FiscalCommittee

June 8, 2017Robert (Bob) Steponovich

Business Services Director

• CEO Council• Each charter = One vote

• Two Council meetings per year – Fall/Spring

• Recommendations for Council vetted with Executive Committee

• Timely communication to the field• Two Fiscal Committee meetings each year – Following CEO

• Follow up from CEO Council

Communication Facilitates Governance

Allocation Plan – 11 Elements

I. State Special Education Funding

II. Federal Special Education Funding

III. Special Education Deficit

IV. Partner Definition

V. Charter SELPA Administrative Fee for Contracted Services

VI. Set Aside Pool

VII. Unspent Funds

VIII.Income Re-Allocation

IX. Educationally Related Mental Health Services (ERMHS)

X. Risk Pool

XI. Low Incidence Materials and Services

Core Principles

• Stability and predictability of funding is critically important

• Timely and accurate projections with no surprises

• Timely and accurate distribution of cash

• Reasonable and consistent rationale developed with a standard of fairness and equitability

• Transparency

Today’s Agenda

1. Budget Update, Deficit, Rate Smoothing Pool

2. Set-Aside Risk Pool

3. Unspent Funds/Charters “At-Risk”

4. Mental Health Funding (ERMHS)

5. Legal Risk Pool

6. Low Incidence Funding

7. SELPA Fiscal Portal

8. General Information

9. Disproportionality in Special Education

May 2017 CEO Council Action

May 2017 CEO Council Action

Budget Update, Deficit, Rate Smoothing Pool1

CEO Council May 2017 Info Item

Special Education Funding Deficits

Yes, the AB602 formula said you would get $100. But, we just can’t budget for that, so here’s $98. Tell ya what. I’ll hit you back if I find some available cash down the road. K?

Budgeting in 2016-17 and 2017-18

*Eligible member defined as existing in prior year and included by CDE in the federal grant. If a charter in the Charter SELPA had unspent funds > 25% in prior year, they are ineligible to receive federal funds in current year.

State Current Year P-2 ADA

$503

2016-17 Estimate

$507

Feb 2017 Confirmed

$514

2017-18 Estimate

Assumes 2% Deficit

Rate Smoothing Pool dollars used to guarantee

Federal* Prior Year Enrollment (CBEDS)

$125

2016-17 Estimate

$127

Feb 2017 Confirmed

$125

2017-18 Estimate

2017-18 Rate DetailAssumes COLA of 1.56%Assumes final deficit (February 2019) of 2%

No changes are expected, but should the budget act signed into law change the rate or June CDE deficit certifications change significantly from projections, Charter SELPA leadership will communicate a revised rate in July 2017.

Rate Smoothing Pool Background

• State level deficits in special education have made funding difficult to predict.

• The rate smoothing pool concept was established by CEO Council action in 2014-15, with 2015-16 being the first year of implementation.

• The goal is to provide budget projections with a higher degree of reliability for state funding.

Rate Smoothing Pool Budget for 2017-18

15-16 Deficit Restored to

1.7%Feb 2017

Because 16-17 Deficit3.3% @ P-1

Feb 2017

Projection is 16-17 DeficitRestored to

2.0% Feb 2018

Pool Balance

Set-Aside Risk Pool2CEO Council May 2017 Info Item

Set-Aside Risk Pool changed this year

Reserve for SELPA-wide Protection• SELPA funding declines as a result of the action of a member• SELPA required to return funding• No recourse to recover the funds – bankruptcy/closure

Model Change for 2016-17• Previous model = severable risk model• Shared risk = lower required balance needed• Existing member contribution = $2.50/ADA• New member contribution = $5.00/ADA contribution

Actions• Close 15-16 under previous rules (i.e. final adjustment, interest, return to departing charters)• Return amounts above $2.50 per ADA to existing partners• Transfer $200K from Legal Risk Pool

Budget UpdateNo expense in 2016-17 from the fund

Budget Impact

• 15-16 Partners returning in 16-17• Amount above $2.50 per ADA (PY P-2) returned

• $25K maximum

• Distribution schedule on website

• New charters 2016-17 forward• New and Expansion

• One-time contribution of $5 per ADA (CY P-2).

