Fiscal Compliance in
Special Education
Under IDEA
ALABAMA STATE DEPARTMENT OF EDUCATION
SPECIAL EDUCATION SERVICES
AGENDA
Federal Fiscal Regulations Under IDEA
IDEA Program Grant Allocations
IDEA Fiscal Allowability Rules
Ensuring IDEA Costs and Expenditures Are Allowable
IDEA Fiscal Requirements
IDEA Fiscal Monitoring
List of Abbreviations and Acronyms
CEIS – Coordinated Early Intervening Services
EDGAR – Education Department General Administrative Regulations
GEPA - General Education Provisions Act
IDEA - Individuals with Disabilities Education Act
MOE - Maintenance of Effort
OMB – Office of Management and Budget
PAR – Personal Activity Report
SEA - State Educational Agency
SES – Special Education Services
Individuals With Disabilities Education Act
•The Individuals with Disabilities Education Act (IDEA) is
a United States federal law that governs how states and
public agencies provide early intervention, special
education, and related services to children
•Most recent reauthorization was in 2004- IDEA
Improvement Act
Part B of IDEA
Creates a grant program that funds special education and
related services in public schools
Sets forth the central responsibilities of schools, districts,
and states
August of 2006-the U.S. Department of Education released
regulations for Part B of IDEA
Related to parental consent, Medicaid reimbursements,
and local maintenance of effort requirements
FEDERAL FISCAL REGULATIONS UNDER IDEA
Applicable Federal Regulations
IDEA Part B Statutes
IDEA Part B Regulations
EDGAR
OMB Circulars
IDEA Statue and Corresponding Regulations
Contain programmatic and fiscal requirements that must be
met by grantees
Office of Management and Budget Circulars- (OMB)
Education Department General Administrative Regulations
(EDGAR)
In addition to the statute and regulations, all IDEA grantees
and sub grantees must ensure that funds are spent in
accordance with applicable OMB Circulars and EDGAR
EDGAR
Sets out administrative requirements for grants funds, including
requirements for an agency’s financial management systems,
procurement systems and inventory management system
As IDEA is a state-administered program, grantees and
sub-grantees must also comply with EDGAR’s requirement for
obligations and liquidation of funds
Failure to comply with EDGAR could lead to potentially repaying
disallowed costs to Education Department with non-federal
funds
OMB Circulars
Rules and restrictions regarding allowable uses of federal funds,
including IDEA funds
Different circulars apply to different entities
December, 2013, OMB published the Uniform Administrative
Requirements, Cost Principles, and Audit Requirement for Federal
Awards
This new circular is being termed the “super-circular” or the “omnicircular.”
The Education Department has until Dec. 26, 2014 to codify these
requirements into EDGAR
Until then, current rules still apply to the administration of the IDEA
grant
Problems with Current Law
The statute permits the federal government to pay up to 40 %
of the cost of providing the required services for students with
disabilities
The federal share of the costs has hovered below 20 % for years
IDEA is a permanently authorized statute and continues to
operate without regular reauthorization
Without statutory amendments, federal agencies continue to
offer new regulations and guidance, adding to the
responsibilities of schools and districts
IDEA PROGRAM GRANT ALLOCATIONS
Allowable State-Level Activities with IDEA
Funds
State-Level Activities with
IDEA Funds
• Support development and provision of
appropriate accommodations for children
with disabilities, development and
provisions of alternative assessments
• Assist LEAs in meeting personnel
shortages
• Development & implementation of
transition programs
• Assist LEAs in providing positive behavior
interventions, supports, and MH services
• Support and direct services including TA,
personnel preparation, PD, training
• Support capacity building
Other State-Level
Activities: LEA RISK Pool
• High Cost Fund Disbursements Only
• 10% may be reserved for assisting LEAs
address high need children with
disabilities
• Support cost sharing by the State, LEA, or
among consortium of LEAs, as
determined by State in coordination with
representatives from LEAs
Required State-Level
Activities
• Monitoring, enforcement, complaint
investigation
• Establish, implement mediation process,
including cost of mediators and support
personnel
IDEA Part B Program Allocation to LEAsHow does the state allocate funds to LEAs for Child
Count?
Step 1: The SEA must award each LEA the amount the LEA would
have received in FY 1999 if the state had distributed 75% of its
grant for that year. This is known as the LEA base payment.
Step 2: Of the funds available after Step 1, the SEA must distribute
85% to LEAs based on the relative numbers of children enrolled in
public and private schools within the LEA’s jurisdiction.
