Maintenance of Effort, Comparability, and Supplement/Supplant PAFPC March 2014

 fiscalguid.doc fiscalguid.doc This guidance covers these areas:  Maintenance of Effort (MOE)  Comparability  Supplement not Supplant  Carryover  Grantbacks

Legal Authority: NCLB: Section 9521

 LEA may receive funds only if SEA finds the combined fiscal effort per student or the aggregate expenditures of the LEA from state and local funds from preceding year is not less than 90% for second preceding year.

 Need to compare final financial data ◦ PDE Uses Annual Financial Report (AFR)  Compare “immediately” PFY to “second” PFY  EX: To receive FY2005 funds (available July 2005), compare FY2004 ( ) to FY2003 ( )

 “Expenditures from state and local funds for free public education”  Administration; instruction; attendance and health services; pupil transportation services; operation and maintenance of plant; fixed charges; and net expenditures to cover deficits for food services and student body activities

 Funds from federal government  Community services; capital outlay; debt service; or supplemental expenditures made as a result of a Presidentially declared disaster

 ESEA: If LEA fails MOE, SEA must reduce amount of allocation in the exact proportion by which LEA fails to maintain effort below 90%.  Reduce all applicable NCLB programs, not just Title I

Aggregate expenditures Amount per student SY 041,000,0006,100 SY05 – must spend 90% 900,0005, – Actual amount 850,0005,200 Shortfall-50, Percent shortfall/ reduction-5.6%-5.3%**

 SEA uses 90% of the prior year amount rather than the actual expenditure amount

 USDE Secretary may waive if: ◦ Exceptional or uncontrollable circumstances such as natural disaster OR ◦ Precipitous decline in financial resources of the LEA

Legal Authority: Title I Statute: §1120A(c)

 An LEA may receive Title I Part A funds only if it uses state and local funds to provide services in Title I schools that, taken as a whole, are at least comparable to the services provided in non-Title I schools.  If all are Title I schools, all must be “substantially comparable.”  Currently demonstrated by staff/pupil ratios.

Compare:  Average of all non-Title I schools to  Each Title I school  Average of all non-title I schools=10:1  Title I schools: -Lincoln: 10:1 Washington: 9:1 Madison: 11:1 Jefferson 12:1

Compare:  Average of one or more of the lowest poverty Title I schools to each higher poverty Title I school  Lincoln 30% poverty, Washington 50%, Madison 55%, Jefferson 60% Chose only Lincoln as the comparison school  Lincoln 30%, Washington 32%, Madison 55%, Jefferson 60%, chose both Lincoln and Washington as the comparison schools

grade-span by grade-span or school by school (district-wide basis)

“Old Method”

 USDE School Level Expenditure report – 44 percent of Title I schools spend fewer state/local dollars on teachers and other personnel compared with non-Title I schools.  Poor kids are getting fewer education dollars than their wealthier peers.  Over 4,000 districts examined as a result of ARRA

 USDE. Results indicate Comparability is “broken.”  Complete report found at i/school-level-expenditures/school-level- expenditures.pdf i/school-level-expenditures/school-level- expenditures.pdf  The biggest (but not only) culprit: teacher salary differentials

 Currently, PA examines comparability only using staff to student ratios, regardless of salary costs.  Duncan “in far too many places, Title I is filling budget gaps rather than being used to close achievement gaps.”

 Guidance: Must be annual determination  (old) Review for current year and make adjustments for current year.  (new) Budget for upcoming year and make adjustments in current year, if needed.  Assurances are due November 15.  eGrants changes were made in 12/13.

 Federal Funds  Private Funds  Need not include unpredictable changes in student enrollment or personnel assignments that occur after the start of a school year

 Administrators (principals and assistant principals)  Art Teachers  Classroom Teachers  Guidance Counselors  Librarians  Music Teachers  Physical Education Teachers  Project Directors (Non-federally funded)  Psychologists  Social Workers  Speech Therapists

 Bus Monitors  Consultants  Crossing Guards  Maintenance Staff  Security Staff  Federally paid Staff

 Bilingual Teachers  Special Education  Title I “Like” Staff  Teachers Aides (instructional)  Although the LEA has the discretion to count or not count these types of staff, it must be done consistently across the grade spans being compared.

 An LEA must first attempt to demonstrate comparability by showing that its combined state and local per-pupil expenditures (including actual personnel and actual non- personnel expenditures) in each Title I school, using prior year financial data, are at least 90% of the average combined state and local per-pupil expenditures for its non-Title I schools.

 Pre-K expenditures.  Central office costs (including cost center 2818).  Charter School Tuition.  Alternative Education Programs (if enrollment is District Wide only).  Summer School expenditures (if enrollment is District Wide only).  Federal expenditures.

