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Hello,

 

The U.S. Department of Education released new federal guidelines on school expenditure reporting and the funding formula for Title IV, Part A at the end of last week. The new guidelines are included below.

The good news is that on June 28th the federal government waived the new individual school expenditure reporting requirement for one year. Most Montana school districts do not currently report expenditures per school. This extension gives OPI another year to develop a process to support all Montana schools and lessen the reporting burden. Currently OPI is developing a transition plan by engaging stakeholders and conducting a pilot with select schools during this 2017-2018 school year.

 On June 30th, the U.S. Department of Education changed the new federal Title IV, Part A formula guidelines. The new formula requires Montana to distribute the funds equally to all school districts regardless of size. These funds are only guaranteed for the 2017-2018 school year. On June 29th, stakeholders and focus group attendees discussed a formula which followed the Title I allocation.  At that time, stakeholders discussed distributing these funds in a timely manner may require utilizing a formula method rather than a competitive grant option.

 Montana’s ESSA plan is a living document. The OPI is currently reviewing options considering these new federal guidelines and welcome input. The Montana ESSA draft plan will be release on July 12th for public input. Montana’s plan will continue to change and be revised in order to best serve students.

 Thank you

 

Dylan Klapmeier

Media Assistant and Federal Relations

Montana Office of Public Instruction


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June 28, 2017

 Dear Colleague:

Thank you for your continued efforts to implement the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the Every Student Succeeds Act (ESSA). To help facilitate this process and ensure a smooth transition to the new law, I am writing to inform you that the U.S. Department of Education (Department) will provide State educational agencies (SEAs) and local educational agencies (LEAs) an additional year to implement the new requirement under Title I, Part A of the ESEA to include on annual State and LEA report cards per-pupil expenditures of Federal, State, and local funds for each LEA and school for the preceding fiscal year, disaggregated by source. In addition, I would like to highlight steps the Department is taking to support SEAs and LEAs in implementing this important new requirement.

Timeline for Implementation

While the Department recognizes that some SEAs and LEAs are prepared to include per-pupil expenditure information on annual report cards for reporting on the 2017-2018 school year, and encourages those SEAs and LEAs to move forward with expediency, we recognize that many SEAs and LEAs face significant technical challenges associated with meeting this requirement in a timely manner. Therefore, consistent with section 4(b) of the ESSA, which authorizes the Department to ensure an orderly transition to the new law, an SEA and its LEAs may delay, until the 2018-2019 school year, reporting information on per-pupil expenditures of Federal, State, and local funds on annual report cards as required under section 1111(h)(1)(C)(x) and (h)(2)(C) of the ESEA. If the SEA elects to delay reporting per-pupil expenditures, the SEA and its LEAs must provide on report cards for the 2017-2018 school year a brief description of the steps the SEA and LEAs are taking to ensure that information on per-pupil expenditures will be included beginning with report cards for the 2018-2019 school year.

The Department anticipates the additional year will allow SEAs and LEAs to update systems and processes in a manner that ensures the public has access to accurate and reliable data on school spending. In particular, it provides additional time to those SEAs and LEAs who are building statewide systems to support school-level reporting of expenditures. Please note, however, that SEAs and LEAs are required to disseminate annual State and LEA report cards with all other required information as specified in the ESEA, as amended by the ESSA, for the 2017-2018 school year.

Additional Support

The Department recognizes that reporting per-pupil expenditures on State and LEA report cards will improve the availability of school spending information to parents, students, teachers, school leaders, researchers, and the public. Given the importance of this information, the Department is committed to supporting SEAs and LEAs as they move forward with implementation of this requirement.

In the short term, the Building State Capacity and Productivity Center (BSCPC), one of seven national content centers supported under cooperative agreements with the Department, is supporting a financial transparency working group to provide support and resources to States on their financial transparency efforts, including reporting on per-pupil expenditures. Most recently, BSCPC held a webinar that outlined the per-pupil expenditures reporting requirement and clarified how SEAs and LEAs can meet this requirement. Materials from the webinar, and other resources related to financial transparency, can be found at http://www.bscpcenter.org/FinancialTransparency.1 Additionally, the State Support Network, a technical assistance initiative offered by the Department, is available to States looking for individualized technical assistance or opportunities to participate in communities of practice on topics of interest. Information about the State Support Network can be found at https://statesupportnetwork.ed.gov/

In the long term, the Department plans to review and revise non-regulatory guidance on State and LEA report cards, including on per-pupil expenditure reporting. The Department also encourages SEAs to contact the BSCPC or their regional Comprehensive Centers (see list here) for additional assistance in this area. Finally, the National Center for Education Statistics, through its work administering the National Public Education Financial Survey (NPEFS) and School District Finance Survey (F-33), will continue to support State fiscal coordinators with regular technical assistance, including through the administration of the School-Level Finance Survey (SLFS), a school-level reporting pilot, which is currently helping States test whether systems and processes are sufficient for accurate statewide reporting of expenditure data.

