1. Maintenance of Effort Office of Special Education Fall Forum 1

2. What is Maintenance of Effort (MOE)? 34CFR §300.203 Except as provided in §§ 300.204 and 300.205, funds provided to an LEA under Part B of the Act must not be used to reduce the level of expenditures for the education of children with disabilities made by the LEA from local funds below the level of those expenditures for the preceding fiscal year. (b) Standard. (1) Except as provided in paragraph (b)(2) of this section, the SEA must determine that an LEA complies with paragraph (a) of this section for purposes of establishing the LEA’s eligibility for an award for a fiscal year if the LEA budgets, for the education of children with disabilities, at least the same total or per capita amount from either of the following sources as the LEA spent for that purpose from the same source for the most recent prior year for which information is available: (i) Local funds only. (ii) The combination of State and local funds. (2) An LEA that relies on paragraph (b)(1)(i) of this section for any fiscal year must ensure that the amount of local funds it budgets for the education of children with disabilities in that year is at least the same, either in total or per capita, as the amount it spent for that purpose in the most recent fiscal year for which information is available and the standard in paragraph (b)(1)(i) of this section was used to establish its compliance with this section. (3) The SEA may not consider any 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 in determining an LEA’s compliance with the requirement in paragraph (a) of this section. Except as provided in §§ 300.204 and 300.205, funds provided to an LEA under Part B of the Act must not be used to reduce the level of expenditures for the education of children with disabilities made by the LEA from local funds below the level of those expenditures for the preceding fiscal year. (b) Standard. (1) Except as provided in paragraph (b)(2) of this section, the SEA must determine that an LEA complies with paragraph (a) of this section for purposes of establishing the LEA’s eligibility for an award for a fiscal year if the LEA budgets, for the education of children with disabilities, at least the same total or per capita amount from either of the following sources as the LEA spent for that purpose from the same source for the most recent prior year for which information is available: (i) Local funds only. (ii) The combination of State and local funds. (2) An LEA that relies on paragraph (b)(1)(i) of this section for any fiscal year must ensure that the amount of local funds it budgets for the education of children with disabilities in that year is at least the same, either in total or per capita, as the amount it spent for that purpose in the most recent fiscal year for which information is available and the standard in paragraph (b)(1)(i) of this section was used to establish its compliance with this section. (3) The SEA may not consider any 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 in determining an LEA’s compliance with the requirement in paragraph (a) of this section. 2

3. What is Maintenance of Effort (MOE)? 34CFR §300.203 2011-12 SE-4096 SE-4094 2010-11 SE-4096 SE-4094 A comparison of Special Education total costs (Local funds only or a combination of local and state) current year versus prior year (or most recent prior year for which information is available) Required for any ISD/LEA/PSA that receives Federal IDEA Part B Funds 3

4. Aggregate Analysis For the 11-12 fiscal year, Maintenance of Effort (MOE) was analyzed on an aggregate level – Values were totaled for all who received federal IDEA Part B funds within an ISD SE-4096, Special Education Actual Cost Report SE-4094, Special Education Transportation Report Per Capita – Aggregate numbers were analyzed – Any LEA that receives IDEA Part B funds is still obligated to maintain effort 4

5. …however, 2011-12 SE-4096 SE-4094 2010-11 SE-4096 SE-4094 If current year total costs are less than prior year… $400,000$500,000 For Example $100,000 Shortfall 5 Beginning with 2013-14 MOE Analysis Only headcount will be utilized in the Maintenance of Effort analysis, as is required by IDEA Part B § 611. FTE will no longer be a part of the maintenance of effort analysis.

6. …however, 2011-12 SE-4096 SE-4094 2010-11 SE-4096 SE-4094 If current year total costs are less than prior year… $400,000$500,000 For Example $100,000 Shortfall 6

7. If a district is unable to meet MOE based on total dollar amount or per capita… 7

8. Allowable Exceptions 34CFR §300.204 8 Costs must be from local/state funds, not federal funds § 300.204 Notwithstanding the restriction in § 300.203(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 § 300.704(c). (Approved by the Office of Management and Budget under control number 1820-0600) (Authority: 20 U.S.C. 1413(a)(2)(B)) § 300.204 Notwithstanding the restriction in § 300.203(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 § 300.704(c). (Approved by the Office of Management and Budget under control number 1820-0600) (Authority: 20 U.S.C. 1413(a)(2)(B))

9. Allowable Exceptions 34CFR §300.204 Voluntary departures/just cause Decrease in enrollment of children with disabilities (e.g., a child who needs services such as speech and physical therapy leaves the school district, the documented costs for the departing student may be an allowable exception) Termination of obligation of the agency 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 Termination of costly expenditures for long-term purchases 9 Costs must be from local/state funds, not federal funds

