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Maintenance of Effort & the Impact of ESSER.

Presenters: Christy Weiler, Special Education & Title Services

Elena Lincoln, Center for IDEA Fiscal Reporting

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Welcome & Agenda

Introductions

Purpose

MOE Concepts & Connections

Think, Pair, Share Activity

Questions and Discussion

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Purpose of Today’s Session

Cover the essential concepts…of IDEA maintenance of effort (MOE)

Consider practical applications…and connections of MOE in the context of common challenges in the field

Collaborate with peers…around best practices and tools for meeting MOE

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Local Educational Agency Maintenance of Effort

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Things to think about

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LEA MOE: Why is it required and what does it mean?

LEA MOE is required to ensure that LEAs do not replace

state/local funding with federal funds.

LEA MOE means that, in each year for the education of children with disabilities,

an LEA:

Budgets at least as much as it expended in the most recent year it met LEA MOE. (Eligibility Standard)
Expends at least as much as it expended in the most recent year it met LEA MOE. (Compliance Standard)

This comparison can be calculated in four ways.

The L-E-A M-O-E requirement as we know it today first appeared in the 1997 Amendments to the I-D-E-A to ensure that federal funds do not replace state and local funding.

Currently, maintaining fiscal effort means that an L-E-A must, for the education of children with disabilities: one — budget for each upcoming S-F-Y, at least as much as it expended in the most recent S-F-Y for which information is available, and in which it met L-E-A M-O-E; and two — expend at least as much, each S-F-Y, as it expended in the most recent S-F-Y in which it met L-E-A M-O-E.

There are four ways to calculate L-E-A M-O-E. We will be talking in some detail about these methods as we work through the presentation.

L-E-A M-O-E is complicated. We have just touched on the basic concepts and will be covering much more detail as we go through the presentation.

[PRESENTER’S NOTE: The following script notes are suggested ONLY IF ASKED about supplement not supplant by an LEA representative or if someone asks about particular cost calculations.]

There used to be a particular cost test for supplanting, but that is no longer the case today. Under the particular cost test, if an L-E-A spent Part B funds to pay for a teacher’s salary that was previously paid for with state or local funds, a supplanting violation would occur, even though the total amount of state and local funds spent on special education was the same or greater than the amount spent the preceding S-F-Y. When the particular cost test was in effect, an L-E-A could maintain effort but still violate the supplement not supplant provision. The particular cost test was removed from the regulations by an amendment that became effective in October 1992. Therefore, no requirement currently exists related to supplanting particular costs, and if an L-E-A maintains effort, it will not violate the supplement not supplant requirements of I-D-E-A. E-S-S-A has a different standard for supplement not supplant. Please check E-S-S-A for details.

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The Eligibility Standard

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LEA MOE Regulation �34 CFR §300.203(a)(1)

Eligibility standard. (1) For purposes of establishing the LEA’s eligibility for an award for a fiscal year, the SEA must determine that the LEA budgets, for the education of children with disabilities, at least the same amount, from at least one of the following sources,* as the LEA spent for that purpose from the same source for the most recent fiscal year for which information is available.

*will be discussed in the “four methods” section

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Eligibility (Budget) Standard: �Two Scenarios

A.�An LEA expended $1,000,000 and met LEA MOE in SFY 2018. In SFY 2020, it budgets $900,000.

B.�An LEA expended $900,000 and met LEA MOE in SFY 2018. In SFY 2020, it budgets $1,000,000.

[NO CUSTOMIZATION: SEE PRESENTER’S NOTE IN “GUIDE TO SLIDES”]

Here are two basic examples of how the eligibility standard plays out. In these examples, an L-E-A’s level of effort is being calculated under the eligibility standard for state fiscal year 2020. Take a moment to review these examples individually. [Allow time for the audience to read the examples.]

The main point of these examples is to give you a foundational understanding of the eligibility standard. Let me ask you, does the L-E-A meet the eligibility standard in both examples, one of the examples, or neither example? [Solicit answers from the audience.] [PRESENTER’S NOTE: Answer: The LEA meets the eligibility standard in example B, because the LEA budgeted more ($1,000,000 in 2020) than it expended in the most recent year for which it had audited data ($900,000 in 2018).] Okay, in example A, the L-E-A did not meet the M-O-E eligibility requirement for an S-F-Y 2020 grant award because it budgeted less for S-F-Y 2020 than it expended in S-F-Y 2018.

