April 30, 2008

Honorable Karen L. Beye

Executive Director

Colorado Department of Human Services

1575 Sherman Street

Denver, Colorado 80203

Dear Director Beye:

The purpose of this letter is to inform you of the results of the Office
of Special Education Programs' (OSEP) verification and focused
monitoring visit to Colorado during the week of December 10, 2007. The
August 23, 2007 letter informed you that OSEP is conducting verification
and focused monitoring visits to a number of States as part of our
Continuous Improvement and Focused Monitoring System (CIFMS) for
ensuring compliance with, and improving performance under, Part C of the
Individuals with Disabilities Education Act (IDEA). As re-authorized in
2004, IDEA requires the Department to monitor States with a focus on:
(1) improving early intervention results and functional outcomes for
infants and toddlers with disabilities; and (2) ensuring that States
meet program requirements, particularly those most closely related to
improving early intervention results for infants and toddlers with
disabilities.

The purpose of our verification and focused monitoring visit was to
evaluate the State's general supervision and data systems in order to
assess and improve State compliance and performance, child and family
outcomes, and the protection of child and parent rights and to review
the State's procedures for its use of IDEA funds and the timely
obligation and liquidation of those funds. During the verification and
focused monitoring visit, OSEP: (1) analyzed the components of the
State's general supervision and data systems to determine the extent to
which they are designed to ensure compliance and improve performance;
and (2) targeted compliance and results issues identified in our June
15, 2007 letter responding to the Colorado Department of Human Services
(CDHS) Federal fiscal year (FFY) 2005 Annual Performance Report
(APR)/State Performance Plan (SPP).

On December 30, 2005 CDHS was designated as the State's new Part C lead
agency. In July 2006, CDHS implemented changes in the Part C system in
order to effectively and efficiently conduct its general supervision and
monitoring responsibilities. The change in lead agency resulted in the
restructuring of 32 local EIS programs to 20 new programs. The Division
of Developmental Disabilities (DDD) within CDHS is responsible for
administering Part C of IDEA. Early intervention services (EIS) in
Colorado are provided through contracts with 20 Community Centered
Boards (CCBs) and four interagency agreements. CDHS also utilizes
twenty-one professional/technical contracts for training and technical
assistance and parent training. CDHS reported in its most recent 618
Federal child count data submission (Fall 2006) that 3,951 infants and
toddlers with disabilities received early intervention services through
CDHS services representing 1.92% of the State's infants and toddlers
from birth to age two.

As part of the verification visit to Colorado, OSEP staff met with
Ardith Ferguson, CDHS's Part C Coordinator, John Miles, Director Child
and Family Services, DDD, and other State personnel responsible for: (1)
CDHS's general supervision (including monitoring, mediation, State
complaint resolution, and impartial due process hearings) and its
procedures for the use of Part C funds and the timely obligation and
liquidation of those funds; and (2) the collection and analysis by CDHS
of required State-reported data under IDEA. OSEP staff also conducted
interviews with staff from CDHS and the Colorado Department of Education
(CDE). In addition, OSEP conducted a group interview with parents, local
EIS providers from Developmental Pathways and Foothills Gateway
Developmental Opportunities/Starpoint, staff from three administrative
units (Aurora Public Schools, Douglas Public Schools, Thompson School
District), and staff from one statewide agency (CO-Hear/CHIP).

Prior to and during the visit, OSEP staff reviewed a number of
documents, including the following: (1) Colorado's FFY 2005 APR
submitted to OSEP in February 2007; (2) Colorado's SPP/APR submitted to
OSEP in December 2005; (3) Colorado's grant applications under Part C of
the IDEA for FFYs 2005, 2006, and 2007; (4) OSEP's March 10, 2005
Verification Visit letter to the Colorado Department of Education,
former lead agency; (6) CDHS' web-site including the local publicly-
reported data; (7) CDHS'monitoring protocols and reports for the period
2006 through 2007; and other pertinent data sources. The information
provided by CDHS' staff during the OSEP visit, together with all of the
information that OSEP staff reviewed in preparation for the visit,
greatly enhanced our understanding of CDHS' systems for general
supervision, data collection and reporting, and financial
accountability. OSEP also conducted a conference call on November 14,
2007 with members of the Colorado Interagency Coordinating Council to
hear their perspectives on the strengths and challenges of the State's
systems for general supervision, data collection, and fiscal management.

