Notes from IDEA SPED Finance Regional Training

Notes from IDEA SPED Finance Regional Training

October 4, 2018

Changes in federal regulations require local districts to adjust accounting practices. The goal is to provide greater transparency for how revenues are spent. DESE is working with local districts to provide training.

Monitoring:

All districts have their special education finances monitored. Every district is placed in a cohort and is monitored according to a schedule. Risk assessments are also conducted by DESE annually. Further monitoring may take place if budgets or FER’s are submitted late, a change in personnel has occurred, or if expenditures are incorrectly coded. For districts receiving on site monitoring a list of 15 (page 12 of monitoring guide) items must be submitted prior to the visit.

Revenue sources:

All funding sources for special education must be tracked at the local level. While IDEA is a federal mandate, federal funding was never intended to cover all expenses. Districts must source code all expenditures. DESE recommends funding sped with local, state, and federal revenue. Decisions on how much of each source is spent on IDEA are made at the local level. For state and local funds, districts do not have to identify specific funding sources. For federal monies districts must document which specific revenue code is used.

General Ledger Basics:

General ledgers are used to build ASBR’s and DESE uses the ASBR to build FER’s. If incorrect coding is used in the ledger a chain reaction of complications will follow. All codes must have:

-fund code (tells which major fund to which the expense belongs): 1, general; 2, teacher; 3, debt service; 4, capital project

-function code (tells the basic purpose of the expense): there are many function codes. Previous guidance told districts to use 1221 primarily. New guidance allows much more flexibility. Examples of function codes include: 1221, sped teacher; 2162, occupational therapy.

-object codes (identifies services or commodities and directs which object the expense is collapsed into):  Examples: certificated salary, 6110; supplies, 6400.

-location code (tells which of the district’s building the expense belongs to)

-source code (tells the source of the funds): this is the major shift in coding. All funds must be coded local, 1; county, 2; state, 3; federal, 4.

-project code (identifies the specific source of the revenue- must be used for federal or specific state awards): Example, IDEA Entitlement funds, 44100. This is new and is a major shift.

Example

Fund, function, object, location, source, and project code for the portion of a high school teacher’s salary paid with IDEA part B funds.

2-1221-6110-1-4-44100

Cash Management

All districts must have a written cash management procedure. If adopted MCE or MSBA policies are current, districts are covered. Federal funds can only be drawn on a reimbursement basis. If federal funds are drawn before they are expended, financial penalties may occur.

Allowable Expenditures

Anything that is required to implement an IEP is an allowable expense for IDEA part B funds; however, the least complicated expenditure is for teacher’s salaries. Using IDEA monies for administrator salaries requires documentation for time and effort. Using IDEA monies for equipment/technology requires additional inventory documentation. All expenditures must be included in the budget submitted through e pegs. If federal funds are used for construction, the construction must be used only for special education. Changing the use of the building would require purchasing it from the federal government. Employees who are on the roster for medicaid roster can not have all of their salary coded as IDEA; however, employees who only have a portion of their salary coded to IDEA can also be included on the SDAC medicaid roster.

Time and Effort

A signed semi-annual certification form must be kept on file for any employee who has any portion of their salary coded to IDEA funds.

https://dese.mo.gov/sites/default/files/fas-SemiAnnualTimeCertification.pdf

Maintenance of Effort

Districts are required to spend state and local dollars in addition to their federal dollars. To receive federal funds districts must spend the same amount of money or more than they spent the year before. There are two avenues for meeting maintenance of effort. The first is local funds only and the second is local and state combined. Districts must be aware of how new expenses are coded because increasing spending creates a new threshold that may be difficult to continue.

The only exceptions are

-voluntary departure of sped staff

-decrease in enrollment of children with disabilities

-termination of a costly obligation for a specific child

-termination of a costly long-term purchase

-assumption of cost by the high need fund

Legal Updates For The 2018/19 School Year

Recent developments in school law may impact educators during the 18-19 school year.

Notes from EdCounsel school law seminar, July 27, 2018.

Senate Bill 1007: Employee Speech

This law limits the ability of districts to take action against employees who are publicly critical of districts. Administrators should seek legal advice before addressing employees who post criticisms on social media.

Student on Student Harassment

A recent Missouri court ruling found that districts are not places of public accommodation under the MHRA. A related case is currently being appealed to the Missouri Supreme Court; however, school districts are less likely to be viewed as a “person” and will not be as likely to be named in certain lawsuits. As long as districts follow policies which address student harassment, they will be in a stronger position than in years past.

