1. VASBO Winter Conference February 17, 2017 Tracie L. Coleman
Division of Special Education and Student Services IDEA Local Maintenance of Effort Requirements
VASBO Winter Conference
February 17, 2017
Tracie L. Coleman

2. Overview Due February 28, 2017 Maintenance of Effort Requirement
Supts. Memo #304-16
Refer to Attached Guidance Documents
Maintenance of Effort Requirement
Background
Eligibility
Compliance
General Federal Grant Requirements

3. Overview of U.S. ED Changes
NPRM Published in September of 2013.
Purpose of NPRM: To amend the LEA MOE regulations in 34 CFR to clarify existing policy and make changes to:
The Compliance Standard
The Eligibility Standard
The Level of Effort Required of an LEA in the Year after it Fails to Maintain Effort (referred to as the Subsequent Years Rule)
Consequences for Failure to Maintain Effort

4. Overview Continued
The US Secretary of Education did not propose any amendments to the LEA MOE Exceptions Provision in 34 CFR or the LEA MOE Adjustment Provision in 34 CFR

5. What is IDEA?
IDEA reauthorized in 2004, implementing federal regulations released 2006 and Virginia’s special education regulations were revised, most recently in 2010.
34 CFR Part 300 Assistance to States for the Education of Children with Disabilities and Preschool Grants for Children with Disabilities.
Virginia regulations set forth the requirements of the Board of Education regarding the provision of Special Education
Each school division shall provide free and appropriate education, including special education for the children with disabilities residing within its jurisdiction….

6. MOE Compliance
The Individuals with Disabilities Education Act (IDEA), § , requires the VDOE to determine that a school division complies with the maintenance of effort requirement to spend (four tests)
at least the same total amount of
either local or local plus state dollars or
per capita amount of either local or local plus state dollars for the education of children with disabilities
that the school division spent from the same source for that purpose in the previous year…..
subject to the subsequent years rule

7. USED Changes to LEA MOE
The USED identified a need for revisions to the LEA MOE requirements based upon fiscal monitoring, audits and questions from States. Most of the changes clarify the way in which the Department had previously interpreted LEA MOE regulations and consolidate requirements from GEPA, EDGAR and appropriations language. These regulations became effective on July 1, 2015 and can be found at:

8. Categories of Changes Structural Changes Four Methods Comparison Year
Use of exceptions and adjustment in eligibility standard
Subsequent Years Rule
Consequences for Failure to Maintain Effort
Added Appendix E
The final regulations adopt the proposed amendments with modifications to improve organization, clarity, and flexibility for LEAs.

9. Structural changes
In order to make the regulations clearer and to improve organization, USED reorganized the regs and renumbered the subsections under § as follows:
Eligibility standard
Compliance Standard
Subsequent Years Rule
Consequences of failure to maintain effort

10. Four Methods Most common fiscal monitoring finding.
Not a substantive change from the prior regulation.
Many commenters suggested the option to use the four methods needed to be more explicit.
Clarifies that applies to both standards.
Four methods are:
local funds only;
the combination of State and local funds;
local funds only on a per capita basis; or
the combination of State and local funds on a per capita basis

11. IDEA MOE Expenditures
The IDEA MOE expenses must include all costs associated with providing special education and related services to children and youth with disabilities that are above and beyond the costs of providing regular education programs to nondisabled students.
Costs associated with capital outlay or regular education programs and services should be excluded from this expenditure calculation.
Costs incurred through the Comprehensive Services Act (CSA) should not be included. As a result, these students would not be included in the per capita calculation.

12. IDEA MOE Expenditures
Expenditures for special education and related services must be reported by source of funds (state and local only).
Federal expenditures are not used to determine whether the division has met its MOE requirement.
Each entry must represent actual expenditures and be consistent with federal and state definitions of special education and related services.
The primary requisite for reporting expenditures for purposes of determining compliance with IDEA’s MOE requirements is that divisions will only report those expenditures the division incurred for students with disabilities for whom the division is legally responsible.

13. IDEA MOE Expenditures
The application includes final SFY 2015 division expenditures . However, due to the subsequent years rule, the SFY 2015 expenditures may not be used as the year to year comparison of local and local plus state expenditures for the provision of special education and related services.
Expenditures entered in the IDEA MOE application may differ from special education expenditures reflected on Schedule A of the Annual School Report Financial Section (ASR) since they reflect a different student type (i.e., served vs. legally responsible).
Expenditures reported in the ASR includes all funding sources (i.e., state, local & federal).

14. Expenditures Included
Direct instruction/provision of special education service through an Individualized Education Program (IEP);
Costs such as salaries and benefits (full and prorated costs) of staff who provide special education and related services;
Costs associated with special transportation as called for in an IEP;
Prorated proportionate costs of certain equipment purchases or certain construction costs;
Costs associated with the provision of special education and related services for divisions responsible for the education program in a regional or local jail;
Costs for providing special education and related services through a homebound or home-based model; and
Tuition paid to another division.

