1. Individuals With Disabilities Education Act (IDEA) Excess Cost Illinois State Board of Education Federal and State Monitoring & Special Education Services April 29, 2015 1 Illinois State Board of Education

2. Presentation Topics Overview of IDEA excess cost Illinois process for IDEA excess cost documentation and verification FY15 - IDEA excess cost Moving forward in FY16 2

3. Acronyms and Terms AFR – annual financial report APPE – average annual per pupil expenditures FRIS – Financial Reimbursement Information System Stand-alone district – an Illinois district that is NOT a part of special education cooperative Subgrant – an IDEA grant for a member district of a special education cooperative Unit district – a district that includes both elementary and secondary populations 3

4. IDEA Requirement The excess cost requirement has been a part of the federal special education act since the original PL 94-142 of 1975. These current federal regulations address excess cost: 34 CFR 300.16, 34 CFR 202, and Appendix A to Part 300 (formula and example). 4

5. Supplement Not Supplant Local Funds IDEA grants are supplementary funds for the excess cost of providing special education and related services to students with disabilities: – In order to expend IDEA funds, districts must first expend local funds on students with IEPs. It is allowable to expend the IDEA funds and local funds simultaneously. – All students are entitled to desks, books, supplies, the excess cost occurs when a student’s disability creates additional costs e.g. adapted desk, audio books, or additional supplies to address academic and behavioral needs. LEAs can’t use IDEA funds to cover ALL expenses for educating students with disabilities (Exceptions for PreK and 18- 21 populations are noted in 300.202(b)(1)(ii)) 5

6. Relevant Points All districts must complete and submit an IDEA excess cost worksheet. The calculation is based on the prior year’s expenditures, i.e. for the FY15 calculation it was the money that was spent during FY14, July 1, 2013 – June 30, 2014. – Do not enter revenue. – Do not enter budgeted amounts. 6

7. Relevant Points (cont) The excess cost worksheet will calculate an average annual per pupil expenditure (APPE) based on the elementary and secondary expenditures and the total student population. Preschool students are excluded from the student counts and IDEA excess cost calculation. Unit districts must complete separate calculations for the elementary (K-8) and secondary (9-12) populations. – Districts cannot use a flat proration to separate the elementary and secondary expenditures. – Proration is allowed when there is no distinct and separate elementary or secondary cost, e.g. superintendent salary/benefits. Districts must keep record of the proration used to separate expenditures. It is also advised to have policies in place for the limited areas that require a proration. 7

8. Relevant Points (cont) Special education cooperatives will provide information for each member district using the IDEA expenditure detail report form. – Cooperatives will not submit a cooperative IDEA excess cost worksheet. – As the federal allocations flow through the cooperatives, those entities have a fiscal responsibility to track sub- recipient spending, carry-over, etc. The IDEA expenditures are specific to the IDEA flow- through grant, not the IDEA preschool grant. Exception - Any expenditures for 5-year-old kindergartners with disabilities paid with IDEA preschool funds would be included in the calculation. 8

9. Excess Cost Timelines Release of Excess Cost Forms – The forms will be released mid-summer to early fall of each year. Data Sources – The data needed to complete the forms is available by December. Previous year excess cost form Previous year AFR (due to ISBE by October) Total student population from the previous year (ISBE provides) Special education population count for current year (due to ISBE in December) Final verified child count (ISBE provides) Submission Deadline – Last business day of January Excess Cost Threshold – The calculated threshold is the amount of state/local funds the district must expend for special education in the current school year. The district knows that amount by the end of January and should monitor spending to ensure the target is met. 9

