GENERAL
QUESTIONS AND ANSWERS on CERTAIN PROVISIONS
of TITLE XIV of the ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965


TABLE OF CONTENTS

Introduction

Consolidated Applications

Consolidation of Administrative Funds

State Administrative Funds

Local Administrative Funds

General Issues

Unneeded Funds

Maintenance of Effort

INTRODUCTION

The Improving America's Schools Act of 1994 (P.L. 103-382) reauthorized the Elementary and Secondary Education Act of 1965 (ESEA).The purpose of the reauthorized ESEA is to improve teaching and learning for all children to enable them to meet challenging academic content and student performance standards. The reauthorized ESEA complements the Goals 2000: Educate America Act and the School-to-Work Opportunities Act by supporting State and local education reform efforts and promoting coordination of resources to improve education for all students.

Title XIV of the ESEA contains general provisions that apply to many ESEA programs. Those provisions provide for flexibility; promote coordinated program services; authorize waivers of certain provisions to increase the quality of instruction or improve academic performance; authorize consolidated State and local plans and applications; authorize consolidation of State and local administrative funds; provide for the use of a limited amount of "unneeded funds" in programs other than the program for which the funds were appropriated; and set forth uniform provisions--for example, maintenance of effort--that apply to a number of programs authorized in the ESEA.

The Department published final regulations at 34 C.F.R. Part 299 in the Federal Register on May 22, 1997 for certain provisions in Title XIV. Most of the provisions of Title XIV are not the subject of these regulations because, in implementing the ESEA, the Department has sought to issue regulations only where absolutely necessary to implement uniform provisions, to decrease burden on grantees, or to provide increased flexibility. Instead, the Department has issued in other documents non-binding guidance to help grantees better understand and implement a number of Title XIV provisions such as coordinated services projects (section 14206(b) and Title XI), State consolidated plans (section 14302), waivers (section 14401), and the Gun-Free Schools Act (sections 14601-14603).

The guidance that follows builds on the guidance in these other documents and is designed to help grantees of programs under the ESEA use the flexibility provisions in Title XIV. It does not impose requirements beyond those in the ESEA and other applicable Federal statutes and regulations. SEAs may wish to consider the guidance in this document in developing their own guidelines and standards. Compliance with the guidance in this document will be deemed by Department officials, including the Inspector General, as compliance with the applicable Federal statutes and regulations, although State and local officials are free to develop alternative approaches that are consistent with applicable Federal statutes and regulations. In other words, this document contains acceptable but not exclusive guidance concerning Title XIV.

A draft of this document was shared with representatives of various State and local educational agencies. We wish to thank all those who submitted questions and provided comments on the draft. If you have questions or additional comments on this guidance, or want copies of this or the other guidance on Title XIV provisions mentioned above, please contact Ms. Delores Warner, U.S. Department of Education, 1250 Maryland Avenue S.W., Room 4000, Portals Building, Washington, DC 20202-6110 (Telephone: (202) 260-1941. Internet: Delores_Warner@ed.gov).

CONSOLIDATED APPLICATIONS

Q.1 What programs may an SEA include in its consolidated State plan?

A. A State educational agency (SEA) may include in its consolidated State plan the following programs:

Program Name Legislative Citation CFDA #
Title I Grants to LEAs ESEA, Title I, Part A 84.010
Even Start ESEA, Title I, Part B 84.213
Migrant Education - Basic State Grant Program ESEA, Title I, Part C 84.011
Neglected, Delinquent, and Dropout Prevention ESEA, Title I, Part D 84.013
Eisenhower Professional Development State Grants ESEA, Title II, except for section 2103 (National Teacher Training Project) and Part C (Professional Development Demonstration Project) 84.281
Technology * ESEA, Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools and Communities - State Grants, except for Governor's Program ESEA, Title IV, Part A, Subpart 1, except for section 4114 84.186A
Innovative Education Program Strategies ESEA, Title VI 84.298
Vocational Education - State Leadership Programs Part A of Title II of the Carl D. Perkins Vocational and Applied Technology Education Act 84.048
Goals 2000 * Goals 2000: Educate America Act 84.276
School-to-Work Opportunities Act of 1994 * School-to-Work Opportunities Act of 1994 84.278
Other programs the Secretary has designated:
Homeless Program Subtitle B of Title VII of the Stewart B. McKinney Homeless Assistance Act 84.196
All other State formula grant programs under the Perkins Act Title II, Parts B & C; Title III, Part E 84.048, 84.243

* These programs were able to be included for coordinated planning purposes but not for funding purposes.

