Intent to Repay to the Missouri Department of Elementary and Secondary Education Funds Recovered as a Result of a Final Audit Determination

DEPARTMENT OF EDUCATION

Intent to Repay to the Missouri Department of Elementary and

Secondary Education Funds Recovered as a Result of a Final Audit

Determination

AGENCY: Department of Education.

ACTION: Notice of intent to award grantback funds.

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SUMMARY: Notice is given that under section 456 of the General

Education Provisions Act (GEPA), 20 U.S.C. 1234e (1982), the U.S.

Secretary of Education (Secretary) intends to repay to the Missouri

Department of Elementary and Secondary Education, the State educational

agency (SEA or Missouri), an amount nearly equal to 75 percent of the

principal amount of funds recovered by the U.S. Department of Education

(Department) as a result of a final audit determination. This notice

describes the SEA's plan for the use of the repaid funds and the terms

and conditions under which the Secretary intends to make those funds

available. The notice invites comments on the proposed grantback.

DATES: All comments must be received on or before August 31, 1994.

ADDRESSES: Comments concerning the grantback should be addressed to

William D. Tyrrell, Sr., U.S. Department of Education, 400 Maryland

Avenue, S.W., room 3609, Switzer Building, Washington, D.C. 20202-6132.

FOR FURTHER INFORMATION CONTACT: William D. Tyrrell, Sr., U.S.

Department of Education, 400 Maryland Avenue, S.W., room 3609, Switzer

Building, Washington, D.C. 20202-6132, telephone: (202) 205-8825.

Individuals who use a telecommunications device for the deaf (TDD) may

call the Federal Information Relay Service (FIRS) at 1-877-8339 between

8 a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION:

A. Background

This notice is based on the Department's recovery of funds

following an audit report prepared by the United States Department of

Education's Office of Inspector General, Office of Audit, Region VII,

issued on May 29, 1984, of the Special School District of St. Louis

County's (SSD) administration of its Part B of the Education of the

Handicapped Act1 (Part B) grant award for the funding period of

July 1, 1977 through June 30, 1983. (Audit Control Number: 07-30032).

Among the objectives of that audit was to determine whether SSD

complied with Part B's non-supplanting requirement. Under that

requirement, a local educational agency (LEA) receiving Part B funds

must, in any particular fiscal year, spend as much State and local

funds on special education and related services, on either an aggregate

or per capita basis, as it did in the prior fiscal year. This part of

the non-supplanting requirement is referred to as the ``aggregate

expenditure'' test.

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\1\In 1990, the name of this Act was changed by Congress to Part

B of the Individuals with Disabilities Education Act. See Pub. L.

101-476.

(See 20 U.S.C. 1414(a)(2)(B)(ii) and (f) (1982) and 34 CFR Sec. 300.230

(1982)). 34 CFR 300.230 also prohibited, during the period at issue,

the use of Part B funds to pay for specific costs that had been

previously paid for with State and local funds. This part of the non-

supplanting requirement is referred to as the ``particular cost'' test.

Id.2

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\2\ The particular cost requirement was removed from the Part B

regulations in 1992. See 57 F.R. 37652 (August 19, 1992).

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On April 17, 1986, the Assistant Secretary for Special Education

and Rehabilitative Services (Assistant Secretary) issued a final letter

of determination (FLD) to the SEA that adopted the finding of the audit

report and disallowed $1,374,880 of fiscal year 1980, 1981, and 1983

Part B funds expended in violation of the non-supplanting

requirement.3 Most of these funds, $929,746, were disallowed

because of SSD's failure to comply with the aggregate expenditure test.

The FLD, however, also disallowed $445,116 because of SSD's failure to

comply with the particular cost test.

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\3\ Under Part B, the SEA is responsible for assuring that the

funds it receives and awards to its school districts will be spent

in accordance with, among other things, the Act's non-supplanting

requirement. (See 20 U.S.C. 1413(a)(1) (1982). See also 20 U.S.C.

1412(6) (1982)). Thus, although SSD violated the non-supplanting

requirement, the Department sought recovery of the misexpended funds

from the SEA.

The FLD also disallowed $107,969 of fiscal year 1983 funds

because of erroneous reporting and improper charges to the Part B

program. This claim was subsequently withdrawn on the basis of

evidence presented by SSD to the Assistant Secretary after the FLD

was issued.

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On May 16, 1986, Missouri filed an application for review of the

FLD with the Education Appeal Board (EAB).4 The SEA's application

for review and the petition to intervene in the proceedings filed by

SSD were accepted by the EAB. During the course of proceedings before

the EAB, the Assistant Secretary, on the basis of documentation

presented by SSD, reduced the claim made in the FLD for funds spent in

violation of the non-supplanting requirement to $911,153. The EAB's

Initial Decision, which was issued on August 9, 1989, held that

Missouri must refund $463,729 to the Department.

