ARKANSAS DEPARTMENT OF EDUCATION SPED Finance-Grants and Data LEA Academy SPED Finance 1

Maintenance of Effort Requirement 2

IDEA Fiscal Requirements Individuals with Disabilities Education Act (IDEA) Fiscal Requirements: Maintenance of Effort (MOE) Excess Costs Private School Proportionate Set Aside Coordinated Early Intervening Services (CEIS) 3

IDEA Fiscal Requirements  Districts should consider their MOE status (Eligibility and Compliance), Excess Cost requirement, Private School Proportionate Set Aside amount and Coordinated Early Intervening Services possible set aside when developing their annual budgets.  All four of these additional fiscal requirements impact a district’s use of its Part B funds. 4

MOE Requirement IDEA Maintenance of Effort The Individuals with Disabilities Education Act (IDEA), § , requires the Arkansas Department of Education to determine that a school division complies with the maintenance of effort requirement to spend 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. 5

MOE Eligibilty Standard  The first MOE requirements for districts to meet is the Eligibility/Budget Standard  Eligibility Standard: a district must budget, for the education of children with disabilities, at least the same total or per capita amount of local or local plus state dollars as the district spent for that purpose from the same source for the most recent prior year available 6

MOE Eligibility Standard  Districts provide the documentation that demonstrates a plan to budget the required amount in their Local Application for Part B funds. 7

MOE Compliance Standard The second MOE requirements for districts to meet is the Compliance/Expenditure Standard Compliance Standard: a district must expend at least the same total or per capita amount of local or local plus state dollars for a current school year on the delivery of special education and related services, as were spent the previous year (comparison year). 8

MOE Compliance Standard  ADE will determine whether a district has met its MOE Compliance requirement by reviewing final district expenditures reported in the Cycle 9 data collection. 9

ELIGIBILITY STANDARD : The comparison year is "the most recent fiscal year for which information is available”, regardless of which method the LEA Uses COMPLIANCE STANDARD: The comparison year is “the preceding fiscal year”, regardless of which method the LEA uses. COMPARISON YEAR: 10

Using Allowable Exceptions for Eligibility Standard To the extent the information is available;  the (exceptions) 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 (exceptions) the LEA reasonably expects to take in the fiscal year for which the LEA is budgeting 11

The 4 Tests of MOE Section of the IDEA Regulations specifies the four MOE tests districts can use to Eligibility and Compliance Standards status: 1. Local expenditures only 2. Local and State combined expenditures 3. Local per pupil expenditure 4. Local and State per pupil expenditure 12

New Clarification on Passing MOE Tests  The level of effort a district 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  Districts must figure all 4 “tests” for MOE compliance and keep track of these amounts (AFR) for reference in each subsequent year (see Compliance example).  Districts must meet at least one MOE test. 13

Impact of Method of 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. 14

Impact of Method of the Subsequent Years Rule  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. 15

Eligibility/Budget Example Fiscal YearLocal OnlyState + LocalLocal per CapitaState + Local per capita Child Count 2011 – 2012$400 *$1,100 *$40 *$110 * – 2013$450 *$1,300 *$45 *$130 * – 2014$550 * $1,200 **$55 *$120 ** – 2015 $500…**$1,300 * $50 **$ * – 2016 Required Amount to Budget for 2016 – 2017 Met MOE ** Failed MOE $550 $1,300 $55 $130 16

Compliance Example/AFR Fiscal YearLocal OnlyState + LocalLocal per CapitaState + Local per capita Child Count 2011$10,500$21,000$1,050$2, $10,400 **$21,600 *$1,040 **$2,160 * $10,650 *$21,500 **$1,065 *$2,150 ** $10,800 *$22,200 *$ 1,080 *$2,220 * $ 8,900 **$22,000 **$ 890 **$2,200…… ** 10 Required MOE *Met MOE **Failed MOE $10,800 $22,200 $1,080 $2,220 17

