Collecting and Tracking Maintenance of Effort DataUpdated June 24, 2022, 8:48 AM
To ensure that State and local public funds used for Early Intervention (EI) services are maintained to meet payor of last resort requirements, 34 CFR §303.225(b) of Part C of IDEA requires that states budget for the current year at least the same aggregate amount of State and local public funds spent in the most recent preceding fiscal year for which the information is available. This is commonly referred to as the Maintenance of Effort (MOE) requirement. Under 34 CFR §303.225(a)(2), Part C funds are designed to "supplement the level of State and local funds", and not supplant State and local funds.
Under 34 CFR §303.120(b), the State Lead Agency (LA) must have a system in place to identify and coordinate all available Federal, State, local and private resources to support the provision of EI services. Further, under 34 CFR §303.510(a), federal IDEA Part C funds may not be used to satisfy a financial commitment for services that have otherwise been paid for by another public or private fund source.
Under Part C, the LA has the ultimate responsibility for ensuring MOE is met from year to year. To determine if the State meets MOE annually, the LA must have in place a process or methodology to collect, track and verify data on the expenditures and budgeting of State and local public funds. These data include State matching funds used to pull down federal dollars from various federal funding sources (e.g., Medicaid, TANF).
The purpose of this technical assistance document is to assist LAs in establishing a process for collecting and tracking the budgeting and expenditures of State and local funds each year to determine if MOE is met. It is strongly recommended that the Part C Coordinator, LA fiscal staff, LA Director or other designated staff work collaboratively in developing the methodology to facilitate collection and use of these data. Once a process is in place for collecting MOE data, it is important that the LA determine if MOE is met on an annual basis and address any identified shortfalls as needed.
Due to wide variation in IDEA Part C State systems and the funding sources used to support Part C EI services, the methodology for collecting and tracking MOE data needs to be State-specific. Technical assistance is available through ECTA, DaSy and ITCA to help the LA establish its methodology for calculating MOE. The LA is also encouraged to work with its OSEP State Lead to ensure the necessary State and local public funds have been identified and tracked to determine if the State meets MOE.
Following are excerpts from IDEA that are relevant to MOE:
The LA is responsible for the identification and coordination of all available resources for EI services within the State, including those from Federal, State, local and private sources consistent with subpart F of this part.
- Nonsubstitution of funds. Except as provided in paragraph (b) of this section, funds under this part may not be used to satisfy a financial commitment for services that would otherwise have been paid for from another public or private source, including any medical program administered by the Department of Defense, but for the enactment of part C of the Act. Therefore, funds under this part may be used only for EI services that an infant or toddler with a disability needs but is not currently entitled to receive or have payment made from another Federal, State, local or private source (subject to §§303.520 and 303.521).
- Interim payments-reimbursement. If necessary to prevent a delay in the timely provision of appropriate EI services to a child or the child's family, funds under this part may be used to pay the provider of services (for services and functions authorized under this part, including health services, as defined in §303.16 (but not medical services), functions of the child find system described in §§303.115 through 303.117 and §§303.301 through 303.320, and evaluations and assessments in §303.321), pending reimbursement from the agency or entity that has ultimate responsibility for payment.
- Non-reduction of benefits. Nothing in this part may be construed to permit a State to reduce medical or other assistance available in the State or to alter eligibility under Title V of the Social Security Act, 42 U.S.C. 701, et seq. [SSA] (relating to maternal and child health) or Title XIX of the SSA, 42 U.S.C. 1396 (relating to Medicaid), including section 1903(a) of the SSA regarding medical assistance for services furnished to an infant or toddler with a disability when those services are included in the child's IFSP adopted pursuant to part C of the Act.
- Each application must provide satisfactory assurance that the Federal Funds made available under section 643 of the Act to the State:
- Will not be commingled with State funds: and
- Will be used to supplement the level of State and local funds expended for infants and toddlers with disabilities and their families and in no case to supplant those State and local funds.
- To meet the requirement in paragraph (a) of this section, the total amount of State and local funds budgeted for expenditures in the current fiscal year for EI 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 EI services for these children and their families in the most recent preceding fiscal year for which the information is available. Allowances may be made for—
- A decrease in the number of infants and toddlers who are eligible to receive EI services under this part: and
- Unusually large amounts of funds expended for such long-term purposes as the acquisition of equipment and the construction of facilities.
