400 MARYLAND AVE. S.W., WASHINGTON, DC 20202-2800

www.ed.gov 

The Department of Education’s mission is to promote student achievement and preparation for global competitiveness

by fostering educational excellence and ensuring equal access.

UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE SERVICES

OFFICE OF SPECIAL EDUCATION PROGRAMS

DIRECTOR

December 20, 2023 

By Email

Honorable Charlie Brereton

Director

Montana Department of Public Health and Human Services 

111 North Sanders, Room 301 

P.O. Box 4210 

Helena, Montana 59604 

E-mail: charles.brereton@mt.gov

Dear Director Brereton: 

The purpose of this letter is to provide an update on the status of the findings and corrective 

actions identified by the U.S. Department of Education’s (the Department) Office of Special 

Education Programs (OSEP) reported in the Differentiated Monitoring and Support (DMS) 

monitoring report to the Montana Department of Public Health and Human Services (DPHHS)

dated January 24, 2023. 

Based upon analysis of revised fiscal policies and procedures submitted by DPHHS on 

October 5, 2023, OSEP cannot determine whether the State treats its early intervention service 

(EIS) providers as subrecipients or contractors. OSEP is issuing this letter to provide the status of 

each of the findings that were issued, including findings that are closed and require no additional 

action, findings that remain open for DPHHS to provide OSEP with evidence of implementation 

or additional documentation as described in the attached chart. 

The summary of monitoring priorities and outcomes chart, included in this letter, describes the 

monitoring component, finding, required actions, OSEP analysis, and status of findings based on 

the evidence received by OSEP to date.

OSEP would like to highlight a concern regarding the State’s determination of EIS providers as 

subrecipients or contractors as required under 34 C.F.R. §§ 303.120(a) and 303.205, and the 

OMB Uniform Guidance in 2 C.F.R. Part 200. Historically, DPHHS has reported to OSEP that 

the State considers its EIS providers to be contractors. In response to OSEP’s January 11, 2021, 

document request, DPHHS submitted fiscal policies and procedures for its procurement process 

and contract management. The State also provided the contract template and scope of work for 

its EIS providers and informed OSEP that the Part C Program's contractors were reimbursed 

using the Agency Wide Accounting and Client System. 

During the fiscal virtual visit on June 7, 2022, the fiscal bureau chief explained that the State 

considers its five EIS providers to be subrecipients, as opposed to contractors. In discussions 

with the State, OSEP informed the State that if DPHHS is going to treat their EIS providers as 

subrecipients, the State will be responsible for conducting subrecipient monitoring in accordance 

with 2 C.F.R. § 200.332, as well as Subpart F. This conversation was also noted in the State's 

January 24, 2023, monitoring report (p. 11). 
Page 2—Lead Agency Director

On August 23, 2023, OSEP held a call with DPHHS staff to obtain clarification on the fiscal 

policies and procedures submitted to OSEP on June 24, 2023. OSEP expressed concerns that the 

division’s Fiscal Monitoring Policies and Procedures, which ensures consistent monitoring 

across all programs within the Early Childhood and Family Support Division, did not include 

citations to IDEA Part C fiscal requirements consistent with 34 C.F.R. §§ 303.120(a) and 

303.205, or the OMB Uniform Guidance in 2 C.F.R. Part 200, where applicable, throughout the 

document. During the call, OSEP informed the State that the document included a subrecipient 

monitoring and a contract section, but it was not clear which section is used to monitor the IDEA 

Part C EIS providers. OSEP further notes that if the EIS providers are considered subrecipients, 

additional requirements for fiscal monitoring apply, and OSEP is concerned about the State’s 

ability to meet these requirements.

We appreciate your efforts to ensure compliance and improve results for children with 

disabilities. If you have any questions, please contact your OSEP State Lead, Vinetta Freeman at 

vinetta.freeman@ed.gov.

Sincerely,

Valerie C. Williams

Director

Office of Special Education Programs 

cc: Part C Coordinator
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 3

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

Monitoring and Improvement

1.1 OSEP finds that DPHSS 

does not have a system 

reasonably designed to 

monitor its EIS providers to 

ensure compliance with 

IDEA Part C requirements, 

such as timely service 

provision to ensure there are 

no waitlists for services, as 

required under IDEA 

34 C.F.R. §§ 303.120(a) and 

303.700.

