Maintenance of Effort under IDEA

Maintenance of Effort under IDEA Oregon Department of Education September 2006

What is IDEA? • “The Individuals with Disabilities Education Act (IDEA) is a federal formula grant that provides states, and through them LEAs, financial assistance in providing special education and related services to children with disabilities under IDEA.” • Financial assistance – intended to fund the “excess costs” of providing special education • U.S. Department of Education: Regional Inspector General for Audit. Letter to Kansas State Department of Education. February 6, 2006.

Why IDEA? • “IDEA was enacted to ensure that all children with disabilities have available to them a free and appropriate public education, and to ensure that the rights of children with disabilities and their parents are protected.” • U.S. Department of Education: Regional Inspector General for Audit. Letter to Kansas State Department of Education. February 6, 2006.

Legislative History of IDEA • 1975 - Education of the Handicapped Act • Also known as P.L. 94-142 6 reauthorizations later EHA became: • 1997 - Individuals with Disabilities Education Act (IDEA 1997) • 2004 – Individuals with Disabilities Education Improvement Act (IDEIA or IDEA 2004)

Nonsupplanting Requirements • IDEA contains nonsupplanting requirements at both the state and local level. • IDEA funds may only supplement, and not replace or supplant, state and local funds for educating students with disabilities. .

Maintenance of Effort (MOE) • Basic requirement: to expend the same amount of state and local funds for special education in any fiscal year as in the previous year.

MOE in EHA (1975) • No Maintenance of Effort (MOE) requirement; • (1975 EHA included nonsupplanting requirement.)

MOE in IDEA 1997 • IDEA 1997 revised the MOE requirements; • Changed the range of expenditures considered; • Added a state-level maintenance of effort requirement based on state expenditures only.

MOE in IDEA 2004 • Added NEW elements that may affect a district’s determination of its Maintenance of Effort compliance; • Effective July 1, 2005

Applying for IDEA Funds • States (SEAs) submit annual applications for IDEA funds to the U.S. Department of Education, Office of Special Education Programs (OSEP). • ODE’s current applications for funds under IDEA Parts B and C are found at: http://www.ode.state.or.us/search/results/?id=260

SEA Compliance = IDEA $$ • To receive IDEA funds, SEAs must: • Assure that the State complies with all requirements of IDEA; • Be able to provide evidence of compliance with IDEA requirements – fiscal and program.

SEA General Supervision +LEA Compliance IDEA $$ • To receive IDEA funds, SEAs must also: • Assure that all LEAs and agencies responsible for providing a free appropriate public education (FAPE) comply with IDEA.

LEA Compliance = IDEA $$ • To receive IDEA funds, LEAs must: • Assure ODE that the District/program complies with all requirements of IDEA; • Be able to provide evidence of compliance with IDEA requirements – fiscal and program.

General supervision & IDEA $$ • As part of its general supervision responsibilites, ODE must ensure LEAs comply with the MOE provisions of IDEA.

MOE Audit Process: Why? • MOE audit process verifies LEA compliance with IDEA requirements in: • Nonsupplanting: not using IDEA funds to supplant general funds committed to the same services. • MOE: maintaining specified levels of financial support for special education unless exceptional circumstances exist.

Audit Process – Who conducts the audit? • ODE:OSL&P selects and awards a contract to an auditing firm through a competitive bidding process. • ODE currently contracts with the firm of Jones & Roth, P.C. of Eugene.

Audit Process - How is the audit conducted? • The annual MOE audit conducted on an LEA is based entirely on the information provided by that LEA to the State.

Beginning the audit process • LEAs required to submit their annual financial reports, using the State approved chart of accounts, to the ODE: Office of Finance and Administration (OFA). • Due Dates: • Electronic data collection - December 10 of each year • Final FY 2005-2006 audit - December 31, 2006

Audit Process - What documents are reviewed? • OFA spreadsheet listing the • LEA’s reported Fund 100: Area of Responsibility 320 expenditures, and • ESD 320 expenditures reported as spent on behalf of students from the LEA. • Figures are totaled and compared with the audited figures from the previous year. .

Audit Process - What documents are reviewed? • OSL&P spreadsheet of the Special Education Child Count (SECC) from the year under audit.

MOE: Revising Documentation • MISTAKES: Prior to the beginning of the audit, an LEA or LEA consortium may submit written notice to the auditing firm to: • Identify coding mistakes; and • Requesting that these changes be reflected in the OFA spreadsheet. • The burden of providing documentation of these errors to OFA falls upon the LEA.

MOE: Requesting exceptions • IDEA 1997 & IDEA 2004 identify four exceptional circumstances an LEA or consortium may invoke to justify reduction in MOE. • Agencies must provide a letter to ODE and the auditing firm clearly identifying the exceptions and detailing their fiscal impact. • More than one may be applicable in a given year.