- If a State has enacted a State statute that meets the requirements in paragraph (b)(2) of this section, regarding the use of private health insurance coverage to pay for EI services under part C of the Act, the State may reestablish a new baseline of State and local expenditures under §303.225(b) in the next Federal fiscal year following the effective date of the statute. NOTE: The statute would have to cover three federal requirements under 34 CFR §303.520(b)(2) in relation to the child, parent and/or family member that are covered under the policy: cannot count towards an annual or lifetime cap, cannot result in discontinuation of coverage, nor cannot increase health insurance premiums.
The State must ensure that it will—
- Make reports in the form and containing the information that the Secretary may require; and
- Keep records and afford access to those records as the Secretary may find necessary to ensure compliance with the requirements of this part, the correctness and verification of reports, and the proper disbursement of funds provided under this part.
In order to calculate MOE on an annual basis, the State must have in place a methodology to collect and track the necessary data. The following steps are proposed to assist States in establishing their methodology:
Step 1.Identify how you would go about gathering needed information from:
- Providers (contractors, vendors, local counties, school districts)
- Partner State agencies
Step 2.Establish mechanisms for accountability:
- For providers (via contract, provider agreement, certified finance statement, application assurances and certifications)
- For partner State agencies (via Memorandum of Understanding, Interagency Agreement)
Step 3.Communicate expectations/mechanisms for accountability
Step 4.Collect and track budget and expenditures data by funding source
Step 5.Verify/validate tracking data
Step 6.Determine if MOE has been met annually
States are required to identify and coordinate all available funding sources and to use federal Part C funds to supplement the level of State and local funds expended for infants and toddlers with disabilities and their families and in no case supplant those State and local funds. As a result, the Part C MOE requirement helps ensure that the State is maintaining at least a certain level of non-federal funds (e.g., State and local public funds) from one year to the next for the provision of EI services to infants and toddlers with disabilities and their families and the State is not supplanting these funds with Part C federal funds. The intent is that federal Part C funds are used to enhance the capacity of the State to provide EI services, not solely fund those services.
State and local funds refer to PUBLIC funds. Public State funds include the State Part C Appropriation, State General Funds allocated to State agencies for other initiatives or programs but that are used by the State to provide EI services, and State matching funds, e.g., for Medicaid (for administration and/or direct services) and TANF. Local public funds include local (county or region) public agency or government funds, such as tax levy, funding from school districts, etc. Overall, any State and local public funds used by Part C would be included in calculating MOE.
The most recent ITCA Finance Survey is the best source for information on amounts and uses by various funding sources (Federal, State and local) by Part C systems across the country.
Each State has a requirement to match federal Medicaid funds in accordance with their State's Federal Medical Assistance Percentage (FMAP). To determine the amount of State funds that must be included in MOE, the LA should consult with their Medicaid State Office as well as their OSEP State Lead.
Private funds are not calculated toward MOE. Specifically, private insurance, family fees under the State's system of payments, private donations such as United Way and Easter Seals, do not count toward MOE. Federal funding, including federal match, are also not included in MOE.
It is important to note that private insurance has the potential of being one of the highest individual sources of funding, assuming State appropriation, Part C and State Medicaid funding are maximized. States considering the pursuit of private insurance to cover Part C services should be aware that leveraging these additional non-public funds cannot reduce the amount of State and local public funds budgeted for EI services. The MOE requirement remains in effect regardless of successful increases in revenue from private funding sources. Use of private insurance is not an opportunity to reduce the obligation of State public funds. However, if a State enacts a State statute related to using private insurance to pay for EI services and the statute includes the protections outlined in 34 CFR §303.520(b)(2), the State may reestablish a new baseline of State and local expenditures for MOE in the next federal fiscal year following the effective date of the statute.
See also: 34 CFR §303.520(b)(3)
The LA is responsible for sharing information with the State Legislature, especially the Appropriations Committee, other State agencies and providers on:
- what MOE is, including its requirements;
- the purpose of MOE;
- the expenditure and budget data needed to calculate and track MOE over time; and
- the accountability methods used to collect and track these data, such as State interagency agreements and provider contracts.