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

Updated policies and procedures 

documenting its process for monitoring 

its EIS providers on key IDEA Part C 

requirements such as ensuring timely 

IFSP service provision requirements 

based on a review of child records and 

all other relevant available data (once 

the State has resolved its data finding 

below). These policies must reflect that 

all services (not just service 

coordination) that are identified on the 

IFSP must be timely initiated and 

provided. 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

document: Montana Milestones 

Comprehensive Monitoring 

Manual.

Based upon analysis of the 

Montana Milestones 

Comprehensive Monitoring 

Manual, OSEP has determined that 

the State has taken the necessary 

steps to address and resolve the

policy and procedure required 

corrective action outlined in 

OSEP's January 24, 2023, 

monitoring report. The manual 

includes information on the steps 

the DPHHS takes to validate data, 

delineates the monitoring process 

of SPP/APR indicators versus the 

comprehensive monitoring process, 

and lists priority indicators that 

cover essential IDEA Part C 

requirements, including timely 

IFSP service.

CLOSED

1.1 OSEP finds that DPHSS 

does not have a system 

reasonably designed to 

monitor its EIS providers to 

ensure compliance with 

IDEA Part C requirements, 

such as timely service 

Evidence of Implementation—as 

soon as possible, but no later than one 

year from the date of the DMS 

monitoring report:

The State LA must submit evidence 

that all five EIS providers were 

monitored for IDEA Part C 

The State has not submitted 

evidence of implementation to 

OSEP for analysis.

OPEN
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 4

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

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ACTIONS/STATUS

provision to ensure there are 

no waitlists for services, as 

required under IDEA 

34 C.F.R. §§ 303.120(a) and 

303.700.

requirements, including timely service 

provision and, if a finding was issued, a 

copy of the monitoring report which 

identifies the findings of 

noncompliance with IDEA Part C 

requirements, and include the one-year 

timeline for correction. 

Data

2.1 OSEP finds that DPHSS 

does not have a system 

reasonably designed to 

collect valid and reliable data 

as needed to report annually 

to the Secretary under 

34 C.F.R § 303.702(b)(2) on 

three of the indicators 

established by the Secretary 

for the State performance 

plans, as required under 

IDEA 34 C.F.R. §§ 303.124, 

303.224, and 303.701(c).

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

The procedures the State uses to verify 

the SPP/APR data for Indicators C-1, 

C-2 and C-7 that are submitted by its 

EIS providers to the LA as required 

under IDEA sections 616 and 618 (as 

modified by IDEA section 642) and 

34 C.F.R. §§ 303.124, 303.224,

303.701(c), and 303.720 through 

303.724.

DPHHS submitted to OSEP on 

June 24, 2023, the following 

documents: Montana Milestones 

Comprehensive Monitoring 

Manual, Montana Milestones Data 

Validation Procedures, and 

Montana Milestones Monitoring 

Record Selection Methodology.

Based on OSEP’s review of the 

documents submitted by DPHHS, 

OSEP has determined that the State 

has taken the necessary steps to 

address and resolve the policy and 

procedure required corrective 

action outlined in OSEP's 

January 24, 2023, monitoring 

report. The documents include 

information on the DPHHS

methodology for selecting, 

reviewing, and validating data from 

its Med Compass data system. 

Moreover, the Montana Milestones 

Comprehensive Monitoring Manual

(pp. 14-16) outline the data 

validation process for SPP/APR 

CLOSED
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 5

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

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FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

Indicators C-1, C-2, and C-7.

2.1 OSEP finds that DPHSS 

does not have a system 

reasonably designed to 

collect valid and reliable data 

as needed to report annually 

to the Secretary under 

34 C.F.R § 303.702(b)(2) on 

three of the indicators 

established by the Secretary 

for the State performance 

plans, as required under 

IDEA 34 C.F.R. §§ 303.124, 

303.224, and 303.701(c).

