First enacted in 1975, IDEA entitles children with disabilities to a free appropriate public education designed to meet the unique needs of each child. To be eligible for IDEA funding, states are required to provide special education in the least restrictive environment; meaning that, to the maximum extent appropriate, these children are to be educated with other children who do not have disabilities. However, to meet the diverse needs of children with disabilities, states must ensure that school districts provide a continuum of alternative placements, including regular classrooms, special classrooms, and special schools. The removal of children with disabilities from the regular classroom can occur only when the nature or severity of the child’s disability is such that education in regular classes with the use of supplementary aids and services cannot be achieved satisfactorily. IDEA requires that the services provided to each individual student be determined through an individualized education program (IEP) that describes the child’s present levels of academic achievement, goals for progress, and the special education and related services needed to attain those goals. The IEP is developed by a team of teachers, parents, school district representatives, and other educational professionals. This team must meet to develop the initial IEP within 30 days of determining that a child needs special education and related services, and it must continue to meet at least once a year to review the IEP to determine if goals are being met and to make any necessary changes. IDEA also provides for procedural safeguards, including that the parents of a child with a disability have the right to inspect and review educational records with respect to the identification, evaluation and educational placement of the child, and to obtain an independent educational evaluation at public expense if the parent disagrees with an evaluation obtained by the school district. IDEA and related regulations provide methods for resolving complaints between parents and school districts, including mediation, due process hearings, and state complaint procedures. IDEA is administered at the federal level by Education’s Office of Special Education Programs in the Office of Special Education and Rehabilitative Services. Part B of IDEA authorizes funding for federal grants to states to enable school districts to provide services for students with disabilities aged 3 through 21. IDEA Part B grants to states are distributed among states using a “base grant”—the amount received by the state for fiscal year 1999—and any remaining funds are distributed based on states’ child population and poverty rates. States distribute the funds to school districts similarly, starting with a base grant and then using a formula based on school enrollment and poverty. According to Education data, in fiscal year 2015, Congress appropriated approximately $11.5 billion under IDEA Part B grants to states, serving nearly 6.6 million children with disabilities (see table 1). In fiscal year 2009, the Recovery Act appropriated federal funding for IDEA, Part B that was more than double the 2008 amount. Since then, federal IDEA, Part B appropriations have been relatively constant. Education data indicate that the federal share of special education spending has generally declined since 2005, holding steady at about 16 percent since 2010, based on the national average per pupil expenditure. This indicates that the state and local share of special education spending has done the opposite: generally increasing since 2005 and holding steady at about 84 percent since 2010. State and local governments are responsible for funding most of the costs of special education and other K-12 programs, relying primarily on state income and sales tax, as well as local residential and commercial property taxes. As a result of the 2008 national recession, however, state and local revenues fell, resulting in cuts to education and other areas of spending. Research has shown that state funding for elementary and secondary education has been slow to recover from the 2008 recession and that long-term budget challenges are likely to persist. As shown in table 1, Education data also indicate that there has been a decline in the number of students with disabilities being served since 2005. Some researchers have suggested this decline may be attributed, in part, to greater emphasis on intervention services that reduce the need for special education among children who struggle but may not need special education with the proper supports. IDEA funds help cover the costs of educating children with disabilities but cannot be used to take the place of state and local funding allocated to special education programs. IDEA’s local MOE requirement generally prohibits districts from reducing their expenditures on special education and related services below the level of the previous year. Education provides districts with various methods for calculating their MOE amount: They can use only local funding or both state and local funding and can base their calculation on either the total or per-pupil amount. Also, a district may be able to reduce its expenditures and still meet the MOE requirement if it qualifies for certain allowable exceptions or the funding adjustment specified in IDEA law and regulations (see fig. 1). IDEA also contains a state MOE requirement for state funding of special education. The standard for state compliance with MOE requires that states maintain the same level of financial support provided (made available) for special education and related services from year to year, regardless of the amount actually expended. Education may waive the states’ MOE requirement for exceptional or uncontrollable circumstances, but there is no comparable provision allowing Education or a state to waive the districts’ local MOE requirement. Other federal funding streams also have MOE requirements, including several Elementary and Secondary Education Act programs. However, in contrast to the IDEA local MOE requirement, which is set at 100 percent of prior year’s spending, other education programs—including the Title I, Part A, Education for the Disadvantaged program (the largest federal funding stream for K-12 education)—have a local MOE requirement set at 90 percent of prior year’s spending for the amounts that school districts must provide in a given fiscal year from state and local sources (see table 2). Based on our previous work on federal grant design, as well as more recent work on MOE provisions under the Recovery Act, we have found MOE requirements to be important mechanisms for helping to ensure that federal spending achieves its intended effect. However, we have also found that without sufficient flexibility, these requirements can reportedly have adverse effects on state and local governments by distorting state and local priorities, penalizing spending reductions arising from fiscal crisis or increased efficiencies, and discouraging program innovation and expansion. In light of these concerns, in a previous report we concluded that federal MOE requirements should be sufficiently flexible to help mitigate some of the potentially adverse effects of the requirement on state and local governments and asked the Congress to consider enacting a standard maintenance of effort requirement across federal programs to help ease confusion among and potential adverse effects on recipients of federal funds. States reported that their school districts generally met the MOE requirement without using the allowable exceptions or funding adjustment but that some faced a variety of challenges in doing so. The key challenges in meeting MOE that districts cited involved state and local budget or cost reductions, which are not among the allowable exceptions for districts to reduce spending. No national level data exist on the extent to which districts are meeting MOE, but according to the responses to our state survey, nearly all school districts met MOE in the 2012-13 school year (the most recent data available in all states at the time of our survey). States reported less than 1 percent of districts nationwide failed to meet MOE in 2012-13, and all these districts were located in 14 states (see fig. 2). In addition, states indicated that the shortfalls for all districts identified as failing to meet MOE in 2012-13 amounted to a total of about $877,000 nationwide as of May 2015. However, this number is understated because 2 of the 14 states with districts failing to meet MOE were unable to report the amount of their districts’ shortfalls at the time. State responses to our survey also indicate that most districts met MOE in 2012-13 without using allowable exceptions or the funding adjustment. Forty states responded to our survey that half or more of their districts met MOE without using either of these provisions (see fig. 3). District responses to our 2015 follow-up survey of those districts that had anticipated trouble meeting MOE in 2011-12 largely mirrored the states’ survey responses on meeting MOE. Of the 87 districts that responded to this survey, only 7 reported that they had failed to meet MOE in school years 2011-12, 2012-13, or 2013-14. Of the 68 districts that reported meeting MOE all 3 years, 16 did so using exceptions or the funding adjustment in at least one of those years. “Our district has staff retire nearly every year, which makes the exception for voluntary staff departure the easiest exception for us to claim.” “Even when we were eligible to use the funding adjustment, the allowable spending decrease would have been negligible. We decided it was not worth the expenses and amount of time it would have taken us to claim it.” The large number of districts meeting MOE without the use of exceptions or the funding adjustment may be partially explained by rising special education costs. According to some state and district officials we interviewed, rising costs have made it easier for districts to meet MOE in the last few years. In addition, some district officials said that documenting their eligibility to the state for use of exceptions is burdensome, which may lead some districts to avoid using them. Those that did use them, however, relied on some exceptions more than others (see fig. 4). Regarding the funding adjustment, many districts have not used it in the last few years because they were not eligible to do so. Although states reported on our survey that most of their districts met MOE in 2012-13, almost all states indicated that some districts faced challenges, and the number of states reporting that half or more of their districts have faced or may face challenges is increasing (see fig. 5).