(a) General. The State must have on file with the Secretary procedures that ensure that the requirements of §§ 300.550-300.556 are met, including the provision in § 300.551 requiring a continuum of alternative placements to meet the unique needs of each child with a disability.

(b) Additional requirement. (1) If the State uses a funding mechanism by which the State distributes State funds on the basis of the type of setting where a child is served, the funding mechanism may not result in placements that violate the requirements of paragraph (a) of this section.

(2) If the State does not have policies and procedures to ensure compliance with paragraph (b)(1) of this section, the State must provide the Secretary an assurance that the State will revise the funding mechanism as soon as feasible to ensure that the mechanism does not result in placements that violate that paragraph.