Evidence of Implementation—as 

soon as possible, but no later than one 

year from the date of the DMS 

monitoring report: 

The State will provide with its FFY 

2022 SPP/APR an explanation of how 

its data for Indicators C-1, C-2, and 

C-7 are valid and reliable and reflect 

the measurement. The explanation 

should include a discussion of the 

methodology used by the State to 

verify the validity and reliability of the 

data for C-1 (the percentage of infants 

and toddlers with IFSPs who receive all 

early intervention services on their 

IFSPs in a timely manner); C-2 (the 

percentage of infants and toddlers with 

IFSPs who primarily receive early 

intervention services in the home or 

community-based settings); and C-7

(the percentage of infants and toddlers 

with IFSPs for whom an evaluation and 

initial assessment and an initial IFSP 

meeting were conducted within 

Part C’s 45-day timeline).

The State has not submitted 

evidence of implementation to 

OSEP for analysis.

OPEN

Fiscal

3.1 OSEP finds that DPHSS 

does not have a general 

supervision system 

reasonably designed to 

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

document: Montana Milestones 

Fiscal Program Monitoring. 

While DPHHS's Montana 

OPEN

The State must resubmit 

fiscal policies and 

procedures to comply with 

IDEA Part C, as required 
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 6

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

monitor its EIS providers to 

ensure fiscal compliance 

with IDEA Part C, as 

required under 

34 C.F.R. §§ 303.120(a)(1) 

and (2) and 303.700(a) and 

(b). Specifically, the DPHSS 

monitoring system is not 

reasonably designed to 

identify and verify correction 

of fiscal noncompliance. 

1. Revised fiscal monitoring policies

and procedures to ensure that the 

LA has a system in place to identify 

and verify the correction of 

noncompliance (such as 

coordination of all available 

funding sources and payor of last 

resort) as soon as possible and in no 

case later than one year after the 

LA's notification of the 

noncompliance as required under 

34 C.F.R. §§ 303.120(a)(1) and (2) 

and 303.700(a) and (b). 

Milestones Fiscal Program 

Monitoring policy addresses how 

the State monitors its EIS providers 

for compliance with the statewide 

system of payments requirements, 

the document does not address all

the required information under 

34 C.F.R. §§ 303.120(a)(1) and (2). 

Specifically, it is unclear what 

actions DPHHS takes to monitor 

the use of funds (i.e., allowable 

expenditures and compliance with 

the terms and conditions of EIS 

provider awards). 

under 

34 C.F.R. §§ 303.120(a)(1) 

and (2).

3.1 OSEP finds that DPHSS 

does not have a general 

supervision system 

reasonably designed to 

monitor its EIS providers to 

ensure fiscal compliance 

with IDEA Part C, as 

required under 

34 C.F.R. §§ 303.120(a)(1) 

and (2) and 303.700(a) and 

(b). Specifically, the DPHSS 

monitoring system is not 

reasonably designed to 

identify and verify correction 

of fiscal noncompliance. 

Evidence of Implementation—as 

soon as possible, but no later than one 

year from the date of the DMS 

monitoring report, the State must 

submit to OSEP:

1. Evidence of the State’s 

implementation of its fiscal 

monitoring policies and procedures 

such as, notification letters, 

monitoring reports, letters of 

findings, examples of fiscal finding 

close-out and verification of 

correction, or other supporting 

documentation demonstrating 

oversight of the State’s fiscal 

monitoring as required under 

The State has not submitted 

evidence of implementation to 

OSEP for analysis.

OPEN
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 7

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

34 C.F.R. §§ 303.120(a)(1) and (2) 

and 303.700(a) and (b).

3.2 OSEP finds that DPHHS has 

failed to monitor its EIS 

providers for compliance as 

required under 

34 C.F.R. § 303.120(a) for 

the statewide system of 

payments policy 

requirements in 

34 C.F.R. §§ 303.520 and 

303.521. 

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP:

2. Revised fiscal monitoring policies 

that demonstrate how the LA will 

provide oversight of the State’s 

system of payments as required 

under 34 C.F.R. §§ 303.120(a), 

303.520, and 303.521. 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

document: Montana Milestones 

Fiscal Program Monitoring. 

Based upon analysis of the 

Montana Milestones Fiscal 

Program Monitoring policy, OSEP 

has determined that the State has 

taken the necessary steps to address 

and resolve the policy and 

procedure required corrective 

action outlined in OSEP's 

January 24, 2023, monitoring 

report. The Montana Milestones 

Fiscal Program Monitoring 

document outlines how the State 

will monitor the use of public 

benefits and private insurance, 

query and review data related to 

payor sources, and review 

documentation demonstrating how 

consideration is given to funding 

sources. 

