Budget Reductions and Your MOE – Watch Out!

1. Budget Reductions and Your MOE – Watch Out! TASBO BUDGET ACADEMY JANUARY 13, 2011

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. Maintenance of Effort – IDEA Part B • Determining Compliance • Total expenditures of two previous fiscal years

11. Maintenance of Effort – IDEA Part B • Determining Compliance • Expenditures per Student

12. Maintenance of Effort – IDEA Part B • Noncompliance occurs when total expenditures AND per pupil expenditures both decline

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. Maintenance of Effort – IDEA Part B • Sample ISD • Letter of Finding - $89,630

20. 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

21. Budget Reductions Factors Causing Budget Reductions: • Declining Financial Resources • Declining Per Pupil Expenditures • Declining Pupil Enrollment • Leading up to the……………… Perfect Storm!!!

22. 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

23. 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

24. 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

25. 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!!!

26. 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!

27. Maintenance of Effort • Questions??? • Resources: • TEA website: • MOE Templates: • TEA Staff Presentations • http://www.tea.state.tx.us/index4.aspx?id=4073