34 C.F.R. § 299.4
What requirements apply to the consolidation of State and local administrative funds?
An SEA may adopt and use its own reasonable standards in determining whether—
(a) The majority of its resources for administrative purposes comes from non-Federal sources to permit the consolidation of State administrative funds in accordance with section 8201 of the ESEA; and
(b) To approve an LEA's consolidation of its administrative funds in accordance with section 8203 of the ESEA.