indirectly in any federal
matching program.
These assurances are part of each Planned Use Report. The chief executive officer
of your government has assured the Secretary of the Treasury of his or her
intention to comply with the restrictions when he or she signs the Planned Use
Report.
Certifications
Sec. 103 (b) and 104 (e)
The chief executive officer must certify that his or her jurisdiction has not used
shared revenues either:
Department of the Treasury
Postage and Fees Paid
Office of Revenue Sharing
Department of the Treasury
1900 Pennsylvania Ave. N.W.
TREAS-551
Washington, D.C. 20226
Official Business
U.S.MAIL
Penalty for Private Use $300
Third Class
DEPARTMENT THE OF 1 THE TREASURY
AMERICAN REVOLUTION 1776-1976 INDENTENNIAL
1789
OF
DEPARTMENT THE TREASURY
THE
1789
31 Code of Federal Regulations
Subtitle B, Part 51
Federal Assistance to State
and Local Governments
Regulations
Governing the Payment
of Entitlements
Under Title I of the State
and Local Fiscal
Assistance Act
of 1972
Department of the Treasury
Office of Revenue Sharing
Revised November 1975
CONTENTS
Revenue Sharing Regulations
1
Appendix- Guidelines on Employee
Selection Procedures (title 29 Part 1607)
27
Revenue Sharing Regulations Index
31
Title 31-Money and Finance: Treasury
Sec.
51.25
Waiver of entitlement; non-delivery
CHAPTER I-MONETARY OFFICES,
of checks; insufficient data,
DEPARTMENT OF THE TREASURY
51.26
Reservation of funds and adjustment
PART 51-FISCAL ASSISTANCE TO STATE
of entitlement.
AND LOCAL GOVERNMENTS
51.27
State must maintain transfers to lo-
cal governments.
Revenue Sharing
51.28
Optional formula.
51.29
The Department of the Treasury
Adjustment of data factors.
51.30
Adjustment of maximum and mini-
hereby publishes in its entirety the reg-
mum per capita entitlement; 100
ulations in Part 51 of Subtitle B of Title
percent criterion.
31, Code of Federal Regulations, which
became effective April 5, 1973 (38 FR
Subpart D-Prohibitions and Restrictions on Use
of Funds
9132) for entitlement periods beginning
51.40
Matching funds.
on or after January 1, 1973 and which
51.41
Permissible expenditures for local
have since been amended. Amendment
governments.
to the regulations was made pursuant to
51.42
Wage rates and labor standards.
the authority vested in the Secretary of
51.43
Restrictions on expenditures by In-
the Treasury by the State and Local
dian tribes and Alaskan native
Fiscal Assistance Act of 1972 (the Reve-
villages.
nue Sharing Act) approved October 20,
Subpart E-Nondiscrimination in Programs
1972.
Funded With Entitlement Funds
These complete regulations include all
51.50
Purpose.
previous amendments and, specifically,
51.51
Definitions.
amendments filed on October 22, 1975 to
51.52
Discrimination prohibited.
31 CFR Part 51, creating a new subpart
51.53
Employment.
51.54
for civil rights regulations, and amend-
Sex discrimination.
51.55
Assurances required.
ments filed October 23, 1975, indicating
51.56
Compliance information and report.
changes in the designation of subparts
51.57
Complaints and investigations.
and section numbers as well as clarify-
51.58
Compliance reviews and affirmative
ing existing policy and changing existing
action.
procedures.
51.59
Procedure for effecting compliance.
51.60
Hearing procedures.
Dated: November 10, 1975.
51.61
Jurisdiction over property.
JOHN K. PARKER,
51.62
Delegation.
Acting Director,
Subpart F-Fiscal Procedures and Auditing
Office of Revenue Sharing.
51.70
Procedures applicable to the use of
Approved: Richard R. Albrecht,
funds.
51.71
General Counsel.
Auditing and evaluation; scope of
audits.
Subpart A-General Information
Subpart G-Proceedings for Reduction In Entitle-
Sec.
ment, Withholding or Repayment of Funds
51.0
Scope and application of regulations.
51.80
Scope of subpart.
51.1
Establishment of Office of Revenue
51.81
Liberal construction.
Sharing.
51.82
Reasonable notice and opportunity
51.2
Definitions.
for hearing.
51.3
Procedure for effecting compliance.
51.83
Opportunity for compliance.
51.4
Extension of time.
51.84
Institution of proceeding.
51.5
Transfer of funds to secondary re-
51.85
Contents of complaint.
cipient.
51.86
Service of complaint and other
Subpart B-Reports and Written Communications
papers.
51.87
Answer, referral to administrative
51.10
Reports to the Secretary; assurances.
law judge.
51.11
Report on planned use and actual
51.88
Supplemental charges.
use of funds.
51.89
Proof; variance; amendment of
51.12
Certifications.
pleadings.
51.13
Publication and publicity of reports;
51.90
Representation.
public inspection.
51.91
Administrative law judge; powers.
51.14
Reports to the Bureau of the Cen-
51.92
Hearings.
sus.
51.93
Stipulations.
51.94
Evidence.
Subpart C-Computation and Adjustment of
51.95
Entitlement
Depositions.
51.96
Stenographic record; oath of re-
51.20
Data.
porter; transcript.
51.21
Data affected by major disaster.
51.97
Proposed findings and conclusions.
51.22
Adjusted taxes.
51.98
Initial decision of the administra-
51.23
Date for determination of allocation.
tive law judge.
51.24
Boundary changes, governmental re-
51.99
Certification and transmittal of
organization, etc.
record and decision.
1
Sec.
context clearly indicates otherwise, or
ognized governing body and which per-
(b) Determination to delay payment.
51.100 What constitutes record.
where the term is defined elsewhere in
form substantial governmental func-
Whenever the Secretary determines that
51.101 Procedures on review of decision of
this part) the following definitions shall
tions. Certification to the Secretary by
a recipient government has failed to
administrative law judge.
apply:
the Secretary of the Interior (or by the
comply with the communication require-
51.102 Decision of the Secretary.
(a) "Act" means the State and Local
Governor of a State in the case of a State
51.103 Effect of order of repayment or with-
ments of Subpart B, he may delay pay-
Fiscal Assistance Act of 1972, Title I of
holding of funds.
affiliated tribe) that an Indian tribe or
ment of entitlement funds to such
51.104 Publicity of proceedings.
Public Law 92-512, approved October 20,
an Alaskan native village has a recog-
recipient. A determination to delay pay-
51.105 Judicial review.
1972.
nized governing body and performs sub-
ment of entitlement funds shall not be
(b) "Chief executive officer" of a unit
stantial governmental functions, shall
subject to the procedure set forth in
AUTHORITY: Pub. L. 92-512; and 5 U.S.C.
of local government means the elected
constitute prima facie evidence of that
paragraph (a) of this section and shall
301.
official, or the legally designated official,
fact.
be in effect only for such time as is nec-
who has the primary responsibility for
(j) "Recipient government" means a
Subpart A-General Information
essary to effect compliance.
the conduct of that unit's governmental
State government or unit of local gov-
§ 51.0 Scope and application of regula-
affairs. Examples of the "chief execu-
ernment as defined in this section.
§ 51.4 Extension of time.
tions.
tive officer" of a unit of local govern-
(k) "Secretary" means the Secretary
When by these regulations (other than
(a) In general. The rules and regula-
ment may be: The elected mayor of a
of the Treasury or any person duly au-
those specified in Subpart F of this part)
tions in this part are prescribed for car-
municipality, the elected county execu-
thorized by the Secretary to perform the
an act is required within a specified time,
rying into effect the State and Local Fis-
tive of a county, or the chairman of a
function mentioned.
the Secretary may grant a request for an
cal Assistance Act of 1972 (Title I, Public
county commission or board in a county
that has no elected county executive, or
(1) "State government" means the
extension of time if in his judgment it is
Law 92-512) applicable to entitlement
government of any of the 50 States or
necessary and appropriate. Requests for
periods beginning January 1, 1973. Sub-
such other official as may be designated
the District of Columbia.
extensions of time shall set forth the
part A sets forth general information
pursuant to law by the duly elected gov-
erning body of the unit of local govern-
(m) "Unit of local government" means
facts and circumstances supporting the
and definitions of terms used in this part.
need for more time and the amount of
Subpart B of this part prescribes reports
ment; or the chairman, governor, chief,
the government of a county, municipal-
additional time requested.
or president (as the case may be) of an
ity, township, or other unit of govern-
required under this part and publicity
Indian tribe or Alaskan native village.
ment below the State which is a unit of
§ 51.5 Transfer of funds to secondary
concomitant thereto. Subpart C of this
(c) "Department" means the Depart-
general government and which shall be
recipients.
part contains rules regarding the compu-
ment of the Treasury.
determined on the basis of the same
Those prohibitions and restrictions set
tation, allocation and adjustment of
(d) "Entitlement" means the amount
principles as used by the Bureau of the
forth in Subparts D and E of this part
entitlement. Subpart D of this part pre-
scribes prohibitions and restrictions on
of payment to which a State govern-
Census for general statistical purposes.
which are applicable to a recipient gov-
the use of funds. Subpart E of this part
ment or unit of local government is en-
The term "unit of local government"
ernment's entitlement funds continue to
titled as determined by the Secretary
shall also include the recognized govern-
be applicable to such funds if they are
prescribes fiscal procedures and auditing
pursuant to an allocation formula con-
requirements. Subpart F of this part
ing body of an Indian tribe or Alaskan
transferred to another governmental
tained in the Act and as established by
contains rules relating to procedure and
native village which performs substan-
unit or private organization. A violation
regulation under this part.
tial governmental functions. The Dis-
of Subparts D and E of this part by a
practice requirements where a recipient
(e) "Entitlement funds" means the
trict of Columbia, in addition to being
secondary recipient shall constitute a
government has failed to comply with
any provision of this part.
amount of funds paid or payable to a
treated as a State, shall also be treated as.
violation by the recipient government
(b) Saving clause. Any cause of action
State government or unit of local gov-
a county area which has no units of local
and the applicable penalty shall be im-
ernment for the entitlement period.
government (other than itself) within its
posed on the recipient government.
arising out of noncompliance with the
(f) "Entitlement period" means one
interim regulations covering payments
geographic area.
of the following periods of time:
Subpart B-Reports and Written
made for the first and second entitle-
(1) The 6-month period beginning
§ 51.3 Procedure for effecting compli-
Communications
ment periods (January 1, 1972, through
January 1, 1973, and ending June 30,
ance.
§ 51.10 Reports to the Secretary; assur-
June 30, 1972, and July 1, 1972, through
1973.
December 31, 1972) shall continue to be
(a) In general. If the Secretary de-
ances.
covered by such regulations and any pro-
(2) The fiscal year beginning July 1,
termines that a recipient government has
(a) Reports for review and evaluation.
1973, and ending June 30, 1974.
ceeding commenced thereon shall be gov-
failed to comply substantially with any
The Secretary may require each recip-
(3) The fiscal year beginning July 1,
erned by the procedures set forth in
provision of this part, and after giving
ient government receiving entitlement
1974, and ending June 30, 1975.
Subpart F of this part.
reasonable notice and opportunity for a
funds to submit such annual and interim
(4) The fiscal year beginning July 1,
hearing to the Governor of the State or
reports (other than those required by
§ 51.1 Establishment of Office of Reve.
1975, and ending June 30, 1976.
the chief executive officer of the unit of
§ 51.11) as may be necessary to provide a
nue Sharing.
(5) The 6-month period beginning
local government pursuant to Subpart G
basis for evaluation and review of com-
There is established in the Office of the
July 1, 1976, and ending December 31,
of this part, the Secretary shall notify
pliance with and effectiveness of the
Secretary of the Treasury the Office of
1976.
the recipient government that if it fails
provisions of the Act and regulations of
Revenue Sharing. The office shall be
(g) "Governor" means the Governor
to take corrective action within 60 days
this part.
headed by a Director who shall be ap-
of any of the 50 States or the Commis-
from the date of receipt of such notifica-
(b) Requisite assurances for receipt
pointed by the Secretary of the Treas-
sioner of the District of Columbia.
tion further payments to it will be with-
of entitlement funds. Each Governor of
ury. The Director shall perform the func-
(h) "Independent public accountants"
held for the remainder of the entitlement
a State or chief executive officer of a
tions, exercise the powers and carry out
means independent certified public ac-
period and for any subsequent entitle-
unit of local government, in order to
the duties vested in the Secretary of the
countants or independent licensed pub-
ment period until such time as the
qualify for entitlement funds, must file
Treasury by the State and Local Fiscal
lic accountants certified or licensed by a
Secretary is satisfied that appropriate
a statement of assurances when re-
Assistance Act of 1972, Title I, Public
regulatory authority of a State or other
corrective action has been taken and
quested by the Secretary, on a form to
Law 92-512.
political subdivision of the United States.
that there will no longer be any failure
be provided, that such government will
(i) "Indian tribes and Alaskan native
§ 51.2 Definitions.
to comply. Until he is satisfied, the Sec-
abide by certain specific requirements of
villages' means those Indian tribes and
retary shall make no further payments
the Act and the prohibitions and restric-
As used in this part (except where the
Alaskan native villages which have a rec-
of such amounts.
tions of Subparts D, E, and F of this part,
2
3
with respect to the use of entitlement
§ 51.13 Publication and publicity of re-
will be the latest and most complete data
factor for purposes of the revenue shar-
funds. The Secretary will afford each
ports; public inspection.
supplied by the Bureau of the Census or
ing allocation process.
Governor the opportunity for review and
such other sources of data as in the judg-
(b) Eligibility requirements. In order
(a) Publication of required reports.
comment to the Secretary on the ade-
Each recipient government must pub-
ment of the Secretary will provide for
for a recipient government to be eligible
quacy of the assurances by units of local
lish in a newspaper a copy of each report
equitable allocations.
for the data stabilization benefit of para-
government in his State.
(b) Computation and payment of en-
graph (a) of this section, it shall:
required to be filed under § 51.11 (a) and
(b) prior to the time such report is filed
titlements. (1) Allocations will not be
(1) Be located within a State desig-
§ 51.11 Report on planned use and ac-
made to any unit of local government
nated by the President as a major dis-
tual use of funds.
with the Secretary. Such publication
shall be made in one or more newspapers
if the available data is so inadequate as
aster area, and
(a) Planned use report. Each recipient
which are published within the State and
to frustrate the purpose of the Act. Such
(2) Be located within a geographical
government which expects to receive
have general circulation within the geo-
units of local government will receive an
subdivision of the State as certified to the
funds under the Act shall submit to the
Secretary a report, on a form to be pro-
graphic area of the recipient government
entitlement and payment when current
Office of Revenue Sharing as a major
and sufficient data become available as
disaster area by the Administrator of the
vided, of the specific amounts and pur-
involved. In the case of a recipient gov-
necessary to permit an equitable alloca-
Disaster Assistance Administration of the
poses for which it plans to spend the
ernment located in a metropolitan area
funds which it expects to receive for an
which adjoins and extends beyond the
tion.
Department of Housing and Urban De-
boundary of the State, the recipient gov-
(2) Payment to units of local govern-
velopment.
entitlement period. The planned use re-
ernment may satisfy the requirement of
ment for which the Secretary has not
Further, each recipient government
ports for the third and fourth entitle-
this section by publishing its reports in
received an address confirmation will be
within the specific geographic area so
ment periods (the 6-month period begin-
ning January 1, 1973 and ending June 30,
a metropolitan newspaper of general cir-
delayed until proper information is avail-
designated will be notified pursuant to
culation even though such newspaper
able to the Secretary.
the data improvement program, pro-
1973, and the fiscal year beginning July 1,
may be located in the adjoining State
(3) Where the Secretary determines
vided for in $ 51.29 of each of its data
1973 and ending June 30, 1974) shall be
filed with the Secretary on a date he shall
from the recipient government.
that the data provided by the Bureau of
factors developed subsequent to the
determine. Thereafter, each planned use
(b) Publicity. Each recipient govern-
the Census or the Department of Com-
major disaster designation and shall be
ment, at the same time as required for
merce are not current enough, or are not
required to verify through its chief ex-
report shall be filed prior to the begin-
publication of reports under paragraph
comprehensive enough, or are otherwise
ecutive officer, that the data was ad-
ning of an entitlement period as defined
(a) of this section, shall advise the news
inadequate to provide for equitable al-
versely affected by the major disaster.
in $ 51.2(f).
media, including minority and bilingual
locations he may use other data, includ-
In addition, the Secretary may require
(b) Actual use report; status of trust
news media, within its geographic area
ing estimates. The Secretary's deter-
that such verifications be accompanied
fund. Each recipient government which
mination shall be final and such other
receives funds pursuant to the Act shall
of the publication of its reports made
by substantiating documentation evi-
additional data and estimates as are
submit to the Secretary an annual re-
pursuant to paragraph (a) of this sec-
dencing a causal relationship between
used, including the sources, shall be pub-
port, on a form to be provided, of the
tion, and shall provide copies of such
the major disaster and the less favorable
licized by notice in the FEDERAL REGISTER.
reports to the news media on request.
revenue sharing allocation value of the
amounts and purposes for which such
(c) Special rule for 6 month entitle-
(c) Public inspection. Each recipient
subject data factor. The Secretary, upon
funds have been spent or otherwise
transferred from the trust fund (as de-
government shall make available for
ment periods. For entitlement periods
being satisfied that all of the require-
which encompass only one-half of a year,
fined in § 51.70(a)) during the reporting
public inspection a copy of each of the
ments of this section have been met with
the adjusted taxes and intergovern-
reports required under § 51.11(a) and
respect to any post-disaster data factor,
period. Such report also shall state any
mental transfers of any unit of local gov-
(b) and information as necessary to sup-
shall refrain from using the post-disaster
interest earned on entitlement funds
port the information and data submitted
ernment for that half-year will be esti-
data factor in the allocation process, and
during the period. Such reports shall
mated to be one-half of the annual
on each of those reports. Such detailed
shall continue to use the pre-disaster
show the status of the trust fund includ-
amounts.
information shall be available for public
data factor, until whichever of the fol-
ing its balance as of June 30 and shall be
(d) Units of local government located
inspection at a specified location during
lowing occurs first: (i) A data factor
filed with the Secretary on or before
in more than one county area. In cases
normal business hours. The Secretary
more beneficial than the pre-disaster
September 1 of each calendar year. All
where a unit of local government is lo-
may prescribe additional guidelines con-
data factor currently being used is de-
such funds must be used, obligated, or
cerning the form and content of such
cated in more than one county, each part
veloped, or (ii) 60 months have expired
appropriated within the time period
information.
of such unit is treated for allocation pur-
from the designation by the President of
specified in § 51.70(b)
poses as a separate unit of government,
the specific major disaster area.
§ 51.14 Reports to the Bureau of the
and the adjusted taxes, and intergovern-
§ 51.12 Certifications.
Census.
mental transfers of such parts are esti-
§ 51.22 Adjusted taxes.
The Secretary shall require a certifica-
It shall be the obligation of each re-
mated on the basis of the ratio which the
(a) In general. Tax revenues are com-
tion by the Governor, or the chief ex-
cipient government to comply promptly
population of such part bears to the pop-
pulsory contributions to a unit of local
ecutive officer of the unit of local gov-
with requests by the Bureau of the Cen-
ulation of the entirety of such unit.
government exacted for public purposes,
ernment, that no entitlement funds have
sus (or by the Secretary) for data and
§ 51.21 Data affected by major disaster.
as such contributions are determined by
been used in violation of the prohibition
information relevant to the determina-
the Bureau of the Census for general
contained in § 51.40 against the use of
tion of entitlement allocations. Failure
(a) In general. Any change in data
statistical purposes. The term "adjusted
entitlement funds for the purpose of ob-
of any recipient government to so comply
otherwise eligible for use in determining
taxes" means the tax revenues adjusted
taining matching Federal funds. In the
may place in jeopardy the prompt re-
the entitlement of a recipient govern-
by excluding an amount equal to that
case of a unit of local government the
ceipt by it of entitlement funds.
ment after April 1, 1974, shall be dis-
portion of such compulsory contributions
Secretary shall require a certification by
regarded for a period of 60 months if that
which is properly allocable to school op-
Subpart C-Computation and Adjustment
the chief executive officer that entitle-
change:
erations, debt service on school indebted-
of Entitlement
ment funds received by it have been used
(1) Resulted from a major disaster
ness, school capital outlays, and other
only for priority expenditures as pre-
§ 51.20 Data.
determined by the President under § 301
educational purposes.
scribed by § 51.41. The certifications re-
(a) In general. The data used in de-
of the Disaster Relief Act of 1974 (Pub.
