Office of Special Education Programs 

(OSEP) Fiscal Monitoring Instrument

(FMI): FFY 2015

Illinois State Board of Education (ISBE)

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.
Illinois State Board of Education (ISBE), page 2 of 7

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)
Illinois State Board of Education (ISBE), page 3 of 7

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.

Yes 34 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: During the onsite fiscal review conducted August 30-31, 2016, the SEA was asked to explain the meaning of 

the following statement in its “IDEA Part B Allocation Procedures” document that described its procedures for distributing section 619 

allocations: “Stand-alone high school districts and State Charter schools that do not serve PreK special education are not eligible for 

Preschool funds.” The SEA explained that the allocation of preschool section 619 funds was determined by grade level, not by age.

Thus, in Illinois, although children with disabilities who turn five years of age by September 1 of each school year may enroll in LEA 

kindergarten programs, ISBE does not distribute section 619 funds to LEAs that provide special education and related services to 

those 5-year-old eligible children with disabilities who enroll in LEA kindergarten programs.

Citation: Under 34 CFR §300.815, each State that receives a grant under section 619 of the IDEA for any fiscal year must distribute 

all of the 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 IDEA for use in accordance with Part B of the IDEA. Under 34 

CFR §300.815, each State that receives a grant under section 619 must distribute grant funds to eligible LEAs (including public 

charter schools that operate as LEAs) in the State that are responsible for providing education to children aged three through five 

years.

Further Action Required: See required actions below on pages four and five.

Finding: Criteria 1.2 and 1.4: During the onsite fiscal review conducted August 30-31, 2016, the SEA was asked how the base 

payment adjustment was calculated when an eligible charter school LEA has a significant expansion of enrollment. The State did not 

know if an eligible charter school LEA in the State has ever experienced a significant expansion, did not know of the State’s definition 
Illinois State Board of Education (ISBE), page 4 of 7

of a significant expansion of enrollment in a charter school LEA, and did not have procedures for making base payment adjustments

when such an expansion occurs.

Citation: Under 34 CFR §§300.705(b)(2), 300.816(b), Part 76 Subpart H, and the U.S. Department of Education’s (Department’s)

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?” (the 

Department’s December 2000 Guidance)1 base payment adjustments must be made if certain conditions exist. Among those 

conditions is when a charter school LEA significantly expands its enrollment. The determination of whether an expansion of 

enrollment in a charter school LEA is significant is based on the State’s definition of a significant expansion of enrollment in a charter 

school LEA, consistent with 34 CFR §76.787. The State is required to allocate the section 611 and section 619 subgrants to all 

eligible LEAs, including new and significantly expanding charter schools that operate as LEAs, in accordance with 34 CFR 

§§300.705 and 300.816 and Subpart H of 34 CFR Part 76, which requires adjusting base allocations of affected LEAs based on the 

relative numbers of children with disabilities ages three through 21 for section 611 subgrants, or ages three through five for section 

619 subgrants, who are currently provided special education by each affected LEA. 

Further Action Required: See required actions below on pages four and five.

Further Action Required for Criterion 1.1, 1.2, and 1.4: Within 90 days of the receipt of this letter, the State must submit to OSEP:

1. Documentation demonstrating that any LEA that received less than the amount of section 611 or section 619 funds to which it 

was entitled in FFY 2015 and/or FFY 2016 was made whole, or a plan outlining how the State will make these LEAs whole 

during FFY 2016, in accordance with 34 CFR §§300.705, 300.815-300.816,76.791-76.793, and the Department’s December 

2000 Guidance. The State may use any remaining FFY 2015 and/or FFY 2016 section 611 and/or section 619 State set-aside 

funds for this purpose.

2. Revised State policies and procedures2 that demonstrate the SEA will allocate IDEA section 611 and section 619 subgrants 

to all eligible LEAs, including significantly expanding charter school LEAs, in accordance with 34 CFR §§300.705, 300.815-

300.816, 34 CFR Part 76 Subpart H, and the Department’s December 2000 Guidance, including requirements for how and 

when an SEA must allocate funds to an eligible charter school LEA that significantly expands its enrollment, beginning in FFY 

2017.

1 Although the regulatory citations have not been updated to reflect the IDEA Part B regulations issued on August 14, 2006, and December 1, 

2008, the substance of the December 2000 Guidance remains applicable and is posted on the Department’s Web site. (See 

http://www2.ed.gov/policy/elsec/guid/cschools/cguidedec2000.pdf.) See questions 79 and 80 regarding base payment adjustments for charter 

school LEAs that significantly expand their enrollment.

2 On November 21, 2016, ISBE submitted additional documentation that updated its allocation policies to address concerns identified by OSEP.

OSEP is reviewing the updated policies and will determine whether they require further revision or are sufficient to close out this corrective action.
Illinois State Board of Education (ISBE), page 5 of 7

3. Revised State policies and procedures3 that demonstrate that section 619 funds will be allocated to all eligible LEAs 

(including public charter school LEAs) in the State that are responsible for providing education to children aged three through 

five years, including five-year-olds in LEA kindergarten programs, beginning in FFY 2017.

4. 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.

Within 30 days of OSEP’s notification to the State that it has approved the revisions made to the policies and procedures, the State 

must provide documentation that it has notified the LEAs of the revisions.

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. 

No 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.

No 2 CFR §200.331(b)

3 See id., footnote 2.
Illinois State Board of Education (ISBE), page 6 of 7

Criterion Number Description 

Noncompliance 

identified? 

Applicable 

Requirement 

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)

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 2.3: During the onsite fiscal review conducted August 30-31, 2016, the SEA described its procedures for 

monitoring of LEAs 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; and that subaward performance goals are achieved. The SEA reported 

that it has no mechanism to ensure that the LEA takes timely and appropriate corrective action on all noncompliance identified 

through audits, on-site reviews, and other means. Specifically, the SEA described its mechanism to track corrective actions by LEAs 

if the identified noncompliance requires the recovery of funds; however, the SEA does not have a mechanism to track corrective 

actions by LEAs if the identified noncompliance does not require the recovery of funds. OSEP also reviewed documents provided by 

the SEA describing its procedures for fiscal monitoring of LEAs. Accordingly, OSEP has determined that the State does not have a 

system reasonably designed to ensure that LEAs comply with the fiscal requirements applicable to Part B of the IDEA, as required 

under 2 CFR §200.331(d), 34 CFR §§300.149, and 300.600(e).

Citation: 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 2 CFR §200.328(a), 34 CFR §§300.149 and 300.600, the State must monitor grant and subgrantsupported activities to ensure 
Illinois State Board of Education (ISBE), page 7 of 7

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, the State must have a system reasonably designed to ensure that LEAs comply with fiscal 

requirements applicable to Part B of IDEA.

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

1. Revised State policies and procedures for fiscal monitoring, including LEAs’ correction of identified noncompliance and the 

SEA’s tracking of those corrective actions taken by LEAs, consistent with the requirements of IDEA, the Single Audit Act 

Amendments of 1996 (31 U.S.C. 7501-7507), and the Uniform Guidance. 

2. 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 Part B State Performance Plan/Annual Performance Report (SPP/APR), due February 1, 2018, the State must 

provide evidence that it has implemented the fiscal monitoring procedures.