April 28, 2015 (80 FR 23644)
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April 28, 2015 (80 FR 23644)
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April 28, 2015 (80 FR 23644)
Vol. 80 Tuesday,
No. 81 April 28, 2015
Part II
Department of Education
34 CFR Part 300
Assistance to States for the Education of Children With Disabilities; Fi
nal
Rule
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23644 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
DEPARTMENT OF EDUCATION
34 CFR Part 300
RIN 1820–AB65
[Docket ID ED–2012–OSERS–0020]
Assistance to States for the Education
of Children With Disabilities
AGENCY : Office of Special Education and
Rehabilitative Services, Department of
Education.
ACTION : Final rule.
SUMMARY : The Secretary of Education
(Secretary) amends regulations for Part
B of the Individuals with Disabilities
Education Act (Part B or IDEA). These
regulations govern the Assistance to
States for the Education of Children
with Disabilities program and the
Preschool Grants for Children with
Disabilities program. These
amendments revise the regulations
governing the requirement that local
educational agencies maintain fiscal
effort.
DATES : These regulations are effective
on July 1, 2015. Applicability dates: The Subsequent
Years rule for Fiscal Years 2014 and
2015, stated in final § 300.203(c)(1),
reiterates the relevant provision of the
2014 Appropriations Act and the 2015
Appropriations Act, respectively. As
explained in the Effective Date section
of the Analysis of Comments and
Changes, the 2014 and 2015
Appropriations Acts made the
Subsequent Years rule applicable for
IDEA Part B grants awarded on July 1,
2014, and July 1, 2015, respectively.
FOR FURTHER INFORMATION CONTACT :
Mary Louise Dirrigl, U.S. Department of
Education, 550 12th Street SW.,
Potomac Center Plaza, Room 5156,
Washington, DC 20202–2641.
Telephone: (202) 245–7324. If you use a
telecommunications device for the deaf
(TDD) or a text telephone (TTY), you
may call the Federal Relay System (FRS)
at 1–800–877–8339.
SUPPLEMENTARY INFORMATION : We amend
the regulations governing the Assistance
to States for Education of Children with
Disabilities program and the Preschool
Grants for Children with Disabilities
program. On September 18, 2013, the Secretary
published a notice of proposed
rulemaking (NPRM) in the Federal
Register (78 FR 57324) to amend the
regulations in 34 CFR part 300
governing these programs. In the
preamble to the NPRM, the Secretary
discussed the changes being proposed to
the regulations governing the requirement that LEAs maintain effort,
specifically: (1) The compliance
standard; (2) the eligibility standard; (3)
the level of effort required of an LEA in
the year after it fails to maintain effort;
and (4) the consequence for a failure to
maintain local effort. These final
regulations adopt the proposed
amendments with modifications to
improve organization, clarity, and
flexibility for LEAs.
Major Changes in the Regulations
The following is a summary of the
major changes in these final regulations
from the regulations proposed in the
NPRM. The rationale for each of these
changes is discussed in the Analysis of
Comments and Changes section of this
preamble. • We moved the regulations
governing eligibility for an IDEA Part B
subgrant (sections 611 and 619 of the
IDEA) from proposed § 300.203(b) to
§ 300.203(a). • We added language to the eligibility
standard in § 300.203(a)(1) to clarify the
four methods that LEAs may use to meet
this standard: (1) Local funds only, (2)
the combination of State and local
funds, (3) local funds only on a per
capita basis, or (4) the combination of
State and local funds on a per capita
basis. • We changed the language in the
eligibility standard in § 300.203(a)(1) to
provide that the comparison year is the
most recent fiscal year for which
information is available, regardless of
which method an LEA uses to establish
eligibility. • We added language in the eligibility
standard in § 300.203(a)(2) to provide
that, when determining the amount of
funds that the LEA must budget to meet
the requirement in paragraph
§ 300.203(a)(1), the LEA may take into
consideration, to the extent the
information is available, the exceptions
and adjustment provided in §§ 300.204
(exceptions for local changes) and
300.205 (adjustment for Federal
increase) that the LEA: (i) 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 (ii) reasonably expects to take in the
fiscal year for which the LEA is
budgeting. • We added language in
§ 300.203(a)(3) to clarify that
expenditures made from funds provided
by the Federal government for which
the State educational agency (SEA) is
required to account to the Federal
government, or for which the LEA is
required to account to the Federal
government directly or through the SEA, may not be considered in determining
whether an LEA meets the eligibility
standard in § 300.203(a)(1).
• We moved the regulations
governing compliance from proposed
§ 300.203(a) to § 300.203(b). • We changed the language in the
compliance standard in § 300.203(b)(1)
to state that the comparison year is the
preceding fiscal year, regardless of
which method an LEA uses to establish
compliance. • We added language to the
compliance standard in § 300.203(b)(2)
to clarify the four methods that LEAs
may use to meet this standard: (1) Local
funds only, (2) the combination of State
and local funds, (3) local funds only on
a per capita basis, or (4) the combination
of State and local funds on a per capita
basis. • We replaced proposed § 300.203(c)
with three paragraphs—§ 300.203(c)(1),
(2), and (3)—to improve clarity and
readability. • The new § 300.203(c)(1)
implements the requirement in the
Consolidated Appropriations Act, 2014
(2014 Appropriations Act) and the
Consolidated and Further Continuing
Appropriations Act, 2015 (2015
Appropriations Act) that, for the fiscal
years beginning on July 1, 2014, and on
July 1, 2015, respectively, the level of
effort an LEA 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. • The new § 300.203(c)(2) is
applicable to any fiscal year beginning
on or after July 1, 2015, and addresses
the level of effort an LEA must maintain
in a fiscal year after it fails to maintain
effort, and the LEA is relying on local
funds only, or local funds only on a per
capita basis. The level of expenditures
required of the LEA is the amount that
would have been required under
paragraph (b)(2)(i) or (iii) in the absence
of that failure, not the LEA’s reduced
level of expenditures. • The new § 300.203(c)(3) is
applicable to any fiscal year beginning
on or after July 1, 2015, and addresses
the level of effort an LEA must maintain
in a fiscal year after it fails to maintain
effort, and the LEA is relying on a
combination of State and local funds, or
the combination of State and local funds
on a per capita basis. The level of
expenditures required of the LEA is the
amount that would have been required
under paragraph (b)(2)(ii) or (iv) in the
absence of that failure, not the LEA’s
reduced level of expenditures. • We added language in § 300.203(d)
to clarify that, if an LEA fails to
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23645 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
maintain its level of expenditures for
the education of children with
disabilities, the SEA is liable in a
recovery action for either the amount by
which the LEA failed to maintain its
level of expenditures in that fiscal year
or the amount of the LEA’s Part B
subgrant in that fiscal year, whichever is
lower.
• We made conforming changes to
§§ 300.204, 300.205, and 300.208. • We added a new ‘‘Appendix E to
Part 300–Local Educational Agency
Maintenance of Effort Calculation
Examples’’.
Public Comment
In response to our invitation in the
NPRM, more than 300 parties submitted
comments on the proposed regulations.
The perspectives of parents, individuals
with disabilities, teachers, related
services providers, State and local
officials, and others were very important
in helping us identify where changes to
the proposed regulations were necessary
and in formulating those changes.
Analysis of Comments and Changes
An analysis of the comments and of
any changes in the regulations since
publication of the NPRM follows. We
group comments and our responses to
them by these subjects and sections:
THE SUBSEQUENT YEARS RULE, § 300.203(c)
EFFECTIVE DATE
LEA COMPLIANCE, § 300.203(b) Compliance Standard and Methodology
Comparison Year
Exceptions and Adjustment
Data Retention and Administration
LEA ELIGIBILITY, § 300.203(a) Eligibility Standard and Methodology
Comparison Year
Exceptions and Adjustment
SEA Review
Ineligibility
FAILURE TO MAINTAIN EFFORT AND CONSEQUENCE, § 300.203(d)
Legal Authority
Burden on SEAs
Calculating Penalties
MISCELLANEOUS COMMENTS
Generally, we do not address:
(a) Minor changes, including
technical changes made to the language
published in the NPRM; (b) Suggested changes the Secretary is
not legally authorized to make under
applicable statutory authority; (c) Suggested changes that are beyond
the scope of the changes proposed in the
NPRM, including comments and
suggestions relating to the scope and
meaning of the exceptions and
adjustment in §§ 300.204 and 300.205,
except as those issues are directly
related to the NPRM; and (d) Comments that express concerns
of a general nature about the U.S. Department of Education (Department)
or other matters that are not germane,
such as requests for information about
innovative instructional methods or
matters that are within the purview of
State and local decision-makers.
However, the Department intends to
issue guidance on LEA maintenance of
effort (MOE) and to continue to provide
technical assistance to States to address
State-specific concerns.
The Subsequent Years Rule,
§ 300.203(c)
Throughout the Analysis of
Comments and Changes, we reference
the Subsequent Years rule. The rule, as
provided in final § 300.203(c), applies to
LEAs that fail to maintain effort and
provides that, in the fiscal year after an
LEA fails to maintain effort, the level of
effort the LEA must meet under
§ 300.203 is the level of effort that
would have been required in the
absence of that failure, not the LEA’s
actual reduced level of expenditures. Comment: Some commenters
supported the Subsequent Years rule,
which provides that, in the fiscal year
after an LEA fails to maintain effort, the
level of effort it must meet under
§ 300.203 is the level of effort that
would have been required in the
absence of that failure, not the LEA’s
actual reduced level of expenditures.
Other commenters disagreed and
asserted that the intent of the IDEA was
to ensure that LEAs not reduce their
level of expenditures for the education
of children with disabilities from the
preceding fiscal year, regardless of
whether the LEA maintained effort in
the preceding fiscal year. Some commenters expressed concern
that the Subsequent Years rule does not
address the flexibility LEAs need as
State and Federal funding levels shrink
and as the demographics and
educational needs of their students vary
from year to year. These commenters
recommended revising the proposed
regulation to permit an LEA to use the
preceding fiscal year as the comparison
year to meet the compliance standard,
regardless of whether the LEA met the
compliance standard in that year. In addition, a few of these
commenters stated that the Subsequent
Years rule is inconsistent with the IDEA
and referenced the Subsequent Years
provision in another section of the IDEA
related to State financial support.
Section 612(a)(18)(D) of the IDEA (20
U.S.C. 1412(a)(18)(D)). These
commenters stated that, while Congress
provided an explicit requirement for
maintenance of State financial support
in any fiscal year following a fiscal year
in which a State failed to maintain State financial support, Congress did not
address what happens in a fiscal year
after an LEA fails to maintain effort. The
commenters, therefore, concluded that
Congress did not intend to provide for
a Subsequent Years rule applicable to
LEA MOE.
Discussion: The Department
continues to believe that when an LEA
fails to maintain its required level of
expenditures, the level of expenditures
required in future fiscal years is the
amount that would have been required
in the absence of that failure, and not
the LEA’s actual expenditures in the
fiscal year in which it failed to meet the
compliance standard. We formally
adopted this interpretation in April
2012, and it is based on a careful
consideration of the statutory language,
structure, and purpose. See April 4,
2012, letter to Ms. Kathleen Boundy,
available at http://www2.ed.gov/policy/
speced/guid/idea/letters/2012-2/
index.html. Section 613(a)(2)(B) and (C) of the
IDEA (20 U.S.C. 1413(a)(2)(B) and (C))
provides four exceptions and an
adjustment that permit an LEA to
lawfully reduce its expenditures for the
education of children with disabilities
when compared to the preceding fiscal
year. The absence of an exception in the
statute for the failure of an LEA to meet
the compliance standard in the
preceding fiscal year strongly supports
that such a failure does not reduce the
level of expenditures required in future
years. In light of the detail with which
other exceptions are laid out in the
statute, we believe that the IDEA’s
silence on the level of expenditures
required in the fiscal year after an LEA
has failed to meet the compliance
standard does not reflect an intent by
Congress to permit LEAs to benefit from
a violation of the IDEA. Indeed,
Congress included the Subsequent Years
rule in the 2014 Appropriations Act,
Public Law 113–76, 128 Stat. 5, 394
(2014), and in the 2015 Appropriations
Act, Public Law 113–235, 128 Stat.
2130, 2499 (2014) and used language
substantially similar both to the
language the Department used in the
NPRM and to the language in the
Subsequent Years subparagraph of the
maintenance of State financial support
provision in section 612(a)(18)(D) of the
IDEA. These factors strongly support the
Department’s conclusion that the
Subsequent Years rule reflects
congressional intent. Furthermore, allowing an LEA to
permanently reduce spending for the
education of children with disabilities
by failing to comply with the IDEA in
a preceding fiscal year is inconsistent
with the purpose of the MOE
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1All references to a ‘‘fiscal year’’ in these
regulations refer to the fiscal year covering that
school year, unless otherwise noted.
requirement, which is to ensure a
continuation of at least a certain level of
non-Federal expenditures for the
education of children with disabilities,
and would provide a long-term financial
incentive for noncompliance. We also believe that permitting an
LEA to reduce expenditures for the
education of children with disabilities
for reasons not specifically stated in the
exceptions and adjustment in section
613(a)(2)(B) and (C) of the IDEA (20
U.S.C. 1413(a)(2)(B) and (C)) would
likely have a negative effect on the
amount and type of special education
and related services available for children with disabilities. This result
would be contrary to the overall
purpose of the IDEA, which is ‘‘to
ensure that all children with disabilities
have available to them a free
appropriate public education.’’ Section
601(d) of the IDEA (20 U.S.C. 1401(d)).
To provide additional clarity on the
Subsequent Years rule and other issues
raised in comments the Department
received, we have included a number of
tables in the Analysis of Comments and
Changes. In addition, we are including
all of the tables in a new Appendix E
in order to ensure that they will be
included when these final regulations are published in the Code of Federal
Register. Tables 1 through 4 provide
examples of how an LEA may comply
with the Subsequent Years rule. Figures
are in $10,000s. In Table 1, for example,
an LEA spent $1 million in Fiscal Year
(FY) 2012–2013 on the education of
children with disabilities.
1The
following year, the LEA was required to
spend at least $1 million but spent only
$900,000. In FY 2014–2015, therefore,
the LEA is required to spend $1 million,
the amount it was required to spend in
2013–2014, not the $900,000 it actually
spent.
TABLE 1—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING A
Y
EAR IN WHICH LEA F AILED TOMEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level of
effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... ........................ 100 Required level of effort is $100 despite LEA’s failure in 2013–2014.
Table 2 shows how to calculate the
required level of effort when there are consecutive fiscal years in which an
LEA does not meet MOE.
TABLE 2—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING
C
ONSECUTIVE YEARS IN WHICH LEA F AILED TOMEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level of
effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... ........................ 100 Required level of effort is $100 despite LEA’s failure in 2013–2014 and
2014–2015.
Table 3 shows how to calculate MOE
in a fiscal year after which an LEA spent
more than the required amount on the education of children with disabilities.
This LEA spent $1.1 million in FY
2015–2016 though only $1 million was required. The required level of effort in
FY 2016–2017, therefore, is $1.1
million.
TABLE 3—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING YEAR
IN WHICH LEA M ET MOE C OMPLIANCE STANDARD
Fiscal year
Actual level of
effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... 110 100 LEA met MOE. 2016–2017 ....................................... ........................ 110 Required level of effort is $110 because LEA expended $110, and met
MOE, in 2015–2016.
Table 4 shows the same calculation
when, in an intervening fiscal year, 2016–2017, the LEA did not maintain
effort.
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TABLE 4—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING YEAR
IN WHICH LEA D ID NOT MEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level of
effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... 110 100 LEA met MOE. 2016–2017 ....................................... 100 110 LEA did not meet MOE. Required level of effort is $110 because LEA
expended $110, and met MOE, in 2015–2016.
2017–2018 ....................................... ........................ 110 Required level of effort is $110, despite LEA’s failure in 2016–2017.
To increase understanding of, and
therefore compliance with, the
Subsequent Years rule, and to address
Congress’s adoption of it for FYs 2014
and 2015 (the fiscal years beginning on
July 1, 2014 and July 1, 2015,
respectively) in the 2014 Appropriations
Act and 2015 Appropriations Act, we
divided proposed § 300.203(c) into three
paragraphs. The first, § 300.203(c)(1), states the
Subsequent Years rule for FYs 2014 and
2015, respectively, as provided by the
2014 and 2015 Appropriations Acts.
Section 300.203(c)(1) states that if, in
the fiscal year beginning on July 1, 2013
or July 1, 2014, an LEA fails to meet the
requirements of § 300.203 in effect at
that time, 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. In short, the 2014
Appropriations Act requires the LEA to
maintain effort, in 2014–2015, at the
level that the LEA maintained in 2013–
2014, unless the LEA did not meet the
effort required in that year. If it did not,
the LEA must maintain effort at the
level that the LEA should have
maintained in 2013–2014, which is the
level from the preceding fiscal year,
2012–2013. Similarly, the 2015
Appropriations Act requires the LEA to
maintain effort, in 2015–2016, at the
level that the LEA maintained in 2014–
2015, unless the LEA did not meet the
effort required in that year. If it did not,
the LEA must maintain effort at the
level that the LEA should have
maintained in 2014–2015, which is the
level from the preceding fiscal year,
2013–2014. The second paragraph,
§ 300.203(c)(2), is applicable beginning
on July 1, 2015, and sets out the
Subsequent Years rule for when an LEA
failed to meet the compliance standard
using local funds only, or local funds
only on a per capita basis, in a
preceding fiscal year, and the LEA is relying on the same method to meet the
eligibility or compliance standard in a
subsequent year.
The third paragraph, § 300.203(c)(3),
is also applicable beginning on July 1,
2015, and sets out the Subsequent Years
rule for when an LEA failed to meet the
compliance standard using a
combination of State and local funds, or
a combination of State and local funds
on a per capita basis, in a preceding
fiscal year, and the LEA is relying on the
same method to meet the eligibility or
compliance standard in a subsequent
year.
Changes: We replaced proposed
§ 300.203(c) with a clearer articulation
of the Subsequent Years rule in three
paragraphs, § 300.203(c)(1), (2), and (3).
