Every Student Succeeds Act (ESSA) Fiscal Requirements: Supplement Not Supplant and Maintenance of Effort Update

May 2018

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• Welcome, Introductions, and ESSA Overview• Supplement Not Supplant (SNS) – School Year 2018-19

o SNS for Titles II-IV (all LEAs, as with NCLB)o SNS for Title I-A (new in ESSA – LEAs with only one

school per grade span are not required to report to OSSE)

• Maintenance of Effort (MOE) – New: DC charter LEAs and all ESEA subgrantees must report to OSSE after final FY18 and FY19 expenditures.

• Next Steps, Additional Resources and Key Contacts

Agenda

Welcome, Introductions, and ESSA Overview

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Elementary and Secondary Education Act Timeline

1965President Johnson

signs original Elementary and

Secondary Education Act

(ESEA)

1994President Clinton

signs the Improving America’s Schools

Act (IASA)

2002President Bush signs

the No Child Left Behind (NCLB)

2015President Obama

signs the Every Student Succeeds

Act (ESSA)

• ESEA is a key federal civil rights law, providing federal funding to states,LEAs and schools to serve disadvantaged students.

• In exchange, states, LEAs and schools are held accountable for student achievement and progress.

• ESEA includes fiscal requirements to ensure states and LEAs do not take federal funding and reduce state/local education spending.

Supplement, Not Supplant (SNS)

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SNS Overview

• ESEA requires that federal funds “supplement and not supplant” public state and local funding for education.

• SNS has been part of ESEA since 1965.• All DC LEAs were subject to SNS under NCLB.• ESSA updated the methodology to demonstrate

compliance with SNS for Title I funds, but made no changes to SNS in Titles II-IV. All LEAs must still demonstrate SNS compliance for Titles II-IV.

• For Title I-A, OSSE has determined that only LEAs with more than one school per grade span must demonstrate SNS compliance to OSSE.

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SNS: ESEA Title II-A and IV-A• ESSA did not change SNS for Title II-A (Supporting Effective Instruction).• Although Title IV-A’s Student Support and Academic Enrichment is a new

ESSA program, its SNS requirements are the same as Title II-A.• In Titles II-A or IV-A, supplanting is presumed when:

o An LEA uses federal funds to pay for an activity that is required by federal, state or local law; or

o An LEA uses federal funds to pay for an activity it supported with state or local funds the prior year.

• An LEA may be able to overcome a presumption of supplanting if it has written documentation (for example, local legislative action, budget information, or other materials) that it does not have the funds necessary to implement the activity and that the activity would not be carried out in the absence of the federal funds.

• OSSE checks SNS compliance as part of the ESEA ConApp Phase II budget application, and as part of ESEA monitoring.

See ESEA Sec. 2301 and Sec. 4110

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SNS: ESEA Title III-AESSA did not change SNS in Title III, which has stricter tests.

1. In Title III, supplanting is presumed when:• An LEA uses Title III funds to pay for an activity that is required by federal, state

or local law; or • An LEA uses Title III funds to pay for an activity it supported with state or local

funds the prior year.

2. An LEA may not use Title III funds to meet civil rights obligations to English learner (EL) students, such as:• Identifying and assessing all potential EL students, including the annual EL

proficiency assessment.• Providing EL students with an educationally sound language assistance program,

including sufficiently well prepared and trained. • Monitoring and evaluating EL students in language assistance programs.• Ensuring EL students have equal opportunities to participate in activities.• Ensuring meaningful communication with limited English proficient parents.

3. An LEA may use Title III funds to pay for Title I activities for ELs, including EL parental notification, parent participation, state reporting on EL progress.

See USED Guidance on Title III

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• ESSA’s revised SNS test for Title I, Part A changes the way SNS compliance is tested for LEAs and schools that received Title I funds.

• Currently, there are neither federal regulations nor federal guidance regarding the revised SNS test.

• IMPORTANT: Proposed regulations by the Obama administration did not go into effect.

