Exceptional Student Services

Formula

The funding formula consists of three main parts with some supplemental items:

• Base – the amount the LEA would have received under section 611 or section 619 if the State had distributed 75% of its funds prior to an allocation formula shift in 1998/2002, for new charters, this amount would lock in the first year a special education count was provided to ESS
• Population – Proportion of students enrolled over October 1 by District of Residence and the number of students K-12 attending an elementary or secondary non-profit private school within any school district boundaries
• Poverty – Proportion of students enrolled over October 1 by District of Residence and submitted free or reduced information into AzEDS or provided school lunch program information to health & nutrition
• Audit Resolution Year One – Repayment as part of the Arizona Department of Education’s repayment to resolve a federal fiscal audit finding from prior years, to be paid over 5 years
• 10% Remaining Set-Aside – 10% of funds from a side fund put on top of the entitlement formula proportionate to population/poverty, provides flexibility so ESS does not have to recalculate all PEAs’ allocations if entities close

For questions, please contact ESS Program Management.

Requirements

34 CFR §300.133 describes the requirements of the proportionate share calculation.

• “…each LEA must spend the following on providing special education and related services (including direct services) to parentally-placed private school children with disabilities:” “For children aged 3 through 21, an amount that is the same proportion of the LEA’s total subgrant under section 611(f) of the Act as the number of private school children with disabilities aged 3 through 21 who are enrolled by their parents in private, including religious, elementary schools and secondary schools located in the school district served by the LEA, is to the total number of children with disabilities in its jurisdiction aged 3 through 21.”
  • Sites must be a nonprofit institutional day or residential school (RTC)
  • ARS 15-101 defines elementary and secondary school grades as:
    • “Elementary grades” means kindergarten programs and grades one through eight; and
    • “Secondary grades” means grades nine through twelve

Annual Count

• Each LEA must –
  1. After timely and meaningful consultation with representatives of parentally-placed private school children with disabilities (consistent with § 300.134), determine the number of parentally-placed private school children with disabilities attending private schools located in the LEA; and
  2. Ensure that the count is conducted on any date between October 1 and December 1, inclusive, of each year (ADE/ESS will use the October 1 date to determine this value for PEAs)
• The count must be used to determine the amount that the LEA must spend on providing special education and related services to parentally-placed private school children with disabilities in the next subsequent fiscal year.

Supplement, not Supplant

34 CFR §300.133(d) indicates what role state and local funds play regarding proportionate share expenditures:

• State and local funds may supplement and in no case supplant the proportionate amount of Federal funds required to be expended for parentally-placed private school children with disabilities under this part.

Child Find

34 CFR §300.131(d) provides clarity on expenses not categorized for proportionate share:

• The cost of carrying out the child find requirements in this section, including individual evaluations, may not be considered in determining if an LEA has met its obligation.

The purpose of Maintenance of Effort Eligibility testing is to ensure that public education agencies (PEAs) are not supplanting state and local funds with IDEA federal funding sources in accordance with 34 C.F.R. §300.203(a). Therefore, any PEA that has received federal funds for IDEA must complete Maintenance of Effort (MOE) testing. To accurately test for MOE budgets, the Arizona Department of Education requires PEAs to login to the MOE application which is located in ADEConnect. If you need access to this application, please contact your ADEConnect Entity Administrator within your PEA.

Any PEA that is failing all tests for MOE will be unable to have its IDEA Entitlement grant approved. Once the MOE items have been resolved, then ADE can continue processing the submitted IDEA Entitlement grant.

Please review this handout describing the FY20 Maintenance of Effort Eligibility testing.

View the quick reference guide for ESS Maintenance of Effort application.

Arizona Revised Statutes Chapter 15 Education, Article 8 Charter Schools, Section 15-183, Paragraph E.5 provides for Charter Schools to be exempt from “all statutes and rules relating to schools, governing boards and school districts.” This includes the requirements of the Uniform System of Financial Records for Charter Schools (USFRCS) published by the Office of the State Auditor General as well as the State Procurement Code. The Arizona State Board for Charter Schools provides written documentation to Charter Schools of exemption to the USFRCS and/or State Procurement Code, typically by email. Although a Charter School can choose to follow the guidelines in the USFRCS and/or State Procurement Code, Charters are not required to adhere to those state guidelines.