10. 50% Flexibility 34CFR §300.205 10 § 300.205 Adjustment to local fiscal efforts in certain fiscal years. (a) Amounts in excess. Notwithstanding § 300.202(a)(2) and (b) and § 300.203(a), and except as provided in paragraph (d) of this section and § 300.230(e)(2), for any fiscal year for which the allocation received by an LEA under § 300.705 exceeds the amount the LEA received for the previous fiscal year, the LEA may reduce the level of expenditures otherwise required by § 300.203(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 § 300.226 shall count toward the maximum amount of expenditures that the LEA may reduce under paragraph (a) of this section. *Assurance Statement is Required § 300.205 Adjustment to local fiscal efforts in certain fiscal years. (a) Amounts in excess. Notwithstanding § 300.202(a)(2) and (b) and § 300.203(a), and except as provided in paragraph (d) of this section and § 300.230(e)(2), for any fiscal year for which the allocation received by an LEA under § 300.705 exceeds the amount the LEA received for the previous fiscal year, the LEA may reduce the level of expenditures otherwise required by § 300.203(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 § 300.226 shall count toward the maximum amount of expenditures that the LEA may reduce under paragraph (a) of this section. *Assurance Statement is Required

11. 50% Flexibility 34CFR §300.205 Available if current year federal flowthrough (§611) allocation exceeds prior year federal flowthrough §611 allocation Example: 2011-12 1,000,000 2010-11 900,000 Federal Funds § 611 Prior year’s §611 allocation…………………….….$900,000 Current year’s §611 allocation…………………..1,000,000 Increase…………………………………………………...…..100,000 Max Available for MOE Reduction…………….…….50,000 ISD/LEA/PSA may use $50,000 to reduce MOE 11

12. If a district does Coordinated Early Intervening Services (CEIS) 12 An LEA may not use more than 15 percent of the amount the LEA receives under Part B of the Act for any fiscal year, less any amount reduced by the LEA pursuant to Sec. 300.205, if any, in combination with other amounts (which may include amounts other than education funds), to develop and implement coordinated, early intervening services, which may include interagency financing structures, for students in kindergarten through grade 12 (with a particular emphasis on students in kindergarten through grade three) who are not currently identified as needing special education or related services, but who need additional academic and behavioral support to succeed in a general education environment. 1.Professional development for teachers and other school staff to enable such personnel to deliver scientifically-based academic and behavioral interventions, including scientifically- based literacy instruction, and, where appropriate, instruction on the use of adaptive and instructional software; and 2.Providing educational and behavioral evaluations, services, and supports, including scientifically based literacy instruction.” Informational Video by Dr. Eleanor WhiteInformational Video by Dr. Eleanor White is available online §300.226

13. If a district does Coordinated Early Intervening Services (CEIS) 13 Informational Video by Dr. Eleanor WhiteInformational Video by Dr. Eleanor White is available online CEIS Not more than 15% of Part B funds (less if 50% flexibility is also used) Must not include students with disabilities General Education Environment K-12 but emphasis on K-3 Academic and Behavioral Interventions, Literacy Instruction (scientifically-based) Professional Development (on delivering scientifically-based) Educational and Behavioral Evaluations CEIS Not more than 15% of Part B funds (less if 50% flexibility is also used) Must not include students with disabilities General Education Environment K-12 but emphasis on K-3 Academic and Behavioral Interventions, Literacy Instruction (scientifically-based) Professional Development (on delivering scientifically-based) Educational and Behavioral Evaluations §300.226

14. If a district does Coordinated Early Intervening Services (CEIS) Required CEISVoluntary CEIS They may claim maximum 50% flexibility only (no CEIS) They may do maximum CEIS program only (no 50% flexibility) If a district does both CEIS and wants to also claim 50% flexibility, the maximum allowable cost for the combined total of both is the lower of the maximum eligible CEIS or 50% flexibility 14 50% Flexibility Unavailable

15. 50% Flexibility / CEIS Example 15 Current year’s §611 allocation………………..$100 Prior year’s §611 allocation………………….….$50 §611 Increase……………………………………..…..$50 MOE 50% Flexibility Reduction……………….$25 Example MOE Reduction (50% Flexibility ) CEIS $25$0 $15$5 $15 $0$20 Current year’s §611 allocation………………..$100 Current year’s §619 allocation…………………..$33 Total Part B IDEA Funds………….$133 Max Available for CEIS…………………………$20 Max Available for If both CEIS and 50% Flexibility are utilized, The combined total for both must not exceed $20 (the lower of 50% rule and CEIS amounts) 50% Flexibility CEIS