 English language instructional costs.  Special education (including gifted and OT/PT).  Transportation.  Food Services.  Capital expenditures (LEA capitalization threshold). Be prepared to justify any other exclusion and keep all documentation on file. Personnel costs defined as objects 100 and 200.

“New Method”

 and click on the eGrants link at the left of the page.  Then click on the Division of Federal Programs link at the left of the screen.  Enter your Login ID and password, then click on the “Consolidated Application” link.  At the main Consolidated Application page you’ll see the link for Comparability towards the bottom of the screen.

 “Supplement not Supplant” is the basis for the use of all federal funds administered via the Division of Federal Programs.  “In general, an LEA and its schools may use Title I, Part A funds only to supplement, and in no case supplant, the funds that would, in the absence of the Title I, Part A funds, be available from non-Federal sources for the education of students participating in Title I programs.”  There are two kinds of supplanting violations, programmatic and fiscal.

 Targeted Assisted – program level supplanting. “Reasonable and necessary.” Very situationally dependent.  “Required by Law, Prior year, and non-Title I students receiving same services with non- Federal funds” tests. - Exclusion: ESEA waiver activities. “An LEA that is using Title I, Part A funds to implement elements of its SEA’s flexibility request that are required by State law or regulations would not violate the “required by law” presumption of supplanting.”

 Schoolwide – fiscal level supplanting only, but must meet “intents and purposes.” School must receive all the state and local funds it would otherwise need to operate in the absence of Federal funds. Meeting comparability is a strong initial indicator of not supplanting in SW. ◦ Includes routine operating expenses such as building maintenance and repairs, landscaping and custodial services

 The Title I statue takes a different approach in schoolwides in an effort to drive comprehensive reforms and approaches in high-poverty schools Instead of making sure Title I delivers “extra” programs and services… We look at the amount of state and local money a schoolwide school receives to make sure its all the money it would get if it did not also receive federal funds  The goal is to make sure Title I schools, in the aggregate, get extra money – they then have flexibility in how they spend their money

Depending on its needs, a schoolwide programs school could spend Title I to: Implement a stronger curriculum Implement an early warning system Extend the school day or school year Reorganize class schedules to increase teacher planning time Revamp the school’s discipline process Hire additional teachers Reorganized classes to promote personalized learning Implement career academies Implement school safety programs Attendance, school climate, and anti-bullying efforts.

 Title I funds are supposed to supplement state and local efforts  Three presumptions of supplanting: ◦ Mandated by state/local law ◦ Paid for with state/local funds in prior year ◦ Same services paid for with the Title I for Title I students and state/local funds for non-Title I students Historically, compliance has been reviewed programmatically, by defining the programs and services school districts will deliver with the state and local funds Under the approach, Title I funds are typically limited to separate add-on services

Example 1: A school district conducts a technology audit, which shows Title I schools have computer labs, but non-Title 1 schools do not The district reduces state/local allocations to Title I schools in order to redirect state/local money to non-Title I schools so they can by computer labs

Result The school district violates the supplemental funds test because Title I schools are deprived of state and local funds because they receive Title 1

Example 2: A school district meets the supplemental funds test State and local resources have declined, forcing school leaders to make tough decisions about what to keep and what to cut Most schools decide not to cut teaching positions Title I schools use Title I funds to retain teacher FTEs, while non-Title I schools do so with state/local funds

Result ◦ This scenario does not violate the supplemental funds test (but is likely to get scrutinized) ◦ The supplemental funds test looks at the overall level of resources going into a school, and not for supplementary services ◦ Here, the Title 1 Schools have extra resources non-Title I schools do not have  The non-Title1 schools had to cut other costs in order to retain the teacher FTEs with state and local funds, cuts Title 1 schools did not have to make. Title 1 Schools should be getting something extra with the extra dollars they have flowing into the school

 All costs charged to Title 1 in a schoolwide program must be: ◦ Consistent with the school’s needs ◦ Reasonably designed to improve student outcomes ◦ Necessary and reasonable ◦ Meets intent and purposes ◦ Educationally related

 Title I should be used to close achievement gaps, not budget gaps.  Total amount of federal funds are supplemental  Does the district have a federally neutral funding formula for school allocations?  Were building allocations reduced? If so, how and which ones.  If Comparability was required, how close did they make it by?  Do expenditures match SW plans and do they meet an educational need.  Finally, examine previous year actual per-pupil expenditures

◦ Instruction – yes ◦ Instructional support – probably yes ◦ Administration – possibly yes ◦ Operational – no

 The SWP is VERY important!  Targeted versus SWP which is better?