In interviews at the lead agency, OSEP focused on the area of transition
of toddlers at age three, specifically the transition requirements in
IDEA section 637(a)(9), and applicable requirements in 34 CFR §§303.148
and 303.344(h), in response to Colorado's 2005 APR submission.

OSEP's discussion and conclusions for each of the critical elements used
to guide our review of each State's general supervision, data, and IDEA
fiscal systems are provided below.

[General Supervision System -- Discussion]{.underline}

*Critical Element 1: Does the State have a general supervision system
that is reasonably designed to identify noncompliance*?

CDHS reported that it has implemented a new multi-faceted system of
general supervision. System components include: (1) web-reported
performance data that inform SPP/APR Indicators 1-8; (2) biannual
on-site program quality surveys, including record reviews; (3) local
desk audit data reviews and reports that document compliance and
performance; (4) contracts; (5) focused surveys on a specific area of
early intervention practices (e.g., public awareness, community
partnerships, and multidisciplinary evaluation/assessment practices);
and (6) training and technical assistance. CDHS explained that the first
five components (including program quality surveys, desk audit data
reviews, and electronic data submission) are used to identify
noncompliance at various times during the year.

In addition, CDHS implemented the following activities: (1) annual
fiscal audits of the CCBs to validate billing information and other Part
C data submitted to the State data system; (2) public reporting and
status determination of local programs; 3) public recognition of high
performance; and (4) processes for tracking the CCB plans of correction
(POCs). CDHS noted that the State's new web-based system provides for
real-time monitoring and detailed tracking of each of the CCBs, in
relation to the SPP/APR Indicators.

CDHS reported that it monitors each CCB program onsite on a cyclical
basis every two years, using the program quality survey and local desk
audit data reviews to identify non-compliance. Ten of the twenty CCB
programs were monitored during FFY 2006-2007. During the onsite visit,
the program survey team utilizes a survey tool, called the "Program
Quality Standards for Onsite Survey Early Intervention Programs," that
the State reported is aligned with new State rules and Federal Part C
regulations. They also use child record reviews, an early intervention
checklist, a family questionnaire, and entrance and exit interviews, to
collect information regarding compliance and performance. Subsequently,
CDHS staff issue a written report of noncompliance findings within 30
days of the visit. This starts the one-year timeline for correction of
noncompliance. The CCB has 30 days to respond to the report with a POC
that is reviewed by the CDHS staff to determine if additional follow-up
is needed.

OSEP reviewed CDHS' monitoring reports for five of the ten CCBs visited
by the State during the period of 2006-2007. OSEP noted during the
review of the five monitoring reports that CDHS cited systemic findings
of noncompliance with the following OSEP SPP/APR Indicators and
requirements: Indicator 1 (Timely Services) 34 CFR §§303.340(c),
303.342(e) and 303.344(f)(1); Indicator 7 (Evaluation, Assessment and
Initial IFSP Meeting Within 45 Days) 34 CFR §§303.321(e)(2),
303.322(e)(1) and 303.342(a); Indicators 8A, B, C (Transition Services)
34 CFR §§303.148 (b)(4) and 303.344(h); 34 CFR §303.148(b)(1) and 34 CFR
§303.148(b)(2)(i).

In addition to its other monitoring procedures, CDHS informed OSEP that
it is working with a consultant on developing focused monitoring
procedures. The State intends to implement this additional monitoring
component along with real time data collection in the next fiscal year.
CDHS' General Supervision Manual indicates that when focused monitoring
is fully implemented statewide it will address issues related to
noncompliance or poor performance on specific priority areas. This
activity will allow the State to tailor appropriate technical assistance
to the needs of the CCBs.