Step 3: Of the funds available after Step 1, the SEA must
distribute 15% to LEAs based on the relative numbers of children
living in poverty, as determined by the SEA.
LEA Distribution of IDEA Funds
 LEA Base Payments
*IDEA Part B (Section 611) Grants base
use-FY 1999 data
*IDEA Preschool (Section 619) Grants
base use-FY 1997 data
85% Based on Population
*Numbers are based on children
enrolled in public and private schools
within the LEA’s jurisdiction
15% Based on Poverty
*Numbers are based on children living in
poverty as determined by SEA
LEA FlowThrough
LEA Base
Payment
(Child Count)
Remaining
Amount
85% Population
Based (ADM)
15% Poverty
Based (Free &
Reduced)
How Must an LEA Allocate Its Funds?
The LEA is required to take certain set-asides off the top of
its allocation:
Proportionate Share-The provision of equitable services to
parentally placed private school children
Coordinated Early Intervening Services (CEIS)- Services
provided to students in grades K-12, with a focus on
students in K-3 who need additional academic or behavioral
support but who have not been identified under IDEA
LEA-Level Funding: Use of IDEA Funds
LEA-Level “Set Asides”
LEA Allocation
Equitable Participation
Services Set-Aside
CFR 300.133
Coordinated Early
Intervening Services
(Up to 15%)
CFR 300.225(a)
LEA Administration
(Necessary and
Reasonable)
OMB A-87
IDEA FISCAL ALLOWABILITY RULES
Allowable Costs for IDEA Entitlement
Grants
For a particular cost to be allowed, it must be an excess cost
of providing special education and related services.
Only allowed costs may be charged to the flow-through or
preschool entitlement grants.
When determine whether a cost is an excess cost, ask
the following guiding questions:
In the absence of special education needs, would this cost
exist?
If the answer is…
No, then the cost is an excess cost and may be eligible.
Yes, then the cost is not an excess cost and is not allowed.
Is this cost also generated by students without disabilities?
If the answer is…
No, then the cost is an excess cost and may be eligible.
Yes, then the cost is not an excess cost and is not allowed.
If it is a child specific service, is the service documented in
the student’s IEP?
If the answer is….
Yes, then the cost is an excess cost and may be eligible.
No, then the cost is not an excess cost and is not eligible.
IDEA Part B Program Funds Allowability Rules
1. Child Find.
The process used to identify, locate and evaluate children to
determine their eligibility for IDEA-funded services.
LEA Child Find Responsibility:
 Promote public awareness of child find-Media-Flyer
 Organize parent/community outreach-Advertisement
 Create an effective screening method
 Create a pre-referral system for at-risk kids, including optional
early intervening services
2. Coordinated Early Intervening Services
The use of funds received under Part B for CEIS is
discretionary, except when an LEA is identified as
significantly disproportionate.
A State Education Agency must require an LEA to reserve
the maximum amount, the full 15%, when a state identifies
an LEA as having significant disproportionality. This
includes the Part B (611) allocation and Preschool (619)
allocation.
What May CEIS Funds Be Spent On?
LEAs may provide professional development for teachers and other
school staff to enable personnel to deliver scientifically based
academic, and behavioral intervention, literacy instruction and on
the use of adaptive and instructional software.
LEAs may provide educational and behavioral evaluations, services
and supports, including scientifically based literacy instruction.
Such activities must benefit students who are not currently
identified as needing special education and related services but who
need additional academic and behavioral supports to succeed in a
general education environment.
3. Evaluations, Special Education and Related ServicesWhat requirements must be met to use Part B funds to
provide special education to students with disabilities?
Under the IDEA, the law permits the use of IDEA program funds to
conduct evaluations on children suspected of having a disability
Any child receiving special education paid for with Part B funds must
meet the IDEA’s definition of “child with a disability”
Services provided must meet the IDEA definition of “special
education”
States and school districts are obligated to ensure that all specialized
instruction required in a student’s IEP is provided by a highly qualified
special education teacher
4. Other Uses of Funds
•Purchase of appropriate technology- For record keeping,
data collection, and related case management activities of
teachers and related service personnel
•Assistive technology- As long as the device is required as
part of the special education, related services or
supplementary aids and services which have been identified
in the student’s IEP. The use of such devices in the child’s
home or in other settings may also be permitted when the
child’s IEP Team determines that the child needs to access
the device in those settings in order to receive FAPE.
Nonacademic Services and Extracurricular
Activities
•LEAs must take steps to ensure that children with disabilities
have equal opportunity for participation in nonacademic and
extracurricular activities.