HB1413: Collective Bargaining

Districts with collective bargaining agreements must review their policies and practices in light of this new law. The law creates grey areas for districts without collective bargaining agreements that utilize salary committees. Teacher unions and associations are weakened and teacher representation committees may have to meet additional bureaucratic regulations.

Surveillance Video Requests

FERPA guidance evolving to expand parental access to videos from bus or security cameras. Administrators must carefully consider requests and balance the interests of all students in the video.

Prevailing Wage

HB1729 allows for more flexibility to districts for projects under $75,000. If a change order pushes the total over $75,000, prevailing wage will only be paid on the portion over $75,000.00. Projects under $75,000 must pay a “public works contracting minimum wage,” and any bid documents for projects over $15,000 to push responsibility onto contractors instead of the district.

Student Speech/Violent Threats

The 2017 Criminal Code treats violent threats as a “terrorist act.” Courts are not responsive to first amendment claims in response to public threats. If a district can not prove a statement was a true threat the Tinker standard, allowing districts to police disruptive speech and conduct, still applies.

EdCounsel provides competent professional legal services for districts. For their complete presentation click below:

http://online.fliphtml5.com/tziy/tmaq/

Empowering Rural School Leaders: An Analysis of Three Policy Responses to Declining Enrollments

Rural schools face declining enrollments as rural populations decline. The Iowa model of Whole Grade Sharing is a better policy response than state mandated consolidation or forcing local school boards to face declining enrollments with no support from state government. 

Problem Definition

From 1996 to 2016 the Hardin-Central school district saw enrollment declines of 7.5 percent; in the neighboring district of Norborne the decline was a more drastic 31 percent (DESE). The enrollment trends match the demographic shift taking place in rural Missouri, characterized by the four percent decline in population in Carroll County, where Norborne is located, between 2010 and 2016 (United States Census Bureau). In an effort to maintain educational opportunities in the face of declining enrollments, a committee formed to study the consolidation of the two districts; however, after six meetings the committee voted not to pursue consolidation, in part because the consolidation would result in a loss of over $800,000 in state funding for the area (Rooney, 2018).

While other states employed proactive interventions to the effects of declining rural populations on education, Missouri’s state legislature has not. Missouri students deserve state leaders who will find responsible ways to protect opportunities for quality education in rural areas.  In a state with a significant percentage of students in rural schools, the problems presented by declining enrollments meet Bardach and Patashnick’s (2016) designation of “public problems” and “legitimately raise claims for amelioration by public resources” (p. 2).

Evidence

Rural states such as Missouri have seen demographic shifts induced by market forces which have decreased the number of farms in America between 2009 and 2016 (USDA). Fewer families own more land in Missouri, a state where enrollment is projected to experience downward trends, particularly in rural areas (Digest of Educational Statistics, 2016). Rural states across the nation have watched the number of districts shrink with their population. Between 1990 and 2009, Nebraska saw over 600 districts close when the legislature eliminated kindergarten through eighth grade districts (Surface, 2012). In Arkansas, Act 60 closed 57 districts (Nita, 2010). In Missouri, leaders have had no response to declining enrollments, and the state has the eighth highest number of school districts (521), in spite of having the 18th highest population (Digest of Educational Statistics, 2016).

The lack of response to declining rural enrollments by Missouri’s leaders places the state in a position to learn from literature produced researching the effects of consolidation elsewhere. Elf (2001) found high school students benefited the most from consolidation in her study of consolidation in an Ohio community. Secondary students report greater course offerings after consolidation (Nitta, 2010). Literature points to consolidation’s benefits for teachers as well as students. Nitta (2010) found teachers reported improved professional development and opportunities for collaboration following consolidation.

Missouri policy makers will also be well served by studying the challenges of consolidation. Surface (2012) found school consolidation can be a divisive issue for the communities affected for several reasons: the economic significance of a school district for small towns, rivalries between groups, and fears of losing community identity. The dynamics of perceived zero sum political games discussed by Samuelson (2016) are often at work in consolidation talks. When consolidation negotiations become too conflicted parties adopt deeply entrenched positions and rarely change strategies as described in game theory (Mouw, 2013). For this reason, Bard (2006) notes that the most successful consolidation efforts maintain schools in each town and engage the community in the process. State mandated consolidation is regarded as less effective (Bard, 2006).

