Maintenance of Effort (MOE) Excess Cost Presenter Patricia Holcomb-Gray Office of Special Education Programs NJ Department of Education June 3, 2015

 Impacts IDEA-B grants for LEAs, as of SFY 2016  Clarification of the Eligibility Standard  Clarification of the Compliance Standard  Subsequent Years rule  Consequences for an LEA’s failure to maintain effort 2

 The term “Maintenance of Effort,” often shortened to “MOE,” refers to the requirement placed upon many federally funded grant programs whereby the Local Education Agency (LEA) demonstrates that the level of local or state and local funding for special education remains relatively constant from year to year. 3

 (a) Eligibility standard. ◦ (1) For purposes of establishing the LEA's eligibility for an award for a fiscal year, the SEA must determine that the LEA budgets, for the education of children with disabilities, at least the same amount, from at least one of the following sources, as the LEA spent for that purpose from the same source for the most recent fiscal year for which information is available:  (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. 4

 (2) When determining the amount of funds that the LEA must budget to meet the requirement in paragraph (a)(1) of this section, the LEA may take into consideration, to the extent the information is available, the exceptions and adjustment provided in §§ and that the LEA: ◦ (i) Took in the intervening year or years between the most recent fiscal year for which information is available and the fiscal year for which the LEA is budgeting; and ◦ (ii) Reasonably expects to take in the fiscal year for which the LEA is budgeting.  (3) Expenditures made from funds provided by the Federal government for which the SEA is required to account to the Federal government or for which the LEA is required to account to the Federal government directly or through the SEA may not be considered in determining whether an LEA meets the standard in paragraph (a)(1) of this section. (Authority: 20 U.S.C. 1413(a)(2)(B)) 5

 Notwithstanding the restriction in § (a), an LEA may reduce the level of expenditures by the LEA under Part B of the Act below the level of those expenditures for the preceding fiscal year if the reduction is attributable to any of the following: ◦ (a) The voluntary departure, by retirement or otherwise, or departure for just cause, of special education or related services personnel. ◦ (b) A decrease in the enrollment of children with disabilities. ◦ (c) The termination of the obligation of the agency, consistent with this part, to provide a program of special education to a particular child with a disability that is an exceptionally costly program, as determined by the SEA, because the child—  (1) Has left the jurisdiction of the agency;  (2) Has reached the age at which the obligation of the agency to provide FAPE to the child has terminated; or  (3) No longer needs the program of special education. ◦ (d) The termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities. ◦ (e) The assumption of cost by the high cost fund operated by the SEA under § (c). 6

 (a) Amounts in excess. Notwithstanding § (a)(2) and (b) and § (a), and except as provided in paragraph (d) of this section and § (e)(2), for any fiscal year for which the allocation received by an LEA under § exceeds the amount the LEA received for the previous fiscal year, the LEA may reduce the level of expenditures otherwise required by § (a) by not more than 50 percent of the amount of that excess.  (b) Use of amounts to carry out activities under ESEA. If an LEA exercises the authority under paragraph (a) of this section, the LEA must use an amount of local funds equal to the reduction in expenditures under paragraph (a) of this section to carry out activities that could be supported with funds under the ESEA regardless of whether the LEA is using funds under the ESEA for those activities.  (c) State prohibition. Notwithstanding paragraph (a) of this section, if an SEA determines that an LEA is unable to establish and maintain programs of FAPE that meet the requirements of section 613(a) of the Act and this part or the SEA has taken action against the LEA under section 616 of the Act and subpart F of these regulations, the SEA must prohibit the LEA from reducing the level of expenditures under paragraph (a) of this section for that fiscal year.  (d) Special rule. The amount of funds expended by an LEA for early intervening services under § shall count toward the maximum amount of expenditures that the LEA may reduce under paragraph (a) of this section. (Authority: 20 U.S.C. 1413(a)(2)(C)) 7

Tab 1 ◦ Special Education Budget lines from the budget program ◦ Ability to calculate 4 ways: Local or State and Local ◦ Total aggregate and/or per capita ◦ Use all 4 methods to determine which one works Tab 2 ◦ Allowable exceptions for why MOE not met, if none of the four work 8

Step 1 choose Fund Source Step 2 Fill in amounts Use Calculate to determine if MOE is met by either method MOE met by per capita (State and Local) 9

LEA will be prompted to select a reason for the reduction from those available 10

