UNITED STATES DEPART~ENT OF EDUCATIO:-.I OFFICE OF INSPECTOR GENERAL DEC I 9 2002 Mr. Robert Pasternack Assistant Secretary Office of Special Education and Rehabilitative Services C.S. Department of Education 330 C Street S.W., Room 3006 Washington. DC 20202 Dear :vir. Pasternack: This Final Audit Report (Control Number ED-OIG/A06-B0029) presents the results of our audits of six-selected State's compliance \vith the funding formula requirements orthe Individuals with Disabilities Education Aet (IDEA). The objective of our audit was to determine if selected States complied with thc new IDEA. Part B. § () 11 formula for distributing flow through funds. Our audit focused on federal fiscal years (FY) 2000 and 2001. We provided a draft: of this report to the Office oCSpecial Education and Rehabilitative Services (OSERS). In its response dated November 15.2002. OSERS generally concurred with the conclusions in the draft: audit report. OSERS' comments are summarized in the section that follows the Rccommendations. A copy of the complete response is enclosed with this report. II AlJDIT .. RESULTS . . .. . II Three of the six States reviewed did not comply with the nc\\ IDEA, Part B. ~ 61 I formula for distributing tlow-through funds. Although the six States selected for audit \vere j udgmentally selected and the results cannot be projected to the remaining States. we believe a high probability exists that more States have incorrectly calculated the funding formula or incorrectly distributed the allocations. Specifically, we found that: • Florida incorrectly calculated the base amount Cor FY 2000 and inappropriately distributed the base amount to the Local Education Agencies (LEAs) for FY 200 I. • Tennessee incorrectly calculated the base amollnt for FY 2000. • Rhode Island over funded the FY 2000 base amount and inappropriately adjusted the population and pov-crty allocation to compensate. • Texas. Missouri. and Idaho correctly distributed IDEA flo\v-through funds to the LEAs. 400 MARYLAND AVE., S.W. WASHIKGTON, D.C. 20202-15]() OUT mission is to ensure equal access to education and to promote educational excellence throughout the Nation. Control Number ED-OG/A06-B0029 Page 2 of 10 Our audit identified a 50% error rate of noncompliance and the error existed within each of the stratified categories of States reviewed (large, medium, and small). Because Florida, Tennessee, and Rhode Island did not comply with the new IDEA funding formula, all 332 LEAs in those States received the wrong funding. Specifically, 140 LEAs were under funded, some by as much as $599,000, while 192 LEAs were over funded, some by as much as $838,000. Florida, Tennessee, and Rhode Island officials stated they incorrectly calculated and distributed the base amounts because the existing guidance was confusing and unclear. Additionally, several of the States indicated that receiving the Grant Notification Letter in July is too late for planning purposes and contributes to LEAs being over and under funded. The States provide the anticipated funding to the LEAs earlier in the school year and once the Grant Notification Letters are received, the States do not always go back and make adjustments because the LEAs have already set their budgets for the coming year. Florida Florida did not comply with the IDEA, Part B, § 611 for FYs 2000 and 2001. While the total base allocation remained the same for both years, Florida distributed the base allocation for each LEA to correspond with the change in each year’s children with disabilities child count. According to Enclosure A of the FY 2000 and FY 2001 Grant Notification Letters, “[L]ocal awards, like state awards, are no longer based on [children with disabilities] child count.” In addition, federal regulations [34 CFR § 300.712(b)(2)] allow for adjustments to the base figure only under very specific conditions--when a new LEA is created, LEAs are combined, or the administrative responsibility or geographic boundary of an LEA is changed. For FY 2000, Florida applied the children with disabilities child count (356,296) that was in effect when the allocation was received from the Department, instead of the children with disabilities child count (345,171) that should have been used to establish the base amount. Consequently, Florida incorrectly calculated the initial base allocation to each LEA. As a result, 38 LEAs were under funded and the remaining 34 LEAs were over funded. For FY 2001, Florida distributed the base allocation for each LEA to correspond with the change in the current children with disabilities child count. As a result, 31 LEAs were under funded and 41 LEAs were over funded. Tables A-1 and A-2 represent the amounts Florida was required to allocate for FYs 2000 and 2001, according to the U. S. Department of Education’s (Department) Grant Notification Letters, and the actual amounts that Florida allocated. The Department’s final FY 2001 Grant Notification Letter awarded Florida $287,672,377 in minimum flow-through funds. However, Florida allocated $289,488,126 based on an earlier estimate provided by the Department. To fund the additional $1,815,749, Florida used part of the State’s administrative funds. Tables B-1 and B-2 illustrate the effect that