oversight

Audit of the Individuals with Disabilities Act, Part B, § 611, at the Florida Department of Education.

Published by the Department of Education, Office of Inspector General on 2002-07-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             UNITED STATES DEPARTMENT OF EDUCATION

                                                OFFICE OF INSPECTOR GENERAL

                                                         JUL '8 2002

MEMORANDUM

TO               Robert H. Pasternack
                 Assistant Secretary
                                   Education and Rehabilitative Services

FROM
                 Assistant Inspector General for Audit Services

SUBJECT:         FINAL AUDIT REPORT
                 Audit ofIDEA, Part B, Section 611 at the Florida Department afEducation
                 Control Number ED-OIG/A06-C0004


Attached is our subject report presenting the finding and recommendation resulting from our
audit at the Florida Department of Education.

In accordance with the Department's Audit Resolution Directive, you have been designated as
the action official responsible for resolution ofthe finding and recommendation in this report.

If you have any questions or wish to discuss the contents of this report, please contact Sherri
Demme}, Regional Inspector General for Audit, Dallas, Texas, at 214-880-3031. Please refer to
the audit control number in all correspondence relating to this report.


Attachment




                                     400 MARYLA:'oID AVE., S.W. WASHINGTON, D.C. 20202·1510 


             Our mission is to ensure equal access to education and to promote educational excellence throughout the Nation. 

                        UNITED STATES DEPARTMEKT OF EDUCATION

                                           OFFICE OF INSPECTOR GENERAL




                                                     JUL I 8 2002

Ms. Shan Goff
Bureau Chief of Instructional
Support and Community Services
Florida Department of Education
325 West Gaines Street, Suite 614
Tallahassee, Florida 32399-0400

Dear Ms. Goff:

This Final Audit Report (A06-C0004) presents the results of our audit of the Individuals
with Disabilities Education Act (IDEA), Part B, § 611, at the Florida Department of
Education (Florida). The objective of our audit was to determine if florida complied with
the IDEA, Part B, § 611 requirements. Our audit focused on federal fiscal years (FY) 2000
and 2001.

A draft of this report was provided to the Florida Department of Education. In its response,
Florida concurred with our recommendation to recalculate the grant allocations for 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's
comments are summarized in the section that follows the Recommendation. A copy of the
complete response is enclosed with this report.


                                               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 ". .; th disabilities. IDEA, Part B requires the U.S. Department of
Education (the Department) to allocate funds to the States who are required to allocate a
portion of the funding to each Local Education Agency (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 making FY 1999 the base.



                                400 MARYLAND AVE .•     s.w. WASHINGTON, D.C. 202021510
        Our mission is to ensure equal access to education and to promote educational excellence throughout the Nation.
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 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. According to § 611(g)(2)(B)(ii), each state is required to
distribute 85 percent of the population and poverty funds on a pro rata basis according to the
LEAs’ public and private elementary and secondary school enrollment. The remaining 15
percent is distributed to each LEA on a pro rata basis according to the number of children
living in poverty.

Each year in July, the Department provides a Grant Notification Letter to each state that
identifies the funding level for the flow-through components. Florida allocates IDEA, Part
B, § 611 funds to 72 LEAs.


                                   AUDIT RESULTS
We determined that Florida did not comply with the new IDEA, Part B, § 611 funding
formula for FY 2000 and FY 2001. While the total base allocation of $179,007,131 remained
the same for both years, Florida redistributed 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 C.F.R. § 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, the first year the funding formula was in effect, 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 initial children with disabilities child count (345,171)
that should have been used to establish the base amount. Consequently, Florida incorrectly
calculated the initial base figure to each LEA. As a result, 38 LEAs were under funded and
the remaining 34 LEAs were over funded. For example, the Duval school district was under
funded by $432,338 while the Broward school district was over funded by $501,061.

For FY 2001, Florida redistributed 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. For example, the Duval school district was under
funded by $599,797 while the Broward school district was over funded by $396,506.




                                              2

The following table represents the amounts Florida was required to allocate for FY 2000,
according to the Department’s Grant Notification Letter and the actual amounts that Florida
allocated.

                                       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. 


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. The following table represents the amounts Florida was
required to allocate for FY 2001, according to the Department’s Grant Notification Letter,
and the actual amounts that Florida allocated.

                                       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. 



                                RECOMMENDATION
We recommend that the Assistant Secretary for the Office of Special Education and
Rehabilitative Services, require Florida officials to recompute the FY 2000 and FY 2001
flow-through funds using the correct base, population and poverty figures, and reallocate the
correct funding to the appropriate LEAs.




                                              3

            FLORIDA’S COMMENTS TO THE DRAFT REPORT 


Florida officials agreed that during the past two years, they have incorrectly redistributed 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. They expect the
corrective measures to be completed no later than July 1, 2003.


                OBJECTIVE, SCOPE, AND METHODOLOGY
The objective of our audit was to determine if Florida complied with the new IDEA, Part B,
§ 611 funding requirements for FYs 2000 and 2001. To accomplish our objective, we:

   • 	 Obtained Florida’s formula allocation to all the LEAs, including the allocation
       breakdown of the base, population and poverty amounts for FYs 2000 and 2001.

   • 	 Reviewed the Florida State Auditor report for 2000.