Final § 300.203(c) accounts for the
adoption of the Subsequent Years rule
for FY 2014 in the 2014 Appropriations
Act, and, for FY 2015 in the 2015
Appropriations Act, but does not change
the substance of the Subsequent Years
rule from what was proposed in the
NPRM.
Effective Date
Comment: Some commenters
requested that the effective date of these
regulations be extended to a date later
than July 1, 2014, because SEAs and
LEAs will need additional time to revise
their policies and procedures. Several
commenters recommended that the
effective date be removed altogether,
because the proposed regulations did
not change LEAs’ existing obligation to
maintain effort, which, some
commenters stated, dates to 1997. Those
commenters stated that the proposed
July 1, 2014, effective date would permit
some LEAs that did not maintain effort
in a fiscal year prior to the fiscal year
that begins on July 1, 2014, to take
advantage of that failure.
Discussion: There appears to have
been confusion among some
commenters about the effective date
proposed in the NPRM. We proposed
July 1, 2014, because that date was to be
the beginning of the first grant award period after the date on which these
regulations were published. The
beginning of the first grant award period
after publication of these regulations is
now July 1, 2015. We have, therefore,
made July 1, 2015, the effective date of
these regulations. We believe this gives
SEAs and LEAs sufficient time to revise
their policies and procedures. This does
not mean, however, that the obligation
of an LEA to maintain effort, or to
comply with the Subsequent Years rule,
begins on that date.
To the contrary, as we previously
explained, the 2014 Appropriations Act
and the 2015 Appropriations Act made
the Subsequent Years rule applicable for
the grant year beginning on July 1, 2014,
and July 1, 2015, respectively. On
March 13, 2014, the Office of Special
Education Programs (OSEP) issued a
letter to Chief State School Officers
explaining the relevant provision of the
2014 Appropriations Act related to the
Subsequent Years rule, and stating that
the provision was effective for Part B
grants awarded on July 1, 2014. See
March 13, 2014 letter to Chief State
School Officers, available at http://
www2.ed.gov/policy/speced/guid/idea/
memosdcltrs/lea-moe-3-13-14.pdf .
Prior to that, in 2012, OSEP issued the
April 4, 2012, letter to Ms. Kathleen
Boundy addressing this issue. In that
letter, the Department set out the
Subsequent Years rule, which stated
that the level of effort that an LEA must
meet in the year after it fails to maintain
effort is the level of effort that it should
have met in the preceding fiscal year
and not the LEA’s actual expenditures
for that year. While these regulations
codify this position, this has been the
Department’s interpretation of the
statute since the letter to Ms. Boundy
was issued. Therefore, the Department’s
expectation is that SEAs and LEAs have
been complying with this interpretation
since FY 2012–2013. For FY 2012–2013, an LEA must have
maintained at least the same level of
expenditures as it did in the preceding
fiscal year, FY 2011–2012, unless it did
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not meet the compliance standard in
that year. If it did not, the LEA must
determine what it should have spent in
FY 2011–2012, which is the amount that
it actually spent in the preceding fiscal
year, FY 2010–2011.
The Department is unable, as some
commenters suggest, to make these
regulations effective back to 1997. The
Department’s guidance about MOE prior
to April 2012 was not always consistent
with the current interpretation. For
example, our 2011 letter to Dr. Bill East
offered different guidance on the
Subsequent Years rule. See June 16,
2011, letter to Dr. Bill East, available at
http://www2.ed.gov/policy/speced/guid/
idea/letters/2011-2/
east061611partbmoe2q2011.pdf We
cannot now fault an SEA or an LEA for
following the Department’s earlier
guidance, and therefore cannot extend
the effective date of the rules back to
1997. Changes: The effective date of these
regulations is July 1, 2015. Comment: One commenter requested
that we add a paragraph (d) to § 300.203
that would, in effect, provide that States
could not determine that LEAs were out
of compliance with the MOE
requirement for any fiscal year for
which the State had previously
determined the LEA to be in
compliance. Discussion: Because the Department
may not impose retroactive
requirements on grantees, it is not
necessary to include in the final
regulations a separate provision
indicating that States and LEAs that
were determined to be in compliance
with the regulations in effect at the time
of the receipt of a grant or subgrant may
rely on those determinations of
compliance. The Department does not
expect States to revisit their compliance
determinations. Changes: None.
LEA Compliance, § 300.203(b)
Compliance Standard and Methodology Comment: Some commenters
suggested that the regulation be revised
to reflect the order of the process so that
the eligibility standard is set out before
the compliance standard. Discussion: We agree that the
eligibility standard should precede the
compliance standard and that doing so
will provide additional clarity.
Therefore, we have set out the eligibility
standard in § 300.203(a) and the
compliance standard in § 300.203(b). Changes: We have revised final
§ 300.203(a) to specify the eligibility
standard and final § 300.203(b) to
specify the compliance standard. We also have made conforming changes in
§§ 300.203(c), 300.204, 300.205, and
300.208.
Comment: Commenters raised many
questions and concerns about the four
methods by which an LEA may meet the
compliance standard. One commenter
requested that the proposed regulations
specifically list the four methods
available to LEAs. Some commenters
requested that the Department clarify
that SEAs are required to allow LEAs to
meet the compliance standard using any
of the four methods. Other commenters
stated that the proposed regulations
emphasize meeting the MOE
requirement using local funds only. Discussion: We agree that additional
clarification is needed regarding the
four methods by which an LEA may
meet the compliance standard. We also
agree that listing the four methods
individually in the compliance standard
will make it easier to understand that an
LEA may meet the compliance standard
using any one of these four methods and
that SEAs must permit LEAs to do so.
Listing the four methods individually
should also clarify that the regulations
do not emphasize meeting the
compliance standard using local funds
only or local funds only on a per capita
basis. Changes: We have revised final
§ 300.203(b)(2) to clarify that an LEA
meets the compliance standard if it does
not reduce the level of expenditures for
the education of children with
disabilities made by the LEA from at
least one of the following sources below
the level of those expenditures from the
same source for the preceding fiscal
year: (i) Local funds only; (ii) the
combination of State and local funds;
(iii) local funds only on a per capita
basis; or (iv) the combination of State
and local funds on a per capita basis. Comment: A few commenters
requested clarification regarding
whether and how LEAs may change
methods to establish compliance from
one year to the next. A commenter
asked whether an LEA must use the
same method to meet the compliance
standard in a fiscal year that it used to
meet the eligibility standard for that
same year. Discussion: LEAs may change
methods to establish compliance from
one year to the next. Many LEAs will
meet the compliance standard for a
fiscal year using more than one method.
An LEA is not required to use the same
method to meet the compliance
standard in a fiscal year that it used to
meet the eligibility standard for that
same year. For example, if an LEA meets
the eligibility standard for FY 2016–
2017 using local funds only, it is not required to meet the compliance
standard for FY 2016–2017 using local
funds only. Likewise, an LEA is not
required to use the same method to meet
the eligibility standard in a subsequent
year that it used to meet the compliance
standard in a preceding fiscal year. For
example, if an LEA met the compliance
standard for FY 2016–2017 using a
combination of State and local funds,
the LEA is not required to meet the
eligibility standard for FY 2017–2018
using a combination of State and local
funds.
An LEA may demonstrate that it
meets the eligibility standard using any
of the four methods. Similarly, during
the course of an audit or other
compliance review, the LEA may
demonstrate that it met the compliance
standard using any of the four methods.
Selecting a particular method does not
mean that the LEA did not meet the
compliance standard using any of the
other methods, or that the LEA cannot
rely on those other methods to identify
the amount of expenditures it must
budget in order to meet the eligibility
standard in a future fiscal year. It simply
means that the LEA only has to meet the
eligibility or compliance standard using
one method.
LEAs may meet the compliance
standard using alternate methods from
year to year. For example, an LEA met
the compliance standard in FY 2016–
2017 using all four methods. During a
compliance review, the LEA provided
data to the SEA demonstrating that it
met the compliance standard for that
year using a combination of State and
local funds on a per capita basis. This
data would be sufficient for the SEA to
find that the LEA met the compliance
standard. Subsequently, the State
conducts an audit to determine if the
LEA met the compliance standard in the
next year, FY 2017–2018. The LEA
provides information to the auditor that
demonstrates that it met the compliance
standard in FY 2017–2018 using local
funds only. In order to demonstrate that
it met the compliance standard using
that method, the LEA provides to the
auditor the amount of local funds only
that the LEA spent for the education of
children with disabilities in FY 2016–
2017 and in FY 2017–2018 so that the
auditor is comparing each year’s
expenditures using the same method. A
further example can be found in Table
5 below.
Changes: None.
Comment: Another commenter asked
whether the LEA must use separate
thresholds for compliance using local
funds only as well as local funds only
on a per capita basis.
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23649 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
Discussion: The LEA would compare
the amount of local funds only spent in
the comparison year and the year for
which it seeks to establish compliance.
The LEA is not required to maintain
effort on both an aggregate and a per
capita basis. For example, if the LEA
spent $100 in local funds only in FY
2016–2017 and had 10 children with
disabilities, the LEA spent $10 in local
funds only on a per capita basis.
Assuming the LEA met MOE in FY
2016–2017 using those two methods,
that is the amount ($10 per child with
a disability) that the LEA would have to
spend in FY 2017–2018 in order to meet
the compliance standard using local
funds only on a per capita basis, and
$100 is the aggregate amount that the
LEA would have to spend in FY 2017–
2018 in order to meet the compliance
standard using local funds only,
assuming that, in FY 2017–2018, the
LEA did not take any exceptions or
adjustment in §§ 300.204 and 300.205.
As noted above, the LEA is required to
meet the compliance standard using
only one of the four methods. Changes: None.
Comment: A commenter noted that
the tables in the NPRM did not address
the difficulties encountered by LEAs
that wish to use the exceptions and
adjustment in §§ 300.204 and 300.205,
or use per capita methods. Discussion:
Tables 5 through 9
address this comment. Table 5 provides
an example of how an LEA may meet
the compliance standard using alternate
methods from year to year without using
the exceptions or adjustment in
§§ 300.204 and 300.205, and provides
information on the following scenario.
In FY 2015–2016, the LEA meets the
compliance standard using all four
methods. As a result, in order to
demonstrate that it met the compliance
standard using any one of the four
methods in FY 2016–2017, the LEA
must expend at least as much as it did
in FY 2015–2016 using that same
method. Because the LEA spent the
same amount in FY 2016–2017 as it did
in FY 2015–2016, calculated using a
combination of State and local funds
and a combination of State and local
funds on a per capita basis, the LEA met
the compliance standard using both of
those methods in FY 2016–2017.
However, the LEA did not meet the
compliance standard in FY 2016–2017
using the other two methods–local
funds only or local funds only on a per
capita basis–because it did not spend at
least the same amount in FY 2016–2017
as it did in FY 2015–2016 using the
same methods.
In FY 2017–2018, the LEA may meet
the compliance standard using any one of the four methods. To meet the
compliance standard using a
combination of State and local funds, or
a combination of State and local funds
on a per capita basis, the LEA must
expend at least the same amount it did
in FY 2016–2017 using either of those
methods, since it met the compliance
standard using those methods in FY
2016–2017. Or, if the LEA seeks to meet
the compliance standard using the other
two methods available, local funds only
or local funds only on a per capita basis,
in FY 2017–2018, it must expend at
least as much as it did in FY 2015–2016
using either of those methods. This is
because the LEA did not meet the
compliance standard using local funds
only or local funds only on a per capita
basis in FY 2016–2017. In FY 2016–
2017, to demonstrate that it met the
compliance standard using local funds
only, or local funds only on a per capita
basis, the LEA is required to spend at
least the amount it expended in FY
2015–2016 from those sources. Per the
Subsequent Years rule, the amount of
expenditures from local funds only and
local funds only on a per capita basis in
FY 2015–2016 becomes the required
level of effort in FY 2017–2018.
Numbers are in $10,000s spent for the
education of children with disabilities.
TABLE 5—E XAMPLE OF HOW AN LEA M AY MEET THE COMPLIANCE STANDARD USING ALTERNATE METHODS FROM YEAR
TO YEAR
Fiscal year
Local funds
only Combination of
State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count
2015–2016 ........................................................................
..... * $500 * $950 * $50 * $95 10 2016–2017 ........................................................................
..... 400 * 950 40 * 95 10 2017–2018 ........................................................................
..... * 500 900 * 50 90 10
* LEA met compliance standard using this method.
Changes:
We have not changed the
regulation but we have included Tables
5 through 9 to illustrate examples of
how an LEA may meet the compliance
or eligibility standard using alternate
methods from year to year, either with
or without using the exceptions or
adjustment in §§ 300.204 and 300.205. Comment: One commenter requested
clarification of the two per capita
methods, one based on local funds only
and one based on a combination of State
and local funds. Discussion: The regulations do not
change the standards for meeting MOE
using local funds only on a per capita
basis or a combination of State and local
funds on a per capita basis. The
regulations continue to use the term ‘‘per capita,’’ which, in context, refers to
the amount per child with a disability
served by the LEA, either in local funds
per child with a disability or a
combination of State and local funds per
child with a disability.
When calculating the required level of
effort on a per capita basis for the
purpose of meeting the compliance
standard, the LEA must determine the
amount of local funds only (or a
combination of State and local funds, as
applicable) on a per capita basis that it
expended for the education of children
with disabilities, and reduce that
amount by the exceptions or adjustment
in §§ 300.204 and 300.205 calculated on
a per capita basis. Specifically, the LEA
must first divide the aggregate amount of exceptions and the adjustment it
properly takes under §§ 300.204 and
300.205 by the child count in the
comparison year. The LEA must then
subtract that result from the amount of
local funds only (or a combination of
State and local funds, as appropriate) on
a per capita basis expended in the
comparison year. Using other methods
to determine the required level of effort
(e.g.,
dividing the required level of
aggregate effort using local funds only
by the current year child count or
dividing the exceptions and adjustment
under §§ 300.204 and 300.205 properly
taken by an LEA by the current year
child count) may result in an inaccurate
calculation of the required level of
effort.
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23650 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
Table 6 provides an example of how
an LEA may meet the compliance
standard using alternate methods from year to year in years that the LEA used
the exceptions or adjustment in
§§ 300.204 and 300.205, including using the per capita methods. Numbers are in
$10,000s spent for the education of
children with disabilities.
TABLE 6—E XAMPLE OF HOW AN LEA M AY MEET THE COMPLIANCE STANDARD USING ALTERNATE METHODS FROM YEAR
TO YEAR AND USING EXCEPTIONS OR ADJUSTMENT UNDER §§ 300.204 AND 300.205
Fiscal year
Local funds only Combination of State
and local funds Local funds only on a per capita basis Combination of State
and local funds on a per capita basis Child
count
2015– 2016 ...... $500 * .............................................. $950 * ........................... $50 * ................................................................... $95 * ............................. 10 2016– 2017 ...... $400 ................................................ $950 * ........................... $40 ..................................................................... $95 * ............................. 10 2017–2018 ....... $450 * .............................................. $1,000 * ........................ $45 * ................................................................... $100 * ........................... 10 In 2017–2018, the LEA was re-
quired to spend at least the
same amount in local funds only
that it spent in the preceding fis-
cal year, subject to the Subse-
quent Years rule. Therefore,
prior to taking any exceptions or
adjustment in §§ 300.204 and
300.205, the LEA was required
to spend at least $500 in local
funds only.
In 2017–2018, the LEA properly re- duced its expenditures, per an
exception in § 300.204, by $50,
and therefore, was required to
spend at least $450 in local
funds only ($500 from 2015–
2016 per Subsequent Years
rule¥$50 allowable reduction
per an exception under
§ 300.204). In 2017–2018, the LEA was required to spend
at least the same amount in local funds only
on a per capita basis that it spent in the pre-
ceding fiscal year, subject to the Subsequent
Years rule. Therefore, prior to taking any ex-
ceptions or adjustment in §§ 300.204 and
300.205, the LEA was required to spend at
least $50 in local funds only on a per capita
basis.
In 2017–2018, the LEA properly reduced its aggregate expenditures, per an exception in
§ 300.204, by $50.
$50/10 children with disabilities in the compari- son year (2015–2016) = $5 per capita allow-
able reduction per an exception under
§ 300.204.
$50 local funds only on a per capita basis (from 2015–2016 per Subsequent Years
rule)¥$5 allowable reduction per an excep-
tion under § 300.204 = $45 local funds only
on a per capita basis to meet MOE.
2018–2019 ....... $405 ................................................ $1,000 * ........................ $45 * ................................................................... $111.11 * ...................... 9 In 2018–2019, the LEA was re- quired to spend at least the
same amount in local funds only
that it spent in the preceding fis-
cal year, subject to the Subse-
quent Years rule. Therefore,
prior to taking any exceptions or
adjustment in §§ 300.204 and
300.205, the LEA was required
to spend at least $450 in local
funds only.
In 2018–2019, the LEA properly re- duced its expenditures, per an
exception in § 300.204 by $10
and the adjustment in § 300.205
by $10.
Therefore, the LEA was required to spend at least $430 in local
funds only. ($450 from 2017–
2018¥$20 allowable reduction
per an exception and the adjust-
ment under §§ 300.204 and
300.205). Because the LEA did
not reduce its ex-
penditures from the
comparison year
(2017–2018) using a
combination of State
and local funds, the
LEA met MOE. In 2018–2019, the LEA was required to spend
at least the same amount in local funds only
on a per capita basis that it spent in the pre-
ceding fiscal year, subject to the Subsequent
Years rule. Therefore, prior to taking any ex-
ceptions or adjustment in §§ 300.204 and
300.205, the LEA was required to spend at
least $45 in local funds only on a per capita
basis.
In 2018–2019, the LEA properly reduced its aggregate expenditures, per an exception in
§ 300.204 by $10 and the adjustment in
§ 300.205 by $10.
$20/10 children with disabilities in the compari- son year (2017–2018) = $2 per capita allow-
able reduction per an exception and the ad-
justment under §§ 300.204 and 300.205.
$45 local funds only on a per capita basis (from 2017–2018)¥$2 allowable reduction
per an exception and the adjustment under
§§ 300.204 and 300.205 = $43 local funds
only on a per capita basis required to meet
MOE. Actual level of effort is $405/9 (the
current year child count). Because the LEA did
not reduce its ex-
penditures from the
comparison year
(2017–2018) using a
combination of State
and local funds on a
per capita basis
($1,000/9 = $111.11
and $111.11 >
$100), the LEA met
MOE.