MOE: Exceptional circumstances • An LEA may reduce level of expenditures required for MOE due to: • The voluntary departure by retirement or otherwise, or for just cause, of special education or relaed services personnel who are replaced by qualified, lower-salaried staff; • A decrease in the enrollment of children with disabilities;

MOE: Exceptional circumstances • Termination of an obligation to provide an exceptionally costly program, as determined by the SEA, because the child- • Has left the agency’s jurisdictions; • Has reached the age at which the obligation to provide FAPE has ended; or • No longer needs the special education program.

MOE: Exceptional circumstances • Termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities.

MOE: Completing the Audit • Audit firm forwards summary to ODE: OSL&P upon completion of audit. • ODE:OSL&P issues a status letter of “pass” or “fail” to the LEA or consortium, documenting the ESD and LEA expenditures and the total expenditures.

MOE: “Pass” Status • Beginning with FY 2003-2004 audit period, ODE:OSL&P reviews both totalexpenditures and per capita expenditures. IDEA permits an LEA to “pass” on either basis. • Agency might “fail” on the basis of total expenditures, but ”pass” on the basis of per student expenditures Example: LEA whose enrollment declined by 10 students, but whose expenditures declined by only $5,000 from the previous year.

MOE: “Pass” Status “PASS” • Total expenditures equal the base amount to which the LEA will be compared in the following audit year.

MOE: “Fail” Status • “FAIL” and Follow-up Audit(s): • If in “fail” status, the LEA or consortium is given a time period within which it may submit information that could place it in a “pass” position. • LEA/consortium responsibility to provide updated documentation to ODE: OSL&P and the auditing firm.

MOE: “Pass” Status • IDEA permits an LEA to “pass” on either basis. • Agency might “fail” on the basis of total expenditures, but “pass” on the basis of per student expenditures Example: LEA whose enrollment declined by 10 students, but whose expenditures declined by only $5,000 from the previous year.

Which applies? IDEA 1997 or IDEA 2004 • IDEA 1997: Expenditures prior to or related to fiscal year (FY) 2004-2005 fall under IDEA 1997. • Last audit under IDEA 1997 was initiated in June 2006. • IDEA 2004: Beginning with FY 2005-2006, audits fall under IDEA 2004.

What’s new in IDEA 2004? • Authority for additional permissive use of funds, including: • Early Intervening Services; and • Administrative Case Management.

What’s new in IDEA 2004? • IDEA 2004 allows an LEA to use up to 50% of the increase in Part B funds from the previous year to reduce its local MOE amount. [20 USC 1413(a)(2)(c)] • Forms to determine the maximum amount of money a district may use to reduce its MOE are available online at: http://www.ode.state.or.us/data/schoolanddistrict/funding/ sped/annapp/eseaactivities.pdf. • Forms are for district use only and do not need to be submitted to ODE.

What’s new in IDEA 2004? • Limitation on the exception to local MOE requirements. • If the SEA determines than an LEA is not meeting IDEA requirements, including the targets in the State Performance Plan (SPP), the SEA shall prohibit the LEA from reducing its MOE under Section 613(a)(2)(C) for any fiscal year.

What’s new in IDEA 2004? • Early Intervening Services (EIS) • LEAs may use up to 15% of Part B funds, in combination with other amounts, to develop and implement coordinated, early intervening services (EIS) for children who have not been identified as needing special education or related services but who need additional academic and behavior support to succeed in a general education environment. Note: IDEA requires SEA to impose EIS on LEAs demonstrating significant disproportionality based on student race or ethnicity in the identification, placement, or disciplinary actions. [618(d)(2)(B)]

What’s new in IDEA 2004? • Early Intervening Services (EIS) Cautions • Local MOE reduction option and use of Part B funds for EiS are interconnected. • LEA decisions about amounts to be used for one purpose would affect the amount it may use for the other. (Reference: See Page 2 of the ODE reduction in MOE form on website AND OSEP’s EIS Topic Brief for examples.) Note: IDEA requires SEA to impose EIS on LEAs demonstrating significant disproportionality based on student race or ethnicity in the identification, placement, or disciplinary actions. [618(d)(2)(B)]

What’s new in IDEA 2004? • States must collect/examine data to determine if significant disproportionality based on race or ethnicity is occurring. • If disproportionality is verified, LEA required to reserve maximum amount of funds under section 20 USC 1413(f) “to provide comprehensive coordinated early intervening services to serve children in the LEA, particularly children in those groups that were significantly over identified” [20 USC 1418(2)(B)].

What’s New in IDEA? Effect of Significant Disproportionality • If a district is found significantly disproportionate, the district must use 15% of its IDEA funds towards early intervening services (EIS). • LEA must public report on the revision of policies, practices, and procedures used to address the disproportionality issues. [20 USC 1418(d)(2)(C)]

Why so much work?  Penalty – Penalty – Penalty

Why so much work? • Failure to maintain effort in a given fiscal year may result in forfeiture of the IDEA grant received by the LEA or consortium member districts during that same year. • SEAs may be subject to penalties if state MOE or general supervision of LEAs is inadequate.

THE END

Maintenance of Effort under IDEA