Narrator
The Center for IDEA Fiscal Reporting. TA On Demand. Part B Local Educational Agency Maintenance of Effort, or LEA MOE: Calculations and Exceptions.
How does LEA MOE work? Every LEA that receives IDEA Part B funds must meet a requirement called maintenance of effort, or MOE each year. This requirement means that LEAs must budget and spend at least as much in local funds, or state and local funds combined, for the education of children with disabilities from one year to the next.
Federal Regulation 34 CFR §300.203 explains the two required MOE standards for LEAs: the Eligibility Standard for budgeting and the Compliance Standard for spending. If you’re unfamiliar with LEA MOE or these standards, please watch Part B Maintenance of Effort: The Basics before continuing with this video. You could find that video in CIFR’s resource library.
How is LEA MOE calculated?
To meet the MOE requirement, an LEA needs to budget and spend at least the same amount or more for the education of children with disabilities using any of these four methods:
- total of local funds only,
- total of state and local funds,
- local funds per capita, meaning per child with a disability, or;
- state and local funds per capita.
An LEA can change which method it uses from year to year. For example, it might meet the MOE requirement using total local funds one year and state and local funds per capita the next. While different methods can be used year to year, the same method must be used when comparing amounts. For instance, if an LEA uses total local funds to meet MOE in a given year, it must compare that amount to the total local funds spent in the most recent year MOE was met. We’ll call that year the comparison year.
Before looking at examples, let’s review a few things about the comparison year. First, regardless of which method is used, the comparison amount is always the spending level from the most recent fiscal year when the LEA met MOE compliance using the same method. This ensures that an LEA maintains or exceeds its last compliance spending level in case of an MOE failure.
Second, comparisons for both the Eligibility and Compliance Standards must use final audited expenditure data for the comparison year. Because these standards are determined at different points in time, the most recent year with final audited data—the comparison year—will differ for each standard.
When determining MOE eligibility, an LEA compares its budgeted amount for the upcoming fiscal year—the calculated year—to the most recent fiscal year with final audited data available and in which MOE was met.
Here’s an example. Assume the current fiscal year is 2024–2025, and the LEA is preparing its budget for 2025–2026, the upcoming fiscal year. When the budget is developed, final audited expenditure data for 2024–2025 are not yet available. The most recent year with final audited data is fiscal year 2023–2024. In that year, the LEA met the MOE Compliance Standard spending $1,000,000 in total state and local funds. This is the comparison year for the 2025–2026 budget. To meet the Eligibility Standard for 2025–2026, the LEA must budget at least $1,000,000 in state and local funds.
Now, let’s look at the MOE Compliance Standard. Compliance is determined after the fiscal year ends, using final audited expenditures. At that point, the LEA compares its actual spending to the most recent fiscal year with final audited data available, and in which MOE compliance was met.
Continuing our example, fiscal year 2025–2026 has now ended. Final expenditure data are available for 2024–2025, which serves as the comparison year. In 2024–2025, the LEA met the MOE compliance standard spending $1,050,000. However, in 2025–2026, the calculated year, the LEA spent only $1,000,000. Because the LEA did not maintain or exceed the most recent compliance spending level, it failed to meet the MOE Compliance Standard.In the next fiscal year, the LEA’s required MOE level using the total state and local funds method remains $1,050,000 and does not reset to the $1,000,000 spent in 2025–2026.
Can an LEA reduce its MOE obligation?
In certain cases, an LEA may lower its required budget or expenditures and still meet the MOE requirement. These exceptions found in 34 CFR §300.204 only apply in specific situations:
- the voluntary or just cause departure of special education staff,
- a reduction in child count of children with disabilities in the LEA,
- the termination of an exceptionally costly program for a child with a disability,
- the termination of a costly long-term purchase such as equipment or construction; or
- the assumption of a cost by a state’s IDEA Part B high-cost fund.
When using these exceptions, an LEA may: apply them to either or both standards, use toward any of the four calculation methods, use more than one exception in the same year, as long as each applies and; apply exceptions that occurred in the years between the comparison year and the calculated year. This is called the intervening years provision.
Note that exceptions do not reduce actual expenditures in the calculated year, but rather the required MOE level in the comparison year. See CIFR’s practice guide on MOE Exceptions for how to calculate the reductions to required budget and spending amounts.
An LEA may also reduce its required MOE level using a provision called the MOE adjustment. When an LEA’s Section 611 subgrant increases from one year to the next, it may reduce its required level by up to 50% of the increase for that year. The LEA must meet specific conditions outlined in 34 CFR §300.205(c), and use freed up funds for activities allowed under the Elementary and Secondary Education Act, or ESEA.
Now that we’ve reviewed basic MOE calculations, consider the following:
- How does your state educational agency, or SEA, help LEAs understand the four methods for calculating LEA MOE?
- What guidance is available to LEAs on identifying the appropriate comparison year?
- What support does your SEA provide to LEAs for calculating MOE and using allowable exceptions and adjustments when needed?
The LEA MOE requirements are complex. CIFR is here to help. To contact your technical assistance team, go to our contact page, choose your state or territory from the drop-down menu and click on any Part B liaison to send a message. Or check out our resource library for more information.
Thank you for watching this CIFR TA On Demand video. If you have any questions, please contact us at [email protected].
