IDEA MOE Update – New OSEP Guidance – from DPI

The Individuals with Disabilities Education Act (IDEA) requires a local educational agency (LEA) to expend from local and state funds at least as much in the current year as it expended in the preceding year, except as provided.  This provision is known as the maintenance of effort (MOE) requirement. When an LEA fails to maintain its level of local expenditures for special education, the State of Wisconsin must pay the U.S. Department of Education from state funds an amount equal to the LEA’s shortfall in local fiscal effort.  The LEA, in turn, reimburses the State, using funds for which it is not accountable to the federal government.  The IDEA regulations do not address whether in the year following the year in which the LEA failed to meet the MOE requirement, the LEA must expend at least the amount it expended in the last year it met the MOE requirement or the lower amount it expended in the immediate prior fiscal year when it failed the MOE requirement. 

In a June 16, 2011, response to an inquiry from Bill East, Executive Director of the National Association of State Directors of Special Education (NASDSE), the Office of Special Education Programs, U.S. Department of Education, issued a policy interpretation addressing this issue.  The letter may be viewed at http://lists.dpi.wi.gov/t/86899/96920/270/0/ It notes the IDEA does not contain a specific provision addressing this circumstance and states “…the Department must rely on the plain language of the statute and regulation…which provide that an LEA may not reduce its level of expenditures…below the level of those expenditures for the preceding fiscal year.”  The letter continues, “It [the LEA] is not obligated to expend at least the amount it expended in the last fiscal year for which it met the maintenance of effort requirement. In other words, each year’s LEA maintenance of effort obligation is based on the amount expended in the immediate prior fiscal year.” 

An LEA that fails to meet the MOE requirement is only required to expend from local and state funds the amount it expended in the immediate prior fiscal year. The DPI will apply this standard for FY 2011. For example, if an LEA expended $650,000 from local and state funds in FY 2009 and only $600,000 in FY 2010, it failed the MOE requirement by $50,000. Consistent with the OSEP policy interpretation, the LEA was required to expend at least $600,000 in FY 2011, not the $650,000 the LEA expended when it last met the MOE requirement in FY 2009. 

Please note an LEA must budget at least as much local and state funds for special education, either in total or per capita, as it expended in the most recent fiscal year.  Therefore, in order to be eligible to receive IDEA grants in FY 2012, an LEA must budget at least the amount of local and state funds it expended in FY 2011.  An LEA that does not meet this requirement will not be eligible for IDEA grants in FY 2012

If you have questions about this letter, you may contact Lori Ames, Fiscal Monitoring Consultant, at (608) 267-3749 or lori.ames@dpi.wi.gov, or Rachel Zellmer at (608) 266-1787 or rachel.zellmer@dpi.wi.gov.