UNITED STATES DEPARTMENT OF EDUCATION 

OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE SERVICES 

DEC - 2 2009 

Contact Persons 

Name: Ruth Ryder 

Telephone: 202-245-7513 

Name: Deborah Morrow 

Telephone: 202-245-7456 

OSEP 10-5 

MEMORANDUM 

TO: Chief State School Officers 

State Directors of Special Education 

FROM: Alexa Posny 

Acting Director 

Office of Special Education Programs 

Since the Office of Special Education Programs (OSEP) began focusing on the fiscal 

requirements of the Individuals with Disabilities Education Act (IDEA) in 2007, the heightened 

scrutiny has given rise to requests for clarification of several of those provisions. In addition, the 

passage of the American Recovery and Reinvestment Act of2009 on February 17, 2009, requires 

States and local educational agencies (LEAs) to examine the fiscal requirements in a new light 

and to be in a position to account for each of those requirements with increasing detail and 

specificity. One of the provisions which OSEP has been asked to clarify is found at 34 CFR 

§300.163, Maintenance of State financial support. 

Under 34 CFR §300.163(a), "a State must not reduce the amount of State financial support for 

special education and related services for children with disabilities, or otherwise made available 

because of the excess costs of educating those children, below the amount of that support for the 

preceding fiscal year." The question has been asked whether this provision specifically means 

the support for special education and related services provided by the State educational agency 

(SEA) or whether, in computing its maintenance of financial support for special education and 

related services, the SEA must include support provided by other State agencies, such as a State 

Department of Health or a State Vocational Rehabilitation Agency. 

SUBJECT: Maintenance of State Financial Support under the 

Individuals with Disabilities Education Act 

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Page 2 - Maintenance of State Financial Support 

Under section 602(31) of the IDEA and 34 CFR §300AO of the Part B implementing regulations, 

"State" is defined as each of the 50 States, the District of Columbia, the Commonwealth of 

Puerto Rico, and each of the outlying areas. Under section 602(32) of the IDEA and 34 CFR 

§300A1 of the regulations, "State educational agency" is defined as the State board of education 

or other agency or officer primarily responsible for the State supervision of public elementary 

schools and secondary schools, or, if there is no such officer or,agency, an officer or agency 

designated by the Governor or by State law. 

The reference to "State financial support" in 34 CFR §300.163 is not limited to only the financial 

support provided to or through the SEA, but encompasses the financial support of all State 

agencies that provide or pay for special education and related services, as those terms are defined 

under the IDEA, to children with disabilities. Because 34 CFR §300.163(a) requires that a State 

not reduce its financial support from year to year for special education and related services, a 

State must include in its calculation of financial support under 34 CFR §300.163(a), any 

financial support for special education and related services provided by any State agency. The 

SEA is one of those agencies and likely provides or supervises the administration of the majority 

of the State's support for special education and related services but possibly not all the State's 

financial support for special education and related services. For example, payment by the State 

Vocational Rehabilitation Agency from State funds for job coaching services to youth with 

disabilities pursuant to an individualized education program (IEP) would be included in the 

calculation of the maintenance of State financial support for special education and related 

services. Likewise, if the State Department of Health provides 'psychological counseling or other 

mental health services to children with disabilities pursuant to their IEPs, the cost of such 

services would also be included in the calculation under 34 CFR §300.163. In other words, a 

State needs to include in its calculation of' State financial support for special education and 

related services' funds other agencies provide to the SEA for such services, funds other agencies 

provide directly to LEAs for the services, and funds other agencies directly pay to staff or 

contractors for the delivery of the services pursuant to an IEP. 

The State financial support provided by the SEA for special education and related services is, of 

course, also included in the calculation required by 34 CFR §300.163. This includes State 

funding for special education staff, the cost of monitoring and carrying out other State 

administrative duties related to special education, and the cost of any direct services provided by 

the SEA, as well as any State funds provided to public agencies (including LEAs) in the State for 

the purpose of providing special education and related services. 

The standard of State financial support provided at 34 CFR §3qO.163(a) is a different standard 

than the LEA maintenance of effort (MOE) standard delineated at 34 CFR §300.203(b). The 

LEA standard at 34 CFR §300.203(b) requires that an LEA both budget, in each subsequent year, 

at least the same amount that it expended in the most recent prior year for which information is 

available, and expend, from year to year, at least the same amount that it expended in the 

previous year. The comparison, for LEA MOE compliance, is expenditures from year to year. 

For SEAs, the comparison is the amount of State financial support provided (made available) for 

special education and related services from year to year, regardless of the amount actually 

expended. 
Page 3 - Maintenance of State Financial Support 

The consequences are also different for an LEA and a State if they fail to meet the required 

standard. If a State fails to maintain the required level of financial support for special education 

and related services, under 34 CFR §300.163(b); the Secretary of Education reduces the 

allocation of funds under section 611 of the IDEA for any fiscal year following the fiscal year in 

which the State fails to comply with the requirement of34 CFR §300.163(a) by the same amount 

by which the State fails to meet the requirement. If an LEA fails to maintain fiscal effort, the 

SEA must return to the U.S. Department of Education, an amount equal to the amount by which 

the LEA failed to maintain effort. This repayment must be from non-Federal funds or from 

Federal funds for which accountability to the Federal government is not required. 

If you have questions regarding these provisions, please contact Ruth Ryder at 202-245-7513 or 

Deborah Morrow at 202-245-7456.