This blanket exemption from state accounting and procurement statutes and rules has led to confusion among some Charter Holders that “exemption” means they are not required to follow any rules and regulations relating to accounting and procurement. Most Charter Schools contract with a trained professional bookkeeper or accountant to perform their routine bookkeeping and accounting functions. However, small Charters may not have sufficient resources to contract for those services so they are performed in-house, often by the Charter Holders who may not be trained to handle bookkeeping or accounting and who frequently believe they are “exempt from the rules.”

Although they may be exempt from state statutes and rules, any LEA that receives federal grant funding is nevertheless required to following federal statutes, rules and guidance. Per the Uniform Grant Guidance, all LEAs must be able to provide these specific Policies and related Procedures. They should be approved by the Governing Board and in use or they do not meet Federal compliance for Grants Management Internal Controls:

1. Cash Management – 2 CFR §200.302(b)(6)
2. Cost Allowability – 2 CFR §200.302(b)(7) with references to Subpart E Cost Principles
3. Equipment & Property Management – 2 CFR §200.313
   • Use – 2 CFR §200.313(1)
   • Property records – 2 CFR §200.313(d)(1)
   • Physical Inventory – 2 CFR §200.313(d)(2)
   • Safeguards to prevent loss, damage, or theft of property – 2 CFR §200.313(d)(3)
   • Maintenance – 2 CFR §200.313(d)(4)
   • Disposition – 2 CFR §200.313(e)
4. Procurement – 2 CFR §200.318
   • Standards of Conduct / Conflicts of Interest – 2 CFR §200.318(c)(1)
   • Gratuities – 2 CFR §200.318(c)(1)
5. Time & Effort
   • Standards for Documentation of Personnel Expenses – 2 CFR §200.430(i) & 2 CFR Part 225 Appendix B(8)(h)
   • Support of Salaries and Wages – 2 CFR §200.313
6. Travel Costs – 2 CFR Part 200.474

Exceptional Student Services pays for a team of fiscal monitors who can help provide guidance on these components as it related to IDEA federal grant awards. They can be contacted through the grants management division.

Fiscal Monitoring Website for IDEA

For a particular cost to be allowed, it must be an excess cost of providing special education and related services. Only allowed costs may be charged to the flow-through or preschool entitlement grants.

When determining whether a cost is an excess cost, ask the following guiding questions:

In the absence of special education needs, would this cost exist?

If the answer is…

• No, then the cost is an excess cost and may be eligible.
• Yes, then the cost is not an excess cost and is not allowed.

Is this cost also generated by students without disabilities?

If the answer is…

• No, then the cost is an excess cost and may be eligible.
• Yes, then the cost is not an excess cost and is not allowed.

If it is a child specific service, is the service documented in the student’s IEP?

If the answer is…

• Yes, then the cost is an excess cost and may be eligible.
• No, then the cost is not an excess cost and is not allowed.

For a particular cost to be allowed, it also must be necessary and reasonable for proper and efficient performance and administration of the grant. A cost is reasonable if it does not exceed what a district would normally incur in the absence of federal funds. Additional guidance about standards for determining costs for federal grants is available from Office of Management and Budget (OMB) Uniform Grants Guidance (2 CFR, Part 200).

The salaries and wages of any employee charged to a Federal grant, including IDEA, must be supported by some form of time and effort documentation that accurately reflects the work performed and supports the amount claimed against the grant. “Standards for Documentation of Personnel Expenses” are set forth by the Office of Management and Budget (2 CFR § 200.430(i)).

