400 MARYLAND AVE. S.W., WASHINGTON, DC 20202-2600

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

September 13, 2021

Honorable Dave Jeppesen

Director

Idaho Department of Health and Welfare

450 West State Street, 10th Floor 

Boise, Idaho 83720

Sent via email: Dave.jeppesen@dhw.idaho.gov

Dear Director Jeppesen:

This letter is to inform the State lead agency (LA), Idaho Department of Health and Welfare 

(IDHW), of the results of Office of Special Education Programs’ (OSEP’s) monitoring under 

Part C of the Individuals with Disabilities Education Act (IDEA) as part of OSEP’s 

Differentiated Monitoring and Support System (DMS 2.0). OSEP has identified one finding of 

noncompliance under Part C of the IDEA and as explained further below, IDHW must submit a 

corrective action plan and additional documentation to address this finding of noncompliance.

Finding: OSEP finds that the State LA does not monitor early intervention service (EIS) 

providers used by the State to carry out Part C to identify and correct noncompliance, consistent 

with IDEA Section 635(a)(10) and 34 C.F.R. § 303.120(a) of the Part C regulations, related to 

fiscal requirements including the payor of last resort and system of payment requirements in 34 

C.F.R. §§ 303.500 through 303.521.

Background: During Phase 1 of OSEP’s DMS 2.0 activities, the first component of OSEP’s 

review was State fiscal management. OSEP staff held phone calls with IDHW staff on 

November 2, 2020, and December 2, 2020, to discuss the IDEA Part C single line of 

responsibility fiscal monitoring protocol. This protocol examines how Idaho’s Statewide system 

implements fiscal elements of the single line of responsibility under IDEA Section 635(a)(10) as 

well as other selected requirements as described under IDEA Sections 635(a), 616 and 642 of 

IDEA and the corresponding Part C regulatory requirements. In addition to conducting 

discussions with representatives from IDHW, OSEP staff reviewed publicly available 

information, policies and procedures, quality control checklists and other related documents 

IDHW submitted to OSEP. 

Legal Requirements: Under IDEA Section 635(a)(10) and 34 C.F.R. § 303.120(a)(1), each 

State’s system must include a single line of responsibility in a LA, designated or established by 

the Governor, that is responsible for the general administration and supervision of all EIS 

providers (regardless of whether they receive Federal IDEA funds), to ensure Statewide 

compliance with IDEA Part C requirements. As part of this responsibility, LAs must monitor and 

enforce the fiscal requirements under Part C of the IDEA, including the payor of last resort 

requirements in IDEA Section 640 and 34 C.F.R. §§ 303.500 and 303.510 and the system of 

payment policies, such as use of public benefits or insurance or private insurance to pay for Part 

C services in 34 C.F.R. §§ 303.520 and 303.521. If the State LA identifies noncompliance, it 

must ensure that the noncompliance is corrected as soon as possible and in no case later than one 

year after the LA’s identification of the noncompliance consistent with 34 C.F.R. § 
Page 2- Director Jeppesen

303.120(a)(2)(iv) and 303.700(e). Further, under 2 C.F.R. § 200.303, the LA must establish 

internal controls in order to comply with “Federal statutes, regulations, and the terms and 

conditions of Federal awards,” and the LA must monitor its compliance with the requirements of 

the Federal award.

OSEP Analysis: IDHW staff acknowledged to OSEP that it has not monitored for fiscal 

requirements. During OSEP’s discussions with the State, IDHW discussed its quality control 

checklists and data system with OSEP. However, when asked about its current process of 

monitoring payor of last resort requirements and other system of payment requirements, the State 

reported that it does not currently have a fiscal monitoring system or fiscal monitoring policies 

and procedures in place. Further, the State’s quality control checklists and data system 

capabilities only address a few fiscal requirements and have not been implemented in a 

systematic manner. For example, the State’s quality checklists include a review of file samples to 

confirm that financial information for the family is updated annually. The checklists also include 

confirmation that documentation of the provision of the system of payments polices to families is 

on file, as well as documentation of parental consent to bill private insurance. The State also 

reported its data system identifies billing errors in the IDEA Part C program but confirmed it has 

been reacting to issues identified by its data system rather than proactively monitoring the Part C 

fiscal requirements and identifying noncompliance. These limited checklists and capabilities of 

the data system do not meet the requirements under 34 C.F.R. § 303.120(a)(2) of the Part C 

regulations.

During follow-up technical assistance conversations with the State on February 1, 2021, and 

March 1, 2021, the State provided OSEP with a draft action plan to address the fiscal monitoring 

requirements, which included reviewing other States’ fiscal monitoring procedures and 

completing a gap analysis to determine necessary monitoring activities. To date, monitoring 

procedures have not been provided to OSEP. Based on this information OSEP is requiring the 

following corrective action. 

Conclusion and Action Required: OSEP’s analysis is based on the documents and information 

provided by, and interviews with, staff of IDHW as the State LA. Based on this analysis, OSEP 

finds that the State LA does not monitor EIS providers as required by IDEA Section 635(a)(10) 

and 34 C.F.R. § 303.120(a) of the Part C regulations, related to fiscal requirements including the 

payor of last resort and system of payment requirements in 34 C.F.R. §§ 303.500 through 

303.521.

Within 90 days from the date of this letter, the State must submit to OSEP:

(1) monitoring procedures under IDEA Section 635(a)(10)(A) and 34 C.F.R. § 303.120(a)(2) to 

reflect the IDEA Part C fiscal requirements, including the payor of last resort and system of 

payments requirements; and 

(2) a corrective action plan that includes a timeline1for, and evidence of, implementation of the 

State’s fiscal monitoring procedures. Evidence shall include submitting to OSEP a schedule of 

monitoring activities and sample letters of findings to EIS providers regarding fiscal 

requirements.

1

In accordance with 34 C.F.R. §§ 303.120(a)(2)(iv) and 303.700(e), all noncompliance must be corrected as soon as 

possible, and in no case later than one year after the identification of the noncompliance. 
Page 3 - Director Jeppesen

OSEP appreciates the State’s cooperation during the DMS 2.0 process and its receptiveness to 

technical assistance in this area. We look forward to our continued work on these issues. If you 

have any questions, please contact your State lead at Jennifer.Barrett.Zitkus@ed.gov.

Sincerely

David Cantrell, PhD

Acting Director

Office of Special Education Programs

cc: Sandy Griffin, State Part C Coordinator