IDEA Funds Under the American Recovery and Reinvestment Act (ARRA) April 22, 2009

1. IDEA Funds Under the American Recovery and Reinvestment Act (ARRA)April 22, 2009 Focus on Budget Management of IDEA Funds Presenters: Frank Podobnik Tim Harris Bob Runkel

2. Welcome • Continuation of the Series on ARRA • Adobe Connect • 25 minutes of presentation • 20 minutes for questions • Resources for this Presentation • Guidance from OSEP • www.ed.gov/policy/gen/leg/recovery/guidance/idea-b.html • Modifications to Guidance from OSEP • www.ed.gov/policy/gen/leg/recovery/guidance/idea-guidance-mod.pdf • OSEP Fact Sheet • www.ed.gov/policy/gen/leg/recovery/factsheet/idea.html • District estimated amounts

3. Topics • Amounts available • Uses: Allowable and Recommended • When funds are available • Application procedure—E-Grants • Carry-over provisions • Maintenance of Effort • OPI support for budgeting • Questions and Answers

4. Amounts Available • ARRA provides $11.3 billion to IDEA Part B programs • Montana share: $36,708,056 (Part B-611), $1,260,947 (Part B-619) • More than doubles total federal special education funds • IDEA regular plus ARRA equals total special education federal funds available. [$73,687,363 (Part B-611), $2,423,929 (Part B-619)] • Raises the percentage from current 17.2% to 34.2% of the average per pupil expenditure (40% is considered “full funding”)

5. Uses Allowable and Uses Recommended • Allowable: • Same as IDEA. For example: • Cost of delivering IEP services • Supplies • Equipment • Professional development • Construction or alteration of facilities (with some additional requirements)

6. Uses Allowable and Uses Recommended • Examples to consider as recommended by OSEP: • Provide intensive district-wide professional development for special education and regular education teachers that focuses on scientifically based strategies in reading, math, science, and writing, and positive behavioral supports to improve outcomes for students with disabilities • Develop or expand the capacity to collect and use data to improve teaching and learning

7. Uses Allowable and Uses Recommended • Examples to consider as recommended by OSEP: • Hire short-term workers or extend teacher contracts for activities that support transition to work. This could include working with the employers and the community to develop job placements for youth with disabilities. • Purchase adaptive equipment for students, and equipment for use by occupation, physical and speech therapists to increase their ability to provide effective services.

8. Uses Allowable and Uses Recommended • Caution: • Funds should be used for investments that can be sustained after ARRA funding expires

9. When funds are available • Available: • Early Application on or about first week in May 2009. • 50 percent of funds immediately available for spending upon approval of application. Costs are allowable beginning February 17, 2009, the effective date of the grants. Note: ARRA funds are in addition to regular state fiscal year 2010 funding. • October 1, 2009, remaining 50 percent of IDEA ARRA available for spending.

10. When funds are available • School districts generate the funds • Part B applicants receive the funds • Advantages when budgeting • Calculation of maintenance of fiscal effort • Amounts for sub-grant recipients can vary based on management board decisions

11. Application Procedure—E-Grants • An abbreviated application will be used for ARRA funds. • Expected to open during the first week of May. • Similar to regular application process with some portions disabled (i.e., MOE, Objectives). • Based upon approved SFY 2009 application. • First 50 percent of ARRA funds become available as soon as application is approved.

12. Carry-over Provisions • ARRA funds are 2009-2010 school year funds. • Current year begins July 1, 2009, and ends June 30, 2010. • Carry-over year begins July 1, 2010, and ends June 30, 2011. • Funds not spent by June 30, 2011, will be recovered by the state and redistributed to other districts unless district documents it will spend all carry-over funds by September 30, 2011. • All funds must be spent or obligated by September 30, 2011.

13. Maintenance of Effort • The IDEA MOE provisions apply. • IDEA allows an MOE reduction equal to 50 percent of the increase in IDEA funds under certain circumstances. • Designated as “Meets Requirements” • No significant disproportionality • Providing FAPE to all students • State has not taken action against the district • All of the above must apply or the district cannot reduce fiscal effort. • Spending IDEA funds on early intervening services affects the size of reduction in fiscal effort dollar for dollar.

14. Maintenance of Effort • Factors affecting calculation of maintenance of fiscal effort • Allowable exceptions • Child count • Departure of staff • Departure of a high-cost student • Required amounts are calculated as a roll up. • “Stand-alone districts” • Cooperatives • Consortiums

15. Maintenance of Effort • Budgeting requirements: • Budgeted amounts must exceed prior year’s expenditure. This is operationalized in E-Grants by using reported expenditures from fiscal year 2008 as the minimum amount to be budgeted in fiscal year 2010. • Expenditure reports from the trustees’ financial summary will be used to make comparisons between fiscal year 2009 and fiscal year 2010 to determine whether fiscal effort was maintained. • Note: • Expenditures for the 2008-2009 school year are reported to OPI in the fall of 2009. • Expenditures for the 2009-2010 school year are reported to OPI in the fall of 2010. • The sanctions for failure to maintain fiscal effort for the 2009-2010 school year are applied in the 2010-2011 school year.

16. Maintenance of Effort • Be mindful of required state match before choosing to replace state and local funds with federal funds for special education. • Note: State funding formula requires a match of one dollar of local funds for every three dollars in state funds. Do not go below this level or your state special education allocation will be reverted. This amount is known as the “minimum amount to avoid reversions.”

17. Maintenance of Effort • Be mindful of your current level of carry-over funds. • Districts with few IDEA carry-over funds may choose to rebuild their carry over • Districts with significant IDEA funds carried over into 2009-2010 school year may bump up against the maximum amount of carry over by fiscal year 2012

18. Maintenance of Effort • Going to the extreme: • If allowed, reduce fiscal effort by 50 percent of your ARRA funds in 2009-2010 and use federal funds to pay for special education expenditures that were formally covered with state and local funds. This frees up a like amount to be spent on any expense allowable under the Elementary and Secondary Education Act (ESEA). Carry over the remaining 50 percent of the ARRA funds. • In fiscal year 2010-2011 spend all of your ARRA carry-over funds; thereby allowing you to continue to spend the same amount of district general fund money as in the preceding year on allowable ESEA. • This process would have the net effect of using all of your ARRA funds to free up district general fund to be spent on ESEA allowable expenses. • Creates a funding cliff in fiscal year 2011-2012.

19. Maintenance of Effort • Going to the extreme: • Spend all of your ARRA funds in the 2009-2010 school year • Creates feast or famine • May compromise relationships when general education has significant shortfalls

20. Maintenance of Effort • Best advice is to take the middle ground • Suggestions include a balance • Spend some money on initiatives to improve the quality of special education programs similar to those expenditures recommended by OSEP • Rebuild amounts of carry-over funds if they’ve been depleted in recent years • If allowed, reduce fiscal effort, but be very careful of the funding cliff if the reduced fiscal effort applies to ongoing special education costs that will again need to be funded by state and local funds in fiscal year 2012 • Consider using the district operating reserve to smooth out the funding cliff

21. OPI Support for Budgeting • E-Grants • OPI staff • Marilyn Pearson (mpearson@mt.gov) available to help Part B applicants and districts to analyze their budget • Frank Podobnik (fpodobnik@mt.gov) available to answer questions regarding procedural requirements when calculating maintenance of fiscal effort or completing budget applications • Tim Harris (tharris@mt.gov) and Bob Runkel (brunkel@mt.gov) available to answer questions concerning policies

22. Questions and Answers