redistributing the LEAs’ base allocation had on six of the LEAs. Control Number ED-OG/A06-B0029 Page 3 of 10 TABLE A-1 FY 2000 Funding Component Grant Notification Letter Florida Actual Funding Required Funding Amounts Amounts Total Minimum Flow Through to LEAs $223,668,878 *$223,668,887 LEA Base Allocation $179,007,131 *$179,007,133 LEA Population/Poverty $ 44,661,747 $ 44,661,756 85% Population Allocation **$ 37,962,485 $ 37,962,485 15% Poverty Allocation **$ 6,699,262 *$ 6,699,271 * Difference due to rounding. ** OIG calculations from the Population/Poverty figure in the Grant Notification Letter. TABLE A-2 FY 2001 Funding Component Grant Notification Letter Florida Actual Funding Required Funding Amounts Amounts Total Minimum Flow Through to LEAs $287,672,377 $289,488,126 LEA Base Allocation $179,007,131 *$179,007,133 LEA Population/Poverty $108,665,246 $110,480,993 85% Population Allocation **$ 92,365,459 *$ 93,908,846 15% Poverty Allocation **$ 16,299,787 *$ 16,572,149 * Difference due to rounding. ** OIG calculations from the Population/Poverty figure in the Grant Notification Letter. TABLE B-1 Florida Under/Over Funding Examples FY 2000 District Incorrect Minimum Correct Minimum Difference Flow-through Flow-through Duval $12,636,022 $13,068,360 $(432,338) Seminole $ 4,725,920 $ 5,027,374 $(301,454) Pinellas $12,594,386 $12,839,064 $(244,678) Broward $18,094,694 $17,593,633 $ 501,061 Miami-Dade $27,086,346 $26,677,932 $ 408,414 Orange $14,440,510 $14,064,499 $ 376,011 Control Number ED-OG/A06-B0029 Page 4 of 10 TABLE B-2 Florida Under/Over Funding Examples FY 2001 District Incorrect Minimum Correct Minimum Difference Flow-through Flow-through Duval $15,944,983 $16,544,780 $(599,797) Pinellas $15,393,788 $15,779,671 $(385,883) Seminole $ 6,280,196 $ 6,511,722 $(231,526) Hillsborough $19,236,517 $18,398,118 $ 838,399 Orange $19,024,855 $18,194,055 $ 830,800 Miami-Dade $37,435,562 $37,018,131 $ 417,431 Florida officials agreed that during the past two years, they incorrectly distributed the base allocation for each district to correspond with each year’s change in the disabled child count. They concurred with our recommendation to recalculate the two fiscal years, FY 2000 and FY 2001. However, they believe that this recalculation of the base amount disproportionately allocates funds to districts with declining child counts. Florida officials believe this creates an inequitable advantage to some of the districts; however, they are prepared to comply with the findings of the audit. Florida has already taken steps to adjust funds for under- and over-funded districts for both FY 2000 and FY 2001. Tennessee In FY 2000, Tennessee did not comply with the IDEA, Part B, § 611 funding formula. Specifically, Tennessee incorrectly calculated the base allocation for each LEA using the 1999 children with disabilities child count instead of the 1998 count. As a result, 84 LEAs were over funded by amounts ranging from $484 to $92,043 and 62 LEAs were under funded by amounts ranging from $82 to $326,755. Tennessee corrected the base allocation and complied with the IDEA, Part B, § 611 requirements for FY 2001. Tables C-1 and C-2 represent the amounts Tennessee was required to allocate for FYs 2000 and 2001, according to the Department’s Grant Notification Letters, and the actual amounts that Tennessee allocated. Table D illustrates the effect that redistributing the LEAs’ base allocation had on six of the LEAs. TABLE C-1 FY 2000 Funding Component Grant Notification Letter Florida Actual Funding Required Funding Amounts Amounts Total Minimum Flow Through to LEAs $82,026,989 *$82,034,232 LEA Base Allocation $66,522,917 **$66,522,957 LEA Population/Poverty $15,504,072 $15,511,275 85% Population Allocation ***$13,178,461 $13,184,579 15% Poverty Allocation ***$ 2,325,611 $ 2,326,696 * Tennessee over funded the Total Minimum Flow Through funds by $7,243. ** Tennessee over funded the FY 2000 base allocation by $40. *** OIG calculations from the Population/Poverty figure in the Grant Notification Letter. Control Number ED-OG/A06-B0029 Page 5 of 10 TABLE C-2 FY 2001 Funding Component Grant Notification Letter Florida Actual Funding Required Funding Amounts Amounts Total Minimum Flow Through to LEAs $106,503,848 *$106,503,848 LEA Base Allocation $ 66,522,917 $ 66,522,917 LEA Population/Poverty $ 39,980,931 *$ 39,980,933 85% Population Allocation **$ 33,983,791 $ 33,983,793 15% Poverty Allocation **$ 5,997,140 $ 5,997,140 * Rounding difference of $2. ** OIG calculations from the Population/Poverty figure in the Grant Notification Letter. TABLE D Tennessee Under/Over Funding Examples FY 2000 Incorrect Base Correct Base *Difference Memphis $6,381,862 $6,709,701 $(327,839) Knox $3,646,553 $3,906,127 $(259,574) Shelby $3,178,333 $3,298,841 $(120,508) Nashville $5,103,180 $5,011,791 $ 91,389 Tipton $ 975,284 $ 912,225 $ 63,059 Rutherford $1,581,555 $1,524,178 $ 57,377 * The difference represents errors in calculating the base allocation for these districts and not the total amount under or over allocated. Tennessee agreed that allocations for FY 2000 and FY 2001 should be based on the same children with disabilities child count, when determining the base allocation. Tennessee stated that the base