Districts Must Show Maintenance of Effort (MOE) under the Individuals with Disabilities Education Act

by the Office of Special Education and Early Intervention Services

Background
The purpose of this issue of FOCUS on Results is to provide information to local education agencies (LEAs) and intermediate school districts (ISDs) on how to calculate district maintenance of effort (MOE) with respect to regulations in the Individuals with Disabilities Education Act (IDEA), and how to invoke and document approved exceptions to the MOE requirement. This calculation applies only to IDEA funds and it is not the same as the state’s calculation of MOE across all federal funds.

Since 1997-98, Michigan’s grant award under the IDEA has increased by over 14 percent yearly. In addition, state aid reimbursement paid to school districts has stabilized as a result of the funding formula approved by the Michigan Supreme Court under the two Durant decisions. These two factors combined have made it difficult for local and intermediate districts to maintain state and local effort when providing programs and services for pupils with disabilities.

Federal Regulations cited in this document refer to State Education Agencies (SEAs) and Local Education Agencies (LEAs). (The SEA is the Michigan Department of Education.) An ISD is treated as an LEA in the calculation of maintenance of effort.

Q: What is maintenance of effort?
A: Generally, the term “maintenance of effort” implies spending the same or a greater amount from a particular source of funds to maintain programs and services from one fiscal year to the next.

Q: Who must prove maintenance of effort?
A: IDEA requires that all local and intermediate school districts maintain state and local expenditure support in providing educational programs and services for pupils with disabilities as a condition for receiving the federal grant funds. All districts that expended IDEA (Part B) funds during 2002-03 should calculate MOE. The Michigan Department of Education (MDE) will notify school districts that may have an MOE problem for 2001-02 and provide technical assistance. (See Figure 1)

Q: What steps does a district take to determine if it is meeting the MOE provision in IDEA?
A: ISDs and LEAs can determine whether they meet the MOE provision in IDEA by following four steps:

1. Calculate the district’s expenditures to determine whether or not the district has maintained effort
   1. Calculate effort on a total cost basis.
   2. Calculate effort on a per capita basis (headcount, FTE).
2. If effort has not been maintained, review the acceptable exceptions to the MOE requirement.
3. If the allowable exceptions under Section 300.232 (see Figure 2) do not apply, review the treatment of federal funds provision under Section 300.233 (see Figure 3).
4. Contact the Office of Special Edu-cation and Early Intervention Services for additional technical assistance.

Step 1: Calculate the district’s MOE.

To begin to calculate the district’s MOE, review the Special Education Actual Cost Report (SE-4096) for the year in question and the immediate preceding fiscal year. (Download worksheet.) ISD and LEA costs from the SE-4096 eligible for the MOE calculation include the totals reported on line 46 under both Section 52 and Section 53 minus any costs reported on line 39 (Indirect Costs) and line 43 (Section 53 Pupil Transportation).

To this total, the district can add any instructional costs paid out of local funds not eligible for state aid reimbursement, with appropriate documentation. For example, the district could add salary and fringe benefits for the time a split-funded instructional aide works with special education students. The district should attach to its worksheet documentation to support such costs.

If the total costs calculated above fall below the costs for the immediate preceding year, the district needs to determine if it has maintained effort on a per-capita basis. This may be done on either a headcount or full-time equivalent (FTE) basis. To calculate the per-capita basis on headcount, the district must use its December 1 count from the two years in question. To calculate on a FTE basis, the district must use the total special education FTE as reported on the September pupil membership report for each year in question.

Step 2: See if the district qualifies for exceptions.

ISDs or LEAs that do not maintain effort are in danger of having their IDEA funds reduced. If the district determines that it has not maintained effort either on a total cost basis or a per capita basis, the district should review the approved exceptions to see if they apply. (See Figure 2.)

Section 300.232 allows exceptions if the reduction of spending is attributable to one of the following situations:

• The voluntary departure of special education or related services personnel who are replaced by qualified, lower-salaried staff.
• A decrease in the enrollment of children with disabilities.
• The termination of the obligation of the agency to provide an exceptionally costly program of special education to a particular child with a disability.
• The termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities.

The maintenance of effort worksheet will help determine if the Section 300.232 exceptions allow the district to comply with the MOE provision.

Step 3: Review the treatment of federal funds provision.

Districts that are not able to satisfy MOE by use of the exceptions above should also consider optional treatment of federal funds under Section 300.233. (See Figure 3.) Section 300.233 allows a district to treat some federal funds as if they were local dollars for the purposes of calculating MOE. An ISD or LEA may treat as local funds for MOE purposes up to 20 percent of the amount it receives that exceed the amount it received under Part B during the prior year.

For example, if a LEA receives $400,000 in Federal IDEA funds in Year 1 and then receives $500,000 in Year 2, 20 percent of the increase, $20,000, may be treated as local funds for MOE calculation purposes.

Step 4: Seek additional help from OSE/EIS.

If none of these calculations allow the ISD or LEA to maintain effort as required under IDEA regulations, contact the Office of Special Education and Early Intervention Services for assistance. Contact either Linda Domine at (517) 373-6309 or Norm Lupton at (989) 201-6095 (pager).

• Download Maintenance of Effort Worksheet •