Q.2 Under what programs may an LEA receive funding based on their inclusion in a consolidated local plan?

A. A local educational agency (LEA) receiving funds under more than one of the following covered ESEA programs as listed in section 14101(10) of Title XIV may include those programs in a consolidated local plan:

Program Name Legislative Citation CFDA #
Improving Basic Programs Operating in LEAs Title I, Part A 84.010
Migrant Education - Basic State Grant Program Title I, Part C 84.011
Eisenhower Professional Development State Grants Title II, except for section 2103 and Part C 84.281
Technology Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools and Communities - State Grants, except for Governor's Program Title IV, Part A, Subpart 1, except for section 4114 84.186A
Innovative Education Program Strategies Title VI 84.298

Q.3 Although section 14101(10) of Title XIV lists as covered programs only those identified in the chart in Q.2, may an LEA include additional programs such as the Even Start program (Title I, Part B) and the Homeless program (Stuart B. McKinney Homeless Assistance Act) in a consolidated local plan?

A. Under section 14302(a)(2) of Title XIV, a State may include in its consolidated State plan additional programs, such as the Even Start program and vocational education programs, that are not included in the list of "covered programs" in section 14101(10). A State that has submitted and had approved a consolidated State plan may require its LEAs that receive funds under more than one program included in the State's consolidated plan to submit consolidated local plans under those programs. Thus, if a State included Even Start or Homeless programs, for example, in its consolidated State plan, it could require its LEAs to do the same. Moreover, even if a State does not require its LEAs to submit consolidated local plans, if the State included any of these additional programs in its consolidated State plan, an LEA in that State may, at its discretion, also include those programs in its consolidated local plan. The LEA may not include any additional programs, however, that the State has not included for funding purposes in its consolidated State plan.

Q.4 How are procedures and criteria for submitting consolidated local plans determined?

A. Through collaboration with LEAs in the State, an SEA establishes procedures and criteria for submitting consolidated local plans. The SEA may require only descriptions, information, assurances, and other material that are essential for considering an LEA's plan. Thus, the SEA may develop criteria for the content of consolidated local plans that substitute for the specific program descriptions and assurances that an LEA would submit if it submitted individual program plans or applications instead of a consolidated plan.

Q.5 If an SEA or LEA submits a consolidated plan, may it combine funds from the programs included in that plan?

A. No. Submission of a consolidated plan does not authorize an SEA or LEA to combine program funds (i.e. not account for the funds by program). Program funds must be accounted for separately unless combined in a schoolwide program under section 1114 of Title I of the ESEA, combined in a consolidated administrative fund under section 14201 or 14203 of Title XIV of the ESEA, or used for State administration of Title I programs under section 1603(c) of Title I.

Q.6 What effect does submitting a consolidated application have on an SEA's or LEA's responsibility to comply with specific program requirements?

A. Submission of a consolidated plan may reduce the paperwork that needs to be filed in an application but does not alter the obligation of an SEA or an LEA to continue to comply with all requirements of each program included in the consolidated plan, including those requirements that the program statute includes as descriptions or assurances in an individual program plan or application.

Q.7 How may an SEA allocate funds to an LEA applying under a local consolidated plan: through a single grant award or through a grant award for each program included in the consolidated plan?

A. An SEA may allocate funds through a single grant award or through separate grant awards for each program included in an LEA's consolidated local plan. However, if the SEA uses a single grant award, the SEA would need to identify the amount that the LEA received from each program. Receipt of a single grant award does not authorize an LEA to combine program funds (i.e. not account for funds by program), ignore program-specific requirements, or alter allocation amounts for specific programs.