• ALSO IMPORTANT: The revised SNS test is different from the new per pupil expenditure reporting requirement. These compliance requirements are not linked.

ESSA’s Revised SNS for Title I, Part A

Source:

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• Prior to ESSA, Title I, Part A contained an SNS requirement, but the law itself did not describe how compliance should be tested.

• Instead, USED used “three presumptions of supplanting” to test for SNS compliance which required an analysis of individual Title I costs to assess whether a particular Title I cost was supplemental. Three presumptions:

1. An activity required by federal, state, or local law;2. An activity that was paid for with state or local funds in the prior year;

or 3. The same services for Title I students that state and local funds support

for non-Title I students.

• These presumption go away for Title I SNS under ESSA.• NOTE: A different SNS test was available for Title I schools

operating schoolwide programs (one that did not rely on three presumptions of supplanting) but the test was not widely implemented because it was poorly understood.

How SNS Compliance was Tested pre-ESSA

Source:

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• ESSA changes the way SNS is tested in Title I, Part A.• Compliance is NOT tested based on an analysis of individual Title I costs or

services.

• Instead, LEAs must demonstrate that the “methodology used to allocate State and local funds to each school receiving assistance under this part ensures that such school receives all of the State and local funds it would otherwise receive if it were no receiving assistance under this part.”

• Senate report describes methodology as “the manner in which [LEAs] distribute state and local funds to schools.”

• ESSA deadline for compliance was initially Dec. 10, 2017.*

*USED memo dated Dec. 6, 2017 extended the deadline to the start of the 2018-19 school year.

Changes to Title I SNS in ESSA

Source:

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• The new ESSA test looks at how an LEA distributes state and local funds to schools.

• It does not look at how an LEA or its schools spends Title I, Part A funds.

• Note: Title I spending must still meet other spending rules like school eligibility, student eligibility, consistency with the purpose of Title I, and federal cost principles.

Changes to Title I SNS in ESSA (cont.)

Source:

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SNS: ESEA Title I-A• OSSE interprets ESSA to mean that only LEAs with more than one school per

grade span must demonstrate SNS compliance to OSSE. • Other LEAs should still have SNS-compliant methodology, and USED could ask to

see funding methodology. • For the 2017-18 school year, OSSE has identified the following LEAs as having

more than one school per grade span:o Center City PCSo Cesar Chavez PCS for Public Policyo DC Prep PCSo District of Columbia Public Schools (DCPS)o Eagle Academy PCSo Friendship PCSo KIPP DC PCSo Rocketship DC PCS

• As part of the Phase II ESEA consolidated application, due Fall 2018, these LEAs must submit their methodology for allocating local funds to schools.

• This school funding methodology must include UPSFF and other DC local funds, and may be in narrative and/or spreadsheet form.

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SNS: ESEA Title I-A• ESSA does not require LEAs to use the same methodology for

allocating funding to each school.• The LEA must demonstrate that its methodology does not

deprive a Title I school of local funds because of its Title I status. • The methodology should either be Title I-neutral or provide

Title I schools with more local funding than non-Title I schools.

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SNS: ESEA Title I-ASNS compliant methodology could include many examples:• Student characteristics (e.g. ELs, students with disabilities, or at-

risk students get more funding per student, similar to DC’s weighted student formula for DC-to-LEA funding, but for LEA-to-school level funding)

• Grade span (e.g., high schools receive more per student than elementary)

• Personnel costs (e.g., schools are assigned teachers based on a 25:1 student:teacher ratio

• School size (e.g., all schools with fewer than 400 students receive the same local funding per pupil, and all with 400-1,000 students receive a different per-pupil amount, etc., regardless of Title I status)

• Any combination of these, or other factors, as long as Title I schools do not receive less because of Title I status.

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SNS: ESEA Title I-APossible example of SNS compliant methodologyThis example is from USED’s 2015 guidance on schoolwide programs, very similar to ESSA’s SNS test.