15. Expenditures Excluded
Tuition received from another LEA
Tuition received by the serving school division for a student the serving division is not legally responsible for should be used to reduce the serving division’s expenditures by the amount of the tuition received.
General capital outlay;
General transportation costs;
Comprehensive Services Act (CSA) local match; and
Any expenditures that apply to all students.

16. Accurate and Consistent Reporting Are Critical
Sample– Sped Expenses
Accurate and Consistent Reporting Are Critical

17. Comparison Year for the Eligibility Standard:
The comparison year is "the most recent fiscal year for which information is available”, regardless of which method the LEA uses
Change from comparison year for local funds only in the prior regulation
Simplifies the requirement for LEAs, States, and auditors

18. APPLICABILITY of Exceptions and ADJUSTMENT TO the Eligibility Standard
Prior regulation silent on applicability of exceptions and adjustment (§§ and 205).
Based on comments, decision was made to explicitly allow LEAs to consider the exceptions and adjustment:
to the extent the information is available;
the LEA 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
the LEA reasonably expects to take in the fiscal year for which the LEA is budgeting.

19. SUBSEQUENT YEARS RULE First Set Out in Letter to Boundy (2012)
Enacted into law in the 2014 and 2015 Appropriations Acts
Final Regulations make the rule permanent and provide details on implementation and implications

20. WHAT IT MEANS?
Defines what level of effort an LEA must meet in order to maintain effort in the year after an MOE failure
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 reduced level of expenditures.
This has an impact on both the eligibility and compliance standards

21. LEA’s Eligibility for IDEA
Established under Subpart C of the regs
An LEA is eligible for assistance under IDEA for a fiscal year if the agency submits a plan that provides assurances to the SEA that the LEA meets each of the conditions in § § through
Assurances are included with the division’s Annual Plan Application

22. Annual Plan Application
The Annual Application (aka Annual Plan) is the LEA’s application to request federal special education funding.
Includes, in part, the following:
Assurances of legal compliance;
Updated information regarding local special education advisory committees (LAC), local & regional jails, implementation of previous application; and
Proposed budgets 22

23. Workbook Tabs Welcome LEA Instructions Cover & Certifications
LEA Assurances & Certifications
LEA Local & Regional Jails (Not applicable for SOPs)
Implementation Narrative
MOE Eligibility (SOPs will submit separately)
CEIS & PSA (Not applicable for SOPs)
Section 611
Section 619

24. MOE Eligibility LEAs Required to Meet MOE Requirements
Spend at least the Same Amount in Local or Local plus State Funds in Current Year as Spent in Prior Year
Further Requires LEA to Both Budget in each Subsequent Year at least the Same Amount that it Expended in the Most Recent Prior Year for Which Information is Available and Expend Year to Year the Amount it Expended in the Prior Year
May Consider Allowable Exceptions Taking Place During FY

25. MOE Planning/Eligibility
Report the projected budget for and compare against actual expenditures; subject to the subsequent years rule
Divisions Must Budget Enough to Meet MOE Requirements
If enough wasn’t budgeted, ineligible to receive funding the next year and Divisions may have to repay funds if MOE is not met, further analysis by VDOE will be required. 25

26. Impact of Method on the Subsequent Years Rule
To determine required level of effort, must look back to most recent fiscal year in which LEA maintained effort.
But must look back to the most recent fiscal year in which the LEA met MOE using the same method.
For example,
LEA wants to use State and local funds (total) to meet the eligibility standard in FY
LEA failed to meet MOE in FY using that method
LEA met MOE in FY using that method
LEA must use FY as the comparison year

27. SUBSEQUENT YEARS RULE AND ELIGIBILITY STANDARD
Follows the method: comparison year = the most recent fiscal year for which information is available and for which LEA met MOE using the same method
For example,
LEA wants to use State and local funds (total) to meet the eligibility standard in FY
LEA has information for FY , but failed to meet MOE in FY using that method
LEA Met MOE in FY using that method
LEA must use FY as the comparison year

28. Meeting Eligibility Standard No MOE Failure
Example of How an LEA May Meet the Eligibility Standard in Using Different Methods (same table as Table 7 in Appendix E)
Fiscal Year
Local
State and local funds
Local funds
Per capita
State/local
Child Count
2015–2016
$500*
$1,000*
$50*
$100* 10
2016–2017
Required Budget Amount
$500
$1,000
$50
$100
*The LEA met the compliance standard using all 4 methods.
Unknown
Comparison Year Based on Most Recent Data Available

29. Meeting Eligibility Standard With MOE Failure
Fiscal Year
Local
State and local funds
Local funds
Per capita
State/local
Child Count
$550*
$1,200*
$55*
$120* 10
2015–2016
$500**
$1,000**
$50**
$100**
2016–2017
Required Budget Amount
$550
$1,200
$55
$120
*=Met MOE ** =Failed MOE
Unknown
Comparison Year Based on Most Recent Data Available

