1. IDEA, Part B Fiscal and Results Driven Accountability TIFFANY R. WINTERS, ESQ. TWINTERS@BRUMAN.COM JENNIFER MAUSKAPF, ESQ. JMAUSKAPF@BRUMAN.COM BRUSTEIN & MANASEVIT, PLLC FALL FORUM 2014

2. Agenda -Summary of Findings Re: OSEP Fiscal Monitoring Letters -Excess Costs -Maintenance of State Financial Support (MFS) and Local Maintenance of Effort (MOE) -Supplement Not Supplant (SNS) Requirements -Results Driven Accountability (RDA) BRUSTEIN & MANASEVIT, PLLC 2

3. OSEP Fiscal Monitoring http://www2.ed.gov/fund/data/report/idea/partbfymlt rs/index.html http://www2.ed.gov/fund/data/report/idea/partbfymlt rs/index.html BRUSTEIN & MANASEVIT, PLLC Reports with NO FindingsReports with Findings 1.Alabama 2.Connecticut 3.Guam 4.Iowa 5.Louisiana 6.Missouri 7.Nevada 8.North Carolina 9.North Dakota 10.Pennsylvania 11.Virginia 12.West Virginia 1.Colorado 2.District of Columbia 3.Georgia 4.Indiana (corrected) 5.Mississippi 6.Montana 7.South Dakota 8.Vermont 9.Washington 10.Wisconsin 11.Wyoming 3

4. Monitoring Area 1, IDEA Part B: Obligation/Liquidation Criterion Number DescriptionApplicable Requirements Criterion 1.1 The SEA has procedures to allocate the IDEA section 611 and section 619 subgrants to eligible LEAs based upon the correct formula. 34 CFR §§300.200, 300.705(a)-(b), 300.815-300.816 Criterion 1.2 The SEA has procedures to ensure that LEAs are provided 27 months to obligate funds. 34 CFR §76.709(a) Criterion 1.3 The SEA has procedures to obligate funds solely during the 27 month period of availability and liquidate funds not later than 90 days after the end of the funding period or an extension of that timeline authorized by the Department. 34 CFR §§76.703, 76.709, 80.23 BRUSTEIN & MANASEVIT, PLLC 4

5. Monitoring Area 1, IDEA Part B: Obligation/Liquidation Criterion Number DescriptionApplicable Requirements Criterion 1.4 The SEA has procedures to ensure that LEAs obligate funds solely during the 27 month period of availability and liquidate funds not later than 90 days after the end of the funding period or an extension of that timeline authorized by the Department. 34 CFR §§76.709, 80.23 Criterion 1.5 The SEA has procedures to reallocate IDEA section 611 and section 619 subgrants, when appropriate, consistent with the regulations. 34 CFR §§300.705(c), 300.817 Criterion 1.6 The SEA has procedures to draw down funds based on immediate needs; any interest accrued by the SEA or LEAs in excess of $100 per year per account is returned to the Department. 34 CFR §80.21(c)&(i) BRUSTEIN & MANASEVIT, PLLC 5

6. Monitoring Area 1, IDEA Part B: Obligation/Liquidation Findings: 1.(Mississippi) State reallocated unspent LEA funds without determining that a FAPE was provided by the district and whether the LEAs that received the reallocation were adequately providing special education and related services. (300.705(c) and 300.817). 2.(Wyoming) State reallocated unspent LEA funds without determining that a FAPE was provided by the district and whether the LEAs that received the reallocation were adequately providing special education and related services. (300.705(c) and 300.817). BRUSTEIN & MANASEVIT, PLLC 6

7. Monitoring Area 2, IDEA Part B: Use of Funds Criterion Number DescriptionApplicable Requirements Criterion 2.1 The SEA has procedures to ensure that funds are expended in accordance with the requirements of the IDEA Part B. 34 CFR §§300.162(a), 300.202(a)(1) Criterion 2.2 The SEA has procedures to ensure that LEAs use IDEA funds only to pay the excess costs of providing special education and related services to children with disabilities in accordance with IDEA. 34 CFR §§300.16, 300.202(a)(2) Criterion 2.3 The SEA has procedures to ensure that LEAs spend the required amount on providing special education and related services to parentally- placed private school children with disabilities. 34 CFR §300.133 BRUSTEIN & MANASEVIT, PLLC 7