*Critical Element 2: As part of its general supervision system, does the
State have mechanisms in place to compile and integrate data across
systems (e.g., 618 State-reported data, due process hearings,
complaints, mediation, previous monitoring results, etc.) to identify
systemic noncompliance issues?*

CDHS described a multi-level approach to compile and integrate data
across systems to identify systemic noncompliance that encompasses
information from section 618 data, the State's DDD/ Community Contract
and Management System (CCMS), the web-based version of CCMS, annual
fiscal audits, cyclical monitoring audits of child records, program
quality surveys, local agency status determination, status of timely
correction of non-compliance, POCs, family outcomes surveys, and
technical assistance surveys. The child outcomes online data system
(under development) will provide an additional source of data. CDHS also
reported that its data system enables them to generate appropriate
reports for Medicaid, which helps CDHS provide uninterrupted early
intervention services.

CDHS reported that trend reports are developed from the data and
utilized by the CICC to determine what is working and where there are
problems to resolve. The CICC has specific work groups that have been
established to address issues identified through the result of analysis
of the shared data. The Part C coordinator reported that staff are able
to use the data system to project growth in the number of children
served and to inform some program decisions, including determining
annual State funding requests.

At the time of OSEP's visit, the State had not received any complaints
or requests for mediation or due process hearings. The State reported
that they plan to review their procedures for requests for mediation or
due process hearings as part of their monitoring procedures and
technical assistance activities.

CDHS' Part C Coordinator reported that as a result of collecting,
analyzing, and reporting data in areas such as child find, provision of
timely services, evaluations and assessments, 45-day timeline from
referral to initial IFSP meeting, the following improvement strategies
were developed and implemented during 2005 and 2006: (1) strengthened
and clarified its policies and procedures; (2) conducted training for
all staff regarding policies, procedures and guidelines; (3) revised its
Individualized Family Service Plan (IFSP) form that is used throughout
the State and other documentation to ensure consistency of data
collection; and (5) modified its child record review procedures to
ensure alignment with SPP/APR Indicators, and all other Part C
requirements.

*Critical Element 3: Does the State have a system that is reasonably
designed to correct identified noncompliance, including the use of State
guidance, technical assistance, follow-up, and, if necessary,
sanctions?*

In its FFY 2006 APR, the State reported that it corrected all of the
noncompliance that was identified in FFY 2005 by the prior lead agency.
The State indicated that most of the EIS programs that had developed
plans of correction under the prior monitoring were no longer providing
EI services in June 2006. For the two providers that continued to
provide services after that time, the State reported that all of the
prior findings of noncompliance have been corrected. OSEP will be
responding under separate cover to the data and information provided in
the State's FFY 2006 APR.

During the verification visit, the State also described its procedures
to ensure that the noncompliance identified by the new lead agency will
be corrected within one year of identification. When a monitoring report
is issued, the CCB has 30 days to respond to the report with a POC that
is reviewed by the CDHS staff to determine if additional follow-up is
needed. CDHS reported that correction of identified noncompliance is
ensured through training and technical assistance and verified through
on-site verification of data.

CDHS reported that it provided targeted technical assistance in response
to local findings, and IFSP and Service Coordination training around
IDEA requirements including transition. Examples of training activities
included: (1) Service Coordination Core Competencies training required
for all service coordinators and EIS Part C Coordinators; (2) Colorado
Individualized Family Service Plan training for service coordinators and
EIS providers, local interagency coordination council members and
community partners; (3) regional Procedural Safeguards training; and (4)
regional training on Assessment, Evaluation and Programming System for
Infants and Toddlers. CDHS also sponsored family leadership and
engagement initiatives, and conducted monthly technical assistance
calls.

CDHS reported that it reviews progress reports, local policies and
procedures, local interagency agreements and child records to document
the correction of noncompliance. Once CDHS determines that the
noncompliance has been corrected, it notifies the CCB in writing that
the terms of the POC have been met.