3 Unspent FundsCharters “At-Risk”

CEO Council May 2017 Action Item

Background

• State Funding• Advanced on a schedule

• Expenditures reported after the fact

• Can be carried over

• Risk• Accumulation of large carryover balances

• Charters that close or are closed suddenly

• Charters experiencing “at-risk” conditions (e.g. Notice of Revocation, Bankruptcy, FCMAT extraordinary audit, audit related)

Allocation Plan & Operating Policy Revised

• Unspent funds greater than 25% or deemed “at-risk”• Reimbursement based state funding cash flow

• Monthly expenditure reporting

• Re: 25% unspent, CY apportionments begin after carryover is spent

• Payments will not exceed regular monthly apportionments

• Need is not demonstrated when Final Expenditures < CY Revenue

• Any unneeded funds go to Legal Risk Pool

• Budget Impact = Modified Cash Flow

Mental Health FundingEducationally Related Mental Health Services (ERMHS)4

CEO Council May 2017 Info Item

Level 2Level 3

Site-BasedLevel 3

NPSLevel 3

NPS-Residential

IEP Based ERMHSServices

Structured Therapeutic ERMHS

Program

ERMHS in NPS Room and Board for ERMHS Services

Any Eligibility ED ED ED

$8 Million$100,000 Transportation

$3 Million

80% of the lesser of:$3,300 per service

$250 per ADABudget Request

80% of ERMHS Allowed Cost

90% of ERMHS Allowed Cost

100% of Room & Board Costs

*By September 15 of each year, there will be a finding of sufficiency of funding that sets the Level 2 rate at a range from $2,000 to $3,000 (or higher) and provides for Level 2 transportation cost funding and Level 2 indirect to be

claimed. By May of each year, SELPA will make an additional finding of sufficiency to fund more than 80%.

80% 90% of ERMHS 80% 90% of the lesser of:

$3,300 per service

ERMHS Budget Update

• 6 vs. 1 Site Based• 52 vs. 37 NPS

placements• $87K vs. $51K

per placement for Residential

Charter SELPA ERMHS

2016-17

2015-16 Final

@ 100%

2016-17 Projected

(May 17)

@ 90%

Variance

State 7,295,390 8,591,961 18%

Federal 1,196,061 1,390,903 16%

Total Income 8,491,451 9,983,000 18%

Level 2 5,356,467 7,570,000 41%

Level 3 Therapeutic 37,245 360,000 867%

Level 3 NPS 971,774 1,590,000 64%

Level 3 Residential 541,788 1,350,000 149%

SELPA indirect 254,744 300,000 18%

Total Expenditures 7,162,018 11,170,000 56%

Income less Expenditures 1,329,433 (1,187,000) -189%

Beginning Balance 1,259,373 2,588,806

Ending Balance 2,588,806 1,401,806

30.49% 14.04%

Budget Impact

• 2016-17 Funding• Level 2 reimbursement from 80% to 90% ($3,300/service on 12/1/16)• Level 2 transportation from 80% to 90%• Level 3 Site Based Therapeutic reimbursement from 80% to 90%• Level 3 NPS ERMHS reimbursement maintained @ 90%• Level 3 NPS Residential reimbursement maintained @ 100%

• 2017-18 Budgeting Assumptions• Level 2 services @ 80% *• Level 3 Site Based Therapeutic @ 80%• Level 3 NPS ERMHS @ 90%• Level 3 Residential @ 100%

*Level 2 per service rate = $2,000 to $3,000+ (established in Sept 2017)

Legal Risk Pool5CEO Council May 2017 Action Item

Background

• Reimbursement for costs associated with a due process filing.

• Legal Risk Pool funding 2016-17:

• Forfeited Set-Aside funds*

• Unspent modified funding reserves

• Closed Charters that did not expend funds

*2016-17 is the last year for this revenue source.

Budget Update

Reimbursement Parameters Increased:

Parameters for 2016-17 and future years:

• Increased reimbursement percentage from 50% to 60%

• Increased maximum claim amount from $20K to $30K

• Maximum reimbursement for legal costs is now $18K (60% of $30K maximum)

Budget Impact

• Increased Revenue• Current and future year eligible claims• Claims already reimbursed in 2016-17 will be

analyzed for additional eligibility

Low Incidence Funding6CEO Council May 2017 Info Item

Background

• Services & Materials• Hearing impairments (hard of hearing, deaf) • Vision impairments • Severe orthopedic impairments • Any combination thereof (e.g. deaf‐blind)

