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Budget Reductions and Your MOE – Watch Out!. TASBO BUDGET ACADEMY JANUARY 13, 2011. Maintenance of Effort. Legal Requirement to maintain local effort No Child Left Behind (NCLB) Individuals with Disabilities Education Act (IDEA) Part B Supplemental Expenditures from Grants

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Budget Reductions and Your MOE – Watch Out!

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Budget Reductions and Your MOE – Watch Out!

TASBO BUDGET ACADEMY

JANUARY 13, 2011


Maintenance of Effort

  • Legal Requirement to maintain local effort

    • No Child Left Behind (NCLB)

    • Individuals with Disabilities Education Act (IDEA) Part B

  • Supplemental Expenditures from Grants

    • Cannot “Supplant” the local effort


Maintenance of Effort

Where Do You Get the Data?

  • Mid Year PEIMS submissions – Expenditures

    • Record 032 (allocated)

    • Record 033 (allocated)

    • Review the PEIMS Edit+ Tips: Allocation Process & Calculating Staff FTEs

  • Student Information for:

    • Average Daily Attendance (ADA)

    • Membership

    • Enrollment


Maintenance of Effort - NCLB

Compliant with Maintenance of Effort (MOE) if:

  • 90% of Preceding Fiscal Year’s Combined Fiscal Effort per Student Expended in Current Year, Using:

    • Fund 199

    • Object Codes 6100 to 6500, Inclusive;

      And


Maintenance of Effort - NCLB

Compliant with Maintenance of Effort (MOE) if:

  • 90% of Prior Year Expenditures as Compared to the Current Year Expenditures Using the Per Pupil Expenditures of:

    • Average Daily Attendance

    • Membership

    • Enrollment

  • Adjustment is based upon 90% less the largest percentage of the four comparisons as most beneficial to the district


Maintenance of Effort - NCLB

If Noncompliant, the District will receive a Letter of Findings

Action to be taken:

Determine Why There is a Decline of Effort:

Extenuating Circumstances; or

PEIMS Data contained material errors


Maintenance of Effort - NCLB

  • If PEIMS errors are discovered:

    • Statement signed by Superintendent and CFO acknowledging errors

    • Schedule indicating the fields of the account code, original erroneous amount, and the proposed correct amount

    • Statement signed by the external auditor

      TEA can process errors in data collection


Maintenance of Effort - NCLB

  • If Extenuating Circumstances:

    • Natural disaster, i.e. hurricanes, tornados, etc.

    • Financial Exigency

  • Waiver must be requested from the U.S. Department of Education (USDE)

  • TEA does NOT have the authority to issue waivers on the Maintenance of Effort requirements


Maintenance of Effort – IDEA Part B

  • Compliant with MOE for Grant if:

    • Current Year Expenditures Meet or Exceed the Level of Expenditures Compared to Prior Year

    • OR

  • Per Pupil Expenditures Increased or Stayed the Same


Maintenance of Effort – IDEA Part B

  • Determining Compliance

    • Total expenditures of two previous fiscal years


Maintenance of Effort – IDEA Part B

  • Determining Compliance

    • Expenditures per Student


Maintenance of Effort – IDEA Part B

  • Noncompliance occurs when total expenditures AND per pupil expenditures both decline


Maintenance of Effort – IDEA Part B

If Noncompliant, the District will receive a Letter of Findings

Action(s) to be taken:

  • Complete Form A: Response to Findings

  • Submit applicable forms:

    • Form B: Adjustment to Fiscal Effort

    • Exceptions:

      • Form C: Departure of Sp. Ed. Personnel

      • Form D: Decrease in Sp. Ed. Student enrollment

      • Form E: Termination of Exceptionally Costly Program

      • Form F: Termination of Costly Expenditures for Long-Term Purchases

      • Form G: Assumption of Cost by High Cost Fund

      • Form H: PEIMS Data errors


Maintenance of Effort – IDEA Part B

  • Exceptions Allowed:

    • Departure of Sp. Ed. Personnel

      • RIF does not qualify

      • Document departing personnel and reason for separation

      • Document personnel that replaced departed personnel (payroll & account distribution journals – data must match PEIMS 050, 060 and 090 records)

