March 8, 2008

Honorable Ed Thompson, M.D., M.P.H.

State Health Officer

Mississippi State Department of Health

P.O. Box 1700

570 East Woodrow Wilson Boulevard

Jackson, MS 39215-1700

Dear Dr. Thompson:

The purpose of this letter is to inform you of the results of the Office
of Special Education Programs' (OSEP) recent verification and focused
monitoring visit to Mississippi during the week of November 5, 2007.
OSEP's August 17, 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 the program requirements, including 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 Mississippi's Federal fiscal year (FFY)
2005 Annual Performance Report (APR)/State Performance Plan (SPP).

The Mississippi State Department of Health (MSDH) is the Mississippi
Part C lead agency. Within MSDH, the First Steps Early Intervention
Program is responsible for administering Part C of IDEA in Mississippi.
IDEA Part C early intervention services are provided in Mississippi
through nine regional Health Districts. The Health Districts are part of
MSDH. Health District employees, including, some, but not all, service
coordinators are MSDH employees. (Several Health Districts hire their
service coordinators through contracts.) The administrators of the nine
Health Districts report to MSDH's Director of Finance and
Administration. Pursuant to a memorandum of understanding, the
Mississippi Department of Mental Health (MSDMH) is the primary public
provider of early intervention services, providing services directly as
well as by sub-contracting with private service providers. The Health
Districts also contract with private service providers for early
intervention services. MSDH reported in its most recent 618 Federal
child count submission (Fall 2006) that 1,546 infants and toddlers with
disabilities received early intervention services.

As part of our verification and focused monitoring visit to Mississippi,
OSEP staff met with Danita Munday, State Part C Coordinator, and State
personnel responsible for: (1) MSDH's general supervision system
(including monitoring, mediation, State complaint resolution, and
impartial due process hearings) and its procedures for use of IDEA Part
C funds and the timely obligation and liquidation of those funds; and
(2) the collection and analysis by MSDH of required State-reported data
under IDEA. The focused monitoring part of OSEP's visit, was limited to
interviews with the District Administrators, District Coordinators, and
service coordinators from Health Districts V and VI. OSEP did not make
on-site visits to these Health Districts to review child records, other
information or data.

Prior to and during the visit, OSEP staff reviewed a number of
documents, including the following: (1) Mississippi's SPP/APR submitted
to OSEP on January 30, 2007; (2) Mississippi's SPP submitted to OSEP in
December 2005; (3) Mississippi's grant applications under Part C of the
IDEA for FFYs 2005, 2006, and 2007; (4) OSEP's verification visit letter
to Mississippi dated June 28, 2004; (6) MSDH's website; and (7) other
pertinent data. The information provided by MSDH 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 the
MSDH's systems for general supervision, data collection and reporting,
and financial accountability.

Listed below is the discussion, followed by conclusions and required
actions, organized by the critical elements used by OSEP to guide our
review of each State's general supervision, data and IDEA fiscal
systems.

[General Supervision System - Discussion]{.underline}

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

The MSDH Part C staff who perform activities directly related to
ensuring the identification and timely correction of noncompliance are
the Part C Coordinator, the Monitoring Coordinator, and three Quality
Monitors, each of whom is responsible for three Health Districts. These
MSDH staff members explained that the Monitoring Coordinator designs and
implements the system for on-site monitoring as it relates to the
identification and correction of noncompliance. The Quality Monitors
conduct focused monitoring in the Health Districts to which they are
assigned, lead follow-up activities for correcting findings of
noncompliance, perform data checks, investigate complaints, and provide
technical assistance and training. The Part C Coordinator meets on a
regular basis with the Monitoring Coordinator and Quality Monitors to
review the performance of each Health District regarding the
identification and correction of noncompliance.

The MSDH Part C staff reported that in March 2006, MSDH implemented a
monitoring system to identify and correct noncompliance. As indicated in
Mississippi's FFY 2006 APR, submitted to OSEP on January 30, 2007,
Mississippi was not, prior to March 2006, able to provide monitoring
data because "no systemic focused and/or compliance monitoring was
carried out in 2003 or 2004 which identified noncompliance or which was
designed to correct noncompliance not later than one year from
identification." MSDH staff reported that from May 2006 through October
2006, MSDH conducted monitoring visits to all nine Health Districts that
addressed compliance regarding Part C and State requirements related to
referral through transition activities. MSDH Part C staff further
reported that MSDH made findings of noncompliance and issued monitoring
reports to Health Districts III through IX in January 2007, to Health
District I in February 2007, and to Health District II in March 2007.

