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The Center for IDEA Fiscal Reporting, TA on Demand. Part C, Maintenance of Effort (or MOE): The Basics.
The Prohibition Against Supplanting requirement in the individuals with Disabilities Education Act is found in 34 CFR Section 303.225(a). You’ll most often hear this requirement called Part C, Maintenance of Effort or MOE. But you won’t find that term in the regulations. What you will find is the Prohibition Against Supplanting requirement.
What this means is that each year, your state must ensure that it does not commingle Part C funds with state funds, and that part C funds are used to supplement and not supplant (or replace) state and local public funds. Your state must provide this assurance in the annual IDEA Part C grant application that it submits to the U.S. Department of Education, Office of Special Education Programs, or OSEP. The goal of the MOE requirement is to make sure that states maintain or increase state and local financial support for their IDEA Part C programs from one year to the next.
Now that you know what MOE is, how do states show that they have met the requirement? This information is found in 34 CFR Section 303.225(b). This requirement says, “The total amount of state and local funds budgeted for expenditures in the current fiscal year for early intervention services for children eligible under this part and their families must be at least equal to the total amount of state and local funds actually expended for early intervention services for these children and their families in the most recent preceding fiscal year for which the information is available.” Put simply, a state must budget at least the same amount of state and local public funds that it spent in the most recent preceding fiscal year for which information is available. Implicit in the requirement is that states must also verify that effort was actually maintained for each fiscal year.
This means that in addition to budgeting to meet the MOE requirement in a state fiscal year, the state must also verify that the actual amount spent in state and local funds was the same or more than the previous year’s expenditures. This means that states must make two types of comparisons at two different points in time. This is covered in more detail in the Part C MOE Calculations video. The only funds included in MOE Calculations are state and local public funds. Examples of commonly used state and local public funding sources that may support the state’s early intervention system include: state general funds, state Part C appropriations, state Medicaid funds, state special education funds for early intervention, Temporary Assistance for Needy Families (or TANF) state match funds, Children and Youth with Special Healthcare Needs state match funds, local educational agency funds, county tax levies, and other local government funds. Funding sources in the MOE calculation may differ for each state.
Federal dollars are not part of the MOE calculation. It is also important to note that local programs may have local sources of funds that are not public and are therefore not included in MOE. Examples of private and federal funds to exclude are: United Way, private insurance including health savings accounts and other types of private insurance, private contributions or endowments, proceeds from fundraisers, parental cost participation fees, federal Medicaid, IDEA Part C funds, and Tricare.
Understanding how to include Medicaid in the MOE calculation can be a challenge. Medicaid is a federally funded health insurance plan that requires states to provide some funding and the state match funds, as they are called, are included in MOE calculations. It can be helpful to establish a strong relationship with your state Medicaid office to understand just how the state match for the Part C program is calculated and funded. You’ll also want to identify the state funding source used to pay the match and determine the state’s match ratio.
Now you know what funding sources to look at for calculating Part C MOE. But what if your state’s budgeting or spending does not meet the MOE requirements? There are two circumstances under which allowances may be made if a state does not meet the Part C MOE requirements. Under 34 CFR section 303.225(b), numbers one and two, allowances may be made for a decrease in the number of infants and toddlers who are eligible to receive early intervention services, and unusually large amounts of funds expended for long-term purposes such as the acquisition of equipment or construction of facilities. If a state demonstrates that it meets the criteria for one or both of these allowances, it may reduce its required level of effort by the amount of the allowance. The reduced level of effort becomes the required level of effort going forward.
However, if a state’s budget or the amount spent is below expenditures of the comparison year and the state does not meet the criteria for these allowances, it has not met the MOE requirement. What if the state does not meet MOE? If a state cannot demonstrate compliance with the Part C MOE requirements, the state would be required to develop a methodology to collect and track state and local public funds that are budgeted and spent. If a state does not meet MOE, it could be subject to liability, including repayment to the U.S. Department of Education in the amount by which it failed to meet the Part C MOE. The state’s repayment must come from non-federal funds or funds from which accountability to the federal government is not required.
States must track budgeting and spending from state and local public funding sources to: proactively identify potential shortfalls, show that funds were not commingled, and show that federal funds were used to supplement, and not supplant, state and local public funds. Tracking these funds can be complicated. Fiscal data may need to be collected from other state agencies and local early intervention service providers depending on the state’s structure, funding sources used, and how money flows from the state to local agencies.
There are many ways states track funds, and again, no two states are alike. Please pause the video and think about what you know or may not know about how your state tracks budgeted and expended state and local public funds. For example, how does your state collect funds budgeted by state agencies and local programs? How does your state track the actual expenditures of state and local public funds?
Accurately capturing how your state implements MOE procedures can seem overwhelming, and CIFR TA liaisons are here to help and support you. Your CIFR TA Liaisons can answer questions and provide team training on the MOE requirement and allowances, review and provide guidance on your state’s MOE calculation methodology, and help you document and strengthen your state’s MOE procedures. To find your assigned TA Liaisons, visit our website’s contact page and select your state or territory from the drop-down menu. Click on any Part C TA liaison to send them a message.
To find more Part C MOE resources, visit our website’s Resource Library and select Part C and maintenance of effort from the filter list.
To learn more about calculating MOE, watch TA On Demand, Part C, Maintenance of Effort: Calculations.
Thank you for watching this CIFR TA on Demand video. If you have any questions about the content of the video, please contact us at [email protected].
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This video was developed under grant #H373F200001 from the U.S. Department of Education. It is not intended to be a replacement for the IDEA statute, regulations, and other guidance issued by OSEP and the U.S. Department of Education. The IDEA and the regulations are found at: https://sites.ed.gov/idea. The video does not necessarily represent the policy of the U.S. Department of Education, and you should not assume endorsement by the Federal Government.
