Office of Special Education Programs (OSEP)

Fiscal Monitoring Instrument (FMI): 

FFY 2015

New York State Education Department (NYSED)

Please note the following abbreviations are used in the Fiscal Monitoring Instrument

(FMI): 

FFY – Federal fiscal year

IDEA – Individuals with Disabilities Education Act 

LEA – local educational agency

MFS – maintenance of State financial support

OMB – Office of Management and Budget 

OIG – Office of Inspector General

SEA – State educational agency

Uniform Guidance – Uniform Administrative Requirements, Cost Principles, and Audit 

Requirements for Federal Awards, codified in 2 CFR Part 200

Scope of Monitoring:

OSEP’s Fiscal Monitoring in 2016 examined two areas: LEA Allocations and Subrecipient 

Monitoring during FFY 2015 (2015-16). In conducting the monitoring, OSEP reviewed 

information from FFYs 2013, 2014, and 2015, including State-submitted documentation and 

other available information; audits conducted under the Uniform Guidance and those conducted 

through the OIG. OSEP conducted both on-site and telephone interviews with State staff.
New York State Education Department (NYSED), page 2 of 8

IDEA Part B

Summary of Monitoring Criterion

Monitoring Area 1, IDEA Part B: LEA ALLOCATIONS

The IDEA Part B section 611 and section 619 funds are to assist States and, through them, LEAs, in providing special education and 

related services to children with disabilities. States are required to distribute any section 611 and section 619 funds that the State 

does not reserve for State-level activities to eligible LEAs for use in accordance with the IDEA. States’ correct allocation of IDEA Part 

B funds to LEAs, consistent with the correct formulas, is critical in helping to ensure that IDEA Part B funds are used appropriately for 

the purposes for which they were intended. 

Criterion Number Description

Noncompliance 

identified? Applicable Requirements

Criterion 1.1 The SEA distributes IDEA section 611 and/or section 619 

allocations to eligible LEAs based upon the correct 

formula for calculating base payments. 

Yes 34 CFR §§300.705(a)-

(b)(1), 300.815-300.816(a)

Criterion 1.2 The SEA calculates LEA base payment adjustments 

under section 611 and/or section 619 consistent with 

IDEA requirements. 

Yes 34 CFR §§300.705(b)(2), 

300.816(b); 34 CFR Part 76

Subpart H; December 2000 

Nonregulatory Guidance on 

34 CFR Part 76 Subpart H, 

titled “How Does a State or 

Local Educational Agency 

Allocate Funds to Charter 

Schools That Are Opening 

for the First Time or 

Significantly Expanding 

Their Enrollment?”

Criterion 1.3 The SEA allocates remaining section 611 and/or section 

619 funds to LEAs, including charter school LEAs, based 

on population and poverty, consistent with IDEA 

requirements. 

No 34 CFR §§300.705(b)(3), 

300.816(c) and (d)
New York State Education Department (NYSED), page 3 of 8

Criterion Number Description

Noncompliance 

identified? Applicable Requirements

Criterion 1.4 The SEA ensures that IDEA funds are properly allocated 

through subgrants to eligible charter school LEAs that 

open or significantly expand their enrollment.

N/A134 CFR §§76.792 –76.793; 

December 2000 

Nonregulatory Guidance on 

34 CFR Part 76 Subpart H, 

titled “How Does a State or 

Local Educational Agency 

Allocate Funds to Charter 

Schools That Are Opening 

for the First Time or 

Significantly Expanding 

Their Enrollment?”

Criterion 1.5 The SEA ensures that FFY 2015 section 619 allocations 

were made consistent with IDEA requirements, given that

the FFY 2015 allocations to States for section 619 grants 

were below the 1997 appropriation level.

No 34 CFR §300.816

Finding: Criterion 1.1: In OSEP’s February 25, 2016 fiscal monitoring letter, OSEP identified noncompliance regarding the State’s 

procedures for allocating the IDEA section 611 and section 619 subgrants to eligible LEAs. As discussed during the onsite fiscal 

review conducted September 28-30, 2016, the SEA has not completed all of the corrective actions required in the February 25, 2016 

letter.

Citation: Under 34 CFR §300.705(a), “[e]ach State that receives a grant under section 611 of the Act for any fiscal year must 

distribute any funds the State does not reserve under 34 CFR §300.704 to LEAs (including public charter schools that operate as 

LEAs) in the State that have established their eligibility under section 613 of the Act.” These funds must be allocated to LEAs in 

accordance with the required formula in 34 CFR §300.705(b). Under 34 CFR §300.815, “[e]ach State that receives a grant under 

section 619 of the Act for any fiscal year must distribute all of the grant funds the State does not reserve under 34 CFR §300.812 to 

LEAs (including public charter schools that operate as LEAs) in the State that have established their eligibility under section 613 of 

the Act.” These funds must be allocated to LEAs in accordance with the required formula in 34 CFR §300.816.