Exceptions to IDEA MOE § a A school division may reduce the level of expenditures below the previous year’s spending if the reduction is attributable to the voluntary departure, by retirement or otherwise, or departure for just cause, of special education or related service personnel.  Excludes positions eliminated through RIF  Includes positions eliminated through attrition from State/Local funds  Includes savings between high salary of departing teaching and low salary of new teacher (only from State/Local funds) 18

Exceptions to IDEA MOE § b A school division may reduce the level of expenditures below the previous year’s spending if the reduction is attributable to a decrease in the enrollment of children with disabilities. 19

Exceptions to IDEA MOE § c A school division may reduce the level of expenditures below the previous year’s spending if the reduction is attributable to the termination of the 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 state’s education agency. 20

Exceptions to IDEA MOE § d A school division may reduce the level of expenditures below the previous year’s spending if the reduction is attributable to the termination of costly expenditures for long-term purchases. 21

Adjustment to MOE  In accordance with section § of the IDEA regulations, in any fiscal year that a district’s subgrant allocation exceeds the amount that the LEA received in the previous fiscal year, that district may reduce the level of local, or state and local, expenditures otherwise required by the district’s MOE requirements in IDEA, section 613(a)(2) by up to 50 percent of the increase in the district’s subgrant allocation. 22

Adjustment to MOE  The district must spend the ‘freed-up’ local (or state and local) funds on activities that are authorized under the Elementary and Secondary Education Act (ESEA) of  This provision cannot be used by any district that has been identified as having significant disproportionality and is required to reserve 15 percent of their federal Part B award for Coordinated Early Intervening Services (CEIS). 23

Adjustment to MOE  However, if a district voluntarily chooses to set aside up to, but not to exceed, 15 percent of its federal Part B grant award, the amount the district chooses to set aside is reduced by the amount taken for the allowable exception under this provision. 24

Consequences of MOE Failure If school division doesn’t meet its MOE requirement:  ADE pays back USED using non-federal funds  ADE may require the district to pay back  The threshold for the next MOE calculation will revert back to the last year that the district did meet MOE. 25

Required MOE Form for the 4 “Tests” Calculation  Soon to be posted on the web is a new required form for the calculation of all 4 MOE tests.  This form will need to be completed in addition to the Budget Checklist in MYSPED  When completed, mail to SPED Finance.  Tab 1 of the excel form includes a basic guidance. 26

MAIL ORIGINAL DOCUMENTS OFFICE: FAX: Special Education Unit Attn: Grants & Data 1401 West Capitol, Suite 450 Little Rock, AR

Excess Cost Requirement 28

Federal Definition of Excess Cost  § Excess costs means those costs that are in excess of the average annual per-student expenditure in an LEA during the preceding school year for an elementary school or secondary school student.  § The excess cost requirement prevents an LEA from using funds provided under Part B to pay for all of the costs directly attributable to the education of a child with a disability. 29

Excess Cost Intent  At both the elementary and secondary school levels (computed separately), the excess cost requirement stipulates you must be spending (in state and local funds) at least as much (average amount per pupil) on special ed kids, as you’re spending on all your other kids (average amount per pupil). 30

Excess Cost Intent  In summary, you must document that you’re spending at least as much (in state and local funding) on your disabled kids, as you spend on your non-disabled kids.  By meeting both the MOE and EC requirements… you’re in compliance with the non-supplanting provisions of federal law and regulation. 31

Excess Cost Calculation  Four components to the Excess Cost Calculation: 1. Compute total expenditures 2. Subtract certain expenditures 3. Compute average annual per pupil amount 4. Determine minimum amount of funds to spend for Students With Disabilities 32

Excess Cost v. MOE Excess Cost:  Spending on Special Education students compared to non- Special Education students  By grade range  Expenditures compared in same year MOE:  Spending only on Special Education students  At district level  Expenditures compared to prior year 33

Private School Proportionate Share 34

Private School Proportionate Set Aside  Under section § of the IDEA regulations, districts are required to complete a formula to identify the amount they must set aside of their Part B award to be used to provide special education and related services, through a Services Plan, to children whose parents have placed their child in a private school but who still want their child to receive some special education 35