Assume:• 1 teacher per 22 students ($65,000/teacher)• 1 principal/school ($120,000)• 1 librarian/school ($65,000)• 2 guidance counselors/school ($65,000/guidance counselor)• $825/student for instructional materials and supplies (including technology)

In a school of 450 students, the school would be expected to receive $2,051,250 in non-Federal resources based on the following calculation:

To meet SNS, an LEA would need to distribute non-federal resources according to the assumptions above to all of its schools, regardless of whether a school receives Title I funds. This example does not, however, suggest that non-federal funds must be used to support the activities in the table above; rather, Title I funds may be used to support any activity identified by the comprehensive needs assessment and articulated in the comprehensive schoolwide plan.

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SNS: ESEA Title I-AHere are some examples of SNS violations:

• Example: an LEA policy ensures at least one guidance counselor in each school. The LEA allocates local funds to pay guidance counselors in non-Title I schools, and uses Title I funds to pay guidance counselors in Title I schools, thus providing fewer local dollars to Title I schools.

This would violate SNS because the schools’ Title I status affects whether they receive local dollars.

• Example: an LEA requires at least one teacher per 30 students. At the non-Title I schools, the LEA uses local funds to reach this ratio. However, the LEA uses federal Title I funds to reach this required ratio at the Title I schools, and thus provides fewer local dollars to these Title I schools.

This would violate SNS because the schools’ Title I status affects how many local dollars they receive.

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Extended Example: Seattle

Source:

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Source:

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Source:

Maintenance of Effort (MOE)

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MOE Overview• MOE requires subgrantees receiving federal funds to

maintain a minimum floor of state/local funding for education from year to year.

• MOE has been part of ESEA since 1965.• The DC School Reform Act of 1995 (DCSRA) exempted

DC charter school LEAs from MOE.• ESSA amended the DCSRA to remove this exemption.• No changes to Individuals with Disabilities Education

Act (IDEA) MOE: these requirements remain the same and are handled separately through your IDEA grants manager.

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• UPDATE: MOE DEADLINE EXTENDED - Per recent U.S. Department of Education technical assistance provided to OSSE on May 10, 2018, DC charter school LEAs will not need to submitESEA MOE expenditure reports to OSSE until after FY18 and FY19 expenditures are complete.

• For charter school LEAs, no action is required for MOE reporting at this time.

• OSSE will first ask for FY18 and FY19 ESEA MOE expenditure reporting after the FY19 fiscal year is complete.

• We developed a reporting tool that was vetted with some key stakeholders. We want to take this delay as an opportunity to get feedback from more charter LEAs in the fall.

MOE Deadline Extended

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MOE Basic RequirementsA subgrantee may receive federal funds for a covered program for a fiscal year only if OSSE finds that either:• Aggregate state/local education expenditures OR• Per-pupil state/local education expendituresFrom the previous fiscal year are at least 90 percent as high as the second previous fiscal year. Use whichever method is more favorable to the subgrantee. (ESEA Sec. 8521)

*Covered programs include the following federal ESEA funds DC receives:• Title I-A (Education for the Disadvantaged);• Title I-D (Neglected and Delinquent);• Title II-A (Teachers and Leaders);• Title III-A (English Language Acquisition);• Title IV-A (Student Support and Academic Enrichment); and • Title IV-B (21st Century Community Learning Centers).

(ESEA Sec. 8101)

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MOE Basic Requirements• Because MOE is new for DC charter LEAs under the 2015 ESSA law,

OSSE will not ask DC charter schools to report on ESEA MOE expenditures before FY18.

• If the subgrantee fails to meet MOE, and also failed to meet MOE once within the five immediately preceding fiscal years, OSSE must reduce the federal funding allocation in the exact proportion by which they failed to maintain effort. (See ESEA Section 8521(b)(1).) Note: Five-year grace period is new flexibility under ESSA, and applies to all subgrantees nationwide.

• OSSE will not penalize DC charter LEAs that fail to meet MOE between FY18 and FY19, unless they also fail to meet MOE again within the next five years beginning FY20.

