RIDE IDEA-B Maintenance of Effort Handbook

RIDE IDEA-B Maintenance of Effort Handbook

Rhode Island Department of Elementary and Secondary Education
IDEA-B MAINTENANCE OF EFFORT (MOE)
LEA HANDBOOK
August12, 2016

Overview

The term “Maintenance of Effort,” (MOE), refers to the requirement placed upon many federally funded grant programs that the State Education Agency (SEA) and LocalEducation Agencies (LEA) demonstrate that the level of state and local funding remains relatively constant from year to year. Failure to meet MOE requirements may result in the LEA losingeligibility to receive Individuals with Disabilities Education Act (IDEA) entitlement funding and requiring an LEA to repay funds, using a non-federal source, to the SEA, who is required to send funds to the US Department of Education.

The rules regulating MOE differ depending on the federal program requiring the effort. Some grant programs do not require MOE, whereas some grant programs such (IDEA) have very specific rules documented in its regulations.

Part B of the Individuals with Disabilities Education Act, which addresses IDEA funding allocations to the SEA and LEAs, includes MOE provisions applicable separately to both the state and local levels.

At the state level, IDEA Part B prohibits a state from reducing state financial support for special education below the amount of that support for the preceding fiscal year as described in the Code of Federal Regulations (34 CFR §300.163). To meet the IDEA MOE state-level expectation, Rhode Island must continue to fund special education at least the same level every year.

At the local level, IDEA requires that LEAs to expend at least the same amount of local / state funding for special education and related services as it expended in the previous fiscal year as described in the Code of Federal Regulations (34 CFR §300.203). There are provisions (allowable exceptions – 34 CFR §300.204) and an (adjustment – 34 CFR §300.205)in IDEA to allow for decreases in an LEA’s financial contribution to special education from one fiscal year to the next.

First is an eligibility standard to receive the funds and second is a compliancestandard to be able to keep the funds without a payback to the SEA and ultimately the Federal Government.Summarily an LEA must meet both standards to be to comply with the IDEA MOE provision. The standards are briefly described below.

Eligibility Standard (34 CFR §300.203(a)): In order to find an LEA eligible for an IDEA Part B sub-grant for the upcoming fiscal year, the SEA (RIDE) must determine that the LEA has budgeted for the education of children with disabilities as least the same amount of local, or State and local, funds, as it actually spent for the education of children with disabilities during the most recent fiscal year for which information is available.

Compliance Standard(34 CFR §300.203(b)): The compliance standard prohibits an LEA from reducing the level of expenditures for the education of children with disabilities made by the LEA from local, or State and local, funds below the level of those expenditures from the same source for the preceding fiscal year. In other words, an LEA must maintain (or increase) the amount of local, or State and local, funds it spends for the education of children with disabilities when compared to the preceding fiscal year.

This handbook provides Rhode Island LEAs with guidance on the process of complying with both (Eligibility and Compliance) standards toIDEA-B LEA MOE requirements.

Relationship of Maintenance of Effort (MOE) to Other IDEA-B Fiscal Compliance Requirements

Prior to defining and providing specific guidance on compliance with IDEA-B LEA MOE, it is helpful to understand the relationship of MOE to other IDEA-B fiscal compliance requirements.

MOE is only one of several fiscal compliance requirements governing the expenditure of federal funds on students with disabilities. Others include excess cost and coordinated early intervening services (CEIS) requirements. To assist LEAs, this handbook includes definitions of these fiscal compliance requirements. It is important to note that the excess cost and CEIS requirements apply to the federal IDEA funds while the MOE and voluntary MOE reduction requirements relate to the expenditure of state and local funds. Voluntary MOE reduction is further described in the Voluntary Reduction of MOE section.

Before budgeting federal and state and/or local funds for services to identified students with disabilities, the LEA should first review and determine the requirements for excess cost, CEIS, voluntary reduction, and MOE. These definitions are listed in the Glossary section of this handbook.

Purpose of LEA MOE

In awarding grant funds for education purposes, the federal government does not intend for LEAs to use federal funds as the primary means of providing services to students with disabilities. The LEA agrees when it accepts the IDEA-B funds that it will expend nonfederal (state and local) funds in accordance with two federal fiscal accountability requirements: (i) supplement, not supplant, and (ii) MOE.

The supplement, not supplant provision of IDEA-B (34 CFR §300.202(a)(3)) mandates that state and local funds may not be diverted to other purposes simply because federal funds are available. The MOE requirement ensures, moreover, that the LEA continues to expend its state and/or local funds at the same level from year to year, either in the aggregate or on a per-pupil basis, instead of limiting services to what can be provided using federal dollars.