* LEA met MOE using this method.
Note: When calculating any exception(s) and/or adjustment on a per capita ba
sis for the purpose of determining the required level of effort, the LEA must use the
child count from the comparison year, and not the child count of the yea
r in which the LEA took the exception(s) and/or adjustment. When determining the actual
level of effort on a per capita basis, the LEA must use the child count
for the current year. For example, in determining the actual level of effort in 2018–2019, the
LEA uses a child count of 9, not the child count of 10 in the comparison
year.
Changes: We have not changed the
regulation but we have revised Table 6
to include the use of alternate methods
from year to year to meet the MOE
requirements in years where the LEA
used the exceptions or adjustment.
Comment: One commenter asked
whether the LEA or the SEA selects the
method by which an LEA met the
compliance standard if the LEA in fact
met the standard using more than one
method. The commenter expressed
concern that choosing one method over another will affect the comparison year
to be used in the future.
Discussion: The SEA is responsible
for determining whether an LEA meets
the MOE eligibility standard in
§ 300.203(a) and for determining
whether an LEA meets the MOE
compliance standard in § 300.203(b). In
order to make this determination, the
SEA must permit the LEA to meet either
standard using any of the four methods.
If the LEA meets the standards using
more than one method, the SEA may select the method it uses to determine
that the LEA met the eligibility or
compliance standard. Ultimately,
however, regardless of the method used
to make these determinations, an LEA is
not precluded from selecting a different
method to meet either the eligibility or
compliance standard in a subsequent
year.
Changes: None.
Comment: A commenter suggested
that the per capita calculation be
expanded to allow for either
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23651 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
‘‘headcount’’ or a full-time equivalent
(FTE) because FTE is more closely
related to the cost of services than
headcount.
Discussion: By referencing FTE, we
assume that the commenter was
referring to using a per capita method of
calculating effort that measures the cost
per hour of special education and
related services an LEA provides to
children with disabilities, rather than
the amount spent per child with a
disability, in a particular fiscal year.
Using a measure that depends on the
cost of FTEs could allow LEAs to meet
MOE by reducing the number of hours
of special education and related services
an LEA provides to children with
disabilities. We therefore decline to
adopt this method of measuring effort.
This decision is consistent with the
position we have taken on the meaning
of ‘‘per capita.’’ As explained in the
Analysis of Comments and Changes in
the preamble to the 2006 IDEA Part B
regulations, ‘‘[w]e do not believe it is
necessary to include a definition of ‘per
capita’ . . . because we believe that, in
the context of the regulations, it is clear
that we are using this term to refer to the
amount per child with a disability
served by the LEA.’’ See 71 FR 46540,
46624 (Aug. 14, 2006). Changes: None.
Comment: Some commenters asked
for clarification on how to determine the
amount an LEA must spend in local
funds only or local funds only on a per
capita basis to meet the compliance and
eligibility standards if the LEA has
never spent local funds for the
education of children with disabilities
in the past. The commenters asked
whether these LEAs may use ‘‘zero’’
local funds as the amount spent in the
comparison year and noted that, if this
is the case, these LEAs will always meet
the compliance and eligibility standards
using local funds only, even in years
when the level of expenditures for the
education of children with disabilities
made from a combination of State and
local funds, or a combination of State
and local funds on a per capita basis, is
lower than the level of those
expenditures in the comparison year. Discussion: LEAs, including an LEA
that has not spent any local funds for
the education of children with
disabilities since the MOE requirement
was enacted in 1997, are permitted to
use any of the four methods to meet the
compliance and eligibility standards.
An LEA that has spent $0 in local funds
for the education of children with
disabilities can meet the compliance
and eligibility standards by continuing
to budget and spend $0 in local funds
for the education of children with disabilities. However, the Department
believes that there are very few
instances where LEAs have expended
$0 in local funds for the education of
children with disabilities. We remind
LEAs that, when demonstrating that
they meet the compliance and eligibility
standards using any of the four
methods, they must be able to provide
auditable data regarding their
expenditures from the relevant sources
in all relevant years. Simply because an
LEA does not account for local funds
separately from State funds does not
mean that the LEA expends $0 in local
funds for the education of children with
disabilities. We also remind LEAs that,
regardless of which method they use to
demonstrate that they meet the
standards, they must continue to make
a free appropriate public education
(FAPE) available to all eligible children
with disabilities.
Changes: None.
Comment: One commenter suggested
that the MOE requirement be changed
from a dollar requirement to a
requirement that LEAs maintain only
the same percentage of expenditures for
the education of children with
disabilities compared to the overall
education budget. Discussion: Section 613(a)(2)(A)(iii) of
the IDEA (20 U.S.C. 1413(a)(2)(A)(iii))
states that, except as provided in section
613(a)(2)(B) and (C) of the Act, Part B
funds provided to an LEA must not be
used to reduce the level of expenditures
for the education of children with
disabilities made by the LEA below the
level of those expenditures for the
preceding fiscal year. Substituting a
requirement that an LEA not reduce the
percentage of its total budget spent for
the education of children with
disabilities would not ensure that the
LEA would meet the requirement in the
statute, which prohibits a reduction in
the level of expenditures for the
education of children with disabilities,
and not a percentage of the overall
education budget. In addition, this
approach does not provide protection
for children with disabilities when the
overall amount of the education budget
drops. Therefore, the Department
declines to make this change. Changes: None.
Comment: A commenter stated that
the Subsequent Years rule does not
permit an LEA to take into account that
the LEA met the compliance standard
using a different method in a preceding
fiscal year and would, for example,
prevent an LEA from meeting the
compliance standard using local funds
only on a per capita basis if the LEA had
used a different method in the
preceding fiscal year. Discussion:
The Subsequent Years
rule does not prevent an LEA from using
any of the four methods to meet the
compliance standard in § 300.203(b), as
demonstrated in Table 5. However, an
LEA that wishes to meet the compliance
standard in a fiscal year using one
particular method must be able to
identify the amount of funds that the
LEA expended in the most recent fiscal
year in which the LEA met the
compliance standard using that same
method. In the hypothetical posed by the
commenter (in which an LEA wished to
meet the compliance standard using
local funds only on a per capita basis),
the LEA would look to the preceding
fiscal year and determine the amount of
expenditures for the education of
children with disabilities made by the
LEA with local funds only on a per
capita basis. If the LEA could have met
the compliance standard using that
method in the preceding fiscal year, the
amount expended by the LEA using
local funds only on a per capita basis in
the preceding fiscal year is the
minimum amount that the LEA must
spend in order to meet the compliance
standard in the current year using that
method. However, if the LEA could not have
met the compliance standard using local
funds only on a per capita basis in the
preceding fiscal year, the Subsequent
Years rule applies. In that case, the LEA
must determine the amount of local
funds only on a per capita basis that the
LEA should have spent in the preceding
fiscal year in order to have met the
compliance standard in that year. That
is the amount of local funds only on a
per capita basis that the LEA will need
to spend in the current year to meet the
compliance standard. Changes: None.
Comment: A commenter suggested we
reverse the order of the compliance
standard in proposed § 300.203(a)(2)(i)
and (ii) so that the methods that
reference local funds only precede the
methods that reference State and local
funds. Another commenter
recommended that the compliance
standard in proposed § 300.203(a)(2) be
rephrased in affirmative language. Discussion: As previously stated, we
have revised final § 300.203(b)(2)
(proposed § 300.203(a)(2)(i) and (ii)).
Therefore, the suggestion to reverse the
order of proposed § 300.203(a)(2)(i) and
(ii) is no longer applicable. These
comments and analyses use affirmative
language where appropriate. In
addition, the Department intends to
issue guidance on these regulations and
plans to provide examples in that
guidance using affirmative language.
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23652 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
Changes: None.
Comment: One commenter
recommended that the determination
that an LEA receives pursuant to section
616 of the IDEA (20 U.S.C. 1416) be
considered when deciding whether an
LEA met the MOE compliance standard
because that determination is based on
IDEA Part B compliance requirements
and is an indication that the LEA
implemented the requirements of the
IDEA. Discussion: Section 616 of the IDEA
includes provisions related to
monitoring, technical assistance, and
enforcement of the IDEA. Pursuant to
section 616(a)(1)(C) of the IDEA and 34
CFR 300.600(a), each State must
determine annually whether an LEA
meets the requirements and purposes of
the IDEA. The commenter’s suggestion
is not consistent with section
613(a)(2)(A)(iii) of the IDEA (20 U.S.C.
1413(a)(2)(A)(iii)), which requires LEAs
to maintain effort. Compliance with the
MOE provision is a distinct requirement
that cannot be met through compliance
with other IDEA requirements or
through meeting results targets. Changes: None.
Comment: One commenter
recommended that we add a new
subsection to proposed § 300.203
entitled ‘‘Budget and Expenditure
Categories’’ that would define or
reference the terms ‘‘education’’ and
‘‘related services.’’ The commenter
recommended that the regulations allow
LEAs to compare either ‘‘education’’
expenditures or ‘‘education and related
services’’ expenditures to meet the
compliance and eligibility standards.
The commenter stated that, in States
where certain federally-defined ‘‘related
services’’ are considered ‘‘education’’
pursuant to State law, an annual MOE
comparison of ‘‘education and related
services’’ may be preferable. The
commenter stated that, in that instance,
the match provided in order to receive
the Federal Medicaid reimbursement
should be included in the calculation. Discussion: The Department disagrees
that the regulations should include
definitions of these terms. The terms
‘‘special education’’ and ‘‘related
services’’ are defined in §§ 300.39 and
300.34, respectively. When calculating
the amount an LEA spends for the
education of children with disabilities,
the LEA must include expenditures for
related services, regardless of whether a
State considers certain federally-defined
related services as education pursuant
to State law. LEAs must include the
amount of local only, or State and local,
funds spent for the education of
children with disabilities when
calculating the level of effort required to meet the eligibility and compliance
standards, even if those local only, or
State and local, funds are also used to
meet a matching requirement in the
Medicaid program. We believe the
regulations adequately address the
expenditures that may be included in
the MOE calculations, and therefore
decline to add a new subsection
addressing specific budget and
expenditure categories.
Changes: None.
Comparison Year Comment: We received many
comments about proposed
§ 300.203(a)(2)(ii), which provided that
the comparison year for an LEA that
seeks to establish compliance using
local funds only, or local funds only on
a per capita basis, is ‘‘the most recent
fiscal year for which the LEA met the
MOE compliance standard based on
local funds only, even if the LEA also
met the MOE compliance standard
based on State and local funds. . . .’’
Some commenters stated that the
comparison year must always be the
‘‘preceding fiscal year’’ because that is
the language in the statute. Other
commenters suggested that proposed
subsection (a)(1) include the language
‘‘even if the LEA also met the MOE
compliance standard based on State and
local funds. . . .’’ A few commenters
stated that, in almost all circumstances,
the baseline for MOE when using
expenditures of local funds only will be
the year of the highest level of
expenditures of local funds only, even
if that level was not from the preceding
fiscal year, and even if the LEA met
MOE in the preceding fiscal year using
a different method. Discussion: We agree with the
commenters that, when an LEA seeks to
meet the compliance standard using
local funds only, or local funds only on
a per capita basis, the comparison year
should align with the language in
section 613(a)(2)(A)(iii) of the IDEA (20
U.S.C. 1413(a)(2)(A)(iii)), which is ‘‘the
preceding fiscal year.’’ Using the same
comparison year for local funds only
and for State and local funds will
simplify the requirement for LEAs,
SEAs, and auditors, which should result
in increased compliance and
enforcement. Therefore, we changed the
comparison year for meeting the
compliance standard using local funds
only in proposed § 300.203(a)(2)(ii) to
‘‘the preceding fiscal year’’ from ‘‘the
most recent fiscal year for which the
LEA met the MOE compliance standard
based on local funds only, even if the
LEA also met the MOE compliance
standard based on State and local
funds.’’ However, because we are adopting the
Subsequent Years rule in § 300.203(c),
the Department is, in effect, defining
‘‘the preceding fiscal year’’ to mean the
last fiscal year in which the LEA met
MOE, regardless of whether the LEA is
seeking to establish compliance based
on local funds only, or based on State
and local funds. Because our change
affects the comparison year for the MOE
calculation using local funds only, the
provision in proposed
§ 300.203(a)(2)(iii), which addresses the
comparison year if the LEA has not
previously met the MOE compliance
standard based on local funds only, is
no longer necessary. With regard to the comment that the
comparison year when using local funds
only, or local funds only on a per capita
basis, will usually be the year of the
highest level of local funds only
expenditures, the final regulations at
§ 300.203(b)(2) provide that, regardless
of the method used, the comparison
year is always the preceding fiscal year.
However, the comparison year is subject
to the Subsequent Years rule in
§ 300.203(c), which means that, if the
LEA did not maintain effort in the
preceding fiscal year using local funds
only, the required amount to meet the
MOE compliance standard using local
funds only is the amount that would
have been required in the absence of
that failure, and not the LEA’s reduced
level of local funds only expenditures. Changes: We have revised final
§ 300.203(b)(2) to specify that the
comparison year, regardless of the
method used, is the preceding fiscal
year. We also removed proposed
§ 300.203(a)(2)(iii). Comment: One commenter questioned
the language in proposed
§ 300.203(a)(2)(i) and (ii) that permitted
LEAs to meet the compliance standard
using local funds only and the
combination of State and local funds.
The commenter stated that having two
standards imposes an unnecessary
burden on SEAs and LEAs, which could
result in additional misapplication of
the MOE compliance standard. Discussion: The Department agrees
that proposed § 300.203(a)(2)(i) and (ii)
could benefit from additional
clarification and that confusion will not
promote compliance. Therefore, we
have revised final § 300.203(b)(2)
(proposed § 300.203(a)(2)(i) and (ii)) to
state the compliance standard more
clearly. However, the option to meet the
compliance standard based on local
funds only or a combination of State
and local funds is not new. The 1999
IDEA Part B regulations provided
additional flexibility to LEAs in the
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23653 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
event of increased funding from State
sources by permitting LEAs to meet
MOE based on State and local funds,
and the 2006 IDEA Part B regulations
maintained that language. As explained
in the Analysis of Comments and
Changes in the preamble to the 1999
IDEA Part B regulations, if a State
increases funding to LEAs to reduce the
fiscal burden on local government, an
LEA may not need to continue to put
the same amount of local funds toward
expenditures for the education of
children with disabilities in order to
meet the MOE requirement. See 64 FR
12406, 12571 (Mar. 12, 1999). However,
if a State increases funding to an LEA,
the LEA should not be able to replace
any or all of its local funds with State
funds unless the combination of State
and local funds is not at least equal to
the amount expended from the same
source in a preceding fiscal year (subject
to the Subsequent Years rule), as this
would result in reductions in
expenditures not contemplated by the
statute. Changes: We have revised final
§ 300.203(b)(2) to state the compliance
standard more clearly and to specify
that the comparison year, regardless of
the method used, is the preceding fiscal
year.
Exceptions and Adjustment
Comment: One commenter asked for
clarification of the relationship between
the amount by which an LEA is
permitted to reduce its expenditures
pursuant to §§ 300.204 and 300.205 and
the amount the LEA must spend to meet
the compliance standard in a future
fiscal year. The commenter asked how
the threshold for future compliance
using local funds only or a combination
of State and local funds is affected if an
LEA reduces its expenditures in an
amount less than the maximum amount
permitted by §§ 300.204 and 300.205. Discussion: The LEA’s actual level of
expenditures for the education of
children with disabilities in a preceding
fiscal year, and not the reduced level of
expenditures that the LEA could have
spent had it taken all of the exceptions
and the adjustment permitted by
§§ 300.204 and 300.205, is the level of
expenditures required of the LEA in a
future fiscal year (which may be affected
by the Subsequent Years rule in
§ 300.203(c)). For example, in FY 2015–
2016, an LEA could have reduced its
expenditures by $100,000 (from
$2,100,000 to $2,000,000) by taking all
of the exceptions permitted by
§ 300.204. However, this LEA actually
spent $2,025,000 in FY 2015–2016.
Therefore, this LEA only reduced its
expenditures by $75,000. In FY 2016– 2017, the LEA must spend at least
$2,025,000 if it chooses to use the same
method of measuring expenditures
(before calculating any exceptions or
adjustment in §§ 300.204 and 300.205
that it takes in FY 2016–2017).
Changes: None.
Comment: A commenter asked
whether exceptions taken pursuant to
§ 300.204 have to be specifically
identified as reductions to State or local
expenditures and whether all
exceptions are allowable against local
expenditures. Discussion: An LEA need not identify
the exceptions and adjustment in
§§ 300.204 and 300.205 as applying
specifically against State or local
expenditures. An LEA may apply the
exceptions and the adjustment in
§§ 300.204 and 300.205 to meet the
compliance standard using any of the
four methods. For an example of this
calculation, see Table 6. Changes: None.
Comment: One commenter requested
that the Department allow an LEA to
reduce its required level of expenditures
if the increase in expenditures with
State and local funds, or local funds
only, in the preceding fiscal year was
caused by a reduction in IDEA Part B
funds. Some commenters stated that, as
Federal funding fluctuates, LEAs need
additional flexibility to move dollars in
and out of programs. Discussion: While it is unusual for
IDEA Part B funds to be reduced, the
Department recognizes that this has
occurred in the past. Nevertheless,
reductions in expenditures, other than
those permitted by the exceptions and
adjustment in §§ 300.204 and 300.205,
are not permissible under the statute
and regulations, even if the LEA
experienced decreased revenues. LEAs,
therefore, must meet the eligibility and
compliance standards regardless of the
amount of their IDEA Part B subgrant. Changes: None.
Comment: A few commenters
requested that the Department consider
a provision in the regulations that
would permit a waiver of the MOE
requirement, and they noted that the
IDEA does not specifically prohibit
MOE waivers. Discussion: The statute does not
include a waiver provision for LEA
MOE. Therefore, we believe that adding
such a waiver would be inconsistent
with the language and purpose of the
MOE requirement in section
613(a)(2)(A)(iii) of the IDEA (20 U.S.C.