CDHS' draft General Supervision Manual indicates that enforcement
activities would be implemented with providers that do not demonstrate
compliance within one year of written notification of noncompliance.
CDHS reported that the following enforcement/sanction options are
available: (1) public reports disseminated to families and the general
public; (2) required State training and technical assistance; (3)
withholding funds; and (4) terminating or not renewing a contract. The
State's contracts between DDD and each CCB include potential sanctions
such as recovering funds, withholding funds or, in extreme
circumstances, the termination of the contract. The Part C Coordinator
explained since this is the first year that CDHS has issued POCs for the
CCB programs, it has not had to use sanctions.

Local determination data is also compiled by CDHS, disaggregated by
provider, and displayed on the State's website. Each provider is able to
compare its performance to the statewide targets and to other providers.
CDHS reported that public reporting of local data and the State's
determination has served as an impetus for local programs to timely
correct noncompliance.

Critical Element 4: Has the State identified any barriers (e.g.,
limitations on authority, insufficient staff or other resources, etc.)
that impede the State's ability to identify and correct noncompliance in
a timely manner? If barriers have been identified, what mechanisms has
the State put in place to address those barriers?

Because the State did not provide data in its Part C FFY 2005 SPP/APR
for Indicator 8B, OSEP collected information related to transition
during its verification visit through interviews with parents, CDE
staff, Administrative Unit representatives and EIS/CCB agencies. OSEP
identified the following barriers to meeting the Part C transition
requirements : (1) data collection and reporting issues; (2) significant
changes in local CCB and child find providers due to the appointment of
a new lead agency; and (3) lack of training for local Part C staff.

To address the data collection and reporting issues, CDHS reported that
data collection and reporting activities specific to transition
requirements are now included in the CCMS as follows: (1) date that the
administrative unit was notified of a child potentially eligible for
services under Part B of the IDEA who is approaching their third
birthday; (2) date that the transition planning steps and services were
documented in the IFSP; and (3) the date that the transition conference
was held. The State has also required CCBs to enter the reason (i.e.,
system or family) into the CCMS if a transition planning conference
occurs less than 90 days before a child's third birthday. In its FFY
2006 APR, the State has provided data for Indicator 8B. OSEP will be
responding under separate cover to the data and information provided in
the State's FFY 2006 APR.

To address the lack of training for Part C staff, and the significant
changes in local CCB and child find providers, CDHS reported that
frequent statewide training is offered to new local program coordinators
and service coordinators on IDEA Part C requirements and best practices.
CDHS staff also described to OSEP during the verification visit the
implementation of ongoing technical assistance activities the State is
participating in with private contractors, the Mountain Plains Regional
Resource Center and the National Early Childhood Technical Assistance
Center.

Critical Element 5: Does the State have dispute resolution systems that
ensure the timely resolution of complaints and due process hearings?

CDHS reported that it has adopted Part C due process hearing procedures
under 34 CFR §303.420 and has dispute resolution systems in place to
ensure the timely resolution of State complaints and due process
hearings. As of December 10, 2007, CDHS reported that it has not
received any complaints or requests for mediation or due process. CDHS
reported that a DDD/Part C Community Coordinator is appointed to process
complaints and requests for mediation and due process hearings, and to
monitor decisions and findings to ensure timely decisions and
resolutions. The DDD/Part C Community Coordinator receives all family
concerns and works directly with the family to determine if informal
strategies may be used to resolve a dispute or whether the parent is
interested in pursuing formal dispute resolution. CDHS described various
options for informal dispute resolution such as: facilitating a meeting
with the parent and the local EIS provider and providing information on
Colorado's Part C system, including explanations of parent rights and
procedural safeguards. CDHS informed OSEP that training is planned for
mediators and hearing officers during FFY 07-08 to provide information
on Part C and Colorado's current policies and procedures.

*Critical Element 6: Does the State have mechanisms that focus on
improving early intervention results and functional outcomes for all
infants and toddlers with disabilities?*

CDHS reported that "Results Matter," Colorado's statewide system for
measuring identified outcomes for all eligible children is the driving
force in systematically improving evaluation and assessment practices,
IFSP development, data collection and reporting, training and technical
assistance and monitoring.