(b) Procedure for exclusion of tax
quired by this section shall be in such
L. 93-288) and
termination of allocations and adjust-
revenues for education. The tax revenues
(2) Results in a data factor which is
form as the Secretary may prescribe.
ments thereto payable under this part
exacted by a unit of local government
less beneficial than the previous data
shall be adjusted to exclude any such tax
4
5
revenues used for financing education in
of local government pursuant to section
a manner consistent with the following
109(e) (2) (B) of the Act (the "Memphis
reorganization, or change in State
before receiving an entitlement adjust-
Rule") will be considered to be a change
statutes or constitution relevant to the
ment or payment redistribution pur-
provisions:
(1) Where a unit of local government
computation of entitlement of a unit of
suant to this section, obtain State cer-
in a data definition and will not be given
finances education from a specific fund
effect for any entitlement periods for
local government under the Act, occur-
tification that such change was ac-
and lists tax revenues to the fund or
which there are final data definitions.
ring during an entitlement period shall
complished in accordance with State
The final date upon which determina-
not result in a change to the entitlement
law. The certifying official shall be des-
levies a separate tax for purposes of edu-
cation, such amounts as determined will
of that unit until the next entitlement
ignated by the Governor, and such cer-
tions of allocations and entitlements, in-
cluding adjustments thereto, may be
period. However, payment tendered to
tification shall be submitted to the
constitute the tax revenues for education.
made for an entitlement period shall be
such unit for the entitlement period may
Bureau of the Census.
(2) If tax revenues for purposes of
determined by the Secretary as soon as
be redistributed pursuant to the provi-
education are not separately identifiable
§ 51.25 Waiver of entitlement; nonde-
because education is financed by ex-
practicable and shall be publicized by
sions of paragraphs (b) and (c) of this
livery of checks; insufficient data.
notice in the FEDERAL REGISTER.
section.
penditure or transferring of moneys
(a) Waiver. Any unit of local govern-
from a general fund (or similarly named
(b) Time limitation and minimum ad-
(b) New units of local government. A
fund) to a school fund or funds, then the
justment. If prior to the date determined
unit of local government which came
ment may waive its entitlement for any
entitlement period: Provided, The chief
ratio of tax revenues (as defined in para-
by the Secretary pursuant to paragraph
into existence during an entitlement pe-
executive officer with the consent of the
graph (a) of this section) to the total
(a) of this section, it is established to the
riod shall first be eligible for an entitle-
governing body of such unit notifies the
revenues in such fund shall be calculated,
satisfaction of the Secretary by factual
ment allocation for the next entitlement
and that ratio multiplied by the expendi-
period. However, if such unit is a succes-
Secretary that the entitlement payments
evidence and documentation that the
ture or transfer of moneys from such
data used in the computation of an allo-
sor government, it shall be eligible to
for a past, current, or next beginning
fund to the school fund shall be equated
receive the entitlement payment of the
entitlement period, or any combination
cation is erroneous an adjustment will
be made. No adjustment of any kind
unit or units of local government to
thereof, are being waived. A waiver of
with the tax revenues properly allocable
to expenses for education. The phrase
which is less than $200 shall be made to
which it succeeded in accordance with
entitlement for the next beginning en-
the conditions of the succession.
titlement period will only be given ef-
"total revenues in such fund" means cash
an entitlement if in the judgment of the
fect if the waiver is received during the
and securities on hand in the general
Secretary such adjustment will be bur-
(c) Dissolution of units of local gov-
6-month period immediately preceding
fund (or similarly named fund) at the
densome, expensive, or otherwise imprac-
ernment. A unit of local government
that entitlement period. In the event that
beginning of the fiscal year, plus all
ticable.
which dissolved, was absorbed or ceased
an entitlement payment is returned or a
revenues to the fund (other than trust
(c) Adjusted taxes and intergovern-
to exist as such during an entitlement
notice of waiver is executed which is not
or agency revenues) less cash and se-
mental transfers. The dates for deter-
period is eligible to receive an entitle-
in accordance with this procedure, the
curities on hand at the end of the fiscal
mining the amount of adjusted taxes and
ment payment for that entitlement pe-
chief executive officer will be so notified
year. Trust and agency funds are those
intergovernmental transfers of a unit of
riod: Provided, That such unit of local
by the Secretary and, unless the at-
held specifically for individuals or gov-
local government will be the fiscal year of
government is in the process of winding
tempted waiver is rescinded within 30
ernments for which no discretion can be
such unit ending during the 12 months
up its governmental affairs or a suc-
days "of such notice, it shall be given ef-
exercised as to the amounts to be paid
prior to July 1, 1971. If a more recent
cessor unit of local government has legal
fect. However, in no event will a notice
to the recipient.
period is used, it shall be such fiscal year
capacity to accept and use such entitle-
of waiver be given effect for an entitle-
(3) If any instance where neither par-
that can be uniformly assembled for all
ment funds. Entitlement payments
ment period which is subsequent to the
agraph (b) (1) nor (2) of this section
units of government prior to the begin-
which are returned to the Secretary be-
next beginning entitlement period. The
permits determination of school taxes,
ning of the affected entitlement period.
cause of the cessation of existence of a
entitlement waived and adjustments
then any procedure deemed equitable by
unit of local government shall be placed
§ 51.24 Boundary changes, governmen-
thereto, if any, resulting from recalcula-
the Secretary shall be utilized to ascer-
in the State and Local Government Fiscal
tal reorganization, etc.
tion of earlier entitlements, shall be
tain adjusted taxes.
Assistance Trust Fund until such times
added to and shall become a part of the
(c) Validity of adjusted tax data. Al-
(a) In general. Boundary changes,
as they can be redistributed according
entitlement of the next highest unit of
location of funds under the Act will be
governmental reorganizations, or
to the conditions under which the unit
government eligible to receive entitle-
based on data reported by States and
changes in State statutes or constitu-
of local government ceased to exist.
ment funds in that State in which the
units of local governments to the Bureau
tions occurring prior to or during an
(d) Limitations on adjustment for an-
unit of government waiving entitlement
of the Census and shall be in accord-
entitlement period which were not taken
nexations. (1) Annexations by units of
is located. However, if the governing
ance with definitions established by the
into account during the initial allocation
local government having a population
body of an Indian tribe or Alaskan native
Bureau. No unit of government shall
shall, if not within the scope of para-
of less than 5,000 on April 1, 1970, shall
village waives its entitlement for any pe-
report to the Department of the Treas-
graph (d) of this section, affect such al-
not affect the entitlement of any unit of
riod, the rules relating to distributions
ury or the Bureau of the Census in a
location or payments in a manner con-
local government for an entitlement
within county areas (pursuant to section
manner which attempts to circumvent or
sistent with the following provisions:
period unless the Secretary determines
108(b) (4) of the Act) are to apply to
frustrate the intent of this section.
(1) A boundary change, governmental
that adjustments pursuant to such an-
the distribution within a county area as
reorganization, or change in State
nexations would be equitable and would
if such tribe or village were not in exist-
§ 51.23 Date for determination of allo-
statutes or constitution relevant to the
not be unnecessarily burdensome, ex-
ence for that period. A waiver of entitle-
cation.
computation of an entitlement of a unit
pensive, or otherwise impracticable.
ment by a unit of local government or
(a) In general. Pursuant to the provi-
of local government under the Act, oc-
(2) Annexations of areas with a popu-
Indian tribe or Alaskan native village
sions of § 51.20 (a) and (b) (3), the de-
curing prior to the beginning of an en-
lation of less than 250, or less than 5 per-
shall be deemed irrevocable 30 days prior
termination of the data definitions upon
titlement period shall result in an altera-
cent of the population of the gaining
to the first payment for the entitlement
which the allocations and entitlements
tion to the entitlement of that unit if
government, shall not affect the en-
period to which it relates.
for an entitlement period are to be cal-
brought to the attention of the Bureau
titlement of any unit of local govern-
(b) Constructive waiver. Any recipient
culated shall be made not later than the
of the Census within 60 days (or by
ment.
government which has not waived and
day immediately preceding the beginning
June 30, 1973, in case of the third entitle-
(e) Certification. Units of local gov-
is otherwise eligible to receive entitle-
of the entitlement period. Any change in
ment period) after the beginning of such
ernment affected by a boundary change,
ment payments and which has failed to
the computation of local tax effort to
entitlement period.
governmental reorganization, or change
provide required reports, assurances or
credit certain county sales taxes to units
(2) A boundary change, governmental
in State statutes or constitution shall,
certifications pursuant to Subpart B is
6
7
subject to a determination of having
(b) Adjustment to entitlement pay-
ment from own sources and to generally
should a State's calculated own source
constructively waived its entitlement
ments. Adjustment to an entitlement of a
monitor level of accordance with the
average aggregate intergovernmental
funds for the affected entitlement pe-
recipient government will ordinarily be
maintenance provision of paragraph (a)
transfers to units of local government
riod through inaction. The Secretary,
effected through alteration to entitle-
of this section during future entitlement
(over the appropriate periods) be less
prior to such a determination, shall noti-
ment payments unless there is a down-
periods:
than such transfers as calculated for the
ward adjustment which is so substantial
(1)- It shall be assumed that the ratio
fy nonresponsive recipient governments
base period, the difference (as defined in
as to make payment alterations imprac-
of a State's own source intergovern-
paragraph (b) (3) of this section) shall
of their noncompliance and that their
ticable or impossible. In such case the
mental transfers to units of local govern-
constitute the future indicated reduction
entitlement funds are being temporarily
Secretary may demand that the funds
ment to that State's total intergovern-
in that State's entitlement unless such
withheld pursuant to § 51.3(b). If com-
received by the recipient government in
mental transfers to units of local gov-
State can document to the Secretary that
pliance is not achieved within a reason-
excess of its entitlement be immediately
ernment is equal to the ratio of that
the fact or amount of nonmaintenance
able period of time, which shall not be
repaid to the Trust Fund of the Depart-
State's own-source revenues to its total
as determined by application of the for-
less than 30 days, the Secretary shall no-
ment of the Treasury.
revenues. Thus. for a State in which such
mula is inaccurate.
tify the affected recipient governments
§ 51.27 State must maintain transfers to
formula may be applied. its base year
(c) Alternative procedure. If the Sec-
that if compliance is not achieved with-
in a period of 30 days after mailing such
local governments.
own source intergovernmental transfers
retary shall determine that application
to units of local government shall be
of the formula set forth in paragraph (b)
notice, a constructive waiver of en title-
(a) General rule. The entitlement of
assumed to equal its total intergovern-
of this section in a particular case pro-
ment funds will be determined to have
any State government for any entitle-
mental transfers to units of local gov-
vides an inaccurate or unfair measure of
occurred. Entitlement funds thus con-
ment period beginning on or after July 1,
ernment in the base year multiplied by
transfer effort, then any formula, pro-
structively waived will be redistributed
1973, shall be reduced by the amount (if
its own source revenue in the base year
cedure, or method deemed equitable by
pursuant to the provisions of paragraph
any) by which—
divided by its total revenues in the base
the Secretary, may be utilized to measure
(a) of this section.
(1) The average of the aggregate
year.
such transfer effort for the purpose of
(c) Nondelivery. Entitlement funds for
amounts transferred by the State gov-
(2) In a State in which the formula is
implementing the maintenance provi-
any entitlement period which are re-
ernment out of its own sources during
applied, the State's own source inter-
sion.
turned by the U.S. Postal Service to the
such period (or during that State's fis-
governmental transfers to units of local
(d) Adjustment where State assumes
Department of the Treasury as being
cal year ending on or immediately prior
government in a future entitlement pe-
responsibility for category of expendi-
nondeliverable because of incorrect ad-
to the end of such period) and the pre-
riod shall be assumed to equal the aver-
tures. If the State government establishes
dress information, or which are un-
ceding entitlement period (or such fiscal
age of-
to the satisfaction of the Secretary that
claimed for any reason, shall be placed
year) to all units of local government (as
(i) The State's total intergovern-
since June 30, 1972, it has assumed re-
in the State and Local Government Fis-
defined in § 51.2(m)) in such State, is
mental transfers to units of local gov-
sponsibility for a category of expendi-
cal Assistance Trust Fund until such
less than,
ernment during that period (or that
tures which (before July 1, 1972) was the
time as payment can be made.
(2) The similar aggregate amount for
State's fiscal year ending on or imme-
responsibility of local governments lo-
(d) Insufficient data. Entitlement
the 1-year period beginning July 1, 1971
diately prior to the end of such period)
cated in such State, then, the aggregate
funds for any entitlement period which
(or that State's fiscal year ending on or
multiplied by its own source revenue in
amount taken into account under para-
are withheld from payment because of
immediately prior to the end of such
that period (or such fiscal year) divided
graph (a) (2) of this section shall be
insufficient data upon which to compute
period).
by its total revenues in that period (or
reduced to the extent that increased
the entitlement, or for which payment
For purposes of paragraph (a) (1) of
such fiscal year) and
State government spending (out of its
cannot be made for any other reason,
this section, the amount of any reduc-
(ii) The State's total intergovern-
own sources) for such category has re-
shall remain in the State and Local Gov-
tion in the entitlement of a State gov-
mental transfers to units of local gov-
placed corresponding amounts which for
ernment Fiscal Assistance Trust Fund
ernment under this section for any en-
ernment during the preceding entitle-
the 1-year period beginning July 1, 1971
until such time as payment can be made.
titlement period shall, for subsequent
ment period (or that State's fiscal year
(or that State's fiscal year ending on or
§ 51.26 Reservation of funds and ad-
entitlement periods, be treated as an
ending on or immediately prior to the
immediately prior to the end of such
justment of entitlement.
amount transferred by the State gov-
end of such period) multiplied by its own
period) it transferred to units of local
ernment out of its own sources during
source revenue in that period (or such
government.
(a) Reservation of entitlement funds.
such period to units of local government
fiscal year) divided by its total revenues
(e) Adjustment where new taxing
In order to make subsequent adjust-
in such State. The phrase "own sources"
in that period (or such fiscal year).
powers are conjerred upon local govern-
ments to an entitlement payment under
means all sources of State revenue (in-
(3) Therefore, in a State in which the
ments. If a State establishes to the satis-
this part which may be necessitated be-
cluding debt proceeds and the State's
formula is applied, maintenance (for a
cause of insufficient or erroneous data,
faction of the Secretary that since June
revenue sharing entitlement funds) but
given entitlement period) of intergovern-
or for any other reason, the Secretary
mental transfer effort to units of local
30, 1972, one or more units of local gov-
excluding intergovernmental revenues
shall reserve in the State and Local Gov-
ernment within such State have had con-
received from the Federal government.
government will be measured by the dif-
ernment Fiscal Assistance Trust Fund
such percentage of the total entitlement
(b) Measurement of maintenance of
ference between that State's average ag-
ferred upon them new taxing authority,
effort. In those States that do not have
gregate intergovernmental transfers to
then, the aggregate amount taken into
funds for any entitlement period as in
his judgment shall be necessary to insure
an accounting system providing an audit
units of local government (over the ap-
account under paragraph (a) (2) of this
trail for all funds concerned (from own
propriate periods) as calculated by em-
section shall be reduced to the extent of
that there will be sufficient funds avail-
source to final application) in intergov-
ploying the method described in para-
the larger of-
able so that all recipient governments
ernmental transfer to units of local gov-
graph (b) (2) of this section and that
(1) An amount equal to the amount of
will receive their full entitlements. Such
ernment (such as those States in which
State's own source intergovernmental
the taxes collected by reason of the exer-
reserve shall be known as the Obligated
intergovernmental transfers to units of
transfers to units of local government in
cise of such new taxing authority by such
Adjustment Reserve and amounts re-
local government are made from a com-
the base period as calculated by employ-
local governments, or
maining in that reserve will accumulate
mingled fund with no identification as
ing the method described in paragraph
(2) An amount equal to the amount of
until the liabilities of the Trust Fund are
to specific revenue source), the following
(b) (1) of this section.
the loss of revenue to the State by reason
discharged or sufficiently diminished to
formula may be applied by the Secretary
(4) Should the application of this for-
of such new taxing authority being con-
permit an allocation to recipient govern-
to establish the base year intergovern-
mula during any entitlement period indi-
ferred on such local governments.
ments.
mental transfers to units of local govern-
cate nonmaintenance, for example,
No amount shall be taken into consider-
8
9
ation under paragraph (e) (1) of this sec-
tion (after any judicial review) shall be
question those data factors by providing
ernments of a State do not total 100
tion if such new taxing authority is an
transferred from the Secretary's Trust
the Department with factual documenta-
percent of the amount allocated to that
increase in the authorized rate of tax
Fund to the general fund of the Treasury
tion demonstrating evidence of error. If
State, the amount to be allocated to
under a previously authorized kind of tax,
on the day on which such reduction be-
the Secretary determines that any data
county areas shall be adjusted appro-
unless the State is determined by the
comes final.
factors used were erroneous, necessary
priately, and the allocation process shall
Secretary to have decreased a related
State tax.
§ 51.28 Optional formula.
adjustments will be made. Data factors
be repeated until the amounts allocated
which are used for more than one en-
to recipient governments of a State total
(f) Special rule for period beginning
(a) In general. A State government
titlement period will be subject to chal-
100 percent of the amount allocated to
July 1, 1973. In the case of the entitle-
may by law provide for the allocation of
lenge and adjustment only for the first
that State.
ment period beginning July 1, 1973, the
entitlement funds among county areas,
entitlement period in which they were
preceding entitlement period for purposes
or among units of local government
Subpart D-Prohibition and Restrictions on
used.
of paragraph (a) (1) of this section shall
(other than county governments Indian
Use of Funds
be treated as being the 1-year period be-
tribes, and Alaskan native villages) (1)
§ 51.40 Matching funds.
ginning July 1, 1972, or that State's fiscal
On the basis of the population multiplied
§ 51.30 Adjustment of maximum and
year which ends prior to June 30, 1973.
by the general tax effort factors of such
minimum per capita entitlement; 100
(a) In general. Entitlement funds
(g) Special rule for period beginning
percent criterion.
may not be used, directly or indirectly,
areas or units of local governments; or,
as a contribution in order to obtain any
July 1, 1976. In the case of the entitle-
(2) on the basis of the population multi-
(a) County area maximum and mini-
Federal funds under any Federal pro-
ment period beginning July 1, 1976, and
plied by the relative income factors of
mum per capita entitlement-(1) In
ending December 31, 1976, the aggregate
general. Pursuant to section 108(b) (6)
gram. The indirect use of entitlement
such areas or units of local government;
funds to match Federal funds is defined
amount taken into account under para-
or, (3) on the basis of a combination of
of the Act, the per capita amount allo-
to mean the allocation of entitlement
graph (a) (1) of this section for the pre-
those two factors. Any State which pro-
cated to any county area shall be not
ceding entitlement period and the aggre-
funds to a nonmatching expenditure and
vides by law for such a variation in the
less than 20 percent, nor more than 145
gate amount taken into account under
allocation formula provided by subsec-
percent, of two-thirds of the amount
thereby releasing or displacing local
paragraph (a) (2) of this section shall be
funds which are used for the purpose of
tions 108(a) or 108(b) (2) and (3) of the
allocated to the State under section 106
one-half of the amounts which (but for
Act, shall notify the Secretary of such
of the Act, divided by the population of
matching Federal funds. This prohibition
this paragraph (g)) would be taken into
on use of entitlement funds as matching
law not later than 90 days before the
that State.
account.
beginning of the first entitlement period
(2) One hundred forty-five-percent
funds applies to Federal programs where
(h) Report by Governor. Pursuant to
to which such law is to apply. Any such
rule. If a county area allocation is greater
Federal funds are required to be matched
the authority of § 51.10 and in order to
law shall:
than the 145-percent limit, its allocation
by non-Federal funds and to Federal pro-
effect compliance with this section, the
(1) Provide for allocating 100 percent
shall be reduced to the 145-percent level
grams which allow matching from either
Governor of each State shall submit to
of the aggregate amount to be allocated
and the resulting surplus shall be shared
Federal 02 non-Federal funds.
the Secretary after the end of the State's
under subsections 108(a) or 108(b) (2)
proportionately by all remaining uncon-
(b) Secondary recipients. The prohi-
fiscal year, on a form to be provided, the
and (3) of the Act;
strained county areas.
bition of paragraph (a) of this section
aggregate amounts transferred out of its
(2) Apply uniformly throughout the
(3) Twenty-percent rule. If, after the
applies to a recipient government's en-
own sources to units of local government
State; and
titlement funds which are transferred by
application of paragraph (a) (2) of this
for those entitlement periods or that
(3) Apply during the period beginning
section, a county area allocation is less
it to another governmental unit or pri-
State's fiscal years specified on the
on the first day of the first entitlement
than the 20-percent limit, its allocation
vate organization. A violation of this
report:
period to which it applies and ending on
shall be increased to the 20-percent level
section by a secondary recipient shall
(1) The State's own source funds.
December 31, 1976.
constitute a violation by the recipient
and the resulting deficit shall be shared
(2) The State's total funds.
(b) Singlc legislation required. If a
proportionately by all remaining uncon-
government and the penalty provided
(3) The State's own source transfers
State government alters its county area
by paragraph (f) of this section shall be
strained county areas.
to units of local government.
allocation formula or its local govern-
(b) Local government (other than a
imposed on the recipient government.
