ARRA FAQs on IDEA Stimulus Funds

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1 ARRA FAQs on IDEA Stimulus Funds Frequently asked questions regarding the ARRA funding under IDEA. Overview Principles: The overall goals of the American Recovery and Reinvestment Act (ARRA) are to stimulate the economy in the short term and invest in education and other essential public services to ensure the long-term economic health of our nation. Four principles guide the distribution and use of ARRA funds: Spend funds quickly to save and create jobs. Improve student achievement through school improvement and reform. Ensure transparency, reporting, and accountability. Due to the unprecedented scope and importance of this investment, ARRA funds are subject to additional and more rigorous reporting requirements than normally apply to grant recipients. 4. Invest one-time ARRA funds thoughtfully to minimize the "funding cliff." Frequently Asked Questions This document includes questions regarding the ARRA funding under Individuals with Disabilities Education Act (IDEA), including eligibility for funds, accountability of funds, distribution of funds, suggestions for use of these funds, clarification of maintenance of effort (MOE), and the effect of ARRA IDEA funds on the calculation of proportion share amount for private parentally placed students. Eligibility What are the ARRA funds for the IDEA? These funds are commonly referred to as the IDEA, Part B, ARRA of 2009 or ARRA IDEA stimulus funds. The ARRA IDEA 611 and ARRA IDEA 619 funds are new one-time federal fiscal year 2009 dollars that support allowable IDEA related services or activities. IMPORTANT NOTE: These funds are in addition to the regular 2009 IDEA Part B awards (IDEA Grants to States and Preschool). Together the ARRA IDEA grants and the regular IDEA grants are the total fiscal year (FY) 2009 Part B Grants to States and Preschool Grants allocations. Are the ARRA IDEA funds available for just state fiscal year 2009? NO. The time frame for these funds is February 17, 2009 through September 30, 201 This time frame means that the ARRA IDEA funds are available for the entire state fiscal years and portions of state fiscal years and IMPORTANT NOTE: All ARRA IDEA funds must be obligated by September 30, 201 May districts apply for ARRA IDEA funds? NO. ARRA IDEA funds are distributed to states on the basis of a funding formula authorized in IDEA. The ARRA IDEA grants are considered federal formula grants to states. Guidance from the U.S. Department of Education (ED) requires that the entire amount of the ARRA IDEA funds flow through to local educational agencies (LEAs) by means of a formula. For California, the Special Education Local Plan Agency (SELPA) is the local educational agency that receives IDEA funds. The SELPA receives its portion of the ARRA funds through a grant award. The SELPA must sign and return the AO 400 grant assurance after they have read and agree to follow the grant conditions that are included with the grant award. Each SELPA s Governance Council or Board develops an annual budget plan to determine the amount of the IDEA grant funds including ARRA funds each of its member districts/charter LEAs receive. Transparency, Accountability, and Reporting Are states required to track IDEA, Part B, ARRA funds separately from IDEA regular funds?