CONSOLIDATION OF ADMINISTRATIVE FUNDS

Q.8 How are "administrative funds" defined?

A. There is no current Federal statutory definition of "administrative funds" that applies to ESEA funds. An SEA and its LEAs should work together, as section 14203 of Title XIV anticipates, to devise a reasonable definition to be used for this purpose in the State.

STATE ADMINISTRATIVE FUNDS

Q.9 May an SEA consolidate administrative funds available under Federal education programs?

A. Yes. An SEA may consolidate the amounts specifically made available for State administration under the programs listed in Q.10 without separately tracking the administrative costs to a particular program if the SEA can demonstrate that the majority of the SEA's resources for administration comes from non-Federal sources (see also 34 CFR 299.4). This authority is in addition to the authority in section 1603(c) of Title I that permits an SEA to use funds from Parts A, C, and D for State administration without separately tracking the costs to a specific part of Title I.

Q.10 Under what programs may an SEA consolidate Federal administrative funds?

A. An SEA may consolidate the amounts available to it for State administration from one or more of the following programs:

Program Name Legislative Citation CFDA #
Improving Basic Programs Operated by LEAs ESEA, Title I, Part A 84.010
Even Start ESEA, Title I, Part B 84.213
Migrant Education - Basic State Grant Program ESEA, Title I, Part C 84.011
Neglected, Delinquent, and Dropout Prevention ESEA, Title I, Part D 84.013
Eisenhower Professional Development State Grants ESEA, Title II, except for section 2103 and Part C 84.281
Technology ESEA, Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools and Communities - State Grants, except for Governor's Program ESEA, Title IV, Part A, Subpart 1, except for section 4114 84.186
Innovative Education Program Strategies ESEA, Title VI 84.298
Goals 2000: Educate America Act Goals 2000, section 308(c) 84.276

Q.11 Under an identified program, what funds may an SEA consolidate?

A. An SEA may consolidate the funds available for State administration under each identified program. For example, under Title I of the ESEA, an SEA may consolidate the funds it reserves under section 1603(c) for State administration of Parts A, C, and D and the funds it reserves under section 1203(a)(1) for State administration of Part B. However, the SEA may not consolidate funds it receives or reserves for school improvement under section 1003 because those are not funds available for State administration. Similarly, under Titles II, III, IV, and VI of the ESEA, an SEA may consolidate the amounts specifically made available for State administration. However, the SEA may not consolidate any additional amounts under those programs that are authorized to be reserved for State-level programmatic activities and technical assistance.

Q.12 What funds are included in determining that a majority of an SEA's resources come from non-Federal sources?

A. Under section 299.4(a) of the Title XIV regulations, an SEA may consolidate State administrative funds if the SEA can demonstrate that the majority of the SEA's resources for administrative purposes come from non-Federal sources. The SEA may adopt and use its own reasonable standard for making this determination. State funds used for programmatic purposes (for example, to operate State schools for children with disabilities), however, would not be funds used for administrative purposes, and thus would not contribute to the majority of non-Federal funds needed to satisfy section 299.4(a).

LOCAL ADMINISTRATIVE FUNDS

Q.13 May an LEA consolidate administrative funds available under Federal education programs?

A. Yes. An LEA, with the approval of its SEA, may consolidate and use for the administration of one or more "covered" programs funds available to the LEA for administration under those programs in a given fiscal year.

Q.14 Under what programs may an LEA consolidate administrative funds?

A. An LEA, with the approval of its SEA, may consolidate administrative funds from the following covered programs:

Program Name Legislative Citation CFDA #
Improving Basic Programs Operated in LEAs Title I, Part A 84.010
Migrant Education - Basic State Grant Program Title I, Part C 84.011
Eisenhower Professional Development State Grants Title II, except for section 2103 and Part C 84.281
Technology Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools and Communities - State Grants, except for Governor's Program Title IV, Part A, Subpart 1, except for section 4114 84.186A
Innovative Education Program Strategies Title VI 84.298i

Q.15 May an LEA consolidate Goals 2000 or Even Start administrative funds?