(4) The State's total transfers to units
(c) Certification required. Pursuant
ment allocation formula, or both, such
county government)-( In general.
of local government.
alteration may be made only once and
to § 51.12, the chief executive officer of
Except as provided below, the per-capita
(1) Reduction in entitlement. If the
must be made in the same legislative
each recipient government must certify
amount allocated to any unit of local
enactment.
to the Secretary that entitlement funds
Secretary has reason to believe that par-
government (other than a county govern-
received by it have not been used in vio-
agraph (a) of this section requires a
(c) Certification required. Paragraph
ment) shall be not less than 20-percent,
lation of this section.
reduction in the entitlement of any State
(a) of this section shall apply within a
nor more than 145-percent, of two-thirds
(d) Increased State or local govern-
government for any entitlement period,
State only if the Secretary certifies that
of the amount allocated to the State
ment. revenues. No recipient govern-
he shall give reasonable notice and op-
the State law complies with the require-
under section 106 of the Act, divided by
ment shall be determined to have used
portunity for hearing to the State. If,
ments of such paragraph. The Secretary
the population of that State.
funds in violation of paragraph (a) of
thereafter, he determines that paragraph
shall not certify any such law with re-
(2) One hundred forty-five-percent
this section with respect to any funds
(a) of this section requires the reduction
spect to which he receives notification
rule. If a unit of local government is al-
received for any entitlement period (or
of such entitlement, he shall also deter-
later than 30 days prior to the first
located an amount greater than the 145-
during its fiscal year) to the extent that
mine the amount of such reduction and
entitlement period during which it is to
percent limit, its allocation shall be re-
net revenues received by it from its own
shall notify the Governor of such State
apply.
duced to that level.
sources during such period exceed the
of such determinations and shall with-
§ 51.29 Adjustment of data factors.
(3) Twenty-percent rule. If a unit of
net revenues received by it from its own
hold from subsequent payments to such
local government is allocated an amount
State government under this subtitle an
The data factors and data definitions
sources during the 1-year period begin-
less than the 20-percent limit, its alloca-
used in computing entitlements under the
ning July 1, 1971 (or its fiscal year end-
amount equal to such reduction.
tion shall be increased to the lower of
(j) Transfer to general fund. An
Act for any entitlement period will be
ing during the same period). In the case
the 20-percent limit or 50 percent of the
made available to each State government
of the entitlement periods of 6 months,
amount equal to the reduction in the en-
sum of that unit's adjusted taxes and
and unit of local government as soon as
one-half of such net revenues shall be
titlement of any State government which
transfers.
measured.
practicable. Each such government will
results from the application of this sec-
(c) One hundred-percent criterion. If
be given a reasonable opportunity to
(e) Presumptions of compliance. No
the amounts allocated to recipient gov-
recipient government shall be determined
10
11
to have used entitlement funds in viola-
ceived by units of local government may
tion of the indirect prohibition of para-
be used only for priority expenditures.
and opportunity for corrective action.
expend entitlement funds only for the
graph (a) of this section to the extent
As used in this part, the term "priority
benefit of members of the tribe or village
that:
§ 51.42 Wage rates and labor standards.
expenditures" means:
residing in the county area from which
(1) The expenditure of entitlement
(1) Ordinary and necessary mainte-
(a) Construction laborers and me-
the allocation of entitlement funds was
funds was accompanied by an aggregate
nance and operating expenses for-
chanics. A recipient government which
originally made. Expenditures which are
increase in nonmatching funds expendi-
(i) Public safety (including law en-
receives entitlement funds under the Act
so restricted will not constitute a failure
tures.
forcement, fire protection, and building
shall require that all laborers and me-
to comply with the requirement of Sub-
(2) The receipt of entitlement funds
code enforcement);
chanics employed by contractors or sub-
part E of this part.
permitted that government to reduce
(ii) Environmental protection (in-
contractors in the performance of work
taxes: Provided, Nonentitlement revenue
cluding sewage disposal, sanitation, and
on any construction project costing in
Subpart E-Nondiscrimination in Pro-
is sufficient to cover all matching funds
pollution abatement)
excess of $2,000.00 and of which 25 per-
grams Funded With Entitlement Funds
contributions.
(iii) Public transportation (including
cent or more of the cost is paid out of its
§ 51.50 Purpose.
(3) The matching funds contribution
transit systems and streets and roads)
entitlement funds: (1) Will be paid
in question is accounted for by an in-
wages at rates not less than those pre-
The purpose of this subpart is to effec-
(iv) Health:
kind contribution which was not financed
vailing on similar construction in the
tuate section 122 of the Act to the end
(v) Recreation;
directly or indirectly with entitlement
locality as determined by the Secretary
that no person in the United States shall
(vi) Libraries;
funds.
(vii) Social services for the poor or
of Labor in accordance with the Davis-
on the ground of race, color, national ori-
(f) Determination by Secretary of the
Bacon Act as amended (40 U.S.C. 276a-
gin, or sex be excluded from participa-
aged; and
Treasury. If the Secretary has reason to
(viii) Financial administration, and
276a-5); and (2) will be covered by
tion in, be denied the benefits of, or be
believe that a recipient government has
(2) Ordinary and necessary capital
labor standards specified by the Secre-
subjected to discrimination under any
used entitlement funds to match Federal
expenditures authorized by law. No unit
tary of Labor pursuant to 29 CFR Parts
program or activity funded in whole or
funds in violation of the Act, the Secre-
of local government may use entitlement
1, 3, 5, and 7.
in part with entitlement funds made
tary shall give such government notice
funds for nonpriority expenditures which
(b) Request for wage determination.
available pursuant to subtitle A of title
and opportunity for hearing. If the Sec-
are defined as any expenditures other
In situations where the Davis-Bacon
I of the Act.
retary determines that such government
than those included in paragraph (a) (1)
standards are applicable, the recipient
§ 51.51 Definitions.
has, in fact, used funds in violation of
and (2) of this section. Pursuant to
government must ascertain the U.S. De-
this section, he shall notify such govern-
§ 51.12, the chief executive officer of each
partment of Labor wage rate determina-
Unless the context requires otherwise,
ment of his determination and shall re-
unit of local government must certify to
tion for each intended project and insure
as used in this subpart, the term:
quest repayment to the United States
that the wage rates and the contract
(a) "Facility" includes all or any part
the Secretary that entitlement funds re-
of an amount equal to the funds so used.
clauses required by 29 CFR 5.5 and 29
of structures, equipment, or other real or
ceived by it have been used only for
To the extent that such government fails
CFR 5a.3 are incorporated in the con-
personal property or interests therein.
priority expenditures as required by the
to repay such amount, the Secretary shall
(b) "Funded" means that entitlement
Act.
tract specifications. The recipient gov-
withhold from subsequent entitlement
funds have been made available for ex-
(b) Use of entitlement funds for debt
ernment must also satisfy itself that the
payments to that government an amount
bidder is made aware of his labor stand-
penditure in a designated program or
retirement. The use of entitlement
of entitlement funds equal to the funds
funds for the repayment of debt is a
ards responsibilities under the Davis-
activity through legislative action.
used in violation of this section or, if
Bacon Act. Wage rate determinations
(c) "Program or activity" means any
permissible expenditure provided that:
this method is impracticable, the Sec-
(1) Entitlement funds are not used to
may be obtained by filing a Standard
function conducted by an identifiable ad-
pay any interest incurred because of the
Form 308 with the Employment Stand-
ministrative unit of the recipient govern-
retary may refer the matter to the At-
ards Administration of the applicable
ment, or by any other unit of govern-
debt,
torney General for appropriate civil
regional office of the U.S. Department of
ment or private contractor receiving en-
(2) The debt was originally incurred
action.
for a priority expenditure purpose as de-
Labor at least 30 days before the invita-
titlement funds from the recipient gov-
(g) Use of entitlement funds to supple-
fined in this section,
tion for bids or, in case of construction
ernment.
ment Federal grant funds. The prohibi-
(3) The actual expenditure from the
covered by general wage rate determina-
§ 51.52 Discrimination prohibited.
tion on use of entitlement funds con-
proceeds of the indebtedness (i.e., for
tions, the appropriate rate may be ob-
tained in paragraph (a) of this section
(a) General. No person in the United
materials, contractors, etc.) was made on
tained from the FEDERAL REGISTER.
does not prevent the use of entitlement
States shall on the ground of race,
funds to supplement other Federal grant
or after January 1, 1972 (the beginning
(c) Government employees. A recipient
color, national origin, or sex be excluded
funds. For example, if expenditures for
of the first entitlement period),
government which employs individuals
from participation in, be denied the
(4) The actual expenditures from the
whose wages are paid in whole or in part
a project exceed the amount available
benefits of, or be subjected to discrimi-
proceeds of the indebtedness were not in
from entitlement funds must pay wages
from non-Federal funds plus matched
nation under any program or activity
violation of any restrictions enumerated
which are not lower than the prevailing
Federal funds, the recipient government
funded in whole or in part with entitle-
in this subpart.
rates of pay for persons employed in sim-
may use entitlement funds to defray the
ment funds made available pursuant to
(c) Effect of noncompliance. In the
ilar public occupations by the same em-
excess costs: Provided, however, That
subtitle A of title I of the Act.
case of a unit of local government which
ployer. However, this subsection shall
the entitlement funds are not used to
(b) Specific discriminatory actions
uses an amount of entitlement funds for
apply with respect to employees in any
match other Federal funds: And Pro-
prohibited. (1) A recipient government
vided further, That in the case of a unit
other than priority expenditures as de-
category only if 25 percent or more of
shall not, under any program or activity
of local government, the use of entitle-
fined in paragraph (a) of this section, it
the wages of all employees of the recip-
to which the regulations of this subpart
will pay over to the Secretary (for deposit
ient government in such category are
ment funds to supplement Federal grants
apply, directly or through contractual
in the general fund of the Treasury) an
paid from the trust fund established by
is restricted to the category of expendi-
or other arrangements, on the ground
amount equal to 110 percent of any
it under $ 51.70(a).
tures as set forth in § 51.41.
of race, color, national origin, or sex:
amount expended in violation of para-
(i) Deny any service or other benefit
§ 51.41 Permissible expenditures for
graph (a) of this section, unless such
§ 51.43 Restriction on expenditures by
Indian tribes and Alaskan native
provided.
local governments.
amount of entitlement funds is promptly
villages.
(ii) Provide any service or other bene-
(a) In general. Entitlement funds re-
repaid to the trust fund of the local
fit which is different, or is provided in
government after notice by the Secretary
Indian tribes and Alaskan native vil-
a different form from that provided to
lages as defined in $ 51.2 are required to
others.
12
13
(iii) Subject any person to segregated
§ 51.53 Employment.
basis of sex, be excluded from participa-
(3) Any distinction between married
or separate treatment in any facility or
(a) Employment practices. In any pro-
tion in, be denied the benefits of, or
males and married females and any dis-
in any matter or process related to re-
be subjected to discrimination in recruit-
tinction between unmarried males and
ceipt of any service or benefit.
gram or activity funded in whole or in
part with entitlement funds, a recipient
ment, hiring, or employment, whether
unmarried females will be considered to
(iv) Restrict in any way the enjoyment
government may not (directly or indi-
full-time or part-time, under any pro-
be a distinction made on the basis of sex.
of any advantage or privilege enjoyed by
others receiving any service or benefit.
rectly through contractual or other ar-
gram or activity funded in whole or in
Similarly, a recipient government must
(v) Treat an individual differently
rangements) subject any individual to
part with entitlement funds.
not deny employment to women with
discrimination on the ground of race,
(b) Recruitment and advertisement.
young children unless it has the same
from others in determining whether the
individual satisfies any admission, en-
color, national origin, or sex in its em-
(1) Recipient governments engaged in
exclusionary policies for men; or termi-
ployment practices. These practices in-
recruiting activity must recruit employ-
nate an employee of one sex in a par-
rollment, eligibility, membership, or other
requirement or condition which individ-
clude recruitment, recruitment advertis-
ees of both sexes for all jobs.
ticular job classification upon reaching
ing, hiring, layoff, termination, upgrad-
(2) Advertisement in newspapers and
a certain age unless the same rule is ap-
uals must meet in order to be provided
ing, demotion, transfer, rates of pay or
other media for employment must not
plicable to persons of the opposite sex.
any service or other benefit.
other forms of compensation, use of fa-
express a sex preference. The placement
(4) A recipient government may not
(vi) Deny any person an opportunity
cilities, and other terms and conditions
of an advertisement in columns headed
refuse to hire men or women, or deny
to participate in a program or activity
of employment.
"Male" or "Female" will be considered to
men or women a particular job because
as an employee.
be a discriminatory limitation.
there are no separate restrooms or other
(vii) Deny any person an equal oppor-
(b) Employee selection procedures.
(3) A recipient government shall not
separate facilities. The recipient govern-
tunity to participate as appointed mem-
The Equal Employment Opportunity
recruit primarily or exclusively at enti-
ment's policies and practices must assure
Commission, in carrying out its respon-
bers of planning or advisory bodies in
ties which furnish as applicants only or
that appropriate facilities are available
sibilities in ensuring compliance with
connection with the disposition of en-
predominantly members of one sex if
for use by both sexes.
title VII of the Civil Rights Act of 1964,
titlement funds.
such recruitment has the effect of dis-
(5) Recipient governments may not
has published Guidelines on Employee
(2) A recipient government may not
criminating on the basis of sex.
deny any employee the right to any job,
Selection Procedures (29 CFR Part 1607)
utilize criteria or methods of administra-
(c) Job policies and practices. (1) Em-
which the employee is qualified to per-
to assist in establishing and maintaining
tion which have the effect of
ployees of both sexes shall have an
form, in reliance upon a State "protec-
equal employment opportunities. Among
(i) Subjecting individuals to discrimi-
equal opportunity to any available job
tive" law that does not apply equally to
other things, these Guidelines forbid the
nation on the basis of race, color, na-
that he or she is qualified to perform.
both sexes.
use of employee selection practices, pro-
tional origin, or sex.
(2) Recipient governments must not
(6) A recipient government shall not:
cedures, and devices (such as tests, min-
(ii) Perpetuating the results of past
imum educational levels, and the like)
make any distinction based upon sex in
(i) Classify a job as being for males
discriminatory practices.
which disqualify a disproportionate num-
employment opportunities, wages, hours
or for females.
(iii) Defeating or substantially impair
or other conditions of employment. It
(ii) Maintain or establish separate
ber of minority individuals or women
ing accomplishment of the objectives 01
shall be an unlawful employment prac-
lines of progression, seniority lists, career
for employment and which are not re-
the program or activity with respect to
lated to job performance. Recipient gov-
tice for an employer to have a pension
ladders, tenure, systems, position de-
individuals of a particular race, color,
or retirement plan which establishes dif-
scriptions or job requirements which are
ernments using selection procedures
national origin, or sex.
which are not in conformity with the
ferent optional or compulsory retirement
based on sex or which classify persons
(3) A recipient government may not,
ages based on sex. It shall be an unlaw-
on the basis of sex.
EEOC Guidelines shall, upon request of
with respect to any program or activity
the Secretary, set forth the reasons for
ful employment practice for an employer
(d) Marital or parental status. In any
to which this subpart applies, make se-
to provide for both, unequal benefits and
program or activity funded in whole or
any such noconformity, and, if neces-
lections of site or location of facilities
unequal contributions in the areas of
in part with entitlement funds:
sary, the actions the recipient govern-
which have the effect of:
insurance, pension or retirement plans,
(1) Family status. A recipient govern-
ment is taking or will take to assure that
(i) Excluding individuals from such
its selection procedures are job related.
welfare or other fringe benefits pro-
ment shall not treat an employee or
facilities.
applicant for employment differently on
(c) Self-evaluation. Recipient govern-
grams, Further, it shall be an unlawful
(ii) Denying the individuals the bene-
employment practice for an employer to
the basis of sex in any employment ac-
ments are expected to conduct a continu-
fits of such facilities.
ing program of self-evaluation to ascer-
provide for either unequal benefits or
tion or policy because of the employee's
(iii) Subjecting individuals using the
unequal contributions in such areas un-
or applicant's marital status or status as
faclities to discrimination on the ground
tain whether any of their recruitment,
less such unequal benefits or unequal
a parent. Such action may also not be
of race, color, national origin, or sex.
employee selection, or promotional poli-
cies (or lack thereof) directly or indi-
contributions are directly related to ac-
taken with respect to pregnancy unless
(4) Recipient governments are encour-
tuarial differences. Proof of such ac-
the recipient government can demon-
aged to take action with entitlement
rectly have the effect of denying equal
tuarial differences shall be provided by
strate that the pregnancy of the indi-
funds to ameliorate an imbalance in
employment opportunities to minority
the recipient government upon the re-
vidual concerned prevents adequate job
individuals or women.
services or facilities provided to any geo-
quest of the Secretary. In the areas of
performance by that individual. In no
(d) Employment compliance reviews.
graphic area or specific group in order
Compliance reviews of recipient govern-
insurance, pensions, welfare programs
event may a recipient government have
to overcome the effects of prior discrim-
and other fringe benefits, it shall be an
a policy or take an action which bene-
ments will be scheduled by the Office
inatory practice or usage. If entitlement
funds are allocated to a program or ac-
of Revenue Sharing, giving priority to
unlawful employment practice for a re-
fits a person because of his or her status
any recipient government programs
cipient government to make available
as head of household or principal family
tivity which currently provides an im-
benefits for the wives and families of
wage earner.
funded with entitlement funds which
balance of services or facilities to per-
male employees where the same benefits
(2) Pregnancy as a temporary disa-
show a significant disparity between the
sons protected by this subpart, then such
are not made available for the husbands
bility. A recipient government shall treat
percentage of minority persons or women
imbalance must be ameliorated.
in the work force and the percentage
and families of female employees; or to
any temporary disability arising from
(5) The enumeration of specific forms
of minority or women employees in the
make available benefits for the wives of
pregnancy, childbirth, false pregnancy,
applicable programs.
male employees which are not made
termination of pregnancy, and recovery
of prohibited discrimination in this para-
graph does not limit the generality of
available for female employees; or to
therefrom in the same manner as it
the prohibition in paragraph (a) of this
§ 51.54 Sex discrimination.
make available benefits to the husbands
treats any other temporary disability for
section.
of female employees, which are not made
all job related purposes. The term "job
(a) General. No person shall, on the
available for male employees.
related purposes" includes commence-
14
15
ment, duration. and extensions of leave,
the exclusive possession of any other
the provisions of this subpart, he will
(1) There has been an express finding
payment of disability income, reinstate-
agency, institution, or person, and such
cause a prompt investigation to be made
on the record, after notice and oppor-
ment or termination of employment, re-
agency, institution, or person fails or
by the Office of Revenue Sharing, or
tunity for hearing, of a failure to comply
instatement pay rate and position, fringe
refuses to furnish this information, the
other appropriate Federal or State agen-
with a requirement of this subpart.
benefits, accrual of seniority or other
recipient government shall SO certify in
cy, of the program or activity concerned.
(2) At least 10 days have elapsed from
benefit of service, and promotion.
its report and shall set forth what ef-
Such investigation may be made, if nec-
the date of the order of the administra-
(e) Sex as a bona fide occupational
forts it has made to obtain the informa-
essary, with the assistance of complain-
tive law judge. During this period addi-
qualification. Nothing in these regula-
tion.
ants or of the recipient government.
tional efforts will be made to assist the
tions shall prohibit the hiring of employ-
(b) Compliance reports. Each recipi-
recipient government to comply with this
ees of one sex if sex is a bona fide occu-
§ 51.58 Compliance reviews and affirm-
ent government shall keep such records
subpart and to take appropriate correc-
pational qualification. A bona fide OC-
ative action.
cupational qualification is only allowed
and submit on request of the Secretary
tive action.
(a) Compliance reviews. The Secre-
where there is a reasonable factual basis
timely, complete and accurate compli-
(3) Thirty days have elapsed after the
tary shall monitor and determine com-
Secretary has filed with the Committee
to believe that all, or substantially all,
ance reports at such times, in such form,
pliance of recipient governments with
on Government Operations of the House
of one sex are unable to perform the job
and containing such information, as the
the requirements of this subpart and of
of Representatives and the Committee on
in question. Further, the burden of dem-
Secretary may determine to be necessary
the Act. Compliance reviews will be un-
Finance of the Senate a full written re-
onstrating that sex is a bona fide occu-
or useful to enable the Office of Revenue
pational qualification for a given job
Sharing to ascertain whether the
dertaken from time to time, as appro-
port of the circumstances and the
priate, at the discretion of the Secretary.
grounds for such action. The time limita-
rests on the recipient government.
recipient government has complied or is
(b) Affirmative action. Any recipient
tion of subparagraphs (2) and (3) can
complying with this subpart. Recipient
§ 51.55 Assurances required.
government which has been determined
run concurrently.
governments shall make available on re-
to be in violation of this subpart must
(4) The Secretary has notified the re-
(a) General. In order to qualify for
quest of Office of Revenue Sharing offi-
cials, rácial, ethnic, male/female, and
take reasonable steps to remove or over-
cipient government that, in addition to
any payment for any entitlement period,
come the consequences of such discrim-
whatever sanctions have been imposed by
each Governor of a State or each chief
national origin data showing the extent
ination where a practice or usage has in
the administrative law judge, the Office
executive officer of a unit of local gov-
to which minorities and females are or
will be beneficiaries of entitlement funds.
purpose or effect tended to exclude in-
of Revenue Sharing shall withhold pay-
ernment shall, prior to the beginning
In the case of any program under which
dividuals from participation in, deny
ment of all entitlement funds until such
of each entitlement period, execute to the
a primary recipient government extends
them the benefits of, or subject them to
time as the recipient government com-
satisfaction of the Secretary an assur-
or will extend entitlement funds to any
discrimination under any program or
plies with the order of the administra-
ance that all programs to be funded in
activity to which this subpart applies, on
tive law judge. Further, the amount of
whole or in part with entitlement funds
other secondary recipient, such second-
the ground of race, color, national origin,
the forfeiture or repayment of entitle-
will be conducted in compliance with the
ary recipient shall submit such compli-
or sex. The Secretary will, upon a find-
ment funds, if any, will be limited to the
requirements of this subpart. Assurances
ance reports to the primary recipient as
ing of noncompliance, determine the
program or activity in which the non-
required under this paragraph shall be
may be necessary or useful to enable the
compliance has been found. Such funds
submitted pursuant to $ 51.10(b) and
primary recipient to carry out its obliga-
steps necessary to remove the noncom-
pliance and will determine a timetable
shall be collected by a downward adjust-
shall be in such form and detail as pre-
tions as a recipient government under
this subpart. Each recipient government
for implementing those steps.
ment to future entitlement payments
scribed by the Secretary.