2 YES. ARRA requires that recipients of funds made available under that Act separately account for, and report on, how those funds are spent. Recipients will need to maintain accurate documentation of all ARRA expenditures to ensure that the data reported are accurate, complete, and reliable. The California Department of Education (CDE) will be expected to monitor sub-grantees to help ensure data quality and the proper expenditure of ARRA funds. The ARRA requires accountability and transparency regarding the use of ARRA funds. Districts and the CDE are required to accurately measure and track results of the spending and outcomes of ARRA funds (final federal guidelines are forthcoming and will be shared upon receipt). Further information on ARRA reporting instructions will be provided as they become available. The CDE has established Standardized Account Codes Structure (SACS) resource codes for the ARRA IDEA funds. The chart below provides the SACS Resource Codes for ARRA and regular IDEA Part B funds. Program Local Agency Entitlements, Section 611 ARRA IDEA Grants Regular IDEA Grants IDEA IEP Allowable Services Expenditures Private Parentally Placed ISP Expenditures Coordinated Early Intervening Services Expenditures State Institutions, Section Preschool Local Entitlement, Section Preschool Grants, Section Are there rules that govern the amount of IDEA, Part B, ARRA funds that the CDE, SELPA, or LEA may draw down at any one time? YES. The CDE must have an effective system for managing the flow of funds that ensures that it and SELPAs or LEAs are able to draw down funds as needed to pay program costs but that also minimizes the time that elapses between the transfer of the funds and their disbursement by the CDE, SELPA, or LEA, in accordance with U.S. Department of the Treasury regulations at 31 Code of Federal Regulations (CFR) Part 205. [See 34 CFR Section ( ) 80.21(b)]. The CDE, SELPA, and LEA must promptly, but at least quarterly, remit to the U.S. Department of Education (ED) any interest greater than $100 that they earned on the payments. (34 CFR 80.21(i)). The ED will take appropriate actions against grantees and subgrantees that fail to comply with this requirement. What information is the CDE required to include in its quarterly reports under the ARRA? The CDE is required to submit reports containing the information required under section 1512(c) of the ARRA. These reports must be submitted not later than 10 days after the end of each calendar quarter to the ED. Each SELPA and LEA shall provide the CDE with information necessary to enable the CDE to carry out its reporting duties under ARRA IDEA. This information, including such quantitative and qualitative data as the CDE may require, shall be submitted in a manner and at a time determined by the CDE. Failure to submit timely and accurate information may be considered by the CDE in making determinations or in taking any other action to enforce IDEA, Part B, ARRA guidelines. As noted above, specific requirements for reporting will be disseminated as they become available. 4. What are our shared responsibilities for ensuring that all funds under the ARRA are used for authorized purposes and instances of fraud, waste, and abuse are prevented? All ARRA funds must be spent with an unprecedented level of transparency and accountability. Accordingly, CDE, SELPAs and LEAs must maintain accurate, complete, and reliable documentation of all ARRA IDEA expenditures. The ARRA contains very stringent reporting requirements and requires that detailed information on the uses of funds be available publicly. The CDE has important oversight responsibilities and must monitor grant and subgrant activities to ensure compliance with all applicable federal requirements. If the CDE, SELPA, or LEA fails to comply with requirements governing the use of IDEA, Part B funds, the ED may, consistent with applicable administrative procedures, take one or more enforcement actions, including withholding or suspending, in whole or in part, IDEA, Part B funds or recovering misspent funds following an audit. Reporting guidelines are forthcoming from

3 the ED. The ARRA establishes the Recovery Act Accountability and Transparency Board, which is responsible for coordinating and conducting oversight of spending under the ARRA to prevent fraud, waste, and abuse. The ED s Office of Inspector General (OIG) will conduct comprehensive audits of ARRA implementation activities. Distribution of Funds Since the ARRA IDEA funds are available for portions of three fiscal years, are districts required to use or expend a certain percentage of the funds each year? NO. There is not a specific percentage requirement. The ARRA recommends that the majority of the funds be used in and and the remainder in District officials should be thoughtful in their use of these one-time ARRA IDEA funds. Therefore, districts should use these funds for short-term investments that may lead to sustainable long-term benefits rather than for expenditures the district may not be able to sustain once the ARRA funds are expended. The ARRA states that ARRA IDEA funds should be distributed as expeditiously as possible by the State Education Agency. How does the CDE distribute the ARRA funds to SELPAs and districts? On May 8, 2009, the Legislature approved the CDE s request for the authority to spend the ARRA IDEA funds. The CDE, Special Education Division s (SED) Grants