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 Other ED Officials/Staff (electronic copy) Audit Liaison Officer Press Secretary Office of Special Education and Office of Public Affairs 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 Regional Commissioner Rehabilitation Services Financial Improvement and Administration, Region VI Post Audit Operations Office of the Chief Financial Officer
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)