(b) Failure to comply. Any recipient
shall identify, on request of the Office of
§ 51.59 Procedure for effecting compli-
and will be deposited in the general fund
government which fails to comply with
Revenue Sharing, any State or local
ance.
of the Treasury. If the Secretary deter-
paragraph (a) of this section shall have
agency which has been legally authorized
(a) General. Whenever the Secretary
mines that adjustment to future entitle-
its entitlement payments withheld for
to monitor its civil rights compliance
determines that a recipient government
ment payments is impracticable, he may
the applicable entitlement period. Any
activities.
has failed to comply with this subpart,
refer the matter to the Attorney Gen-
recipient government to which a deter-
§ 51.57 Complaints and investigations.
he shall notify the chief executive officer
eral for appropriate civil action to re-
mination of noncompliance with para-
of the recipient government and the
quire payment of such amount to the
graph (a) of this section has been made
(a) Complaints. Any person who be-
Governor of the State in which the gov-
United States.
shall be entitled to notice and oppor-
lieves anyone has been subjected to dis-
ernment is located of the noncompliance
(c) Withholding pursuant to court
tunity for hearing. However, notwith-
crimination prohibited by this subpart,
and shall request the Governor to secure
action. The Secretary may immediately
standing § 51.59, no payments shall be
may personally or by a representative file
compliance. If, within a reasonable
withhold the payment of entitlement
made for the applicable entitlement pe-
with the Secretary a written statement
period of time not to exceed 60 days, the
funds to a recipient government pending
riod pending the outcome of such hear-
setting forth the nature of the discrim-
Governor fails or refuses to secure com-
the entry of an affirmative action order
ing.
ination alleged and the facts upon which
pliance, the Secretary is authorized:
by a Federal court if:
the allegation is based. No representative
§ 51.56 Compliance information and
(1) To refer the matter to the Attor-
(1) A violation of the nondiscrimina-
of a recipient government nor any of its
reports.
ney General of the United States with a
tion provision of this subpart or the Act
agencies shall intimidate, threaten, co-
recommendation that an appropriate
(Sec. 122) was alleged in the complaint
(a) Access to sources of information.
erce, or discriminate against any person
civil action be instituted;
before the court;
Each recipient government shall permit
or class of persons because of testimony,
(2) To initiate an administrative hear-
(2) The court finds that the recipient
access by authorized representatives of
assistance, or participation in an inves-
ing pursuant to the powers and functions
government has violated the nondis-
the Office of Revenue Sharing and De-
tigation, proceeding, or hearing under
provided by title VI of the Civil Rights
crimination provision of this subpart or
partment of Justice during normal busi-
this subpart.
Act of 1964 (42 U.S.C. 2000d) or
the Act; and
ness hours to such of its facilities, books,
(b) Investigations. The Secretary shall
(3) To take such other action as may
(3) The question of withholding has
records, accounts, personnel, and other
advise the chief executive officer of the
be provided by law.
not been resolved by the court.
sources of information as may be rele-
recipient government of any complaint
(b) Administrative hearing. An order
(d) Action by Attorney General.
vant to a determination of whether the
received pursuant to paragraph (a). If
of an administrative law judge to with-
Nothing in these regulations is intended
recipient government is complying with
the Secretary has reason to believe that
hold temporarily, to repay, or to forfeit
to preclude the United States, in a civil
this subpart. Where any information re-
the complaint shows that a recipient
entitlement funds will not become effec-
action initiated by the Attorney General
quired of a recipient government is in
government has failed to comply with
tive until:
of the United States pursuant to § 122
16
17
(c) of the Act, from seeking, or a court
from granting, an order to require the
Subpart F-Fiscal Procedures and Auditing
viewing compliance and operations
audit reports are retained for 3 years
repayment of funds previously paid un-
§ 51.70 Procedures applicable to the
under the Act.
after the issuance of the audit report,
use of funds.
and are available upon request to the
der the Act, or an order that the payment
§ 51.71 Auditing and evaluation; scope
of funds under the Act be terminated
Secretary and the Comptroller General
A recipient government which receives
of audits.
or to their representatives; and,
or withheld. In addition, the Secretary
entitlement funds under the Act shall:
may initiate the procedure provided for
(a) In general. The Secretary shall
(4) Audit reports shall contain a clear
in paragraph (a) (2) of this section
(a) Establish a trust fund and deposit
provide for such auditing and evalua-
statement of the auditor's findings as to
all entitlement funds received and all
against a recipient government which
tion as may be necessary to insure that
compliance or noncompliance with the
interest earned thereon in that trust
has been named as a defendant in such
expenditures of entitlement funds by re-
requirements of the Act and the regula-
fund. The trust fund may be established
civil action if it is the Secretary's judg-
cipient governments comply with the re-
tions of this part. In the event that an
ment, after consultation with the Attor-
on the books and records as a separate
quirements of the Act and regulations of
auditor is unable to review compliance
set of accounts, or a separate bank ac-
ney General, that an administrative
this part. Detail audits, reviews and
with all of the provisions of paragraph
count may be established.
withholding of entitlement funds is an
evaluations may be made on a sample
(b), the audit report shall reflect those
(b) Use, obligate, or appropriate such
basis through inspection of records, and
areas in which a compliance review was
appropriate measure to ensure compli-
funds within 24 months from the end
of reports required under subpart B of
not performed. Audit reports which
ance with this subpart.
of the entitlement period to which the
this part, and through on-site examina-
disclose or otherwise indicate a possible
§ 51.60 Hearing procedures.
check is applicable. Any interest earned
tions, to determine whether the recipient
failure to comply substantially with any
on such funds while in the trust fund
governments have properly discharged
requirements of the Act or the regula-
Whenever a procedure which requires
shall be used, obligated, or appropriated
notice and opportunity for a hearing is
their financial responsibilities and to
tions of this part will be submitted to the
within 24 months from the end of the
invoked by the Secretary to effect com-
evaluate compliance with the Act and
Secretary by the Governor or chief ex-
entitlement period during which the in-
pliance under this subpart, the proce-
the regulations of this part.
ecutive officer.
terest was received or credited. An ex-
dural regulations promulgated in sub-
(b) Scope of audits. The scope of such
tension of time in which to act on the
part G of this part shall govern.
audits may include a review of entitle-
funds, or interest earned thereon, must
Subpart G-Proceedings for Reduction in
ment fund transactions, accounts and
§ 51.61 Jurisdiction over property.
be obtained by application to the Secre-
Entitlement, Withholding, or Repayment
reports. In addition, the scope of such
of Funds
tary. Such application will set forth the
audits may include an examination of
The Office of Revenue Sharing shall
facts and circumstances supporting the
§ 51.80 Scope of subpart.
the following areas:
have jurisdiction over any program or
need for more time and the amount of
(1) Compliance with assurances made
The regulations of this subpart govern
activity for purposes of this subpart for
additional time requested. The Secretary
under § 51.10.
the procedure and practice requirements
as long as a recipient government retains
may grant such extensions of time
(2) Compliance with the requirement
involving adjudications where the Act
ownership or possession of any real or
as in his judgment appear necessary or
that States must maintain transfers to
requires reasonable notice and oppor-
personal property or any interest there-
appropriate.
local governments as required by section
tunity for hearing.
in, which was purchased in whole or in
(c) Provide for the expenditure of en-
107(b) of the Act.
part with entitlement funds for the ap-
titlement funds in accordance with the
§ 51.81 Liberal construction.
(3) Compliance with the reporting re-
plicable program or activity. Further, if
laws and procedures applicable to the ex-
quirements and accuracy of the reports
The regulations in this subpart shall
such property is transferred to another
penditure of its own revenues.
submitted to the Secretary as set forth
be liberally construed to secure just, ex-
party, the Office of Revenue Sharing will
(d) Maintain its fiscal accounts in a
in Subpart B of this part.
peditious, and efficient determination of
retain jurisdiction over the recipient
manner sufficient to:
(4) Accuracy of fiscal data reported to
the issues presented. The Rules of Civil
government for purposes of this subpart
(1) Permit the reports required by the
the Bureau of the Census.
Procedure for the District Courts of the
for as long as the property is used to
Secretary to be prepared therefrom,
(5) Accuracy of the public records re-
United States, where applicable, shall be
provide benefits similar to those which
(2) Document compliance with the
quired under § 51.13(c).
a guide in any situation not provided for
were provided by the property before the
matching funds certification, and
(c) Reliance on State auditors and in-
or controlled by this subpart, but shall be
transfer.
(3) Permit the tracing of entitlement
dependent public accountants. It is the
liberally construed or relaxed when
funds to a level of expenditure adequate
intention of the Secretary to rely to the
necessary.
§ 51.62 Delegation.
to establish that such funds have not
maximum extent possible on audits of
been used in violation of the restrictions
§ 51.82 Reasonable notice and oppor-
The Secretary may assign to officials
recipient governments by State auditors
tunity for hearing.
and prohibitions of this part.
of the Department, officials of other
and independent public accountants.
The accounting for entitlement funds
Whenever the Secretary has reason to
departments or agencies of the Federal
shall at a minimum employ the same fis-
The Secretary may accept such audits
believe that a recipient government has
government, or officials of State agen-
and audits by local government auditors
cal accounting and internal audit pro-
failed to comply with any section of the
cies, responsibilities and authority to
cedures as are used with respect to ex-
when such acceptance is consistent with
Act or of the provisions of this part, and
effectuate the purposes of this section
penditures from revenues derived from
the objectives of the Act and regulations
that repayment, withholding, or reduc-
including the achievement of effective
the recipient government's own sources.
of this part, and provided:
tion in the amount of an entitlement of
(e) Provide to the Secretary and to the
(1) Audits are performed in accord-
coordination within the executive branch
a recipient government is required, he
Comptroller General of the United
ance with generally accepted auditing
shall give reasonable notice and oppor-
in the implementation of Title VI and
States, on reasonable notice, access to
standards. Recipient governments are
tunity of hearing to such government
Title VII of the Civil Rights Act of 1964
encouraged to have such audits per-
and the right to examine such books,
prior to the invocation of any sanction
(42 U.S.C. 2000d; 2000e). Such delega-
documents, papers or records as the Sec-
formed, to the extent they consider prac-
under the Act.
tion shall be made only with the consent
ticable, in accordance with standards for
retary may reasonably require for the
of the affected departments and agen-
the Audit of Governmental Organiza-
§ 51.83 Opportunity for compliance.
purpose of reviewing compliance with
cies, and in no event will the Secretary
the Act and the regulations of this part
tions, Programs, Activities and Functions
Except in proceedings involving will-
delegate authority to review the initial
issued by the Comptroller General in
or, in the case of the Comptroller Gen-
fulness or those in which the public in-
decision of an administrative law judge
June 1972.
eral, as the Comptroller General may
terest requires otherwise, a proceeding
to officials outside the Department.
(2) Audits include coverage as set
reasonably require for the purpose of re-
under this part will not be instituted
forth in paragraph (b) of this section.
until such facts or conduct which may
(3) Audit workpapers and related
warrant such action have been called to
18
19
the attention of the chief executive of-
first-class mail. Such mailing shall con-
shall file one if the administrative law
Act (5 U.S.C. 3105), shall conduct pro-
ficer of the recipient government in writ-
stitute complete service.
judge so requests.
ceedings upon complaints filed under
ing and he has been accorded an oppor-
(c) Filing of papers. Whenever the
(f) Referral to administrative law
this subpart.
tunity to demonstrate or achieve com-
filing of a paper is required or permitted
judge. Upon receipt of the answer by the
-(b) Powers of administrative law
pliance with the requirements of the Act
in connection with a proceeding under
Director, or upon filing a reply if one
judge. Among other powers provided by
and the regulations of this part. If the
this part, and the place of filing is not
is deemed necessary, or upon failure of
law, the administrative law judge shall
recipient government fails to meet the
specified in this subpart or by rule or
the respondent to file an answer within
have authority, in connection with any
requirements of the Act and regulations
order of the administrative law judge,
the time prescribed in the complaint or
proceeding under this subpart, to do the
within such reasonable time as may be
the paper shall be filed with the Director,
as extended under paragraph (a) of this
following things:
specified by the Secretary, a proceeding
Office of Revenue Sharing, Treasury De-
section, the complaint (and answer, if
(1) Administer oaths and affirma-
shall be initiated. If the recipient gov-
partment, Washington, D.C. 20226. All
one is filed) shall be referred to the ad-
tions;
ernment is a unit of local government, a
papers shall be filed in duplicate.
ministrative law judge who shall then
(2) Make ruling upon motions and
copy of all written communications re-
(d) Motions and requests. Motions
proceed to set a time and place for hear-
requests. Prior to the close of the hearing
garding the alleged violation shall be
and requests may be filed with the desig-
ing and shall serve notice thereof upon
no appeal shall lie from any such ruling
transmitted by the Secretary to the Gov-
nated administrative law judge, except
the parties at least 15 days in advance
except, at the discretion of the adminis-
ernor of the State in which the unit of
that an application to extend the time
of the hearing date.
trative law judge, in extraordinary
local government is located.
for filing an answer shall be filed with
§ 51.88 Supplemental charges.
circumstances;
§ 51.84 Institution of proceeding.
the Director, Office of Revenue Sharing.
(3) Determine the time and place of
pursuant to § 51.87(a).
If it appears that the respondent in
hearing and regulate its course and con-
A proceeding to require repayment of
§ 51.87 Answer; referral to administra-
its answer falsely and in bad faith, denies
duct. In determining the place of hear-
funds to the Secretary, or to withhold
tive law judge.
a material allegation of fact in the com-
ing the administrative law judge may
funds from subsequent entitlement pay-
plaint or states that it has no knowledge
take into consideration the requests and
ments, or to reduce the entitlement of a
(a) Filing. The respondent's answer
sufficient to form a belief, when in fact
convenience of the respondent or its
recipient government, shall be instituted
shall be filed in writing within the time
it does possess such information, or if it
counsel;
by the Secretary by a complaint which
specified in the complaint, unless on
appears that the respondent has know-
(4) Adopt rules of procedure and
names the recipient government as the
application the time is extended by the
ingly introduced false testimony during
modify the same from time to time as
respondent.
Secretary. The respondent's answer shall
the proceedings, the Secretary may
occasion requires for the orderly disposi-
§ 51.85 Contents of complaint.
be filed in duplicate with the Director,
thereupon file supplemental charges
tion of proceedings;
Office of Revenue Sharing.
(a) Charges. A complaint shall give a
against the respondent. Such supple-
(5) Rule upon offers of proof, re-
(b) Contents. The answer shall con-
plain and concise description of the al-
mental charges may be tried with other
ceive relevant evidence, and examine
tain a statement of facts which con-
charges in the case, provided the re-
witnesses;
legations which constitute the basis for
stitute the grounds of defense, and it
spondent is given due notice thereof and
(6) Take or authorize the taking of
the proceeding. A complaint shall be
shall specifically admit or deny each
is afforded an opportunity to prepare its
depositions;
deemed sufficient if it fairly informs the
allegation set forth in the complaint, ex-
defense thereto.
(7) Receive and consider oral or
respondent of the charges against it so
cept that the respondent shall not deny
a material allegation in the complaint
§ 51.89 Proof; variance; amendment of
written arguments on facts or law:
that it is able to prepare a defense to the
pleadings.
(8) Hold or provide for the holding
which it knows to be true; nor shall a
charges.
of conferences for the settlement or sim-
respondent state that it is without suffi-
In the case of a variance between the
(b) Demand for answer. Notification
plification of the issues by consent of the
cient information to form a belief when
allegations in a pleading and the evi-
shall be given in the complaint as to the
parties:
in fact it possesses such information.
dence adduced in support of the plead-
place and time within which the re-
(9) Perform such acts and take such
The respondent may also state affirma-
ing, the administrative law judge may
spondent shall file its answer, which time
tively special matters of defense.
measures as are necessary or appropri-
order or authorize amendment of the
shall be not less than 30 days from the
ate to the efficient conduct of any pro-
(c) Failure to deny or answer allega-
pleading to conform to the evidence:
date of service of the complaint. The
ceeding; and
tion in the complaint. Every allegation
Provided, The party that would other-
complaint shall also contain notice that
(10) Make initial findings and
in the complaint which is not denied in
wise be prejudiced by the amendment is
a decision by default will be rendered
decision.
the answer shall be deemed to be ad-
given reasonable opportunity to meet the
against the respondent in the event it
mitted and may be considered as proved,
allegation of the pleading as amended.
fails to file its answer as required.
§ 51.92 Hearings.
and no further evidence in respect of
The administrative law judge shall make
such allegation need be adduced at a
findings on any issue presented by the
(a) In general. The administrative
§ 51.86 Service of complaint and other
hearing.
pleadings as so amended.
law judge shall preside at the hearing
papers.
(d) Failure to file answer. Failure to
on a complaint. Testimony of witnesses
§ 51.90 Representation.
(a) Complaint. The complaint or a
file an answer within the time prescribed
shall be given under oath or affirmation.
true copy thereof may be served upon
in the complaint, except as the time for
A respondent or proposed respondent
The hearing shall be stenographically
the respondent by first-class mail or by
answer is extended under paragraph (a)
may appear in person through its chief
recorded and transcribed. Hearings will
certified mail, return receipt requested;
of this section, may constitute an ad-
executive officer or it may be represented
be conducted pursuant to section 7 of
or it may be served in any other manner
mission of the allegations of the com-
by counsel or other duly authorized rep-
the Administrative Procedure Act (5
which has been agreed to by the respond-
resentative. The Secretary shall be rep-
U.S.C. 556).
plaint and a waiver of hearing, and the
ent. Where the service is by certified
administrative law judge may make his
resented by the General Counsel of the
(b) Failure to appear. If a respondent
mail, the return Postal Service receipt
findings and decision by default without
fails to appear at the hearing, after due
Treasury.
duly signed on behalf of the respondent
a hearing or further procedure.
notice thereof has been served upon it or
shall be proof of service.
(e) Reply to answer. No reply to the
§ 51.91 Administrative law judge;
upon its counsel of record, it shall be
(b) Service of papers other than com-
respondent's answer shall be required,
powers.
deemed to have waived the right to a
plaint. Any paper other than the com-
and new matter in the answer shall be
(a) Appointment. An administrative
hearing and the administrative law
plaint may be served upon the respond-
deemed to be denied, but the Secretary
judge may make his findings and deci-
law judge, appointed as provided by sec-
ent or upon its attorney of record by
may file a reply in his discretion and
sion against the respondent by default.
tion 11 of the Administrative Procedure
(c) Waiver of hearing. A respondent
20
21
copy duly certified (pursuant to para-
(b) Oath of reporter. The reporter
mined to be expended in violation of the
may waive the hearing by informing the
graph (b) of this section) shall be
making the stenographic record shall
Act and the provisions of this part; or
administrative law judge, in writing, on
or before the date set for hearing, that
deemed sufficient.
subscribe an oath before the administra-
(c) An order that the Secretary with-
(e) Objections. Objections to evidence
tive law judge, to be filed in the record of
hold from subsequent entitlement pay-
it desires to waive hearing. In such event
shall be in short form, stating the
the case, that he (or she) will truly and
ments to the respondent an amount equal
the administrative law judge may make
his findings and decision based upon the
grounds of objection relied upon, and
correctly report the oral testimony and
to the amount of entitlement funds de-
pleadings before him. The decision shall
the record shall not include argument
proceedings at such hearing and accu-
termined to be expended in violation of
thereon, except as permitted by the ad-
rately transcribe the same to the best of
the Act and the provisions of this part; or
plainly show that the respondent waived
ministrative law judge. Rulings on such
his (or her) ability.
(d) An order that the entitlement of a
hearing.
objections shall be a part of the record.
(c) Transcript. In cases where the
recipient government be reduced and
§ 51.93 Stipulations.