See also: Part C Fiscal 101, Module 10: Maintenance of Effort (9 minutes)
6. From which agencies do we need to collect data in order to determine the aggregate MOE for the State?
The agencies from which the LA must collect MOE data vary depending on how money moves within the State EI system and which entities fund, provide services, and/or do billing. Some examples are as follows:
- Pay and chase
- When the State has a centralized billing system and uses a pay and chase process to reimburse for the provision of services, the State typically has available data on amounts budgeted and expended for each funding source used in the Part C system, including the State appropriation. In this situation, the LA typically does not need to collect MOE data from providers or other State agencies, unless providers also access local public funds to support Part C services.
- Provider claiming
- In a State where providers do the billing to Medicaid and other funding sources, the State needs to collect MOE data from providers regarding their budgeting and expenditures of State and local public funds. The LA needs to ensure that providers that use local funds to support EI maintain the same level of local public funds. The LA typically incorporates language in the provider's contract regarding the requirement to report and frequency of reporting these data.
- Partner State agencies funding and providing EI services
- In some states, other State agencies use State and local public funds for the purpose of providing EI services (e.g., Education, Deaf/blind, Developmental Disabilities). As a result, the LA needs to collect MOE data—the proportionate legislative appropriation budgeted and expended for EI services—from these other State agencies. Incorporating this reporting requirement in State level interagency agreements can help ensure that all agencies collect and report these data on an annual basis.
Based on the LA's identification of which public State and local funds are used for Part C services, the LA should develop a spreadsheet, or other uniform mechanism, and timelines to collect MOE data from other State agencies and providers.
See also: Part C MOE Tracking Tool
Verifying and validating MOE data is an important step in the process and will vary depending on the State's structure and how money flows in the State. If a State collects budget and expenditure data from local agencies providing EI services, the State could consider validating the reported State funds by accessing fiscal data from other State agencies that fund EI services (e.g., Medicaid, TANF, CSHCN). States can use fiscal monitoring and audit reports to verify the accuracy of the reported MOE data from State and local agencies.
The LA is responsible for working with the State Legislature to ensure that MOE is met from year to year. The LA should share annually with the Legislature the total amount of State and local public funds that were expended in the prior year, those that are budgeted for the current year, and any data associated with the two federal exemptions to MOE:
- a decrease in the number of children who are eligible for EI services; and
- unusually large amounts of funded expended for long-term purposes.
These data are used to:
- make sure the same amount of State funds for EI are appropriated for the current year as were expended in the prior year for which information is available; and
- identify if additional State funds need to be appropriated to address shortfalls in meeting MOE.
Since a one-time increase from a public funding source (e.g., State allocation) has implications for maintaining that same increased level of effort over subsequent years, the LA may use this opportunity as leverage to maintain the increase in future years. If, however, it is known that the one-time increase will not be maintained over time, the LA can use this as an opportunity to expend a large amount of funds for a long-term purpose, such as the purchase of a new data system, which may qualify for one of the MOE exemptions under 34 CFR §303.225(b)(2).
The Part C regulations allow two exceptions under 34 CFR §303.225(b):
- a decrease in the number of infants and toddlers who are eligible to receive EI services under this part; and
- unusually large amounts of funds expended for such long-term purposes as the acquisition of equipment and the construction of facilities.
The LA is encouraged to have a discussion with their OSEP State Lead if one of these exceptions is anticipated.
In Part C, the LA is ultimately responsible for meeting MOE requirements. MOE calculation is an aggregate of all State and local public funds used to provide EI services. In order to ensure that the LA can met MOE on an ongoing basis, some states contractually require local agencies to maintain MOE and use State level interagency agreements to require other State agencies that fund and provide EI to also maintain MOE.
Under 34 CFR §303.225(b) of the Part C regulations, the current year budget amount is compared to the expenditure in "...the most recent preceding fiscal year for which the information is available." During monitoring, or through an audit finding, OSEP would likely want to review MOE data in the State's records back to the last year in which the State met effort.
In OMB Uniform Guidance 2 CFR §200.333, record retention requirements are "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report". These regulations also provide a number of exceptions related to document retention. According to OSEP's guidance in Letter to Anonymous (2017), the three-year records retention timeframe begins upon the date the final expenditure report is to be submitted. As a result, the minimum records retention period extends five and a half years from the date the record is created, due to the obligation and liquidation timeline of IDEA Part C funds.
Under 34 CFR §303.224(b), the State must ensure that it will "Keep records and afford access to those records as the Secretary may find necessary to ensure compliance with the requirements of this part, the correctness and verification of reports, and the proper disbursement of funds provided under this part."