Unit, mailed grant awards to the SELPAs on May 12, SELPAs are required to read and approve the grant conditions that are attached to the award notice. Once the SELPA grantee signs and returns the grant assurance page to the CDE, the SED Unit begins the process for a payment request for the first 20 percent of the total grant award. The State Controller s Office issues a warrant to the SELPA s county treasurer s office. The SELPA is responsible for disseminating the ARRA funds to its member districts. IMPORTANT NOTE: Local ARRA IDEA grant awards to SELPA are based on the full IDEA ARRA award to California. The ED will release the ARRA IDEA funds in two phases to CDE. The state has received the first 50 percent. The second phase will become available in October 2009, provided the state has (1) implemented a compliant tracking process and (2) that the LEAs are using funds consistent with the purposes of the Act. Funds will be released to SELPAs according to the requirements of the Federal Cash Management Improvement Act. The CDE must have an effective system for managing the flow of funds that ensures that it and SELPAs or LEAs are able to draw down funds as needed to pay program costs but that also minimizes the time that elapses between the transfer of the funds and their disbursement by the CDE, SELPA, or LEA, in accordance with U.S. Department of the Treasury regulations at 31 CFR Part 205. (See 34 CFR 80.21(b).) What is the expenditure reporting period for ARRA IDEA grant awards? In addition, there will be more frequent expenditure reporting periods for the ARRA IDEA grant awards. The first interim report will cover the time period of February 17, 2009 through June 30, The second reporting period is July 1, 2009 through September 30, Thereafter, SELPAs may submit calendar quarterly expenditure reports through September 30, 201 Once all ARRA funds are expended and a final expenditure report has been submitted, no further expenditure reports are necessary. The SED Grants Unit has posted interim expenditure report forms on the CDE Web page under Other Resources. 4. The ARRA grant award I received shows that 50 percent of the grant award is and 50 percent is Does this mean that the SELPA will receive the first 50 percent of the grant award by the end of ? NO. The Legislature decided to split the spending authority of the ARRA IDEA funds 50 percent for FY and 50 percent for FY , hence the fiscal split on the grant award. As stated above, the SED will distribute 20 percent of the total ARRA IDEA award upon receipt of the signed assurance document from the SELPA. This is the initial or first payment of the ARRA IDEA funds. The next payment made by SED will be calculated on the basis of the actual expenditures reported by the SELPA on its first expenditure report due no later than July 10, The maximum amount that SED can pay a SELPA based on its first expenditure report is up to 50 percent of the total grant award because the federal government has only provided the state 50 percent of the state s total ARRA grant award.

4 5. How and when will IDEA Part B, ARRA funds be allocated by the CDE to SELPAs? Unlike the regular IDEA grant payment schedule, the CDE intends to award the IDEA Part B Grants to States and Preschool Grants ARRA funds in calendar quarterly installments beginning July 1, SELPAs may report within 10 days of the calendar quarter actual expenditures to the SED. The table below provides the payment schedule for the ARRA IDEA grant funds. The initial payment to SELPAs is upon the SED receipt of the AO 400 grant assurance document. To receive additional funds, a SELPA must show expenditures on interim reports. Report Scheduled Time Frame Type Payment Initial June Percent of Total Grant (40 Percent of Funds Available) 1st July Percent of Total Grant Interim (70 Percent of Funds Available) 2nd October 50 Percent of Total Grant Interim 2009 (100 Percent of Funds Available) 3rd Interim January 2010 Amount of Funds Expended Up to100 Percent of Total Maximum Payment 20 Percent of Total Grant (40 Percent of Funds Available) 50 Percent of Total Grant (100 Percent of Funds Available) 50 Percent of Total Grant (100 Percent of Funds Available) 100 Percent of Total NOTE: The first payment of the second 50 percent of ARRA IDEA funds will be distributed to SELPAs on a proportionate basis of the year-to-date reported expenditures. Maintenance of Effort (MOE) Since the ARRA IDEA funds cross three fiscal years, are districts allowed to use a percent of the ARRA IDEA funds to lower their or Special Education MOE? NO. The ARRA IDEA funds all count as funds for the purpose of the MOE calculation. Thus is the only year that districts may include ARRA funds as part of its 50 percent MOE reduction exception. Districts cannot use ARRA IDEA funds to reduce their FY special education MOE. The same is true for FY special education MOE. IMPORTANT NOTE: The SACS MOE software will add a new adjustment column to the Special Education MOE reports. This column will extract the new ARRA IDEA resource codes. The total of the new ARRA resource codes will be subtracted from the federal expenditures for the Special Education Actual to Actual (SEMA) Report that compares the actual expenditures to the actual expenditures and the Special Education Budget to Actual (SEMB) Report that compares the budgeted amounts to the actual expenditures. The School Fiscal Services Division will save the