1413(a)(2)(A)(iii)). In addition, the
Department believes that the exceptions
and adjustment in §§ 300.204 and
300.205, and the ability to meet the
MOE eligibility and compliance standards using any of the four
methods, provide adequate flexibility to
LEAs. Therefore, these regulations do
not provide for waivers of LEA MOE.
Changes: None.
Data Retention and Administration Comment: Commenters raised many
questions and concerns about whether
the proposed regulations would require
LEAs and SEAs to maintain data and
information on expenditures. Some
commenters raised concerns or
questions about the number of years for
which LEAs and SEAs would have to
maintain information related to meeting
the eligibility and compliance
standards. One of these commenters
questioned how the MOE requirement
interacts with State and local data
retention policies because, without
established time limits on how long the
data must be maintained, the
requirement may conflict with those
policies. Several commenters expressed
concern about the requirement for LEAs
and SEAs to have systems that maintain
information on the reductions an LEA
took pursuant to §§ 300.204 and
300.205. Commenters were concerned
about LEAs’ ability to track the
allowable exceptions and adjustment
every year, and the cost of doing so,
even if LEAs meet the MOE
requirement, and particularly if they are
required to go back an indefinite
number of years to examine
information. Some commenters stated
that the proposed regulations would
increase administrative costs if LEAs are
required to track expenses by local and
State sources separately. A few
commenters asked what circumstances
an LEA may take into account if it is
required to go back more than five years
to compare its expenditures (e.g.,
population shifts; State changes in
funding formulas for special education;
changes in poverty levels; statutory
structural changes that shift pension or
health care contributions from the
employer (LEA) to the employees). Discussion: As an initial matter, in
accordance with 34 CFR 76.731, SEAs
and LEAs must keep records to show
their compliance with program
requirements, including the MOE
requirement in § 300.203 and the
provisions for exceptions and
adjustment permitted in §§ 300.204 and
300.205. SEAs and LEAs are subject to
the record retention requirements in 2
CFR 200.333, under which records must
generally be retained for three years
from the day the grantee or subgrantee
submits to the awarding agency its
single or last expenditure report for that
period. Under 34 CFR 76.709, if SEAs or
LEAs do not obligate all of their IDEA
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Part B grant or subgrant funds by the
end of the fiscal year for which Congress
appropriated the funds, they may
obligate those funds during a carryover
period of one additional year. Therefore,
SEAs and LEAs must generally keep
records to show compliance with the
MOE requirement for a minimum of five
years. SEAs and LEAs have the
discretion to keep the records longer
than the required retention period if
necessary to meet State and local data
retention requirements.
The Department recognizes that there
is confusion about the information and
data that LEAs and SEAs must maintain
in order to meet the eligibility and
compliance standards. In addition to the
minimum five-year record retention
requirement discussed above, an LEA
that wishes to retain the flexibility to
use any of the four methods to meet the
MOE requirement in a particular fiscal
year must have data and information
that allow the LEA to determine the
amount of expenditures it made in the
relevant comparison year using that
same method. An LEA that wishes to reduce its
expenditures pursuant to the exceptions
and adjustment in §§ 300.204 and
300.205 must have data and information
that demonstrate the LEA properly took
the exceptions and adjustment. Unless the LEA failed to meet the
compliance standard in the preceding
fiscal year, the LEA will need
information only from the preceding
fiscal year to demonstrate compliance
with the MOE requirement. However, if
the LEA did not meet the compliance
standard in the preceding fiscal year,
the LEA will have to determine the
proper comparison year. To do so, the
LEA must use the Subsequent Years rule
in § 300.203(c) and have information for
that fiscal year, even if that fiscal year
falls outside of the five years required
for record retention. For example, an LEA that wishes to
meet the compliance standard in FY
2016–2017 using a combination of State
and local funds must have information
on the amount of State and local funds
it expended for the education of
children with disabilities in the
preceding fiscal year, which is FY 2015–
2016. If the LEA did not meet the
compliance standard using that method
in FY 2015–2016, it must have
information from the proper comparison
year. Since the Subsequent Years rule
requirement is effective, at the earliest,
for FY 2012–2013, the earliest fiscal
year for which the LEA must have
information is FY 2010–2011. This is
because, in FY 2012–2013, the LEA
must have spent at least the same
amount for the education of children with disabilities as it spent in FY 2011–
2012. If the LEA did not meet the
compliance standard in FY 2011–2012,
the LEA must, using that same method,
determine what it should have spent in
FY 2011–2012, which is what it actually
spent in FY 2010–2011. In addition, in
this hypothetical, if the LEA reduces
expenditures in FY 2016–2017 based on
an exception or adjustment permitted in
§§ 300.204 and 300.205, the LEA must
have documentation that it properly
took the exception or adjustment.
Finally, neither the proposed nor the
final regulations change the
circumstances under which an LEA may
use the exceptions and adjustment in
§§ 300.204 and 300.205, nor do they
impose additional data retention
requirements on LEAs. The change in
circumstances raised by commenters,
such as shifts in funding formulas, or
changes that shift pension or health care
contributions from the State or LEA to
the employee, are not exceptions to the
MOE requirement, and LEAs, therefore,
would not be required to retain this
information to demonstrate compliance
with the MOE requirement. Changes: None.
Comment: One commenter stated that,
if an LEA does not have information on
the amount of ‘‘local funds only’’
expended for the education of children
with disabilities for a specified time
period, the LEA should not be able to
use the ‘‘local funds only’’ option to
meet the eligibility and compliance
standards for that same time period. Discussion: We understand that, due
to State or local fiscal systems, some
LEAs cannot distinguish between
expenditures made with State funds and
those made with local funds. While the
regulations permit LEAs to use any one
of the four methods, the regulations do
not require an LEA to separately
account for expenditures made with
local funds and those made with State
funds. However, regardless of the
method used, LEAs must be able to
provide auditable data to document that
they met the eligibility and/or
compliance standards using that
method. Therefore, LEAs that are unable
to account for local funds only, or local
funds only on a per capita basis, or that
choose not to retain those records, will
be unable to use those methods to meet
the eligibility and compliance standards
and instead must meet the eligibility
and compliance standards using either
the combination of State and local funds
or the combination of State and local
funds on a per capita basis. Changes: None.
Comment: One commenter expressed
concern that the proposed changes to
the regulations will require significant revision of training materials and
documentation that some States have
used for at least 15 years.
Discussion: We understand that the
changes to the MOE regulations may
require changes to States’ policies and
procedures and may therefore also
require revisions to their training
materials and documentation practices.
However, we believe that the changes
we are making to the regulations are
necessary to increase understanding of,
and compliance with, the MOE
requirement. The Department will
provide guidance on these regulations
that will assist States in training LEAs
on the documentation needed to
demonstrate compliance with the MOE
requirement. Changes: None.
LEA Eligibility, § 300.203(a)
Eligibility Standard and Methodology Comment: Commenters raised many
questions and concerns related to the
four methods by which an LEA may
meet the eligibility standard. One
commenter requested that the
regulations specifically list the four
methods available to LEAs. Some
commenters requested that the
Department clarify that SEAs are
required to allow LEAs to meet the
eligibility standard using all four
methods. Other commenters stated that
the proposed regulations emphasize
meeting the MOE requirement using
local funds only, rather than clarifying
that an LEA may meet the requirement
through any of the four methods. Discussion: We agree that additional
clarification is needed regarding the
four methods by which an LEA may
meet the eligibility standard. We also
agree that listing the four methods
individually in the eligibility standard
will clarify that an LEA may meet the
eligibility standard using any one of
these four methods, and that SEAs must
permit LEAs to do so. Listing the four
methods individually should also
clarify that the regulations do not give
preference or greater weight to any of
the four methods. Changes: We have revised final
§ 300.203(a)(1) (proposed § 300.203(b))
to specify that, for purposes of
establishing an 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: (i) Local
funds only; (ii) the combination of State
and local funds; (iii) local funds only on
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23655 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
a per capita basis; or (iv) the
combination of State and local funds on
a per capita basis.
Comment: One commenter
recommended that the Department
retain the language in current
§ 300.203(b)(1) requiring ‘‘at least the
same total or per capita amount . . . the
LEA spent . . . for the most recent prior
year for which information is available.’’
The commenter objected that replacing
‘‘the most recent prior year’’ with ‘‘the
most recent fiscal year’’ would narrow
the regulation and not give LEAs the
opportunity to submit allowable
exceptions for reduced expenditures
that may have taken place multiple
fiscal years ago. Other commenters
supported the change from ‘‘most recent
prior year’’ to ‘‘most recent fiscal year’’
because the latter provides more clarity.
Discussion: We do not believe that the
change from ‘‘most recent prior year’’ to
‘‘most recent fiscal year’’ has the effect
on demonstrating eligibility that the
commenter attributes to it. The change
is not a substantive change, and merely
aligns the language of the regulation to
the language of the statute, which uses
‘‘fiscal year’’ and does not use ‘‘prior
year.’’ Section 613(a)(2)(A)(iii) of the
IDEA (20 U.S.C. 1413(a)(2)(A)(iii)).
Nothing in this language prevents an
LEA from reducing the amount of funds
expended for the education of children
with disabilities pursuant to the
exceptions in § 300.204 or adjustment in
§ 300.205. However, an LEA may not
look back to a previous fiscal year and
claim exceptions for that fiscal year that
it did not actually take during that fiscal
year. For example, an LEA expended
$10,000 for the education of children
with disabilities in FY 2014–2015.
During that fiscal year, the LEA could
have properly reduced its expenditures
pursuant to exceptions in § 300.204 by
$500 but chose not to do so. In January
2016, the LEA is budgeting for the
expenditures for the education of
children with disabilities in order to
demonstrate eligibility for an IDEA Part
B subgrant for FY 2016–2017. The most
recent fiscal year for which the LEA has
information is FY 2014–2015. The LEA
must budget $10,000 for the education
of children with disabilities, and not
$9,500. This is not a change in current
law.
Changes: None.
Comparison Year Comment: The Department received
many comments about the comparison
year an LEA must use when meeting the
eligibility standard. Some commenters
supported a comparison year that is the
same regardless of which of the four methods the LEA uses to meet the
eligibility standard.
Discussion: The Department
appreciates the comments and questions
that we received about the comparison
year for the eligibility standard. We
agree that the comparison year should
be the same regardless of the method an
LEA uses to meet the eligibility
standard. Using the same comparison year for
local funds only and for the
combination of State and local funds
will simplify the requirement for LEAs,
SEAs, and auditors, and therefore
should result in increased compliance
and enforcement. In addition, this is
consistent with how we changed the
comparison year for the compliance
standard using local funds only.
Therefore, we have changed the
comparison year for meeting the
eligibility standard using local funds
only in proposed § 300.203(b)(2) from
‘‘the most recent fiscal year for which
information is available and the LEA
met the MOE compliance standard
based on local funds only, even if the
LEA also met the MOE compliance
standard based on State and local
funds’’ to ‘‘the most recent fiscal year
for which information is available’’ in
final § 300.203(a)(1). However, because
we are adopting the Subsequent Years
rule in § 300.203(c), the Department is,
in effect, defining ‘‘the most recent
fiscal year for which information is
available’’ to mean the most recent fiscal
year in which the LEA met MOE and for
which it has information available,
regardless of whether the LEA is seeking
to meet the eligibility standard based on
local funds only, or based on the
combination of State and local funds.
Because we have changed the
comparison year for local funds only,
the provision in proposed
§ 300.203(b)(3), which addresses the
comparison year if the LEA has not
previously met the MOE compliance
standard based on local funds only, is
no longer necessary. Changes: We have revised final
§ 300.203(a)(1) (proposed
§ 300.203(b)(2)) to specify that the
comparison year, regardless of the
method used, is the most recent fiscal
year for which information is available.
We also removed proposed
§ 300.203(b)(3). Comment: Some commenters sought a
comparison year for the eligibility
standard that is the ‘‘preceding fiscal
year’’ and objected to making the
comparison year ‘‘the most recent fiscal
year for which information is available.’’
These commenters stated that the
proposed regulation leaves open the
possibility that the comparison year will be so far in the past that it will not
provide a meaningful comparison.
Similarly, other commenters
recommended including language that
limits how far back SEAs and LEAs
must look as a reference point for
comparison.
Discussion: We do not agree with
commenters who stated that the
comparison year should be ‘‘the
preceding fiscal year’’ because, at the
time most LEAs are budgeting for the
next fiscal year (the ‘‘budget year’’), the
fiscal year preceding the budget year has
not yet ended. Therefore, the LEA must
look to the amount actually spent in
‘‘the most recent fiscal year for which
information is available’’ to determine
the amount it must budget to meet the
eligibility standard. We anticipate that ‘‘the most recent
fiscal year for which information is
available’’ will be two years before the
budget year and therefore will not be so
far in the past as to preclude a
meaningful comparison. We assume, for
example, that when an LEA is budgeting
for FY 2016–2017, the most recent fiscal
year for which final expenditure data
are available would be FY 2014–2015.
However, because circumstances in
individual LEAs may vary, the
Department declines to include
language in the regulations that limits
how far back SEAs and LEAs must go
to identify a comparison year. Changes: None.
Comment: A commenter asked what
comparison year an LEA would use to
meet the eligibility standard in a fiscal
year subsequent to a fiscal year (or
years) when the LEA was not eligible
for, or did not receive, an IDEA Part B
subgrant. Discussion: An LEA that seeks to
establish eligibility in a fiscal year
subsequent to a fiscal year (or years)
when the LEA was not eligible, or did
not receive, an IDEA Part B subgrant,
must use the comparison year in
§ 300.203(a)(1), which is ‘‘the most
recent fiscal year for which information
is available.’’ This is the case even if the
most recent fiscal year for which
information is available is a fiscal year
during which the LEA was not eligible
for, or did not receive, an IDEA Part B
subgrant. Changes: None.
Comment: A commenter asked
whether, in order to meet the eligibility
standard, an LEA must use the same
method it used to meet the compliance
standard in the most recent fiscal year
for which information is available. Discussion: When establishing
eligibility, an LEA is not required to use
the same method it used to meet the
compliance standard in the most recent
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23656 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
fiscal year for which information is
available. When an LEA is budgeting for
the education of children with
disabilities, the LEA selects a method by
which it intends to meet the eligibility
standard. The LEA identifies the
amount it spent for the education of
children with disabilities using that
same method in the most recent fiscal
year for which information is available.
If the LEA met the compliance standard
using the same method in the most
recent fiscal year for which information
is available, the LEA must budget at
least that amount (after taking into consideration the exceptions and
adjustment in §§ 300.204 and 300.205,
as permitted by § 300.203(a)(2)) in order
to meet the eligibility standard.
Pursuant to the Subsequent Years rule
in § 300.203(c), if the LEA did not meet
the compliance standard using that
method in the most recent fiscal year for
which information is available, the LEA
determines the amount that the LEA
should have spent for the education of
children with disabilities using that
same method in the most recent fiscal
year for which information is available.
In that case, the LEA must budget at least that amount (after taking into
consideration the exceptions and
adjustment in §§ 300.204 and 300.205,
as permitted by § 300.203(a)(2)) in order
to meet the eligibility standard.
Tables 7 and 8 demonstrate how an
LEA could meet the eligibility standard
over a period of years using different
methods from year to year. These tables
assume that the LEA did not take any
of the exceptions or adjustment in
§§ 300.204 and 300.205. Numbers are in
$10,000s budgeted and spent for the
education of children with disabilities.
TABLE 7—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD IN 2016–2017 U SING DIFFERENT METHODS
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
2014–2015 ............................ * $500 * $1,000 * $50 * $100 10 2015–2016 ............................ .................... .................... .................... .................... ..........
.......... Final information not available at time
of budgeting for 2016–2017.
How much must the LEA budget for 2016–2017 to
meet the eligibility standard
in 2016–2017? 500 1,000 50 100 .................... When the LEA submits a budget for
2016–2017, the most recent fiscal
year for which the LEA has informa-
tion is 2014–2015. It is not nec-
essary for the LEA to consider infor-
mation on expenditures for a fiscal
year prior to 2014–2015 because
the LEA maintained effort in 2014–
2015. Therefore, the Subsequent
Years rule in § 300.203(c) is not ap-
plicable.
* The LEA met the compliance standard using all 4 methods.
TABLE 8—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD IN 2017–2018 U SING DIFFERENT METHODS
AND THE APPLICATION OF THE SUBSEQUENT YEARS RULE
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
2014–2015 ............................ * $500 * $1,000 * $50 * $100 10 2015–2016 ............................ 450 * 1,000 45 * 100 10 2016–2017 ............................ .................... .................... .................... .................... ..........
.......... Final information not available at time
of budgeting for 2017–2018.
How much must the LEA budget for 2017–2018 to
meet the eligibility standard
in 2017–2018? 500 1,000 50 100 .................... If the LEA seeks to use a combination
of State and local funds, or a com-
bination of State and local funds on
a per capita basis, to meet the eligi-
bility standard, the LEA does not
consider information on expenditures
for a fiscal year prior to 2015–2016
because the LEA maintained effort
in 2015–2016 using those methods.
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23657 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
TABLE 8—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD IN 2017–2018 U SING DIFFERENT METHODS
AND THE APPLICATION OF THE SUBSEQUENT YEARS RULE —Continued
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
However, if the LEA seeks to use local
funds only, or local funds only on a
per capita basis, to meet the eligi-
bility standard, the LEA must use in-
formation on expenditures for a fis-
cal year prior to 2015–2016 because
the LEA did not maintain effort in
2015–2016 using either of those
methods, per the Subsequent Years
rule. That is, the LEA must deter-
mine what it should have spent in
2015–2016 using either of those
methods, and that is the amount that
the LEA must budget in 2017–2018.
* LEA met MOE using this method.
Changes: None.
Comment: A commenter stated that
because the SEA is responsible for
paying back funds if an LEA fails to
maintain effort, it is better left to the
SEA to determine how LEAs must
demonstrate eligibility for an IDEA Part
B subgrant.