If certain supplementary aids and services are determined
necessary by a child's IEP Team to ensure equal opportunity
for participation in those activities, Part B funds may be
used(34 CFR 300.107).
Private School Tuition
IDEA Part B funds may be used to cover the cost of
student’s private school tuition under two circumstances:
1. When a student’s needs are such that the LEA is unable
to fully implement the student’s IEP in a public school,
the IEP Team may agree upon an appropriate private
school placement that is able to fully implement the
student’s IEP and provide FAPE.
2. When the LEA and the parent disagree regarding the
provision of FAPE to a student and the parents unilaterally
place the student in a private school for the provision of
FAPE, the parents could file a due process complaint against
the LEA. A hearing officer may order the LEA to reimburse
the parents the cost of the private school tuition if it is
determined that a private school placement is required for
FAPE.
Residential Placements
IDEA Part B funds may be used to cover the costs of a
residential program when the IEP Team has determined that
the placement is necessary for the provision of FAPE.
The IEP Team must determine that a service or cost is
required for the student to access their education.
Federal funds may not be used to benefit a private
school, such as to finance the existing level of
instruction.
Federal funds may only be used to meet the specific
needs of students with disabilities enrolled in the
private school.
ENSURING IDEA COSTS AND EXPENDITURES
ARE ALLOWABLE
Allowable Costs
For a cost to be allowable, it must be:
 Necessary-Is the expense necessary for the performance of
the administration of the IDEA grant?
Reasonable-Is the expense a valid programmatic or
administrative consideration? Is it a fair rate that can be
proven and defended? Does it exceed what a district would
normally incur in the absence of federal funds?
Allocable- Cost must be in proportion to the value received
and can only be for the benefit of special education.
Authorized expenditures cannot benefit other programs
other than through incidental benefit.
Adequately Documented- Documentation must be clear:
The amount and exactly how the funds are used, the total
cost of the project, records showing performance and
compliance that could facilitate an effective audit.
Teachers and Service Providers
A special education teacher or “service provider” who is
providing specialized instruction or related services to an
eligible student as required by that student’s IEP may be
paid from IDEA funds, assuming the teacher meets the
highly qualified standards outlined in the IDEA and ESEA.
IDEA funds may be used to support the salaries of related
service personnel as long as they meet the state
requirements for related service providers.
IDEA, Part B funds may not be used for non-special
education instruction in the general education classroom,
instructional materials for use with non-disabled children,
or for professional development of general education
teachers not related to meeting the needs of children with
disabilities, subject to two exceptions:
CEIS set-aside funds
Consolidated in schoolwide schools
Can special education teachers provide interventions to
small groups of students with and without disabilities?
Yes, if the teacher must prepare the lesson and/or provide services
to students with disabilities, other nondisabled students may
attend the lesson and benefit from those services,
BUT
If fully funded by IDEA, Part B, the teacher cannot grade papers,
meet with parents or perform any other functions with
nondisabled students. (34 CFR 300.208(a))
Can special education teachers provide interventions as
part of RTI to small groups of students solely without
disabilities?
No, teachers funded with IDEA, Part B funds cannot
serve small groups of students without disabilities.
Can special education teachers co-teach in an inclusion
classroom with a general education teacher and have
equal responsibilities for students with and without
disabilities?
This should be determined on a case by cases basis,
however teachers funded with IDEA, Part B cannot perform
functions beyond providing specialized instruction and
related services.
Can special education teachers assist teachers working with
nondisabled students regarding interventions?
To the extent the assistance is considered professional
development for the general education teachers to identify ,
locate and evaluate students with disabilities. Otherwise,
the special education teachers funded with IDEA, Part B
funds cannot assist in interventions for general education
students.
Professional Development
IDEA funds may be used for professional development for
special education teachers as long as the professional
development relates to the provision of special education
and related services to students with disabilities.
Professional development costs must be necessary and
reasonable for the proper and efficient performance and
administration of the grant.
Paraprofessionals
IDEA funds may be used to support the salaries of
paraprofessionals as long as the paraprofessional is providing
services under the supervision of a certified teacher.
IDEA does not prevent paraprofessionals who are appropriately
trained and supervised to assist in providing specialized
instruction. However, the IDEA does not “permit or encourage
the use of paraprofessionals as a replacement for teachers..
..who meet State qualification standards (71 Fed. Reg. 46612).
IDEA & FEDERAL FISCAL REQUIREMENTS
IDEA and Federal Requirements
Budget (eGAP)
Equitable Services (Proportionate
Share)
EDGAR Grants Management Systems
Supplement Not Supplant
Maintenance of Effort (MOE)
Excess Cost
Time and Effort Reporting and
Certification
Budget
Requirements
Budget Requirements
ELECTRONIC GRANT APPLICATION PROCESS
eGAP is the Federal Programs Consolidated
Application, As well as the funding applications
for Career Technical Education, Safe and DrugFree Schools, Special Education, and Technology
Initiatives.