If the State fails to maintain effort in a particular fiscal year, the State could be subject to liability under the Single Audit Act. A remedy could be for the State to pay back the amount by which it failed to meet the MOE requirement. The actual amount that the State would need to pay back would most likely be based on the State's shortfall in meeting the total amount of State and local public expenditures for the provision of EI services in that fiscal year, as supported by records of those expenditures.
A more common scenario is that the State is simply not able to calculate MOE of public State and local funds used to provide EI services. Inability to calculate MOE would lead to a finding that requires the State to develop a methodology to collect and track MOE data. OSEP fiscal and TA center staff can help the State establish a methodology to collect the information needed to obtain a complete calculation.
The State's repayment must be made with non-federal funds, or federal funds for which accountability to the federal government is not required. In addition, a State cannot decline to draw down all of its Federal IDEA Part C award funds to offset the amount by which the State failed to maintain effort because this would constitute repayment using federal funds.
This Excel spreadsheet was created to enable and simplify the tracking and use of fiscal data for determining if a State's IDEA Part C MOE requirement for prohibition of supplanting under 34 CFR §303.225(a)(2) is met from year to year. The use of this tool should be part of a larger methodology for sustaining the State's Part C MOE. Instructions and details on functionality of the tool are provided.
|Potential State and Local Fund Sources||Expenditures FFY 2017||Budgeted Amount FFY 2018||Expenditures FFY 2018||Budgeted Amount FFY 2019||Expenditures FFY 2019|
|State Part C appropriation (those allocated specifically to Part C)|
|Other State General Funds used for Part C|
|State Education funds|
|State Temporary Assistance for Needy Families (TANF) match funds|
|State Tobacco funds|
|State Developmental Disabilities funds|
|State Mental Health funds|
|Medicaid State match (e.g., administrative claiming, EPSDT, TCM, waiver)|
|State Children with Special Health Care Needs (CSHCN)|
|State Deaf and Blind funds|
|Local public funds (e.g., county or regional government funds, LEAs)|
|Allowable Exception 1 34 CFR 303.225 (b) (1)||Child Count FFY 2017||Child Count FFY 2018||Child Count FFY 2019|
|Decrease in number of children served from prior year.|
|Allowable Exception 2 34 CFR 303.225 (b) (2)||Itemized Expenditures FFY 2017||Itemized Expenditures FFY 2018||Itemized Expenditures FFY 2019|
|Unusually large amounts of State/local public funds expended for long-term purposes, such as the acquisition of equipment or construction of facilities.|
This Excel workbook lists potential public fund sources for IDEA Part C EI services. The content is sorted across three sheets containing federal, state, and local funding sources. Each tab contains details by fund source, including purpose, eligible population, services/activities covered, issues for availability of funds, and associated funding for calculation in MOE.
This module from Part C Fiscal 101 Modules: Federal Fiscal Requirements covers the MOE requirement, located in the supplement not supplant requirement under 34 CFR §303.225(a)(2). MOE essentially requires that a state must maintain the same level of (public) financial commitment- prior year's expenditure, not budgeted- for its subsequent Part C system's fiscal year.
Federal Regulations and Guidance
- Part C of IDEA Regulations: 34 CFR Part 303
- OMB Uniform Guidance: 2 CFR §200.333 — Retention requirements for records
OSEP Policy Letters
- Letter to Anonymous (2017) on record retention requirements
- Issuance of Guidance on the Final Local Educational Agency (LEA) Maintenance of Effort (MOE) Regulations under Part B of the Individuals with Disabilities Education Act (IDEA) (2015)
- Letter to Willden (2011) on prohibition against supplanting
- Letter to Moser and Keuster (2011) on prohibition against supplanting
ITCA collects data from multiple surveys in order to develop position papers, to showcase effective practices, to provide technical assistance, and to establish Part C needs at the national, regional, and State levels.
- Children's Health Insurance Program
- Children with Special Health Care Needs
- Developmental Disabilities
- Early and Periodic Screening, Diagnostic, and Treatment
- Early Intervention
- Individuals with Disabilities Education Act
- Lead Agency
- Local Education Agency
- Maintenance of Effort
- Office of Special Education Programs
- Targeted Case Management
- Temporary Assistance for Needy Families
- Health care program for uniformed service members, retirees, and their families