Transcript Peggy O`Guin - Tehama County Department of Education

Maintenance of Effort Requirements
in
No Child Left Behind Programs
Categorical Cooperative Program
Directors Association
September 20, 2012
Presented by Peggy O’Guin, CPA
California Department of Education
School Fiscal Services Division
Maintenance of Effort (MOE)
Overview:

MOE concept = “supplement not supplant”
 Feds expect us to use federal funds to supplement, not
supplant, what we were already doing with state and
local funds
 In other words: They expect us to put forth at least
the same level of effort using state and local funds as
we did before they gave us federal funds
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Maintenance of Effort (MOE)
Overview, continued:

Most federal programs have an MOE
requirement
Administration of requirement varies slightly
from program to program
Example: Special Ed MOE rules differ slightly
from NCLB MOE rules
But concept is the same
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Maintenance of Effort (MOE)
Legal requirement:

An LEA may receive its full allocation of NCLB
funds for covered programs for a given year only
if the LEA expended, in the preceding fiscal
year, from state and local funds, at least 90% as
much as it expended in the second preceding
fiscal year from state and local funds
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Maintenance of Effort (MOE)
Legal requirement, continued:

In other words: “The bar” is 90% of prior year
level of expenditure from state and local funds
Either aggregate or per capita, whichever is
more favorable
NCLB Act Title IX and 34 CFR 299.5 in
handout
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Maintenance of Effort (MOE)
Overly simplified illustration:
 In Year 1, LEA spends $111,111 from state and
local funds
 For Year 2, “the bar” will be 90% of $111,111
(= $100,000)

In Year 2, LEA spends only $98,000 from state
and local funds
 LEA fails to maintain effort by 2%

In Year 3, LEA’s NCLB program allocations are
reduced by 2%
 Waivers possible: More on this shortly
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Maintenance of Effort (MOE)
Practical realities:

Note that in the preceding example, LEA really
“failed” to maintain effort by 12%
Because “the bar” is 90% of PY, so the first
10% “reduction of effort” doesn’t count
Pretty lenient – not all programs have a
similar “grace factor”
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Maintenance of Effort (MOE)
Practical realities, continued:

There is actually a two-year lag in when
MOE failure impacts program allocations
Due to timing differences between federal
and state fiscal year, MOE failure in
2010-11 affects allocations for second
subsequent year (2012-13)
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Maintenance of Effort (MOE)
How CDE administers NCLB MOE:

MOE comparison is automated in CDE’s data
collection (“SACS”) software

We extract LEA’s expenditure data, calculate
LEA’s MOE-eligible expenditures from state
and local funds, and compare to PY
 We calculate both aggregate and per capita, and
use whichever is more favorable
 Note that calc at LEA level is preliminary:
“Official” calc is performed at CDE
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Maintenance of Effort (MOE)
How CDE administers NCLB MOE, continued:

“MOE-eligible expenditures” includes most
costs of running a school district: Instruction,
school administration, curriculum
development, pupil transportation, guidance
and counseling, maintenance, district
administration
 Costs such as community services, capital outlay,
debt service, and interfund transfers are excluded
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Maintenance of Effort (MOE)
How CDE administers NCLB MOE, continued:

Temporary exception to the usual
requirement: ARRA Fiscal Stabilization and
Ed Jobs expenditures are allowed to count
toward “state and local” expenditures
 CDE counts only the amount of ARRA needed for
LEA to not fail MOE (or to fail at a lesser
percentage)
 To avoid setting a new higher “bar”
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Maintenance of Effort (MOE)
How CDE administers NCLB MOE, continued:

Automated comparison in software is now
available to LEAs at budget and interim
reporting periods, in addition to year-end
For monitoring & planning
Use is optional; still only required at yearend
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Maintenance of Effort (MOE)
Waivers

Since bar is only 90%, “failure” of up to 10%
is a freebie; after that, waivers possible

An LEA’s request for waiver must
demonstrate either:
Uncontrollable circumstance
Precipitous decline in state and local
resources
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Maintenance of Effort (MOE)
Waivers, continued

Uncontrollable circumstance example:
“In the year before last, our expenditures were high
because we restocked the library after the fire. Last
year, our expenditures were lower by comparison.”