Thank you for the work that you continue to do for a successful transition to the new law.

Sincerely, 

Jason Botel

Acting Assistant Secretary

cc:        State Title I Directors

State Fiscal Coordinators

 



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United States Department of Education

Office of Elementary and Secondary Education

Office of Safe and Healthy Students

June 30, 2017

 

Subgranting FY 2017 Title IV-A Funds to LEAs:  Questions and Answers

1. How may an SEA use fiscal year (FY) 2017 funds to make subgrants to its LEAs under the SSAE program?

The Consolidated Appropriations Act, 2017 (Pub. L 115-31) (Appropriations Act)[1] provides SEAs with the option of making SSAE subgrants to LEAs through the formula in the program statute, on a competitive basis (as described in the Appropriations Act), or via a combination of the competitive and formula methods.

The competitive subgrant authority in the Appropriations Act does not amend the program statute and applies only to SEAs’ use of FY 2017 funds. In addition, states must comply with all statutory requirements for any portion of Title IV, Part A funds it awards by formula, and all applicable requirements for any portion of Title IV, Part A funds it awards by competition (see question 3 below for more information).  

2. How does an SEA make SSAE subgrants to its LEAs by formula?

Under section 4105(a) of the ESEA, an SEA that makes subgrants to its LEAs by formula must do so based on their relative shares of funds under Title I, Part A for the preceding fiscal year, except that no LEA may receive an allocation that is less than $10,000. If funds are insufficient to provide the $10,000 minimum allocation to each eligible LEA (i.e., each LEA that received Title I, Part A funds for the preceding fiscal year), the SEA must provide each eligible LEA with an allocation in an amount that is ratably reduced below $10,000, consistent with section 4105(b).

Accordingly, there are two potential allocation scenarios for an SEA, depending on whether or not it has sufficient funds to provide each LEA with the $10,000 minimum. Below is an “Initial Test” that an SEA should apply to determine which scenario it falls into, and then a set of steps the SEA should take to make allocations under the applicable scenario.

An SEA making subgrants by formula should first determine whether funds available for LEA allocations are sufficient to provide each eligible LEA with at least the $10,000 minimum allocation under section 4105(a). An SEA can determine this by dividing the amount of available funds by the total number of eligible LEAs in the State. The result will determine whether the SEA falls under “Scenario 1” or Scenario 2” described below.

For example, if an SEA has $500,000 in available funds and 5 eligible LEAs, the SEA would divide $500,000 by 5. From the resulting amount of $100,000, the SEA would determine that funds are sufficient to provide each LEA with at least the minimum allocation, and would proceed under “Scenario 1.” .

If an SEA making subgrants by formula determines that funds are sufficient to provide each eligible LEA with at least the $10,000 minimum allocation, the SEA must allocate funds to its LEAs based on shares of Title I, Part A funds for the preceding fiscal year. An SEA should follow the steps below for making allocations consistent with these requirements in section 4105(a).

 

For example, in the table below, LEA Delta and LEA Echo each have an initial formula allocation below $10,000. The sum of their initial formula allocations is $15,000. By statute, LEA Delta and LEA Echo must receive a minimum allocation of $10,000 each. These are their adjusted allocations. The difference between the total initial and total adjusted allocations of these LEAs is $5,000. If the sum of the initial allocations for all other LEAs (i.e., LEAs Alpha, Bravo, and Charlie) is $485,000, the SEA would divide $5,000 by $485,000, resulting in a percentage of 1.03 percent. If under this example an LEA’s initial formula allocation is $50,000 (see LEA Charlie), the SEA would then multiply $50,000 by 1.03 percent and subtract the resulting amount ($515) from $50,000, resulting in an adjusted allocation of $49,485.

The table below shows results of Steps 1-3 for an example SEA with $500,000 in available funds and five eligible LEAs:

LEA

Step 1: Initial formula allocation

Step 2: Adjusted allocation for LEAs below $10,000

Step 3: Adjusted allocation for all other LEAs

Adjusted allocation for all LEAs

Alpha

$300,000

--

$296,907

$296,907

Bravo

$135,000

--

$133,608

$133,608

Charlie

$50,000

--

$49,485

$49,485

Delta

$9,000

$10,000

--

$10,000

Echo

$6,000

$10,000

--

$10,000

Total funds

$500,000

$20,000

$480,000

500,000

 

 

If an SEA making subgrants by formula determines that the amount of SSAE funds reserved for formula allocations is insufficient to provide each eligible LEA with the $10,000 minimum allocation, the SEA must, consistent with section 4105(b), provide each LEA with an allocation in an amount that is ratably reduced below $10,000. Effectively, this means that each LEA’s allocation is the same as the amount the SEA obtained by dividing the funds available for LEA allocations by the total number of eligible LEAs in the State under the “Initial Test” above.