16. District must compare the amounts for 50% flexibility and CEIS. 3 important scenarios: Maximum 50% flexibility only (no CEIS) Maximum dollars for CEIS program only (no 50% flexibility) Do both CEIS program and claim 50% flexibility Combined total reserved for both must not exceed either the maximum CEIS funds or the maximum 50% flexibility amount, whichever is lower Assurance statement must be submitted by any district that chooses 50% flexibility Does the ISD, LEA or PSA have REQUIRED CEIS? Yes 50% Flexibility Flowchart Yes 16 District MAY NOT use 50% flexibilty No Voluntary CEIS? District may claim full amount of 50% flexibility* toward shortfall *assurance statement must be submitted Yes No Did the ISD, LEA or PSA receive more §611 federal grant dollars in current year versus prior year? No

17. District must repay from local funds the amount of the shortfall or amount of federal grant(s), whichever is smaller MOE Flowchart based on individual analysis; aggregate review may affect outcome Are local or local and state costs per capita greater in current year versus prior year? Yes Are there allowable exceptions? Voluntary departures/just cause Decrease in enrollment of children with disabilities Termination of obligation to provide an exceptionally costly program to a particular child Termination of costly expenditures for long-term purchases Are current local or local and state costs ≥prior year costs? Yes No ISD/LEA/PSA has maintained effort Can ISD/LEA/PSA Use 50% Flexibility? IF the ISD, LEA or PSA received more federal funds in current year than they did in prior year, they may be able to take ½ the difference and apply toward shortfall 17 No Yes Is there enough in exceptions and 50% flexibility to cover shortfall? No

18. The Single Auditor’s Role Have district demonstrate that they have met maintenance of effort – Request to see MOE test http://www.michigan.gov/ose-eis – Click “Program Finance” (found in left navigation buttons) – Click “LEA Maintenance of Effort (MOE)” (found under IDEA Fiscal Compliance Requirements) » New Aggregate Test Spreadsheet Now Posted – Review exceptions to see if allowable – Ask if they plan to use 50% flexibility Local districts still responsible, even with new aggregate analysis approach District may – Recode costs and make a journal adjustment – Get audit finding if effort is not maintained 18

19. Federal Notice of Proposed Rule Making (NPRM) Purpose of the NPRM is to clarify not change To Review the Document: NPRM Link NPRM Link (https://www.federalregister.gov/articles/search?conditions[agency_ids]=126&conditions[publica tion_date][is]=09%2F18%2F2013&conditions[type]=PRORULE) Document Name: Assistance to States for the Education of Children With Disabilities To leave comment Go to regulations.govregulations.gov (http://www.regulations.gov/#!documentDetail;D=ED-2012-OSERS-0020-0001) Use document ID ED-2012-OSERS-0020 if needed click on “comment now.” Comments are due by December 02, 2013. “The Secretary seeks public comment on proposed amendments to the regulation regarding local maintenance of effort to clarify existing policy and make other related changes regarding: The compliance standard; the eligibility standard; the level of effort required of a local educational agency (LEA) in the year after it fails to maintain effort under the IDEA; and the consequence for a failure to maintain local effort.” 19

20. QUESTIONS/DISCUSSION 20

21. 21 MOE Q & A If the MOE test is based on the ISD aggregate, why does a local district need to care about MOE? – It is a requirement of receiving IDEA Part B allocations – If the aggregate MOE test at an ISD is not met documentation for districts will be required meeting allowable exceptions or utilizing the 50% flexibility – If ISD ever runs into a time where they must gather exceptions, the information is ready. – Single auditors are testing for MOE at the LEA level

22. Can employee benefits costs that were reduced as a result of state legislature changes be used as an exception? For example, recently Michigan law required teachers to pay 20% of their benefits. No. The only allowable exceptions are described in the law: if employees voluntarily left or left for just cause, if the number of students with disabilities declined, if there was termination of the obligation to provide an exceptionally costly program to a particular child, or termination of costly expenditures for long-term purchases §300.204 22 MOE Q & A

23. Updates and Reminders Beginning with 2013-14 MOE Analysis Only headcount will be utilized in the Maintenance of Effort analysis, as is required by IDEA Part B § 611. FTE will no longer be a part of the maintenance of effort analysis. Please contact Rene Richardson at richardsonr2@michigan.gov with questions or concerns.richardsonr2@michigan.gov Financial Analyst Program Finance Office of Special Education Michigan Department of Education Phone: (517) 241-4415 23