      • Document hiring action (personnel action memo, etc)

      • Submit SBEC certification of personnel

      • Submit “signed” job description

      • Document difference in salary between staff


Maintenance of Effort – IDEA Part B

  • Exceptions Allowed:

    • Decrease in Sp. Ed. Student enrollment

    • Use PEIMS Edit+ Child Count numbers

    • Document Special Education FTEs and Special Education allotment

    • Document allocated and unallocated costs


Maintenance of Effort – IDEA Part B

  • Exceptions Allowed:

    • Termination of Exceptionally Costly Program

      • Special Education Child left the District and/or Program

      • Child has reached the age at which the District is no longer required to support the child’s education

      • Document the following:

        • Description of costly program

        • Reason for program termination

        • IEP supporting services/program

        • Total costs – detailed general ledger


Maintenance of Effort – IDEA Part B

  • Exceptions Allowed:

    • Termination of Costly Expenditures for Long-Term Purchases

    • Defined by LEA’s capitalization policy

      • Equipment such as a Braille Machine, other apparatus, etc.

      • Construction of School Facilities

      • Document with detailed general ledger


Maintenance of Effort – IDEA Part B

  • Exceptions Allowed:

    • Assumption of Cost by High Cost Fund

      • Must have received a High Cost Grant

      • Costs may only include those approved by TEA

      • Document with detailed general ledger


Maintenance of Effort – IDEA Part B

  • Sample ISD

    • Letter of Finding - $89,630


Maintenance of Effort – IDEA Part B

  • Best Practices

    • Calculate estimated MOE during budget development process

    • Track and document special education staff changes – HR paper trail and PEIMS data accuracy

    • Distribute and collect signed job descriptions for staff for current position – keep current with changes in funding and/or assignments (HR)

    • Track and document expenditures related to exceptions – use sub-objects as appropriate

    • Calculate actual MOE during the fiscal year


Budget Reductions

Factors Causing Budget Reductions:

  • Declining Financial Resources

  • Declining Per Pupil Expenditures

  • Declining Pupil Enrollment

  • Leading up to the………………

    Perfect Storm!!!


Budget Reductions

  • How do you maintain local effort when reducing the budget?

    • 1. Calculate District’s MOE during the Budget Process

    • 2. With Declining Financial Resources—Easier to meet Per Pupil Expenditures rather than the Aggregate Expenditures , but must monitor

    • 3. With Declining Per Pupil Expenditures, must monitor costs

    • With Declining Per Pupil Enrollment, Monitor Per Pupil Expenditures in order to meet MOE


Budget Reductions

  • Number of Special Education Students

    • Inclusion Model—factor in declining numbers

    • Response to Intervention (RTI)—causing a delay in identification of Special Education Students

  • Number of Staff FTE’s may not decline, but may be recoded with different Program Intent Codes

    • Appearance of Decline in Maintenance of Effort

    • Students may need additional assistance in classrooms—causing additional staffing needs without corresponding state program aid


Budget Reductions

  • Sample School District

    • Decrease of $4,031,313 in local effort (Line 15)

    • Decline in local effort adjustment:

      • Adjusted by 50% of Increase of Entitlement from 2009-10 compared to 2008-09 (Line 16 = 50% of Line 27)

      • Decline in local effort adjusted:

        • Line 16$10,235,048

        • Less Line 15 4,031,313

        • Line 17$ 6,203,735


Budget Reductions and Your MOE – Watch Out!

Reducing Staff to Reduce Your Payroll Costs and the Expenditure Budget……………

May Cause an Offsetting Reduction in Revenues!!!!

Watch out!!!


Plan for Your Maintenance of Effort

  • Repercussions of Reduction in Staff?

    • COMMUNICATE!

    • Make sure the Superintendent and School Board are aware of possible recapture of funding!


Maintenance of Effort

  • Questions???

  • Resources:

  • TEA website:

    • MOE Templates:

    • TEA Staff Presentations

    • http://www.tea.state.tx.us/index4.aspx?id=4073


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