No exception to the ruling is necessary
hearing is stenographically reported by
the amount of such reduction to be with-
to preserve the right of either party to
a Government contract reporter copies
held from subsequent entitlement pay-
The administrative law judge shall
of the transcript may be obtained from
the proceeding.
ments; or
prior to or at the beginning of the hear-
the reporter at rates not to exceed the
(e) An order dismissing the proceed-
ing require that the parties attempt to
§ 51.95 Depositions.
maximum rates fixed by contract be-
ings.
arrive at such stipulations as will elimi-
(a) In general. Depositions for use at
tween the Government and the reporter.
Where the hearing is stenographically
§ 51.99 Certification and transmittal of
nate the necessity of taking evidence
a hearing may, with the written approval
record and decision.
with respect to allegations of facts con-
of the administrative law judge, be taken
reported by a regular employee of the
cerning which there is no substantial dis-
by either the Secretary or the respond-
Department of the Treasury, a copy
After reaching his initial decision, the
pute. The administrative law judge shall
thereof will be supplied to the respond-
administrative law judge shall certify to
ent or their duly authorized representa-
take similar action, where it appears ap-
tives. Depositions may be taken upon
ent or its counsel at actual cost of dupli-
the complete record before him and shall
propriate, throughout the hearing and
oral or written interrogatories, upon not
cation. Copies of exhibits introduced at
immediately forward the certified record,
shall call and conduct any conferences
the hearing or at the taking of deposi-
together with a certified copy of his initial
less than 15 days written notice to the
which he deems advisable with a view to
tions will be supplied to the parties upon
decision, to the Secretary. The adminis-
other party, before any officer duly au-
the simplification, clarification, and dis-
thorized to administer an oath for gen-
the payment of a reasonable fee (31
trative law judge shall serve also a copy
position of any of the issues involved.
U.S.C. 483(a)).
of the initial decision by certified mail to
eral purposes. Such written notice shall
the chief executive officer of the respond-
state the names of the witnesses and the
$ 51.97 Proposed findings and conclu-
§ 51.94 Evidence.
ent or to its attorney of record.
time and place where the depositions are
sions.
(a) In general. Any evidence which
§ 51.100 What constitutes record.
would be admissible under the rules of
to be taken. The requirement of 15 days
Except in cases where a respondent
written notice may be waived by the par-
has failed to answer the complaint or
The transcript of testimony, pleadings
evidence governing proceedings in mat-
ties in writing, and depositions may then
has failed to appear at the hearing, or
and exhibits, all papers and requests filed
ters not involving trial by jury in the
be taken from the persons and at times
has waived the hearing, the administra-
in the proceeding, together with all find-
Courts of the United States, shall be ad-
and places mutually agreed to by the
tive law judge, prior to making his ini-
ings, decisions and orders, shall con-
missible and controlling as far as pos-
parties.
tial decision, shall afford the parties a
stitute the exclusive record in the matter.
sible: Provided that, the administrative
(b) Written interrogatories. When a
reasonable opportunity to submit pro-
law judge may relax such rules in any
§ 51.101 Procedure on review of de-
deposition is taken upon written inter-
posed findings and conclusions and sup-
hearing when in his judgment such re-
cision of administrative law judge.
rogatories, any cross-examination shall
porting reasons therefor.
laxation would not impair the rights of
(a) Appeal to the Secretary. Within 30
be upon written interrogatories. Copies
either party and would more speedily
§ 51.98 Initial decision of the adminis-
days from the date of the initial decision
of such written interrogatories shall be
conclude the hearing, or would better
trative law judge.
and order of the administrative law
served upon the other party with the no-
serve the ends of justice. Evidence which
tice, and copies of any written cross-
As soon as practicable after the con-
judge, the respondent may appeal to the
is irrelevant, immaterial or unduly repe-
interrogatories shall be mailed by first
clusion of a hearing and the receipt of
Secretary and file his exceptions to the
titious shall be excluded by the admin-
class mail or delivered to the opposing
any proposed findings and conclusions
initial decision and his reasons therefor.
istrative law judge.
party at least 10 days before the date
timely submitted by the parties, but in no.
The respondent shall transmit a copy of
(b) Depositions. The deposition of any
of taking the depositions, unless the par-
event later than 30 days after the sub-
his appeal and reasons therefor to the
witness may be taken pursuant to § 51.95
mission of proposed findings and con-
Director of the Office of Revenue Shar-
ties mutually agree otherwise. A party
and the deposition may be admitted.
upon whose behalf a deposition is taken
clusions if they are submitted, the ad-
ing. who may, within 30 days from receipt
(c) Proof of documents. Official docu-
must file it with the administrative law
ministrative law judge shall make his
of the respondent's appeal, file a reply
ments, records, and papers of a respond-
judge and serve one copy upon the op-
initial decision in the case. The initial
brief in opposition to the appeal. A copy
ent shall be admissible as evidence
decision shall include a statement of the
of the reply brief, if one is filed, shall be
posing party. Expenses in the reporting
without the production of the original
of depositions shall be borne by the party
findings of fact and the conclusions
transmitted to the respondent or its
provided that such documents, records
at whose instance the deposition is
therefor, as well as the reasons or basis
counsel of record. Upon the filing of an
and papers are evidenced as the original
taken.
therefor, upon all the material issues
appeal and a reply brief, if any, the Sec-
by a copy attested or identified by the
of fact, law or discretion presented on
retary shall make the final agency deci-
chief executive officer of the respondent
$51.96 Stenographic record; oath of
the record, and shall provide for one of
sion on the record of the administrative
or the custodian of the document. and
reporter; transcript.
the following orders:
law judge submitted to him.
contain the seal of the respondent.
(a) In general. A stenographic record
(a) An order that the respondent pay
(b) Appeal by the Director of the Office
(d) Exhibits. If any document, record,
shall be made of the testimony and pro-
over to the Secretary an amount equal
of Revenue Sharing. In the absence of an
paper, or other tangible or material thing
ceedings, including stipulations and ad-
to 110 percent of any amount determined
appeal by the respondent, the Director
is introduced in evidence as an exhibit,
missions of fact in all proceedings, but
to be improperly expended by the re-
of the Office of Revenue Sharing may, on
the administrative law judge may au-
not arguments of counsel unless other-
spondent in violation of § 51.41 relating
his own motion, within 45 days after the
thorize the withdrawal of the exhibit
wise ordered by the administrative law
to priority expenditures; or
initial decision, serve on the respondent
subject to any conditions he deems
judge. A transcript of the proceedings
(b) An order that the respondent pay
by certified mail a notice that he will ap-
proper. An original document, paper or
(and evidence) at the hearing shall be
over to the Secretary an amount equal
peal the decision to the Secretary, for
record need not be introduced, and a
made in all cases.
to the amount of entitlement funds deter-
review. Within 30 days from such notice,
22
23
the Director of the Office of Revenue
will be withheld until the Secretary is
Sharing or his counsel will file with the
satisfied that appropriate corrective ac-
Secretary his exceptions to the initial
tion has been taken and there is full
decision and his supporting reasons
compliance with the Act and regulations
therefor. A copy of the exceptions shall be
of this part. In every case in which the
transmitted to the respondent or its
counsel of record, who, within 30 days
respondent is a unit of local government,
after receipt thereof, may file a reply
a copy of the final order and notice shall
brief thereto with the Secretary and sub-
be submitted to the Governor of the
mit a copy to the Director of the Office
State in which the respondent is located.
of Revenue Sharing or his counsel. Upon
the filing of a reply brief, if any, the Sec-
§ 51.104 Publicity of proceedings.
retary will make the final agency decision
(a) In general. A proceeding con-
on the record of the administrative law
ducted under this subpart shall be open
judge.
to the public and to elements of the news
(c) Absence of appeal. In the absence
media provided that, in the judgment of
of either exceptions by the respondent
the administrative law judge, the pres-
or a notice of appeal by the Director of
ence of the media does not detract from
APPENDIX
the Office of Revenue Sharing within the
the decorum and dignity of the proceed-
time set forth in paragraphs (a) and (b)
ing.
of this section, or a review initiated by
(b) Availability of record. The record
the Secretary on his own motion within
established in any proceeding conducted
the time allowed to the Director of the
under this subpart shall be made avail-
Office of Revenue Sharing, the initial de-
able to inspection by the public as pro-
cision of the administrative law judge
vided for and in accordance with regu-
shall constitute the final decision of the
lations of the Department of the Treas-
Department.
ury pursuant to 31 CFR Part 1.
$ 51.102 Decision of the Secretary.
(c) Decisions of the administrative law
judge. The statement of findings and the
On appeal from or review of the initial
initial decision of the administrative law
decision of the administrative law judge,
judge in any proceedings, whether or not
the Secretary will make the final agency
on appeal or review, shall be indexed and
decision. In making his decision the Sec-
maintained by the Director of the Office
retary will review the record or such por-
of Revenue Sharing and made available
tions thereof as may be cited by the par-
for inspection by the public at the public
ties to permit limiting of the issues. The
documents room of the Department. If
Secretary may affirm, modify, or revoke
the findings and initial decision of the
practicable, the statement of findings
and the decisions of the administrative
administrative law judge. A copy of the
law judge shall be published periodically
Secretary's decision shall be transmitted
immediately to the chief executive officer
by the Department and offered for sale
of the respondent or its counsel of record.
through the Superintendent of Docu-
ments.
§ 51.103 Effect of order of repayment
or withholding of funds.
§ 51.105 Judicial review.
In case the final order against the re-
Actions taken under administrative
spondent is for repayment of funds to
proceedings pursuant to this subpart
the United States, such amount as de-
shall be subject to judicial review pur-
termined by the order shall be repaid
suant to section 143 of Subtitle C of the
upon request by the Secretary. To the ex-
Act. If a respondent desires to appeal a
tent that the respondent fails to do SO
decision of the administrative law judge
upon request of the Secretary, the Secre-
which has become final, or a final order
tary shall withhold from subsequent en-
of the Secretary for review of appeal, to
titlement payments to the respondent an
the U.S. Court of Appeals, as provided by
amount equal to the amount not repaid.
law, the Secretary, upon prior notifica-
In case the final order against the re-
tion of the filing of the petition for re-
spondent is for the withholding of an
view, shall have prepared in triplicate, a
amount of subsequent entitlement pay-
complete transcript of the record of the
ments, such amounts as ordered shall be
proceeding, and shall certify to the cor-
withheld by the Director of the Office of
rectness of the record. The original cer-
Revenue Sharing after notice to the chief
tificate together with the original record
executive officer of the recipient govern-
shall then be filed with the Court of Ap-
ment that if it fails to take corrective
peals which has jurisdiction.
action within 60 days after receipt of
the notice, further entitlement payments
[FR Doc.75-31236 Filed 11-17-75;8:45 am]
24
PART 1607-GUIDELINES ON EM-
instances persons are using tests as the
PLOYEE SELECTION PROCEDURES
basis for employment decisions without
evidence that they are valid predictors
Sec.
of employee job performance. Where
1607.1
Statement of purpose.
1607.2
"Test" defined.
evidence in support of presumed rela-
1607.3
Discrimination defined.
tionships between test performance and
1607.4
Evidence of validity.
job behavior is lacking, the possibility of
1607.5
Minimum standards for validation.
discrimination in the application of test
1607.6
Presentation of validity evidence.
results must be recognized. A test lacking
1607.7
Use of other validity studies.
demonstrated validity (i.e., having no
1607.8
Assumption of validity.
known significant relationship to job
1607.9
Continued use of tests.
1607.10
behavior) and yielding lower scores for
Employment agencies and employ-
ment services.
classes protected by title VII may result
1607.11
Disparate treatment.
in the rejection of many who have neces-
1607.12
Retesting.
sary qualifications for successful work
1607.13
Other selection techniques.
performance.
1607.14 Affirmative action.
(c) The guidelines in this part are
AUTHORITY: The provisions of this Part
designed to serve as a workable set of
1607 issued under sec. 713(a), 78 Stat. 265; 42
standards for employers, unions and
U.S.C. 2000e-12.
employment agencies in determining
SOURCE: The provisions of this Part 1607
whether their selection procedures con-
appear at 35 F.R. 12333, Aug. 1, 1970, unless
form with the obligations contained in
otherwise noted.
title VII of the Civil Rights Act of 1964.
Section 703 of title VII places an affirma-
§ 1607.1 Statement of purpose.
tive obligation upon employers, labor
(a) The guidelines in this part are
unions, and employment agencies, as
based on the belief that properly vali-
defined in section 701 of the Act, not to
dated and standardized employee selec-
discriminate because of race, color,
tion procedures can significantly con-
religion, sex, or national origin Subsec-
tribute to the implementation of non-
tion (h) of section 703 allows such per-
discriminatory personnel policies, as
sons to give and to act upon the
required by title VII. It is also recognized
results of any professionally developed
that professionally developed tests, when
ability test provided that such test, its
used in conjunction with other tools of
administration or action upon the results
personnel assessment and complemented
is not designed, intended or used to dis-
by sound programs of job design, may
criminate because of race, color, religion,
significantly aid in the development and
sex or national origin."
maintenance of an efficient work force
§ 1607.2 "Test" defined.
and, indeed, aid in the utilization
and conservation of human resources
For the purpose of the guidelines in
generally.
this part, the term "test" is defined as
(b) An examination of charges of dis-
any paper-and-pencil or performance
crimination filed with the Commission
measure used as a basis for any employ-
and an evaluation of the results of the
ment decision. The guidelines in this part
Commission's compliance activities has
apply, for example, to ability tests which
revealed a decided increase in total test
are designed to measure eligibility for
usage and a marked increase in doubtful
hire, transfer, promotion, membership,
testing practices which, based on our
training, referral or retention. This defi-
experience, tend to have discriminatory
nition includes, but is not restricted to,
effects. In many cases, persons have
measures of general intelligence, mental
come to rely almost exclusively on tests
ability and learning ability; specfic intel-
as the basis for making the decision to
lectual abilities; mechanical, clerical and
hire, transfer, promote, grant member-
other aptitudes; dexterity and coordina-
ship, train, refer or retain, with the
tion; knowledge and proficiency; occu-
result that candidates are selected or re-
pational and other interests; and atti-
jected on the basis of a single test score.
tudes, personality or temperament. The
Where tests are so used, minority can-
term "test" includes all formal, scored,
didates frequently experience dispropor-
quantified or standardized techniques of
tionately high rates of rejection by fail-
assessing job suitability including, in
ing to attain score levels that have been
addition to the above, specific qualifying
established as minimum standards for
or disqualifying personal history or back-
qualification.
ground requirements, specific educa-
tional or work history requirements,
It has also become clear that in many
scored interviews, biographical informa-
27
(1) Where a validity study is conducted
made to underscore the principle that
(5) Differential validity. Data must be
tion blanks, interviewers' rating scales,
in which tests are administered to appli-
attainment of or performance at a
generated and results separately reported
scored application forms, etc.
cants, with criterion data collected later,
higher level job is a relevant criterion
for minority and nonminority groups
the sample of subjects must be represent-
§ 1607.3 Discrimination defined.
in validating emp' syment tests only
wherever technically feasible. Where a
ative of the normal or typical candidate
when there is a high probability that
minority group is sufficiently large to
The use of any test which adversely
group for the job or jobs in question.
persons employed will in fact attain
constitute an identifiable factor in the
affects hiring, promotion, transfer or
This further assumes that the applicant
that higher level job within a reasonable
local labor market, but validation data
any other employment or membership
sample is representative of the minority
have not been developed and presented
opportunity of classes protected by title
period of time.
population available for the job or jobs in
(2) Where a test is to be used in dif-
separately for that group, evidence of
VII constitutes discrimination unless:
question in the local labor market. Where
(a) the test has been validated and evi-
ferent units of a multiunit organization
satisfactory validity based on other
a validity study is conducted in which
and no significant differences exist be-
groups will be regarded as only provi-
dences a high degree of utility as here-
tests are administered to present em-
inafter described, and (b) the person
tween units, jobs, and applicant popula-
sional compliance with these guidelines
ployees, the sample must be represent-
tions, evidence obtained in one unit may
pending separate validation of the test
giving or acting upon the results of the
ative of the minority groups currently
suffice for the others. Similarly, where
for the minority group in question. (See
particular test can demonstrate that al-
included in the applicant population. If
ternative suitable hiring, transfer or
the validation process requires the col-
§ 1607.9). A test which is differentially
it is not technically feasible to include
promotion procedures are unavailable
lection of data throughout a multiunit
valid may be used in groups for which
minority employees in validation studies
organization, evidence of validity specific
it is valid but not for those in which
for his use.
conducted on the present work force, the
to each unit may not be required. There
it is not valid. In this regard, where a
conduct of a validation study without
§ 1607.4 Evidence of validity.
may also be instances where evidence of
test is valid for two groups but one group
minority candidates does not relieve any
(a) Each person using tests to select
validity is appropriately obtained from
characteristically obtains higher test
from among candidates for a position or
more than one company in the same in-
person of his subsequent obligation for
scores than the other without a cor-
dustry. Both in this instance and in the
validation when inclusion of minority
for membership shall have available for
responding difference in job performance,
use of data collected throughout a multi-
candidates becomes technically feasible.
inspection evidence that the tests are
cutoff scores must be set so as to predict
(2) Tests must be administered and
being used in a manner which does not
unit organization, evidence of validity
the same probability of job success in
scored under controlled and standardized
both groups.
violate § 1607.3. Such evidence shall be
specific to each unit may not be re-
conditions, with proper safeguards to
examined for indications of possible
quired: Provided, That no significant
(c) In assessing the utility of a test
protect the security of test scores and to
discrimination, such as instances of
differences exist between units, jobs, and
the following considerations will be ap-
insure that scores do not enter into any
plicable:
higher rejection rates for minority can-
applicant populations.
judgments of employee adequacy that
didates than nonminority candidates.
(1) The relationship between the test
Furthermore, where technically fea-
§ 1607.5 Minimum standards for vali-
are to be used as criterion measures.
and at least one relevant criterion must
dation.
Copies of tests and test manuals, includ-
sible, a test should be validated for each
be statistically significant. This ordi-
(a) For the purpose of satisfying the
ing instructions for administration,
minority group with which it is used;
narily means that the relationship should
scoring, and interpretation of test results,
that is, any differential rejection rates
requirements of this part, empirical evi-
be sufficiently high as to have a prob-
that are privately developed and/or are
dence in support of a test's validity must
ability of no more than 1 to 20 to have
that may exist, based on a test, must be
not available through normal commercial
be based on studies employing generally
occurred by chance. However, the use of
relevant to performance on the jobs in
channels must be included as a part of
accepted procedures for determining cri-
a single test as the sole selection device
question.
the validation evidence.
(b) The term "technically feasible"
terion-related validity, such as those
will be scrutinized closely when that test
(3) The work behaviors or other cri-
described in "Standards for Educational
is valid against only one component of
as used in these guidelines means having
teria of employee adequacy which the
and Psychological Tests and Manuals"
job performance.
or obtaining a sufficient number of mi-
test is intended to predict or identify
nority individuals to achieve findings of
published by American Psychological
(2) In addition to statistical signifi-
must be fully described; and, addition-
Association, 1200 17th Street NW.,
cance, the relationship between the test
statistical and practical significance, the
ally, in the case of rating techniques, the
Washington, D.C. 20036. Evidence of
and criterion should have practical sig-
opportunity to obtain unbiased job per-
appraisal form(s) and instructions to
formance criteria, etc. It is the responsi-
content or construct validity, as defined
nificance. The magnitude of the rela-
the rater(s) must be included as a part
bility of the person claiming absence of
in that publication, may also be appro-
of the validation evidence. Such criteria
tionship needed for practical signifi-
technical feasibility to positively demon-
priate where criterion-related validity is
may include measures other than actual
cance or usefulness is affected by sev-
strate evidence of this absence.
not feasible. However, evidence for con-
eral factors, including:
work proficiency. such as training time.
(c) Evidence of a test's validity should
tent or construct validity should be ac-
(i) The larger the proportion of ap-
supervisory ratings, regularity of attend-
consist of empirical data demonstrating
companied by sufficient information from
plicants who are hired for or placed on
ance and tenure. Whatever criteria are
that the test is predictive of or signifi-
job analyses to demonstrate the rele-
the job, the higher the relationship needs
used they must represent major or
cantly correlated with important ele-
vance of the content (in the case of job
to be in order to be practically useful.
critical work behaviors as revealed by
ments of work behavior which comprise
knowledge or proficiency tests) or the
careful job analyses.
Conversely, a relatively low relationship
or are relevant to the job or jobs for
construct (in the case of trait measures).
(4) In view of the possibility of bias
may prove useful when proportionately
which candidates are being evaluated.