A. No. Section 14203 of Title XIV only authorizes consolidation of local administrative funds under one or more "covered programs." Administrative funds under Goals 2000 and Even Start may not be consolidated because Goals 2000 and Even Start are not covered programs listed in section 14101(10) of Title XIV.

Q.16 For most of the programs that may be consolidated at the local level, there is no specific limitation on the amount that may be used for administration. How are administrative funds determined at the local level?

A. Section 14203(b) of Title XIV requires an SEA, in collaboration with LEAs in the State, to establish procedures (1) for responding to requests from LEAs to consolidate administrative funds and (2) for establishing limitations on the amount of funds that may be used for administration on a consolidated basis. Thus, an SEA may establish a specific limitation on the amount of funds an LEA may consolidate for local administration. If an SEA does not establish a specific limitation, an LEA may, absent a specific statutory restriction, consolidate from a particular program only those funds that are reasonable and necessary for the proper and efficient administration of that program. An LEA that consolidates administrative funds in a given fiscal year may not use any other funds for administration in that year from the programs included in the consolidation.

Q.17 What information must an LEA include in its consolidated grant application if it consolidates administrative funds?

A. The contents of LEA consolidated grant applications are to be determined through collaboration between LEAs in the State and the SEA.

Q.18 If an SEA consolidates administrative funds, may the SEA require its LEAs to do the same or must the SEA allow LEAs to decide whether to consolidate funds?

A. Under section 14203 of Title XIV, an LEA may consolidate administrative funds with the approval of its SEA. The SEA must develop procedures for responding to requests from LEAs to consolidate administrative funds and those procedures must be developed in collaboration with LEAs. Therefore, the SEA has some discretion in determining whether its LEAs may consolidate administrative funds, but the LEAs also have input into that determination. An SEA, however, may not require its LEAs to consolidate administrative funds.

Q.19 If an SEA does not consolidate administrative funds, may its LEAs consolidate their administrative funds?

A. An SEA may allow LEAs to consolidate administrative funds regardless of whether the SEA consolidates its administrative funds.

GENERAL ISSUES

Q.20 May an SEA or LEA consolidate administrative funds even if it does not submit a consolidated State or local plan?

A. Yes. An LEA needs its SEA's approval, however.

Q.21 May an SEA or LEA use consolidated administrative funds for purposes other than administering the Federal programs whose funds are consolidated?

A. Yes. Of course, the first priority for using consolidated funds must be administering the Federal programs whose funds were consolidated. However, under sections 14201(b) and 14203(d) of Title XIV, respectively, an SEA or LEA may also use consolidated funds for administrative activities designed to enhance the effective and coordinated use of funds under the programs whose administrative funds are consolidated, such as:

* coordination of programs whose funds are consolidated with other Federal and non-Federal programs * establishment and operation of peer-review mechanisms under the ESEA * the administration of Title XIV of the ESEA * dissemination of information regarding model programs and practices * technical assistance under programs whose funds may be consolidated

Q.22 What recordkeeping requirements apply if an SEA or LEA consolidates administrative funds?

A. An SEA or LEA must be able to show (1) the amount of administrative funds from each program for each grant year that the agency consolidated for administrative activities; (2) that the amount consolidated from each program does not exceed any statutory or regulatory cap on administrative funds; (3) that funds were obligated within the period of availability; and (4) that the activities for which the funds were used were allowable under section 14201(b) of Title XIV.

An SEA or LEA is NOT required to assign specific costs to specific Federal programs. Costs for allowable administrative activities under section 14201(b) may be paid for with any of the administrative funds that were consolidated.

For purposes of reporting Federal dollars, an SEA or LEA that consolidates administrative funds has flexibility in how it attributes the costs of administrative activities to particular grant awards. For example, an SEA or LEA may attribute costs in proportion to the dollars provided to the fund by each program for each program year. For example, if Title I, Part A contributed 30% of the funds in the consolidated administrative fund and Title II contributed 5% in a given year, the SEA or LEA could attribute 30% of its expenditures of consolidated administrative funds in that year to Title I, Part A and 5% to Title II.