amounts in the ARRA Deduct column. These amounts will be added to the SEMA report that compares the actual expenditures to actual expenditures. How does a district calculate the 50 percent MOE reduction exception for ? An LEA compares the total federal subgrant allocation award received under the Part B Grants to States program in with the total subgrant Grants to States allocation award they expect to receive in (including both the regular Part B grants to states subgrant allocation and any Part B IDEA grants to states ARRA funds that the LEA receives). If the total federal subgrant allocation under the Part B Grants to States program received by an LEA in exceeds the amount received by that LEA in under that program, the LEA may be eligible to reduce the level of local, or state and local, special education expenditures otherwise required, by up to 50 percent of this increase. An LEA choosing to take advantage of this flexibility is only required to maintain expenditures at the reduced MOE level in subsequent years, until that LEA increases the level of special education expenditures, using state or local funds, on its own. What are the potential uses of state/local funds freed-up by the MOE reduction? The LEA must spend the full amount by which it reduces local, or state and local, effort for special education and related services under this provision on activities that could be supported with funds under the Elementary

5 Secondary Education Act (ESEA) - regardless of whether the LEA is using funds under the ESEA for those activities. This includes any activities allowed under Title I, Impact Aid, and other ESEA programs. An LEA could use these funds to pay for activities that are currently being funded with other state or local funds or for new activities. 4. How does the LEA reduce its MOE in light of the ARRA IDEA Part B funds? For example, if the LEA expended $2,000,000 of local and state funds on special education and related services in and lowered that amount by $350,000 in , the LEA must expend at least $1,650,000 in state and local funds on special education and related services in to meet the MOE requirement in 34 CFR IMPORTANT NOTE: In , the year the LEA took the MOE reduction; it also must separately track and ensure that the $350,000 is expended on activities allowable under the ESEA. In and subsequent years, the LEA does not have to continue to separately track the $350,000 expended for ESEA activities 5. Are there eligibility requirements that a district must meet in order to use the 50 percent MOE reduction exception for the FY 2009? YES. Under IDEA section 613(a)(2)(C) (34 CFR ), a district must meet the following eligibility requirements that limit whether an LEA may reduce effort. (a) District Compliance Determinations - A district must receive a compliance determination in the category of Meets Requirements to be permitted to reduce their MOE for FY Under IDEA Section 616(a), states are required to make annual determinations of each district. The range of Meets Requirements is a compliance score of 5 to 4.0. (b) Significant Disproportionality Calculations A district must not be found to be significantly disproportionate. Under IDEA Section 616(f) 34 CFR , states are required to collect and examine data to determine if LEAs have significant disproportionality based on race and ethnicity in the identification of children as children with disabilities, the identification of children with specific impairments, the placement in particular education settings, and the incidence, duration, and type of disciplinary actions. States must require an LEA with significant disproportionality to utilize 15 percent of the LEA s total amount of IDEA Part B funds for comprehensive early intervening services (CEIS). The 15 percent is calculated based on the aggregate of the Grants to States and Preschool Grants amounts for both the regular IDEA awards and the IDEA ARRA awards. [See Office of Special Education Programs (OSEP) Memo 07-09, April 24, 2007 and Memo 08-09, July 28, 2008 (Outside Source) for further information on funds for CEIS when significant disproportionality exists]. LEAs that are required to use the full 15 percent for CEIS will not be able to take advantage of the flexibility for local MOE reduction that would otherwise be available under IDEA section 613(a)(2)(C). IMPORTANT NOTE: The Assessment and Evaluation Services Unit of the SED will provide the outcome of the significant disproportionality calculations by the end of July (c) Free Appropriate Public Education (FAPE) A district must be able to demonstrate that is able to establish and maintain programs of FAPE. States are required to prohibit an LEA from using 50 percent MOE rule when it determines that a district is unable to establish and maintain programs of FAPE. (d) Other programmatic findings A district that the state has taken action against the LEA for any violations under IDEA Section 616 may not take advantage of the 50 percent MOE rule. 6. May a district request a waiver to lower its local MOE on the basis of loss of local revenue? There is no provision authorizing waiver of the local MOE requirement based on economic conditions or loss of local revenue. Uses of ARRA IDEA Funds What are some valid uses (expenditures) for the ARRA IDEA funds? Additional details on the suggestions below will follow but for now here are some ideas that will support students and staff.

