Maintenance of Effort Requirements in No Child Left Behind Programs Categorical Cooperative Program Directors Association September 20, 2012 Presented.

Maintenance of Effort Requirements Maintenance of Effort Requirements

in in No Child Left Behind ProgramsNo Child Left Behind Programs

Categorical Cooperative Program Directors Association

September 20, 2012

Presented by Peggy O’Guin, CPACalifornia Department of Education

School Fiscal Services Division

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Maintenance of Effort (MOE)Maintenance of Effort (MOE)

Overview:

MOE concept = “supplement not supplant”Feds expect us to use federal funds to supplement, not

supplant, what we were already doing with state and local funds

In other words: They expect us to put forth at least the same level of effort using state and local funds as we did before they gave us federal funds

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Overview, continued:

Most federal programs have an MOE requirement

Administration of requirement varies slightly from program to programExample: Special Ed MOE rules differ slightly

from NCLB MOE rules

But concept is the same

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Legal requirement:

An LEA may receive its full allocation of NCLB funds for covered programs for a given year only if the LEA expended, in the preceding fiscal year, from state and local funds, at least 90% as much as it expended in the second preceding fiscal year from state and local funds

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Legal requirement, continued:

In other words: “The bar” is 90% of prior year level of expenditure from state and local funds

Either aggregate or per capita, whichever is more favorable

NCLB Act Title IX and 34 CFR 299.5 in handout

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Overly simplified illustration: In Year 1, LEA spends $111,111 from state and

local fundsFor Year 2, “the bar” will be 90% of $111,111

(= $100,000) In Year 2, LEA spends only $98,000 from state

and local fundsLEA fails to maintain effort by 2%

In Year 3, LEA’s NCLB program allocations are reduced by 2%Waivers possible: More on this shortly

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Practical realities:

Note that in the preceding example, LEA really “failed” to maintain effort by 12%

Because “the bar” is 90% of PY, so the first 10% “reduction of effort” doesn’t count

Pretty lenient – not all programs have a similar “grace factor”

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Practical realities, continued:

There is actually a two-year lag in when MOE failure impacts program allocations

Due to timing differences between federal and state fiscal year, MOE failure in 2010-11 affects allocations for second subsequent year (2012-13)

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How CDE administers NCLB MOE:

MOE comparison is automated in CDE’s data collection (“SACS”) software

We extract LEA’s expenditure data, calculate LEA’s MOE-eligible expenditures from state and local funds, and compare to PYWe calculate both aggregate and per capita, and

use whichever is more favorableNote that calc at LEA level is preliminary:

“Official” calc is performed at CDE

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How CDE administers NCLB MOE, continued:

“MOE-eligible expenditures” includes most costs of running a school district: Instruction, school administration, curriculum development, pupil transportation, guidance and counseling, maintenance, district administrationCosts such as community services, capital outlay,

debt service, and interfund transfers are excluded

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Temporary exception to the usual requirement: ARRA Fiscal Stabilization and Ed Jobs expenditures are allowed to count toward “state and local” expenditures CDE counts only the amount of ARRA needed for

LEA to not fail MOE (or to fail at a lesser percentage)

To avoid setting a new higher “bar”

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Automated comparison in software is now available to LEAs at budget and interim reporting periods, in addition to year-end

For monitoring & planningUse is optional; still only required at year-

end

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Waivers

Since bar is only 90%, “failure” of up to 10% is a freebie; after that, waivers possible

An LEA’s request for waiver must demonstrate either:

Uncontrollable circumstancePrecipitous decline in state and local

resources

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Waivers, continued

Uncontrollable circumstance example:

“In the year before last, our expenditures were high because we restocked the library after the fire. Last year, our expenditures were lower by comparison.”

Precipitous decline in state and local resources example:

“We could not maintain our previous level of expenditures because our state funding was reduced by 13 percent.”

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Waiver process: “Failure Notification” letter from CDE

describes process (sample in handout)

LEA sends waiver request to USDE with copy to CDE

USDE requests some information from CDELEA waiver requests due in January, to

allow time for USDE to process & for states to reallocate

Generally, best to request a waiver if eligible

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Waiver format:

No prescribed format or “template”

Clear & succinct works best

Legitimate & defensible helps too

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Q: Are districts in danger of failing MOE?

A: Yep! Failure statistics & trends:

Fiscal Year

#

Failures

Affecting Funding

Year

Waivers

Requested

Waivers

Approved

2006-07 3 2008-09 1 1

2007-08 4 2009-10 0 0

2008-09 19 2010-11 8 4

2009-10 74 2011-12 46 38

2010-11 13 2012-13 not due until Jan 2013

-

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Q: Is there a statewide plan to help ensure federal funding is not in jeopardy?

A: Not much state can do – federal law is federal lawLEAs agree to MOE rules as a condition of fundingAdherence to grant terms is part of program &

fiscal management, & includes monitoring MOEWaivers provide some relief for events outside

LEA’s control

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Q: Can the state arrange for a blanket waiver?

A: NoFeds do allow states to request waivers on behalf of

LEAs But it’s not a “blanket waiver” – normal rules applyCDE did this once, but it didn’t expedite much - some

of process involves extenuating circumstances that CDE wouldn’t know, so we had to involve LEAs anyway

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Q: What happens to amounts reduced from allocations of LEAs who fail MOE?

A: Ultimately, amounts get reallocated among LEAs

Reallocation process involves considerable complexity - outside scope for today

Amounts reduced don’t go back to the feds

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Q: What happens if an LEA’s waiver request is approved?

A: Amounts reduced are restored

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Where from here:

For 2010-11: CDE performed MOE calculations, comparing 2010-11 to 2009-10Affecting allocations for 2012-13

“Failure Notification” letters sent to LEAs August 16

“Passed Notification” e-mails sent to LEAs August 23 (sample in handout)

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Where from here, continued: For 2011-12: In spring 2013, CDE will perform

MOE calcs comparing 2011-12 to 2010-11Affecting allocations for 2013-14

Target date for “Failure Notifications:” June 30, 2013But “don’t call us, we’ll call you” - sometimes things

take longerProcess allows plenty of time to prepare a waiver

request Target date for “Passed Notification:” A week or

two after “Failure Notifications”

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Where from here, continued:

For 2012-13: Monitor & manage your MOE throughout the year

Review preliminary MOE calc during year-end closing

Strategize: Sometimes, it’s better to use state & local funds instead of federal funds (!)

Strategize: If you can’t meet MOE, consider eligibility for a waiver

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In closing…

“Nobody said categorical program management was easy.”

~ P. O’Guin

“Federal gift horses sometimes bear special presents for the recipients.”

~ L. Sharp

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Questions before we adjourn?

Thank you for managing your federal funds carefully!

Maintenance of Effort Requirements in No Child Left Behind Programs Categorical Cooperative Program Directors Association September 20, 2012 Presented.

Documents

moe concept

moe comparison

local funds slide

nclb moe rules

local funds lea

level of effort

federal funds slide

state fiscal year