34 CFR §608.40

1. (a)Allowable costs. Except as provided in paragraphs (b) and (c) of this section, a grantee may expend grant funds for activities that are related to carrying out the allowable activities included in its approved application.
2. (b)Supplement and not supplant. Grant funds shall be used so that they supplement, and to the extent practical, increase the funds that would otherwise be available for the activities to be carried out under the grant, and in no case supplant those funds.
3. (c)Limitations on allowable costs. A grantee may not—
   1. (1)Spend more than fifty percent of its grant award in each fiscal year for costs relating to constructing or maintaining a classroom, library, laboratory, or other instructional facility; or
   2. (2)Use an indirect cost rate to determine allowable costs under its grant.