30. Comparison Year for the Compliance Standard
The comparison year is “the fiscal year”, based on the when the LEA met MOE using that method (meet one of the four methods/tests)
Simplifies the requirement for LEAs, States, and auditors

31. SUBSEQUENT YEARS RULE AND COMPLIANCE STANDARD
Follows the method: comparison year= the most recent fiscal year in which the LEA met MOE using the same method
For example:
LEA wants to use State and local funds (total) to meet the compliance standard in FY
LEA failed to meet MOE in FY using that method
LEA Met MOE in FY using that method
LEA must use FY as the comparison year

32. Meeting Compliance Standard With MOE Failure and Subsequent Years Rule
Fiscal Year
Local
State and local funds
Local funds
Per capita
State/local
Child Count
2014–2015
$500*
$1,000*
$50*
$100* 10
2015–2016
 $450**
 $900**
$45**
 $90**
 10
Amount required to meet MOE
$500
$1,000
$50
$100
*= Met MOE **= Failed MOE

33. Compliance Standard and Subsequent Years Rule: Different MethodsFY
Local Funds Total
State and Local
Total
Local Funds
Per Capita
State and Local Per Capita
Child Count
2015–2016 
$500*
$950*
$50*
$95* 10
2016–2017
$450**
$45**
$900**
$90**
*= Met MOE **= Failed MOE

34. Consequences for Failure to Maintain Effort
If LEA Fails MOE Compliance Standard, SEA is Required to Repay Federal Government Using Non-Federal Funds (or non-accountable Federal Funds)
May require repayment from LEA Using Non-Federal Funds (or non-accountable Federal Funds)
This is not new: based on section 452 of GEPA (20 U.S.C. 1234a)
Clarify by making it explicit in regulations. Also clarifies how much must be returned

35. Amount to be repaid in case of LEA MOE failure
…an amount equal to the amount by which the LEA failed to maintain its level of expenditures in accordance with paragraph (b) of this section in that fiscal year, or the amount of the LEA’s Part B subgrant in that fiscal year, whichever is lower. 34 CFR § (d)

36. Appendix E Eligibility and compliance standards Subsequent years rule
Appendix E Includes 10 Tables That Provide Examples of How to Calculate LEA MOE, including:
Eligibility and compliance standards
Subsequent years rule
Applying exceptions and adjustment to eligibility
Calculating per capita
We encourage you to review these tables; VDOE will continue to provide additional guidance

37. Effective Date Effective Date was July 1, 2015.
However, Subsequent Years Rule took affect for FYs and ….included in U.S. Appropriations Act

38. Effective Date and Eligibility Determinations
Eligibility determinations for LEAs’ IDEA Part B sub-grants are due May 12th
States were not required to apply the new eligibility standard, if they were making the determination before July 1. However, VDOE implemented this standard for determinations

39. MOE Requirement
There is no flexibility in the IDEA for any waiver or variance to a school division’s MOE requirement
Under certain conditions specified in the IDEA regulations, a school division may reduce the expenditures needed to meet its MOE requirement

40. MOE Allowable Exceptions/Adjustments
The possible allowable exceptions specified in IDEA are below.
§ (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–”
§ (d), “ … The termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities.”
§ , “ … Adjustment to local fiscal efforts in certain fiscal years up to 50% of excess in allocation.” Divisions must have ‘Meets Requirements’ status and those taking advantage of this provision must use an amount of local funds equal to the reduction in expenditures for activities that could be supported with funds under the ESEA in the same school year it took this adjustment. CEIS and Local Determination status are a factor.

41. IDEA MOE Not Met?
The VDOE will be required to pay the amount of the division’s shortfall to the U.S. Department of Education
The VDOE will then establish a payment plan for the division to reimburse the VDOE
Federal funds cannot be used to make this payment

42. LEA Responsibilities
Be familiar with the published Uniform Guidance Regulations (2 CFR Part 200)
Expend Funds in Accordance with Approved Plan
Ensure Procurement mechanisms conform to Federal and State laws and standards
Document time & effort for employees funded from federal grant sources
Maintain financial & programmatic records as required by Federal & State law
General Rule – Sole Use of property purchased with Part B funds
Maintain a physical inventory of property purchased with Part B funds (Ipads, computers, etc.,)
Submit Timely & Accurate Reimbursement Requests

43. Throughout the School Year?
Spend Funds in Accordance with Approved Application
Submit Application Amendments, if major change to how funds are being used
Submit Budget Amendments, if necessary for category spending changes
Submit Timely Reimbursement Requests
Maintain Time & Effort Reports and other Supporting Documentation

44. SESS Budget & Finance Staff Members’ Contact Information
Pat Brooks –
Emily Boothe –
Tracie Coleman –
Sherry Hubbard –
Deneen Jackson –

45. Questions