For purposes of time distribution under OMB Circular A-87, Attachment B.11.h, consolidated administrative funds would be considered a single cost objective. Employees who work solely on a single cost objective are not required to prepare personnel activity reports or keep equivalent documentation as described in OMB Circular A-87, Attachment B.11.h(4). Please note that, normally, section 11.h(3) of that attachment would require semi-annual certifications from personnel who work on a single cost objective. However, if a State's or LEA's general standards for payroll documentation meet the criteria in section 11.a, b, and c of that attachment, the SEA or LEA may code the consolidated administrative cost objective as a "dedicated function." Consequently, normal time and attendance processing for personnel working on that cost objective would then be acceptable in lieu of separate semi-annual certifications.

Q.23 Under OMB Circular A-87, Attachment B.11.h, charges for wages and salaries of employees who work on multiple activities or cost objectives must be supported by personnel activity reports or equivalent documentation. May an SEA or LEA consolidate State or local administrative funds along with Federal administrative funds in order to eliminate the need for personnel activity reports for persons paid with both State and Federal funds?

A. Generally, State and local funds may not be consolidated with Federal administrative funds because there would be no way to determine if the Federal funds were being used in accordance with section 14201(b) of Title XIV. However, if State and local funds are used only for activities authorized under section 14201(b), those funds may be combined with Federal consolidated administrative funds, and those personnel would not have to keep personnel activity reports or equivalent documentation because they are working solely on one cost objective.

In addition, OMB Circular A-87 itself contains flexibility with respect to personnel activity reports that may be helpful. Under Attachment B.11.h(6), ED, as a cognizant agency, may approve the use of substitute systems for allocating salaries and wages to Federal grants in place of personnel activity reports.

UNNEEDED FUNDS

Q.24 What are "unneeded funds"?

A. Under section 14206(a) of Title XIV, an LEA, with the approval of its SEA, may determine for any fiscal year that funds under a "covered" program (other than Title I, Part A) are not needed for the purpose of that program, and may use such funds, not to exceed 5%, for the purpose of another covered program. (This authority is different and distinct from the authority in section 14206(b) of Title XIV, which allows an LEA, generally with ED's approval, to use not more than 5% of its total ESEA funds for a coordinated services project under Title XI of the ESEA.)

Q.25 On what base is the 5 percent for unneeded funds calculated?

A. In general, an LEA would calculate 5% of its allocation under a covered program for a given fiscal year to determine the maximum amount it could consider "unneeded" and therefore transfer to another covered program. An LEA may also include carryover funds from the prior fiscal year if the LEA did not include those funds in its calculation of unneeded funds for the prior year. In other words, an LEA may not transfer as "unneeded" the same funds twice.

Q.26 What programs are included as possible sources of "unneeded funds."

A. The following programs are "covered" programs for the purposes of unneeded funds:

Program Name Legislative Citation CFDA #
Migrant Education - Basic State Grant Program Title I, Part C 84.011
Eisenhower Professional Development State Grants Title II, except for section 2103 and Part C 84.281
Technology Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools - State Grants, except for Governor's Program Title IV, Part A, Subpart 1, except for section 4114 84.186A
Innovative Education Program Strategies Title VI 84.298

Although an LEA may not transfer unneeded funds from Title I, Part A to another program, the LEA may use unneeded funds from other covered programs in its Title I, Part A program.

Q.27 What recordkeeping requirements apply if an LEA transfers unneeded funds?

A. When unneeded funds are transferred to another program, they become funds of the program to which they are transferred and subject to all the requirements of that program. However, ED is required to account for the funds under the program for which the funds were appropriated. Therefore, in submitting final expenditure reports to ED, SEAs should account to ED for "unneeded" funds as part of the original program for which the funds were appropriated even though the LEA must comply with the requirements of the program that the funds were transferred to when using the funds.