• If an LEA fails to meet MOE, the lesser amount shall not be used to reset the LEA’s level by which expenditure efforts must be maintained. (See ESEA 8521(b)(2).)

• Federal Waiver - The U.S. Department of Education may waive this requirement only in cases of exceptional or uncontrollable circumstances, such as a natural disaster, change in the organizational structure of the agency or precipitous decline in the agency’s fiscal resources. (See ESEA Section 8521(c).)

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MOE Reporting Process - PlanningFederal regulations govern MOE reporting.Funding sources to report:• Include all local public expenditures for free public education

(i.e. expenditures from UPSFF and all state/local grants); and• Exclude expenditures from federal grants or private donations.Expenditure categories to report:• Include state/local expenditures for "administration, instruction,

attendance and health services, pupil transportation services, operation and maintenance of plant, fixed charges, and net expenditures to cover deficits for food services and student body activities” and

• Exclude state/local expenditures for "community services, capital outlay, debt service or supplemental expenses made as a result of a Presidentially declared disaster."

See 34 CFR 299.5

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Two approaches to calculating:o Option 1: Add totals of each category of included local

education expenditures.o Add totals of each category of included local education

expenditures for "administration, instruction, attendance and health services, pupil transportation services, operation and maintenance of plant, fixed charges, and net expenditures to cover deficits for food services and student body activities." [34 CFR 299.5(d)(1)]

o Option 2: Start with all local public expenditures for education, and subtract excluded categories.o Start with all local public expenditures for education, and

subtract excluded categories: "community services, capital outlay, debt service or supplemental expenses made as a result of a Presidentially declared disaster." [34 CFR 299.5(d)(2)]

MOE Reporting Process – Planning

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Option 1: Included Local Expenditures

AdministrationSalaries, Employee Benefits, Purchased Services, Property (equipment), Other Administration for Policy, Board, Executive Administration, Principal, Full-time Department Chairs, fiscal services, human resources, planning, and administrative information technology.

Instruction

Instruction includes the activities dealing directly with the interaction between teachers and students, including Salaries, Employee Benefits (fixed charges), Services, Curriculum Development, Staff Training, Library/Media Services, Instructional Technology, or Assessment. Teaching may be provided for students in a school classroom, in another location such as a home or hospital, and in other learning situations such as those involving cocurricular activities. It may also be provided through some other approved medium—such as television, radio, computer, the Internet, multimedia, telephone, and correspondence—that is delivered inside or outside the classroom or in other teacher-student settings. Included here are the activities of aides or classroom assistants of any type (graders, teaching machines, etc.) who assist in the instructional process. If proration of expenditures is not possible for department chairpersons who also teach, include department chairpersons who also teach in instruction. Expenditures for full-time department chairpersons should be reported in School Administration.

Attendance and Health Services [Support Services -Students]

Attendance and Social Work Services, Guidance Services, Health Services, Psychological Services, Speech Pathology and Audiology, Occupational Therapy, Physical Therapy, Visually Impaired/Vision Services, and other Student Support Services.

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Option 1: Included Expenditures, cont.

Pupil Transportation Services

Activities concerned with conveying students to and from school, as provided by state and federal law. These include trips between home and school and trips to school activities. This category includes Vehicle Operation, Monitoring Services, (i.e. crossing guards), Vehicle Servicing and Maintenance, and Other Student Transportation Services. The Transportation Director should be coded here. Expenditures for driver's education programs should be coded to Instruction.

Operation and Maintenance of Plant

Operation and Maintenance of Plant. Activities concerned with keeping the physical plant open, comfortable, and safe for use and with keeping the grounds, buildings, and equipment in effective working condition and state of repair. These include the activities of maintaining safety in buildings, on the grounds, and in the vicinity of schools. Include expenditures for Operation of Buildings (including rental, and insurance premiums for liability and property insurance), Maintenance of Buildings, Care and Upkeep of Grounds and Equipment, Vehicle Operation (other than student transportation), Security, Safety, and Other Operations and Maintenance of Plant.

