Presentation on theme: "West Virginia’s Experience. West Virginia Issues SEA Maintenance of Financial Support (MFS) – USED Waiver LEA Maintenance of Effort (MOE) – OSEP Verification."— Presentation transcript:
West Virginia’s Experience
West Virginia Issues SEA Maintenance of Financial Support (MFS) – USED Waiver LEA Maintenance of Effort (MOE) – OSEP Verification Monitoring Challenges Reduction in MOE Medicaid Other Post Employee Benefits accounting
OSEP Verification Monitoring WV online plan system pulls expenditures to calculate LEA MOE for the annual funding application, based on state/local funding OSEP required WV to inform districts of the option to calculate MOE based on local funds only, January 2011 West Virginia pulls combined state/local expenditures but accounting system currently does not facilitate separation of state/local to allow SEA verification of local only expenditures. WV plans changes to the Chart of Accounts to clearly separate expenditures of state and local funds
Lessons Learned from Inspector General Audit Report for Kansas Dept. of Education KSDE did not demonstrate that it adequately monitored the LEAs’ maintenance of effort KSDE did not have financial data to exclude gifted, ensure federal funds were excluded, or to check data submitted by LEAs LEAs incorrectly reduced reported expenditures by federal IDEA funds they received (revenue) instead of federal funds they expended (expenditures).
Inspector General Audit Kansas Dept. of Education KSDE did not ensure the LEAs’ accounting records supported the data LEAs reported for local level maintenance of effort calculations. LEAs only submitted totals; accounting records were not always maintained to verify
OIG Recommendations – February Clarify the maintenance of effort requirements at 34 CFR §§ (IDEA 97) in writing to LEAs. Provide LEAs written guidance on the specific methodology KSDE requires of LEAs in performing the maintenance of effort calculations, including an explanation of what LEA expenditures are included in the calculation. 1.2 Develop and implement policies and procedures to verify LEA data and strengthen controls to ensure the LEAs report accurate and complete special education budget and expenditure data needed to ensure that on a total or per capita basis financial support for special education and related services for children with disabilities meets the IDEA local level maintenance of effort requirements
KSDE KSDE could not demonstrate it maintained total state-level maintenance of effort requirements because it included federal funds (not state financial support) and expenditures for gifted children (not for children with disabilities) in its state-level maintenance of effort calculation.
IDEA 97 – SEA MOE Paralleled LEA According to 34 C.F.R. § (a), on either a total or per capita basis, the state will not reduce the amount of state financial support for special education and related services for children with disabilities below the amount of that support for the preceding fiscal year.
IDEA 2004 Changes MFS Kansas report was based on IDEA 1997 IG reviewed expenditures rather than “support” and could not determine whether the state had met MOE IDEA 2004 changed the standard for SEAs from MOE to “maintenance of financial support” December 2009 memo from OSEP informed states of this requirement MFS = amount made available (not expenditures)
Part B State MOE IDEA 2007 Requirements A State must not reduce the amount of State financial support for special education and related services for children with disabilities, or otherwise made available because of the excess costs of educating those children, below the amount of that support for the preceding fiscal year. See 34 CFR § (a) RRC IFA Subgroup Part B State MOE10May 19, 2009
The Secretary may waive the requirement at 34 CFR § (a), for one fiscal year at a time if the Secretary determines that granting a waiver would be equitable due to exceptional or uncontrollable circumstances such as a natural disaster or a precipitous and unforeseen decline in the financial resources of the State; OR See 34 CFR § (c) RRC IFA Subgroup Part B State MOE11May 19, 2009 Part B State MOE Waivers
Part B State MOE Waivers If a State provides clear and convincing evidence that all eligible children with disabilities throughout the State have FAPE available to them, the Secretary may waive for a period of one year, in whole or in part, the requirement under 34 CFR § (regarding State- level nonsupplanting), if the Secretary concurs with the evidence provided by the State. See 34 CFR §§ (c)(2) and (b) RRC IFA Subgroup Part B State MOE12May 19, 2009
Part B State MOE Waivers If a State provides clear and convincing evidence that all eligible children with disabilities throughout the State have FAPE available to them, the Secretary may waive for a period of one year, in whole or in part, the requirement under 34 CFR § (regarding State- level nonsupplanting), if the Secretary concurs with the evidence provided by the State. See 34 CFR §§ (c)(2) and (b) RRC IFA Subgroup Part B State MOE13May 19, 2009
WV MFS Waiver Economic downturn resulted in initial state budget cut for FY10 ( ) based on revenue estimates Midyear Executive Order from Governor required an additional cut to all state agencies Education receives budget priority Provided state budget and information from financial system documenting midyear cuts to show education/special education was cut less than other programs
WV MFS Waiver Additional information requested by OSEP state contacts and submitted May 2010 Waiver was granted for FY10 Subsequent to WV submission, OSEP issued guidance regarding waiver requests