MSDH staff reported that the 2006 monitoring process included: (1) data
collection from several sources including the First Steps Information
System (FSIS), Mississippi's real-time Statewide data system,
interviews, observations, and record reviews; triangulation of data;
formal and informal complaints; (2) findings of noncompliance and
monitoring reports; (3) development of corrective action plans; (4)
follow-up activities to ensure correction that incorporated small group
and individualized technical assistance in addition to other ongoing
activities targeted at correcting noncompliance; (5) local
determinations; and (6) revisions to forms and instructions if needed.

During the verification visit, MSDH Part C staff told OSEP that in
January 2007 MSDH implemented a focused monitoring process, which will
operate on a three-year cycle, to ensure the identification and
correction of noncompliance. MSDH Part C staff explained that the
focused monitoring process continues to reflect Part C SPP/APR
indicators and related requirements as well as State requirements. The
staff further explained that in addition, the focused monitoring process
has a new component that focuses on the changes within a Health District
that will have the most significant impact on improving early
intervention services for infants and toddlers with disabilities and
their families.

The MSDH Part C staff reported that the focused monitoring process
required all Health Districts to complete annual self-reviews that
addressed meeting indicator targets and resolving previously identified
compliance issues. MSDH reported that it began the on-site focused
monitoring in three Health Districts (I, VI, and IX) in June 2007. MSDH
staff reported that as part of the first cycle of the focused monitoring
in these Health Districts, the Part C Coordinator, Monitoring
Coordinator, and Quality Monitors had already met with Health District
staffs and service providers to identify the changes needed that would
have the most significant impact on improving early intervention
services in their Health Districts.

The MSDH Part C staff reported that the Quality Monitors monitor their
Health Districts to assist with implementation of the changes, to
determine whether the changes are effective, and to provide constant,
ongoing technical assistance related to these areas. The MSDH Part C
staff told OSEP that the results of the 2007 focused monitoring process
will be determined before April 30, 2008, at which time findings of
noncompliance will be made. MSDH Part C staff explained that MSDH makes
a finding of noncompliance when information from one source such as a
service provider, parent, service coordinator, the FSIS data system, or
a request for technical assistance suggests a problem and further
investigation based on other sources and other activities such as a
record review, observation, or review of provider contact notes,
confirms the original information regarding noncompliance. The Part C
staff indicated that corrective actions will be required to ensure the
timely correction of any noncompliance identified.

The MSDH Part C staff informed OSEP that, as a result of the monitoring
system (initial and focused monitoring), they have been able to identify
problems, barriers, and solutions to issues facing Health Districts and
that compliance with Part C requirements has improved in several areas.
The staff also noted increases in questions from District Administrators
and service coordinators, as well as requests for training and technical
assistance.

*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?*

MSDH's Part C Coordinator, Monitoring Coordinator, Quality Monitors, and
Data Manager reported that they have regular meetings to discuss
systemic issues and data trends. The Data Manager and monitoring staff
reported that they use data from the FSIS data system (which collects
data for reporting on section 618 and SPP/APR requirements and other
data pertaining to MSDH's Part C program) to identify and report trends
to the Part C Coordinator and to decide when further investigation is
needed to determine the nature and possible causes of any systemic
noncompliance identified. The Part C staff members further reported that
when they identify systemic issues and problems, they generate reports
aggregated by the various noncompliance areas to assist the Quality
Monitors in their focused monitoring follow-up, training, and technical
assistance. The Part C staff explained that they also utilized the
results of data analysis to group Health Districts for focused
monitoring in order to target resources that will advance the correction
of noncompliance across the Health Districts.

The Part C Coordinator reported that she also uses the FSIS data system
to generate reports specific to compliance with Part C SPP/APR
indicators, and then compiles that information along with additional
information collected from any State complaints and mediation and due
process hearing requests to identify systemic issues and problems.

