Any state agency that desires to receive a subgrant for any fiscal year for Part B funding must demonstrate to the satisfaction of the OSPI that:

(1) All children with disabilities who are participating in programs and projects funded under Part B of the act receive FAPE, and that those children and their parents are provided all the rights and procedural safeguards described in this part; and

(2) The agency meets the other conditions of this subpart that apply to school districts.