Office of Special Education Programs (OSEP) 

Fiscal Monitoring Instrument (FMI): FFY 2016

New Mexico Public Education Department (NMPED) 

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 the Inspector General 

SEA – State education 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 2017 examined two areas: LEA Allocations and Subrecipient 

Monitoring. In conducting the monitoring, OSEP reviewed information from FFYs 2014, 2015

and 2016, 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 Mexico Public Education Department (NMPED), page 2 of 9 

IDEA Part B 

Summary of Monitoring Criteria 

Monitoring Area 1, IDEA Part B: LEA ALLOCATIONS 

The IDEA Part B 611 and 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 funds to 

LEAs, consistent with statutory and regulatory 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 section 619 

allocations to eligible LEAs based upon the correct 

formula for calculating base payments. 

No 34 CFR §§ 300.705(a)-

(b)(1), 300.815-

300.816(a)

Criterion 1.2 The SEA calculates LEA base payment adjustments 

consistent with IDEA requirements. 

No 34 CFR §§ 300.705(b)(2), 

300.815, 300.816(b);

34 CFR Part 76 Subpart 

H

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), 

Criterion 1.4 The SEA ensures that IDEA funds are properly allocated 

to IDEA through subgrants to eligible charter school 

LEAs that open or significantly expand their enrollment.

No 34 CFR §§76.792 –

76.793
New Mexico Public Education Department (NMPED), page 3 of 9 

Criterion Number Description

Noncompliance 

identified?

Applicable 

Requirements

Criterion 1.5 The SEA reallocates section 611 and/or section 619 

funds to eligible LEAs, including charter school LEAs, 

consistent with IDEA requirements. 

No 34 CFR §§300.705(c) and 

300.817. 

Criterion 1.6 The SEA ensures that FFY 2015 section 619 allocations 

were made consistent with IDEA requirements although

the FFY 2015 allocations to States for section 619 

grants were below the 1997 appropriation level.

No 34 CFR §300.816

Finding: 

None. 
New Mexico Public Education Department (NMPED), page 4 of 9 

Monitoring Area 2, IDEA Part B: SUBRECIPIENT MONITORING 

Under the IDEA and 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.

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), 

CFR §§300.149 and 

300.600
New Mexico Public Education Department (NMPED), page 5 of 9 

Criterion Number Description 

Noncompliance 

identified? 

Applicable 

Requirement 

Criterion 2.4 Depending upon the assessment of risk posed by the 

subrecipient, the SEA has policies and procedures that 

consider monitoring activities of LEAs ranging from 

technical assistance to on-site monitoring or conducting 

agreed-upon-procedures engagements (audits).

No 2 CFR §200.331(e)

Criterion 2.5 The SEA conducts monitoring activities that verify that 

every subrecipient is audited in accordance with the 

Uniform Guidance.

No 2 CFR §200.331(f)

Criterion 2.6 The SEA considers 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 2.2: During OSEP’s virtual fiscal monitoring, conducted on July 10 and 11, 2017, OSEP asked about the State’s 

mechanism for 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. The State reported that it had revised its fiscal 

monitoring procedures to meet the requirements of the Uniform Guidance. According to the State’s special education monitoring 

procedures,1the NMPED’s general supervision system is designed with an integrated approach to accountability which includes, but 

is not limited to, integrated fiscal accountability, targeted technical assistance and professional development as well as, integrated 

monitoring activities. As a part of this accountability system, subrecipient monitoring is included. According to the Public Education 

Department Federal Programs and Administrative Service Department Policy and Procedure Subrecipient Monitoring, during the 

 

1 New Mexico’s Integrated Special Education Accountability System—a Comprehensive Monitoring Approach to Improving Outcomes for Students 

with Disabilities, was revised January 2016. 
New Mexico Public Education Department (NMPED), page 6 of 9 

award monitoring period, as a part of the information gathering process, a letter is sent by the NMPED to subrecipients which asks if 

the subrecipient was monitored and if audit findings were made. If the subrecipient had audit findings related to federal awards, 

corrective action plans (CAPs) are then developed by the NMPED. Thereafter, based on the CAP and the type of audit finding, 

specific document submissions and frequency of those submissions are specified. According to NMPED procedures, the three types 

of audit findings are: (1) material weakness, (2) significant deficiency and (3) other matters. Under this structure, an LEA with 

“material weakness” findings are subject to document submission to the NMPED every three months or sooner and is designated as 

a “high risk grantee”. An LEA with “significant deficiency” findings is subject to a required document submission to the NMPED every 

six months or sooner and is designated as a “medium risk grantee”. An LEA with findings in the “other matters” category is subject 

to document submission to NMPED every six months or sooner and is designated as a “low risk grantee”. The State then uses the 

assigned risk determinations as a part of the criteria when making annual LEA determinations under section 616(b)(1)(A) of the 

IDEA. Therefore, under the State’s current accountability system, the determinations of risk of noncompliance applied by the 

NMPED to its LEAs are used for the purposes of making LEA determinations under 34 CFR §300.600(a)(2) and are not used for the 

purposes of determining the appropriate subrecipient monitoring activities. NMPED did not identify any mechanism that it is using to 

evaluate an LEA’s risk of noncompliance for purposes of determining appropriate subrecipient monitoring activities. Therefore, 

OSEP finds that the State’s policies, and procedures are not reasonably designed to 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 activities, as required by 2 CFR §200.331(b). 