Further Action Required: OSEP will notify the State under separate cover when the corrective actions identified in the February 25, 

2016 letter have been completed.

 

1

As reported by the State, there are no LEA charter schools in New York.
New York State Education Department (NYSED), page 4 of 8

Finding: Criterion 1.2: During the onsite fiscal review conducted September 28-30, 2016, the SEA reported that it did not have 

procedures to calculate LEA base payment adjustments under section 611 and section 619 consistent with IDEA requirements. 

Citation: Under 34 CFR §§300.705(b)(2) and 300.816(b), base payment adjustments must be made if a new LEA is created; if one 

or more LEAs are combined into a single new LEA; if, for two or more LEAs, geographic boundaries or administrative responsibility 

for providing services to children with disabilities change; or if an LEA received a base payment of zero in its first year of operation 

but reports that it is serving any children with disabilities in a subsequent year. 

Further Action Required: Subsequently, in the December 19, 2016 email correspondence, the State provided documentation that 

demonstrates the State corrected the identified noncompliance. No further action is required.
New York State Education Department (NYSED), page 5 of 8

Monitoring Area 2, IDEA Part B: SUBRECIPIENT MONITORING

Under the IDEA and the Uniform Guidance, SEAs are responsible for oversight of the operations of IDEA-supported activities. Each 

SEA must monitor its own activities, and those of its LEAs, to ensure compliance with applicable Federal requirements and that 

performance expectations are being achieved. Monitoring must cover each program, function, or activity. Subrecipient monitoring is 

at the core of the SEA’s general supervisory responsibilities, and can help the SEA ensure that its LEAs are in compliance with IDEA 

and related requirements, as well as aligned with SEA priorities designed to improve results for children with disabilities. The focus 

of this activity was to review the State’s fiscal subrecipient monitoring.

Criterion Number Description 

Noncompliance 

identified? 

Applicable 

Requirement 

Criterion 2.1 The SEA ensures that every subaward is clearly identified to 

the subrecipient as a subaward and includes required

information at the time of the subaward. If any of the data 

elements change, the SEA includes the changes in 

subsequent subaward modification. 

Yes 2 CFR §200.331(a) 

Criterion 2.2 The SEA evaluates each subrecipient’s risk of 

noncompliance with Federal statutes, regulations, and the 

terms and conditions of the subaward for purposes of 

determining the appropriate subrecipient monitoring.

Yes 2 CFR §200.331(b)

Criterion 2.3 The SEA monitors the activities of the subrecipient as 

necessary to ensure that the subaward is used for 

authorized purposes, in compliance with Federal statutes, 

regulations, and the terms and conditions of the subaward; 

and that subaward performance goals are achieved.

Yes 2 CFR §200.331(d), 34 

CFR §§300.149 and 

300.600

Criterion 2.4 Depending upon the assessment of risk posed by the 

subrecipient, the SEA has policies and procedures that 

consider monitoring activities ranging from technical 

assistance to on-site monitoring or conducting agreed-uponprocedures engagements (audits).

No 2 CFR §200.331(e)

Criterion 2.5 The SEA conducts monitoring activities that verify that every 

subrecipient is audited as required by the Uniform Guidance.

No 2 CFR §200.331(f)
New York State Education Department (NYSED), page 6 of 8

Criterion Number Description 

Noncompliance 

identified? 

Applicable 

Requirement 

Criterion 2.6 The SEA considers taking enforcement actions against 

noncompliant subrecipients as required under the Uniform 

Guidance and IDEA. 

No 2 CFR §§200.338 and

200.331(h); 34 CFR 

§§300.149, 300.222, 

300.600, and 300.604

Finding: Criterion 2.1: Based on the review of documents and confirmed through meetings with NYSED September 28-30, 2016, 

OSEP finds that the State does not have procedures to ensure that every subaward includes the information required under 2 CFR 

§200.331(a) at the time of the subaward. Specifically, the subgrant document does not include the correct amount of Federal funds 

obligated to the subrecipient (2 CFR §200.331(a)(1)(vi)), or the correct funding dates/period of performance (2 CFR 

§200.331(a)(1)(v). In addition, in two out of the three sample documents provided by NYSED, the regulation cited is 34 CFR §301, 

instead of 34 CFR §300. 2 CFR §200.331(a)(2)

Citation: All pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and 

includes the information contained in 2 CFR §200.331(a) at the time of the subaward: (1) Federal award identification information

(including subaward period of performance start and end date, and the total amount of federal funds obligated to the subrecipient by 

the pass-through entity including the current obligation); (2) all requirements imposed by the pass-through entity on the subrecipient 

so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal 

award; (3) any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to 

meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; 

(4) an approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government or, if no 

such rate exists, either a rate negotiated between the pass-through entity and the subrecipient (in compliance with this part) or a de 

minimis indirect cost rate as defined in 2 CFR §200.414 Indirect (F&A) costs, paragraph (f); (5) a requirement that the subrecipient 

permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for 

the pass-through entity to meet the requirements of 2 CFR Part 200; and (6) appropriate terms and conditions concerning closeout of 

the subaward. 