allocation should be calculated using the December 1998 children with disabilities child count, and that the allocations for FY 2000 were incorrectly based on the December 1999 children with disabilities child count, while allocations for FY 2001 were correctly based on the December 1998 children with disabilities child count. Regarding the recommendation to reallocate for FY 2000, Tennessee stated, “Since this award is no longer available for use, we propose utilizing some of Tennessee’s discretionary money from the FY 2001 award to reallocate funds to those LEAs who did not receive their fair share.” Rhode Island Rhode Island over funded the FY 2000 base allocation and, in order to compensate for the over funding, inappropriately adjusted downward the population and poverty amounts. As a result, nine LEAs were under funded and the remaining 33 LEAs were over funded. Control Number ED-OG/A06-B0029 Page 6 of 10 The LEA base allocation should have been $13,181,363 instead of the $13,767,447 initially computed by Rhode Island. When Rhode Island officials received the final IDEA Grant Notification Letter in July 2000, they did not recompute and make downward adjustments to their initial base allocations because the LEAs had already been notified of their expected funding level (the expected funding levels are provided to the LEAs earlier in the year so the LEAs can plan for the upcoming school year). Instead of lowering the base allocations, Rhode Island lowered the population and poverty allocations in order to meet the minimum flow- through amounts. Rhode Island should have allocated $2,979,698 for the population and poverty amounts (85 percent or $2,532,743.30 based on population and 15 percent or $446,954.70 based on poverty). Instead, Rhode Island allocated a total of $2,393,604--$2,034,563 for population and $359,041 for poverty. Rhode Island correctly allocated IDEA flow through funds for FY 2001. Table E represents the amounts Rhode Island was required to allocate for FY 2000, according to the Department’s Grant Notification Letter, and the actual amounts that Rhode Island allocated. Table F illustrates the effect that redistributing the LEAs’ base allocation had on six of the LEAs. TABLE E FY 2000 Funding Component Grant Notification Letter Florida Actual Funding Required Funding Amounts Amounts Total Minimum Flow Through to LEAs $16,161,061 $16,161,051 LEA Base Allocation $13,181,363 $13,767,447 LEA Population/Poverty $ 2,979,698 $ 2,393,604 85% Population Allocation **$ 2,532,743 $ 2,034,563 15% Poverty Allocation **$ 446,955 $ 359,041 ** OIG calculations from the Population/Poverty figure in the Grant Notification Letter. TABLE F Rhode Island Under/Over Funding Examples FY 2000 Incorrect Minimum Correct Minimum Difference Flow-through Flow-through Providence $2,355,098 $2,403,314 $(48,217) East Providence $ 662,555 $ 666,421 $ (3,866) Pawtucket $1,002,046 $1,005,769 $ (3,723) Cranston $1,191,794 $1,185,173 $6,621 Cumberland $ 531,669 $ 527,589 $ 4,080 Warwick $1,310,747 $1,306,739 $ 4,008 Rhode Island officials requested that our recommendation to reallocate FY 2000 funds be modified. We did not change our recommendation based on Rhode Island’s response. Rhode Island stated, “Rhode Island prepared the FFY [Federal Fiscal Year] 2000 allocation based on the interpretation of the regulations to mean that the base amount of 75% required by the new Control Number ED-OG/A06-B0029 Page 7 of 10 allocation method was the minimum amount that could be allocated to LEAs. We believed that if in that base year a state had allocated more than 75%, as we did in RI, it was allowable to use that higher amount as a hold harmless for the base. In preparing the [second year’s] allocation, it was learned that this was an incorrect premise. The base amount of 75% of FFY 2000 funds was to be used even if the SEA had given out higher amounts than that to the LEAs in FFY 2000. The appropriate base was used to prepare the FFY 2001 LEA allocations.” Rhode Island further stated that, although the FY 2000 allocation was prepared based on an invalid interpretation of the methodology, the nine LEAs that were under funded did not spend all allocated funds. Also, even if they were given the additional monies due them, they could not have spent it. Consequently, no harm had been done to the Federal or to the local interest. They further stated that in view of the absence of harm, to undergo the complex administrative process of reallocating funds would be burdensome and unproductive. RECOMMENDATIONS We recommend that the Assistant Secretary for Special Education and Rehabilitative Services: 1.1 Provide clearer guidance to all of the States on calculating and distributing the base, population, and poverty allocations. 1.2 Require the remaining 44 States, the District of Columbia, and Puerto Rico to reaffirm that they: (1) calculated the FY 1999 base allocation figure using the 1998 children with disabilities child count; (2) correctly distributed the base allocations, based on the 1998 count, in FYs 2000 and 2001; and (3) correctly distributed the FYs 2000 and 2001 population and poverty allocations. 