Discussion: Section 613(a) of the IDEA
(20 U.S.C. 1413(a)) provides the
standard for an LEA’s eligibility for an
IDEA Part B subgrant. An LEA is eligible
for assistance under IDEA Part B in a
fiscal year only if it submits a plan that
provides assurances to the SEA that the
LEA meets each of the conditions in
section 613(a) of the IDEA, including an
assurance that amounts provided to the
LEA will not be used, except as
provided in the statutory exceptions and
adjustment, 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. In addition, for the purpose
of establishing an LEA’s eligibility for
an IDEA Part B subgrant in § 300.203(a),
the SEA must determine that the LEA
budgets for the education of children
with disabilities at least the same total
or per capita amount as the LEA spent
for that purpose from the same source
for the most recent fiscal year for which
information is available. Because the
IDEA statute and regulations specify
that LEAs must meet these eligibility
requirements, it would be inconsistent
with the IDEA to allow SEAs to use
different eligibility requirements. The fact that an SEA would be liable in a
recovery action pursuant to section 452
of the General Education Provisions Act
(GEPA) (20 U.S.C. 1234a) does not affect
the Department’s responsibility to
interpret the statute and issue
regulations on the MOE requirement or
the State’s responsibility to ensure that
LEAs meet the eligibility requirements.
Changes: None.
Exceptions and Adjustment Comment: Many commenters objected
to the eligibility standard in proposed
§ 300.203(b)(1), which would require an
LEA to budget, for the education of
children with disabilities, at least the
same total or per capita amount as the
LEA spent for that purpose from the
same source for the most recent fiscal
year for which information is available
without permitting LEAs to take into
consideration the exceptions and
adjustment permitted in §§ 300.204 and
300.205. Some of these commenters
recommended that proposed
§ 300.203(b)(1) make explicit reference
to the authorized exceptions and
adjustment in §§ 300.204 and 300.205.
In addition, some commenters asked the
Department to clarify how an LEA may
consider the exceptions and adjustment
in §§ 300.204 and 300.205 when
budgeting for the expenditures for the
education of children with disabilities.
Discussion: The commenters appear
to have partially misread proposed
§ 300.203(b)(1), which did permit an
LEA to take into consideration the
exceptions and adjustment that the LEA actually took in the comparison year, as
permitted in §§ 300.204 and 300.205,
when calculating the amount of
expenditures for the education of
children with disabilities in the most
recent fiscal year for which information
is available. The final regulations at
§ 300.203(a)(1) continue to permit an
LEA to take into consideration the
exceptions and adjustment, as permitted
in §§ 300.204 and 300.205.
What the proposed rule did not do,
however, was permit an LEA to take
into consideration exceptions or an
adjustment taken in the intervening
fiscal year(s) between the budget year
and the comparison year. The proposed
rule also did not permit an LEA to
consider the exceptions and adjustment
that it reasonably anticipates taking in
the budget year but that have not yet
occurred.
We understand that an LEA will have
information about exceptions and an
adjustment that it took in the
intervening year(s), even if the LEA does
not have final information on
expenditures for that year(s). For
example, when an LEA is budgeting for
FY 2016–2017, the LEA knows that it
took an exception under § 300.204 in FY
2015–2016 that will permissibly lower
the amount the LEA was otherwise
required to spend for the education of
children with disabilities in FY 2015–
2016 when compared to FY 2014–2015
(the most recent fiscal year for which
the LEA has information). The LEA may
also reasonably anticipate that it will
take an exception under § 300.204 in FY
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23658 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
2016–2017, the budget year. We agree
with the commenters that the eligibility
standard should permit LEAs to take
into consideration the exceptions and adjustment in the intervening fiscal
year(s) and the budget year. Table 9
provides an example of how an LEA
may consider the exceptions and adjustment in §§ 300.204 and 300.205
when budgeting for the expenditures for
the education of children with
disabilities.
TABLE 9—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD USING EXCEPTIONS AND ADJUSTMENT IN
§§ 300.204
AND 300.205, 2016–2017
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
Actual 2014–2015 expendi-
tures. * $500 * $1,000 * $50 * $100 10 ...................................... The LEA met the compli-
ance standard using all
4 methods.*
Exceptions and adjustment taken in 2015–2016. ¥50
¥50 ¥5 ¥5 ........................................... LEA uses the child count
number from the com-
parison year (2014–
2015).
Exceptions and adjustment the LEA reasonably ex-
pects to take in 2016–
2017. ¥25
¥25 ¥2.50 ¥2.50 ........................................... LEA uses the child count
number from the com-
parison year (2014–
2015).
How much must the LEA budget to meet the eligi-
bility standard in 2016–
2017? 425 925 42.50 92.50 ........................................... When the LEA submits a
budget for 2016–2017,
the most recent fiscal
year for which the LEA
has information is 2014–
2015. However, if the
LEA has information on
exceptions and adjust-
ment taken in 2015–
2016, the LEA may use
that information when
budgeting for 2016–
2017. The LEA may
also use information that
it has on any exceptions
and adjustment it rea-
sonably expects to take
in 2016–2017 when
budgeting for that year.
However, we caution that, when
taking into consideration the exceptions
and adjustment that the LEA took in the
intervening fiscal year(s) for the purpose
of meeting the eligibility standard in the
budget year, the LEA does so without
having final information on its
expenditures for the education of
children with disabilities in the
intervening fiscal year(s). That
intervening fiscal year will be the
comparison year (subject to the
Subsequent Years rule) for the purpose
of meeting the compliance standard in
the budget year. Accordingly, LEAs
should also take into consideration
information related to increased
expenditures for the education of
children with disabilities in the
intervening fiscal year(s) that would
affect the amount the LEA must spend
in the budget year in order to meet the
compliance standard in the budget year.
Otherwise, the LEA may budget less for the education of children with
disabilities than it will need to expend
in order to meet the compliance
standard in that year.
Changes: We added new
§ 300.203(a)(2), which permits an LEA
to take into consideration, to the extent
the information is available, the
exceptions and adjustment provided in
§§ 300.204 and 300.205 that the LEA: (i)
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 (ii) reasonably expects to
take in the fiscal year for which the LEA
is budgeting.
SEA Review
Comment: A few commenters
objected to the language in the NPRM
that ‘‘States will need to carefully
review LEA applications, and compare amounts budgeted to amounts expended
in prior years.’’ These commenters
stated that section 613(a) of the IDEA
(20 U.S.C. 1413(a)) requires only
assurances in an LEA’s application to
the State, rather than information that
demonstrates its compliance with the
MOE requirement, and that the
requirement that an LEA have on file
with the SEA information to
demonstrate that the eligibility
requirement has been met was
intentionally removed from the IDEA
Part B regulations after the 2004
reauthorization of the IDEA. Moreover,
these commenters stated that requiring
LEAs to submit a budget as part of the
eligibility process imposes undue
burden on SEAs and LEAs, creating
additional paperwork and requiring
more staff to provide oversight. One
commenter stated that the Department
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23659 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
must clarify whether a State must
receive a detailed special education
budget from each LEA outlining how
the LEA has taken the exceptions and
adjustment in §§ 300.204 and 300.205 or
whether the State must receive an
overall budgeted amount from the LEA
for the education of children with
disabilities for the upcoming fiscal year.
Discussion: The requirement that, in
order to find an LEA eligible for an
IDEA Part B subgrant award for a fiscal
year, an SEA must determine that the
LEA has budgeted sufficient funds to
meet the MOE eligibility standard is a
regulatory requirement that has been in
effect since 1999 and was not removed
from the 2006 IDEA Part B regulations
implementing the 2004 amendments to
the IDEA. In 2006, the Department did
remove the requirement that an LEA
have information on file with the SEA
to demonstrate that the LEA actually
met the MOE compliance standard. That
regulatory change was based on the
statutory change to section 613(a) made
by the 2004 IDEA Amendments to
require LEAs to provide assurances,
rather than information demonstrating,
that the LEA meets each of the
conditions in section 613(a) of the IDEA.
However, in § 300.203(b)(1) of the 2006
IDEA Part B regulations, the Department
maintained the regulatory requirement
that the SEA determine whether the
LEA has met the MOE eligibility
standard (i.e., has budgeted sufficient
funds for the education of children with
disabilities). The Department continues
to believe that the MOE eligibility
standard is necessary because an LEA
that has met the eligibility standard for
a fiscal year is more likely to meet the
MOE compliance standard for that same
fiscal year. We do not believe that this
requirement imposes an undue burden
on SEAs or LEAs. Some SEAs already
use the IDEA Part B subgrant
application process to collect
compliance data on MOE, and the
Department has learned through fiscal
monitoring that most SEAs already
require LEAs to submit budget
information and are not relying on an
assurance to determine whether an LEA
has budgeted sufficient funds. In
addition, the SEA has the discretion to
determine the type and amount of
information that it must review in order
to be able to determine that the LEA has
budgeted sufficient funds to meet the
MOE eligibility standard. It is not
necessary for the SEA to review a
detailed budget, so long as the SEA has
sufficient information to determine if
the LEA meets the eligibility standard.
For example, these regulations do not
require LEAs to submit budgets broken down by object codes or line items. The
Department intends to issue guidance
following the publication of these
regulations and will include
information regarding the eligibility
standard.
Changes: None.
Comment: A commenter urged the
Department to clarify that, when
reviewing an LEA’s application for an
IDEA Part B subgrant, an SEA may rely
on information on expenditures for the
most recent fiscal year for which
information is available at the time the
LEA submits its application, rather than
requiring the SEA to review information
on expenditures for a more recent fiscal
year than the one for which the LEA
submits information to the SEA during
the review of the LEA’s application.
Discussion: The Department
understands that, in some States,
because of the timing of their fiscal
years or for other State- or LEA-specific
reasons, after an LEA submits its
application for an IDEA Part B subgrant,
the LEA submits information on
expenditures for a more recent fiscal
year than the one for which it provided
information in its application. SEAs
need not make multiple determinations
of an LEA’s eligibility for an IDEA Part
B subgrant for a given fiscal year.
However, the SEA must use, as a
comparison year for the purpose of
determining an LEA’s eligibility, the
most recent fiscal year for which the
LEA has information. Accordingly, if,
before the SEA determines the LEA’s
eligibility for a given fiscal year, the
LEA submits to the SEA information on
expenditures for a more recent fiscal
year, the SEA must use that information
in determining the LEA’s eligibility.
Changes: None.
Comment: A commenter noted that
budget data submitted with an LEA’s
application for an IDEA Part B subgrant
are often preliminary, and that,
therefore, by the time the SEA
determines eligibility for an IDEA Part
B subgrant, the LEA’s budget may have
changed.
Discussion: We recognize that, at the
time some LEAs submit their
applications to the SEA for an IDEA Part
B subgrant, their budgets may be
preliminary. The SEA has the discretion
to determine, based on the patterns and
practices of its LEAs, whether an LEA
submitted reasonable budget data with
its application. If, before it determines
an LEA’s eligibility for an IDEA Part B
subgrant, an SEA finds that the budget
data have changed substantially, we
expect the SEA would require the LEA
to update its application.
Changes: None. Comment:
One commenter asked if an
LEA must submit budget amendments
to the SEA if its expenditures change
during the year.
Discussion: No. Once an SEA has
determined an LEA’s eligibility for an
IDEA Part B subgrant, the LEA does not
need to provide amendments that reflect
changes in expenditures in order to
remain eligible for that year.
Changes: None.
Comment: One commenter asked
whether an LEA must describe in its
IDEA Part B subgrant application the
method it will use to meet the MOE
eligibility standard.
Discussion: Although these
regulations do not require an LEA to
describe in its application the method
that it will use to meet the MOE
eligibility standard, an SEA may require
this information, and the LEA is not
prohibited from providing that
information in its application. The SEA
must be able to determine that the LEA
meets the eligibility standard using at
least one of the four permissible
methods. As stated above, regardless of
which method it uses to meet the MOE
eligibility standard, the LEA may use a
different method to meet the eligibility
standard in a subsequent fiscal year.
Changes: None.
Comment: A commenter stated that
the proposed regulations created a new
requirement for auditors to compare the
amounts budgeted to meet the MOE
eligibility standard in a given fiscal year
to the amounts spent in the comparison
year to meet the MOE compliance
standard. This commenter expressed
concern that anticipated budget
amounts might not align with prior
expenditures.
Discussion: Neither the proposed nor
the final regulations create a new audit
standard. The eligibility standard has
always required a comparison of
amounts budgeted in a given fiscal year
to amounts expended in the comparison
year.
Changes: None.
Ineligibility
Comment: A few commenters
requested clarification on the
consequence of not meeting the MOE
eligibility standard. One commenter
asked if an SEA would be required to
find an LEA ineligible for its IDEA Part
B subgrant if the proposed LEA budget
does not meet the MOE eligibility
standard. Another commenter asked for
clarification on what happens to the
IDEA Part B funds that are not awarded
to an LEA.
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23660 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
Discussion: If an SEA determines that
an LEA does not meet the MOE
eligibility standard using any of the four
methods in final § 300.203(a) (proposed
§ 300.203(b)), the SEA must provide
notice that the LEA is not eligible for an
IDEA Part B subgrant, as required by
§ 300.221(a). The SEA must also provide
the LEA with reasonable notice and an
opportunity for a hearing, pursuant to
§ 300.221(b). If the SEA determines that
the LEA is not eligible to receive a Part
B subgrant for that fiscal year, the SEA
retains the amount of Part B funds that
the LEA would have received. 34 CFR
300.227(a)(1). The SEA would then be
required to provide special education
and related services directly to children
with disabilities residing in the area
served by that LEA. 34 CFR
300.227(a)(1).
Changes: None.
Comment: None.
Discussion: Current § 300.203(b)(3)
provides that SEAs and LEAs may not
consider any expenditures made from
funds provided by the Federal
government for which the SEA and LEA
are required to account to the Federal
government in determining an LEA’s
compliance with current § 300.203(a).
While the proposed regulations
included this requirement in the
compliance standard in proposed
§ 300.203(a)(3), the proposed regulations
did not include this requirement in the
eligibility standard. This was an
oversight. To ensure that this
requirement applies to both the
eligibility and compliance standards, we
added § 300.203(a)(3).
Changes: We added new
§ 300.203(a)(3) to require that
expenditures made from funds provided
by the Federal government for which
the SEA is required to account to the
Federal government or for which the
LEA is required to account to the
Federal government directly or through
the SEA may not be considered in
determining whether an LEA meets the
eligibility standard in § 300.203(a)(1).
Failure To Maintain Effort and
Consequence, § 300.203(d)
Legal Authority
Comment: One commenter stated that
proposed § 300.203(d) is based on a
misreading of section 452 of GEPA (20
U.S.C. 1234a). The commenter stated
that it is the responsibility of the LEA,
rather than the SEA, to return any
funds. Another commenter asked if an
SEA has the right to seek recovery of
funds from the LEA and requested that
this right be included in the final
regulation. Discussion:
The liability of the SEA in
a recovery action if an LEA fails to meet
the compliance standard is not new.
The SEA is responsible for ensuring that
LEAs receiving an IDEA Part B subgrant
comply with all applicable requirements
of that statute and its implementing
regulations, including the MOE
requirement. If an LEA fails to meet the
MOE requirement in a particular fiscal
year, the Department has authority to
take steps to recover the appropriate
amount of funds from the SEA. Section 452(a)(1) of GEPA (20 U.S.C.
1234a(a)(1)) provides that the
Department may recover funds if a
grantee has made an unallowable
expenditure of funds or has otherwise
failed to discharge its obligation to
account properly for funds under the
grant. Under IDEA Part B, it is the State
(operating through the SEA), and not the
LEA, that is the Department’s grantee.
As such, the authority granted to the
Department pursuant to GEPA
specifically authorizes recovery of funds
from the SEA. Section 453(a)(1) of GEPA
(20 U.S.C. 1234b(a)(1)) provides that the
measure of recovery in such a
circumstance is an amount that is
proportionate to the extent of the harm
that the violation caused to an
identifiable Federal interest associated
with the program under which the
recipient received the award. An
identifiable Federal interest includes,
but is not limited to, compliance with
expenditure requirements and
conditions, such as maintenance of
effort. Section 453(a)(2) of GEPA (20
U.S.C. 1234b(a)(2)). Accordingly, when
an SEA fails to ensure that an LEA has
met the compliance standard in final
§ 300.203(b), the SEA, not the LEA, is
liable in a recovery action under these
provisions for the amount by which the
LEA failed to maintain its level of
expenditures, or the amount of the
LEA’s Part B IDEA subgrant, whichever
is lower. The SEA, in turn, following
applicable State procedures, could seek
reimbursement from the LEA. See July
26, 2006, letter to Ms. Carol Ann Baglin,
available at http://www2.ed.gov/policy/
speced/guid/idea/letters/2006-3/
baglin072606moe3q2006.pdf. The
Department has not included a
provision permitting SEAs to seek
reimbursement from LEAs because that
is a matter of State law. Changes: None.
Burden on SEAs Comment: Some commenters objected
to proposed § 300.203(d) and stated that
the consequence for a failure to meet the
MOE compliance standard should fall
on the LEA and not the SEA. These commenters stated that while an SEA is
able, through its oversight
responsibilities, to identify that an LEA
has failed to meet its MOE obligation,
SEAs have no control over local
budgets, and not all States have the
fiscal resources to provide State funds to
help an LEA meet its MOE obligation.
Some commenters stated that if an LEA
fails to maintain effort and is not able
to pay back funds to the SEA, the SEA
will be required to absorb the financial
loss and has no recourse because
Federal funding cannot be reduced or
withheld from the LEA.
Discussion: The Department
appreciates the concern of some
commenters that SEAs should not be
liable in a recovery action to return non-
Federal funds because of an LEA’s
failure to meet the MOE compliance
standard. However, as noted in the Legal
Authority section of the Analysis of
Comments and Changes, the SEA
(acting on behalf of the State), not the
LEA, is the grantee in the IDEA Part B
program. As a condition of eligibility for
an IDEA Part B grant, States must
provide an assurance to the Department
that the SEA is responsible for ensuring
that, among other things, all
requirements of Part B are met. Section
612(a)(11)(A)(i) of the IDEA (20 U.S.C.
1412(a)(11)(A)(i)). SEAs can minimize
LEA noncompliance by carefully
reviewing an LEA’s application for an
IDEA Part B subgrant to determine if the
LEA meets the MOE eligibility standard,
by monitoring for compliance on a
regular basis, and by providing
technical assistance to LEAs. SEAs that
find an LEA is failing to comply with
the MOE requirement may take further
enforcement action as provided in
§ 300.222.