Precipitous decline in state and local resources
example:
“We could not maintain our previous level of
expenditures because our state funding was reduced
by 13 percent.”
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Maintenance of Effort (MOE)
Waiver process:

“Failure Notification” letter from CDE
describes process (sample in handout)
LEA sends waiver request to USDE with
copy to CDE
USDE requests some information from CDE
LEA waiver requests due in January, to
allow time for USDE to process & for states
to reallocate
 Generally, best to request a waiver if eligible 15
Maintenance of Effort (MOE)
Waiver format:

No prescribed format or “template”
Clear & succinct works best
Legitimate & defensible helps too
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Maintenance of Effort (MOE)

Q: Are districts in danger of failing MOE?

A: Yep! Failure statistics & trends:
Fiscal
Year
#
Failures
Affecting
Funding
Year
2006-07
2007-08
3
4
2008-09
2009-10
1
0
1
0
2008-09
19
2010-11
8
4
2009-10
74
2011-12
46
38
2010-11
13
2012-13
not due until
Jan 2013
-
Waivers
Requested
Waivers
Approved
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Maintenance of Effort (MOE)

Q: Is there a statewide plan to help ensure
federal funding is not in jeopardy?

A: Not much state can do – federal law is
federal law
 LEAs agree to MOE rules as a condition of funding
 Adherence to grant terms is part of program &
fiscal management, & includes monitoring MOE
 Waivers provide some relief for events outside
LEA’s control
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Maintenance of Effort (MOE)

Q: Can the state arrange for a blanket waiver?

A: No
 Feds do allow states to request waivers on behalf of
LEAs
 But it’s not a “blanket waiver” – normal rules apply
 CDE did this once, but it didn’t expedite much - some
of process involves extenuating circumstances that
CDE wouldn’t know, so we had to involve LEAs
anyway
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Maintenance of Effort (MOE)

Q: What happens to amounts reduced from
allocations of LEAs who fail MOE?

A: Ultimately, amounts get reallocated among
LEAs
Reallocation process involves considerable
complexity - outside scope for today
Amounts reduced don’t go back to the feds
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Maintenance of Effort (MOE)

Q: What happens if an LEA’s waiver request
is approved?

A: Amounts reduced are restored
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Maintenance of Effort (MOE)
Where from here:

For 2010-11: CDE performed MOE
calculations, comparing 2010-11 to 2009-10
 Affecting allocations for 2012-13

“Failure Notification” letters sent to LEAs
August 16

“Passed Notification” e-mails sent to LEAs
August 23 (sample in handout)
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Maintenance of Effort (MOE)
Where from here, continued:
 For 2011-12: In spring 2013, CDE will perform
MOE calcs comparing 2011-12 to 2010-11
 Affecting allocations for 2013-14

Target date for “Failure Notifications:” June 30,
2013
 But “don’t call us, we’ll call you” - sometimes things
take longer
 Process allows plenty of time to prepare a waiver
request

Target date for “Passed Notification:” A week or
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two after “Failure Notifications”
Maintenance of Effort (MOE)
Where from here, continued:

For 2012-13: Monitor & manage your MOE
throughout the year
Review preliminary MOE calc during yearend closing
Strategize: Sometimes, it’s better to use state
& local funds instead of federal funds (!)
Strategize: If you can’t meet MOE, consider
eligibility for a waiver
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Maintenance of Effort (MOE)
In closing…
“Nobody said categorical program
management was easy.”
~ P. O’Guin
“Federal gift horses sometimes bear special
presents for the recipients.”
~ L. Sharp
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Maintenance of Effort (MOE)
Questions before we adjourn?
Thank you for managing your federal funds
carefully!
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