Evidence of content validity alone may
few job vacancies are available;
inherent in subjective evaluations, su-
be acceptable for well-developed tests
(ii) The larger the proportion of ap-
(1) If job progression structures and
that consist of suitable samples of the
pervisory rating techniques should be
plicants who become satisfactory em-
seniority provisions are so established
essential knowledge, skills or behaviors
carefully developed, and the ratings
ployees when not selected on the basis
that new employees will probably, within
should be closely examined for evidence
composing the job in question. The types
of the test, the higher the relationship
a reasonable period of time and in a
of bias. In addition, minorities might ob-
of knowledge, skills or behaviors con-
needs to be between the test and a cri-
great majority of cases, progress to a
tain unfairly low performance criterion
templated here do not include those
terion of job success for the test to be
higher level, it may be considered that
which can be acquired in a brief orien-
scores for reasons other than supervisor's
practically useful. Conversely, a relatively
candidates are being evaluated for jobs
prejudice, as when, as new employees,
low relationship may prove useful when
at that higher level. However, where job
tation to the job.
they have had less opportunity to learn
(b) Although any appropriate valida-
proportionately few applicants turn out
progression is not so nearly automatic,
job skills. The general point is that all
or the time span is such that higher
tion strategy may be used to develop
to be satisfactory;
criteria need to be examined to insure
such empirical evidence, the following
(iii) The smaller the economic and
level jobs or employees' potential may
freedom from factors which would un-
minimum standards, as applicable, must
human risks involved in hiring an un-
be expected to change in significant
fairly depress the scores of minority
ways, it shall be considered that candi-
be met in the research approach and in
qualified applicant relative to the risks
groups.
the presentation of results which con-
entailed in rejecting a qualified appli-
dates are being evaluated for a jcb at
or near the entry level. This poirt is
stitute evidence of validity:
29
28
or its publisher, or casual reports of test
dation, as described in the guidelines in
cant, the greater the relationship needs
earlier "failure" candidates who have
utility be accepted in lieu of evidence of
this part, before it administers the test-
to be in order to be practically useful.
availed themselves of more training or
Conversely, a relatively low relationship
validity. Specifically ruled out are: as-
ing program and/or makes referral pur-
suant to the test results. The employment
experience. In particular, if any appli-
may prove useful when the former risks
sumptions of validity based on test names
or descriptive labels; all forms of pro-
agency must furnish on request such
cant or employee during the course of
are relatively high.
motional literature; data bearing on the
evidence of validation. An employment
an interview or other employment pro-
§ 1607.6 Presentation of validity evi-
agency or service will be expected to
cedure claims more education or experi-
frequency of a test's usage; testimonial
dence.
refuse to administer a test where the
ence, that individual should be retested.
statements of sellers, users. or consul-
The presentation of the results of a
tants; and other nonempirical or anec-
employer or union does not supply satis-
§ 1607.13 Other selection techniques.
validation study must include graphical
dotal accounts of testing practices or
factory evidence of validation. Reliance
by the test user on the reputation of the
Selection techniques other than tests,
and statistical representations of the re-
testing outcomes.
(b) Although professional supervision
test, its author, or the name of the test
as defined in § 1607.2, may be improperly
lationships between the test and the cri-
shall not be deemed sufficient evidence
used so as to have the effect of discrim-
teria, permitting judgments of the test's
of testing activities may help greatly to
of validity (see § 1607.8(a)). An employ-
inating against minority groups. Such
utility in making predictions of future
insure technically sound and nondis-
ment agency or service may administer
techniques include, but are not restricted
work behavior. (See § 1607.5(c) concern-
criminatory test usage, such involvement
a testing program where the evidence of
to, unscored or casual interviews and un-
ing assessing utility of a test.) Average
alone shall not be regarded as constitut-
ing satisfactory evidence of test validity.
validity comports with the standards
scored application forms. Where there
scores for all tests and criteria must be
provided in § 1607.7.
are data suggesting employment discrim-
reported for all relevant subgroups, in-
cluding minority and nonminority groups
§ 1607.9 Continued use of tests.
ination, the person may be called upon to
§ 1607.11 Disparate treatment.
present evidence concerning the validity
where differential validation is required.
Under certain conditions, a person may
be permitted to continue the use of a
The principle of disparate or unequal
of his unscored procedures as well as
Whenever statistical adjustments are
test which is not at the moment fully
treatment must be distinguished from
of any tests which may be used, the
made in validity results for less than per-
the concepts of test validation. A test
evidence of validity being of the same
fect reliability or for restriction of score
supported by the required evidence of
or other employee selection standard-
types referred to in §§ 1607.4 and 1607.5.
range in the test or the criterion, or both,
validity. If, for example, determination
of criterion-related validity in a specific
even though validated against job per-
Data suggesting the possibility of dis-
the supporting evidence from the valida-
setting is practicable and required but
formance in accordance with the guide-
crimination exist, for example, when
tion study must be presented in detail.
not yet obtained. the use of the test may
lines in this part-cannot be imposed
there are differential rates of applicant
Furthermore, for each test that is to be
continue: Provided: (a) The person can
upon any individual or class protected
rejection from various minority and
established or continued as an opera-
by title VII where other employees,
nonminority or sex groups for the same
tional employee selection instrument, as
cite substantial evidence of validity as
applicants or members have not been
job or group of jobs or when there are
a result of the validation study, the
described in $ 1607.7 (a) and (b); and
subjected to that standard. Disparate
disproportionate representations of mi-
minimum acceptable cutoff (passing)
(b) he has in progress validation pro-
nority and nonminority or sex groups
score on the test must be reported. It is
cedures which are designed to produce,
treatment, for example, occurs where
members of a minority or sex group have
among present employees in different
expected that each operational cutoff
within a reasonable time, the additional
data required. It is expected also that the
been denied the same employment, pro-
types of jobs. If the person is unable
score will be reasonable and consistent
motion, transfer or membership oppor-
or unwilling to perform such validation
with normal expectations of proficiency
person may have to alter or suspend test
cutoff scores so that score ranges broad
tunities as have been made available to
studies, he has the option of adjusting
within the work force or group on which
enough to permit the identification of
other employees or applicants. Those
employment procedures so as to elimi-
the study was conducted.
employees or applicants who have been
nate the conditions suggestive of em-
criterion-related validity will be obtained.
§ 1607.7 Use of other validity studies.
denied equal treatment, because of prior
ployment discrimination.
In cases where the validity of a test
§ 1607.10 Employment agencies and
discriminatory practices or policies, must
employment services.
at least be afforded the same opportu-
§ 1607.14 Affirmative action.
cannot be determined pursuant to
(a) An employment service, including
nities as had existed for other employees
$ 1607.4 and $ 1607.5 (e.g., the number of
Nothing in these guidelines shall be
private employment agencies, State em-
or applicants during the period of dis-
subjects is less than that required for a
interpreted as diminishing a person's ob-
technically adequate validation study. or
ployment agencies, and the U.S. Training
crimination. Thus, no new test or other
ligation under both title VII and Execu-
an appropriate criterion measure cannot
and Employment Service, as defined in
employee selection standard can be im-
tive Order 11246 as amended by Execu-
be developed), evidence from validity
section 701(c), shall not make applicant
posed upon a class of individuals pro-
tive Order 11375 to undertake affirmative
studies conducted in other organizations,
or employee appraisals or referrals based
tected by title VII who, but for prior
action to ensure that applicants or em-
on the results obtained from any psycho-
discrimination, would have been granted
such as that reported in test manuals and
ployees are treated without regard to
logical test or other selection standard
the opportunity to qualify under less
race, color, religion, sex, or national
professional literature, may be consid-
ered acceptable when: (a) The studies
not validated in accordance with these
stringent selection standards previously
origin. Specifically, the use of tests which
in force.
pertain to jobs which are comparable
guidelines.
have been validated pursuant to these
(i.e., have basically the same task ele-
(b) An employment agency or service
§ 1607.12 Retesting.
guidelines does not relieve employers,
ments), and (b) there are no major dif-
which is requested by an employer or
unions or employment agencies of their
ferences in contextual variables or
union to devise a testing program is
Employers. unions, and employment
obligations to take positive action in af-
sample composition which are likely to
required to follow the standards for test
agencies should provide an opportunity
fording employment and training to
validation as set forth in these guide-
for retesting and reconsideration to
members of classes protected by title VII.
significantly affect validity. Any person
citing evidence from other validity
lines. An employment service is not
studies as evidence of test validity for his
relieved of its obligation herein because
the test user did not request such valida-
own jobs must substantiate in detail job
tion or has requested the use of some
comparability and must demonstrate the
lesser standard than is provided in these
absence of contextual or sample differ-
ences cited in paragraphs (a) and (b) of
guidelines.
(c) Where an employment agency or
this section.
service is requested only to administer
$ 1607.8 Assumption of validity.
a testing program which has been else-
where devised, the employment agency
(a) Under no circumstances will the
or service shall request evidence of vali-
general reputation of a test, its author
30
31
Revenue Sharing Regulations Index
Item
Section
Act Defined
51.2(a)
Activity Defined
51.51(c)
Actual Use Report
51.11(b)
Adjusted Taxes
51.22
Intergovernmental transfers
51.23(c)
Procedure for excluding education revenues
51.22(b)
Validity of data
51.22(g)
Adjustment of (see also Computation)
Data factors
51.29
Entitlement
51.20
Entitlement payments
51.26(b)
Local Government
51.30(a)(b)
Obligated Adjustment Reserve
51.26(a)
One-hundred percent criterion
51.30(c)
New Tax powers
51.27(e)
Administrative Hearing
51.59(b)
Administrative Law Judge
51.90, 51.104(c), 51.9
Appeals
51.101(a)(b)(c)
Allocations-Data Sufficiency
51.20(b)(1)
Dates
51.23
Alternate State Procedure for State Maintenance
of Transfers
51.27(c)
Application of Regulations
51.0
Appropriation Time Limit (see also Auditing)
51.70(b)
Assurances
Required
51.55
Reports to the secretary
51.10
Reports for review
51.10(a)
Auditing and Fiscal Procedures
Auditing and evaluation
51.71
Procedures applicable to the use of funds
51.70
access to books
51.70(e)
appropriations
51.70(b)
compliance, documented
51.70(d)(2)
expenditures
51.70(c)
fiscal account
51.70(d)
interest earned
51.70(b)
tracing
51.70(d)(2)
trust fund
51.70(a)
Availability of Records
51.104(b)
Bonafied occupational qualification
51.54(e)
33
Item
Section
Section
Item
Chief Executive Officer
51.24
51.2(b)
Boundary Changes
Department
51.2(c)
Bureau of the Census Report
51.14
Entitlement Funds
51.2(d), (e)
Entitlement Period
51.2(f)
Certification Report
51.12
Facility
51.51(a)
Funded
51.2(b)
51.51(b)
Chief Executive Officer
Governor
51.2(g)
Application of Regulations
51.0
Independent Public Accountants
51.2(g)
Indian Tribes and Alaskan Native Villages
51.2(i)
Appropriation Time Limit (see also Auditing)
51.70(b)
Program
51.51(c)
Recipient Government
51.2(j)
Assurances
Required
51.55
Depositions
51.64, 51.65
Reports to the secretary
51.10
51.10(a)
Disaster Relief
Reports for review
51.21
Discrimination
Auditing and Fiscal Procedures
51.50
51.71
Assurances
Auditing and evaluation
51.55
Procedures applicable to the use of funds
51.70
Complaints and investigations
51.57
51.70(e)
Hearing Procedure
access to books
51.60
51.70(b)
Specific actions prohibited
appropriations
51.52, 51.53, 51.54
compliance, documented
51.70(d)(2)
51.70(c)
Dissolution of Local Government Unit
51.24(c)
expenditures
fiscal account
51.70(d)
Education Tax Revenues
51.22(b)
interest earned
51.70(b)
51.70(d)(2)
Effect of Order of Withholding Funds
51.103
tracing
trust fund
51.70(a)
Employee selection procedures
51.53(b)
Availability of Records
51.104(b)
Employment discrimination
51.53, 4
Bonafied occupational qualification
51.54(e)
Entitlement Funds
51.2(e)
51.24
Periods
Boundary Changes
51.2(f)(1-5)
Reservation of
51.26(a)
Bureau of the Census Report
51.14
Waiver of
51.25(a)
Certification Report
51.12
Errors (see also Adjustment of)
51.29
Chief Executive Officer
51.2(b)
Evaluation (see also Auditing and Evaluation)
51.71
Civil Rights
51.50
Evidence (see also Administrative law judge)
51.94
Compliance information
51.56(a)
Expenditures (see also Auditing and Fiscal Procedures)
51.70
51.56(b)
Debt retirement (conditions)
51.41(b)
Compliance Report
Environmental
51.41(a)(1)
51.58
Financial administration
Compliance Review
51.41(a)(1)
Ordinary and necessary capital expenditures
51.41(a)(1)
Complaints and investigations
51.85-51.86
Public safety
51.41(a)(1)
Computation and Adjustment of Entitlements
51.20
Public transportation
51.41(a)(1)
Streets
51.41(a)(1)
Transit
51.41(a)(1)
County
Local unit in one or more counties
51.20(d)
Social services
51.41(a)(1)
Minimum and maximum entitlement
51.30(a)
Extension of Time
51.4
Data (see also Computation)
Insufficient
51.25(c)
Fire Protection
51.41(a)(1)
Public record
51.13(c)
Fiscal Account (see also Auditing and Fiscal Procedures) 51.70
Davis-Bacon Act
51.42
Government
51.41(b)
Local
Debt Retirement
51.2(m)
boundary changes
51.24
Definitions
51.2, 51.51
unit
Activity
51.51(c)
51.2(m)
35
34
Section
Item
Item
Section
units in one or more counties
51.20(d)
Reports (see also Bureau of Census)
51.14
Recipient
51.2(j)
Actual use
51.11(b)
State
51.2(I)
Assurances
51.10
Planned use
51.11(a)
Government Employees-Wage Standards
51.42(c)
Recruitment and Advertisement
51.54(b)
Governor's Report
51.27(h)
Reservations of Funds
51.26
Hearing Procedures
51.60
Secondary Recipients
51.5
Independent Public Accountants
51.2(h)
Self Evaluation
51.53(c)
Indian Tribes and Alaskan Native Villages
51.2(i)
Sex Discrimination
51.54
51.25(c)
Social Services
Insufficient Data-Waiver
51.41(a)(1)
Interest Earned
51.70(b)
Special Districts
51.5
Intergovernmental Transfers-Allocation
51.23(c)
State Maintenance of Local Transfers
51.27
Interrogatories (see also Depositions)
51.95(b)
Transfer of Funds
51.5
Judicial Review (see also Administrative Law Judge)
51.105
Trust Fund (see also Auditing and Fiscal Procedures)
51.70(a)
Jurisdiction over Property
51.61
Validity of Adjusted Tax Data
51.22(c)
Limitations on Adjustments for Annexations
51.24(d)
Wage Rates and Labor Standards
51.43
Marital Status
51.54(d)(1)
Withhold Future Payments
51.98(c)
Matching Funds (see Expenditures)
51.40
Waiver
51.25(a)
Non-compliance-permissible expenditures
51.41(c)
Non-delivery of Check
51.25(b)
Office of Revenue Sharing
51.1
Optional Formula
51.28
Parental Status
51.54(d)(1)
Penalties for Matching (see also Prohibitions
and Restrictions)
51.40(f)
Planned Use Report
51.11(a)
Pregnancy
51.54(d)(2)
Procedure for Affecting Compliance
51.59
Prohibitions and Restrictions on Use-Matching Funds
51.40
Certification
51.40(c)
Discrimination
51.50
Federal funds
51.40(a)
Supplement federal grants
51.40(g)
Indian tribes
51.44
Increase in State or local revenues
51.40(d)
Secondary recipients
51.40(b)
Wage Rates and Labor Standards
51.43
Publications and Publicity
News reports
51.13
Publicity of proceedings
51.104
Records
51.104(b)
36
*U.S. GOVERNMENT PRINTING OFFICE:1975 633-509/53 1-3
37
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Office of Revenue Sharing
Department of the Treasury
Treas 551
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U.S.MAIL
Penalty for Private Use $300
Public Law 92-512
92nd Congress, H. R. 14370
October 20, 1972
An Act
86 STAT. 919
To provide fiscal assistance to State and local governments, to authorize Federal
collection of State individual income taxes, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
Federal-
State revenue
TITLE I-FISCAL ASSISTANCE TO STATE AND LOCAL
sharing.
GOVERNMENTS
Subtitle A-Allocation and Payment of Funds
SEC. 101. SHORT TITLE.
This title may be cited as the "State and Local Fiscal Assistance Act
Citation
of
of 1972".
title.
SEC. 102. PAYMENTS TO STATE AND LOCAL GOVERNMENTS.
Except as otherwise provided in this title, the Secretary shall, for
each entitlement period, pay out of the Trust Fund to-
(1) each State government a total amount equal to the entitle-
ment of such State government determined under section 107 for
such period, and
(2) each unit of local government a total amount equal to the
entitlement of such unit determined under section 108 for such
period.
In the case of entitlement periods ending after the date of the enact-
ment of this Act, such payments shall be made in installments, but not
less often than once for each quaiter, and, in the case of quarters
ending after September 30, 1972, shall be paid not later than 5 days
after the close of each quarter. Such payments for any entitlemen
period may be initially made on the basis of estimates. Proper adjust-
ment shall be made in the amount of any payment to a State govern-
ment or a unit of local government to the extent that the payments
previously made to such government under this subtitle were in
excess of or less than the amounts required to be paid.
SEC. 103. USE OF FUNDS BY LOCAL GOVERNMENTS FOR PRIORITY
EXPENDITURES.
(a) IN GENERAL-Funds received by units of local government
under this subtitle may be used only for priority expenditures. For
"Priority
purposes of this title, the term "priority expenditures" means only-
expenditures."
(1) ordinary and necessary maintenance and operating expenses
for-
(A) public safety (including law enforcement, fire protec-
tion, and building code enforcement),
(B) environmental protection (including sewage disposal,
sanitation, and pollution abatement),
(C) public transportation (including transit systems and
streets and roads),
(D) health,
(E) recreation,
(F) libraries,
(G) social services for the poor or aged, and
FORD LIBRARY & 078830
(H) financial administration; and
(2) ordinary and necessary capital expenditures authorized by
law.
(b) CERTIFICATES BY LOCAL GOVERNMENTS.-The Secretary is
authorized to accept a certification by the chief executive officer of a
unit of local government that the unit of local government has used
25
Pub. Law 92-512
October 20, 1972
86 STAT. 920
the funds received by it under this subtitle for an entitlement period
only for priority expenditures, unless he determines that such certi-
fication is not sufficiently reliable to enable him to carry out his duties
under this title.
SEC. 104. PROHIBITION ON USE AS MATCHING FUNDS BY STATE OR
LOCAL GOVERNMENTS.
(a) IN GENERAL.-No State government or unit of local government
may use, directly or indirectly, any part of the funds it receives under
this subtitle as a contribution for the purpose of obtaining Federal
funds under any law of the United States which requires such govern-
ment to make a contribution in order to receive Federal funds.
(b) DETERMINATIONS BY SECRETARY OF THE TREASURY.-If the Sec-
retary has reason to believe that a State government or unit of local
government has used funds received under this subtitle in violation of
subsection (a), he shall give reasonable notice and opportunity for
hearing to such government. If, thereafter, the Secretary of the Treas-
ury determines that such government has used funds in violation of
subsection (a), he shall notify such government of his determination
and shall request repayment to the United States of an amount
equal to the funds SO used. To the extent that such government fails to
repay such amount, the Secretary shall withhold from subsequent
payments to such government under this subtitle an amount equal to
the funds SO used.
(c) INCREASED STATE OR LOCAL GOVERNMENT REVENUES.-No State
government or unit of local government shall be determined to have
used funds in violation of subsection (a) with respect to any funds
received for any entitlement period to the extent that the net revenues
received by it from its own sources during such period exceed the net
revenues received by it from its own sources during the one-year period
beginning July 1, 1971 (or one-half of such net revenues, in the case
of an entitlement period of 6 months).
(d) DEPOSITS AND TRANSFERS TO GENERAL FUND.-Any amount
repaid by a State government or unit of local government under sub-
section (b) shall be deposited in the general fund of the Treasury. An
amount equal to the reduction in payments to any State government or
unit of local government which results from the application of this sec-
Post, P. 935.
tion (after any judicial review under section 143) shall be transferred
from the Trust Fund to the general fund of the Treasury on the day
on which such reduction becomes final.
(e) CERTIFICATES BY STATE AND LOCAL GOVERNMENTS.-The Secre-
tary is authorized to accept a certification by the Governor of a State
or the chief executive officer of a unit of local government that the
State government or unit of local government has not used any funds
received by it under this subtitle for an entitlement period in violation
of subsection (a); unless he determines that such certification is not
sufficiently reliable to enable him to carry out his duties under this
title.
SEC. 105. CREATION OF TRUST FUND; APPROPRIATIONS.
(a) TRUST FUND.-
(1) IN GENERAL-There is hereby established on the books of
the Treasury of the United States a trust fund to be known as the
"State and Local Government Fiscal Assistance Trust Fund"
(referred to in this subtitle as the "Trust Fund"). The Trust Fund
shall remain available without fiscal year limitation and shall con-
sist of such amounts as may be appropriated to it and deposited
in it as provided in subsection (b). Except as provided in this title,
26
October 20, 1972
Pub. Law 92-512
86 STAT. 921
amounts in the Trust Fund may be used only for the payments to
State and local governments provided by this subtitle.
(2) TRUSTEE.-The Secretary of the Treasury shall be the
Report to
trustee of the Trust Fund and shall report to the Congress not
Congress.
later than March 1 of each year on the operation and status of the
Trust Fund during the preceding fiscal year.