8. Monitoring Area 2, IDEA Part B: Use of Funds Criterion Number DescriptionApplicable Requirements Criterion 2.4 The SEA has procedures to provide an approved restricted indirect cost rate (RICR) for its LEAs. 34 CFR §§76.560- 76.569 Criterion 2.5 The SEA has procedures to provide IDEA funds to LEA charter schools in accordance with IDEA and EDGAR. 34 CFR §§76.788- 76.797, 300.209(c), 300.705(a) and (b), 300.815-300.816 Criterion 2.6 The SEA has procedures to ensure that each LEA provides funds to charter schools that are part of the LEA in the same manner it provides funds to its other schools. 34 CFR §§76.799, 300.209(b) BRUSTEIN & MANASEVIT, PLLC 8

9. Monitoring Area 2, IDEA Part B: Use of Funds Findings: 1.(District of Columbia) SEA had no procedures to ensure that LEAs use IDEA funds only to pay the excess costs; SEA did not compute excess cost. 2.(Mississippi) SEA’s excess cost computation was inconsistent with IDEA regulations by looking at CWD count from preceding year rather than current year. 3.(Montana) SEA had no procedures to ensure that LEAs use IDEA funds only to pay the excess costs; SEA did not compute excess cost. 4.(South Dakota) SEA had no procedures to ensure that LEAs use IDEA funds only to pay the excess costs; SEA did not compute excess cost. 5.(Wyoming) SEA had no procedures to ensure that LEAs use IDEA funds only to pay the excess costs; SEA did not compute excess cost. 6.(Wisconsin) SEA had developed but not implement procedures to calculate excess costs. BRUSTEIN & MANASEVIT, PLLC 9

10. Monitoring Area 3, IDEA Part B: ARRA Criterion Number DescriptionApplicable Requirements Criterion 3.1 The SEA ensures that infrastructure investments are properly certified and posted. ARRA §1511 Criterion 3.2 The SEA has procedures to ensure that LEAs comply with the “Buy American” requirements. 2 CFR §§176.60- 176.170 Criterion 3.3 The SEA has procedures to ensure that LEAs comply with the prevailing wage requirements. 2 CFR §§176.180, 176.190 Criterion 3.4 The SEA has procedures to ensure that it prevents and detects fraud, waste, and abuse. Inspector General Act of 1987 (P.L. 100-504) BRUSTEIN & MANASEVIT, PLLC 10

11. Monitoring Area 3, IDEA Part B: ARRA Findings: None. BRUSTEIN & MANASEVIT, PLLC 11

12. Monitoring Area 4, IDEA Part B: Level of Effort Criterion Number DescriptionApplicable Requirements Criterion 4.1 The State has procedures to calculate its financial support for special education and related services for children with disabilities in accordance with the IDEA. 34 CFR §300.163(a) Criterion 4.2 The SEA has procedures to ensure that each LEA budgets, for the education of children with disabilities, at least the same amount as the LEA spent for that purpose in the most recent prior year for which information is available. 34 CFR §300.203(b) Criterion 4.3 The SEA has procedures to ensure that each LEA expends at least the same amount as it expended in the immediate prior year for the education of children with disabilities, unless the LEA has allowable exceptions or adjustments. 34 CFR §§300.203(a), 300.204- 300.205 Criterion 4.4 The SEA’s procedures for reviewing LEA MOE consider each of the following ways to calculate MOE: total local funds; per capita local funds; total local and State funds; or per capita local and State funds. The SEA’s procedures for reviewing LEA MOE find an LEA to have met MOE if the LEA met MOE based on one or more of those comparisons. 34 CFR §300.203(b) BRUSTEIN & MANASEVIT, PLLC 12

