Source: http://www.ideamoneywatch.com/main/index.php?view=article&catid=36%3Amaintenance-of-effort&id=59%3Amaintenance-of-effort&tmpl=component&print=1&layout=default&page=&option=com_content&Itemid=71
Timestamp: 2019-04-22 08:35:44+00:00

Document:
In general, Federal funds appropriated under Part B of IDEA may only be utilized to cover the excess costs of providing special education and related services to students with disabilities. These Federal funds must supplement/increase the level of other Federal, State and local funds expended for special education and related services and in no case supplant these funds. In addition, IDEA includes separate maintenance of effort (MOE) provisions that apply independently at the State and local levels. The term “Maintenance of Effort” (“MOE”) generally refers to a requirement placed upon many federally funded grant programs that the State Education Agency (SEA) and Local Education Agencies (LEAs) or school districts, demonstrate that the level of State and local funding remains constant from year to year. Both the rules and the consequences of failing to meet the required level of effort by the State or by the LEA are different under IDEA.
Although States may vary in the manner in which they support special education, for each State to meet its MOE obligation under IDEA, it must continue to provide support for special education at the same level every year.
· IDEA Part B prohibits a State from reducing State financial support for special education and related services below the amount of that support made available by the State the preceding fiscal year. 20 U.S.C. §1412(a)(18); 34 C.F.R. §300.163.
· Furthermore, the statute is clear that the Secretary of Education will reduce the amount of a State’s grant by the same amount by which the State fails to meet this requirement for any fiscal year following the fiscal year in which the State fails to comply with this requirement. 20 U.S.C. §1412(a)(18)(B).
At the local level, IDEA requires that LEAs, as a condition of eligibility for Part B funds, submit a plan that provides assurances to the SEA that the LEA shall not use IDEA monies to reduce the level of expenditures from local funds for educating students with disabilities below the level of those expenditures for the preceding fiscal year. 20 U.S.C. § 1413(a)(2)(A)(iii).
An SEA will find the LEA eligible for an award of Part B funds in a fiscal year based on this standard if the LEA budgets for the education of students with disabilities at least the same total or per capita amount as the LEA expended for that purpose from the same source(s) for the most recent prior fiscal year.
The sources considered are local funds only or the combination of local funds and State funds. 34 C.F.R. §300.203(b).
The SEA may not consider any expenditure made from federal funds for which the SEA, or the LEA directly or through the SEA, is required to account to the Federal government. 34 C.F.R. §300.203.
(vi) an increase in the IDEA allocation from the previous year triggers the “50%” rule. 20 U.S.C. §1413(a)(2)(C); 34 C.F.R. §300.205.
Under Section 612(a)(11)(A)(i) of the IDEA, “the SEA is responsible for ensuring that . . . the requirements of this part are met” including for ensuring that LEAs receiving assistance under IDEA comply with all applicable requirements, including the local MOE. If an LEA fails to meet its MOE obligation, the SEA is required to pay the US ED an amount equal to the short-fall in required local fiscal special education effort. An SEA may not use IDEA funds; nor reduce a current year IDEA subgrant as a means of resolving a prior year’s MOE violation by an LEA. Faced with a history of noncompliance with the MOE requirement, US ED admonished the SEA to carefully determine whether the LEA will meet the MOE requirement in the coming year, or whether the SEA should begin an administrative withholding action consistent with § 1413(c) and (d) because it is not convinced that the LEA will meet the MOE requirement for the new year. OSEP letter to Baglin, 2006.
To be eligible for IDEA Part B funding in a particular fiscal year, an LEA submits as part of its Part B Application report of actual expenditures from the most recent fiscal year and the Budgeted Expenditures for the current fiscal year as an assurance that the LEA intends to comply with local MOE requirements under IDEA and its regulations.
At least the same student per capita amount from local funds are budgeted as the LEA expended for special education the previous fiscal year.
At least the same student per capita amounts from local funds were expended as the LEA expended on special education the previous fiscal year.
Again in conducting its review of LEA compliance with MOE, only one test is needed to pass and to be in compliance with MOE requirements. However, if an LEA fails all four tests based on the comparison of two fiscal years’ expenditures for special education, then the LEA must submit documentation to the SEA that supports its use of the authorized MOE reduction exceptions under IDEA and its regulations. The LEA will be notified of the findings and given the opportunity to respond with allowable exceptions. If there are no allowable exceptions to explain the reduction, the LEA will have the opportunity to submit information from its auditor explaining possible errors in reporting on the annual report.
If, after efforts to resolve a MOE failure, it is determined that there has been an unallowable reduction, the SEA will be required to repay to the US ED the amount of the reduction. This repayment cannot be made from IDEA Part B funds or from any funds with federal accountability. In addition, the MOE level for that year will be reset to the higher amount that the LEA should have met.

References: §1412
 §300
 §1412
 § 1413
 §300
 §300
 §1413
 §300
 § 1413