Q.28 Some programs have limitations on the use of funds for certain activities within the program. For example, section 4116(c)(1) of Title IV (safe and drug-free schools) limits expenditures for certain activities (supporting "safe zones of passage," acquiring and installing metal detectors, and hiring security personnel) to not more than 20% of the funds made available to an LEA under Part A, Subpart 1 of Title IV. How does the Title IV limitation, for example, apply in the following scenarios?

(a) Calculating the amount of the cap. If unneeded funds from another ESEA program are transferred into a Title IV, Subpart 1 program, does that transfer raise the base on which the 20% cap is calculated?

A. No. Unneeded funds from another ESEA program are not included in calculating the 20% cap in the example above, because section 4116(c)(1) of Title IV limits the expenditure of funds for the activities described above to not more than 20% of the funds made available to the LEA under Title IV, Subpart 1 in a given fiscal year. We interpret this language to mean the allocation of Title IV, Subpart 1 funds an LEA receives from the Federal appropriation for that program in a given fiscal year. Thus, the amount of the 20% cap is calculated only on the basis of an LEA's Title IV, Subpart 1 allocation.

(b) Exceeding the cap. If unneeded funds from another covered program are used, for example, for installing metal detectors or hiring security personnel, are those funds considered in determining whether the cap has been exceeded?

A. Yes. When unneeded funds are transferred to another covered program, they become funds of the program to which they are transferred and subject to all the requirements and limitations of that program. Therefore, all funds--including unneeded funds transferred from another covered program--used, for example, for metal detectors or security personnel would be considered in determining whether the 20% cap under Title IV, Part A, Subpart 1 has been exceeded.

Q.29 At least two Federal education programs limit the amount of funds an LEA may carry over to the subsequent fiscal year. Section 1127(a) of Title I prohibits an LEA from carrying over more than 15% of the amount of funds allocated to it for any fiscal year under Part A, Subpart 2. Similarly, section 4113(f)(2) of Title IV (safe and drug-free schools) prohibits an LEA from carrying over more than 25% of the allocation it receives under Title IV for that fiscal year unless approval to carry over a greater amount is given by the SEA. How do these limitations apply in the following scenarios?

(a) Calculating the amount of the cap. If unneeded funds are transferred to a program that has a carryover limitation, are those funds included in the base on which the carryover limitation is calculated?

A. No. Under both Title I, Part A and Title IV, the respective carryover limitations are calculated only on the allocations an LEA receives under those programs in a given fiscal year.

(b) Exceeding the cap. If unneeded funds are transferred from a program that has a different carryover limit or no carryover limit to a program that has a carryover limit and not all of the funds are spent from either program, are the unspent funds from both programs considered in determining whether the carryover limit has been exceeded?

A. Yes. When unneeded funds are transferred to another covered program, they become funds of the program to which they are transferred and subject to all of the requirements of that program. Therefore, any unspent funds in a program with a carryover limitation (even if some of those funds were contributed from a program with no carryover limitation) would be considered in determining whether the carryover limitation has been exceeded.

MAINTENANCE OF EFFORT

Q.30 What is the maintenance of effort requirement in Title XIV?

A. Section 14501 of Title XIV provides that an LEA may receive funds under a covered program for any fiscal year only if the SEA finds that either the combined fiscal effort per student or the aggregate expenditures of the LEA and the State with respect to the provision of free public education by the LEA for the preceding fiscal year was not less than 90 percent of the combined fiscal effort or aggregate expenditures for the second preceding fiscal year.

Q.31 May the Title XIV maintenance of effort requirement be waived?

A. The Secretary may waive the maintenance of effort requirement in section 14501 for an LEA if the Secretary determines that such a waiver would be equitable due to--

* exceptional or uncontrollable circumstances such as a natural disaster; or * a precipitous decline in the financial resources of the LEA.

Q.32 To which programs does the Title XIV maintenance of effort requirement apply?