The MSDH Part C staff also explained that they use the results from data
analysis throughout the general supervision process, not only to
identify systemic noncompliance, but also to guide improvements in the
general supervision system itself. The staff indicated that the analysis
of data was the catalyst for such improvements to MSDH's general
supervision system as developing the Data Verification Checklist and
making changes to the FSIS data system that have made the Part C data
easier to analyze.

*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?*

The State's FFY 2006 Part C grant award contained Special Conditions,
one of which was imposed because Mississippi was not ensuring the timely
correction of noncompliance as required by 34 CFR §303.501(b). In its
FFY 2006 APR submitted to OSEP on January 30, 2007, MSDH reported that
it had not monitored during FFYs 2004 and 2005. The State further
reported that it first monitored all nine Health Districts by the end of
2006, issued monitoring reports in January 2007 that required correction
of the findings of noncompliance by January 2008, and developed
correction plans. Since MSDH's June 1, 2007 final progress report
indicated that no further correction data could be provided, OSEP
determined that Mississippi did not meet its FFY 2006 Special
Conditions, and included Special Conditions in the State's FFY 2007
grant award to ensure, among other things, the State's timely correction
of identified noncompliance.

During the verification visit, MSDH Part C staff reported that they are
continuing to review for timely correction of noncompliance in each of
the nine Health Districts on a monthly basis. The District
Administrators, District Coordinators, and service coordinators from
Health Districts V and VI described the extensive technical assistance,
guidance and support they have received from the Part C Coordinator,
Monitoring Coordinator and Quality Monitors to correct the noncompliance
identified in their monitoring reports, including technical assistance
with small groups and individuals; record reviews; announced and
unannounced visits; observations; problem solving sessions; parent and
staff interviews; and instruction ensuring that any providers involved
in the noncompliance understand correct practices which is followed by
observation to determine they are in fact practicing those procedures.
MSDH Part C staff stated that MSDH would provide information on the
status on the timely correction of noncompliance for the nine Health
Districts in the FFY 2007 APR that was due on February 1, 2008 and in
the Special Conditions final progress report due on June 1, 2008. OSEP
will review, and respond to in separate letters, the data in
Mississippi's Part C FFY 2006 APR and FFY 2007 Special Conditions final
progress report.

The MSDH Part C staff reported that components of the monitoring system
used to correct noncompliance include: (1) ongoing and continuous
technical assistance; (2) incentives such as public recognition; (3)
published data report cards; (4) presentations at District Administrator
quarterly meetings to discuss current compliance and performance status
and barriers to correction and improvement; (5) staff and individual
meetings to identify activities to improve performance; (6) revisions to
forms, procedures and data system as needed to adequately report data;
(7) on-line question and answer documents to communicate process,
procedures and guidance; (8) support and involvement from the Directors
of Finance and Administration and Child and Adolescent Health Services;
and (9) continued monitoring and follow-up activities.

MSDH Part C staff further told OSEP that as part of the general
supervision process, MSDH also maintains a notebook for each Health
District that is used to quickly determine areas of noncompliance and
the technical assistance that a Health District needs to ensure
correction of that noncompliance. The notebook includes the Health
District's monitoring report, data, and a follow-up and documentation
report. The staff explained that the Quality Monitors begin with the
most current disaggregated data from the FSIS data system to identify
information that needs to be obtained during the on-site visit and to
tailor technical assistance to the needs of individual Health Districts.
Quality Monitors then enter all information gathered during each on-site
visit into the notebook. MSDH Part C staff reported that the notebook
serves as a mechanism to document all of the technical assistance and
guidance that Quality Monitors provide to the Health Districts and to
measure the effectiveness of those activities as they relate to improved
performance and compliance and the correction of noncompliance.

Although the Part C Coordinator indicated during the verification visit
that she had participated in discussions with District Administrators
concerning possible enforcement actions, she informed OSEP that
enforcement actions or sanctions have not yet been imposed for any
Health District that have remaining noncompliance at the end of the
one-year correction period.

*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?*

MSDH staff, District Administrators and service coordinators from Health
Districts V and VI, and stakeholders told OSEP that the Part C
Coordinator's lack of authority over the Health Districts was a barrier
to MSDH's ability to ensure timely correction of noncompliance. They
explained that while the Part C Coordinator has overall responsibility
for Mississippi's Part C program, each Health District is managed by its
District Administrator who reports to the Director of Finance and
Administration, rather than the Part C Coordinator. MSDH reported that
other barriers to correcting noncompliance include staff turnover, some
District Administrators' limited knowledge of Part C requirements, and
shortages of service coordinators and service providers in parts of the
State.