 The compliance standard prohibits LEAs from reducing the level of expenditures from local, or State and local, funds for the education of children with disabilities below the level of expenditures for that same purpose in the preceding fiscal year 11

 The Subsequent Year rule governs what level of effort an LEA must maintain in the year after the LEA fails to maintain effort. Under this rule if, during a fiscal year, an LEA fails to maintain effort, in the subsequent year the LEA must restore its level of effort to the level that would have been required had the LEA not failed LEA MOE. The Subsequent Year rule prevents an LEA that failed to maintain effort in one year from permanently reducing its required level of effort due to an LEA MOE failure. 12

 When an LEA fails to maintain effort, the SEA is liable in a recovery action under section 452 of GEPA(20 U.S.C. 1234a) to return to the Department, using non-Federal funds, an amount equal to the amount by which the LEA failed to maintain its level of expenditures in that fiscal year, or the amount of the LEA’s IDEA Part B subgrant in the fiscal year, whichever is lower.  The SEA, in turn, is permitted to seek reimbursement from the LEA. 13

 Figures are in $10,000s. In Table 1, for example, an LEA spent $1 million in Fiscal Year (FY) 2012–2013 on the education of children with disabilities. The following year, the LEA was required to spend at least $1 million but spent only$900,000. In FY 2014–2015, therefore, the LEA is required to spend $1 million, the amount it was required to spend in2013–2014, not the $900,000 it actually spent. 14

 Table 2 shows how to calculate the required level of effort when there are consecutive fiscal years in which an LEA does not meet MOE. 15

 Table 3 shows how to calculate MOE in a fiscal year after which an LEA spent more than the required amount on the education of children with disabilities. This LEA spent $1.1 million in FY 2015–2016 though only $1 million was required. The required level of effort in FY 2016–2017, therefore, is $1.1million. 16

 Except as otherwise provided, amounts provided to an LEA under Part B of the Act may be used only to pay the excess costs of providing special education and related services to children with disabilities. Excess costs are those costs for the education of an elementary school or secondary school student with a disability that are in excess of the average annual per student expenditure in an LEA during the preceding school year for an elementary school or secondary school student, as may be appropriate. An LEA must spend at least the average annual per student expenditure on the education of an elementary school or secondary school child with a disability before funds under Part B of the Act are used to pay the excess costs of providing special education and related services.  Section 602(8) of the Act and § require the LEA to compute the minimum average amount separately for children with disabilities in its elementary schools and for children with disabilities in its secondary schools. LEAs may not compute the minimum average amount it must spend on the education of children with disabilities based on a combination of the enrollments in its elementary schools and secondary schools. 17

 The following example shows how to compute the minimum average amount an LEA must spend for the education of each of its elementary school children with disabilities under section 602(3) of the Act before it may use funds under Part B of the Act. ◦ a. First the LEA must determine the total amount of its expenditures for elementary school students from all sources— local, State, and Federal (including Part B)—in the preceding school year. Only capital outlay and debt services are excluded. 18

◦ b. Next, the LEA must subtract from the total expenditures amounts spent for:  (1) IDEA, Part B allocation,  (2) ESEA, Title I, Part A allocation,  (3) ESEA, Title III, Parts A and B allocation,  (4) State and local funds for children with disabilities, and  (5) State or local funds for programs under ESEA, Title I, Part A, and Title III, Parts A and B.  These are funds that the LEA actually spent, not funds received last year but carried over for the current school year. 19

 c. Except as otherwise provided, the LEA next must determine the average annual per student expenditure for its elementary schools dividing the average number of students enrolled in the elementary schools of the agency during the preceding year (including its children with disabilities) into the amount computed under the above paragraph. The amount obtained through this computation is the minimum amount the LEA must spend (on average) for the education of each of its elementary school children with disabilities. Funds under Part B of the Act may be used only for costs over and above this minimum. 20

 d. Except as otherwise provided, to determine the total minimum amount of funds the LEA must spend for the education of its elementary school children with disabilities in the LEA (not including capital outlay and debt service), the LEA must multiply the number of elementary school children with disabilities in the LEA times the average annual per student expenditure obtained in paragraph c above. Funds under Part B of the Act can only be used for excess costs over and above this minimum. 21

22 Directions on the calculation of Excess Cost Sample File Click Save to attach the file

 Reach out to  You may also contact your county supervisor of child study, or  Contact Patricia Holcomb-Gray at or  Federal Regulations and Guidance idx?tpl=/ecfrbrowse/Title34/34cfr300_main_02.tpl 23