In addition, CDHS reported that it has provided information and
directives, both at the State-level and the local program level, that
will have a direct impact on improved outcomes for infants and toddlers.
For example, in a December 3, 2007 memorandum, CDHS notified CCBs of the
Part C requirements for transition procedures, and timelines for
toddlers who are transitioning out of early intervention services and
into Part B preschool services or other appropriate community services.
In addition, CDHS reported that it issued directives requiring local
interagency agreements between CCBs and school districts or boards of
cooperative services regarding transition agreements within local
communities.

[General Supervision System -- Conclusions]{.underline}

As described above, CDHS, the State's new Part C lead agency, reported
that it began implementing new monitoring procedures for Part C in July
2006. Based on OSEP's review of the new procedures, they appear to be
reasonably designed to identify and correct noncompliance. OSEP cannot,
however, without also collecting data and conducting reviews at the
local level, determine whether the monitoring procedures are effective
in identifying and correcting noncompliance.

[Data System -- Discussion]{.underline}

Critical Element 1: Does the State have a data system that is reasonably
designed to collect and report annually to the Department and the
public, timely valid and reliable data and information?

CDHS uses an electronic database to gather data for section 618 and
SPP/APR. The database captures the data for Indicators 2, 5, 6 and 7. At
the local level, during the on-site program quality survey monitoring,
CDHS reviews child records to verify the data submitted by the providers
for Indicators 1, 8a, 8b, 8c and 14 as well as other areas required by
the State.

CDHS staff reported that it has in place its web-based system to collect
and analyze data for all of the SPP/APR Indicators (inclusive of its
section 618 data) and provided a demonstration for OSEP staff during the
visit.

CDHS changed its data system from an Access database to CCMS in October
2007. The CCMS is an online database and billing system that allows real
time reporting at the local and State level. Data reports are currently
run annually for the APRs and to rank CCBs on their performance in
meeting Part C requirements. Reports are also generated through the CCMS
database for section 618 data tables. The State reported that the
CCMSweb provides efficiencies for CCBs in meeting data collection
requirements, and allows for data collection to address reporting
requirements of sections 618 and the SPP/APR.

CDHS reported to OSEP that its data system has many key components to
ensure the collection of timely, valid and reliable data. They include:
unique user IDs and passwords to authenticate access; drop-down menu;
monthly edit checks; a data manual, training and technical assistance;
on-site monitoring that certifies data accuracy; and verification of
data in POCs. Additionally, the data coordinator conducts error checks,
and sends error reports to the CCBs with corrections. The corrections
are made directly in the individual database as well as the State's
aggregated database to ensure the reliability and accuracy of data
entered into the system.

CDHS reported that the system utilizes different sources of data to
monitor implementation of Part C, and CDHS staff cross-reference all
available data in order to verify the data reported by the CCB programs
and collected by CDHS staff.

Critical Element 2: Does the State provide clear guidance and ongoing
training to local EIS programs and public agencies regarding
requirements and procedures for reporting data under section 618 of IDEA
and the SPP/APR?

CDHS reported that it has implemented a specific set of procedures to
determine data accuracy and ensure that individuals who enter data do so
in a manner that is consistent with State and Federal guidance. As a
part of program monitoring, CDHS staff compare the data entered at the
CCB to see if it matches the data received at the State level. The Part
C Coordinator reported that the State's focus on data collection and
reporting has been on training and implementation of the new data
system. CDHS conducted six initial trainings statewide on the State's
procedures, data and information requirements under section 618 and
section 616 for the SPP/APR, and continues to provide 1:1 technical
assistance with every CCB.

*Critical Element 3: Does the State have procedures to determine whether
the individuals who enter and report data at the local and/or regional
level do so accurately and in a manner that is consistent with IDEA
sections 616 and 618, OSEP guidance, and State procedures?*

CDHS developed a data manual for data users which it distributed
electronically and can be downloaded by all local data managers.
Definitions in the manual are those provided by Westat to the States.
When inconsistencies in use of the definitions are found through the
data audits sent to CDHS, the data manager provides clarification for
all the users through guidance documents and telephone contact. The data
manager sends notification to the CCBs on a quarterly basis of specific
dates for updating all data.

Critical Element 4: Does the State have procedures for identifying
anomalies in data that are reported to the State and correcting any
inaccuracies?