13. Monitoring Area 4, IDEA Part B: Level of Effort Findings: 1.(District of Columbia) State MFS did not include all special education costs (non- public tuition for students with IEPs in non-public settings at public expense; transportation for students with IEPs; and certain other state agency costs). 2.(Indiana) State MFS did not include funds from other state agencies. 3.(Mississippi) State MFS did not include funds from other state agencies. 4.(Vermont) State did not ensure LEAs were meeting the MOE eligibility standard. 5.(Colorado) State did not permit LEAs to meet MOE using local funds only on a total or per capital basis. 6.(Georgia) State included local funds in MFS calculation. 7.(Washington) State permitted LEAs to reduce MOE by the exact amount of the CEIS set-aside. BRUSTEIN & MANASEVIT, PLLC 13

14. Monitoring Area 5, IDEA Part B: Procurement, Property, and Record Retention Criterion Number DescriptionApplicable Requirements Criterion 5.1 The SEA obtains approval from the Department prior to using its State-level IDEA funds for equipment, construction, or alteration of facilities. 34 CFR §300.718 Criterion 5.2 The SEA has procedures to ensure that an LEA obtains its approval prior to using IDEA funds for equipment, construction, or alteration of facilities. 34 CFR §300.718 Criterion 5.3 The SEA has procedures to ensure that its procurement mechanisms, and those used by its LEAs, conform to applicable Federal law and State procurement rules. 34 CFR §80.36 BRUSTEIN & MANASEVIT, PLLC 14

15. Monitoring Area 5, IDEA Part B: Procurement, Property, and Record Retention Criterion Number DescriptionApplicable Requirements Criterion 5.4 The SEA has procedures to ensure that each LEA maintains a physical inventory of property acquired with IDEA funds and conducts inventories to reconcile with property records at least once every two years. 34 CFR §80.32(d)(2) Criterion 5.5 The SEA has procedures to ensure that it, and its LEAs, do not award or obligate funds to any party that has been debarred or suspended. 34 CFR §80.35 Criterion 5.6 The SEA has procedures to ensure it, and its LEAs, maintain financial and programmatic records for the period of time required by Federal law. 34 CFR §80.42 BRUSTEIN & MANASEVIT, PLLC 15

16. Monitoring Area 5, IDEA Part B: Procurement, Property and Record Retention Findings: None. BRUSTEIN & MANASEVIT, PLLC 16

17. Excess Cost BRUSTEIN & MANASEVIT, PLLC 17

18. Excess Cost Requirement The excess cost requirement prevents an LEA from using funds provided under Part B of the Act to pay for all of the costs directly attributable to the education of a child with a disability. ◦Exception: Children with disabilities ages 3-5 and 18-21 if local or State funds are not available. (IDEA Regs Section 300.202(b)(1)) BRUSTEIN & MANASEVIT, PLLC 18

19. What is an Excess Cost? Costs in excess of the average annual per-student expenditures in an LEA during the preceding school year for an elementary school or secondary school student, as may be appropriate, and that must be computed after deducting amounts received under – ◦IDEA Part B; ◦Title I, Part A ESEA; ◦Title III, Parts A and B of the ESEA; ◦Any State or local funds expended for programs that would qualify for assistance under any of the grant programs described above; and ◦Capital outlay or debt services. (IDEA Regs Section 300.16) BRUSTEIN & MANASEVIT, PLLC 19

20. How to Calculate Excess Costs? Calculate elementary school students separately from secondary school students. (IDEA Regs Section 300.16) BRUSTEIN & MANASEVIT, PLLC 20

21. Four Steps: Step 1: LEA must determine total amount of expenditures for elementary school students from all sources-local, State and federal (including Part B)-in the proceeding school year. ◦(Less Capital outlay and debt services) BRUSTEIN & MANASEVIT, PLLC State and Local tax Funds + Federal Funds – Capital Outlays and Debt = Total Expenditures Less Capital Outlays and Debt 21