6 Student Focus 1 Purchase state of the art assistive technology and conduct subsequent professional development in its use 1 Equipment for student use in instruction 2 Work stations for student use 2 Purchase new resources and materials for use in instruction 1 Student and teacher textbooks aligned to curriculum 2 Supplemental materials for pre teach and re-teach techniques 3 Contract with experts in behavioral intervention or instructional intervention to improve instruction for students 1 Support consultation and training for administrators and staff 2 Disability specific consultation Staff Focus 1 Provide intensive professional development on evidence-based practices for academics and behavior 1 Enhance Response to Intervention Squared (RTI2) efforts (process, interventions, procedures) 2 Enhance Positive Behavioral Supports (PBS) efforts (process, interventions, procedures) 3 Expand to secondary RTI2 efforts 2 Conduct district-wide training on use of a single progress monitoring tool 3 Develop or expand the capacity to collect and use data to improve teaching and learning and to monitor progress 4 Create development time for staff to align IEP with content standards 5 Create planning time for school teams to prepare for IEP meetings, data review meetings, and improvement planning 6 Provide intensive district-wide professional development for special and general education teachers that focuses on scaling up, through replication, proven and innovative evidence-based school-wide strategies in reading, math, writing and science, and positive behavioral supports to improve student outcomes Expand Certification Options 1 Assist special education teachers in meeting the Highly Qualified Teacher (HQT) rule under ESEA for teaching core reading, math 2 Fund internal candidates to become certified in speech pathology (utilizing the new on-line program) 3 Fund internal candidates to become speech pathology assistants 4 Support mentoring for new special education teachers or administrators 4. Expand Staff to Support Closing the Achievement Gap 4.1 Fund coaches in reading and behavior for RTI2 and PBS 4.2 Support development of the more intense services under PBS and RTI2 4.3 Increase hours for paraprofessionals to allow time for planning instructional strategies with special and general education teachers 4.4 Expand instructional time in reading, math and student management 4.5 Employ Instructional Assistants to assist in the inclusion efforts that enhance access to the general education curriculum (including techniques for students with autism and their families) 4.6 Employ transition coordinators to work with community employers to develop job placements for youth with disabilities. 4.7 Employ secondary transition staff to improve post school outcomes for students with disabilities 4.8 Employ summer coaches/teachers for algebra prep for students with disabilities Parentally-Placed Private School Students How will the ARRA funds be included in the calculation for proportionate share of IDEA funds for services to parentallyplaced private school children? In calculating the proportionate share required under IDEA section 612(a)(10)(A)(i)(I), an LEA must first aggregate the school year funds received under the Grants to States regular and ARRA awards and

7 apply the formula outlined in 34 CFR to the aggregated amount. The proportionate share of ARRA IDEA 611 funds set-aside for parentally-placed private school children with disabilities must be tracked separately from regular IDEA 61 CDE has established SACS Resource Code 3314 for LEAs to track private parentally placed individual service plan expenditures. The proportionate share of ARRA IDEA 611 funds set-aside for parentally-placed private school children with disabilities is available through September 30, 201 If an LEA has completed its consultation required under IDEA section 612(a)(10)(A)(iii), will the LEA have to conduct additional consultation because the IDEA ARRA funds will increase the amount available for equitable services to parentally placed private school children? Under section 612(a)(10)(A)(iii), timely and meaningful consultation must occur during the design and development of special education and related services. The consultation process must include discussions of how the process will operate throughout the school year to ensure that parentally-placed children with disabilities identified through the child find process may meaningfully participate in special education and related services. An LEA may be able to use the mechanisms developed for the ongoing consultation process to work with representatives of the private schools located in the area served by the LEA and representatives of parents of parentally-placed private school children with disabilities in determining how the proportionate share of IDEA ARRA funds will be expended. In any case, an LEA must ensure that it has engaged in consultation with the private school representatives and representatives of parents of parentally-placed private school children with disabilities about how the additional funds available for services for parentally-placed private school children with disabilities will be used. Questions: Chris Essman California Department of Education 1430 N Street Sacramento, CA Last Reviewed: Monday, June 01, 2009