Also, the state fiscal years in the example may stand out to you. Let’s talk through that. When applying for I-D-E-A Part B funds for S-F-Y 2020, an L-E-A needs to compare its budget to the last year it has verified expenditure numbers that demonstrated it met L-E-A M-O-E. For most L-E-As, the most recent year with verified data would be S-F-Y 2018. If an L-E-A met L-E-A M-O-E in S-F-Y 2018, it would need to budget for S-F-Y 2020 at least what it spent in S-F-Y 2018 to meet the eligibility standard.

Then, you can see how S-F-Y 2019 would be an intervening year between S-F-Y 2018 and S-F-Y 2020. The concept of intervening years may be relevant when applying exceptions and adjustments. We’ll revisit this topic, and work through examples applying it, once we’ve reviewed the exceptions and adjustment themselves.

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The Compliance Standard

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LEA MOE Regulation �34 CFR §300.203(b)

Compliance standard. (1) Except as provided in 34 CFR §§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.

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Compliance (Expenditures) Standard: Two Scenarios

A. �The LEA expended $900,000 and met LEA MOE in SFY 2019. In SFY 2020, it expended $950,000.

B.�The LEA expended $900,000 and met LEA MOE in SFY 2019. In SFY 2020, it expended $850,000.

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The Four Methods

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Methods for Calculating LEA MOE

Total amount of state and local funds.
Per capita amount of state and local funds.
Total amount of local funds.
Per capita amount of local funds.

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Quick Recap

Budget as much as expended in the most recent state fiscal year for which information is available and in which LEA MOE is met.
Expend as much as expended in the most recent state fiscal year in which LEA MOE is met.
Two sources of funds and four methods of calculation.
Method can change SFY to SFY; comparison year method must match current SFY method.

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The Subsequent Years Rule

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LEA MOE Regulation �34 CFR §300.203(c)(1)

The Subsequent Years Rule

“…the level of expenditures required of the LEA for the fiscal year subsequent to the year of the failure is the amount that would have been required in the absence of that failure, not the LEA’s reduced level of expenditures.”

Required level of effort (for either standard) is based on the last state fiscal year in which LEA MOE compliance was met.

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Key Takeaways of the Subsequent Years Rule

Required level of effort (for either standard) is based on the last state fiscal year in which LEA MOE compliance was met.
Must use the same calculation method when comparing current year to comparison year.
If LEA meets MOE by any of the four methods, LEA MOE is met.

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Allowable Exceptions to LEA MOE

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Exceptions — General

It is permissible to take multiple exceptions in one year, as long as each exception applies in that year.
An LEA may apply these exceptions to reduce its required MOE level and meet the compliance standard using any of the four methods.
An LEA also may apply these exceptions to reduce its required MOE level and meet the eligibility standard using any of the four methods.

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Exception (a)

As described in 34 CFR §300.204, an LEA may reduce LEA MOE for…

(a) The voluntary departure, by retirement or otherwise, or departure for just cause, of special education or related services personnel.

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Exception (a) Example

A veteran special education teacher retired and is replaced by a less-experienced special education teacher.
The LEA expended $150,000 in salary and benefits on the veteran teacher last school year, and will expend $90,000 on the new hire in the current school year.
The LEA can reduce its required level of effort by $60,000 ($150,000 – $90,000) in the current school year.

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(a) The voluntary departure, by retirement or otherwise, or departure for just cause, of special education or related services personnel.

What does this mean for your MOE?
How could you strategically use MOE exceptions to meet your required level of effort?

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Exception (b)

As described in 34 CFR §300.204, an LEA may reduce MOE for…

(b) A decrease in the enrollment of children with disabilities.

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(b) A decrease in the enrollment of children with disabilities.

What does this mean for your MOE?
How might you strategically consider this MOE exception in budgeting and expending funds in your LEA?

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Exception (c)

As described in 34 CFR §300.204, an LEA may reduce LEA MOE for…

(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 —

Has left the jurisdiction of the agency;
Has reached the age at which the obligation of the agency to provide FAPE to the child has terminated; or
No longer needs the program of special education.

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Exception (c) State definition

Kansas definition of “exceptionally costly program”

“Exceptionally Costly Program” is defined as a program agreed to by the individualized education program (IEP) team for any child with a disability, for which the associated cost is greater than four times the LEA average special education expenditure per pupil, as determined in the prior fiscal year

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Exception (c) Example

An LEA sends a child with a disability to a private residential facility. The cost of this program is $169,000.

Student no longer needs program as he graduated with a regular diploma last year.

The LEA can reduce its MOE by $169,000 in the current SFY.

