Special Education Maintenance of Effort Issues Presenters: Susan Woodmansey Bobbi Leiferman Colleen Skinner Rob Huffman
What is maintenance of effort (MOE)? • Federal funding is intended to supplement and not replace state and local funding. • Districts receiving federal funds are expected to maintain a constant level of state and local funding from year to year. • The rules regulating MOE differ depending on the federal program. • IDEA has a different standard than the ESEA
MOE Requirement of the IDEA • The district cannot use Federal IDEA funds to replace or reduce the level of special education expenditures from non-Federal sources. • Each fiscal year the district must spend the same amount of local, or state and local, funds for special education as it did in the previous fiscal year. • May be calculated on either a: • district aggregate total, • or per student (child count) basis. • Some exceptions are available.
Allowable Reductions to MOE (1) • Voluntary departure, retirement, or departure for just cause, of special education personnel. • Examples: • Local funded experienced Special Education teacher retires making combined Salary & Benefits of $60,000. • Teacher is replaced with a new qualified teacher making a combined salary & benefits of $40,000. • The district could reduce its local MOE by $20,000. • Contract non-renewal or staff lay-offs due to district budget shortfalls are NOT allowable exceptions.
Allowable reductions to MOE (2) • A decrease in the enrollment of children with disabilities. • The per special education pupil cost must still meet or exceed the cost spent per special education student the previous year. • Example: • 2010 sped enrollment is 50 and MOE expenditures $100,000 so per pupil cost is $2,000 • 2011 sped enrollment is 40 and MOE expend is $95,000 so per pupil cost is $2,375 – allowable $5,000 reduction • 2011 sped enrollment is 40 and MOE expend is $75,000 so per pupil cost is $1,875 (less than $2,000 in 2010 above) not allowable reduction.
Allowable Reductions to MOE (3) • A student with a disability that incurs an exceptionally costly program either; • Leaves the district, • Ages out, or • No longer needs the special education program.
District MOE Reductions • Allowable reductions must be attributed to a reduction in local or state expenditures. • Reductions in federally funded expenditures do not qualify for reducing the district’s MOE.
50% Rule • If a district receives an increase in IDEA Section 611 funds from one fiscal year to the next; • The district may reduce its MOE by ½ of the increased amount. • The freed up local funds must be spent on ESEA allowable activities. • Example 2011 Section 611 allocation is $100,000 and 2012 allocation is $110,000 for an increase of $10,000 • The district could reduce its special education MOE by $5,000 and the freed up $5,000 in local funds must be tracked and spent on ESEA activities during the fiscal year. • Due to elimination of ARRA funding – no district will be eligible to transfer local funds under this rule in FY2011.
What happens if MOE is missed? • Districts that do not meet the MOE compliance tests will be required to pay the Department of Education an amount equal to the amount of the short-fall. • This amount cannot be paid with federal funds. • The district’s MOE level stays at the same level. • Example • 2010 MOE expenditures $100,000 • 2011 MOE expenditures $90,000 so missed MOE by $10,000 and must pay DOE this amount from non federal funds. • 2012 MOE required expenditure level remains $100,000
Cooperative Projects • Cooperative is the Applicant, Grantee & Fiscal Agent • The districts have assigned their allocations to the Coop. • The Coop submits a Coop level budget in its grant application. • The Coop will receive the federal IDEA funds directly from the State. • The Coop is responsible for reporting the federal IDEA expenditures. • Coop member districts will not receive or report the IDEA funds. • Not to be confused with fee-for-service Cooperatives.
Cooperatives & IDEA MOE • The Coop must ensure that its member district are in compliance with the requirements of the IDEA. • Each member district must comply with the requirements of the IDEA. • Each member district must ensure its level of local and/or state funded special education expenditures are in compliance with the MOE requirements of the IDEA.
What if district revenues decline? • The IDEA does not allow for an exception to MOE due to a reduction in district revenues. • If special education revenues are insufficient the district must find the funds from other non federal sources. • The district must show they have sufficient funds budgeted to comply with the MOE requirement, or they will lose eligibility for the next year’s IDEA Part B funding.
Where can district get the funds? • Supplement the special education fund with general funds. • Ensure property tax revenues are sufficient to make MOE.