Private School Proportionate Set Aside Number of eligible children with disabilities in the District (December 1, 2014 Child Count) 148 Number of parentally placed or home school eligible children with disabilities in private schools or home school located in the district and number identified as needing services but services not being provided. Use Dec. 1, 2014 Child Count and Private School Survey Questions 4 & 5. 2 Total Title VI Part B allocation to the District (current year only) 246, Average allocation per eligible child (#3 divided by #1) 1, Amount to be expended for parentally placed children and home school children with disabilities (PSPS) (#4 multiplied by #2) 3,

Coordinated Early Intervention Services (CEIS) 37

Coordinated Early Intervening Services (CEIS)  As permitted by section § of the IDEA regulations, a school district may use 15 percent (or up to 15 percent) of their Part B award to provide certain services to students who ARE NOT identified under the IDEA as students with disabilities.  The first way is that a school district might be identified as having significant disproportionality and will be required to set aside 15 percent of its Part B award. 38

Coordinated Early Intervening Services (CEIS)  The second way is that a school district might choose to voluntarily set up to 15 percent of their Part B award for Coordinated Early Intervening Services (CEIS). This situation is described as follows.  Districts that voluntarily set aside up to 15 percent of its Part B award will have to be aware of the implications with Section and a possible adjustment to its MOE status. 39

Coordinated Early Intervening Services (CEIS)  Each LEA that develops and maintains coordinated, early intervening services must annually report to the SEA on—  The number of children served under this section who received early intervening services; and  The number of children served under this section that received early intervening services and subsequently receive special education and related services under Part B of the Act during the preceding two year period. 40

Key Changes 41

Key Changes in Post-Award Activities  Notable Key Changes:  Greater emphasis on internal controls to ensure compliance and fiscal responsibility;  Enhanced oversight requirements of subrecipients, which includes risk assessment to develop an appropriate monitoring plan and tools;  Enhanced oversight of contracts; and  Greater focus on performance expectations and results 42

43 Key Changes in Post-Award Activities  Longstanding grantee flexibilities known as the “Expanded Authorities” are still there, just moved to 2 CFR :  Pre-award costs allowable up to 90 days before award  Extension one time, up to 12 months  “Carry forward” of unobligated balances  Budget transfers 43

44 Key Changes for Pass-Through Entities  Under 2 CFR , pass-through entities are required to:  Provide subaward information to their subrecipients, including the indirect cost rate for the Federal award  Perform a risk assessment for the purpose of subrecipient monitoring  Verify that every subrecipient is audited (as required by the Single Audit Act) 44

45 Key Changes: Risk-Based Monitoring  Increased responsibilities for pass-through entities:  2 CFR (b) Pass-through entities must evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate monitoring actions.  Risk Assessment does not have to be completed before subawards are made, but recipients can decide to make assessments before making the subawards. 45

46 Key Changes: Risk-Based Monitoring (cont.)  Considerations for pass-through entities in evaluating sub-recipient risk:  Prior experience with the same or similar subaward  History of audits  New personnel or new systems  Relevant Federal monitoring 46

47 Key Changes: Risk-Based Monitoring (cont.)  Increased responsibilities for pass-through entities:  Under 2 CFR (d) Pass-through entity monitoring must include: Review of financial and performance reports; Issuance of management decisions for audit findings on subrecipients; and Follow-up activities ensuring subrecipients take timely, appropriate action to cure deficiencies 47

48 Key Changes: Risk-Based Monitoring(cont.)  Under 2 CFR (e) the pass-through entity must assess risk to determine monitoring approach. Monitoring and follow up may include:  Providing training and technical assistance,  Performing an on-site review of entity’s program operations, and  Arranging for agreed-upon-procedures for audit services 48

49 Required Self-Review  In November, SPED Finance will post a Self-Review form to be completed before January 1 and mailed to SPED Finance.  The Self-Review will provide baseline data for the monitoring process.  Questions on the Self-Review reflect the Fiscal Monitoring Protocol. 49

MAIL ORIGINAL DOCUMENTS OFFICE: FAX: Special Education Unit Attn: Grants & Data 1401 West Capitol, Suite 450 Little Rock, AR