Further Action Required: Within 90 days of the receipt of this letter, the State must submit to OSEP:

1. Revised State policies and procedures that demonstrate the State will ensure that every subaward is clearly identified to the 

subrecipient as a subaward and includes the information required under 2 CFR §200.331(a) at the time of the subaward and 

if any of these data elements change, include the changes in subsequent subaward modification.

A copy of the correspondence in which the State has informed its State audit office that is responsible for conducting audits in 

accordance with the Single Audit Act and the Uniform Guidance, of this finding of noncompliance and OSEP’s required corrective 

actions.
New York State Education Department (NYSED), page 7 of 8

Finding: Criteria 2.2 and 2.3: Based on the review of documents and confirmed through meetings with NYSED September 28-30, 

2016, OSEP finds that the State does not have procedures to evaluate each subrecipient’s risk of noncompliance for purposes of 

determining the appropriate subrecipient monitoring or to monitor subrecipients to ensure that the IDEA subaward is used for 

authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Specifically, 

the State reported that due to staff turnover, the State did not have a process in place to evaluate each subrecipient’s risk of 

noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, as required under 2 CFR 

§200.331(b). In addition, the State reported that it did not have a process in place to ensure that LEAs comply with the fiscal 

requirements applicable to Part B of the IDEA, as required under 2 CFR §200.331(d) and 34 CFR §§300.149 and 300.600(e). For 

example, the State reported that it does not have a mechanism to ensure that LEAs are resolving audit findings, but instead relies on 

auditors to identify the issue in subsequent years if the LEA has not otherwise corrected the noncompliance. 

Citation: Under 2 CFR §200.331(b), the State (as the pass-through entity) must evaluate each subrecipient’s risk of noncompliance 

with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate 

subrecipient monitoring. Under 2 CFR §200.331(d), the State must monitor the activities of the subrecipient as necessary to ensure 

that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of 

the subaward; and that subaward performance goals are achieved. The State’s monitoring of the subrecipient must include, among 

other things, following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the 

Federal award provided to the subrecipient from the State detected through audits, on-site reviews, and other means. In addition, 

under 34 CFR §§300.149 and 300.600, the State must monitor grant and subgrant supported activities to ensure compliance with 

applicable Federal requirements, including fiscal requirements, and must ensure that when it identifies noncompliance with the 

requirements by LEAs, the noncompliance is corrected as soon as possible, and in no case later than one year after the State’s 

identification of the noncompliance. Accordingly, while a State has flexibility to determine the methods it uses to conduct 

subrecipient monitoring, a State must have a system reasonably designed to ensure that LEAs comply with fiscal requirements 

applicable to Part B of IDEA.

Further Action Required:

Subsequently, in the November 18, 2016 email correspondence, the State provided revised State policies, as well as a 

timeline for developing and implementing procedures, for:

a. Evaluating each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions 

of the subaward for purposes of determining the appropriate subrecipient monitoring; and 

b. Subrecipient monitoring to ensure compliance with the fiscal requirements applicable to Part B of the IDEA.

OSEP finds that the revised policies are consistent with 2 CFR §200.331and 34 CFR §§300.149 and 300.600(e).

However, NYSED must still demonstrate that it is implementing procedures consistent with its policies and the Uniform 

Guidance and IDEA requirements.

Within 90 days of the receipt of this letter the State must submit to OSEP:
New York State Education Department (NYSED), page 8 of 8

a. Revised State procedures for evaluating each subrecipient’s risk of noncompliance with the Federal statutes, 

regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient 

monitoring; 

b. Revised State procedures for fiscal subrecipient monitoring consistent with the requirements of IDEA and the Uniform 

Guidance; 

c. A copy of the correspondence in which the State has informed its State audit office that is responsible for conducting 

audits in accordance with the Single Audit Act and the Uniform Guidance, of this finding of noncompliance and 

OSEP’s required corrective actions.

With the FFY 2016 APR, due February 1, 2018, the State must provide evidence that it has implemented the procedures for 

evaluating each subrecipient’s risk of noncompliance and the fiscal subrecipient monitoring procedures.