22. Step 2: ◦Subtract from the total expenditures less capital outlays and debt: ◦IDEA Part B; ◦Title I, Part A ESEA; ◦Title III, Parts A and B of the ESEA; and ◦Any State or local funds expended for programs that would qualify for assistance under any of the grant programs described above =Total expenditures less capital outlay and debt, minus deductions BRUSTEIN & MANASEVIT, PLLC 22

23. Step 3: Determine the average annual student expenditure: BRUSTEIN & MANASEVIT, PLLC (total expenditures less capital outlay and debt minus deductions) / (average number of students) = Average annual student per expenditures 23

24. Step 4: Determine the total minimum amount of funds the LEA must spend for the education of its elementary school children with disabilities (not including capital outlay debt service): BRUSTEIN & MANASEVIT, PLLC (Number of children with disabilities in LEA elementary schools) X (average annual per student expenditure) = (Total minimum amount LEA must spend for education of children with disabilities before using part B funds) 24

25. SEA Exceptions SEA providing direct services to children with disabilities to make FAPE available: ◦May use Part B funds from State set aside OR Part B payments that would have otherwise been available to an LEA for the purpose of serving those children ◦Does not need to comply with excess cost requirement (IDEA Regs Sections 300.175, 300.227(a)(2)(ii)) BRUSTEIN & MANASEVIT, PLLC 25

26. Reallocatio n of Funds to LEAs BRUSTEIN & MANASEVIT, PLLC 26

27. LEA Reallocation If a State determines: That an LEA is adequately providing FAPE to all children with disabilities residing in the area served by the LEA with State and local funds, THEN Then the State MAY reallocate any portion of the funds under this part not needed by the LEA to provide FAPE to other LEAs in the State that are not adequately providing special education and related services to all children with disabilities residing in the areas served by those LEAs. (IDEA Regs Sections 300.705(c) and 300.817). BRUSTEIN & MANASEVIT, PLLC 27

28. Maintenance of State Financial Support and Maintenance of Effort WHAT??? KEEP IT UP! BRUSTEIN & MANASEVIT, PLLC 28

29. Maintenance of State Financial Support (MFS) A State must 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. ◦Includes ALL State funds!! (IDEA Regs Section 300.163) BRUSTEIN & MANASEVIT, PLLC 29

30. Failure to Meet State MFS Consequences for failure to maintain support: ◦ED reduces allocation for any FY following the FY in which the State fails to comply. ◦Reduction is the same amount by which the State fails to meet the requirement. ◦Following year reverts back to previous level of effort Ability of SEA to reduce its MOE is VERY RARE! (IDEA Regs Section 300.230) BRUSTEIN & MANASEVIT, PLLC 30

31. Local-level Maintenance of Effort (MOE) An LEA may not use its Part B funds 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. (IDEA Regs Section 300.203(a)) BRUSTEIN & MANASEVIT, PLLC 31

32. Local-level MOE (cont.) For eligibility purposes: LEA must budget, for the education of CWDs, at least the same total or per capita amount from either local funds only or state and local funds as the LEA spent for that purpose for the same source for the most recent prior year for which information is available (IDEA Regs Section 300.203(b)(1)) BRUSTEIN & MANASEVIT, PLLC 32

33. Local-level MOE (cont.) Four ways to calculate Local MOE: 1.Comparison of total expenditures using local funds only, 2.Comparison of total expenditures using State and local funds, 3.Comparison of the per pupil amount using local funds only, or 4.Comparison of the per pupil amount using State and local funds. 34 CFR 300.203(b) BRUSTEIN & MANASEVIT, PLLC 33

34. Local-level MOE Reductions Allowable reductions: 1.Voluntary departure of special education or related services personnel 2.A decrease in the enrollment of children with disabilities 3.The assumption of cost by the SEA’s high cost fund 4.An exceptionally costly child has left the agency’s jurisdiction, aged out of the eligibility age-range, or no longer needs the program of special education, or 5.The termination of costly expenditures for long-term purchases, such as the acquisition of equipment. 34 CFR 300.204 BRUSTEIN & MANASEVIT, PLLC 34

