Education Department Releases Guidance Specifics on IDEA Stimulus Funds

The Department of Education (ED) released long awaited guidance documents for the major programs funded in the American Recovery and Reinvestment Act on April 1st. Each document specifies how funds for each program will be distributed, how each governor must disperse the funds, and how states and local education agencies (LEAs) will be able to use them. Because each document is quite long, we will summarize the guidance in three separate posts. Last week we discussed the guidance for the State Fiscal Stabilization Fund and Title I Part A.

Today, we take you through the details of the guidance for the IDEA, Part B funds provided in the stimulus. The stimulus legislation provides $11.3 billion for IDEA, Part B.

Like the Title I Part A guidance, the IDEA Part B guidance is short on information for how states and LEAs can actually spend the new IDEA stimulus funds. However, it provides extensive information on distribution of funds; the supplement, not supplant provision; and the maintenance of effort provision.

Distribution of Funds

As we reported before, 50 percent of the IDEA Part B funds were distributed to states on April 1^st based on the existing 2008 state application for funds. The remaining 50 percent will be distributed by September 30, 2009 contingent on the approval of each state’s record-keeping and reporting amendment to their 2009 application. Although the stimulus funds can be used in fiscal years 2009 and 2010, it’s considered part of the fiscal year 2009 appropriation. Funds will be distributed to states based on their previous year’s IDEA Part B allocation.

According to the guidance, an LEA may refuse to accept the stimulus IDEA funds. If the state determines that students in the LEA are not receiving “free, appropriate public education” (FAPE), the state must use the refused funds to provide the necessary services. If the students are receiving FAPE, the state can either distribute the refused funds to other districts or provide early intervention services.

As stated under the Individuals with Disabilities Education Improvement Act of 2004, States are also required to identify districts that disproportionately identify students of a particular race or ethnicity as disabled. These districts must reserve 15 percent of their IDEA allocation to provide early intervention services to these students. LEAs that do not disproportionately identify students can also opt to reserve 15 percent of funds for early intervention services.

The IDEA Part B stimulus funds can also be used, in particular instances, for facilities construction and purchase of equipment. The guidance states, however, that both expenditures must have prior approval from the Department and constitute a significant improvement in the LEA’s special education program.

Supplement, Not Supplant and Maintenance of Effort

These new funds are also subject to the IDEA supplement, not supplant provision, and the maintenance of effort provision. Supplement, not supplant requires the federal IDEA Part B funds to provide additional services over state and local special education funds. The maintenance of effort provision requires that state and local expenditures for special education in each LEA not fall below the level of the same expenditures in the previous year. As with Title I Part A, State Fiscal Stabilization Funds can be used to demonstrate maintenance of effort as long as the state provides the required data.

However, IDEA Part B provides flexibility in the maintenance of effort provision that is not available under Title I Part A. Specifically, when an LEA’s IDEA Part B allocation exceeds its previous year allocation, the LEA can reduce its state or local expenditures on special education by up to 50 percent of the difference between the two years’ allocations.

For example, if an LEA received $800,000 for IDEA Part B in 2008 and $1,100,000 in 2009, the LEA could lower its state and local expenditures by one-half of the difference between the two allocations, or $150,000. This newly available $150,000 must be used for purposes specified in the Elementary and Secondary Education Act of 1965.

This flexibility in the maintenance of effort provision is particularly relevant given the large increase in IDEA Part B allocations as a result of the stimulus. The guidance implies that the Department expects many districts to capitalize on the flexibility, effectively freeing up more local and state funds for general education use.

Additionally, the guidance states that an LEA can lower its required maintenance of effort funding levels if there are significant changes in the number of students with disabilities the LEA serves, the services it needs to provide, the staff it employs, or the cost of construction it incurs. These allowances provide LEAs several opportunities to lower the required state and local expenditure.

The stimulus bill provides $11.3 billion in additional funds for special education grants to states. But it appears that the flexibility in the maintenance of effort will allow LEAs to lower their state and local contribution, rather than dramatically increase the quality of services provided to special education students. While this may have been Congress’ intention, it may not benefit students in the long run. At the same time, LEAs still have little guidance on how to actually spend the new funds. Without that valuable information, these new funds make have little effect, if any.