How can the change to productivity for agricultural property impact tax requests? • Due to change of valuing agricultural property based on productivity my district is unable to raise as much from local property taxes as it did in the previous year --- what are my options? • When submitting the district’s tax request to the county auditor - make the request in the form of a dollar amount NOT a requested levy (such as $1.40). • The county auditor may adjust the levy as per SDCL 13-37-16: • 13-37-16. District tax levy for special education--School district special education fund…. For taxes payable in 2012, 2013, 2014, and 2015, the total amount of revenue payable from the levy provided in this section may not increase more than the lesser of three percent or the index factor, as defined in § 10-13-38, over the maximum amount of revenue that could have been generated for the taxes payable in 2010 plus any unused index factor from the previous years. After applying the index factor, a school district may increase the revenue payable from taxes on real property above the limitations provided by this section by the percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value. For taxes payable in 2011, 2012, 2013, 2014, and 2015, the levy limitation of one dollar and forty cents per thousand dollars of taxable valuation does not apply to any school district. • http://www.state.sd.us/drr2/propspectax/property/productivity.htm
Impact on State SE Funding • 13-37-35.1. Definition of terms. Terms used in chapter 13-37 mean……… (7) "Local effort," shall be calculated for taxes payable in 2011 and shall be the amount of revenue that could have been generated for the taxes payable in 2010 using a special education levy of one dollar and twenty cents per one thousand dollars of valuation increased by the lesser of three percent or the index factor, as defined in § 10-13-38, plus a percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value. For taxes payable in 2012, 2013, 2014, and 2015, the total amount of local effort shall be increased by the lesser of three percent or the index factor, established pursuant to § 10-13-38 plus a percentage increase of value resulting from any improvements or change in use of real property, annexation, minor boundary changes, and any adjustments in taxation of real property separately classified and subject to statutory adjustments and reductions under chapters 10-4, 10-6, 10-6A, and 10-6B, except § 10-6-31.4, only if assessed the same as property of equal value;
Tax Request for County Auditor • RESOLUTION NO. ______________ • ADOPTION OF ANNUAL BUDGET: • Let it be resolved, that the School Board of the ____________________________________ School District, after duly considering the proposed budget and its changes thereto, to be published in accordance with SDCL 13-11-2 hereby approves and adopts its proposed budget and changes thereto, to be its Annual Budget for the fiscal year July 1, 20___ through June 30, 20____. The adopted Annual budget levy requests are as follows: • TAX DOLLAR REQUEST TAX LEVY REQUEST • General Fund $___________________ OR General Fund $____________ /per • $1,000 of ag valuation • Opt Out Amt $___________________ • Total General • Fund Req. $___________________ • Special Ed Fund $___________________ OR Special Ed Fund $____________/per • $1,000 of total valuation • Capitol Outlay $ ___________________ OR Capitol Outlay $____________/per • $1,000 of total valuation • Retire./Pension $ ___________________ OR Retire/Pen $____________/per • $1,000 of total valuation • Bond Redemption $ ___________________ • (General, special ed, retirement and capitol outlay levies may be requested in a dollar amount or a dollar/thousand. Bond redemption and opt out amounts MUST be requested as a dollar amount) • (A list of the changes from the proposed to the adopted is as follows:)
What Changes to MOE for 2011? • Change in how Medicaid funding is reflected on the MOE calculation form. • MOE threshold for FY2011 may be adjusted by the transfer of local funds in Fy2010 or adjustments made by DOE. • MOE reporting continues to be separate from the annual financial reporting data collection. • SE MOE forms will be due after annual report data is finalized (October or November, 2011)
Where can I find my MOE form? • http://doe.sd.gov/ofm/maintenanceofeffort.asp • A blank FY2011 MOE form is available on the right hand side of the screen. • Individual district MOE forms for the 2010 vs 2011 comparison are available (scroll down on main section of screen) on the above stated website.
Contacts • Tax Information: • Colleen Skinner, Dept. of Revenue • (605) 773-5120 • Colleen.Skinner@state.sd.us • Special Education MOE Calculations: • Kelsey Hanson, Dept. of Education/Grants Management • (605) 773-8061 • Kelsey.Hanson@state.sd.us • Bobbi Leiferman, Dept. of Education/State Aid & School Finance • (605) 773-5407 • Bobbi.Leiferman@state.sd.us • Non-compliance with MOE – Impact to the District? • Rob Huffman or Mark Gageby, Dept. of Education/Grants Management • Rob – (605) 773-4600, Mark – (605) 773-3727 • Robyn.Huffman@state.sd.us or Mark.Gageby@state.sd.us