(b) APPROPRIATIONS.-
(1) IN GENERAL.-There is appropriated to the Trust Fund, out
of amounts in the general fund of the Treasury attributable to the
collections of the Federal individual income taxes not otherwise
appropriated-
(A) for the period beginning January 1, 1972, and ending
June 30, 1972, $2,650,000,000;
(B) for the period beginning July 1, 1972, and ending
December 31, 1972, $2,650,000,000;
(C) for the period beginning January 1, 1973, and ending
June 30, 1973, $2,987,500,000;
(D) for the fiscal year beginning July 1, 1973,
$6,050,000,000;
(E) for the fiscal year beginning July 1, 1974,
$6,200,000,000;
(F) for the fiscal year beginning July 1, 1975,
$6,350,000,000; and
(G) for the period beginning July 1, 1976, and ending
December 31, 1976, $3,325,000,000.
(2) NONCONTIGUOUS STATES ADJUSTMENT AMOUNTS.-There is
appropriated to the Trust Fund, out of amounts in the general
fund of the Treasury attributable to the collections of the Federal
individual income taxes not otherwise appropriated-
(A) for the period beginning January 1, 1972, and ending
June 30, 1972, $2,390,000;
(B) for the period beginning July 1, 1972, and ending
December 31, 1972, $2,390,000;
(C) for the period beginning January 1, 1973, and ending
June 30, 1973, $2,390,000;
(D) for each of the fiscal years beginning July 1, 1973,
July 1, 1974, and July 1, 1975, $4,780,000; and
(E) for the period beginning July 1, 1976, and ending
December 31, 1976, $2,390,000.
(3) DEPOSITS.-Amounts appropriated by paragraph (1) or (2)
for any fiscal year or other period shall be deposited in the Trust
Fund on the later of (A) the first day of such year or period, or
(B) the day after the date of enactment of this Act.
(c) TRANSFERS FROM TRUST FUND TO GENERAL FUND.-The Secre-
tary shall from time to time transfer from the Trust Fund to the
general fund of the Treasury any moneys in the Trust Fund which he
determines will not be needed to make payments to State governments
and units of local government under this subtitle.
SEC. 106. ALLOCATION AMONG STATES.
(a) IN GENERAL.-There shall be allocated to each State for each
entitlement period, out of amounts appropriated under section 105 (b)
(1) for that entitlement period, an amount which bears the same ratio
to the amount appropriated under that section for that period as the
amount allocable to that State under subsection (b) bears to the sum
of the amounts allocable to all States under subsection (b).
(b) DETERMINATION OF ALLOCABLE AMOUNT.-
27
Pub. Law 92-512
October 20, 1972
86 STAT, 922
(1) Ix GENERAL.-For purposes of subsection (a), the amount
allocable to a State under this subsection for any entitlement period
shall be determined under paragraph (2), except that such amount
shall be determined under paragraph (3) if the amount allocable
to it under paragraph (3) is greater than the sum of the amounts
allocable to it under paragraph (2) and subsection (c).
(2) THREE FACTOR FORMULA.-For purposes of paragraph (1),
the amount allocable to a State under this paragraph for any
entitlement period is the amount which bears the same ratio to
$5,300,000,000 as-
(A) the population of that State, multiplied by the general
tax effort factor of that State, multiplied by the relative
income factor of that State, bears to
(B) the sum of the products determined under subpara-
graph (A) for all States.
(3) FIVE FACTOR FORMULA.-For purposes of paragraph (1), the
amount allocable to a State under this paragraph for any entitle-
ment period is the amount to which that State would be entitled
if-
(A) 1/3 of $3,500,000,000 were allocated among the States on
the basis of population.
(B) 1/3 of $3,500,000,000 were allocated among the States on
the basis of urbanized population,
(C) 1/3 of $3,500,000,000 were allocated among the States on
the basis of population inversely weighted for per capita
income,
(D) ½ of $1,800,000,000 were allocated among the States on
the basis of income tax collections. and
(E) ½ of $1,800,000,000 were allocated among the States on
the basis of general tax effort.
(c) NONCONTIGUOUS STATES ADJUSTMENT.-
(1) IN GENERAL.-In addition to amounts allocated among the
States under subsection (a), there shall be allocated for each
entitlement period, out of amounts appropriated under section
105 (b) (2), an additional amount to any State (A) whose alloca-
tion under subsection (b) is determined by the formula set forth
in paragraph (2) of that subsection and (B) in which civilian
employees of the United States Government receive an allowance
80 Stat. 512.
under section 5941 of title 5, United States Code.
(2) DETERMINATION OF AMOUNT.-The additional amount allo-
cable to any State under this subsection for any entitlement period
is an amount equal to a percentage of the amount allocable to that
State under subsection (b) (2) for that period which is the same
as the percentage of basic pay received by such employees sta-
tioned in that State as an allowance under such section 5941. If
the total amount appropriated under section 105 (b) (2) for any
entitlement period is not sufficient to pay in full the additional
amounts allocable under this subsection for that period, the Sec-
retary shall reduce proportionately the amounts so allocable.
SEC. 107. ENTITLEMENTS OF STATE GOVERNMENTS.
(a) DIVISION BETWEEN STATE AND LOCAL GOVERNMENTS.-The
State government shall be entitled to receive one-third of the amount
allocated to that State for each entitlement period. The remaining
portion of each State's allocation shall be allocated among the units
of local government of that State as provided in section 108.
(b) STATE MUST MAINTAIN TRANSFERS TO LOCAL GOVERNMENTS.-
28
October 20, 1972
Pub. Law 92-512
86 STAT. 923
(1) GENERAL RULE.-The entitlement of any State government
for any entitlement period beginning on or after July 1, 1973,
shall be reduced by the amount (if any) by which—
(A) the average of the aggregate amounts transferred by
the State government (out of its own sources) during such
period and the preceding entitlement period to all units of
local government in such State, is less than,
(B) the similar aggregate amount for the one-year period
beginning July 1, 1971.
For purposes of subparagraph (A), the amount of any reduction
in the entitlement of a State government under this subsection
for any entitlement period shall, for subsequent entitlement
periods, be treated as an amount transferred by the State govern-
ment (out of its own sources) during such period to units of
local government in such State.
(2) ADJUSTMENT WHERE STATE ASSUMES RESPONSIBILITY FOR
CATEGORY OF EXPENDITURES.-If the State government establishes
to the satisfaction of the Secretary that since June 30, 1972, it has
assumed responsibility for a category of expenditures which
(before July 1, 1972) was the responsibility of local governments
located in such State, then, under regulations prescribed by the
Secretary, the aggregate amount taken into account under para-
graph (1) (B) shall be reduced to the extent that increased State
government spending (out of its own sources) for such category
has replaced corresponding amounts which for the one-year
period beginning July 1, 1971, it transferred to units of local
government.
(3) ADJUSTMENT WHERE NEW TAXING POWERS ARE CONFERRED
UPON LOCAL GOVERNMENTS.-If a State establishes to the satisfac-
tion of the Secretary that since June 30, 1972, one or more units of
local government within such State have had conferred upon them
new taxing authority, then, under regulations prescribed by the
Secretary, the aggregate amount taken into account under para-
graph (1) (B) shall be reduced to the extent of the larger of-
(A) an amount equal to the amount of the taxes collected
by reason of the exercise of such new taxing authority by
such local governments, or
(B) an amount equal to the amount of the loss of revenue
to the State by reason of such new taxing authority being
conferred on such local governments.
No amount shall be taken into consideration under subparagraph
(A) if such new taxing authority is an increase in the authorized
rate of tax under a previously authorized kind of tax, unless the
State is determined by the Secretary to have decreased a related
State tax.
(4) SPECIAL RULE FOR PERIOD BEGINNING JULY 1, 1973.-In the
case of the entitlement period beginning July 1. 1973, the preced-
ing entitlement period for purposes of paragraph (1) (A) shall
be treated as being the one-year period beginning July 1, 1972.
(5) SPECIAL RULE FOR PERIOD BEGINNING JULY 1, 1976.-In the
case of the entitlement period beginning July 1, 1976. and ending
December 31, 1976. the aggregate amount taken into account un-
der paragraph (1) (A) for the preceding entitlement period and
the aggregate amount taken into account under paragraph (1)
(B) shall be one-half of the amounts which (but for this para-
graph) would be taken into account.
29
Pub. Law 92-512
October 20, 1972
86 STAT, 924
(6) REDUCTION IN ENTITLEMENT.-If the Secretary has reason
to believe that paragraph (1) requires a reduction in the entitle-
ment of any State government for any entitlement period, he shall
give reasonable notice and opportunity for hearing to the State. If.
thereafter, he determines that paragraph (1) requires the reduc-
tion of such entitlement, he shall also determine the amount of
such reduction and shall notify the Governor of such State of
such determinations and shall withhold from subsequent payments
to such State government under this subtitle an amount equal
to such reduction.
(7) TRANSFER TO GENERAL FUND.-An amount equal to the
reduction in the entitlement of any State government which
Post, p. 935.
results from the application of this subsection (after any judicial
review under section 143) shall be transferred from the Trust
Fund to the general fund of the Treasury on the day on which
such reduction becomes final.
SEC. 108. ENTITLEMENTS OF LOCAL GOVERNMENTS.
(a) ALLOCATION AMONG COUNTY AREAS.-The amount to be allo-
cated to the units of local government within a State for any entitle-
ment period shall be allocated among the county areas located in that
State SO that each county area will receive an amount which bears the
same ratio to the total amount to be allocated to the units of local
government within that State as-
(1) the population of that county area, multiplied by the
general tax effort factor of that county area, multiplied by the
relative income factor of that county area, bears to
(2) the sum of the products determined under paragraph (1)
for all county areas within that State.
(b) ALLOCATION TO COUNTY GOVERNMENTS, MUNICIPALITIES, Town-
SHIPS, ETc.-
(1) COUNTY GOVERNMENTS.-The county government shall be
allocated that portion of the amount allocated to the county area
for the entitlement period under subsection (a) which bears the
same ratio to such amount as the adjusted taxes of the county
government bear to the adjusted taxes of the county government
and all other units of local government located in the county area.
(2) OTHER UNITS OF LOCAL GOVERNMENT.-The amount remain-
ing for allocation within a county area after the application of
paragraph (1) shall be allocated among the units of local gov-
ernment (other than the county government and other than town-
ship governments) located in that county area so that each unit
of local government will receive an amount which bears the same
ratio to the total amount to be allocated to all such units as-
(A) the population of that local government, multiplied by
the general tax effort factor of that local government, multi-
plied by the relative income factor of that local government,
bearsto
(B) the sum of the products determined under subpara-
graph (A) for all such units.
(3) TOWNSHIP GOVERNMENTS.-If the county area includes one
or more township governments, then before applying paragraph
(2)-
(A) there shall be set aside for allocation under subpara-
graph (B) to such township governments that portion of the
amount allocated to the county area for the entitlement
period which bears the same ratio to such amount as the sum
30
October 20, 1972
Pub. Law 92-512
86 STAT. 925
of the adjusted taxes of all such township governments bears
to the aggregate adjusted taxes of the county government,
such township governments, and all other units of local gov-
ernment located in the county area, and
(B) that portion of each amount set aside under subpara-
graph (A) shall be allocated to each township government
on the same basis as amounts are allocated to units of local
government under paragraph (2).
If this paragraph applies with respect to any county area for any
entitlement period, the remaining portion allocated under para-
graph (2) to the units of local government located in the county
area (other than the county government and the township govern-
ments) shall be appropriately reduced to reflect the amounts set
aside under subparagraph (A).
(4) INDIAN TRIBES AND ALASKAN NATIVE VILLAGES.-If within a
county area there is an Indian tribe or Alaskan native village
which has a recognized governing body which performs substan-
tial governmental functions, then before applying paragraph (1)
there shall be allocated to such tribe or village a portion of the
amount allocated to the county area for the entitlement period
which bears the same ratio to such amount as the population of
that tribe or village within that county area bears to the popula-
tion of that county area. If this paragraph applies with respect
to any county area for any entitlement period, the amount to be
allocated under paragraph (1) shall be appropriately reduced
to reflect the amount allocated under the preceding sentence. If
the entitlement of any such tribe or village is waived for any
entitlement period by the governing body of that tribe or village,
then the provisions of this paragraph shall not apply with respect
to the amount of such entitlement for such period.
(5) RULE FOR SMALL UNITS OF GOVERNMENT.-If the Secretary
determines that in any county area the data available for any
entitlement period are not adequate for the application of the
formulas set forth in paragraphs (2) and (3) (B) with respect to
units of local government (other than a county government) with
a population below a number (not more than 500) prescribed for
that county area by the Secretary, he may apply paragraph (2)
or (3) (B) by allocating for such entitlement period to each such
unit located in that county area an amount which bears the same
ratio to the total amount to be allocated under paragraph (2)
or (3) (B) for such entitlement period as the population of such
unit bears to the population of all units of local government in
that county area to which allocations are made under such para-
graph. If the preceding sentence applies with respect to any
county area, the total amount to be allocated under paragraph
(2) or (3) (B) to other units of local government in that county
area for the entitlement period shall be appropriately reduced
to reflect the amounts allocated under the preceding sentence.
(6) ENTITLEMENT.-
(A) IN GENERAL.-Except as otherwise provided in this
paragraph, the entitlement of any unit of local government for
any entitlement period shall be the amount allocated to such
unit under this subsection (after taking into account any
applicable modification under subsection (c)).
(B) MAXIMUM AND MINIMUM PER CAPITA ENTITLEMENT.
Subject to the provisions of subparagraphs (C) and (D), the
per capita amount allocated to any county area or any unit of
local government (other than a county government) within a
31
Pub. Law 92-512
October 20, 1972
86 STAT. 926
State under this section for any entitlement period shall not
be less than 20 percent, nor more than 145 percent, of two-
thirds of the amount allocated to the State under section 106,
divided by the population of that State.
(C) LIMITATION.-The amount allocated to any unit of
local government under this section for any entitlement period
shall not exceed 50 percent of the sum of (i) such government's
adjusted taxes, and (ii) the intergovernmental transfers of
revenue to such government (other than transfers to such
government under this subtitle).
(D) ENTITLEMENT LESS THAN $200, OR GOVERNING BODY
WAIVES ENTITLEMENT.-If (but for this subparagraph) the
entitlement of any unit of local government below the level of
the county government-
(i) would be less than $200 for any entitlement period
($100 for an entitlement period of 6 months), or
(ii) is waived for any entitlement period by the gov-
erning body of such unit,
then the amount of such entitlement for such period shall (in
lieu of being paid to such unit) be added to, and shall be-
come a part of, the entitlement for such period of the county
government of the county area in which such unit is located.
(7) ADJUSTMENT OF ENTITLEMENT.-
(A) IN GENERAL-In adjusting the allocation of any county
area or unit of local government, the Secretary shall make any
adjustment required under paragraph (6) (B) first, any adust-
ment required under paragraph (6) (C) next, and any adjustment
required under paragraph (6) (D) last.
(B) ADJUSTMENT FOR APPLICATION OF MAXIMUM OR MINIMUM
PER CAPITA ENTITLEMENT.-The Secretary shall adjust the alloca-
tions made under this section to county areas or to units of local
governments in any State in order to bring those allocations into
compliance with the provisions of paragraph (6) (B). In making
such adjustments he shall make any necessary adjustments with
respect to county areas before making any necessary adjustments
with respect to units of local government.
(C) ADJUSTMENT FOR APPLICATION OF LIMITATION.-In any case
in which the amount allocated to a unit of local government is re-
duced under paragraph (6) (C) by the Secretary, the amount of
that reduction-
(i) in the case of a unit of local government (other than a
county government), shall be added to and increase the
allocation of the county government of the county area in
which it is located, unless (on account of the application of
paragraph (6)) that county government may not receive it,
in which case the amount of the reduction shall be added to
and increase the entitlement of the State government of the
State in which that unit of local government is located; and
(ii) in the case of a county government, shall be added to
and increase the entitlement of the State government of the
State in which it is located.
(c) SPECIAL ALLOCATION RULES.-
(1) OPTIONAL FORMULA.-A State may by law provide for the
allocation of funds among county areas, or among units of local
government (other than county governments), on the basis of the
population multiplied by the general tax effort factors of such
areas or units of local government, on the basis of the population
32
October 20, 1972
Pub. Law 92-512
86 STAT. 927
multiplied by the relative income factors of such areas or units
of local government, or on the basis of a combination of those
two factors. Any State which provides by law for such a variation
in the allocation formula provided by subsection (a), or by para-
graphs (2) and (3) of subsection (b), shall notify the Secretary
of such law not later than 30 days before the beginning of the first
shall- entitlement period to which such law is to apply. Any such law
(A) provide for allocating 100 percent of the aggregate
amount to be allocated under subsection (a), or under para-
graphs (2) and (3) of subsection (b)
(B) apply uniformly throughout the State; and
(C) apply during the period beginning on the first day of
the first entitlement period to which it applies and ending
on December 31, 1976.
(2) CERTIFICATION.-Paragraph (1) shall apply within a State
only if the Secretary certifies that the State law complies with
the requirements of such paragraph. The Secretary shall not
certify any such law with respect to which he receives notifica-
tion later than 30 days prior to the first entitlement period dur-
ing which it is to apply.
(d) GOVERNMENTAL DEFINITIONS AND RELATED RULES.-For pur-
poses of this title—
(1) UNITS OF LOCAL GOVERNMENT.-The term "unit of local gov-
ernment" means the government of a county, municipality, town-
ship, or other unit of government below the State which is a unit
of general government (determined on the basis of the same prin-
ciples as are used by the Bureau of the Census for general statis-
tical purposes). Such term also means, except for purposes of
paragraphs (1), (2), (3), (5), (6) (C), and (6) (D) of subsec-
tion (b), and, except for purposes of subsection (c), the recog-
nized governing body of an Indian tribe or Alaskan native village
which performs substantial governmental functions.
(2) CERTAIN AREAS TREATED AS COUNTIES.-In any State in
which any unit of local government (other than a county govern-
ment) constitutes the next level of government below the State
government level, then, except as provided in the next sentence,
the geographic area of such unit of government shall be treated
as a county area (and such unit of government shall be treated as
a county government) with respect to that portion of the State's
geographic area. In any State in which any county area is not
governed by à county government but contains two or more units
of local government, such units shall not be treated as county
governments and the geographic areas of such units shall not be
treated as county areas.
(3) TOWNSHIPS.-The term "township" includes equivalent
subdivisions of government having different designations (such
as "towns"), and shall be determined on the basis of the same
principles as are used by the Bureau of the Census for general
statistical purposes.
(4) UNITS OF LOCAL GOVERNMENT LOCATED IN LARGER ENTITY.-A
unit of local government shall be treated as located in a larger
entity if part or all of its geographic area is located in the larger
entity.
(5) ONLY PART OF UNIT LOCATED IN LARGER ENTITY.-If only part
of a unit of local government is located in a larger entity, such
part shall be treated for allocation purposes as a separate unit of
33
Pub. Law 92-512
October 20, 1972
86 STAT. 928
local government. and all computations shall, except as otherwise
provided in regulations, be made on the basis of the ratio which
the estimated population of such part bears to the population of
the entirety of such unit.
(6) BOUNDARY CHANGES, GOVERNMENTAL REORGANIZATION, ETC.-
If, by reason of boundary line changes, by reason of State statu-
tory or constitutional changes. by reason of annexations or other
governmental reorganizations. or by reason of other circum-
stances, the application of any provision of this section to units of
local government does not carry out the purposes of this subtitle,
the application of such provision shall be made, under regulations
prescribed by the Secretary, in a manner which is consistent with
such purposes.
SEC. 109. DEFINITIONS AND SPECIAL RULES FOR APPLICATION OF
ALLOCATION FORMULAS.
(a) IN GENERAL.-For purposes of this subtitle-
(1) POPULATION.-Population shall be determined on the same
basis as resident population is determined by the Bureau of the
Census for general statistical purposes.
(2) URBANIZED POPULATION.-Urbanized population means
the population of any area consisting of a central city or cities of
50,000 or more inhabitants (and of the surrounding closely settled
territory for such city or cities) which is treated as an urbanized
area by the Bureau of the Census for general statistical purposes.
(3) INCOME-Income means total money income received from
all sources, as determined by the Bureau of the Census for general
statistical purposes.
(4) PERSONAL INCOME.-Personal income means the income of
individuals, as determined by the Department of Commerce for
national income accounts purposes.
(5) DATES FOR DETERMINING ALLOCATIONS AND ENTITLE-
MENTS.-Except as provided in regulations, the determination of
allocations and entitlements for any entitlement period shall be
made as of the first day of the third month immediately preceding
the beginning of such period.
(6) INTERGOVERNMENTAL TRANSFERS-The intergovernmental
transfers of revenue to any government are the amounts of revenue
received by that government from other governments as a share in
financing (or as reimbursement for) the performance of govern-
mental functions, as determined by the Bureau of the Census for
general statistical purposes.
(7) DATA USED; UNIFORMITY OF DATA.-
(A) GENERAL RULE-Except as provided in subparagraph
(B), the data used shall be the most recently available data
provided by the Bureau of the Census or the Department of
Commerce, as the case may be.