1.3 Provide an accurate estimate of the final IDEA Grant to the States earlier in the year to allow more time for budget planning and allocations. DEPARTMENT’S COMMENTS and OIG’S RESPONSE The Office of Special Education and Rehabilitative Services generally concurred with the conclusions and Recommendation 1.2 in the report. The Department did not specifically address Recommendation 1.1; however, OSERS did include the guidance that was provided to the States during our audit period. Regarding Recommendation 1.2, OSERS proposed to send a Memorandum to the other 44 States, the District of Columbia and Puerto Rico explaining that they should examine the methodology that was used to distribute the IDEA funds in order to ensure that each state allocates funds correctly. With respect to Recommendation 1.3, OSERS agreed that earlier notification would be beneficial; however, it was concerned that if it provided the States with funding figures earlier in the year, accuracy of the estimates might be compromised. Census data on which the estimates are based have a tendency to change because of the constant revisions of the census data. Control Number ED-OG/A06-B0029 Page 8 of 10 OIG’s Response Based on the comments received by the Department, we are not changing our recommendations. With regards to Recommendation 1.3, we understand that the recommendation might not be feasible to implement at this time. However, to the extent reliable data becomes available earlier in the process, we believe the Department should implement this recommendation. BACKGROUND The IDEA Grants to States program provides formula grants to assist the 50 States, the District of Columbia, Puerto Rico, and the outlying areas of the Pacific Basin and Freely Associated States in meeting the excess costs of providing special education and related services to children with disabilities. IDEA, Part B requires the Department to allocate funds to the States who are required to allocate a portion of the funding to each LEA. Prior to 1997, the formula for calculating the funds that each State and LEA would receive was based on the total number of children with disabilities. The IDEA Amendments of 1997 changed the formula to require States to allocate funds to the LEAs based on total student population and the number of students living in poverty. The new formula was slated to take effect when the Grants to States program exceeded $4.925 billion. This trigger figure was reached in FY 2000, making it the first year of the new formula and FY 1999 the base year. The new funding formula has several components, some of which are funds the States may use at the State level. Although the new formula has several components, our audit focused on the funds designated for allocation to the LEAs. These funds are known as the “minimum flow- through funds.” The minimum flow-through funds are composed of three components--a fixed base amount, an amount based on total student population, and an amount based on the number of students living at poverty level. The fixed base figure for each LEA is the amount the LEA would have received for the base year (FY 1999), if the State had distributed 75 percent of its grant for that year. The remaining flow-through funds are distributed based on each LEA’s total public and private elementary and secondary school population (85 percent) and the number of children living in poverty (15 percent). Each year in July, the Department provides a Grant Notification Letter to each State that identifies the funding level for the flow-through components. OBJECTIVE, SCOPE, AND METHODOLOGY The objective of our audit was to determine if selected States complied with the new IDEA, Part B, § 611 formula for distributing flow-through funds. We selected six States for our audit by stratifying the 1998-1999 State Grant Awards into three strata: large States with a funding level greater than $100 million; medium States with funding levels between $20 and $100 million; and small States with a funding level under $20 million. We selected the first two States in each stratum with the largest funding levels, except for Florida and Rhode Island. After consulting with Department officials, we agreed not to visit California and New York because of several recent audits in California and the events occurring in New Control Number ED-OG/A06-B0029 Page 9 of 10 York. This resulted in the selection of Florida, the State with the fourth largest funding level. Department officials also asked that we visit Rhode Island because of difficulties that the State has had implementing the revised formula contained in the 1997 IDEA amendments. The six States selected were: large – Texas and Florida; medium – Missouri and Tennessee; and small – Idaho and Rhode Island. Initially, our audit (Texas) covered FY 2000. The scope was expanded to included FY 2001 in the remaining five States. To accomplish our objective, we: • Obtained the States’ formula allocation to all the LEAs, including the allocation breakdown of the base, population and poverty amounts for FYs 2000 and 2001 (FY 2000 only in Texas). • Reviewed State Auditor reports for 2000 where available. • Interviewed State officials regarding the data used in the allocation formula, the methodology used in the formula, and other applicable procedures. • Recalculated the