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(c) The termination of the obligation of the agency, to provide. . . an exceptionally costly program.

What are some examples you can think of that might qualify as an exceptionally costly program for a particular child with a disability in your LEA?
What are the possible implications for MOE as a result of these programs?
What are some ways you could track or monitor these types of programs so that the MOE exception can be considered in meeting MOE eligibility and compliance standards?

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Exception (d)

As described in 34 CFR §300.204, an LEA may reduce LEA MOE for…

(d) The termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities.

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(d) The termination of costly expenditures for long-term purchases...

What does this mean for your MOE compliance?
How could you strategically use this MOE exception to ensure you meet your required level of effort?

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Adjustment to LEA MOE

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Adjustment to local fiscal effort in certain fiscal years: 34 CFR §300.205

“…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….”

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Conditions for Using Adjustment

The LEA must:
Use the freed-up local (or state and local) funds to carry out �ESSA activities during the SFY in which the adjustment takes place.
Receive a determination of “meets requirements” from the SEA for the SFY of the adjustment.
Not have had action taken against it by the SEA under IDEA Section 616.
Not have had the responsibility for providing FAPE taken away by the SEA.
Not be determined to have significant disproportionality for the SFY of the adjustment.

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Consequences of LEA Failure to Maintain Fiscal Effort

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Consequences of Failing to Meet LEA MOE

State must repay federal government the amount by which LEA failed to maintain effort (34 CFR §300.203(d)).
Payback must be made from nonfederal funds or federal funds for which accountability to federal government is not required (GEPA 20 U.S.C. 1234a(a)(1) and (a)(2) and 1234(a)(1)).
State may require the LEA to repay the state.
*Eligibility: An LEA is not eligible to receive an IDEA subgrant if it does not budget at least as much as expended in the most recent year it met MOE.

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LEA MOE Wrap-Up & Questions

Compliance Standard

Four Methods

Intervening Years

Exceptions

Adjustment

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Impact of ESSER

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Impact of ESSER

SCENARIO #1

FY22 Special Education

Actual Expenditures

$600,000

Does the LEA meet MOE?

NO

SPECIAL EDUCATION EXPENDITURES

STATE & LOCAL

FEDERAL

FUNDS

IDEA VI-B, ESSER I, ESSER II, ARP

FY21

Level of Effort

$350,000

Expenditures

$300,000

Federal Funds

$300,000

MOE

FAIL

$50,000

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Impact of ESSER scenario 2

Impact of ESSER

SCENARIO #2

FY22 Special Education

Actual Expenditures

$600,000

Does the LEA meet MOE?

NO

SPECIAL EDUCATION EXPENDITURES

STATE & LOCAL

FEDERAL

FUNDS

IDEA VI-B, ESSER I, ESSER II, ARP

FY21

Level of Effort

$350,000

Expenditures

$350,000

Federal Funds

$400,000

MOE

FAIL

$150,000

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Impact of ESSER Scenario 3

Impact of ESSER

SCENARIO #3

FY22 Special Education

Actual Expenditures

$750,000

Does the LEA meet MOE?

YES

SPECIAL EDUCATION EXPENDITURES

STATE & LOCAL

FEDERAL

FUNDS

IDEA VI-B, ESSER I, ESSER II, ARP

FY21

Level of Effort

$350,000

Expenditures

$450,000

Federal Funds

$300,000

MOE

MET

$150,000

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Think, Pair, Share

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Think, Pair, Share:

What are some ways your LEA does or could proactively monitor/track LEA MOE over time?

In what ways could you strategically connect program needs to fiscal requirements like MOE?

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Questions and Discussion

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Reflections & Next Steps:

Who would you need to talk to in order to better track and utilize MOE exceptions?

What, if any, actions will you take to ensure your LEA meets LEA MOE after today’s session?

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Contact Information

Christy Weiler�Coordinator�Special Education & Title Services�(785) 296-1712�cweiler@ksde.org

Elena Lincoln �Senior Technical Assistance Consultant�Center for IDEA Fiscal Reporting (CIFR)�(620) 412-1634�elincoln@air.org

The Kansas State Department of Education does not discriminate on the basis of race, color, national origin, sex, disability or age in its programs and activities and provides equal access to the Boy Scouts and other designated youth groups. The following person has been designated to handle inquiries regarding the nondiscrimination policies: KSDE General Counsel, Office of General Counsel, KSDE, Landon State Office Building, 900 S.W. Jackson, Suite 102, Topeka, KS 66612, (785) 296-3201.