February 24, 2004

Honorable Kurt Knickrehm

Department of Human Services

Donaghey Plaza West

Slot 329

P.O. Box 1437

Little Rock, AR 72203-1437

Dear Dr. Knickrehm,

The purpose of this letter is to inform you of the result of the Office
of Special Education Program's (OSEP's) recent verification visit to
Arkansas. OSEP is conducting verification 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
Parts B and C of the Individuals with Disabilities Education Act (IDEA).
We conducted our visit to Arkansas during the week of October 27, 2003.

The purpose of our verification reviews of States is to determine how
they use their general supervision, State-reported data collection, and
statewide assessment systems to assess and improve State performance,
and to protect child and family rights. The purposes of the verification
visits are to: (1) understand how the systems work at the State level;
(2) determine how the State collects and uses data to make monitoring
decisions; and (3) determine the extent to which the State's systems are
designed to identify and correct noncompliance.

As part of the verification visit to the Arkansas Department of Human
Services (ADHS), OSEP staff met with Sherrill Archer (the State's Part C
Coordinator) and members of ADHS's staff who are responsible for: (1)
the oversight of general supervision activities (including monitoring,
mediation, complaint resolution, and impartial due process hearings; and
(2) the collection and analysis of State-reported data. Prior to and
during the visit, OSEP staff reviewed a number of documents[^1],
including the following:

\(1\) OSEP's August 2000 Monitoring Report; (2) the State's Annual
Performance Report for grant period July 1, 2001-June 30, 2003; (3) the
State's Part C application; and (4) information from the State's website
as well as other information and documents. OSEP also conducted a
conference call on October 3, 2003 with members of the Part C Steering
Committee, to hear their perspectives on the strengths and weaknesses of
the State's systems for general supervision and data collection and
reporting. The information that Ms. Archer and her staff provided during
the OSEP visit, together with all of the information that OSEP staff
reviewed in preparation for the visit, greatly enhanced our
understanding of ADHS' systems for general supervision, data collection
and reporting, for the Arkansas First Connections Infant and Toddler
Program.

> OSEP's 2000 monitoring report identified the following ten areas of
> noncompliance:

(1) lack of effective monitoring procedures to ensure compliance among
    participating agencies;

(2) child find efforts among public agencies were not coordinated;

(3) procedures were not in place to determine the extent to which
    primary referral sources disseminate information to parents, and all
    primary referral sources did not have appropriate and adequate
    information about the early intervention system;

(4) evaluators did not use informed clinical opinion in determining
    initial and continuing eligibility as required by Federal
    regulation;

(5) ADHS impermissibly required that children with diagnosed conditions
    also meet developmental delay criteria in order to be eligible for
    services;

(6) ADHS did not ensure that all services for eligible children and
    their families were identified and provided;

(7) ADHS did not ensure that each family had one service coordinator who
    acted as the single point of contact for a child and family to
    assist families with all service coordination activities as required
    by Part C;

(8) ADHS did not ensure an appropriate IFSP team decision making process
    for the identification of the unique needs of the child and family
    including the natural environment for the delivery of services;

(9) ADHS did not ensure that the supports and services necessary to
    enhance the family's capacity to meet the developmental needs of
    their children were identified and included in a statement of the
    specific services needed to meet the unique needs of the child and
    family on the IFSP; and

\(10\) ADHS did not ensure that a written transition plan was developed
and implemented for each child according to requirements in the IDEA.

ADHS submitted its Improvement Plan to address each of these findings,
which OSEP approved by letter dated April 15, 2003. The April 15, 2003
letter to Arkansas indicated that the State must address each of the ten
areas of noncompliance identified in OSEP's August 25, 2000 Monitoring
Report within one year from the issuance of the letter and must submit a
final progress report on April 15, 2004 providing data that demonstrates
full compliance with each of the ten areas of non-compliance. ADHS
submitted an updated progress report on July 1, 2003 as part of its
Federal fiscal year 2001 (FFY) Annual Performance Report (APR). OSEP has
responded in a separate letter to ADHS' FFY 2001 APR and addressed each
finding separately.