allocation for the LEAs in each of the States. • Performed limited data reliability tests on the data used in the allocation formula and found the data to be reliable for our purposes. We performed fieldwork at the six States from November to December 2001. We conducted an exit conference with officials from each of the six States. We also conducted an exit conference with Department officials on June 5, 2002. Our work was performed in accordance with generally accepted government auditing standards appropriate to the scope of the audit described above. STATEMENT OF MANAGEMENT CONTROLS As part of our review of each State, we gained an understanding of the system of management controls, policies, procedures, and practices applicable to each State’s compliance with the new IDEA, Part B, § 611 formula for distributing flow-through funds. Because of inherent limitations, a study and evaluation made for the limited purpose described above would not necessarily disclose all material weaknesses in the management controls. However, we identified management control weakness that affected the allocation of flow-through funds to LEAs in Florida, Tennessee, and Rhode Island. The weaknesses are discussed in the Audit Results section of this report and in each of the three State audit reports. Control r\umber ED-OG/A06-B0029 Page 10 of 10 ADMINISTRATIVE MA TTERS Statements that managerial practices need improvements, as well as other conclusions and recommendations in this report represent the opinions of the Office of Inspector General. Determinations of corrective action to be taken will be made by the appropriate Department of Education officials. In accordance with the Freedom of Information Act (5 "C.S.c. § 552), rep0l1s issued by the Office of Inspector General are available, if requested, to members of the press and general public to the extent information contained therein is not subject to exemptions in the Act. If you have any questions or if you wish to discuss the contents of this report, please contact Sherri L. Demmel, Regional Inspector General for Audit, Dallas, Texas, at 214-880-3031. Please refer to the control number in all correspondence related to the report. S]I~7~Lt~ 'I~Lew Acting Assistant Inspector General for Audit Services Enclosure Enclosure UNITED STATES DEPARTMENT OF EDUCATION OFFICE OF SPECIAL EDUCATION A.'iD REHABILITATIVE SERVICES THE ASSISTANT SECRETARY \! nv I 5 2002 TO: Thomas A. Carter Assistant Inspector General FROM: Robert H. Pasternack, Ph.D. SUBJECT: State Educational Agencies' Compliance with the Funding Formula Requirements of Section 611 of Part B, the Individuals with Disabilities Education Act This memorandum provides the Office of Inspector General (OIG) with the Office of Special Education and Rehabilitative Services' (OSERS) advanced review comments concerning the ~iG's Draft Audit Report Control Number ED-OIG/A06-B0029 (Report). This Report presents the results of audits of six selected States' compliance with the funding formula requirements of the Individuals with Disabilities Education Act (IDEA). The audits' objective was to determine if selected States complied with the new IDEA, Part B, section 611 fornlUla for distributing flow through funds to local educational agencies (LEAs). OSERS reviewed the content and recommendations detailed in the above-referenced Report, and concurs with the conclusions reached as a result of your audit sample of the six States. Understanding the concerns raised as a result of this audit sample, OSERS would like to inforn1 OIG about the efforts that OSERS is taking to minimize the potential for State educational agencies (SEAs) to make mistakes in the Part B funding formula distributions to LEAs. Also, OSERS would like to note concerns with recommendation three in the Report. Documentation accompanying each Part B of IDEA grant award includes Enclosure A (copy attached). This enclosure provides specific details explaining the minimum flow-through amount to LEAs, including the section 611 base allocation and popUlation/poverty allocation. Also included in Enclosure A is a numerical chart listing the total dollar amount of the Part B, section 611 grant award for each State, as well as the total dollar minimum flow-through amount, including the exact base allocation, along with the population/poverty allocation amounts. These detailed data provide the States \\lith the specific amounts, in the aggregate, that must be distributed to the LEAs. Regarding the Report's second recommendation, OSERS proposes to send a Memorandum to all 44 States, the District of Columbia and Puerto Rico explaining that OIG found errors in several SEAs' distribution of IDEA funds to their LEAs for FYs 2000 and 2001 and that the SEAs need 600 I~DEPENDENCE AVE.