10. 34 CFR, Part 300, Appendix AIDEA Excess Cost Worksheet Calculate the total expenditures from the previous fiscal year Section A – Use the AFR and IDEA expenditure detail report form for data sources Subtract the previous fiscal year’s capital outlay, non-capitalized equipment, and debt services Section B – Use the AFR for data sources Section C – The worksheet calculates the new total Subtract the previous fiscal year’s expenditures for ESEA Title I & III and special education expenses Section D – Use the AFR and IDEA expenditure detail report form for data sources Section E – The worksheet calculates the new total Calculate the average annual per pupil expenditure by dividing the previous year expenditures by that year’s total student population (FY14 expenditures ÷ FY14 population = FY15 APPE) Section F – Enter the total student population, the worksheet calculates the APPE Multiply the APPE by the current year’s special education population for the current year’s excess cost threshold (APPE X FY15 spec. ed. population = FY15 excess cost) Section G – Enter the special education population, the worksheet calculates the excess cost threshold. That is the amount of state/local funds the district must expend in the current fiscal year. Verification ProcessSection H – The FY16 worksheet will include a section to enter the FY15 excess cost threshold, the worksheet will then calculate to verify whether the district met the excess cost threshold. IDEA Excess Cost Formula 10

11. 11 This is a screen shot of part of the FY16 excess cost worksheet: Section A – Total Expenditures Section B – Cap. Outlay/Debt Section C – Subtract B from A Section D – Special population expenditures Most of the worksheet is dedicated to calculating a per pupil expenditure based on the previous year expenditures and student population.

12. 12 This is a screen shot of the FY16 IDEA Expenditure Detail Report form. The form is used by member districts of special education cooperatives to identify all IDEA expenditures.

13. IDEA Excess Cost Threshold The IDEA excess cost threshold is the amount of state/local funds a district must spend on students with disabilities. When the IDEA excess cost form is completed, the district has the IDEA excess cost threshold for the current fiscal year. – Do not file and forget. – Track the current year’s local spending on special education. Failure to meet the IDEA excess cost threshold results in repayment of the shortfall. – The grant coordinators will work with districts to identify any errors. – If the district is not able to resolve the issue, it must repay the federal shortfall with local funds. 13

14. State/Local Costs for Special Education (Section D of the IDEA Excess Cost Worksheet) All districts have local costs for special education. Those would be any costs for special education that are not paid with the IDEA grant funds, such as: salaries/benefits (special education staff) supplies/materials for special education classes supplies/materials used by special educators contracted services for special education tuition to other districts/cooperatives assessment/membership fees to cooperatives costs for IEP meetings (substitutes, materials) costs for completing evaluations of students with IEPs administrative time devoted to special education professional development for special education staff and school-wide professional development on special education topics special education transportation (as documented in IEPs) 14

15. FY15 – IDEA Excess Cost FY15 was the initial year for the IDEA excess cost documentation/verification process. The new process generated many questions – Telephone calls, emails – Webinars, presentations, guidance documents The grant coordinators reviewed all excess cost worksheets and contacted districts for any needed revisions. 15

16. FY15 – Some Bumps in the Road Elementary and secondary expenditures – Separating expenditures by K-8 and 9-12 – Pro-ration allowed when costs are not “separate and distinct” e.g. superintendent salary/benefits, must keep record of the pro-ration method used FRIS reimbursement amounts were entered, which did not reflect the total expenditure amounts (Section D) 16

17. FY15 – Bumps in the Road(cont.) Special populations expenditures (special education and Title I & III) – Locating in the AFR – Separating federal from local (state/local) – Entering ALL expenditures in the form Discrepancies between the FY15 excess cost threshold and reported FY14 state/local funds expended on special education Negative carryover on Expenditure Detail Report form 17

18. IDEA Funds Flowing Through Cooperatives- 1 IDEA funds are generated by each district’s student population. Federal funds do not lose their identify, IDEA funds retained at the cooperative are still attached to the students/districts that generated the funds. – The cooperative is a pass-through entity and the IDEA funds remain attached to the districts that generated the federal funds. – When the cooperative provides the IDEA funds through a subgrant, the district can expend the funds on allowable expenses, including purchasing services from the cooperative. As the entity receiving the IDEA funds, the cooperative is responsible for sub-recipient monitoring - i.e. tracking each district’s IDEA allocation and use of those IDEA funds, including any carryover. – Member district IDEA subgrants – IDEA funds retained at the cooperative and expended on behalf of the member district 18