For example, if an SEA has $500,000 in funds available for formula allocations and 55 eligible LEAs, the SEA would have divided $5,000,000 by 55. In this case, each LEA would receive the resulting amount of $9,090.

3. How does an SEA make competitive SSAE subgrants?

Under the Appropriations Act, SEAs may award subgrants on a competitive basis to eligible LEAs (i.e., those that receive Title I, Part A funds), or consortia of eligible LEAs, to support activities under one or more of ESEA sections 4107 (well-rounded educational opportunities), 4108 (safe and healthy students), or 4109 (effective use of technology). An SEA making competitive subgrants must give priority to LEAs, or consortia of LEAs, with the greatest need based on the number or percentage of children counted under section 1124(c) of the ESEA (i.e., children counted for purposes of grants to LEAs under Title I, Part A of the ESEA), and must make awards in a manner that ensures geographic diversity among subgrant recipients representing rural, suburban, and urban areas. An SEA must make competitive subgrants for a term of one year and in an amount not less than $10,000.

Under the Appropriations Act, an SEA making competitive subgrants must also ensure that, of the State’s funds available for competitive subgrants, at least 20 percent is distributed for well-rounded educational opportunities, at least 20 percent for safe and healthy students, and a portion for effective use of technology. In other words, the Appropriations Act applies the minimum expenditure requirements in section 4106(e)(2) of the ESEA to the SEA for those amounts awarded competitively, even though under the SSAE statute, those requirements apply to the LEA’s use of its formula funds.  LEAs are not subject to the minimum expenditure requirements applicable to formula subgrants for any funds they receive as competitive subgrants.

In addition, the Appropriations Act allows an LEA receiving a competitive subgrant and using funds to carry out only activities to support the effective use of technology to use up to 25 percent of its competitive subgrant for purchasing technology infrastructure. In comparison, an LEA receiving a formula subgrant and using funds to carry out activities to support the effective use of technology, or an LEA receiving a competitive subgrant and using funds to carry out these and other allowable activities, may use only up to 15 percent of its funds for this purpose.

Except as noted above, competitive subgrants are subject to the same terms and conditions as formula subgrants.[2]

 

4. May an SEA make SSAE subgrants to its LEAs both by formula and competitively?

Yes, the Department has determined that the FY 2017 Department of Education Appropriations Act, which provides authority for SEAs to make subgrants to LEAs through a competitive process, does not prohibit an SEA from choosing to make both competitive and formula-based subgrants with FY 2017 SSAE funds.  The competitive subgrant authority provided for FY 2017 includes multiple requirements for competitive subgrants that may be challenging to reconcile with the statutory requirements for formula-based subgrants. The Department is available to assist SEAs in addressing these challenges and strongly encourages any SEA seeking to make both formula and competitive subgrants to share its plan with the Department for awarding FY 2017 SSAE funds to ensure that the plan meets all applicable requirements prior to the implementation of the SEA’s plan.  Finally, the Department encourages any SEA considering such a plan to consult with its LEAs prior to implementation. SSAE funds awarded by formula must be provided to all eligible LEAs, and an SEA may not provide a predetermined allocation to every LEA, as this would not be formula-based. If an SEA chooses to award SSAE subgrants both by formula and competitively, it may not reduce an LEA’s formula allocation if that LEA receives a competitive subgrant.

 

5. Does the same period of fund availability apply to SSAE funds awarded by formula or competitively?

Yes. Because SSAE is a State-administered program, the “Tydings Amendment”[3] applies and all FY 2017 SSAE funds, whether awarded by formula or competitively, remain available for obligation by LEAs through September 30, 2019. For an SEA making competitive subgrants, FY 2017 funds remain available for obligation by the SEA until September 30, 2018, and by its LEAs under the Tydings Amendment until September 30, 2019.

6. May an LEA that receives a competitive SSAE (Title IV, Part A) subgrant transfer funds to or from that award consistent with section 5103(b) of the ESEA?

   No. An LEA that receives a competitive SSAE subgrant may not transfer funds into or out of that award.  The State and Local Transferability Act, currently codified in Title V, Part  A of the ESEA, provides authority for States and LEAs to transfer funds allotted under certain ESEA formula grant programs; it does not authorize the transfer of awards made by competition.  Such transfers would undermine the competitive award process by allowing a subgrantee to avoid implementing the activities in its “winning” application.  In addition, an LEA may transfer funds only into a Title IV, Part A formula allocation and not into a competitive Title IV, Part A subgrant. Accordingly, if an LEA does not receive a formula Title IV, Part A allocation, it may not transfer Title II funds to Title IV, Part A, under the transferability provisions in section 5103(b).

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