Allowable Costs for IDEA Entitlement Grants – Guidance document

34 CFR 76.788 details the responsibilities a charter has in obtaining a new or expanding allocation.

There are three items required:

1. Notice – At least 120 days prior to opening or expanding, the charter must notify the ADE in writing a notification of the event and its corresponding date
2. Information
   1. The charter must provide information so that the ADE can reasonably estimate the amount of funds any charter is eligible for under IDEA Entitlement grants
   2. Once the charter has opened or expanded, it must provide actual enrollment or eligibility data to the ADE aligned to October 1 metrics (ESS Census, October 1 Enrollment & Poverty)
      1. If a charter opens or expands after October 1, ESS will utilize an equivalent means with a different date that represents actual enrollment and eligibility data
   3. The ADE is not required to provide funds to a new or expanding charter until the charter provides reasonable enrollment or eligibility data
3. Compliance – The new charter will comply with all federal requirements of the IDEA

Upon receiving adequate notification, the ADE will provide the charter with timely communication regarding its eligibility and requirements for the IDEA Entitlement grants. If there is a failure to provide the ADE with adequate notice (Notice and Information #1), the ADE has no obligation to generate a timely allocation within five months of the opening or expansion.

ADE will reserve funds for entities that provide all of the required information before the IDEA Entitlement allocations are finished for an upcoming year. After October 1, ADE will process and generate actual enrollment and eligibility numbers to determine the allocation.

When adequate notice has been provided along with enrollment/eligibility metrics, allocations will be generated and awarded with the following timelines. If the charter opens or expands on the following dates:

• On or before November 1 – charter will receive a proportionate amount of funds worked into the current year’s overall allocation
• After November 1 and before February 1 – charter will receive a pro rata amount of an allocation for the amount of the academic year the charter is under the covered program
• On or after February 1 – charter will receive an allocation from the following year’s SEA allocation

34 CFR 76.787 defines significant expansion of enrollment

“a substantial increase in the number of students attending a charter school due to a significant event that is unlikely to occur on a regular basis, such as the addition of one or more grades or educational programs in major curriculum areas. The term also includes any other expansion of enrollment that the SEA determines to be significant.”

Non-regulatory guidance from the CSEA (Charter School Expansion Act) allows further flexibility in how states determine significant expansion for federal programs

“…the final regulations give States unfettered discretion to determine any expansion of enrollment to be significant within the meaning of the final regulations, the State could, in its discretion, make a determination that a charter school has undergone a significant expansion of enrollment based on an increase in the number of children with disabilities attending the charter school.”

For purposes of the IDEA Entitlement grants, the ADE has defined significant expansion to be dependent upon all of the following metrics:

• A significant event that is unlikely to occur on a regular basis;
  • Addition of one or more grades
  • Addition of a new site under the same Charter LEA (PEA)
  • Addition of a major educational program that services students with disabilities
  • Other unique events (requires supporting documentation)
• Increase in enrollment of at least 30% from the prior year’s October 1 enrollment (or static calendar date if Oct 1 is not applicable); and
• Increase in SPED students of at least 30% counted on the ESS Census child count (or similar calendar date if Oct 1 is not applicable)

As ESS reviews high cost child applications, we will approach applications with the following mindset, as this is the first fiscal year in its new deployment through the ESS Vouchers Application.

First, ESS will place limitations on how much can be claimed for particular student(s) or an entity to ensure the funds are addressing high cost students equitably across the state. The primary focus of these funds is to reimburse direct/charter services for the eligible students and remove some or all the burden from as many PEAs as possible this first year. Second, we will be reserving approval timelines to ensure that the funds do not deplete within the first 30 days of the deployment. This is to provide time for PEAs to get into the application and submit items but not drain the funds immediately, which will allow PEAs to have access to the funds for the initial launch. Third, ESS will focus with more severity on unexpected expenditures than on repeating funds. Tuition for returning private school students would not generally meet the criterion as an unexpected burden that the state would have to relieve from a PEA.  ESS will adjust the criteria as the needs of students and the PEAs change throughout the state.

Quick Reference Guide for High Cost Child Applications

Fiscal Info: Fiscal Year 2019 High Risk Child Funding

Unorganized Territories application will be open for FY19 on April 1, 2019.

Quick Reference Guide for Unorganized Territory Applications