With respect to the concern raised by
some commenters that some SEAs may
be unable to absorb the loss because
they do not have sufficient State funds,
or because the SEA may not withhold
Federal funds to an LEA that has failed
to meet the MOE compliance standard,
we remind States that they may seek
reimbursement of these amounts from
the LEA, to the extent permitted under
State law. Whether a State seeks
recovery from an LEA is at the
discretion of the State.
Changes: None.
Comment: Some commenters stated
that SEAs will be required to spend
additional administrative time
collecting funds, accounting for the
collection in their financial systems,
and returning funds to the Department.
One of these commenters requested
clarification about the timeframe within
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23661 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
which funds must be returned to the
Department and the process for
returning funds (such as what
identifying information to include on
the check, where to send it, and what
supporting documentation to include).
Discussion: There should be no
additional burden on, or expense to, an
SEA as a result of codifying the
Department’s long-standing practice,
which is consistent with GEPA, into
final § 300.203(d). We added this
provision to the final regulations not
because this is a change in law, but
because the Department believes that
some SEAs and LEAs were not aware of
the consequence of an LEA’s failure to
meet the MOE compliance standard. We
acknowledge that those SEAs that were
not aware of this requirement may need
additional time to set up a process for
returning funds to the Department and
taking any associated actions against an
LEA that the SEA wishes to take.
However, this is a long-standing
requirement, and therefore, we expect
that SEAs already have a process in
place. The Department believes that
enforcement of the MOE requirement is
critical to ensuring compliance.
The Department intends to provide
guidance on the process for returning
funds but does not believe it is
appropriate or necessary to include administrative details in these
regulations.
Changes: None.
Calculating Penalties Comment: A few commenters
requested clarification of the definition
of the ‘‘amount equal to the amount by
which the LEA failed to maintain its
level of expenditures’’ in proposed
§ 300.203(d). One commenter asked how
to determine the amount of the penalty
if an LEA failed to meet the MOE
compliance standard. The commenter
asked whether the SEA should
determine the amount of the failure to
be the lesser amount generated by the
four methods (after accounting for the
allowed exceptions and adjustment). Discussion: The ‘‘amount equal to the
amount by which an LEA failed to
maintain its level of expenditures’’ is
determined by calculating the amount
by which the LEA failed to meet the
MOE compliance standard. Before
determining the amount of the failure,
the SEA must permit the LEA to use any
one of the four methods and to take the
exceptions and the adjustment in
§§ 300.204 and 300.205, where
permissible. The amount of the failure,
therefore, would be the smallest amount
generated by the four methods (after
accounting for the allowed exceptions
and adjustment). Changes: None. Comment:
A commenter asked if the
amount by which an LEA failed to meet
the compliance standard could exceed
the amount of the LEA’s IDEA Part B
subgrant received in the year of the
failure.
Discussion: While it is possible that
the amount of a failure to meet the
compliance standard may exceed the
amount of the LEA’s IDEA Part B
subgrant for the fiscal year in question,
the SEA’s liability to the Department
cannot. This is because, as discussed
earlier, section 453(a)(1) of GEPA (20
U.S.C. 1234b(a)(1)) provides that the
measure of recovery in such a
circumstance is proportionate to the
extent of the harm that the violation
caused to an identifiable Federal
interest associated with the program
under which the recipient received the
award. Under this circumstance, the
Federal interest associated with the
IDEA Part B program is limited to the
amount of the LEA’s IDEA Part B
subgrant (the total amount of the LEA’s
subgrants under sections 611 and 619 of
the IDEA).
Table 10 provides examples of how to
calculate the amount by which an LEA
failed to maintain its level of
expenditures and of the amount of non-
Federal funds that an SEA must return
to the Department on account of that
failure.
TABLE 10—E XAMPLE OF HOW TO CALCULATE THE AMOUNT OF AN LEA’ SFAILURE TOMEET THE COMPLIANCE STANDARD
IN 2016–2017 AND THE AMOUNT THAT AN SEA M UST RETURN TO THE DEPARTMENT
Fiscal year Local funds
only Combination
of State and local funds Local funds only on a per
capita basis Combination of State and
local funds on a per capita basis Child count Amount of
IDEA Part B subgrant
2015–2016 .......... * $500 * $950 $50 * ....................................... $95 * ....................................... .......... .......... Not relevant. 2016–2017 .......... 400 750 $40 ......................................... $75 ......................................... 10 $50. Amount by which
an LEA failed
to maintain its
level of expend-
itures in 2016–
2017. 100 200 $100 (the amount of the fail-
ure equals the amount of
the per capita shortfall
($10) times the number of
children with disabilities in
2016–2017 (10)). $200 (the amount of the fail-
ure equals the amount of
the per capita shortfall
($20) times the number of
children with disabilities in
2016–2017 (10)).
The SEA determines that the amount of the LEA’s failure is $100 using
the calculation method that results in the lowest amount of a failure. The SEA’s liability is the lesser of the four calculated shortfalls a
nd the amount of the LEA’s Part B subgrant in the fiscal year in which the
LEA failed to meet the compliance standard. In this case, the SEA must r
eturn $50 to the Department because the LEA’s IDEA Part B
subgrant was $50, and that is the lower amount.
* LEA met MOE using this method.
Changes: We added language in
§ 300.203(d) to clarify that, if an LEA
fails to maintain its level of
expenditures for the education of
children with disabilities, the SEA is
liable in a recovery action for the
amount by which the LEA failed to
maintain its level of expenditures in
that fiscal year, or the amount of the LEA’s Part B subgrant in that fiscal year,
whichever is lower.
Comment: A commenter suggested
that the phrase ‘‘up to the amount of
IDEA funds spent in that year’’ be added
to the end of proposed § 300.203(d)
because section 613(a)(2)(A)(iii) of the
IDEA (20 U.S.C. 1413(a)(2)(A)(iii)) states
that an LEA shall not use these funds to
reduce its level of expenditures for the education of children with disabilities
below the level of those expenditures
for the preceding fiscal year; therefore,
the penalty should be no more than the
IDEA Part B funds that the LEA spent
in a particular fiscal year.
Discussion: The Department disagrees
with the commenter who recommended
that § 300.203(d) be changed to limit the
amount of the penalty to the amount of
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23662 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
IDEA Part B funds actually spent by the
LEA in the fiscal year in which the LEA
failed to meet the compliance standard.
Once an LEA accepts an IDEA Part B
subgrant, the LEA is required to meet
the compliance standard in § 300.203(b),
and the amount of IDEA Part B funds
spent by the LEA in that fiscal year is
not relevant to the calculation of the
MOE penalty.
Changes: None.
Comment: Many commenters
requested that proposed § 300.203(d)
incorporate language from the July 26,
2006, letter to Baglin, which stated,
‘‘Faced with a history of noncompliance
with the MOE requirement, however,
the SEA would need to carefully
determine whether the LEA will meet
the MOE requirement in the coming
year (in which case a grant should be
made), or whether the SEA should begin
an administrative withholding action
[consistent with section 613(c) and (d)
of the IDEA] because it is not convinced
that the LEA will meet the MOE
requirement for the new year.’’ The
commenters stated that this language
would underscore the importance of
SEA monitoring and oversight to ensure
implementation and compliance with
the MOE requirement. Another
commenter suggested that the
Department add a specific consequence
for LEAs that fail to comply with MOE
for more than one fiscal year. Discussion: The Department agrees
that SEAs have a responsibility to
ensure that LEAs meet the MOE
eligibility and compliance standards.
However, §§ 300.221 and 300.222
address what procedures the SEA must
follow if the SEA determines that the
LEA is not eligible or that an eligible
LEA is failing to comply with the MOE
requirement, and it is not necessary to
duplicate those provisions in
§ 300.203(d). We believe that
§ 300.203(d) provides an appropriate
consequence for MOE failures that occur
in more than one fiscal year, because the
penalty in § 300.203(d) applies in each
fiscal year in which the LEA fails to
maintain effort. Therefore, it is not
necessary to add an additional
consequence for such LEAs. Changes: None.
Comment: Some commenters stated
that LEAs should not be penalized for
MOE violations in the absence of
evidence that the LEA has failed to
make FAPE available. Another
commenter questioned the effectiveness
of the consequence for MOE violations.
Specifically, the commenter asked what
evidence demonstrates that repayment
of Federal funds by an LEA leads to
increased compliance with the IDEA or
a greater ability to maintain effort in future years. In addition, the commenter
questioned whether losing access to
Federal dollars will be an incentive for
LEAs to use sound financial practices
that are fair to all the students they
serve and to be better positioned to
provide FAPE in the least restrictive
environment for children with
disabilities.
Discussion: The Department
appreciates, but disagrees with, these
comments. LEAs that receive an IDEA
Part B subgrant must meet both the
FAPE obligation and the MOE
requirement separately; the two
provisions are not contingent on each
other. Regarding the comment
questioning the effectiveness of the
consequence for failure to maintain
effort, the Department notes that the
requirement to return funds based on an
LEA’s failure to maintain effort is a
statutory requirement. Consistent with
sections 452(a)(1) and (a)(2) and
453(a)(1) of GEPA (20 U.S.C. 1234a(a)(1)
and (a)(2) and 1234b(a)(1)) and long-
standing Department practice, an SEA is
liable in a recovery action to pay the
Department, from non-Federal funds or
funds for which accountability to the
Federal government is not required, the
difference between the amount of local,
or State and local, funds the LEA should
have expended and the amount that it
actually did expend. Section 453(a)(1) of
GEPA (20 U.S.C. 1234b(a)(1)) provides
that the measure of recovery in such a
circumstance is an amount that is
proportionate to the extent of the harm
that the violation caused to an
identifiable Federal interest associated
with the program under which the
recipient received the award. An
identifiable Federal interest includes,
but is not limited to, compliance with
expenditure requirements and
conditions, such as maintenance of
effort. Section 453(a)(2) of GEPA (20
U.S.C. 1234b(a)(2)). Because the SEA in
such a recovery action is required to
return non-Federal funds, and not
Federal funds, the SEA and LEA are not
losing access to Federal IDEA Part B
funds. See 2 CFR 200.441.
Changes: None.
Miscellaneous Comments Comment: A few commenters stated
that, because the Department
acknowledged that MOE violations have
not been extensive, a more restrained
regulatory approach is justified. Discussion: We disagree. In
determining whether there was a need
to revise the MOE regulations, OSEP
found that at least 40 percent of States
have policies and procedures that are
not consistent with the MOE
requirement. For example, many States have not permitted LEAs to use all four
methods to meet the eligibility or
compliance standard. Another State did
not allow LEAs to include local funds
spent for the education of children with
disabilities in its MOE calculations if
the LEA was also required to spend
those funds to meet a Medicaid
matching requirement. These actions
restrict the ability of LEAs to meet the
MOE requirement and may result in a
finding of noncompliance by LEAs
where none exists. Moreover, the
Department learned through fiscal
monitoring that some States, prior to
awarding IDEA Part B subgrants, were
not requiring LEAs to demonstrate that
they met the MOE eligibility standard.
In addition, as we stated in the NPRM,
some States identified noncompliance
by LEAs with the MOE requirement and
returned non-Federal funds to the
United States Treasury in the amount of
that failure but did not inform the
Department of the failures, indicating
that the number of failures to comply
with the MOE requirement may be
undercounted. Moreover, the
Department learned, through its review
of comments received in response to the
NPRM, that some States were not aware
that, if an LEA failed to meet the MOE
compliance standard, the SEA was
liable in a recovery action to return non-
Federal funds to the Department in the
amount of the failure. Accordingly, the
Department does not believe that the
lack of documentation of widespread
MOE noncompliance necessarily leads
to the conclusion that States and LEAs
understand and comply with the MOE
requirement.
Changes: None.
Comment: Many commenters
supported the proposed changes to the
MOE regulations because the changes
would provide necessary clarification.
Other commenters stated that the
proposed regulations did not clarify the
MOE requirement. A few commenters
stated that the MOE requirement should
be imposed only after the Department
and Congress make an effort to
compensate school districts for the 40
percent of special education costs that
the commenters say the States were
promised when the IDEA was enacted. Discussion: We believe that the final
regulations and the tables provided here
clarify the MOE requirement. We
disagree with the view expressed by
commenters that the Department should
not issue and enforce MOE regulations
until the maximum amount of the grant
a State receives is 40 percent of the
average per-pupil expenditure in public
elementary and secondary schools in
the United States. The Department has
no legal authority to condition
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23663 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
compliance with the MOE requirement
on Congress’s providing a particular
level of appropriations. The IDEA
requires that amounts provided to LEAs
shall not be used, except as allowed by
the exceptions and adjustment in
§§ 300.204 and 300.205, 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.
The Department believes that the
MOE regulations provide necessary
clarification on, and therefore will
increase understanding by States and
LEAs of, the MOE requirement,
including: The Subsequent Years rule,
the eligibility and compliance
standards, the four methods available to
LEAs to meet the eligibility and
compliance standards, and the existing
exceptions and adjustment in
§§ 300.204 and 300.205. The
Department also believes that the MOE
requirement is consistent with, and
promotes, the requirement that LEAs
make FAPE available to all eligible
children with disabilities. Changes: None.
Comment: Several commenters
objected generally to the MOE
requirement and raised a variety of
concerns, including that the proposed
regulations encourage fraud, waste, and
abuse because they encourage LEAs to
spend funds to meet the MOE
requirement rather than to ensure that
children with disabilities receive FAPE.
Other commenters stated a concern that
LEAs will submit budgets that have
inflated or non-existent costs simply to
demonstrate eligibility for an IDEA Part
B subgrant. A few commenters also
stated that the proposed regulations
create a disincentive for LEAs that wish
to increase their expenditures for the
education of children with disabilities
for one-time, high-cost initiatives,
because the district would be forced to
continue spending the same amount of
funds in future years after the initiative
is completed. Discussion: We do not believe that the
regulations encourage fraud, waste, and
abuse because they encourage LEAs to
spend funds to meet the MOE
requirement rather than to ensure that
children with disabilities receive FAPE.
State and local funds spent on the
education of children with disabilities
meet both the requirement to maintain
effort and the requirement to make
FAPE available to children with
disabilities. With respect to the comment that the
MOE regulations create a disincentive
for LEAs that wish to implement
temporary initiatives for the education of children with disabilities because
doing so will increase the LEA’s
required level of effort in future years,
section 613(a)(2)(B) of the IDEA and its
implementing regulations in § 300.204
include five exceptions that permit an
LEA to reduce its required level of
expenditures. We believe these
exceptions, such as the termination of
costly expenditures for long-term
purchases, and the adjustment in
§ 300.205 provide LEAs sufficient
flexibility to adjust their required level
of effort based on changed
circumstances.
Changes: None.
Comment: Some commenters stated
that the MOE regulations do not take
into account the variety of fiscal systems
in States and LEAs. The commenters
expressed concern over the many State-
specific issues that need to be
independently addressed by OSEP or
that fall outside the scope of the
proposed regulation. Discussion: We believe that the
regulations provide sufficient direction
to States and LEAs regardless of their
fiscal systems. State-specific issues will
be addressed by OSEP as needed. In
addition, the Department intends to
issue guidance on the MOE requirement
and will continue to provide technical
assistance to States to address State-
specific concerns, including those
related to the specifics of financial
systems. One source of technical
assistance will be the new Center for
IDEA Fiscal Reporting that OSEP
awarded under the FY 2014 competition
CFDA 84.373F. OSEP awarded the grant
to WestEd. The Center for IDEA Fiscal
Reporting can be found at http://
cifr.wested.org/. This center will
improve the capacity of State staff to
collect and report accurate fiscal data to
meet the data collection requirements
related to LEA MOE Reduction and
Coordinated Early Intervening Services
(CEIS) and State Maintenance of
Financial Support (State MFS); and
increase States’ knowledge of the
underlying fiscal requirements and the
calculations necessary to submit valid
and reliable data on LEA MOE/CEIS and
State MFS. Changes: None.
Comment: One commenter asked
whether the requirement regarding CEIS
will be affected by the proposed
regulations. Discussion: The provisions regarding
CEIS in §§ 300.205(d) and 300.226 are
not affected by these regulations. Changes: None.
Comment: A few commenters
recommended that the Department issue
additional guidance to accompany the
final regulations. Suggestions included: A detailed checklist of what needs to be
accounted for in LEAs’ budgets, a chart
that lays out how to meet the MOE
requirement, and examples that use
specific numbers.
Discussion: We appreciate the
commenters’ suggestions for additional
guidance. This Analysis of Comments
and Changes includes several tables to
assist States and LEAs. These tables also
have been included in new Appendix E
to the regulations. In addition, the
Department intends to issue guidance
on the MOE requirement. Changes: We have redesignated
current Appendix E as new Appendix F.
We have added new Appendix E to
include Tables 1 through 10, which are
included in the Analysis of Comments
and Changes. This appendix will be
published in the Code of Federal
Regulations.
Executive Orders 12866 and 13563
Regulatory Impact Analysis
Under Executive Order 12866, the
Secretary must determine whether this
regulatory action is ‘‘significant’’ and,
therefore, subject to the requirements of
the Executive order and subject to
review by the Office of Management and
Budget (OMB). Section 3(f) of Executive
Order 12866 defines a ‘‘significant
regulatory action’’ as an action likely to
result in a rule that may— (1) Have an annual effect on the
economy of $100 million or more or
adversely affect a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local, or tribal governments or
communities in a material way (also
referred to as an ‘‘economically
significant’’ rule); (2) Create serious inconsistency or
otherwise interfere with an action taken
or planned by another agency; (3) Materially alter the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4) Raise novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
stated in the Executive order. This final regulatory action is a
significant regulatory action subject to
review by OMB under section 3(f) of
Executive Order 12866. We have also reviewed these
regulations under Executive Order
13563, which supplements and
explicitly reaffirms the principles,
structures, and definitions governing
regulatory review established in
Executive Order 12866. To the extent
permitted by law, Executive Order
13563 requires that an agency—
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23664 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
(1) Propose or adopt regulations only
on a reasoned determination that their
benefits justify their costs (recognizing
that some benefits and costs are difficult
to quantify); (2) Tailor its regulations to impose the
least burden on society, consistent with
obtaining regulatory objectives and,
taking into account—among other things
and to the extent practicable—the costs
of cumulative regulations; (3) In choosing among alternative
regulatory approaches, select those
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety,
and other advantages; distributive
impacts; and equity); (4) To the extent feasible, specify
performance objectives, rather than the
behavior or manner of compliance a
regulated entity must adopt; and (5) Identify and assess available
alternatives to direct regulation,
including economic incentives—such as
user fees or marketable permits—to
encourage the desired behavior, or
provide information that enables the
public to make choices. Executive Order 13563 also requires
an agency ‘‘to use the best available
techniques to quantify anticipated
present and future benefits and costs as
accurately as possible.’’ The Office of
Information and Regulatory Affairs of
OMB has emphasized that these
techniques may include ‘‘identifying
changing future compliance costs that
might result from technological
innovation or anticipated behavioral
changes.’’ We are issuing these final regulations
only on a reasoned determination that
their benefits justify their costs. In
choosing among alternative regulatory
approaches, we selected those
approaches that maximize net benefits.