To address these barriers, the MSDH Part C staff reported that MSDH has
implemented solutions such as generating contracts with early
intervention service providers directly through the Part C Coordinator,
increasing service coordinator salaries through the reclassification of
their positions within the personnel system, and providing information
regarding the challenges of the State's Part C program to appropriate
State officials.

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

MSDH Part C staff reported that MSDH has implemented policies and
procedures that ensure the timely resolution of State complaints and
Part C due process hearings. The staff also reported that Mississippi
policies and procedures are consistent with the Part C requirements in
34 CFR §303.423(b) and require that due process hearings be resolved not
later than 30 days after the receipt of a request for a hearing
including the issuance of a final decision with copies mailed to the
parties. Similarly, MSDH Part C staff reported that Mississippi policies
and procedures regarding State complaints are consistent with 34 CFR
§303.512(a) and require that the complaint resolution process be
completed within 60 calendar days after the compliant is filed.

MSDH Part C staff reported that MSDH's procedure for timely resolving a
State complaint includes logging the complaint; acknowledging the
receipt of the complaint; contacting the appropriate agency, program or
provider identified in the complaint; conducting an on-site
investigation, if necessary; giving the complainant the opportunity to
submit additional information; reviewing all relevant information;
making an independent determination; issuing a written decision; and
implementing procedures for effective implementation of the final
decision. The staff further reported that if needed, MSDH provides
technical assistance and takes corrective actions necessary to achieve
compliance.

MSDH Part C staff reported that in FFY 2005, Mississippi had one State
complaint, which was timely resolved, and no requests for mediations or
due process hearings. The staff further reported that in FFY 2006, there
were eight State complaints, one of which had already been resolved
through other procedures, and that the seven remaining complaints were
all resolved within the 60-day timeline. The MSDH Part C staff indicated
that there were no requests for mediations or due process hearings in
FFY 2006.

*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?*

MSDH staff told OSEP that recent changes to system practices embrace a
focus on quality, in addition to compliance. MSDH staff reported that
the State is in the beginning stages of measuring outcomes, and that in
the past year, there have been many system changes in planning,
monitoring, dispute resolution, and technical assistance, all geared
toward improving outcomes for infants and toddlers with disabilities and
their families. MSDH staff explained for example that in monitoring
Health Districts, MSDH reviews not only individualized family service
plan (IFSP) content requirements, but also the effectiveness of the IFSP
planning process in addressing the unique needs of children and their
families.

MSDH staff told OSEP that they interpret the increase in State
complaints and requests for technical assistance by Health Districts as
evidence of improved systemic functioning, because it indicates that
families are better informed about their rights and the purpose of early
intervention services and Health Districts are focused on making changes
in their Districts that will improve outcomes for infants and toddlers
with disabilities.

[General Supervision System - Conclusions and Required
Actions]{.underline}

Based on information provided to OSEP during the verification visit, it
appears that MSDH has a general supervision system that is reasonably
designed to identify noncompliance. In 2006, MSDH monitored all Health
Districts and made findings of noncompliance and issued monitoring
reports based on those findings. As a continuation of its statewide
monitoring, MSDH has developed a focused monitoring process to identify
and correct noncompliance, which was implemented with the first cycle of
on-site visits in three Health Districts beginning in 2007. It appears
that MSDH also has mechanisms to compile and integrate different sources
of data, including data from the FSIS data system, record reviews,
interviews, observations, and its dispute resolution process to identify
systemic noncompliance issues.

OSEP recognizes MSDH's efforts to improve the performance of its general
supervision system to correct noncompliance. However, OSEP is unable to
determine whether MSDH's general supervision system is effective in
ensuring correction of noncompliance because the one-year timeline for
correction of the findings made in 2006 was not over at the time of
OSEP's verification visit. In addition, MSDH reported that it had not
yet developed the enforcement actions and/or sanctions that it would use
to ensure correction of any noncompliance remaining after the one-year
period has expired. As required in the Special Conditions imposed on
Mississippi's FFY 2007 Part C grant award, MSDH must provide in the
Progress Report due June 1, 2008, information on the corrective actions
that it has implemented to correct any remaining noncompliance,
including any program-specific enforcement actions or sanctions.