35. Local-level MOE – Optional Flexibility & CEIS The amount of LEA MOE reduction that an LEA can take is affected by an LEA’s use of Part B funds for coordinated early intervening services (CEIS). Therefore, must subtract any CEIS set-aside from any potential LEA MOE reduction! BRUSTEIN & MANASEVIT, PLLC 35

36. Notice of Proposed Rulemaking (NPRM) 300.203(a) The NPRM comment period was extended until December 10, 2014 (bc of the Gov’t shutdown). Final regulations were expected around June 2014 … ??? BRUSTEIN & MANASEVIT, PLLC 36

37. NPRM – 300.203(b) Eligibility standard. The amount of local funds an LEA budgets for CWDs is at least the same, 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 LEA met MOE compliance standard based on local funds only ◦If an LEA has not previously met MOE based on local funds only, then budget the amount spent from local funds in the most recent fiscal year for which information is available. BRUSTEIN & MANASEVIT, PLLC 37

38. NPRM – 300.203(c) Subsequent years. If LEA fails to meet MOE, level of expenditures required is the amount that would have been required in the absence of that failure and not the LEA’s reduced level of expenditures. o Initially stated in the Boundy Letter (April 2012), overturning East letter (June 2011) However, this is current law (even without the final rulemaking!) Because language was included in H.R. 3547, the Consolidated Appropriations Act, 2014, 113 th Cong. (2 nd Sess. 2014) BRUSTEIN & MANASEVIT, PLLC 38

39. NPRM – 300.203(d) Consequence of failure to maintain effort. If LEA fails to meet MOE, the SEA is liable in a recovery action to return to ED, using non-federal funds, an amount equal to the amount by which the LEA failed to maintain its level of expenditures. BRUSTEIN & MANASEVIT, PLLC 39

40. Supplement not Supplant BRUSTEIN & MANASEVIT, PLLC 40

41. SEA Supplement Not Supplant (SNS) Part B funds must be used to supplement and increase the level of Federal, State and local funds expended for special education and related services provided to children with disabilities, and in no case supplant those Federal, State and local funds. A State may use State admin and other State-level activities without regard to the prohibition on supplanting. (IDEA Regs Section 300.162; 300.704(d)) BRUSTEIN & MANASEVIT, PLLC 41

42. LEA SNS Part B funds must be used to supplement State, local and other Federal funds (used for providing services to children with disabilities). 34 CFR 300.202. If LEA meets MOE, then LEA meets supplement not supplant requirements No particular cost test ARRA Guidance, April 2009 BRUSTEIN & MANASEVIT, PLLC 42

43. OMB Circular A-133 Compliance Supplement Auditors presume supplanting occurs if federal funds were used to provide services**... 1.Required to be made available under other federal, State, or local laws 2.Paid for with non-federal funds in prior year 3.Same service to non-Title I students with State/local funds **Note that the 2014 Compliance Supplement states that these provisions do not apply to IDEA! BRUSTEIN & MANASEVIT, PLLC 43

44. Results Driven Accountability BRUSTEIN & MANASEVIT, PLLC 44

45. IDEA Monitoring U.S. Department of Education Office of Special Education Programs (OSEP) monitors States’ implementation of IDEA Parts B and C States monitor local educational agencies’ (LEAs) implementation of Part B and early intervention services (EIS) programs’ implementation of Part C BRUSTEIN & MANASEVIT, PLLC 45

46. Monitoring Priorities “The primary focus of Federal and State monitoring activities shall be on – ◦Improving educational results and functional outcomes for all children with disabilities; and ◦Ensuring that States meet the program requirements under this part with a particular emphasis on those that are closely related to improving education results for children with disabilities.” IDEA Sec. 616(a)(2) BRUSTEIN & MANASEVIT, PLLC 46