16 Why ask for a waiver? Possible Implications of Failing to Maintain Effort Audit implications – Noncompliance with MOE requirements – Pay back the amount by which the State failed to meet MOE – Paybacks must be made out of out of non-federal funds Grant implications – Ineligibility for grant funds RRC IFA Subgroup Part B State MOE16May 19, 2009
WV MFS Waiver Lessons learned Wait until the fiscal year has ended to apply to ensure no additional cuts occur Waiver and assurances in the IDEA Annual Part B Application are different issues Reduction only affected high cost fund (state- funded portion) and WV Schools for the Deaf and the Blind, so LEA MOE was not affected Budget requests for the next fiscal year are submitted in late summer, so start early to ensure requests maintain MFS
19 Part B LEA MOE LEA MOE Requirement: Eligibility In order to determine an LEA’s eligibility for a Part B allocation, the SEA must ensure that: With certain exceptions, an LEA budgets for the education of children with disabilities at least the same total or per capita amount of either local, or State and local, funds as it spent from those same sources in the most recent prior year for which the information is available See 34 CFR § (b)(1) 19
Building the Legacy U.S. Department of Education Office of Special Education Programs LEA Maintenance of Effort LEA application standard: With certain exceptions, an LEA budgets for the education of children with disabilities, at least the same total or per capita amount of either: local funds only; or State and local funds as it spent from those same sources in the most recent prior year for which the information is available SEA must give LEA the option of either calculation method
WV Five-Year Online Strategic Plan WV code requires one plan for all districts Federal programs has an annual update; a plan within the plan due on different timelines LEA expenditures are pulled from the statewide financial management system (WVEIS) into the plan screen for calculation of excess cost and maintenance of effort Spaces provided for district entry when needed
23 Part B LEA MOE Requirement: Supplement/Not Supplant Funds under Part B must be used to supplement State, local and other Federal funds and not to supplant them See 34 CFR § (a)(3) If an LEA maintains its fiscal effort, it will only be using Part B funds to supplement local, or State and local, funds, and not to supplant them IDEA does not require a “particular cost” test – This is contrary to Title I and confusing to many WV LEAs 23
WV Chart of Accounts – July 1, 2009 Budget and Expenditure Data Maintained in WVEIS for All LEAs 2xxxx- Special Education Services – Gifted Services 1xxxx - Coordinated Early Intervening Services 5xxxx - Services for Students with Disabilities Parentally Placed in Private Schools Project Code (43) will identify IDEA funds 00Y87 – MOE reduction funds 00Y83 – Medicaid funds
Reduction in Maintenance of Effort (MOE) An LEA may be able to reduce the level of state and local expenditures otherwise required by the IDEA LEA maintenance of effort (MOE) requirements. In any fiscal year that an LEA’s IDEA allocation exceeds the amount the LEA received in the previous year, under certain circumstances, the LEA may reduce the level of state and local expenditures by up to 50 percent of the amount of the increase, as long as the LEA uses those freed-up local funds for activities that could be supported under the ESEA.
Part B LEA MOE Doing the Math In 2008, the LEA received a sec. 611 allocation of 800,000 In 2009, the LEA received a sec. 611 allocation of 900,000 AND an ARRA allocation for sec. 611 of 750, , ,000 = 1,650,000 – 800,000 = 850,000 * 50% = $425,000 6/16/09 RRC IFA Subgroup Part B LEA MOE26
Part B LEA MOE Using the “Freed-Up Funds” The LEA may reduce its expenditure of local, or State and local, funds for FY 2009 by $425,000 The $425,000 must be expended for activities/programs allowable under the Elementary and Secondary Education Act (ESEA) Because these are funds the LEA would expend as part of its FY 2009 program of special education and related services, the LEA should expend these funds for the ESEA activities in FY LEAs are accountable for being able to demonstrate HOW and WHEN these funds are expended, such as during an audit. 6/16/09 RRC IFA Subgroup Part B LEA MOE27
WV Process for LEAs Taking Reduction in MOE Annual funding application required LEA to provide: Description of previous use of the state/county funds spent for special education Description and budget for planned use of the “freed-up” state/county funds resulting from moving some special education expenditures into IDEA OR ARRA IDEA funds Must be allowable expenditure under ESEA.
Reduction in MOE: WV Challenges MOE is difficult concept for LEAs Reduction in MOE is not well understood Some LEAs were not able to expend the “freed up” funds in the same fiscal year due to unforeseen delays and misunderstanding the process Some LEAs spent more in FY10 ( ) than the prior year, despite an approved reduction in MOE
Medicaid and MOE § (g)(2) Methods of ensuring services If a public agency spends reimbursements from Federal funds (e.g., Medicaid) for services under this part, those funds will not be considered ‘‘State or local’’ funds for purposes of the maintenance of effort provisions In WV Medicaid State Plan, reimbursement goes into LEA general fund, creating accounting challenges
Other Post Employment Benefits In WV, LEAs are required to account for future post employment benefits for employees Controversy regarding whether these liabilities reside at the SEA or LEA Lawsuit by LEAs in progress Some LEAs show OPEB as an expenditure, but they don’t actually expend funds; has created a concern when pulling LEA expenditures for MOE calculation