Based on the analysis that follows, the
Department believes that these final
regulations are consistent with the
principles in Executive Order 13563. We also have determined that this
regulatory action would not unduly
interfere with State, local, or tribal
governments in the exercise of their
governmental functions.
Potential Costs and Benefits
In accordance with both Executive
orders, the Department has assessed the
potential costs and benefits, both
quantitative and qualitative, of this
regulatory action. In conducting this
analysis, the Department examined the
extent to which the changes made by
these proposed regulations would add
to or reduce the costs to States, LEAs,
and others, as compared to the costs of
implementing the current Part B program regulations. Based on the
following analysis, the Secretary has
concluded that the changes could result
in reduced costs for States and LEAs to
the extent that increased understanding
of the MOE requirement and use of all
four methods to demonstrate that LEAs
met MOE would result in States making
fewer repayments to the Department
and seeking fewer recoveries from LEAs.
However, there is also the potential for
additional costs for States and LEAs to
the extent that LEAs are required to
increase expenditures in the year
following a failure to meet the MOE
provisions under Part B of the Act or if
a State or LEA incorrectly calculated
MOE in a preceding year. The Secretary
believes that the benefits of ensuring
that adequate resources are available to
provide FAPE for children with
disabilities are likely to outweigh any
costs to LEAs that violated the MOE
requirement in the preceding year and
do not plan to restore funding in the
subsequent year to the level they should
have maintained in the preceding year.
Section 300.203
The effect of the final regulations on
LEAs will depend on: (1) The degree of
understanding by States and LEAs about
the eligibility and compliance standards
and the ability that the LEAs have to
meet one of four methods; and (2) the
likelihood that LEAs would violate the
MOE requirement in any given year and
seek to maintain funding at the reduced
level in subsequent years. One possible
source of information that could be used
to estimate the effect of the final
regulations on LEAs is data on previous
findings of LEA violations. However, as
described in the Analysis of Comments
and Changes section, the Department
has limited information on LEA
violations. States are responsible for
monitoring LEA compliance with the
MOE requirement and resolving any
audit findings in this area, but States are
not required to report the number of
LEAs that violated the MOE
requirement, the basis of the violations,
or the amount of funding involved. Other sources of information on the
likely effects of the final regulations are
audit reports and OSEP’s fiscal
monitoring of States’ implementation of
the current regulations. OSEP’s fiscal
monitoring, in conjunction with the
Department’s Office of Inspector
General’s (OIG) audit findings and
reports, have identified a number of
problems with State administration of
the MOE requirement under the current
regulations, suggesting that there is
confusion about the MOE requirement
and a lack of clarity in the existing
regulations. Specifically, OSEP has found that at least 40 percent of States
have policies and procedures that are
not consistent with how States should
determine eligibility for, or compliance
with, the MOE requirement. Most
notably, it appears that some States have
not allowed LEAs to use all four
methods to demonstrate that they have
met the MOE requirement for purposes
of eligibility or compliance
determinations, including the method
that allows the LEA to demonstrate that
it met the MOE requirement on the basis
of local funds only. There is also some
indication that States may have used an
incorrect comparison year when LEAs
made a local-to-local comparison.
In years in which States did not allow
the LEAs to use all four methods to
demonstrate they met MOE, it is
possible that LEAs budgeted for, and
expended, more than they would have
if both States and LEAs had understood
that they had flexibility to use any of the
four methods. In these instances, the
clarification made in the final
regulations will result in a reduction in
future expenditures on the part of LEAs.
Additionally, in instances in which
States did not appropriately allow the
LEAs to use any of the four methods in
meeting MOE, the State may have
sought to recover funds from LEAs or
made unnecessary repayments to the
Department. Clarifying that all four
methods may be used for MOE
determinations should result in States
making fewer repayments to the
Department and seeking fewer
recoveries from LEAs. Alternatively, in those cases in which
States may be allowing LEAs to use an
incorrect comparison year when using
the local funds only method, clarifying
the comparison year may result in
increased expenditures by LEAs. For
example, in its May 20, 2013 Alert
Memorandum, the OIG raised concerns
about the comparison years used by the
State of California in determining MOE
compliance. According to that
memorandum, the State used an
incorrect comparison year when
determining that two LEAs met the
MOE requirement using local funds
only method. Specifically, California
allowed the LEAs that had never relied
on local funds only to meet the MOE
requirement to use a comparison year
from three years earlier, instead of
requiring a comparison of expenditures
made with local funds only to the
preceding fiscal year. In this case, the
clarification made by the final
regulations will require increased LEA
expenditures. We do not know the
extent to which the use by States and
LEAs of incorrect comparison years has
permitted lower expenditures than
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23665 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
would be required under the final
regulations, or, alternatively, the extent
to which using the incorrect comparison
year has resulted in higher
expenditures. However, in general, the
findings made during fiscal monitoring
demonstrating that States are providing
less flexibility to LEAs than is allowable
under the law suggest that the
clarifications included in these
regulations would reduce costs for both
LEAs and States.
The regulations also specifically
address the level of expenditures
required by an LEA in the fiscal years
following a fiscal year in which an LEA
violated the MOE requirement.
Specifically, the final regulations clarify
that, in a fiscal year following a fiscal
year in which the LEA failed to meet
MOE, the required level of expenditures
is the level of expenditures in the last
fiscal year in which the LEA met the
MOE requirement, not the reduced level
of expenditures in the preceding fiscal
year (the Subsequent Years rule). We believe that this clarification in
the regulations will improve State
administration of the program, and that
it is consistent with the IDEA and in the
best interest of children with
disabilities. We do not expect this
change to have a significant impact on
LEA expenditures in the near term
based on available data concerning the
extent of LEA violations and the
likelihood of future violations.
However, this change would eliminate
the risk, under the current regulations,
that State policy could permit LEAs that
reduce spending in violation of the
MOE requirement to maintain the
reduced level of expenditures in
subsequent years. The Department typically learns of an
LEA violation in conjunction with its
review of audit findings. In the
relatively few instances in which the
Department has issued program
determination letters to States
concerning audit findings about LEA
failure to maintain the appropriate level
of effort, most of the findings concerned
the absence of an effective State system
for monitoring MOE rather than specific
MOE violations. Since 2004, the only program
determination letter that identified
specific questioned costs for LEA failure
to meet MOE involved Oklahoma. In
December 2006, the Department issued
a program determination letter to the
Oklahoma SEA seeking recovery of
$583,943.29 expended under IDEA Part
B due to audit findings that 76 LEAs
had not met their required level of effort
for funds in Federal fiscal Year (FFY)
2003. In School Year (SY) 2009–2010,
Oklahoma reported having 532 LEAs; accordingly, approximately 14 percent
of the State’s LEAs were affected by
these audit findings. After reviewing
additional materials provided by the
State that supported the application of
the MOE exceptions in § 300.204, the
Department reduced the amount of its
determination to $289,501.76. The final
claim against Oklahoma was settled for
$217,126.32.
We also searched the Federal Audit
Clearinghouse for information about
single audits of Federal awards
conducted by States or private
accounting firms of LEAs that expend
$500,000 or more in a year in Federal
award funds, as required by Office of
Management and Budget (OMB)
Circular A–133. The Federal Audit
Clearinghouse is located at the
following link: www.census.gov/econ/
overview/go1400.html. We searched for
audit findings in response to area ‘‘G’’
of the compliance supplement to OMB
Circular A–133, which relates to
‘‘Matching, Level of Effort, and
Earmarking,’’ for audits related to Code
of Federal Domestic Assistance section
84.027 (funds awarded under section
611 of the IDEA). Single audits of
Federal awards are not available for all
LEAs through the Federal Audit
Clearinghouse, but there is information
on single audits for 9,024 LEAs for FY
2009, which represents approximately
60 percent of LEAs. Our search identified 25 audits that
contained findings related to section G
of the compliance supplement, four of
which were accompanied by audit
reports that included questioned costs
related to failure to achieve the required
MOE. Only two of the four audits
specified amounts of questioned costs,
for $10,428 and $153,621.53,
respectively. Although these findings do
not necessarily represent all violations
of the MOE requirement, both the small
number and size of questioned costs
related to failure to meet this
requirement suggest that MOE
violations are not extensive. Audit
findings for fiscal years 2007, 2008,
2010, and 2011 (to the extent available)
were generally consistent with the
findings for 2009. Another source of information for
estimating the likelihood of future MOE
violations are data on the extent to
which LEAs have reduced expenditures
pursuant to the new flexibility provided
in the 2004 amendments to the IDEA.
Pursuant to section 613(a)(2)(C) of the
IDEA, for any fiscal year in which an
LEA receives an allocation under
section 611(f) that exceeds its allocation
for the previous fiscal year, an LEA that
otherwise meets the requirements of the
IDEA may reduce the level of expenditures that are otherwise required
to meet the MOE requirement by not
more than 50 percent of the amount of
the increased allocation. Since May
2011, States have been reporting the
amount that each LEA received in an
IDEA subgrant under section 611 or
section 619, whether the State had
determined that the LEA or educational
service agency (ESA) had met the
requirements of Part B of the IDEA, and
whether each LEA or ESA had reduced
its expenditures pursuant to § 300.205.
Data are available at http://
tadnet.public.tadnet.org/pages/712
(Table 8 LEA-level files, revised 2/29/
12, accessed 11/03/14).
The data we have collected to date
include reductions taken in the year in
which LEAs were most likely to make
reductions because of the availability of
an additional $11.3 billion for formula
grant awards under the Grants to States
program provided under the American
Recovery and Reinvestment Act of 2009
(ARRA). Because these additional funds
increased the annual allocation to most
LEAs in FFY 2009 over FFY 2008, LEAs
meeting conditions established by the
State and the Department were
permitted to reduce the level of support
they would otherwise be required to
provide during SY 2009–2010 by up to
50 percent of the amount of the
increase. Of the 14,936 LEAs that received
allocations under section 611 in FFY
2008 and FFY 2009, States reported that
12,061 received increased allocations
under section 611 and met other
conditions so that they were eligible to
reduce their level of effort. Notably,
only 4,237 LEAs (or 36 percent)
reported that they reduced their level of
effort. If they met the conditions, LEAs
were permitted to reduce effort by up to
50 percent of the increase in their
allocation, but they typically reduced
spending only by 38 percent. Larger LEAs were more likely to
reduce expenditures than LEAs in
general. For the 100 largest LEAs, based
on their FFY 2008 allocations under
section 611, 31 of the 51 LEAs that were
eligible to reduce expenditures actually
did so, and these LEAs reduced
expenditures by an average of 73
percent of the allowable amount. Of the 4,237 LEAs that reported
reducing expenditures, only 32 had
been determined to have not met the
requirements of IDEA Part B and may
have violated the MOE requirement,
unless one of the exceptions to the MOE
requirement in § 300.204 were
applicable. The combined amount of
MOE reductions for these LEAs was
$19,304,506, with a median reduction of
$745. One of these LEAs reported a
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23666 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
reduction of $18,358,631, which
represents 41 percent of the increase in
that LEA’s allocation from the previous
year; but the reductions that were taken
by the remaining LEAs were relatively
small.
The combined amount by which
eligible LEAs in the 50 States, the
District of Columbia, and Puerto Rico
could have reduced their level of effort
in SY 2009–2010 was $5.6 billion, but
the actual combined reduction was only
27 percent of that amount, or $1.5
billion. Because most LEAs did not
reduce expenditures when they had an
opportunity to do so, which would have
led to an allowable reduction of their
level of effort required in future years,
it is reasonable to assume that a smaller
number of LEAs would undertake
reductions that constitute violations of
the MOE requirement. We believe that
it is highly unlikely that the 4,205 LEAs
that met the requirement of section
613(a)(2)(C) of the IDEA and reduced
their level of effort would seek further
reductions that would violate the MOE
requirement because they legitimately
lowered their own required level of
effort when they made those previous
reductions. Based on available audit findings and
data, the Department believes that LEAs
generally are unlikely to reduce
expenditures in violation of the MOE
requirement. Moreover, we believe that
the requirement that LEAs make FAPE
available to all eligible children with
disabilities provides another critical
protection against unwarranted
reductions of expenditures to support
education for children with disabilities.
However, to ensure that State policy and
administration of the MOE requirement
are consistent with the Department’s
position on the required level of future
expenditures in cases of LEA violations,
we think that it is critical to change the
regulations to clearly articulate the
Department’s interpretation of the law.
Paperwork Reduction Act of 1995
Under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501–3520), we have
assessed the potential information
collections in these proposed
regulations that would be subject to
review by OMB (Report on IDEA Part B
Maintenance of Effort Reduction
(§ 300.205(a)) and Coordinated Early
Intervening Services (§ 300.226))
(Information Collection 1820–0689). In
conducting this analysis, the
Department examined the extent to
which the amended regulations would
add information collection requirements
for public agencies. Based on this
analysis, the Secretary has concluded
that these amendments to the Part B regulations would not impose
additional information collection
requirements.
Intergovernmental Review
This program is subject to the
requirements of Executive Order 12372
and the regulations in 34 CFR part 79.
One of the objectives of the Executive
order is to foster an intergovernmental
partnership and a strengthened
federalism. The Executive order relies
on processes developed by State and
local governments for coordination and
review of proposed Federal financial
assistance.
This document provides early
notification of the Department’s specific
plans and actions for this program.
Assessment of Educational Impact
In the NPRM we requested comments
on whether the proposed regulations
would require transmission of
information that any other agency or
authority of the United States gathers or
makes available.
Based on the response to the NPRM
and on our review, we have determined
that these final regulations do not
require transmission of information that
any other agency or authority of the
United States gathers or makes
available.
Accessible Format: Individuals with
disabilities can obtain this document in
an accessible format (e.g., braille, large
print, audiotape, or compact disc) on
request to the program contact person
listed under
FOR FURTHER INFORMATION
CONTACT .
Electronic Access to This Document:
The official version of this document is
the document published in the Federal
Register. Free Internet access to the
official edition of the Federal Register
and the Code of Federal Regulations is
available via the Federal Digital System
at: www.gpo.gov/fdsys. At this site you
can view this document, as well as all
other documents of this Department
published in the Federal Register, in
text or Adobe Portable Document
Format (PDF). To use PDF you must
have Adobe Acrobat Reader, which is
available free at the site.
You may also access documents of the
Department published in the Federal
Register by using the article search
feature at: www.federalregister.gov.
Specifically, through the advanced
search feature at this site, you can limit
your search to documents published by
the Department. You may also view this
document in text or PDF at the
following site: idea.ed.gov.
(Catalog of Federal Domestic Assistance
Number 84.181)
List of Subjects in 34 CFR Part 300
Administrative practice and
procedure, Education of individuals
with disabilities, Elementary and
secondary education, Equal educational
opportunity, Grant programs—
education, Privacy, Private schools,
Reporting and recordkeeping
requirements.
Dated: April 9, 2015.
Arne Duncan,
Secretary of Education.
For the reasons discussed in the
preamble, the Secretary amends part
300 of title 34 of the Code of Federal
Regulations as follows:
PART 300—ASSISTANCE TO STATES
FOR THE EDUCATION OF CHILDREN
WITH DISABILITIES
■1. The authority citation for part 300
is revised to read as follows:
Authority: 20 U.S.C. 1221e–3, 1406, 1411–
1419, 3474, unless otherwise noted.
■2. Section 300.203 is revised to read
as follows:
§ 300.203 Maintenance of effort.
(a) 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: (i) Local funds only;
(ii) The combination of State and local
funds; (iii) Local funds only on a per capita
basis; or (iv) The combination of State and
local funds on a per capita basis. (2) When determining the amount of
funds that the LEA must budget to meet
the requirement in paragraph (a)(1) of
this section, the LEA may take into
consideration, to the extent the
information is available, the exceptions
and adjustment provided in §§ 300.204
and 300.205 that the LEA: (i) 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 (ii) Reasonably expects to take in the
fiscal year for which the LEA is
budgeting. (3) Expenditures made from funds
provided by the Federal government for
which the SEA is required to account to
the Federal government or for which the
LEA is required to account to the
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Federal government directly or through
the SEA may not be considered in
determining whether an LEA meets the
standard in paragraph (a)(1) of this
section.
(b) Compliance standard. (1) Except
as provided in §§ 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.
(2) An LEA meets this standard if it
does not reduce the level of
expenditures for the education of
children with disabilities made by the
LEA from at least one of the following
sources below the level of those
expenditures from the same source for
the preceding fiscal year, except as
provided in §§ 300.204 and 300.205:
(i) Local funds only;
(ii) The combination of State and local
funds;
(iii) Local funds only on a per capita
basis; or
(iv) The combination of State and
local funds on a per capita basis.
(3) Expenditures made from funds
provided by the Federal government for
which the SEA is required to account to
the Federal government or for which the
LEA is required to account to the
Federal government directly or through
the SEA may not be considered in
determining whether an LEA meets the
standard in paragraphs (b)(1) and (2) of
this section.
(c) Subsequent years. (1) If, in the
fiscal year beginning on July 1, 2013 or
July 1, 2014, an LEA fails to meet the
requirements of § 300.203 in effect at
that time, 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.