• S.W. WASHINGTOK. D.C. 20202-2500 Our mission is to ensure equal access to education and to promote educational excellence throughout the Natlon. Enclosure Page 2 - Thomas A. Carter, Assistant Inspector General to examine the methodology that was used to distribute those IDEA funds in order to ensure that the State is allocating funds correctly (and to prevent future audit findings against the State). If, through the reexamination of its procedures, an SEA concludes that it has incorrectly calculated the LEAs' allocation of section 611 funds for FY s 2000 or 200 1, the SEA will be instructed to take appropriate steps to ensure that those LEAs that were under funded receive the amount of section 611 funds to which they were entitled in FY s 2000 and 2001. With respect to OIG's third recommendation that addresses the provision of an accurate estimate of the final IDEA grant to States earlier in the year to allow more time for budget planning and allocations, OSERS has some concern that such a shift in the notification to States may present complications not considered by OIG. The IDEA grant estimates are based on data obtained from the U.S. Census Bureau. The Census data are not necessarily compiled at a point in the year that would permit OSERS to move up the notification of the funding amounts and at the same time provide accurate final estimates. Although OSERS could provide the States with funding figures earlier in the year, accuracy of the estimates would be compromised in that the Census data on which the estimates are based have a tendency to change as a result of the constant revision of the Census data. Although OSERS agrees that an earlier notification to SEAs would be beneficial, the use of earlier Census data has the likely potential of compromising the accuracy of the figures. If you have any questions on this matter, please do not hesitate to contact JoLeta Reynolds at (202) 205-5507. Enclosure ENCLOSURE A SECTION 611 (PART B - GRANTS TO STATES) Total Grant Award (Column A of Table I) Column A includes your total grant award for FFY 2002. The amount that you have received in the accompanying grant award, plus the additional funds that you will receive in October 2002, will make up your total award amount. State grants are calculated as fo11O\.,..s: States are first provided an amount equal to the amount they received in FFY 1999. Ofthe funds in excess of the FFY 1999 level, 85% are allocated to States on the basis of their relative populations of children aged 3 through 21, who are the same age as children with disabilities for whom the State ensures the availability ofFAPE, and 15% on the relative populations of children of those ages who are living in poverty. The statute also contains a number of floors and ceilings below and above which a State's allocation may not fall. Minimum Flow Through to LEAs (Column B of Table I) Column B includes the total minimum amount that you must flow through to local educational agencies (LEAs). This amount is in addition to any funds that the State may choose to flow through to LEAs from its State set-aside funds or funds required for Capacity Building. Note that local awards, like State awards, are no longer based on child count. The minimum flow through is comprised of the base allocation and population and poverty amounts listed below. Section 611 Base Allocation (Column C of Table I) The amount shown in Column C is the portion of the LEA flow-through amount that must be distributed to LEAs based on the amounts that the LEAs would have received from FFY 1999 funds had the State education agency (SEA) flowed through 75% of the State award to LEAs. Note that this amount is less than the minimum amount that you were required to provide to LEAs from FFY 1999 funds. Section 300.712(b)(1)-(2) of the Part B regulations clarifies how base payments are made to LEAs. Section 611 Population/Poverty (Column D of Table I) The amount shown in Column D is the remaining amount that must be flowed through to LEAs. Of this amount, 85% is distributed on a pro rata basis to LEAs according to public and private elementary and secondary school enrollment, and 15% on a pro rata basis to LEAs according to the number of children in LEAs living in poverty, as determined by the State. Enclosure Capacity a-iNn.: and f1IIpro\'rmad M.Ciritias (Column E of Table I) Column E includes the minimum mnount that must be used for Capacity Building and Improvement Activities. The minimum amount that a State must use for sub grants to LEAs for capacity building and improvement activities is equal to the maximum amount that the State was allowed to retain fOT State level activities for FFY 2001, multiplied by the difference betv.'een the percentage increase in the State's allocation under Section 611 from FFY 2001, and the rate of inflation. These fimds are to be used by LEAs to provide direct services and make systemic change to improve results for children with disabilities through: (l) direct services, including alternative programmjng for clrildrcnwho have been expelled from school, and services for children in correctional facilities., children enrolled in State-operated or State-supported schools, and children in charter schools; (2) addressing needs or carrying out improvement strategies identified in the State Improvement Plan; (3) adopting promising practices, materials, and technology, based on knowledge derived from education research and other sources; (4) establishing, expanding or implementing interagency agreements and arrangements between LEAs and other agencies concerning the provision of services to children with disabilities and their families; and (5) increasing cooperative problem-solving between