IDEA-B MOE Eligibility and Compliance Requirements

Per 34 CFR §300.203(a), in order to receive IDEA-B funds, an LEA must budget at least as much withstate and local funds for the education needs of children with disabilities as it had in the last completed fiscal year. The rules and regulations in section 300.203(a) and 300.203(b) are nearly identical as to the testing and application of allowed exceptions and the adjustment provision (50% rule). Section 300.203(a) is a look forward at proposed budgetsfor eligibility and section 300.203(b) is a look back at expenditure data for compliance.

The Four Methods of Determining Eligibility and Compliance

An LEA may use the following four methods to meet the eligibility and compliance standards:

(i) Local funds only;

(ii) The combination of State and Local funds;

(iii) Local funds only on a per capita basis; or

(iv)The combination of State and Local funds on a per capita basis.

An LEA needs to meet onlyone of these four methods to meet the standard. An LEA may demonstrate that it has met the standard using any one of the four methods. Additionally, an LEA may meet the standard using alternate methods from year to year.

Subsequent Years Rule

The rule, as provided in section 300.203(c)(1) states that the level of effort an LEA must meet in the fiscal year after it fails to maintain effort is the level of effort that would have been required in the absence of that failure, not the LEA’s actual reduced level of expenditures.

The subsequent years rule applies individually to all four compliance methods that LEAs may use to meet this standard: (1) Local funds only, (2) the combination of State and local funds, (3) local funds only on a per capita basis, or (4) the combination of State and local funds on a per capita basis.

If the LEA was non-compliant in maintaining effort in the preceding year for any of the four compliance measures, then next year’s compliance measure for the failedmeasures must be compared to the second preceding year’ rather than the preceding year when the LEA was noncompliant for that measure. If the second preceding year’s measure(s) were also non-compliance then the LEA must look further back in years to the last compliant year for that specific measure. For example, if the LEA was noncompliant in the fiscal year 2015 final determination for one of the four specific measures, then the fiscal year 2016 determination must compare fiscal year 2016 to fiscal year 2014 or the last fiscal year that the LEA was compliantwith the MOE requirement for that specific measure. See examples 1 thru 3 in Appendix 2 of this handbook for further illustration of the subsequent years rule.

Consequences of Non-compliance

An LEA is not eligible to receive IDEA Part B funds until it has met the MOE eligibility (i.e. budget) standard. If the SEA (RIDE) determines that the LEA is not eligible to receive a Part B sub-grant for that fiscal year, the SEA would retain the amount of Part B funds that the LEA would have received. The SEA would then be required to provide special education and related services directly to children with disabilities residing in the area served by the LEA. 34 CFR §300.227(a)(1).

If an LEA fails to meet its MOE compliance (i.e. expenditure) standard, the LEA must returnto RIDE the amount by which the LEA failed to maintain effort (i.e., the difference between its comparison and current year expenditures on students with disabilities after all applicable federal exceptions and voluntary MOE reductions have been applied). Of the four measures that the LEA fails to comply with the maintenance of effort provision, the measure resulting in the lowest amount of payback for the LEA will be applied. See Appendix 3 in this handbook for an example of a payback calculation.

If the refund amount exceeds the LEA's IDEA-B maximum entitlement (combination of section’s 611(Part B) and 619 (Preschool)) for the fiscal year under determination, the LEA will only be required to refund the amount up to the LEA’s maximum entitlement. The repayment must be made from non-federal funds or from funds for which accountability to the federal government is not required, that is, from state and/or local funds.

Timeline and Process

MOE Test – Eligibility of IDEA Funding:

The MOE test for eligibility of IDEA funds can be found as a separate page (MOE Test Page) within the IDEA Part B section of the consolidated resource plan (CRP). In order to apply for IDEA funds for the next fiscal year, an LEA must pass at least one of the four eligibility methods (before or after applying approvable exceptions). RIDE preloads the special education expenditure data for each LEA from the previous fiscal year funded by local and (state and local) sources. See the calculating state and local funds section of this handbook for the determination of local funds in support of special education. RIDE loads each LEAs special education pupil counts (from the December Special Education Census) for the previous fiscal year for calculation of the per capita expenditure amounts.

For the next fiscal year section of the MOE eligibility test page, RIDE loads the special education pupil counts from the December census of the current fiscal year. The LEA can over-write this pupil count if the LEA has a better projection of the number of students with IEPs for the upcoming school year. The LEA must input their next year budgeted amount for special education expenditures from state and local sources combined. The system will pro-rate the local share of the special education budget based upon the local to state and local ratio from the previous fiscal year. If necessary, the LEA will need to complete the approvable exceptions section of the test in order to become eligible to receive IDEA funding.