# General Supervision

In looking at the State's general supervision system, OSEP collected
information regarding a number of elements, including whether the State:
(1) had identified any barriers (e.g., limitations on authority,
insufficient staff or other resources, etc.) that impeded the State's
ability to identify and correct noncompliance; (2) has systemic,
data-based, and reasonable approaches to identifying and correcting
noncompliance;

\(3\) utilizes guidance, technical assistance, follow-up, and --- if
necessary --- sanctions, to ensure timely correction of non-compliance;
(4) has dispute resolution systems that ensure the timely resolution of
complaints and due process hearings; and (5) has mechanisms in place to
compile and integrate data across systems (e.g., 618 State-reported
data, due process hearings, complaints, mediation, large-scale
assessments, previous monitoring results, etc.) to identify systemic
issues and problems.

OSEP is unable to conclude at this time that Arkansas has a
comprehensive, systemic monitoring system that can identify and correct
all potential areas of Part C noncompliance because at the time of
OSEP's verification visit, ADHS was neither monitoring for all
requirements of Part C nor was it monitoring the other non-ADHS entities
that provide Part C services. The lack of monitoring activities and
materials to ensure compliance with all Part C requirements was cited in
OSEP's August 2000 monitoring report to ADHS. Although ADHS has made
some progress in developing its protocols to monitor within its own
agency, it still does not monitor for all Part C requirements. OSEP is
extremely concerned about ADHS' ability to meet the April 15, 2004
timeline for ADHS to demonstrate full compliance with its general
supervision and monitoring responsibilities. In its letter responding to
the FFY 2001 APR submitted by ADHS, OSEP indicated that Arkansas must
submit to OSEP its final data (including monitoring reports) by April
15, 2004 indicating that ADHS is monitoring for all requirements of Part
C and all entities within the State that are part of the Part C system
and provide Part C services.

ADHS has partially developed a systematic monitoring process with
activities for the identification and correction of noncompliance. This
means that ADHS has in place a process that monitors for most Part C
requirements and can identify and correct noncompliance in those areas
it is monitoring. OSEP learned through interviews that ADHS has
implemented a data-based process for these areas that consists of the
following steps that allow ADHS to build a body of information regarding
a program or provider that could potentially result in a broad range of
compliance findings. ADHS can use its Performance Effectiveness
Evaluation Plan (PEEP) self assessment process and electronic data
systems to collect information from multiple sources which include: (1)
random desk audits and previsit review of provider agreements; (2)
financial, and monthly service reports provided to the Part C office by
the monitored program or through ADHS's data systems; (2) on-site record
reviews and interviews; (3) issuance of a written compliance report that
includes Part C findings and recommendations concerning strengths and
weaknesses; and (4) follow-up and ongoing technical assistance. ADHS
indicated to OSEP that the current monitoring materials and procedures
are in various stages of development to more fully capture all Part C
requirements. For example, Part C has worked closely with the Quality
Assurance Section of the Developmental Disabilities Services Division to
develop a monitoring tool that would better address the first 45 days
after referral of a child for Part C services. The tool will cover
natural environments, transition, the family assessment process, and the
use of informed clinical opinion. It appears that ADHS is making
progress in ensuring that the State's monitoring tools are comprehensive
and include all Part C requirements.

In Arkansas, there are three major providers of services to children
with special needs and their families. They are: (1) The First
Connections Program (Part C); (2) the Developmental Disabilities
Treatment Clinic Service Centers (DDTCS) under ADHS; and (3) Children\'s
Health Management Services (CHMS). CHMS primarily serves medically
fragile and developmentally delayed children ages 0-6 in a full day
treatment program. Some CHMS sites are privately owned and are not
licensed through the DDS system but by the State health department. Part
C program providers and DDTCS centers are licensed by Developmental
Disabilities Services within ADHS. There are some DDTCS centers that are
jointly licensed with CHMS centers. It is only when a center is jointly
licensed as a DDTCS center and as a CHMS center that it is subject to
DDS licensure and monitoring activities. The result is that not all CHMS
sites are included in the Part C system of services and are therefore
not monitored by Part C.

It was recently brought to OSEP's attention that Arkansas proposed
legislation, Senate Bill 23 (84^th^ Assembly section 20), appears to
identify CHMS clinics as the only early intervention service day
provider in the State; the actual language reads "As CHMS clinics are
the only providers of early intervention day treatment, ...". It is
unclear how this bill relates to the implementation of Part C in the
State. However, under 34 CFR §303.500, the Governor of Arkansas has
designated ADHS as the "lead agency" under Part C. As the Part C lead
agency, ADHS is responsible for implementing the Part C general
supervisory responsibilities including monitoring to ensure that CHMS
clinics and entities that provide Part C services are in compliance with
Part C requirements. Each Part C lead agency is responsible for the
general administration and supervision of programs and activities
receiving assistance (34 CFR §§303.501(a) and (b)(1)-(4)). The State
must monitor the programs and activities used to carry out Part C,
whether or not they receive funds under Part C, to ensure the State
complies with all requirements of Part C. As cited in OSEP's August 2000
monitoring report, ADHS must adopt and use proper methods to monitor
each program including monitoring agencies, institutions and
organizations used by the State to carry out Part C, enforcing any
obligations imposed on those agencies under Part C and its regulations,
providing technical assistance, and correcting deficiencies.