parents and school personnel and promoting the use of alternative dispute resolution. SectiOD. .611 State Set-aside (Columns F and G of Table I) Column F includes the maximwn State set-aside amount (including funds for administration) and Column G includes the maximum portion of the State set-aside amount that may be used for administration. State set-aside amounts are limited to the maximum amount that a State could set aside in the prior FFY~ plus an adjustment based on the lesser of the rate of inflation or the percentage increase in the State's allocation over the preceding fiscal year. For FFY 2002, the maximum amount that each State may use for State-level activities is the State 2001 level plus approximately 2.13% for inflation. SEAs may use the State set-aside funds for: (1) support and direct services, including technical assistance and personnel development and training; (2) administrative costs of monitoring and complaint investigation, but only to the extent that those costs exceed the costs incurred for those activities during Fiscal Year 1985; (3) establishing and implementing the mediation process required by the Individuals with Disabilities Education Act (IDEA) Section 615( e). including providing for the costs of mediators and support personnel; (4) assisting LEAs in meeting personnel shortages; (5) developing a State Improvement Plan under subpart 1 of Part D of the IDEA; (6) conducting activities at the State and local levels to meet the performance goals established by the State; (7) supporting implementation of the State Improvement Plan; (8) supplementing other amounts used to develop and implement a Statewide coordinated services system designed to improve results for children and families, including children with disabilities and their families (not to exceed 1% of the funds received under this program); and (9) as an additional source of funding for providing subgrants 10 LEAs for capacity building an(! improvement activities as described above. Funds that a State sets aside may also be distributed to LEAs, at the State's discretion, in any manner determined appropriate by the State. States may also use up to 20% of the maximum funds available for State set-aside activities for administration (see Column G). 2 Enclosure Section 611 St.te Set-aside Percentages (Columns H and I of Table I) Column H is the percentage of the total award that is the maximum amount that may be set aside for State-level activities (including funds for administration) and Column I is the percentage of the total award that may be used for 2.dministration. Funding Revisions The sum of Columns B, E, and F equals the total award for your State in Column A. Please note that, while no changes are expected, total grant award, capacity building, and flow-through amounts may be revised when final awards are made in October 2002. No changes are expected in the maximum amounts available fOT set-aside, since these amounts have been calculated for all States based on their FFY 2001 maximum set-aside amounts and the rate of inflation. 3 02/1912002 TABLE I FISCAL YEAR 2002 ALLOCA liONS GRANTS TO STATES INDIVIDUALS WITH DISABILITIES EDUCATION ACT - PART B, SECTION 611 C2IlImD.A Cohlmll2 C2hmnl.C C911HnnJ! C2IlIInn..f ColumllE cmwnn..G C9.bmm.H CQI\!moJ Mlmlmum Minimum LEA Minimum ortlon of Milimum Maximum State Portion of MaxlmurII SI.le Flow-Through LEA Populallonl Capacity Ma.lmum St.te Set-Aside Sel-Aslde Sel-Aslde Available for Grant to n.. se Poverty Building and Siale Available 'or Percent of Administration as Aw.rd LfA1 Allo~all!!ll AIl2rnIo.n Iml![Q~~ment S~ AdmIn/slrlllon Total Awanl Pe~ent of Mil Awanl US TOTAL 57,528,533,000 $6.400,559,589 $3,158,941\.901 53,241,610,688 $141,807,5OR $853,500,980 5173,401,408 Alabama 119,960,334 103,058,512 51,763,442 51,295,070 2,451,393 14,450,429 2,890,086 12,0% 2,4% Alaska 22,199,605 19,136,095 9,185,518 9,950,577 461,773 2,601,737 549,814 11.7% 25% Arizona 111,045,656 97,227,559 45,947,295 51.280.264 2,082,846 11,735,251 2,347,050 106% 2.1% Ar1canSI$ 71,962,298 62,304,868 30,654,695 31,650,173 1.455,695 8,201.735 1,640,347 11.4% 2.3% Callfomla 781.662,507 679,958,560 ~~3,42e,031 356,530,529 15,330,161 86,373,786 17,274,757 11.1% 2,2% Colorado .. 94,048.771 81,604,212 38,914.504 42,689,708 1,875.808 10,568,751 2,113,750 11.2% 2.2% Connecticut 89,245,788 76,261,973 3\1,795,094 36.466,879 1.674.964 11,308,851 2,261,770 12.7% 2.5% Delaware 20,345.877 17,615,171 8,418,502 9,196,669 411,608 2.319,098 549,814 11.4% 2.7% Florida 405,878,306 350,785,138 179,007,131 171,778,007 7,349,058 47,744,110 9,548,822 11.8% 24% Georgia 195,216,655 170,639,615 80,774,679 89,864,936 3,704,576 20,872,464 4,174,493 10.7% 21% HawaII 25,660,148 21,711,406 10,617,384 12,094,022 444,473 2,504.269 549,814 98% 2.1% Idaho 34,533,972 30,145.863 14,289,101 15,856,762 661.434 3,726,675 745,335 10.8% 2.2% illinois 336,446,325 290,916,158 145.798.830 145,117,378 G.409,163 39,121,004 7,824,201 11.6% 23% Indiana 170,853,119 147,315,778 7fl,006,114 71,309,664 3,Ofl4,32~ 20,453.016 4,090,603 12.0% 2.4% Iowa 82,526,911 70,975,591 36,799,117 34,176.474 1,490,IE7 10,061,153 2,012,231 12.2% :/4% Kan••• 70,893,325 61,448,458 30,299.450 31.149,008 1,258.071 8,186,796 1,fl37,359 11.5% 2.3% Kentucky 104,503.321 89,967,110 45,623,108 44,343,942 1,958,955 12.577,256 2,515.451 12.0% 24% Louisiana 119,376,775 103,220,337 49,394.457 53.825,880 2,435,312 13,721,126 2,7~4,225 115% 2.3% Maine 36,989,288 31,460,019 16,493,686 14,966,331 713,2D8 4,815.971 963,194 13.0% 2.6% Mlryland 131,443,233 113,558,662 57,921,866 5~,636,796 2.409,628 15,474,943 3,094,989 11.8% 74% Masslchusetts 191,890,947 164,887,660 85,565,027 79,322.633 3.483.533 23,519,754 4,703,951 12.3%. 