(B) USE OF ESTIMATES, ETC.-Where the Secretary deter-
mines that the data referred to in subparagraph (A) are not
current enough or are not comprehensive enough to provide
for equitable allocations, he may use such additional data
(including data based on estimates) as may be provided for
in regulations.
(b) INCOME TAX AMOUNT OF STATES.-For purposes of this sub-
title-
(1) IN GENERAL.-The income tax amount of any State for any
entitlement period is the income tax amount of such State as deter-
mined under paragraphs (2) and (3).
34
October 20, 1972
Pub. Law 92-512
86 STAT. 929
(2) INCOME TAX AMOUNT.-The income tax amount of any State
for any entitlement period is 15 percent of the net amount collected
from the State individual income tax of such State during 1972 or
(if later) during the last calendar year ending before the begin-
ning of such entitlement period.
(3) CEILING AND FLOOR.-The income tax amount of any State
for any entitlement period-
(A) shall not exceed 6 percent, and
(B) shall not be less than 1 percent,
of the Federal individual income tax liabilities attributed to such
State for taxable years ending during 1971 or (if later) during
the last calendar year ending before the beginning of such entitle-
ment period.
(4) STATE INDIVIDUAL INCOME TAX.-The individual income tax
of any State is the tax imposed upon the income of individuals by
such State and described as a State income tax under section
164 (a) (3) of the Internal Revenue Code of 1954.
78 Stat. 40.
(5) FEDERAL INDIVIDUAL INCOME TAX LIABILITIES.-Federal indi-
26 USC 164.
vidual income tax liabilities attributed to any State for any period
shall be determined on the same basis as such liabilities are deter-
mined for such period by the Internal Revenue Service for general
statistical purposes.
(c) GENERAL TAX EFFORT OF STATES.-
(1) IN GENERAL.-For purposes of this subtitle-
(A) GENERAL TAX EFFORT FACTOR.-The general tax effort
factor of any State for any entitlement period is (i) the net
amount collected from the State and local taxes of such State
during the most recent reporting year, divided by (ii) the
aggregate personal income (as defined in paragraph (4) of
subsection (a)) attributed to such State for the same period.
(B) GENERAL TAX EFFORT AMOUNT.-The general tax effort
amount of any State for any entitlement period is the amount
determined by multiplying-
(i) the net amount collected from the State and local
taxes of such State during the most recent reporting year
by
(ii) the general tax effort factor of that State.
(2) STATE AND LOCAL TAXES.-
(A) TAXES TAKEN INTO ACCOUNT.-The State and local
taxes taken into account under paragraph (1) are the com-
pulsory contributions exacted by the State (or by any unit of
local government or other political subdivision of the State)
for public purposes (other than employee and employer
assessments and contributions to finance retirement and social
insurance systems, and other than special assessments for
capital outlay), as such contributions are determined by the
Bureau of the Census for general statistical purposes.
(B) MOST RECENT REPORTING YEAR.-The most recent
reporting year with respect to any entitlement period consists
of the years taken into account by the Bureau of the Census
in its most recent general determination of State and local
taxes made before the close of such period.
(d) GENERAL TAX EFFORT FACTOR OF COUNTY AREA.-For purposes
of this subtitle, the general tax effort factor of any county area for
any entitlement period is-
(1) the adjusted taxes of the county government plus the ad-
35
Pub. Law 92-512
October 20, 1972
86 STAT. 930
justed taxes of each other unit of local government within that
county area, divided by
(2) the aggregate income (as defined in paragraph (3) of
subsection (a)) attributed to that county area.
(e) GENERAL TAX EFFORT FACTOR OF UNIT OF LOCAL GOVERN-
MENT.-For purposes of this subtitle-
(1) IN GENERAL-The general tax effort factor of any unit of
local government for any entitlement period is-
(A) the adjusted taxes of that unit of local government,
divided by
(B) the aggregate income (as defined in paragraph (3) of
subsection (a)) attributed to that unit of local government.
(2) ADJUSTED TAXES.-
(A) IN GENERAL-The adjusted taxes of any unit of local
government are-
(i) the compulsory contributions exacted by such
government for public purposes (other than employee
and employer assessments and contributions to finance
retirement and social insurance systems, and other than
special assessments for capital outlay), as such contri-
butions are determined by the Bureau of the Census for
general statistical purposes,
(ii) adjusted (under regulations prescribed by the
Secretary) by excluding an amount equal to that portion
of such compulsory contributions which is properly
allocable to expenses for education.
(B) CERTAIN SALES TAXES COLLECTED BY COUNTIES.-In any
case where-
(i) a county government exacts sales taxes within the
geographic area of a unit of local government and
transfers part or all of such taxes to such unit without
specifying the purposes for which such unit may spend
the revenues, and
(ii) the Governor of the State notifies the Secretary
that the requirements of this subparagraph have been
met with respect to such taxes,
then the taxes SO transferred shall be treated as the taxes of
the unit of local government (and not the taxes of the
county government).
(f) RELATIVE INCOME FACTOR.-For purposes of this subtitle, the
relative income factor is a fraction-
(1) in the case of a State, the numerator of which is the per
capita income of the United States and the denominator of which
is the per capita income of that State;
(2) in the case of a county area, the numerator of which is the
per capita income of the State in which it is located and the denom-
inator of which is the per capita income of that county area; and
(3) in the case of a unit of local government, the numerator of
which is the per capita income of the county area in which it is
located and the denominator of which is the per capita income of
the geographic area of that unit of local government.
For purposes of this subsection, per capita income shall be determined
on the basis of income as defined in paragraph (3) of subsection (a).
(g) ALLOCATION RULES FOR FIVE FACTOR FORMULA.-For purposes
of section 106 (b) (3)-
(1) ALLOCATION ON BASIS OF POPULATION.-Any allocation
among the States on the basis of population shall be made by
36
October 20, 1972
Pub. Law 92-512
86 STAT, 931
allocating to each State an amount which bears the same ratio to
the total amount to be allocated as the population of such State
bears to the population of all the States.
(2) ALLOCATION ON BASIS OF URBANIZED POPULATION.-Any
allocation among the States on the basis of urbanized population
shall be made by allocating to each State an amount which bears
the same ratio to the total amount to be allocated as the urbanized
population of such State bears to the urbanized population of all
the States.
(3) ALLOCATION ON BASIS OF POPULATION INVERSELY WEIGHTED
FOR PER CAPITA INCOME.-Any allocation among the States on
the basis of population inversely weighted for per capita income
shall be made by allocating to each State an amount which bears
the same ratio to the total amount to be allocated as-
(A) the population of such State, multiplied by a fraction
the numerator of which is the per capita income of all the
States and the denominator of which is the per capita income
of such State, bears to
(B) the sum of the products determined under subpara-
graph (A) for all the States.
(4) ALLOCATION ON BASIS OF INCOME TAX COLLECTIONS.-Any
allocation among the States on the basis of income tax collections
shall be made by allocating to each State an amount which bears
the same ratio to the total amount to be allocated as the income tax
amount of such State bears to the sum of the income tax amounts
of all the States.
(5) ALLOCATION ON BASIS OF GENERAL TAX EFFORT.-Any allo-
cation among the States on the basis of general tax effort shall be
made by allocating to each State an amount which bears the same
ratio to the total amount to be allocated as the general tax effort
amount of such State bears to the sum of the general tax effort
amounts of all the States.
Subtitle B-Administrative Provisions
SEC. 121. REPORTS ON USE OF FUNDS; PUBLICATION.
(a) REPORTS ON USE OF FUNDS.-Each State government and unit
of local government which receives funds under subtitle A shall, after
the close of each entitlement period, submit a report to the Secretary
setting forth the amounts and purposes for which funds received dur-
ing such period have been spent or obligated. Such reports shall be in
such form and detail and shall be submitted at such time as the
Secretary may prescribe.
(b) REPORTS ON PLANNED USE OF FUNDS.-Each State government
and unit of local government which expects to receive funds under
subtitle A for any entitlement period beginning on or after January 1,
1973, shall submit a report to the Secretary setting forth the amounts
and purposes for which it plans to spend or obligate the funds which
it expects to receive during such period. Such reports shall be in such
form and detail as the Secretary may prescribe and shall be submitted
at such time before the beginning of the entitlement period as the
Secretary may prescribe.
(c) PUBLICATION AND PUBLICITY OF REPORTS.-Each State govern-
ment and unit of local government shall have a copy of each report
submitted by it under subsection (a) or (b) published in a newspaper
which is published within the State and has general circulation within
the geographic area of that government. Each State government and
unit of local government shall advise the news media of the publica-
tion of its reports pursuant to this subsection.
37
Pub. Law 92-512
October 20, 1972
86 STAT. 932
SEC. 122. NONDISCRIMINATION PROVISION.
(a) IN GENERAL.-No person in the United States shall on the
ground of race, color, national origin, or sex be excluded from partici-
pation in, be denied the benefits of, or be subjected to discrimination
under any program or activity funded in whole or in part with funds
made available under subtitle A.
(b) AUTHORITY OF SECRETARY.-Whenever the Secretary determines
that a State government or unit of local government has failed to
comply with subsection (a) or an applicable regulation, he shall notify
the Governor of the State (or, in the case of a unit of local government,
the Governor of the State in which such unit is located) of the non-
compliance and shall request the Governor to secure compliance. If
within a reasonable period of time the Governor fails or refuses to
secure compliance, the Secretary is authorized (1) to refer the matter
to the Attorney General with a recommendation that an appropriate
civil action be instituted; (2) to exercise the powers and functions
78 Stat. 252.
provided by title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d)
or (3) to take such other action as may be provided by law.
(c) AUTHORITY OF ATTORNEY GENERAL.-When a matter is referred
to the Attorney General pursuant to subsection (b), or whenever he has
reason to believe that a State government or unit of local government is
engaged in a pattern or practice in violation of the provisions of this
section, the Attorney General may bring a civil action in any appro-
priate United States district court for such relief as may be appro-
priate, including injunctive relief.
SEC. 123. MISCELLANEOUS PROVISIONS.
(a) ASSURANCES TO THE SECRETARY.-In order to qualify for any
payment under subtitle A for any entitlement period beginning on or
after January 1, 1973, a State government or unit of local government
must establish (in accordance with regulations prescribed by the Sec-
retary, and, with respect to a unit of local government, after an
opportunity for review and comment by the Governor of the State in
which such unit is located) to the satisfaction of the Secretary that-
(1) it will establish a trust fund in which it. will depcsit all pay-
ments it receives under subtitle A;
(2) it will use amounts in such trust fund (including any
interest earned thereon while in such trust fund) during such rea-
sonable period or periods as may be provided in such regulations;
(3) in the case of a unit of local government, it will use amounts
in such trust fund (including any interest earned thereon whi'e in
such trust fund) only for priority expenditures (as defined in
section 103(a)), and will pay over to the Secretary (for depcsit
in the general fund of the Treasury) an amount equal to 110 per-
cent of any amount expended out of such trust fund in violation of
this paragraph, unless such amount is promptly repaid to such
trust fund (or the violation is otherwise corrected) after notice
and opportunity for corrective action;
(4) it will provide for the expenditure of amounts received
under subtitle A only in accordance with the laws and procedures
applicable to the expenditure of its own revenues;
(5) it will-
(A) use fiscal, accounting, and audit procedures which
conform to guidelines established therefor by the Secretary
(after consultation with the Comptroller General of the
United States),
(B) provide to the Secretary (and to the Comptroller Gen-
eral of the United States), on reasonable notice, access to, and
38
October 20, 1972
Pub. Law 92-512
86 STAT. 933
the right to examine, such books, documents, papers, or rec-
ords as the Secretary may reasonably require for purposes of
reviewing compliance with this title (or, in the case of the
Comptroller General, as the Comptroller General may reason-
ably require for purposes of reviewing compliance and oper-
ations under subsection (c) (2) and
(C) make such annual and interim reports (other than
Reports.
reports required by section 121) to the Secretary as he may
reasonably require;
(6) all laborers and mechanics employed by contractors or sub-
contractors in the performance of work on any construction proj-
ect, 25 percent or more of the costs of which project are paid out
of its trust fund established under paragraph (1), will be paid
wages at rates not less than those prevailing on similar construc-
tion in the locality as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act, as amended (40 U.S.C.
276a-276a-5), and that with respect to the labor standards speci- 49 Stat. 1011.
fied in this paragraph the Secretary of Labor shall act in accord-
ance with Reorganization Plan Numbered 14 of 1950 (15 F.R.
3176; 64 Stat. 1267) and section 2 of the Act of June 13, 1934, 5 USC app.
as amended (40 U.S.C. 276c)
63 Stat. 108.
(7) individuals employed by it whose wages are paid in whole
or in part out of its trust fund established under paragraph (1)
will be paid wages which are not lower than the prevailing rates
of pay for persons employed in similar public occupations by the
same employer; and
(8) in the case of a unit of local government as defined in the
second sentence of section 108 (d) (1) (relating to governments of
Indian tribes and Alaskan native villages), it will expend funds
received by it under subtitle A for the benefit of members of the
tribe or village residing in the county area from the allocation of
which funds are allocated to it under section 108 (b) (4).
Paragraph (7) shall apply with respect to employees in any category
only if 25 percent or more of the wages of all employees of the State
government or unit of local government in such category are paid
from the trust fund established by it under paragraph (1).
(b) WITHHOLDING OF PAYMENTS.-If the Secretary determines that
a State government or unit of local government has failed to comply
substantially with any provision of subsection (a) or any regulations
prescribed thereunder, after giving reasonable notice and opportunity
for a hearing to the Governor of the State or the chief executive officer
of the unit of local government, he shall notify the State government
or unit of local government that if it fails to take corrective action
within 60 days from the date of receipt of such notification further
payments to it will be withheld for the remainder of the entitlement
period and for any subsequent entitlement period until such time as
the Secretary is satisfied that appropriate corrective action has been
taken and that there will no longer be any failure to comply. Until he
is satisfied, the Secretary shall make no further payments of such
amounts.
(c) ACCOUNTING, AUDITING, AND EVALUATION.-
(1) IN GENERAL-The Secretary shall provide for such account-
ing and auditing procedures, evaluations, and reviews as may be
necessary to insure that the expenditures of funds received under
subtitle A by State governments and units of local government
comply fully with the requirements of this title. The Secretary is
authorized to accept an audit by a State of such expenditures of a
39
Pub. Law 92-512
October 20, 1972
86 STAT. 934
State government or unit of local government if he determines that
such audit and the audit procedures of that State are sufficiently
reliable to enable him to carry out his duties under this title.
(2) COMPTROLLER GENERAL SHALL REVIEW COMPLIANCE.-The
Comptroller General of the United States shall make such reviews
of the work as done by the Secretary, the State governments, and
the units of local government as may be necessary for the Con-
gress to evaluate compliance and operations under this title.
Subtitle C-General Provisions
SEC. 141. DEFINITIONS AND SPECIAL RULES.
(a) SECRETARY.-For purposes of this title, the term "Secretary"
means the Secretary of the Treasury or his delegate. The term "Secre-
tary of the Treasury" means the Secretary of the Treasury per-
sonally, not including any delegate.
(b) ENTITLEMENT PERIOD.-For purposes of this title, the term
"entitlement period" means-
(1) The period beginning January 1. 1972, and ending June 30,
1972.
(2) The period beginning July 1, 1972, and ending Decem-
ber 31, 1972.
(3) The period beginning January 1, 1973, and ending June 30,
1973.
(4) The one-year periods beginning on July 1 of 1973, 1974, and
1975.
(5) The period beginning July 1, 1976, and ending Decem-
ber 31, 1976.
(e) DISTRICT OF COLUMBIA.-
(1) TREATMENT AS STATE AND LOCAL GOVERNMENT.-For pur-
poses of this title, the District of Columbia shall be treated both-
(A) as a State (and any reference to the Governor of a
State shall, in the case of the District of Columbia, be treated
as a reference to the Commissioner of the District of
Columbia). and
(B) as a county area which has no units of local govern-
ment (other than itself) within its geographic area.
(2) REDUCTION IN CASE OF INCOME TAX ON NONRESIDENT INDIVID-
UALS-If there is hereafter enacted a law imposing a tax on
income earned in the District of Columbia by individuals who are
not residents of the District of Columbia, then the entitlement of
the District of Columbia under subtitle A for any entitlement
period shall be reduced by an amount equal to the net collections
from such tax during such entitlement period attributable to
individuals who are not residents of the District of Columbia. The
preceding sentence shall not apply if-
(A) the District of Columbia and Maryland enter into an
agreement under which each State agrees to impose a tax
on income earned in that State by individuals who are resi-
dents of the other State, and the District of Columbia and
Virginia enter into an agreement under which each State
agrees to impose a tax on income earned in that State by
individuals who are residents of the other State, or
(B) the Congress enacts a law directly imposing a tax on
income earned in the District of Columbia by individuals who
are not residents of the District of Columbia.
40
October 20, 1972
Pub. Law 92-512
86 STAT. 935
SEC. 142. REGULATIONS.
(a) GENERAL RULE.-The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the provisions of this
title.
(b) ADMINISTRATIVE PROCEDURE ACT To APPLY.-The rulemaking
provisions of subchapter II of chapter 5 of title 5 of the United States
Code shall apply to the regulations prescribed under this title for enti-
80 Stat. 381.
tlement periods beginning on or after January 1, 1973.
5 USC 551.
SEC. 143. JUDICIAL REVIEW.
(a) PETITIONS FOR REVIEW.-Any State which receives a notice of
reduction in entitlement under section (b), and any State or unit
of local government which receives a notice of withholding of pay-
ments under section (b) or 123 (b), may, within 60 days after
receiving such notice, file with the United States court of appeals for
the circuit in which such State or unit of local government is located
a petition for review of the action of the Secretary. A copy of the peti-
tion shall forthwith be transmitted to the Secretary; a copy shall also
forthwith be transmitted to the Attorney General.
(b) RECORD-The Secretary shall file in the court the record of the
proceeding on which he based his action, as provided in section 2112
of title 28, United States Code. No objection to the action of the
72 Stat. 941;
Secretary shall be considered by the court unless such objection has
80 Stat. 1323.
been urged before the Secretary.
(c) JURISDICTION OF COURT.-The court shall have jurisdiction to
affirm or modify the action of the Secretary or to set it aside in whole
or in part. The findings of fact by the Secretary, if supported by sub-
stantial evidence contained in the record, shall be conclusive. However,
if any finding is not supported by substantial evidence contained in
the record, the court may remand the case to the Secretary to take
further evidence, and the Secretary may thereupon make new or
modified findings of fact and may modify his previous actions. He
shall certify to the court the record of any further proceedings. Such
new or modified findings of fact shall likewise be conclusive if sup-
ported by substantial evidence contained in the record.
(d) REVIEW BY SUPREME COURT.-The judgment of the court shall
be subject to review by the Supreme Court of the United States upon
certiorari or certification, as provided in section 1254 of title 28,
United States Code.
62 Stat. 928.
SEC. 144. AUTHORITY TO REQUIRE INFORMATION ON INCOME TAX
RETURNS.
(a) GENERAL RULE.-
(1) INFORMATION WITH RESPECT TO PLACE OF RESIDENCE.-Sub-
part B of part II of subchapter A of chapter 61 of the Internal
Revenue Code of 1954 (relating to income tax returns) is amended
68A Stat. 731.
by adding at the end thereof the following new section:
26 USC 6001.
"SEC. 6017A. PLACE OF RESIDENCE.
"In the case of an individual, the information required on any
return with respect to the taxes imposed by chapter 1 for any period 26 USC 1.
shall include information as to the State, county, municipality, and
any other unit of local government in which the taxpayer (and any
other individual with respect to whom an exemption is claimed on such
return) resided on one or more dates (determined in the manner pro-
vided by regulations prescribed by the Secretary or his delegate)
during such period."
(2) CLERICAL AMENDMENT.-The table of sections for such
subpart B is amended by adding at the end thereof the following:
41
Pub. Law 92-512
October 20, 1972
86 STAT. 936
"Sec. 6017A. Place of residence."
(b) CIVIL PENALTY.-
(1) IN GENERAL-Subchapter B of chapter 68 of the Internal
68A Stat. 821;
Revenue Code of 1954 is amended by adding at the end thereof
85 Stat. 551.
the following new section:
26 USC 6651.
"SEC. 6687. FAILURE TO SUPPLY INFORMATION WITH RESPECT TO
PLACE OF RESIDENCE.
"(a) CIVIL PENALTY.-If any person fails to include on his return
any information required under section 6017A with respect to his place
of residence, he shall pay a penalty of $5 for each such failure, unless
it is shown that such failure is due to reasonable cause.
'(b) DEFICIENCY PROCEDURES NOT To APPLY.-Subchapter B of
26 USC 6211.
chapter 63 (relating to deficiency procedures for income, estate, gift,
26 USC 4940.
and chapter 42 taxes) shall not apply in respect of the assessment or
collection of any penalty imposed by subsection (a)."
(2) CLERICAL AMENDMENT.-The table of sections for such sub-
chapter B is amended by adding at the end thereof the following:
"Sec. 6687. Failure to supply information with respect to place of
residence."
*U.S. GOVERNMENT PRINTING OFFICE: 1973-729-146/301
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