(1) In the event the OSPI determines that a school district is not eligible under Part B of the act, or is not complying with corrective actions as a result of monitoring, state complaints, or due process decisions and the OSPI intends to withhold or recover funds in whole or in part, the school district shall be provided:

(a) Written notice of intent to withhold or recover funds and the reasons supporting its notice;

(b) The school district's opportunity for a hearing before the superintendent of public instruction's designee prior to a denial of the request.

(2) The OSPI shall provide an opportunity for a hearing before it disapproves the request in accordance with the following procedures:

(a) The applicant shall request the hearing within thirty days of receiving notice of the action of the OSPI.

(b) Within thirty days after it receives a request, the OSPI shall hold a hearing to review its action. At the hearing, the district shall have the opportunity to provide the superintendent's designee with documentary evidence demonstrating that the OSPI erred in reaching its determination.

(c) The superintendent's designee shall consider any new evidence provided and respond in writing to the school district within thirty days, by affirming the initial determination, rescinding its initial determination, or issuing a revised determination.

(d) If the district remains unsatisfied with the OSPI's determination, it may file an appeal of OSPI's determination with the office of administrative hearings within thirty days of receiving OSPI's final determination. Procedures for filing an appeal of a determination under this section shall be in accordance with the Administrative Procedure Act, chapter 34.05 RCW and chapter 10-08 WAC.