CRP applications (including the completed MOE test page) for the next fiscal are due no later than July 1st of each new fiscal year. For LEAs seeking substantial approval from RIDE for proposed summer activities, CRP applications are due approximately six weeks prior to the July 1st deadline.

MOE Test – Compliance with Special Education Expenditure Requirements:

Annually, each LEA must complete the IDEA LEA MOE performance report with its embedded compliance test page found in AcceleGrants to verify that the LEA is in compliance with IDEA’s maintenance of effort requirement for the school fiscal year most recently completed. For the first year of completion of the electronic compliance test, RIDE will pre-load each LEAs comparison year expenditure data and special needs student head counts. For each subsequent school fiscal year, the AcceleGrants’ system will pre-fill the comparison year data measures from the previous year‘s completed report. After the LEA provides all the required data from the fiscal year being tested, the system will determine if the LEA has “passed” any of the four compliance methods. Please note: Local and State revenue data and special education expenditure data to be used for the compliance test must come from the LEA’s final audit adjusted and allocated UCOA data file provided back to the LEA by RIDE. If none of the four compliancemethods are passed, the LEA must complete the allowed exceptions and adjustment section on the compliance test page to determine if compliance can be achieved. If the LEA hasmet/passed the compliance standard but failed one, two, or three of the four compliance methods, RIDE strongly urges the LEA to complete the allowed exceptions and adjustment section since the subsequent years rule makes it possible for the LEA to lower the MOE comparison year threshold on the next year’s MOE test for that failed method after the application of all allowed exceptions and/or adjustment. The LEA will also need to complete and upload into AcceleGrants the completed exceptions detail worksheet (format worksheet provided by RIDE) into the related documents page. The exceptions worksheet captures the detailsthe exceptions taken by the LEA due to the voluntary departure of personnel, high cost equipment, and high cost special needs students whom are no longer receiving services.

IDEALEA MOE Compliance Test for the previous fiscal year must be completed and submitted through the AcceleGrants performance report portal by March 31st of the next fiscal year. For example, the MOE compliance test comparing FY 2015 special education expenditures to the special education expenditures for the comparison year must be submitted through the FY 2015 performance reports section of AcceleGrants. The FY 2015 (fiscal year ending June 30, 2015) LEA MOE compliance testperformance report is due byMarch 31, 2016.The LEA completed report status must be moved to “Business Manager Approved” to be considered submitted to RIDE for review. RIDE’s fiscal staff will then review the LEA submitted MOE Compliance Test performance reports for accuracy of data and proper application of any allowed exceptions taken.

If an LEA fails to maintain effort for the compliance standard, RIDE will notify the LEA by letter in which the amount of the MOE failure will be stated. Apayback of non-federal dollars will be required due to failure by the LEA to comply with MOE compliance standard. Payment checks should be made out to the “State of Rhode Island, General Treasurer” and sent to the attention of the RIDE Finance Office – 6th Floor, 255 Westminster St., Providence, RI 02903. Please include a copy of the non-compliance finding letter along with the check.

LEAs must retain documentation supporting all data reported as well asdocumentation of any allowed exceptions claimed within the MOE compliance test page for future audit and monitoring purposes. See records retention section of this guide for more information.

Federal Exceptions to the MOE Requirement

As stated in 34 CFR §300.204, the LEA may reduce the level of its state and/or local expenditures below the level of those expenditures for the preceding fiscal year only if the reduction is attributable to any of the following; which are listed below and described in greater detail later in the document.

(a)The voluntary departure, by retirement or otherwise, or departure for just cause, of special education or related services personnel.

Example: A special education teacher retires, and the salary and fringe of this teacher is $100,000. The LEA replaces this position with a qualified special education teacher at a salary and fringe of $60,000. The LEA would be allowed to reduce their MOE obligation by $40,000 (difference between the retiring teacher salary and new teacher salary). If the teacher was not replaced, then the LEA would be allowed to use the entire $100,000.00 of salary and fringe savings as an allowable federal exception for a reduction in MOE. A key fact to this scenario is that the personal departure was voluntary on the part of the employee.

(b)A decrease in the enrollment of children with disabilities.

Example:

2015 Sp.Ed. Enrollment2015 MOE2015 per pupil costExample Base Year

50$200,000 $4,000

2016 Sp.Ed. Enrollment2016 MOE2016 per pupil costAcceptable reduction in MOE