Clarifying LEA MOE Requirements and Consequences

A group of education organizations recently sent a letter to key members of Congress asking for “flexibility” related to the local maintenance of effort requirements in the IDEA. The letter is available here and states, in part:

” Under IDEA, when a district fails to maintain fiscal effort for special education, the district must pay back any unspent special education funding to the federal government.”

This statement is totally inaccurate and is sure to lead to more misunderstanding of one of the key requirements of IDEA.

In fact, the issue of the consequences when an LEA (school district) fails to meet its MOE requirement is spelled out in OSEP’s 2015 non-regulatory guidance issued following release of MOE regulations. The pertinent Q+As are:

Question E-1: What are the consequences of an LEA’s failure to meet the MOE compliance standard?

Answer: If an LEA fails to meet the MOE compliance standard, the SEA is liable in a recovery action under section 452 of GEPA (20 U.S.C. 1234a) to return to the Department, using non-Federal funds, an amount equal to the amount by which the LEA failed to maintain its level of expenditures in that fiscal year, or the amount of the LEA’s IDEA Part B subgrant in that fiscal year, whichever is lower.

Question E-2: How do the GEPA requirements interact with LEA MOE?

Answer: Under 20 U.S.C. 1234b, a failure to comply with expenditure requirements, including the IDEA’s LEA MOE requirement, is a harm to an identifiable Federal interest. If an LEA fails to meet the MOE requirement, the SEA is liable in a recovery action for the amount that is proportionate to the extent of the harm the violation caused to the identifiable Federal interest – that is, the amount by which the LEA failed to maintain its level of expenditures for the education of children with disabilities, or the amount of the LEA’s Part B subgrant, whichever is lower. The SEA is responsible for ensuring that LEAs receiving an IDEA Part B subgrant comply with all applicable requirements of that statute and its implementing regulations, including the MOE requirement. If an LEA, in a particular fiscal year, fails to meet the MOE requirement, the Department has authority to take steps to recover the appropriate amount of funds from the SEA. The SEA, in turn, following applicable State procedures, could seek reimbursement from the LEA. See July 26, 2006, letter to Ms. Carol Ann Baglin, available at

Question E-3: Why does the SEA have to pay funds when an LEA fails to meet its MOE requirement?

Answer: The SEA (acting on behalf of the State), not the LEA, is the grantee in the IDEA Part B program. As a condition of eligibility for an IDEA Part B grant, States must provide an assurance to the Department that the SEA is responsible for ensuring that, among other things, all requirements of Part B are met. IDEA § 612(a)(11)(A)(i) (20 U.S.C. 1412(a)(11)(A)(i)). SEAs may minimize LEA noncompliance by carefully reviewing the LEA’s application for an IDEA Part B subgrant to determine if the LEA meets the eligibility standard, by monitoring for compliance on a regular basis, and by providing technical assistance to LEAs. SEAs that find an LEA is failing to comply with the MOE requirement may take further enforcement action as provided in 34 CFR §300.222.

Other issued raised in the groups’ letter are accurate and we wish to acknowledge those here:

  • “Unlike districts, states can receive a waiver from the U.S. Department of Education to reduce Title I and IDEA funding if they are experiencing financial distress.”

CORRECT: The IDEA provides a “one-year waiver” provision for states, which is detailed at 34 CFR section 300.163. During the Great Recession, eight states requested a waiver to reduce their state financial support to LEAs. Details are available here. Importantly, states requesting a waiver must ensure the Secretary that the state will continue to ensure that FAPE is available to all students with disabilities within the state (34 CFR section 300.164 (c)(1)).

While IDEA does not contain a similar “waiver” provision, it does provide several allowable ways that LEAs may reduce their MOE. These include

  • Departure of special education personnel (voluntary or for just cause).
  • Decrease in number of special education students.
  • End of an exceptionally costly education program for a particular child (moves out, graduates, ages out, or no longer needs an exceptionally costly program).
  • End of obligation for long‐term purchases (such as the acquisition of equipment or construction of school facilities).
  • Assumption of cost by the SEA for high-need children with disabilities.

In addition, LEAs may also reduce their MOE in years when their IDEA sub-grant exceeds the previous year, as long as they meet certain conditions. This provision, known as the “50 percent rule” allows an LEA to reduce its spending level by up to half of the amount of the additional Federal funds. Should Congress provide additional one-time appropriations for IDEA, as many groups are requesting, this provision would be triggered. The result would be that up to 50 percent of the additional appropriation could be moved to other education expenditures. (More here)

  • “Unfortunately, the maintenance of effort requirements in IDEA do not have a pandemic exception.”

CORRECT: None of our education laws have a “pandemic exception.” However, it is important to remember that Congress asked the U.S. Secretary of Education to submit a report with recommended waiver authority due to the pandemic. In that report, the Secretary recommended only a couple of IDEA waivers to IDEA, with none having to do with LEA maintenance of effort.

Let’s keep working together to figure out how best to serve the nation’s 7 million school-age students with disabilities, appreciate the unparalleled situation we are currently experiencing, and stick to the facts.

More: We’ve teamed up with Stride Policy Solutions to produce issue briefs on IDEA State and LEA MOE Requirements and the LEA MOE 50% Reduction Provision.

May 28, 2020

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