Fixed ChargesInterest on short-term current loans, andjudgments against the LEA. (Note that other fixed charges such as employee benefits and property insurance are already included in categories above, so there is no need to count them again here.)

Net Expenditures to Cover Deficits for Food Services and Student Body Activities

Activities concerned with providing food to students and staff in a school or school district. This service area includes preparing and serving regular and incidental meals, lunches, or snacks in connection with school activities and food delivery.

These descriptions include examples of each category. For full definitions, visit USED's Financial Accounting for Local and State School Systems, 2014: https://nces.ed.gov/pubs2015/fin_acct/chapter6_5.asp

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Option 2: Excluded Local Expenditures

Capital Outlay Capital outlay includes expenditures for fixed assets, construction, property and for buildings and alterations completed by school district staff or contractors .

Community Services

Community Services includes expenditures such as Salaries, benefits, purchased services, supplies, machinery, equipment, furniture, fixtures, vehicle expenditures and other expenditures paid for services to students, staff, and community participants that are community service activities. Examples include community swimming pools, recreation programs for the elderly, parental training, and child care centers for working parents. Counseling for the parents of students, where the objective is to improve the education and well-being of the student, SHOULD be included in Attendance and Health Services.

Debt Service

Debt Service includes expenditures related to servicing the long-term (beyond 1 year) debt of the school district, including payments of both principal and interest. This function should be used to account for bond interest payments, retirement of bonded debt (including current and advance refundings), capital lease payments, and other long-term notes. Interest on short-term notes or loans (repayable within 1 year of receiving the obligation) is included as part of fiscal services within Administration.

Supplemental expenses made as a

result of a Presidentially declared

disaster

Supplemental expenses made as a result of Presidentially declared disasters for the District of Columbia, as found at https://www.fema.gov/disasters. In the past two fiscal years, the only relevant presidentially declared disaster was the major snowstorm of January 22-23, 2016.

These descriptions include examples of each category. For full definitions, visit USED's Financial Accounting for Local and State School Systems, 2014: https://nces.ed.gov/pubs2015/fin_acct/chapter6_5.asp

Additional Resources and Key Contacts

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• OSSE’s ESSA Guidance for LEAs Page: https://osse.dc.gov/node/1253976. • Federal Formula Grants Toolkit: ESEA and IDEA. OSSE, Aug. 18, 2017.

https://osse.dc.gov/node/1267731. • Text of ESEA, as amended by ESSA.

http://legcounsel.house.gov/Comps/Elementary%20And%20Secondary%20Education%20Act%20Of%201965.pdf.

• ESSA Non-Regulatory Guidance: Fiscal Changes. U.S. Department of Education (USED), Nov. 21, 2016. https://www2.ed.gov/policy/elsec/leg/essa/essaguidance160477.pdf.

• Title I Fiscal Guidance. USED, Feb. 2008. http://www.ed.gov/programs/titleiparta/fiscalguid.doc.

• Non-Regulatory Guidance: English Learners and Title III of ESEA, as amended by ESSA. USED, Sep. 23, 2016. https://www2.ed.gov/policy/elsec/leg/essa/essatitleiiiguidenglishlearners92016.pdf.

• Supporting School Reform by Leveraging Federal Funds in a Schoolwide Program. USED, July 2015. https://www2.ed.gov/policy/elsec/guid/eseatitleiswguidance.pdf

Resources

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Federal ESEA GrantsCon.App@dc.gov

Bonnie BaconSupervisory Education Program SpecialistBonnie.Bacon@dc.gov

Giana HuttonESEA Title I-IV Grant ManagerGiana.Hutton@dc.gov

Mildred WashingtonESEA Title I-IV Grant ManagerMildred.Washington@dc.gov

Key OSSE Contacts

Grants Technical Assistanceosse.callcenter@dc.gov(202) 719-6500EGMS Training Guides and Videoshttp://grants.osse.dc.gov

OSSE Organizational Charthttps://osse.dc.gov/node/855822

OSSE Key Points of Contact for LEAshttps://osse.dc.gov/node/1106621

Questions?

Thank you!