ADHS has added additional Part C requirements to its monitoring process.
In fiscal year 2003, some Part C requirements, primarily those related
to referral, intake, evaluation and the initial IFSP, were integrated
into the DDS annual licensure protocol that is used with all contracted
community service providers and the initial service coordinators[^2].
This is an on-site desk audit and three percent of the files of the
provider's total number of files are randomly pulled for review. Within
30 days of the completion of the on-site monitoring, a written report is
sent to the service coordinator or program provider documenting findings
and any areas of concern requiring additional training or technical
assistance. A copy of this report is sent to the Part C coordinator. The
data system also is able to provide ADHS with a file print out every two
months on each child, which includes the referral and evaluation date,
date of IFSP, services on the IFSP, location of services and eligibility
data. These data reports coupled with the financial reports allow the
Part C office to identify by child or by provider which services have
been provided, are reviewed as part of the on-site desk audits and are
used to flag potential non-compliance issues to be investigated during
on-site visits.

At the time of OSEP's visit to the State, ADHS was in the process of
adding two additional methods for collecting monitoring data regarding
the implementation of Part C as methods to monitor other entities that
provide Part C services. The first is a self-assessment process that
would include DDTCS centers, initial service coordinators and
independent providers. At the time of OSEP's visit to the State, the
initial data on the self-assessment had been collected but not analyzed.
OSEP requests that ADHS' analysis of this data be included as part of
ADHS' next APR to OSEP (due March 31, 2004). The second method was to
include Children's Medical Services nurses, who are serving as initial
service coordinators, in the system of on-site desk audits that
previously only included Part C initial service coordinators and some
community programs. The inclusion of these strategies into the Part C
monitoring system has more fully brought the DDTCS centers and some CHMS
sites under the general supervision of ADHS.

OSEP also learned through interviews with ADHS staff and review of
documents, that ADHS conducts technical assistance visits, as necessary,
to local programs and providers to ensure correction of identified
non-compliance. OSEP reviewed an example of a case where non-compliance
was identified during monitoring. Follow-up procedures included a
corrective action report, technical assistance to the provider and a
final report of correction. ADHS has established and implemented
procedures to ensure that deficiencies identified through monitoring are
corrected. OSEP asks that ADHS keep OSEP informed by reporting in the
FFY 2002 APR (due March 31, 2003) concerning its progress in ensuring
correction of non-compliance and provide a final progress report by
April 15, 2004.

Regarding the State's ability to correct noncompliance once it is
identified, ADHS has established a list of sanctions that may be imposed
if a program fails to take the requisite corrective actions. These
sanctions are triggered primarily as the result of a violation of State
program licensure requirements or billing improprieties (i.e. over
billing for services) and do not specifically focus on Part C
requirements. However, findings of noncompliance identified by DSS
monitors are reported to the Part C office, which triggers a Part C
review of the entity. Entities that are debarred by the Department of
Human Services are also debarred from contracting with DDS or Part C.
OSEP asks that ADHS provide OSEP in the next FFY 2002 APR with a list of
the number of times and reasons that any entities have been debarred, a
summary of findings of noncompliance made against providers, any
corrective actions required of providers by the State, and any other
sanctions that ADHS has developed and/or used to ensure that it can
correct noncompliance once it is identified by the State.

OSEP also reviewed ADHS's systems for the resolution of State
complaints, due process hearings and mediation. ADHS reports that, to
date, there have been no due process hearing or mediation requests
filed. OSEP reviewed one complaint that was filed with ADHS during
OSEP's verification visit that was resolved according to the timeline
requirements. OSEP cannot determine whether the fact that one complaint
has been filed and no due process hearing requests have been received is
due to a high degree of family satisfaction with Part C services, or
whether parents have not been sufficiently informed regarding the
State's Part C dispute resolution procedures.