   • 	 Interviewed state officials regarding the data used in the allocation formula, the
       methodology used in the formula, and other applicable policies and procedures.

   • 	 Recalculated the allocation for all Florida LEAs.

   • 	 Performed limited data reliability tests on the data used in the allocation formula and
       found the data to be reliable for our purposes.

Our audit of Florida’s formula allocation covered FYs 2000 and 2001. We performed
fieldwork from December 3 through December 6, 2001, at the State offices in Tallahassee,
Florida. An exit conference was held on April 4, 2002. Our work was performed in
accordance with generally accepted government auditing standards appropriate to the scope
of the audit described above.




                                               4

               STATEMENT OF MANAGEMENT CONTROLS 

As part of our review, we assessed the management control system of policies, procedures,
and practices applicable to Florida’s compliance with IDEA, Part B, § 611. Our assessment
was performed to determine the level of control risk for determining the nature, extent, and
timing of our substantive tests to accomplish the audit objective.

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, our assessment disclosed a management control weakness that adversely
affected the allocation of flow-through funds to the 72 Florida LEAs. That weakness is
discussed in the Audit Results section of this report.


                          ADMINISTRATIVE MATTERS
If you have any additional comments or information that you believe may have a bearing on
the resolution of this audit, you should send them directly to the following U.S. Department
of Education official, who will consider them before taking final Departmental action on the
audit:

               Dr. Robert H. Pasternack, Assistant Secretary
               U.S. Department of Education
               Office of Special Education & Rehabilitative Services
               330 C Street, SW
               Room 3006, MES Building
               Washington, DC 20202-2500

Office of Management and Budget Circular A-50 directs Federal agencies to expedite the
resolution of audits by initiating timely action on the findings and recommendations
contained therein. Therefore, we request receipt of your comments within 30 days.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports 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.




                                              5

If you have any questions or 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 this report.




                                      Assistant Inspector General for Audit Services

Enclosur~




                                               6

                                                                                                                                            ENCLOSURE 

                                     FLORIDA DEPART1tIENT OF EDUCATION




CHARLIE CRIST                                                                                                SHAN GOFF, CHIEF

 CO\1MISSIO:-':ER 
                                                                                          BUREAl: OF J~SlRlicrJO'lAL SlPPORT A"D
                                                                                                             COMM\J~I'TY SERVICES 

      May 29,2002


      Ms. Sherri L. Demmel 

      Regional Inspector General for Audit 

      U.S. Department of Education 

      Office of Inspector General 

      1999 Bryan Street 

      Suite 2630 

      Dallas, Texas 75201-6817 


      Dear Ms. Demmel:

      SUBJECT: Draft Audit Repon A06-C004

      This is in response to the aforementioned audit report that the Florida Department of Education
      recently received concerning the formula used to allocate Indivlduals with Disabilities Education
      Act (IDEA), Part B funds for federal fiscal years 2000 and 2001.

      It is our understanding that, as pan of the formula, the "base amount" remains a fixed amount
      and that this base figure is the amount that districts (LEAs) would have received for the base
      year (FFY 1999) if Florida had distributed 75 percent of its grant for that year. However, during
      the past two years that this formula has been implemented, our Department has been incorrectly
      redistributing the base allocation for each district to correspond with the change in the disabled
      chlld count each year. As a result, we were found "out-of-compliance" with this portion of the
      funding formula.

      While we concur with your office's recommendation to recalculate the two fiscal years, FFY
      2000 and FFY 2001, it is our belief that this recalculation of the base amount disproportionately
      allocates funds to districts with declining child counts. Although we believe this creates an
      inequitable advantage to some of our districts, the Department is prepared to comply with the
      findings of this audit and recalculate FFY 2000 and FFY 200 1.

      Steps are already underway to adjust funds for under- and over-funded districts for both FFY
      2000 and FFY 2001. These corrective measures will be completed no latcr than July I, 2003.




                325 W,S' GAINES   STREET •   Roo" 614 •   TALIP.nASSE':. FLORIDA   32399-0400 • (850) 488-1570 • FA.X. (850\ 921-fl.2..16
                                                                    www.firn.edu/doe

                                                  An affirmative action/equal opportunity employer
                                                                                      ENCLOSURE 

Ms. Sherri L. Demmel
Regional Inspector General for Audit
May 29. 2002
Page Two


We understand that this audit report is still in draft form and further recommendations will be
forthcoming from the Office of Speci?J gducation Programs. Please fee1 free to call me at
850/488-1570 if you have any questiorl~tir;<&oncerns reg~Iding our response.
                                         :',,) ,          ~r'
Sincerely.



Shan Goff. Chief
Bureau of Instructional Support and Community Services

cc: 	 Larry Wood
      Wayne Pierson
      Betty Coxe
      Martha Asbury
      Virginia Sasser
                          REPORT DISTRIBUTION LIST 

                         CONTROL NO. ED-OIG/A06-C0004 

Auditee                                             ED Action Official

Ms. Shan Goff                                       Dr. Robert H. Pasternack
Bureau Chief of Instructional                       Assistant Secretary
Support and Community Services                      Office of Special Education and
Florida Department of Education                      Rehabilitative Services
325 West Gaines Street, Suite 614
Tallahassee, Florida 32399-0400


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