CLOSED 

3.2 OSEP finds that DPHHS has 

failed to monitor its EIS 

providers for compliance as 

required under 

34 C.F.R. § 303.120(a) for 

the statewide system of 

Evidence of Implementation—as 

soon as possible, but no later than one 

year from the date of the DMS 

monitoring report:

2. Evidence of the State’s system of 

payments practices such as, the 

The State has not submitted 

evidence of implementation to 

OSEP for analysis.

OPEN
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 8

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

payments policy 

requirements in 

34 C.F.R. §§ 303.520 and 

303.521. 

process for evaluating the payor 

source, evidence of training to EIS 

providers, access to insurance, 

interim payments, or other 

supporting documentation 

demonstrating oversight of the 

State’s system of payments as 

required under 

34 C.F.R. §§ 303.120(a), 303.520,

and 303.521. In addition, the State 

must provide evidence that families 

have been provided a copy of the 

State’s system of payments policy 

and have consented, as appropriate, 

for the use of public and/or private 

insurance.

3.3 OSEP finds that DPHHS 

does not have procedures and 

practices that are reasonably 

designed to ensure the 

appropriate use of IDEA Part 

C funds as required under 

34 C.F.R. §§ 303.120(a) and 

303.205, and the OMB 

Uniform Guidance in 

2 C.F.R. Part 200. 

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

3. Revised fiscal monitoring policies 

and procedures that demonstrate 

how the LA will provide oversight 

of the EIS providers use of IDEA 

Part C funds (including internal 

controls) as required under 

34 C.F.R. §§ 303.120(a) and 

303.205, and the OMB Uniform 

Guidance in 2 C.F.R. Part 200. 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

documents: Fiscal Monitoring 

Policies and Procedures, Fiscal 

Monitoring Part C Annex, and

Montana Milestones Internal 

Controls and Fiscal Monitoring. 

OSEP conducted a follow-up 

conversation with DPHHS staff on 

August 23, 2023, to further clarify 

OSEP's expectations regarding the 

required actions. On 

October 5, 2023, the State 

resubmitted its Fiscal Monitoring 

Part C Annex document.

OPEN 

The State must submit 

revised fiscal monitoring 

policies and procedures 

demonstrating how DPHHS 

ensures compliance with 

appropriate IDEA Part C 

fiscal requirements including 

use of funds requirements

consistent with 

34 C.F.R. §§ 303.120(a) and 

303.205, and the OMB 

Uniform Guidance in 

2 C.F.R. Part 200. The 

policies and procedures must 

include the applicable 
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 9

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

In the State's Fiscal Monitoring 

Policies and Procedures, there are 

references to 45 C.F.R. § 75, which 

are not the federal regulations that 

govern the U.S. Department of 

Education Federal Awards. The 

policy also includes subrecipient 

and contractor monitoring 

procedures; OSEP could not 

determine which monitoring 

method is used with DPHHS's EIS 

providers. Additionally, the Fiscal 

Monitoring Part C Annex policy 

(p. 9) states, "In January 2021...For 

Part C Regional Providers, they 

were considered Subrecipients...," 

yet in this same policy (p. 10), it 

states, “As of September 2023:" 

which is followed with the Early 

Childhood Technical Assistance 

Center Finance definitions for 

contractor and subrecipient. The 

State has not yet fully addressed the 

required action for this finding.

citations from IDEA Part C 

and OMB Uniform Guidance 

in 2 C.F.R. Part 200, which 

are associated with Sections 

II of the State's FFY 2022 

and 2023 grant applications. 

Additionally, the State must 

explicitly state if its EIS 

providers are subrecipients

or contractors as defined by 

OMB Uniform Guidance 

2 C.F.R. § 200.331.

3.3 OSEP finds that DPHHS 

does not have procedures and 

practices that are reasonably 

designed to ensure the 

appropriate use of 

IDEA Part C funds as 

required under 

34 C.F.R. §§ 303.120(a) and 

Evidence of Implementation—as 

soon as possible, but no later than one 

year from the date of the DMS 

monitoring report:

3. Evidence of the State’s monitoring 

of its EIS providers use of IDEA 

Part C funds such as, fiscal 

monitoring reports, and local EIS 

The State has not submitted 

evidence of implementation to 

OSEP for analysis.