OSEP did not identify any other areas of concern regarding Mississippi's
general supervision system. OSEP cannot determine, however, without also
collecting data and conducting reviews at the local level, whether all
public agencies in the State implement the State's policies and
procedures in a manner that is consistent with Part C.

[Data System -- Discussion]{.underline}

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

MSDH staff reported that Mississippi has developed the FSIS, a
comprehensive, real-time data system, that enables the State to collect
valid and reliable data. Information collected by the FSIS data system
includes data required by IDEA section 618, the SPP/APR reporting
requirements, and IFSP development for individual infants and toddlers
with disabilities. MSDH staff further reported that the FSIS data system
is able to: (1) generate multiple real-time data reports pertaining to
SPP/APR indicators; (2) track and verify section 618 data; (3) send
automated notifications of referrals; and (4) disaggregate real-time
caseload information by multiple variables.

MSDH staff reported that over time, the FSIS data system has evolved to
be a centrally located system that addresses multiple needs and
requirements of the State's Part C program. MSDH staff reported that
since the February 1, 2007, MSDH has improved the FSIS system by adding:
(1) an IFSP page that incorporates data and information regarding all
dates for IFSP development and reviews; (2) a transition page that
identifies information and collects data regarding transition steps and
activities and due dates; (3) an updated service tab, which can be used
to provide information regarding a new service provider for a continuing
service; and (4) a search feature that allows service coordinators and
MSDH Part C staff to answer inquiries about specific children within the
system.

OSEP's June 15, 2007 response to the State's SPP/APR indicated that the
State's data for Indicator 1 (timely provision of services) were not
valid and reliable because Mississippi reported data on services on the
initial IFSP, rather than services on initial IFSPs and new services on
subsequent IFSPs. During the verification visit, the MSDH staff reported
that MSDH is able to report data regarding timely services on both
initial and subsequent IFSPs and would do so in the APR that was due
February 1, 2008. OSEP looks forward to reviewing, and will respond
separately to, the data in the State's Part C FFY 2006 APR.

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

MSDH staff reported that newly hired service coordinators are required
to take a three-day orientation training program that includes
information on the functions of the FSIS data system, how data are used,
and proper data entry. MSDH staff reported that veteran service
coordinators are also required to attend these training sessions, which
provide ongoing training opportunities for them. MSDH staff reported
that technical assistance and support for personnel who enter data are
provided when reports generated on individual coordinators or monitoring
reveal such a need, and that the Part C staff follows up on the
effectiveness of that support. MSDH staff reported that data entry
training is also an ongoing part of other State level trainings such as
IFSP training.

*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?*

MSDH staff reported that MSDH has a set of procedures in place to ensure
that data are entered accurately. The MSDH Part C staff indicated that
they run data checks that can identify illogical data, such as
inappropriate birthdates or improbable service initiation dates, to
discover information that was potentially entered incorrectly. MSDH Part
C staff explained that they then follow up with Health District staffs
to resolve any inaccuracies identified. MSDH Part C staff reported that
the Quality Monitors also generate reports from the FSIS data system
prior to each on-site visit to a Health District and complete a Data
Verification Checklist during the visit. The MSDH Part C staff explained
that the Data Verification Checklist is the tool used by the Quality
Monitors to compare information from the FSIS data system to information
in child records. The Part C coordinator, Monitoring Coordinator, Data
Manager, and training and technical assistance staff also generate
routine State level checks and reports.

MSDH staff reported that since MSDH has begun this process, it found
that one of the Health Districts had not been correctly entering data
and another Health District had not been entering data in a timely
fashion. The MSDH Part C staff told OSEP that the Part C Coordinator and
the training and technical assistance staff have been providing specific
guidance to the Health Districts regarding correct and timely data
entry. MSDH staff reported that recent FSIS data reports indicate
improvement in accurate and timely data for these Health Districts.

