118 STAT. 2671 PUBLIC LAW 108–446—DEC. 3, 2004 child with a disability as described in subparagraph (C)(ii)(I). ‘‘(H) MEDICAID SERVICES NOT AFFECTED.—Disburse ments provided under this paragraph shall not be used to pay costs that otherwise would be reimbursed as medical assistance for a child with a disability under the State medicaid program under title XIX of the Social Security Act. ‘‘(I) REMAINING FUNDS.—Funds reserved under subparagraph (A) in any fiscal year but not expended in that fiscal year pursuant to subparagraph (D) shall be allocated to local educational agencies for the succeeding fiscal year in the same manner as funds are allocated to local educational agencies under subsection (f) for the succeeding fiscal year. ‘‘(4) INAPPLICABILITY OF CERTAIN PROHIBITIONS.—A State may use funds the State reserves under paragraphs (1) and (2) without regard to— ‘‘(A) the prohibition on commingling of funds in section 612(a)(17)(B); and ‘‘(B) the prohibition on supplanting other funds in sec tion 612(a)(17)(C). ‘‘(5) REPORT ON USE OF FUNDS.—As part of the information required to be submitted to the Secretary under section 612, each State shall annually describe how amounts under this section— ‘‘(A) will be used to meet the requirements of this title; and ‘‘(B) will be allocated among the activities described in this section to meet State priorities based on input from local educational agencies. ‘‘(6) SPECIAL RULE FOR INCREASED FUNDS.—A State may use funds the State reserves under paragraph (1)(A) as a result of inflationary increases under paragraph (1)(B) to carry out activities authorized under clause (i), (iii), (vii), or (viii) of paragraph (2)(C). ‘‘(7) FLEXIBILITY IN USING FUNDS FOR PART C.—Any State eligible to receive a grant under section 619 may use funds made available under paragraph (1)(A), subsection (f)(3), or section 619(f)(5) to develop and implement a State policy jointly with the lead agency under part C and the State educational agency to provide early intervention services (which shall include an educational component that promotes school readi ness and incorporates preliteracy, language, and numeracy skills) in accordance with part C to children with disabilities who are eligible for services under section 619 and who pre viously received services under part C until such children enter, or are eligible under State law to enter, kindergarten, or elementary school as appropriate. ‘‘(f) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES.— ‘‘(1) SUBGRANTS REQUIRED.—Each State that receives a grant under this section for any fiscal year shall distribute any funds the State does not reserve under subsection (e) to local educational agencies (including public charter schools that operate as local educational agencies) in the State that have established their eligibility under section 613 for use in accordance with this part.
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