Myrna, Mandlawitz, Esq. LDA, Director of Public Policy
Myrna, Mandlawitz, Esq.
LDA, Director of Public Policy

In September 2013, the Secretary of Education published a Notice of Proposed Rulemaking (NPRM) seeking to amend the regulations governing the IDEA maintenance of effort (MOE) requirements.  After considering and acting on over 300 public comments, the Department issued the final rule (Fed. Reg., Vol. 80, No. 81, Part II, April 28, 2015), which takes effect on July 1, 2015.

The changes address the compliance and eligibility standards for local school districts regarding MOE, the level of effort required by a school district in a year after MOE was not maintained, and consequences for failure to maintain MOE.  Rules on the IDEA eligibility standard now will precede the compliance standard regulations to reflect the actual order of the process. 

Eligibility Standard

The amended provisions on district eligibility for an award in a fiscal year require the State to determine that the district budgets at least the same amount from one of the four specified sources as it spent from the same source for the most recent fiscal year for which information is available.  The four sources are (a) local funds only; (b) combination of State and local funds; (c) local funds only on a per capita basis; and, (d) combination of State and local funds on a per capita basis.  These provisions also now allow a school district to take into consideration, to the extent information is available, exceptions and adjustments taken in the “intervening year or years” between the budgeting and comparison years and those the district “reasonably expects” to take in the budgeting year.

Language is changed from “the most recent prior year” to “the most recent fiscal year,” which is not a substantive change, but simply aligns the regulatory (“prior year”) language with statutory language (“fiscal year”).  The rule also clarifies the comparison year is the most recent fiscal year for which information is available, regardless of the method used.

The new regulations also state that expenditures made using federal funds for which the State or district must account to the federal government may not be considered in determining whether the district meets the compliance or the eligibility standard.

Compliance Standard

A school district will meet the compliance standard if it does not reduce its level of expenditures from at least one of the four sources below the level of those expenditures from the same source for the preceding fiscal year.  The Department of Education clarifies school districts may change the method used to meet the eligibility or compliance standard from year to year.  In addition, the district 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 in that same year.

Subsequent Years Rule

A key addition to the regulations codifies a Department of Education interpretation on MOE adopted in April 2012.  The same interpretation was announced in the Fiscal Year (FY) 2015 and FY 2015 appropriations acts passed by Congress.

The rule states that in the fiscal year following a year in which the school district failed to maintain effort, the level of effort the district must meet is the level that would have been required had the school district maintained effort rather than the district’s actual reduced level of expenditure. Two separate rules, applicable beginning on July 1, 2015, address the following:

  • The Subsequent Years rule for when a district did not meet the compliance standard using local funds only or local funds only on a per capita basis in a preceding fiscal year, and the district is relying on the same method to meet the eligibility or compliance standard in a subsequent year
  • The same rule, but referring instead to when the district did not meet the compliance standard based on a combination of State and local funds or a combination of those funds on a per capita basis.

Since this rule has been the interpretation since 2012, the Department of Education expects States and districts have been complying with this provision since FY 2012-13.  Therefore, this addition to the regulations simply codifies what is current interpretation and practice.

Failure to Maintain Effort and Consequence

Finally, the new provisions codify the longstanding practice regarding returning funds to the Department.  The reason for including this specifically is to ensure States and districts are aware of the consequences of a district’s failure to meet the MOE compliance standard.  The regulation clarifies if a district fails to maintain its level of expenditures, the State is liable in a recovery action for the amount by which the district failed to maintain the level of expenditures in that fiscal year or the amount of the district’s Part B subgrant in that fiscal year, whichever is lower.

Click here to read the final rules and all the comments and discussion. 


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