OPEN
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 10

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

303.205, and the OMB 

Uniform Guidance in 

2 C.F.R. Part 200.

provider budgets, and fiscal data 

system procedures/screenshots, 

demonstrating the system’s capacity 

for oversight of Federal

IDEA Part C funds.

Dispute Resolution

4.1 OSEP finds that Montana 

Milestones’ State complaint 

policies and procedures are 

inconsistent with 

34 C.F.R. § 303.434(a). 

Specifically, publicly 

available documents indicate 

that families must engage in 

an informal process prior to 

filing a formal State 

complaint.

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

1. For State complaints: 

a. Revised procedural safeguards 

documents to ensure 

compliance with Part C 

requirements regarding 

complaints, under 

34 C.F.R. § 303.434(a); 

b. A copy of the memo sent to all 

EIS providers explaining the 

revised complaint procedures; 

and

c. A training schedule for its EIS 

providers on implementing the 

revised Montana Milestones 

complaint procedures.

DPHHS submitted to OSEP on 

June 24, 2023, the following 

documents: Montana Milestones 

Part C of IDEA Procedural 

Safeguards Dispute Resolution, 

Montana Milestones Dispute 

Resolution Memo, and Montana 

Milestones Dispute Resolution 

Training Schedule.

Based on OSEP’s review of the 

documents submitted by DPHHS, 

OSEP has determined that the State 

has taken the necessary steps to 

address and resolve the findings of 

noncompliance and the required 

corrective actions outlined in 

OSEP's January 24, 2023, 

monitoring report.

CLOSED 

4.2 OSEP finds that the State 

does not maintain a list of 

trained mediators as required 

under 

34 C.F.R. § 303.431(a)(2).

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

2. For Qualified Mediators: 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

documents: Montana Milestones 

Dispute Resolution Training 

Schedule, ATTACHMENT I 

Dispute Resolution Presentation 

CLOSED
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 11

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

MONITORING COMPONENT &

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NEXT STEPS/REQUIRED 

ACTIONS/STATUS

a. Policies and procedures that 

detail the State’s training 

activities and assurance that 

their mediators are 

knowledgeable on the Part C 

IDEA regulations relating to the 

provision of early intervention

services.

b. A list of individuals who are 

qualified mediators in the State 

and available on a random, 

rotational, or other impartial 

basis.

2023, and Montana Milestones Part 

C Mediator List 2023. 

Based on OSEP’s review of the 

documents submitted by DPHHS, 

OSEP has determined that the State 

has taken the necessary steps to 

address and resolve the findings of 

noncompliance and the required 

corrective actions outlined in 

OSEP's January 24, 2023, 

monitoring report. 

4.3 OSEP finds that the State 

does not ensure hearing 

officers possess knowledge 

of IDEA Part C consistent 

with 34 C.F.R. § 303.435(a).

Policies and Procedures—within 90 

days of the date of the DMS 

monitoring report the State must 

submit to OSEP: 

3. For Hearing Officers: 

a. Policies and procedures that 

demonstrate that the State trains 

its hearing officers on IDEA 

Part C requirements and the 

early intervention services 

available to infants and toddlers 

with disabilities and their 

families. 

b. Policies and procedures that 

demonstrate that the State 

ensures its hearing officers 

listen to the presentation of 

relevant viewpoints about the 

DPHHS submitted to OSEP on 

June 24, 2023, the following 

document: Montana Milestones 

Dispute Resolution Training 

Schedule. 

Based on OSEP’s review of the 

documents submitted by DPHHS, 

OSEP has determined that the State 

has taken the necessary steps to 

address and resolve the findings of 

noncompliance and the required 

corrective actions outlined in 

OSEP's January 24, 2023, 

monitoring report.

CLOSED 
OSEP DMS STATUS REPORT NOVEMBER 2023

MONTANA-PART C | 12

SUMMARY OF MONITORING PRIORITIES AND OUTCOMES

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FINDING REQUIRED ACTIONS OSEP ANALYSIS AND COMMENTS

NEXT STEPS/REQUIRED 

ACTIONS/STATUS

due process complaint, will 

examine all information 

relevant to the issues, will seek 

to reach a timely resolution of 

due process complaints and 

provide a record of the 

proceedings, including a written 

decision to the LA and parties 

involved in the due process 

hearing.