Citation: 

Under 2 CFR §200.331(b), all pass-through entities must evaluate each subrecipient’s risk of noncompliance with Federal statutes, 

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

described in section 2 CFR §200.331(d) and (e), which may include consideration of factors such as: (1) The subrecipient's prior 

experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives 

a Single Audit in accordance with Subpart F — Audit Requirements of this part, and the extent to which the same or similar subaward 

has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; 

and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly 

from a Federal awarding agency).
New Mexico Public Education Department (NMPED), page 7 of 9 

Further action required: 

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

1. Revised policies and procedures that demonstrate that the State allows for the evaluation of 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, consistent with 2 CFR §200.331(b)(1)-(4). 

With the 2017 SPP/APR due on February 1, 2019, the State must submit evidence of implementation of the revised policies and 

procedures demonstrating that the State 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, consistent with 

2 CFR §200.331(b)(1)-(4). 

Finding: 

Criterion 2.3: Based on OSEP’s January 11, 2016 fiscal monitoring letter, and the additional documentation reviewed and interviews 

conducted during OSEP’s 2017 fiscal monitoring , OSEP finds that: 

1) The State does not have a mechanism that is reasonably designed 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, as required by 2 CFR §§200.328(a), 200.331(d) and 34 CFR §§300.149, 300.600. 

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 the IDEA. 

2) The State does not have policies and procedures to issue a management decision for audit findings pertaining to the 

Federal award provided to the subrecipient from the pass-through entity, as required by 2 CFR §200.521. 

OSERS/OSEP first documented findings on NMPED’s subrecipient monitoring system in a program determination letter (PDL) dated 

September 13, 2012. In that PDL, OSERS required the State to provide: (1) a copy of NMPED’s subrecipient monitoring policies, 

procedures and protocols used to ensure LEA compliance with the IDEA and EDGAR requirements; (2) with its FFY 2011 Annual 

Performance Report (APR), due February 1, 2013, documentation demonstrating that the NMPED implemented these policies and 

procedures and (3) documentation demonstrating that the NMPED has reviewed and issued management decisions on audit findings 

within six months after receipt of the LEA’s audit report. The State did not provide the required documentation releated to the 
New Mexico Public Education Department (NMPED), page 8 of 9 

implementation of its subrecipient monitoring procedures nor did the State provide documentation demonstrating that the NMPED 

reviewed and issued management decisions on audit findings within six months of the LEA’s audit report. On March 31, 2014, the 

State provided their policies and procedures related to the fndings in the PDL. Thereafter, in the fiscal monitoring letter dated 

January 11, 2016, OSEP found that the State did not have a system reasonably designed to ensure that LEAs comply with the fiscal 

requirements applicable to Part B of the IDEA, as required at that time under 34 CFR §§80.26(b)(2) and (3), 80.40(a), 300.149, and 

300.600, and OMB Circular A-133, Subpart D, §400(d)(5).2

 In the 2016 letter OSEP stated that it would continue to work with 

NMPED on this issue through its audit resolution process. For additional information please see the New Mexico Fiscal Monitoring 

letter at http://www2.ed.gov/fund/data/report/idea/partbfymltrs/index.html#nm. 

Additionally, based on information the State provided during OSEP’s 2017 fiscal monitoring related to Criterion 2.2, the NMPED’s 

subrecipient monitoring activities are limited to the results of IDEA A-133 audit findings. According to the State’s policies and 

procedures, during the monitoring period, LEAs are asked: (1) If they were subject to an A-133 audit, single audit, and had to be 

audited; (2) If the required audit was completed within nine months of the end of the subrecipient’s audit period; and (3) if the 

subrecipient had audit findings related to Federal awards. According to the State’s policies and procedures, the results of the audit 

findings either lead to a CAP, impact determinations or both. Consequently, unless an LEA receives an A-133 audit there is no 

mechanism 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 as required by 2 CFR §200.331(d), 

34 CFR §§300.149, and 300.600. Moreover, as a part of OSEP’s fiscal monitoring, the State was required to submit to OSEP 

findings made against LEAs to demonstrate implementation of the State’s subrecipient monitoring structure. Upon review of the 

State’s data, it appears all findings made by the NMPED against LEAs were issued solely under the State’s audit structure.

Furthermore, when asked about policies and procedures that ensure the issuance of management decisions on audit findings, the 

State responded that management decisions are issued by the State and that the documentation would be forwarded to OSEP. 

Subsequently, on September 12, 2017, during a technical assistance visit to NMPED, OSEP followed up with SEA staff and 

requested evidence that the SEA issued management decisions on audit findings as required by 2 CFR §200.331(d)(3). At that time, 

State staff explained that management decisions are not issued. 

 

2

 Effective July 1, 2015, for IDEA FFY 2015 for IDEA Part B FFY 2015 grant awards, the Uniform Guidance provisions governing audit 

requirements at Subpart F of 2 CFR Part 200 and monitoring and reporting program performance at 2 CFR §§200.328 and 200.331 replace the 

provisions previously found at 34 CFR §§80.26(b)(2) and 80.40(a), respectively. 
New Mexico Public Education Department (NMPED), page 9 of 9 

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 identified 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 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. Additionally, in accordance with 2 CFR §200.331(d)(3), the pass-through entity monitoring of the 

subrecipient must include a management decision for audit findings pertaining to the Federal award provided to the subrecipient from 

the pass-through entity as required by 2 CFR §200.521. 

Further Action Required: 

Within 30 days of the date of this letter, the State must submit to OSEP a plan for meeting the specific required actions detailed 

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

1. Revised State policies and procedures for subrecipient monitoring, including procedures for correction of identified 

noncompliance, consistent with the requirements of IDEA, the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507), 

and the Uniform Guidance; and 

2. Revised State policies and procedures that demonstrate that the State ensures management decisions are issued on audit 

findings pertaining to the Federal award in accordance with 2 CFR §§200.331(d)(3) and 200.521. 

With the FFY 2017 APR, due February 1, 2019, the State must provide evidence that it has implemented the subrecipient monitoring 

procedures.