47. OSEP’s Vision for RDA All components of an accountability system will be aligned in a manner that best support States in improving results for infants, toddlers, children and youth with disabilities, and their families. OSEP’s RDA Website: http://www2.ed.gov/about/offices/list/osers/osep/rda/inde x.html http://www2.ed.gov/about/offices/list/osers/osep/rda/inde x.html BRUSTEIN & MANASEVIT, PLLC 47

48. Components of RDA State Performance Plan / Annual Performance Report (SPP/APR) measures results and compliance. Determinations reflect State performance on results, as well as compliance. Differentiated monitoring and technical assistance support improvement in all States, but especially low performing States. BRUSTEIN & MANASEVIT, PLLC 48

49. Proposed SPP/APR Focus on Systemic Improvement “Aligned with RDA Vision and Goals” Reduction of Reporting Burden Combines SPP and APR into one document Collects SPP/APR data through a web-based, on- line submission process (GRADS) BRUSTEIN & MANASEVIT, PLLC 49

50. State Systemic Improvement Plan (SSIP) Comprehensive, multi-year SSIP, focused on improving results for children with disabilities Instead of multiple small improvement plans for each indicator Broad strategies with detailed improvement activities New Indicator 17 Multi-year, multi-phase process, beginning with FFY 2013 APR (submitted in 2015) BRUSTEIN & MANASEVIT, PLLC 50

51. SSIP Phase 1 Submitted in 2015 with FFY 2013 SPP/APR Components of Phase I: Data Analysis Identification of Focus for Improvement Infrastructure to Support Improvement and Build Capacity Theory of Action (If X  then Y) BRUSTEIN & MANASEVIT, PLLC 51

52. SSIP Phases 2 & 3 Phase 2 (submitted in 2016 with FFY 2014 SPP/APR) Infrastructure Development Support for LEA/EIS Program Implementation of Evidence-Based Practices Evaluation Plan Phase 3 (submitted in 2017 with FFY 2015 SPP/APR) Results of ongoing evaluation of strategies in the SSIP Extent of implementation of strategies Progress toward established goals Any revisions made to the SSIP in response to the evaluation BRUSTEIN & MANASEVIT, PLLC 52

53. Determinations, 2012-2015 OSEP working to revise determination process to be more results focused. 2012: Determinations were driven by compliance indicators 2013: Began to use compliance data in determinations, issuance of ‘Compliance Matrix’ 2014: OSEP used RDA data in determinations for the first time 2015: OSEP will continue to use RDA in determination, but exactly how remains unclear BRUSTEIN & MANASEVIT, PLLC 53

54. RDA Factors in 2014 Determinations  First Time RDA Factors used in Determinations  Made up 50% of each State’s APR Determination  RDA data used in FFY 2012 APR considered:  Participation and Performance on Statewide Assessments and the National Assessment of Educational Progress (NAEP)  Had significant impact on many determinations BRUSTEIN & MANASEVIT, PLLC 54

55. RDA Impact on 2014 Determinations IDEA State Determinations 2014 Meets Requirements Needs Assistance Needs Intervention Compliance Only (If results factors had not been considered) 43143 Actual Determinations (Including RDA Results Factors) 18366 BRUSTEIN & MANASEVIT, PLLC 55

56. Differentiated Monitoring and Support Based on determinations and SSIP All States to receive TA on SSIP development and general TA States with the greatest needs will receive more intensive support OSEP piloting collaborative efforts in connection with SIG visits BRUSTEIN & MANASEVIT, PLLC 56

57. Accountability for Compliance Review of compliance indicators in SPP/APR Ongoing fiscal monitoring and audit resolution OSEP TA in key areas OSEP Desk Audit Process To be conducted for every State over next four years To include State accountability, dispute resolution, and data quality OSEP reserving option to conduct on-site reviews where necessary to collect additional data / provide technical support BRUSTEIN & MANASEVIT, PLLC 57

58. Questions?? BRUSTEIN & MANASEVIT, PLLC 58

59. Disclaimer This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client- lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. BRUSTEIN & MANASEVIT, PLLC 59