A. An LEA that receives funds under the following programs must maintain fiscal effort under section 14501 of the ESEA:

Program Name Legislative Citation CFDA #
Improving Basic Programs Operating in LEAs Title I, Part A 84.010
Eisenhower Professional Development State Grants Title II, except for section 2103 and Part C 84.281
Technology Title III, Part A, Subpart 2 84.318
Safe and Drug-Free Schools and Communities - State Grants, except for Governor's Program Title IV, Part A, Subpart 1, except for section 4114 84.186A

Title VI (Innovative Education Program Strategies) and Title VIII (Impact Aid) of the ESEA have separate maintenance of effort provisions.

Q.33 What expenditures are included and excluded in the determining whether an LEA has maintained effort under section 14501?

A. In determining whether an LEA has maintained fiscal effort under section 14501 of the ESEA, an SEA must consider the LEA's expenditures from State and local funds for free public education. Expenditures that must be included are expenditures for administration, instruction, attendance and health services, pupil transportation services, operation and maintenance of plant, fixed charges, and net expenditures to cover deficits for food services and student body activities.

Expenditures for community services, capital outlay, debt service, and supplemental expenses made as a result of a Presidentially declared disaster are not to be included in the determination. In addition, any expenditures made from funds provided by the Federal Government are excluded from the determination.

Q.34 For determining maintenance of effort under section 14501, what is the "preceding fiscal year"?

A. For purposes of determining maintenance of effort under section 14501, the "preceding fiscal year" is the Federal fiscal year or the 12-month fiscal period most commonly used in a State for official reporting purposes prior to the beginning of the Federal fiscal year in which funds are available.

Fiscal Year Funds Preceding Fiscal Year Second Preceding Fiscal Year
FY 1996 funds (available July 1, 1996)

FY 1997 funds (available July 1, 1997)

FY 1998 funds (available July 1, 1998)

FY 1999 funds (available July 1, 1999)

FY 2000 funds (available July 1, 2000)

FY 1995 (1994-95)

FY 1996 (1995-96)

FY 1997 (1996-97)

FY 1998 (1997-98)

FY 1999 (1998-99)

FY 1994 (1993-94)

FY 1995 (1994-95)

FY 1996 (1995-96)

FY 1997 (1996-97)

FY 1998 (1997-98)

Q.35 What happens if an LEA fails to maintain effort under section 14501?

A. If in the preceding year an LEA failed to spend at least 90 percent of what it spent in the second preceding year, the SEA must reduce the LEA's allocation under each covered program in the exact proportion by which the LEA failed to maintain effort by falling below 90 percent of both the combined fiscal effort per student and aggregate expenditures (using the measure most favorable to the LEA).

Q.36 How does an SEA determine maintenance of effort under section 14501 in the year following a failure to maintain effort?

A. In determining maintenance of effort under section 14501 for the fiscal year immediately following the fiscal year in which an LEA failed to maintain effort, the SEA must consider the LEA's expenditures in the year the failure occurred to be no less than 90 percent of the expenditures for the third preceding year.

EXAMPLE: (This example is based on an LEA with expenditures of $1,000,000 in FY 94, $850,000 in FY 95, $810,000 in FY 96, $800,000 in FY 1997, and $700,000 in FY 1998.)

  1 2 3 4
Program/Grant Year Expenditures first preceding year Expenditures second preceding year Level required to meet the requirement (90% of column 2) Reduction in LEA's allocation for each covered program
1996-97 (FY 96 funds) $850,000 (FY 95) $1,000,000 (FY 94) $900,000 5.6% of LEA's FY 97 allocations ($50,000/$900,000)
1997-98 (FY 97 funds) $810,000 (FY 96) $900,000 90% of FY 94--i.e., 3rd preceding year--instead of FY 95 $810,000 No reduction to FY 98 grant
1998-99 (FY 98 funds) $800,000 (FY 97) $810,000 (FY 96) $729,000 No reduction to FY 99 grant
1999-2000 (FY 99 funds) $700,000 (FY 98) $800,000 (FY 97) $720,000 2.8% of LEA's FY 2000 allocations ($20,000/$720,000)

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