2.5% Michigan 260,135.764 226,498,694 107,9n,fll0 118,575,064 5,010.570 28,626,500 5,725,300 11.0% 2.2% Mlnnesotl 128,321,623 111.133,036 55,057.097 W,075,939 2,217,397 14,971,190 2,994,238 117% 2.3% Mississippi 77,199,160 65,800,526 32,007,733 33.7:)2,/93 1,718.153 9,680.481 1,936,096 125% 25% Missouri 153,553,541 132,219,616 ()8,230,162 63,989,454 2,752,162 18,581,763 3,716,353 121% 2.4% Montanl 23,559,507 20,320,275 9.748.203 10,572.072 488,260 2,750,972 550.H14 11.7% 2.3% Nebraska 50,475,888 43,704,138 22,507.423 21,196,715 673,563 5,898,167 1,179,633 11.7% 2.3% Nevada 41.760,879 36,541,193 17,279,374 19,261,619 786,780 4.432,906 886,581 10.6% :7.1% New Hampshire 32,080,256 27,593,943 14,262,653 13,331,290 578,752 3,907,561 781,512 122% 24% New Jeruy 244,340,509 209,972,164 108,952,520 101.019.644 4.433,655 29,934,690 5,986,938 123% 2.5% New Mexico 61.594,953 53,253,334 :/7,026,021 26,227,313 1.07f1.107. 7,265,517 1,453,103 11.8% 2.4% NewYor1c 509,305,853 438.449,982 224,090,730 214,351,252 9,808,308 61,047,563 12,209.513 120% 2.4% North Carolln. 202,724,229 170,103,858 85,734,091 90.369,767 3,897,510 72,722,861 4,544,572 11.2% 22% North Dlkota 15.520,608 14.~O7,13~ 6,835,722 7,471,413 333,644 1.879.829 549,814 11.4% 33% Ohio 288,468,284 249,117.401 119,359,351 129.758,050 5,931.484 33.419,399 6,683,880 116% 2.3% Oklahoml 98,502,970 85,654,029 41.636.213 44,015,816 I,03().l62 10,912,179 2,182,436 11.1% 22% Oregon 86,394,113 75,362,307 36,24?,655 39,119,652 1.603,671 9.428,135 1,885,627 10.9% 2.2% Pennsylvillnl. 281,508,625 244,176,527 117.400,583 126,775,944 5,466,996 31,865,102 6,373,020 11.3% 23% Rhode Island 29,560,959 25,294,038 13,181,363 12,112,675 550.450 3.716.471 7~3,294 12.6% 25% South Carolina 115.429,949 99,984,508 51,358,930 48.625.578 2,021,745 13,423,696 2,684,739 11.6% 2.3% South Dakola 19,680,342 17,059,180 8,143,124 8,916,056 395,096 2,226,066 549,814 11.3% 2.8% Tennessee 154,805,179 132,972.777 66,522,917 66.449,860 3,290,868 18,541,534 3,708,307 120% 2.4% Tex.& 608,102,898 527,719,235 252.423,854 275,295.381 12,116.487 68,267,176 13,653,435 112% 2.2% Utlh 68,595,427 59,212,808 28,382,690 30,830,118 1.414,272 7,968,347 1,593,660 11.6% 2.3% Verlllont 15,029,020 13,879,599 6,590,041 7,288,658 308,916 1.740,505 549,814 10.9% 3.b% Vlrglnll 181,253,563 156,606,894 79,717,764 ~6,889,130 3,261,136 21,38~,533 4,277,107 11,8% 24% Washington 142,673.221 123,985,987 59,195,558 64,790,429 2.809,250 15.827,984 3,165,597 11.1% ,. 2°10 West Vlrglnll 51.337,699 43,636,253 22,891,709 20,744,544 993,517 6.707,029 1,341,586 13.1% 26% Wisconsin 140,599,055 121.407,379 60,304,853 61,102,526 2,863,341 16,328,335 3,265,667 11.6% 23% Wyoming 16,711,120 14.468,913 6,914,550 7,554,363 337,975 1,904,232 549,814 11.4% 3.3% District of Columbia 10,229,967 9,066,805 4,232,848 4,833,957 175,327 987,835 549.814 9.7% 5.4% PUerto Rico 67,879,755 59,858.310 28.086,566 31,771,744 1,209,098 6,812,347 1.362.469 10.0% 2.0% Dep"rtment 01 the Inlerlor 79,377,301 m :::l (') AmerlCln Samoa 5,705,650 NOTES: Column A - B ... E + F 285,283 50% Guam 12,629,887 ColumI'lA-C+D+ E+F 631,494 50% 0 Northem Marianas 4,372,921 Column H - 20% of Column G except for Outly 216,646 5.0% en Virgin ISlands Pacific easln Compelltlon 7,999,858 6.579,300 Column B-C'" D Amounls lor Outlying Areas are not based 399,993 5.0% ..,s::::: on MaximUm SI~t. Set-Aside amounts <D Evaluation 16,000,000 REPORT DISTRIBUTION LIST CONTROL NO. ED-OIG/A06-B0029 ED Action Official Robert H. Pasternak Assistant Secretary Office of Special Education and Rehabilitative Services Other ED Officials/Staff (electronic copy) Audit Liaison Officer Press Secretary Office of Special Education Office of Public Affairs and Rehabilitative Services Correspondence Control Assistant General Counsel Office of General Counsel Office of the General Counsel Assistant Secretary Deputy Secretary Office of Legislation and Office of the Deputy Secretary Congressional Affairs Assistant Secretary Chief of Staff Office of Intergovernmental Office of the Secretary and Interagency Affairs Director Under Secretary Financial Improvement and Office of the Under Secretary Post Audit Operations Office of the Chief Financial Officer Post Audit Group Supervisor Director Financial Improvement and Office of Public Affairs Post Audit Operations Office of the Chief Financial Officer Indirect Cost Group Supervisor Financial Improvement and Post Audit Operations Office of the Chief Financial Officer
Audits of six-selected State's compliance with the funding formula requirements of the Individuals with Disabilities Education Act.
Published by the Department of Education, Office of Inspector General on 2002-12-19.
Below is a raw (and likely hideous) rendition of the original report. (PDF)