The State reported that the CDHS data manager conducts quarterly audits
of data submitted by CCB programs to identify anomalies, and works with
the CCB programs to ensure correction. All infants and toddlers referred
or eligible for early intervention services are entered into the data
system with entry and exit dates regardless of funding sources. CDHS
reported that the data system has two separate fields for validity and
reliability. In order to ensure the correction of errors, the data is
cross-checked with the database when local data are submitted to the
State. If a CCB has inconsistent data, the State requires resubmission
of the data for verification. The data manager works with Westat to
ensure the accuracy of the data submitted under section 618.

[Data System -- Conclusions]{.underline}

It appears that the State's data system, CCMSweb, and related policies
and procedures, including the provision of ongoing technical assistance,
are reasonably designed to ensure the collection and reporting of
required data by Colorado to OSEP and the public under sections 616 and
618. CDHS also confirmed that its section 618 data provided to WESTAT
are timely and accurate. OSEP cannot, however, without also conducting a
review of data collection and reporting policies, procedures and
practices at the local level, determine whether all public agencies in
the State implement the State's data collection and reporting procedures
in a manner that is consistent with Part C.

[Fiscal Management System -- Discussion]{.underline}

*Critical Element 1: Does the State have procedures that are reasonably
designed to ensure appropriate use of IDEA funds at the State level?*

OSEP reviewed CDHS's procedures for the use of Part C funds consistent
with section 638 of IDEA.[^1] The State reported that it has mechanisms
for ensuring fiscal accountability at the State level in the use of IDEA
Part C funds, including (1) a Governor's Executive Order; (2) State
statute and regulation; (3) interagency agreements; (4) a line item in
the budget for IDEA Part C funds; (5) the Colorado Financial Reporting
System (COFRS); and (6) contracted fiscal audits.

CDHS staff reported that the State uses annual audits, and State
accounting and procurement procedures. CDHS reported that internal
control is exercised over expenditures to ensure compliance with program
rules and regulations. All Part C expenditures are tracked by codes and
verified by CDHS-DDD State staff. CDHS additionally reported that it
conducts fiscal review of Part C funds used for the provision of early
intervention services. An audit firm conducts State audits on each CCB
contract on an annual basis. DDD provides budget reports externally to
the State legislature and the Colorado Interagency Coordinating Council,
and internally to CDHS staff. CDHS staff reported that it ensures that
Part C funds that are not expended by CCBs are recovered by the State
for appropriate obligation and liquidation. CDHS reported that it does
not charge Part C FFYs 2006 and 2007 funds restricted indirect costs.

*Critical Element 2: Does the State have procedures for ensuring the
timely obligation and liquidation of IDEA funds by the State?*

The State reported that it has mechanisms for ensuring the timely
obligation and liquidation of IDEA Part C funds. CDHS reported that it
uses the State COFRS accounting system, utilization reviews, and annual
audits to track IDEA Part C funds and thus can easily determine when
IDEA funds have been obligated and liquidated.

[Fiscal Management System -- OSEP Conclusions]{.underline}

Based on the information obtained prior to and during the visit, it
appears that the State has procedures reasonably designed to ensure that
the appropriate use of IDEA Part C funds at the State level consistent
with IDEA section 638 and for ensuring that the State timely obligates
and liquidates IDEA Part C funds at the State level.

We appreciate the cooperation and assistance provided by your staff
during our visit to review the State's general supervision, data and
fiscal management systems to ensure the provision of early intervention
services to infants and toddlers with disabilities and their families in
Colorado.

We look forward to collaborating with Colorado as it continues to work
to improve results for infants and toddlers with disabilities and their
families.

> Sincerely,
>
> /s/William W. Knudsen
>
> William W. Knudsen
>
> Acting Director
>
> Office of Special Education Programs

cc: State Part C Coordinator

[^1]: Without conducting a complete review of CDHS's expenses and source
    documentation of all obligations, OSEP cannot determine or conclude
    that costs charged to IDEA Part C funds are allowable and whether
    CDHS's policies for use of funds are fully and appropriately
    implemented.