The eGAP system allows LEAs to:
submit applications
Develop plans
Request funding
Provide expenditure reports over the internet
Budget Requirements (cont’d)
Must have a Funds Narrative
Must Complete Budget Assurances Outlined in Regulations
IDEA Budget application must be submitted and approved
before release of funds
Budget changes are allowable and processed after initial
budget approvals
Equitable
Services
Requirements
For Parentally-Placed Private School
Students With Disabilities
Proportionate Share Requirement
Parentally-placed private school children with disabilities
Count (October 1st )
Consultation (annual/on-going meetings)
Calculate (allotment eligible public + private school children = per
child amount × eligible private school children)
Spend required share from proportionate share calculation and
track expenditures
State Fiscal Monitoring Desk/On-site Review and Audit Compliance
Supplement
Equitable Services (Proportionate Share)
Equitable services Set-Aside Includes
FY set-aside funds plus any unused PS carryover from previous year
IDEA Regulation 34 CFR 300.133 (a)(3)
Number of eligible Parentallyplaced private school children
with disabilities
______________________
Total number of eligible children
with disabilities in the LEA (public
and private school
=
% of LEA IDEA Part B Grant for
Equitable Services to Parentallyplaced children with disabilities
EDGAR Grants
Management
Systems
EDGAR Grants Management Systems
Inventory
Management
Financial
Management
Procurement
EDGAR
Financial Management System
Controls and accounts for IDEA funds and other assets
which assist in support of ensuring costs were necessary,
reasonable, and allocable
LEA ‘s financial management system must have seven
specific EDGAR requirements
Financial Management System
LEA’s financial management system must have seven specific EDGAR requirements:
1. Financial Reporting
-accurate, current, and complete disclosure of financial information
2. Accounting Records
-details of expenditures
3. Internal Controls
-tools to assist the LEA with achieving results and complying with all
applicable laws and regulations
4. Budget Controls
-routinely compare actual expenditures to budgeted amounts
5. Allowable Costs
-follow applicable cost principles to determine reasonable, allowable, and
allocable
6. Source Documentation
-i.e., payrolls, time and effort records, bank records, contract, etc.
Must be retained for at least 5 years
7. Cash Management
-payment process, obligations, liquidations, etc.
Procurement System
Purchasing processes used to purchase goods and services including
contract administration, that ensures maximum value of federal
funds and that these processes are documented appropriately.
An LEA’s procurement system must meet specific EDGAR
requirements. 34 CFR 80.36
Special Note: IDEA Specific Procurement Rule! 34 CFR 300.718
IDEA Part B requires preapproval for equipment purchases!
Procurement System (cont’d)
Written code of conduct, and conflict of interest policy
Contain a full and open competitive bid process
Cost and Price Analysis
Vendor Selection Process
Contract Administration System that ensures contractors perform in
accordance with the terms, conditions, and specifications of the
contract
Maintained records detailing the procurement and contracting
process along with history (includes rationale for the method of
procurement)
Inventory Management System
IMS tracks the items purchased with federal funds.
EDGAR requires that LEAs follow specific inventory criteria.
34 CFR 80.32(b)
Inventory Management System (cont’d)
An LEAs IMS must include the following:
All equipment be tracked and inventoried -At least every 2 years and reconcile
the results
Must have adequate controls to account for location, custody, and security of
property purchased with federal funds (LEAs are responsible for safeguarding all
property purchased with federal funds, not just equipment)
Property records must include-description, serial number or other ID, title info,
acquisition date, cost, percent of federal participation, location, use and
condition, and ultimate disposition
Control system to prevent loss, damage, theft and protect against unauthorized
use
Supplement Not
Supplant
Supplement Not Supplant
IDEA Part B funds must be used to supplement State, local
and other Federal funds used for providing services to
children with disabilities, and not supplant those funds.
34 CFR 300.202 Note: Designed to ensure Part B funds are
used to pay for something “EXTRA”
If an LEA meets MOE, then LEA meets supplement not
supplant requirements
Supplement Not Supplant (cont’d)
3 Presumptions of Supplanting:
1. Required to be made available under other federal, state
or local laws
2. Provided with non-federal funds in the prior year
3. IDEA funds were used to provide services to IDEA
students, and the same services are provided to non-IDEA
students using other funds.