(2) If, in any fiscal year beginning on
or after July 1, 2015, an LEA fails to
meet the requirement of paragraph
(b)(2)(i) or (iii) of this section and the
LEA is relying on local funds only, or
local funds only on a per capita basis,
to meet the requirements of paragraph
(a) or (b) of this section, 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 under paragraph (b)(2)(i)
or (iii) in the absence of that failure, not
the LEA’s reduced level of expenditures.
(3) If, in any fiscal year beginning on
or after July 1, 2015, an LEA fails to
meet the requirement of paragraph
(b)(2)(ii) or (iv) of this section and the
LEA is relying on the combination of
State and local funds, or the
combination of State and local funds on
a per capita basis, to meet the
requirements of paragraph (a) or (b) of
this section, 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 under paragraph (b)(2)(ii) or
(iv) in the absence of that failure, not the
LEA’s reduced level of expenditures.
(d) Consequence of failure to
maintain effort. If an LEA fails to
maintain its level of expenditures for
the education of children with
disabilities in accordance with
paragraph (b) of this section, the SEA is
liable in a recovery action under section
452 of the General Education Provisions
Act (20 U.S.C. 1234a) to return to the
Department, using non-Federal funds,
an amount equal to the amount by
which the LEA failed to maintain its
level of expenditures in accordance
with paragraph (b) of this section in that
fiscal year, or the amount of the LEA’s
Part B subgrant in that fiscal year,
whichever is lower. (Approved by the Office of Management and Budget under
control number 1820–0600)
(Authority: 20 U.S.C. 1413(a)(2)(A), Pub. L.
113–76, 128 Stat. 5, 394 (2014), Pub. L. 113–
235, 128 Stat. 2130, 2499 (2014))
§ 300.204 [Amended]
■3. Section 300.204 is amended by
removing, from the introductory text,
the citation ‘‘§ 300.203(a)’’ and adding,
in its place, the citation ‘‘§ 300.203(b)’’.
§ 300.205 [Amended]
■4. Section 300.205 is amended by
removing, from paragraph (a), both
instances of the citation ‘‘§ 300.203(a)’’,
and adding, in both places, the citation
‘‘§ 300.203(b)’’.
§ 300.208 [Amended]
■5. Section 300.208 is amended by
removing, from paragraph (a), the
citation ‘‘300.203(a)’’ and adding, in its
place, the citation ‘‘300.203(b)’’.
Appendix E to Part 300 [Redesignated as
Appendix F to Part 300]
■6. Appendix E to part 300 is
redesignated as Appendix F to part 300.
■7. A new Appendix E is added to read
as follows:
Appendix E To Part 300—Local
Educational Agency Maintenance of
Effort Calculation Examples
The following tables provide examples of
calculating LEA MOE. Figures are in
$10,000s. All references to a ‘‘fiscal year’’ in
these tables refer to the fiscal year covering
that school year, unless otherwise noted. Tables 1 through 4 provide examples of
how an LEA complies with the Subsequent
Years rule. In Table 1, for example, an LEA
spent $1 million in Fiscal Year (FY) 2012–
2013 on the education of children with
disabilities. In the following year, the LEA
was required to spend at least $1 million but
spent only $900,000. In FY 2014–2015,
therefore, the LEA was required to spend $1
million, the amount it was required to spend
in FY 2013–2014, not the $900,000 it actually
spent.
TABLE 1—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING A
Y
EAR IN WHICH LEA F AILED TOMEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level
of effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... ........................ 100 Required level of effort is $100 despite LEA’s failure in 2013–2014.
Table 2 shows how to calculate the
required amount of effort when there are consecutive fiscal years in which an LEA
does not meet MOE.
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TABLE 2—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING
C
ONSECUTIVE YEARS IN WHICH LEA F AILED TOMEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level
of effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... ........................ 100 Required level of effort is $100 despite LEA’s failure in 2013–2014 and
2014–2015.
Table 3 shows how to calculate the
required level of effort in a fiscal year after
the year in which an LEA spent more than the required amount on the education of
children with disabilities. This LEA spent
$1.1 million in FY 2015–2016 though only $1 million was required. The required level of
effort in FY 2016–2017, therefore, is $1.1
million.
TABLE 3—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING YEAR
IN WHICH LEA M ET MOE C OMPLIANCE STANDARD
Fiscal year
Actual level
of effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... 110 100 LEA met MOE. 2016–2017 ....................................... ........................ 110 Required level of effort is $110 because LEA expended $110, and met
MOE, in 2015–2016.
Table 4 shows the same calculation when,
in an intervening fiscal year, 2016–2017, the
LEA did not maintain effort.
TABLE 4—E XAMPLE OF LEVEL OF EFFORT REQUIRED TOMEET MOE C OMPLIANCE STANDARD IN YEAR FOLLOWING YEAR
IN WHICH LEA D ID NOT MEET MOE C OMPLIANCE STANDARD
Fiscal year Actual level
of effort Required level
of effort Notes
2012–2013 .......................................
$100 $100 LEA met MOE. 2013–2014 ....................................... 90 100 LEA did not meet MOE. 2014–2015 ....................................... 90 100 LEA did not meet MOE. Required level of effort is $100 despite LEA’s
failure in 2013–2014.
2015–2016 ....................................... 110 100 LEA met MOE. 2016–2017 ....................................... 100 110 LEA did not meet MOE. Required level of effort is $110 because LEA
expended $110, and met MOE, in 2015–2016.
2017–2018 ....................................... ........................ 110 Required level of effort is $110, despite LEA’s failure in 2016–2017.
Table 5 provides an example of how an
LEA may meet the compliance standard
using alternate methods from year to year
without using the exceptions or adjustment
in §§ 300.204 and 300.205, and provides
information on the following scenario. In FY
2015–2016, the LEA meets the compliance
standard using all four methods. As a result,
in order to demonstrate that it met the compliance standard using any one of the
four methods in FY 2016–2017, the LEA
must expend at least as much as it did in FY
2015–2016 using that same method. Because
the LEA spent the same amount in FY 2016–
2017 as it did in FY 2015–2016, calculated
using a combination of State and local funds
and a combination of State and local funds
on a per capita basis, the LEA met the compliance standard using both of those
methods in FY 2016–2017. However, the LEA
did not meet the compliance standard in FY
2016–2017 using the other two methods—
local funds only or local funds only on a per
capita basis—because it did not spend at
least the same amount in FY 2016–2017 as
it did in FY 2015–2016 using the same
methods.
TABLE 5—E XAMPLE OF HOW AN LEA M AY MEET THE COMPLIANCE STANDARD USING ALTERNATE METHODS FROM YEAR
TO YEAR
Fiscal year
Local funds
only Combination of
State and local funds Local funds
only
on a per
capita basis Combination of
State and local funds on a per capita basis Child count
2015–2016 ........................................................................
..... * $500 * $950 * $50 * $95 10 2016–2017 ........................................................................
..... 400 * 950 40 * 95 10
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23669 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
TABLE 5—E XAMPLE OF HOW AN LEA M AY MEET THE COMPLIANCE STANDARD USING ALTERNATE METHODS FROM YEAR
TO YEAR —Continued
Fiscal year Local funds
only Combination of
State and local funds Local funds
only
on a per
capita basis Combination of
State and local funds on a per capita basis Child count
2017–2018 ........................................................................
..... * 500 900 * 50 90 10
* LEA met compliance standard using this method.
Table 6 provides an example of how an
LEA may meet the compliance standard using alternate methods from year to year in
years in which the LEA used the exceptions or adjustment in §§ 300.204 and 300.205,
including using the per capita methods.
TABLE 6—E XAMPLE OF HOW AN LEA M AY MEET THE COMPLIANCE STANDARD USING ALTERNATE METHODS FROM YEAR
TO YEAR AND USING EXCEPTIONS OR ADJUSTMENT UNDER §§ 300.204 AND 300.205
Fiscal year
Local funds only Combination of State
and local funds Local funds only on a per capita basis Combination of State
and local funds on a per capita basis Child
count
2015– 2016 ...... $500 * .............................................. $950 * ........................... $50 * ................................................................... $95 * ............................. 10 2016– 2017 ...... 400 .................................................. 950 * ............................. 40 ....................................................................... 95 * ............................... 10 2017–2018 ....... 450 * ................................................ 1,000 * .......................... 45 * ..................................................................... 100 * ............................. 10 In 2017–2018, the LEA was re-
quired to spend at least the
same amount in local funds only
that it spent in the preceding fis-
cal year, subject to the Subse-
quent Years rule. Therefore,
prior to taking any exceptions or
adjustment in §§ 300.204 and
300.205, the LEA was required
to spend at least $500 in local
funds only.
In 2017–2018, the LEA properly re- duced its expenditures, per an
exception in § 300.204, by $50,
and therefore, was required to
spend at least $450 in local
funds only ($500) from 2015–
2016 per Subsequent Years rule
¥ $50 allowable reduction per
an exception under § 300.204). ...................................... In 2017–2018, the LEA was required to spend
at least the same amount in local funds only
on a per capita basis that it spent in the pre-
ceding fiscal year, subject to the Subsequent
Years rule. Therefore, prior to taking any ex-
ceptions or adjustment in §§ 300.204 and
300.205, the LEA was required to spend at
least $50 in local funds only on a per capita
basis.
In 2017–2018, the LEA properly reduced its aggregate expenditures, per an exception in
§ 300.204, by $50.
$50/10 children with disabilities in the compari- son year (2015–2016) = $5 per capita allow-
able reduction per an exception under
§ 300.204.
$50 local funds only on a per capita basis (from 2015–2016 per Subsequent Years
rule) ¥ $5 allowable reduction per an ex-
ception under § 300.204 = $45 local funds
only on a per capita basis to meet MOE. ...................................... ............
2018–2019 ....... 405 .................................................. 1,000 * .......................... 45 * ..................................................................... 111.11 * ........................ 9 In 2018–2019, the LEA was re-
quired to spend at least the
same amount in local funds only
that it spent in the preceding fis-
cal year, subject to the Subse-
quent Years rule. Therefore,
prior to taking any exceptions or
adjustment in §§ 300.204 and
300.205, the LEA was required
to spend at least $450 in local
funds only.
In 2018–2019, the LEA properly re- duced its expenditures, per an
exception in § 300.204 by $10
and the adjustment in § 300.205
by $10.
Therefore, the LEA was required to spend at least $430 in local
funds only. ($450 from 2017–
2018 ¥ $20 allowable reduction
per an exception and the adjust-
ment under §§ 300.204 and
300.205). Because the LEA did
not reduce its ex-
penditures from the
comparison year
(2017–2018) using a
combination of State
and local funds, the
LEA met MOE. In 2018–2019, the LEA was required to spend
at least the same amount in local funds only
on a per capita basis that it spent in the pre-
ceding fiscal year, subject to the Subsequent
Years rule. Therefore, prior to taking any ex-
ceptions or adjustment in §§ 300.204 and
300.205, the LEA was required to spend at
least $45 in local funds only on a per capita
basis.
In 2018–2019, the LEA properly reduced its aggregate expenditures, per an exception in
§ 300.204 by $10 and the adjustment in
§ 300.205 by $10.
$20/10 children with disabilities in the compari- son year (2017–2018) = $2 per capita allow-
able reduction per an exception and the ad-
justment under §§ 300.204 and 300.205.
$45 local funds only on a per capita basis (from 2017–2018) ¥ $2 allowable reduction
per an exception and the adjustment under
§§ 300.204 and 300.205 = $43 local funds
only on a per capita basis required to meet
MOE. Actual level of effort is $405/9 (the
current year child count). Because the LEA did
not reduce its ex-
penditures from the
comparison year
(2017–2018) using a
combination of State
and local funds on a
per capita basis
($1,000/9 = $111.11
and $111.11 >
$100), the LEA met
MOE.
* LEA met MOE using this method.
Note: When calculating any exception(s) and/or adjustment on a per capita ba
sis for the purpose of determining the required level of effort, the LEA must use the
child count from the comparison year, and not the child count of the yea
r in which the LEA took the exception(s) and/or adjustment. When determining the actual
level of effort on a per capita basis, the LEA must use the child count
for the current year. For example, in 2018–2019, the LEA uses a child count of 9, not the child
count of 10 in the comparison year, to determine the actual level of eff
ort.
Tables 7 and 8 demonstrate how an LEA
could meet the eligibility standard over a
period of years using different methods from year to year. These tables assume that the
LEA did not take any of the exceptions or
adjustment in §§ 300.204 and 300.205. Numbers are in $10,000s budgeted and spent
for the education of children with
disabilities.
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TABLE 7—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD IN 2016–2017 U SING DIFFERENT METHODS
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
2014–2015 ........... * $500 * $1,000
* $50 * $100 10 The LEA met the compliance stand-
ard using all 4 methods.*
2015–2016 ........... ........................ ........................ ........................ ........................ ........... ............. Final information not available at
time of budgeting for 2016–2017.
How much must the LEA budget
for 2016–2017
to meet the eli-
gibility standard
in 2016–2017? 500 1,000 50 100 ........................ When the LEA submits a budget for
2016–2017, the most recent fiscal
year for which the LEA has infor-
mation is 2014–2015. It is not nec-
essary for the LEA to consider in-
formation on expenditures for a fis-
cal year prior to 2014–2015 be-
cause the LEA maintained effort in
2014–2015. Therefore, the Subse-
quent Years rule in § 300.203(c) is
not applicable.
* The LEA met the compliance standard using all 4 methods.
TABLE 8—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD IN 2017–2018 U SING DIFFERENT METHODS
AND THE APPLICATION OF THE SUBSEQUENT YEARS RULE
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
2014–2015 ........... * $500 * $1,000 * $50 * $100 10 2015–2016 ...........
450 * 1,000 45 * 100 10 2016–2017 ........... ........................ ........................ ........................ ........................ ........... ............. Final information not available at
time of budgeting for 2017–2018.
How much must the LEA budget
for 2017–2018
to meet the eli-
gibility standard
in 2017–2018? 500 1,000 50 100 ........................ If the LEA seeks to use a combina-
tion of State and local funds, or a
combination of State and local
funds on a per capita basis, to
meet the eligibility standard, the
LEA does not consider information
on expenditures for a fiscal year
prior to 2015–2016 because the
LEA maintained effort in 2015–
2016 using those methods.
However, if the LEA seeks to use local funds only, or local funds
only on a per capita basis, to meet
the eligibility standard, the LEA
must use information on expendi-
tures for a fiscal year prior to
2015–2016 because the LEA did
not maintain effort in 2015–2016
using either of those methods, per
the Subsequent Years rule. That
is, the LEA must determine what it
should have spent in 2015–2016
using either of those methods, and
that is the amount that the LEA
must budget in 2017–2018.
* LEA met MOE using this method.
Table 9 provides an example of how an
LEA may consider the exceptions and
adjustment in §§ 300.204 and 300.205 when budgeting for the expenditures for the
education of children with disabilities.
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23671 Federal Register/ Vol. 80, No. 81 / Tuesday, April 28, 2015 / Rules and Regulations
TABLE 9—E XAMPLE OF HOW AN LEA M AY MEET THE ELIGIBILITY STANDARD USING EXCEPTIONS AND ADJUSTMENT IN
§§ 300.204
AND 300.205, 2016–2017
Fiscal year Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count Notes
Actual 2014–2015 ex-
penditures. * $500 * $1,000 * $50 * $100 10 The LEA met the compliance
standard using all 4 methods.*
Exceptions and adjust-ment taken in 2015–
2016. ¥50
¥50 ¥5 ¥5 ........................ LEA uses the child count number
from the comparison year
(2014–2015).
Exceptions and adjust-ment the LEA rea-
sonably expects to
take in 2016–2017. ¥25
¥25 ¥2.50 ¥2.50 ........................ LEA uses the child count number
from the comparison year
(2014–2015).
How much must the LEA budget to meet
the eligibility stand-
ard in 2016–2017?. 425 925 42.50 92.50 ........................ When the LEA submits a budget
for 2016–2017, the most re-
cent fiscal year for which the
LEA has information is 2014–
2015. However, if the LEA has
information on exceptions and
adjustment taken in 2015–
2016, the LEA may use that in-
formation when budgeting for
2016–2017. The LEA may also
use information that it has on
any exceptions and adjustment
it reasonably expects to take in
2016–2017 when budgeting for
that year.
Table 10 provides examples both of how to
calculate the amount by which an LEA failed to maintain its level of expenditures and of
the amount of non-Federal funds that an SEA must return to the Department on account of
that failure.
TABLE 10—E XAMPLE OF HOW TOCALCULATE THE AMOUNT OF AN LEA’ SFAILURE TO MEET THE COMPLIANCE STANDARD
IN 2016–2017 AND THE AMOUNT THAT AN SEA M UST RETURN TO THE DEPARTMENT
Fiscal year
Local funds
only Combination
of State and local funds Local funds
only on a
per capita basis Combination
of State and local funds on a per
capita basis Child count
Amount of
IDEA Part B subgrant
2015–2016 .......... * $500 * $950 $50 * ................................. $95 * ................................. ...................... .. Not relevant. 2016–2017 ..........400 750 40 ..................................... 75 ..................................... 10 $50 Amount by which
an LEA failed to
maintain its
level of expend-
itures in 2016–
2017. 100 200 100 (the amount of the
failure equals the
amount of the per cap-
ita shortfall ($10) times
the number of children
with disabilities in
2016–2017 (10)). 200 (the amount of the
failure equals the
amount of the per cap-
ita shortfall ($20) times
the number of children
with disabilities in
2016–2017 (10)). ........................ ........................
The SEA determines that the amount of the LEA’s failure is $100 using
the calculation method that results in the lowest amount of a failure.
The SEA’s liability is the lesser of the four calculated shortfalls a
nd the amount of the LEA’s Part B subgrant in the fiscal year in which the LEA
failed to meet the compliance standard. In this case, the SEA must retur
n $50 to the Department because the LEA’s IDEA Part B subgrant was
$50, and that is the lower amount. * LEA met MOE using this method.
[FR Doc. 2015–09755 Filed 4–27–15; 8:45 am]
BILLING CODE 4000–01–P
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Changes effective July 1, 2015
- Amends Part B of the Individuals with Disabilities Education Act governing the Assistance to States for the Education of Children with Disabilities program and the Preschool Grants for Children with Disabilities program
- Revises the regulations governing the requirement that local educational agencies maintain fiscal effort
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Last modified on March 24, 2023