Missouri policy makers must be informed about the current realities of Missouri’s rural schools. While figure 1 demonstrates significant differences between the projected enrollments of Missouri’s smallest and largest districts, figures 2 and 3 respectively demonstrate no significant difference in the academic performance or financial health of Missouri’s smallest districts in comparison to the largest.  Parents in small communities such as Norborne and Hardin intuitively worry about missed opportunities for their children; however, policy makers have no widespread evidence of academic or financial failures among small districts.

Figure 1

Effect of District Enrollment on Projected Change in HS Enrollment (2018-27)
		N	Mean	Std. Deviation	Std. Error Mean
% change	Smallest Districts	122	-0.14	0.305	0.027
	Largest Districts	122	0.002	0.181	0.016
Effect of District Enrollment on Projected Change in HS Enrollment (2018-27)
		Levene's Test for Equality of Variances
		F	Sig.	t	df	Sig. (2-tailed)
% change	Equal variances assumed	23.616	0	-4.396	242	0
	Equal variances not assumed			-4.396	197.031	0

Figure 2

Effect of District Enrollment on Percentage of Students Scoring Advanced
		N	Mean	Std. Deviation	Std. Error Mean
% advanced	Smallest Districts	160	17.53	8.73007	0.69017
	Largest Districts	160	17.5225	6.67354	0.52759
Effect of District Enrollment on Proficiency Percentage
		Levene's Test for Equality of Variances
		F	Sig.	t	df	Sig. (2-tailed)
% advanced	Equal variances assumed	9.154	0.003	0.009	318	0.993
	Equal variances not assumed			0.009	297.523	0.993

Figure 3

Effect on District Enrollment on Fund Balance Growth (2005-2011)
		N	Mean	Std. Deviation	Std. Error Mean
fundgrowth	Smallest Districts	183	0.6354	3.00372	0.22204
	Largest Districts	183	0.2019	2.15953	0.15964
Independent Samples Test
		Levene's Test for Equality of Variances
		F	Sig.	t	df	Sig. (2-tailed)
fundgrowth	Equal variances assumed	2.2	0.139	-1.585	364	0.114
	Equal variances not assumed			-1.585	330.478	0.114

Source: DESE

Evaluating Alternatives

Determining an appropriate public policy response often relies on analyzing various models (Bardoch & Patashnik, 2016). Consolidation efforts in other states allow Missouri policy makers to assess the models based on actual outcomes.

One model could be described as consolidation through state mandate. Arkansas used this model with Act 60 (Nita, 2010). Another Missouri neighbor, Nebraska, also mandated school consolidation, through the closing of kindergarten through eighth grade schools (Surface, 2012).  In Missouri, this approach has been advocated by legislators seeking to close small districts, but has not received enough statewide support to be implemented (Reishman, 2015).

Rather than force consolidation through mandate, Missouri’s state government has adopted a do-nothing model.  Local school boards and communities respond to declining enrollments at their own discretion. Rarely do local school boards make the difficult decision to close a district to join another, and when they do, the community suffers from the divisions and disruptions, as in the case of the Stet closure in 2014 (Rooney, 2014). Missouri’s school funding policies disincentivize consolidation as found by the Hardin and Norborne community members (Rooney, 2018).  

A third model can be found in Iowa, which neither mandates consolidation or leaves local communities to negotiate decline enrollment with no support. Iowa code section 282.10 allows communities to negotiate an intermediate phase of consolidation through a process known as whole grade sharing (Iowa Department of Education).  This model allows neighboring districts to share resources, while maintaining independent school boards and receiving the same state funding.

Predicting Outcomes

If state leaders continue with a do nothing approach to declining enrollment, predicting outcomes is straightforward. Rural districts will continue to decline in enrollment. While some communities may seek consolidation with their neighbors, game theory suggests most will hold tightly to their districts. As in the case of Stet, communities will struggle to determine when their district is no longer viable. Dissolutions of districts will only occur after capacity to deliver quality educational experiences begins to diminish. The outliers who seek planned consolidation will find, as the Norborne/Hardin group did, state funding policies a deterrent to their efforts.

Should the state adopt a forced consolidation model, the process will happen faster, but local communities will not have as much agency in crucial decisions such as the setting of boundaries and closure of schools. Leading new districts in communities that have been forced together without consent will be challenging for boards and administrators. Over time, students will benefit from consolidation, but the transitions will be disruptive. Political pushback will be significant.  