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

MSDH staff reported that MSDH's training and technical assistance
personnel conduct monthly data reviews to identify anomalies and then
work with Health District staffs and service coordinators to resolve the
problems. MSDH staff reported that service coordinators must provide a
written explanation for any anomaly or inaccuracy that is identified.
The staff further explained that the Data Manager is contacted when an
error is identified and the Part C Coordinator is contacted if trends
emerge. The Part C Coordinator provides technical assistance if
necessary and follows-up through electronic mail until errors are
corrected.

[Data System -- Conclusion and Required Actions]{.underline}

Based on the information provided to OSEP during the verification visit,
it appears that Mississippi's data system, including the related
practices of ongoing training and technical assistance, is reasonably
designed to ensure the collection and reporting of timely, valid and
reliable data and information to OSEP and the public under IDEA sections
616 and 618.

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

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

OSEP reviewed MSDH's procedures for the use of Part C funds consistent
with section 638 of IDEA.[^1] MSDH staff reported that the distribution
of Part C funds is included in the State budgeting process. MSDH staff
reported that MSDH receives Part C funds and subsequently distributes
these funds to the Health Districts' Part C early intervention service
programs and while Health Districts may request an amount needed for a
particular program, most funding decisions are based on the previous
year's budget with necessary adjustments.

The Part C Coordinator reported that she must approve all expenditures
of Part C funds that are allocated through the budgeting process to the
Part C central office. MSDH Finance and Administration staff reported
that expenditures are listed and tracked by budget category in the State
budget. The staff indicated that they verify monthly that the Part C
budget is not overspent. MSDH staff informed OSEP that MSDH fiscal
personnel review the Health Districts' expenditures on an ongoing basis
and MSDH's Part C staff ensures that the Districts do not exceed the
established budget for State and Part C funds.

During OSEP's visit, MSDH staff provided information indicating that the
State may not track, as required by Part C regulations in 34 CFR
§303.124(b), the amount of State and local funds actually expended for
early intervention services to infants and toddlers with disabilities
and their families in the most recent preceding fiscal year. This
information is key to the State's ability to determine whether it meets
Part C's nonsupplanting/maintenance of effort requirements in IDEA
section 637(b)(5)(B) and 34 CFR §303.124.

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

Data from the federal Grants Administration and Payments System (GAPS)
show that Mississippi Part C has expended the majority of its IDEA Part
C funds in the last five fiscal years. While MSDH did not provide any
written procedures for ensuring the timely obligation and liquidation of
Part C funds, OSEP staff reviewed the period of available obligation and
liquidation. OSEP noted that the State lapsed a minimal amount
(\$741.57) of its FFY 2004 Part C funds. The State lapsed \$16,805.93 of
its FFY 2006 Part C funds, but explained that while it had obligated
these funds for a computer contract, it was not able to liquidate those
funds, because the contractor went out of business. The Part C
Coordinator reported that she analyzes monthly budget reports from
Finance and Administration to ensure the timely obligation and
liquidation of Part C funds and communicates with Finance and
Administration staff when she has concerns about timely liquidation.

[Fiscal Management System -- Conclusion and Required
Actions]{.underline}

With the exception of Part C's nonsupplanting requirements in 34 CFR
§303.124, OSEP has determined that the State has procedures reasonably
designed to ensure the appropriate use and timely obligation and
liquidation of IDEA Part C funds by the State. However, without
conducting audits at the State and local levels, OSEP cannot determine
whether all public agencies in the State implement the State's fiscal
procedures in a manner that is consistent with Part C and other
applicable Federal fiscal requirements.

With respect to Part C's nonsupplanting/maintenance of effort
requirements in IDEA section 637(b)(5)(B) and 34 CFR §303.124, MSDH must
provide a specific written assurance within 60 days of the date of this
letter (or with its FFY 2008 Part C grant application), that MSDH has
informed its State audit office of the need to review under the State's
Single Audit, conducted pursuant to the Single Audit Act, its procedures
to comply with, and actual State and local expenditures to meet the
requirements of, Part C's maintenance of effort (MOE) requirements in 34
CFR §303.124. MSDH must continue to keep OSEP apprised in writing of any
further efforts it or the State makes to ensure compliance with Part C's
MOE requirements.

We appreciate the cooperation and assistance provided by your staff
during our visit. We look forward to collaborating with the as you
continue to work to improve results for children 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 MSDH'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
    MSDH's policies for use of funds are fully and appropriately
    implemented.