• SELPA receives ≈$430 x PY LI pupil count

• $600 minimum claim

• Claims must be submitted by May 1st

• Claims rising faster than funding

32

54

94

161

$87K

$97.4K

$118K

$153K

0

20

40

60

80

100

120

140

160

180

2014-15 2015-16 2016-17 2017-18

Claims Funding

YearAvailable $ Per Claim

2014-15 $2,720

2015-16 $1,800

2016-17 $1,260

2017-18 $ 950

The Low Incidence Conundrum

CEO Council Approved (May 2016)

• For 2016-17 and future years:• Set minimum per claim reimbursement level in May of PY• Determine final claim reimbursement level in May of CY• Starting point for reimbursement is the state rate• May increase to a maximum of $3,000

Budget Impact

• 2016-17• Funding started at $430/claim

• Funded rate is up to $1,500 (based on requests submitted by May 1st)

• Reimbursements paid in July

• 2017-18• Funding starts at $430/claim

• Final rate communicated May 2018

SELPA Fiscal Portal7

Credentials are coming…

General Information8

Items of Note

2017-18 Administrative Fee

2017-18 Multi-Year Revenue Projection Tool

2016-17 Cash Advance• New charters 1st state cash = Feb 2018• Start-up charters = No federal revenue until year 2• 25% advance on annual state revenue• Repaid out of May & June apportionments• Application by October 13th

ACH Payments• Faster cash• More secure

Items of Interest

• AB 312

• Equalize SELPA Rates @ 90th percentile

• ~$50 more/ADA to El Dorado Charter SELPA

• Triggered once LCFF fully funded

• Ed Committee passed unanimously – Assembly Appropriations Committee

• AB 1449

• LCFF add-On for SpEd based on percentage of identified students

• Now a 2-year bill

Mark Your Calendars

• Final Mental Health Expenditures & Final Federal Expenditures

Available 6/22/17 - Due 7/13/17*

• Final 16/17 Revenues and Accruals Posted 8/7/17

• Year End/MOE Template Available 8/7/17 – Due 9/5/17

* Credentials are coming…

Connection Opportunities

• Fiscal Workshops• Los Angeles Region Monday, July 24th

• Sacramento Region Tuesday, August 1st

• Bay Area Region Wednesday, August 2nd

• San Diego Region Wednesday, August 9th

• Program Business Roundtables• October PM Sessions Tuesday, October 24th

• October AM Sessions Wednesday, October 25th

• February AM Sessions Tuesday, February 13th

• February PM Sessions Thursday, February 15th

Fiscal Email Communication

9CEO Council May 2017 Info Item

Ginese Quann

Charter SELPA Director

Disproportionality inSpecial Education

Disproportionality Defined

LEA disproportionality refers to the “overrepresentation” of a particular racial or ethnic group in one of four areas:

• Special Education in general

• Special Education within a specific disability category

• Discipline

• Least Restrictive Environment (LRE)

Changes to Methodology

• CDE has made changes to the calculation methodologies for Indicators 4, 9, and 10 on the Annual Performance Report (APR) as well as adding disproportionality for Least Restrictive Environment (LRE).

• These changes are being implemented in 2016-17, and we anticipate CDE will be recalculating data for the 2014-15 and 2015-16 school years.

Consequences of Disproportionality

• Any LEA that is found to have disproportionate representation will be subject to state monitoring to ensure that the LEA’s policies, procedures, and practices are compliant and do not lead to inappropriate identification.

Significant Disproportionality

• LEAs can be identified as having significant disproportionality by the following criteria:

• Identified disproportionate by both measures (E-formula and Alternate Risk Ratio) defined as:

• Identified disproportionate in the same cell (disability by ethnicity):

• In the current year, and in at least two of the previous three years.

If found Significantly Disproportionate, LEAs are required to use 15 percent of IDEA funds for Coordinated Early

Intervening Services (CEIS).

Disproportionality Prevention

• Implement and monitor systems for correct data entry and regular examination of data to ensure data integrity between student information systems (CASEMIS and CALPADS).

• Implement and monitor processes and procedures for systemic behavior interventions, i.e. PBIS.

• Implement and monitor disciplinary policies, processes, and procedures that minimize suspensions and expulsions.

• Explore programs and practices that support alternatives to suspension and expulsion, i.e. Restorative Practices.

• Move towards inclusive practices to maximize opportunities for special education students in general education settings.