The Iowa model of whole grade sharing presents a third path. Should the state support communities that show interest in pooling resources voluntarily, overcoming the inertia of community identity will be less difficult for local leaders. An external change in financial factors would likely force parties to adjust their strategies and increase the likelihood of a Nash equilibrium emerging (Williamson 2013). Students and families can receive the benefits of consolidation without the disruption that can occur if the merger is dictated from the state capitol.

Confronting Tradeoffs

Evaluating trade-offs and outcomes requires leaders to consider “projections of policy outcomes for the various alternatives being considered” (Bardach & Patashnik, p. 47). Ignoring declining enrollments avoids short term political complications. Because data suggests academic outcomes are not significantly impacted by attending school in a smaller setting, no sense of emergency exists to motivate local leaders. Responsibility for evaluating the viability of the local district is passed to a future generation of local leaders. However, in the time that passes, students miss the improved social and extracurricular activities the literature documents. Teachers miss the professional support they would find in a larger district. Forced consolidation may accelerate a process which ultimately leads to better outcomes; however, community involvement in some decisions may be limited. The literature suggests that community engagement in the process is correlated to the ultimate success of the district.

Policies which incentivise consolidation empower local leaders to support and direct the pace and logistics of a consolidation effort. Students and teachers benefit, and disruption is minimized. The adoption of a policy permitting whole grade sharing would stress some sectors of the administrative bureaucracy; however, the state budget impacts would be minimal, as local districts would be receiving the same amount of state revenue.   

Conclusions

Declining rural populations and shrinking school enrollments present challenges to local government and school leaders. State leaders must respond to the demographic shift and engage with local communities in thoughtful ways. All evidence supports the adoption of the Iowa model which provides support, while respecting the autonomy of local school boards. Missouri’s rural residents would benefit from a similar practice.  

References

Bard, J. G., & Wieland, R. (2006).  Rural School Consolidation: History, Research Summary, Conclusions, and Recommendations. Rural Educator, 27, 40-48.

Bardach, E. & Patashnik, E.  (2016). A Practical Guide for Policy Analysis.  Sage: Los Angeles.

Department of Elementary and Secondary Education (2018). Missouri Comprehensive Data System. Retrieved from https://mcds.dese.mo.gov/quickfacts/Pages/default.aspx

Elf, T. L. (2001). Evaluation of a Single School District Consolidation in Ohio.  American Secondary Education, 30(1), 71.

Iowa Department of Education (2017). Whole Grade Sharing. Retrieved from https://educateiowa.gov/whole-grade-sharing

Loss, C. & McGuinn, P. (2016).  The Convergence of K-12 and Higher Education. Harvard Education Press: Cambridge.

Mouw, C. (2013).  Game theory, political psychology, and the process of democratization. The Global Studies Journal. 5 (2). 7-17.

National Center for Educational Statistics. (2016). Digest of Educational Statistics 2016. Retrieved from https://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2017094

Nitta, Keith A., Holley, Marc J., Wrobel, Sharon L. (2014). A Phenomenological Study of Rural School Consolidation. Journal of Research in Rural Education, 15510670, 20100101, Vol. 25, Issue 2.

United States Census Bureau (2016). Quick Facts Carroll County, Missouri. Retrieved from https://www.census.gov/quickfacts/fact/table/carrollcountymissouri,MO,US/PST120216#viewtop

United States Department of Agriculture (2017). Farms and Land in Farms. Retrieved from

http://usda.mannlib.cornell.edu/usda/nass/FarmLandIn/2010s/2017/FarmLandIn-02-17-2017.pdf

Reischman, C. (2015). Bahr pushes to consolidate rural school districts. The Missouri Times. March 24, 2015.

Rooney, S. (2018, April 19). Committee vote: no consolidation. The Richmond Daily News. p. 1.

Rooney, S. (2014, January 16). April Election on Norborne, H-C Boundaries.  The Richmond Daily News. p. 1.

Samuelson, L. (2016). Game theory in economics and beyond. Journal of Economic Perspectives. 30, 107-130.

Zimmer, T., DeBoer, L., & Hirth, M. (2009). Examining Economies of Scale in School Consolidation: Assessment of Indiana School Districts. Journal of Education Finance, 35, Issue 2.