19. IDEA Funds Flowing Through Cooperatives - 2 Negative carryover on the IDEA expenditure detail report form raises “red flags” regarding: – Procedures for tracking IDEA funds and carryover by district (cooperative sub-recipient monitoring) – Use of IDEA funds in accordance with federal allocations, i.e. IDEA funds follow the students that generated the fund. Cooperative distribution of IDEA funds (IDEA subgrants) and use of IDEA funds on behalf of member districts must be in accordance with the allocations the districts generate. 19

20. IDEA Funds Flowing Through Cooperatives – 3 Fee for Service – Cooperatives can set a rate for each service provided and bill districts based on their individual use. Flat Fee for Shared Membership Services – Cooperatives can set flat fees for shared services that are available to all districts and are provided on an as needed basis. It is possible for cooperatives to use both methods, some fee for service costs and some flat fees for shared membership services. The billing method(s) used should reflect the financial structure established in the cooperative Articles of Joint Agreement. 20

21. Articles of Joint Agreement All special education cooperatives must have Articles of Joint Agreement, approved by the board and filed with ISBE. – The Articles of Joint Agreement must include a section that addresses fiscal responsibilities of the cooperative and member districts – Member withdrawal procedures cannot include the forfeiture of IDEA funds due to withdrawal from the cooperative. That includes IDEA carryover from member district subgrants and any portion of the IDEA funds maintained and expended by the cooperative. 21

22. IDEA Excess Cost and Audits Federal and State Monitoring Division audits of IDEA grants will include excess cost requirements: District/Cooperative - review of supporting documentation to determine on a sample basis that the submission is correct and adequately documented. Cooperatives - review to ascertain that the Cooperative is properly accounting for IDEA expenditures and excess cost on a member by member basis. 22

23. FY16 – IDEA Excess Cost Build on what we learned in the initial year of the process. Policies & procedures in place to identify special education expenditures and track as either IDEA or state/local expenditures Policies & procedures in place to track expenditures by elementary and secondary Cooperatives tracking IDEA funds and IDEA carryover 23

24. FY16 – IDEA Excess Cost (cont.) Revisions/additions to the IDEA Excess Cost worksheet: Update per the FY15 AFR – The AFR lines change slightly each year, so the excess cost worksheet must be updated to accommodate those changes. FRIS references removed from the worksheet - The FRIS references caused confusion and many districts entered the FRIS reimbursement amounts rather than the total expenditures. 24

25. FY16 – IDEA Excess Cost (cont.) Districts will enter the AFR locations (lines/columns) for Title I & III and special education Section D of the excess cost worksheet. – Districts have to be able to verify the amounts entered in the excess cost worksheet. Noting the AFR expenditure lines is an auditing safeguard for the districts. Revised (improved) process for entering data from the IDEA Expenditure Detail Report Form – Adding a line to Section A to enter the IDEA costs expended by the cooperative on behalf of the district. 25

26. FY16 – IDEA Excess Cost (cont.) Addition of Section H – Excess Cost Check, i.e. did the district meet the excess cost threshold identified in the FY15 worksheet 26 As the district completes the FY16 excess cost worksheet, the excel worksheet calculates the FY15 Special Education Costs in Section H. The district must enter: the number of students with IEPs from the final verified child count ( ISBE provides the data), and the excess cost threshold from the FY15 worksheet ( worksheet that was submitted to ISBE by January 30, 2015). The worksheet will calculate to determine if the district met the FY15 excess cost threshold. H Excess Cost Check Elementary (K-8)Secondary (9-12) Total FY15 # of Students with IEPs (final verified list - www.isbe.net) FY15 Special Education Costs (APPE X students with IEPs) $$$ Enter the FY15 IDEA Excess Cost Threshold (line 81 of the FY15 worksheet) $ $$ HFY15 Check (line 77 - line 78 ) The district met the FY15 IDEA excess cost threshold if the final amount is zero or a positive number. A negative amount indicates the district did not meet the FY15 IDEA excess cost threshold.

27. Questions 27

28. 28 Mark Ribelin Division Administrator Federal and State Monitoring Tammy Greco and Felicia Malloy IDEA Grant Coordinators Special Education Services Illinois State Board of Education