As part of its evaluation of the State's dispute resolution system, OSEP
reviewed after the verification visit, ADHS' prior written notice
documents, required pursuant to 34 CFR §303.403, to determine whether
they include all of the required information regarding complaints and
due process hearings, and whether any lack of required notice content
might be a factor in the lack of complaints and due process hearing
requests. OSEP received the following forms from Arkansas: Notice to
Parent, Parent Notice of Meeting Outcome, First Connections Program
Participation Authorization, and Developmental Disabilities
Services/First Connections Evaluation & Information Authorization.
However, these forms do not include the content required by 34 CFR
§303.403. The Part C regulations at 34 CFR §303.403(b) require that:
"The notice must be in sufficient detail to inform the parents
about---...(4) The State complaint procedures under §§303.510-303.512,
including a description of how to file a complaint and the timelines
under those procedures." OSEP finds that ADHS's prior notice forms do
not include most of the requisite information. Arkansas must revise its
forms, or create a separate prior written notice document, to address
all of the regulatory content requirements under 34 CFR §303.403. OSEP
is available to work with Arkansas to ensure that the required
information is included. Please submit to OSEP within 60 days from the
date of this letter the revised notice materials that include the
content required in 34 CFR §303.403(b).

**Data Collection under Section 618 of the IDEA**

In looking at the State's system for data collection and reporting, OSEP
collected data regarding a number of elements, including whether the
State: (1) provides clear guidance and ongoing training to local
programs/public agencies regarding requirements and procedures for
reporting data under section 618 of the IDEA; (2) implements 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 the State's procedures, OSEP guidance, and section 618;
(3) implements procedures for identifying anomalies in data that are
reported, and correcting any inaccuracies; and (4) has identified any
barriers, (e.g., limitations on authority, sufficient staff or other
resources, etc.) that impede the state's ability to accurately, reliably
and validly collect and report data under section 618.

OSEP believes that ADHS' system for collecting and reporting data is a
reasonable approach to ensuring the accuracy of the data that ADHS
reports to OSEP under 618. ADHS staff informed OSEP that when ADHS
receives a referral form from a parent or other referrals source, ADHS
enters the child into its data system. They explained that ADHS does not
include a child as part of the Part C child count until the evaluation
and assessment process is complete, ADHS has found the child eligible
under Part C, and the child has an IFSP; once a child is determined to
be eligible, the initial service provider is responsible for entering
child and family information, along with the child/s IFSP, into the
database.

ADHS further informed OSEP that local early intervention programs and
ongoing independent service coordinators are responsible for providing
updated information to keep the State's Part C data system current. The
Part C office is able to review this data by child or by provider at any
time. Monthly data reports track the infants and toddlers and their
families who are served by the local program or receive service
coordination through independent providers. ADHS staff reviews these
data reports, checking the data for errors, and requires providers to
make appropriate edits and updates with regard to their service data.
Additionally, when a child and family exits the Part C system the local
program or independent service provider enters the appropriate edits
into the data system which clearly flags that child as exited from the
system. Overall 618 data collection activities are monitored through
both the monthly data reports and the desk audit process.

ADHS staff informed OSEP that they disseminate the annual OSEP data
collection policy letters and memoranda to ongoing service coordinators
as guidance on how to collect and report all required data consistent
with Federal data reporting requirements. ADHS staff expressed overall
confidence in the 618 data that they report to OSEP.

ADHS is in the process of reconfiguring and enhancing its data systems.
OSEP suggests that, as the State continues to develop its data systems,
ADHS consider ways in which to better ensure that the data collected is
coordinated and monitored at the local/provider level to better inform
its monitoring and decision-making activities.

We appreciate the cooperation and assistance provided by your staff
during our visit. As noted above, we request that you keep us informed
of your progress in ensuring correction in the local programs with
ongoing noncompliance and await the submission of your revised notice
materials within 60 days from the date of this letter. We look forward
to collaborating with Arkansas as you continue to work to improve
results for children with disabilities and their families.

> Sincerely,
>
> /s/Patricia J. Guard for
>
> Stephanie Smith Lee
>
> Director
>
> Office of Special Education Programs

cc: Sherrill Archer

Part C Coordinator

[^1]: Documents reviewed as part of the verification process were not
    reviewed for legal sufficiency but rather to inform OSEP's
    understanding of your State's systems.

[^2]: There are currently 10 initial service providers who are each
    state employees. More initial service providers previously under CMS
    are being added to increase the total number. Typically, initial
    service providers manage a case up to and including the initial IFSP
    meeting and then hand the case over to the ongoing service
    coordinator.