Maintenance of
Effort (MOE)
Requirements
LEA Maintenance of Effort (MOE)
Requirement
The MOE provision prohibits the use of Part B funds by
LEAs to reduce the level of local fund expenditures for the
education of children with disabilities below the preceding
fiscal year level 34 CFR 300.20
LEA Maintenance of Effort (Cont’d)
MOE is a two-part test:
The LEAs must budget at least the
same total or per-capita amount as the
LEA spent for that purpose during the
most recent prior year for which
information is available
(34 CFR 300.204 (b)).
When the fiscal year is over, the LEA
must have spent at least what was
spent in the prior fiscal year
(34 CFR 300.203 (b)).
How is MOE calculated?
Two possible sets of funding sources:
Local funds only
The combination of state and local
fund
Note: The same funding sources must
be used from year to year for the
comparison.
LEA Maintenance of Effort (Cont’d)
Four ways in which an LEA can meet MOE:
1. Local funds only, total expenditures
2. Local funds only, per pupil
3. State and local funds, total expenditures
4. State and local funds, per pupil
LEA Maintenance of Effort (Cont’d)
Can an LEA reduce its MOE?
Yes- with a few exceptions, however, the LEA
Determination status must be Meets
Requirements
Exceptions include:
The voluntary departure (by retirement or otherwise) or
the departure for just cause of special education and
related services personnel
A decrease in the enrollment of children with disabilities
The termination of the obligation of the LEA to provide a
program of special education to a particular child with a
disability exceptionally costly program, as determined by
the SEA, because the child: has left the LEAs jurisdiction;
has reached maximum service age or no longer needs the
special education program
The termination of costly expenditures for long-term
purchases such as the acquisition of equipment or
construction of school facilities
The assumption of cost by high-cost fund operated by
the state
Excess Cost
Excess Cost Requirements
“Excess costs” are those costs incurred in excess of the average
annual per-student expenditure in an LEA during the preceding
school year for an elementary or secondary school student.
Excess Cost
Spending base-calculation threshold of the federal regulations
Note: Calculate separately for elementary and secondary schools
Thresholds will establish the cut off for determining what’s excess cost of
providing special education and related services
The LEA must spend minimum average amount on education of children with
disabilities, before it can use IDEA Part B funds
Time and Effort
Requirements
Time and Effort Reporting
If IDEA Program funds are used for
salaries, then time distribution
records are required
Who Must Participate?
All employees paid with federal
funds
Some employees paid with nonfederal funds (When salaries are
split/match funded)
Not Contracted Workers
Time and Effort Certification
100% on Single Cost Objective
Semi-Annual Certification
Completed at least every 6 months
Completed after work completed
Signed by an employee or supervisor
with firsthand knowledge of the
activity performed
Accounts for the total activity for
which employee is compensated
Time and Effort Certification
Multiple (Split-funded) Cost Objectives
Personnel Activity Reports (PARs)
Completed at least Monthly
Completed after work completed
Accounts for the total activity for
which employee is compensated
Signed by the employee
Must coincide with one or more pay
periods
LEA IDEA Funding Requirements Apply to the
Following Cost Objectives:
Administration (As Applicable)
IDEA Part B Program
Coordinated Early Intervening Services (CEIS)
Equitable Services/Proportionate Share
IDEA FISCAL MONITORING
LEA Documentation for Fiscal Monitoring
Review
eGAP Budget
Time and Effort Documentation/PAR
100% Certification Documentation
Equitable Services Documentation
Inventory Documentation
Contract and Sub-award Documents
Documents Retained 5 years (Statute of Limitations= 5 Years)
Time and Effort Documentation
SEMI-MONTHLY
100% CERTIFICATION
LEA Fiscal Monitoring Review
Budget Review
Desk Review & On-Site Review
• Budget vs Expenditures
• 10% over Expenditures
•
•
•
•
•
Inventory Documentation (Equipment/Supplies)
Time & Effort, 100% Certification
MOE
Proportionate Share
Contracts/Licensure, Memorandums of Agreements
SO WHAT DOES ALL THIS MEAN???
ALL recipients of federal funds must
spend federal funds correctly and
prove they spent federal funds
correctly!!!
FISCAL COMPLIANCE IN SPECIAL
EDUCATION UNDER IDEA!!!
Q&A
Thank You!
If you have additional questions, or need assistance, please
contact Alabama State Department of Education, Special
Education Services at 334-242-8114 or via email:
Lisa Highfield lhighfield@alsde.edu
Crystal Richardson crystalr@alsde.edu
Erika Richburg erichburg@alsde.edu