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\4\ The procedures for appealing FLDs issued by officials of the

Department of Education were changed by Pub. L. 100-297 (April 28,

1988). 20 U.S.C. Secs. 1234 and 1234a (1988). The Department's

Office of Administrative Law Judges now performs the duties related

to the adjudication of appeals of FLDs that were previously assigned

to the EAB.

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The SEA, SSD, and the Secretary of Education entered into a

settlement agreement that resolved the issues in the appeal on May 22,

1991. On June 17, 1991, pursuant to the terms of that agreement, SSD

returned $223,500 to the Department. The EAB, on the basis of a Joint

Motion filed by all the parties, dismissed the appeal with prejudice.

All terms of the settlement agreement have been satisfied.

B. Authority for Awarding a Grantback

Section 456(a) of GEPA, 20 U.S.C. 1234e(a)(1982), provides that

whenever the Secretary has recovered funds following a final audit

determination with respect to an applicable program, the Secretary may

consider those funds to be additional funds available for the program

and may arrange to repay to the SEA or LEA affected by the

determination an amount not to exceed 75 percent of the recovered

funds. The Secretary may enter into this ``grantback'' arrangement if

the Secretary determines that the--

(a) Practices and procedures of the SEA or LEA that resulted in the

audit determination have been corrected, and the SEA or LEA is, in all

other respects, in compliance with the requirements of the applicable

program;

(b) The SEA has submitted to the Secretary a plan for the use of

the funds to be awarded under the grantback arrangement that meets the

requirements of the program and, to the extent possible, benefits the

population that was affected by the failure to comply or by the

misexpenditures that resulted in the audit exception; and

(c) Use of funds to be awarded under the grantback arrangement in

accordance with the SEA's plan would serve to achieve the purposes of

the program under which the funds were originally granted.

C. Plan for Use of Funds Awarded Under a Grantback Arrangement

Pursuant to section 456(a)(2) of GEPA, the SEA has applied for a

grantback totaling $167,585, which is slightly less than 75 percent of

the principal amount of the recovered funds, and has submitted a plan

for use of the grantback funds to meet the special education needs of

children with disabilities. Under section 456(c) of GEPA, 20 U.S.C.

1234e(c)(1982), these funds are available for expenditure until

September 30, 1994. The SSD's plan, which has been submitted by the

SEA, is to train its personnel in a transdisciplinary team approach to

serving children with disabilities. The training has five major

components: (1) initial training on the transdisciplinary team approach

of providing services to students with disabilities; (2) concept

support training, including Project RIDE (Responding to Individual

Differences in Education), the nationally recognized program for at-

risk students aimed at helping students who have difficulty functioning

successfully in the regular classroom; (3) monthly site-based meetings;

(4) consultation with recognized experts and trainers; and (5)

evaluation to continue modification of the process as appropriate and

planning to continue implementation district-wide. The training will be

provided to 18 teams on the concept of transdisciplinary service and

the process of working as a team. Each team will be composed of one

general education teacher, one general education counselor, two special

education teachers, one speech/language pathologist, and one special

education area coordinator. Approximately ten occupational/physical

therapists, serving multiple teams, will also be included. These teams

will benefit from the initial two-day training workshop which focuses

on the transdisciplinary approach. In addition, there will be

supplemental training: follow-up sessions, one mid-way in the project

and one near the end of the project period. The teams will also be

participating in the monthly meeting guided by the local Project

Leader.

D. The Secretary's Determinations

The Secretary has carefully reviewed the plan submitted by the SEA.

Based upon that review, the Secretary has determined that the

conditions under section 456 of GEPA have been met.

These determinations are based upon the best information available

to the Secretary at the present time. If this information is not

accurate or complete, the Secretary is not precluded from taking

appropriate administrative action. In finding that the conditions of

section 456 of GEPA have been met, the Secretary makes no determination

concerning any pending audit recommendations or final audit

determinations.

E. Notice of the Secretary's Intent To Enter Into a Grantback

Arrangement

Section 456(d) of GEPA requires that, at least 30 days before

entering into an arrangement to award funds under a grantback, the

Secretary must publish in the Federal Register a notice of intent to do

so, and the terms and conditions under which the payment will be made.

In accordance with section 456(d) of GEPA, notice is hereby given

that the Secretary intends to make funds available to Missouri under a

grantback arrangement. The grantback award would be in the amount of

$167,585, which is approximately 75 percent--the maximum percentage

authorized by statute--of the principal amount recovered as a result of

the audit.

F. Terms and Conditions Under Which Payments Under a Grantback

Arrangement Would Be Made

The SEA agrees to comply with the following terms and conditions

under which payments under a grantback arrangement would be made:

(a) The funds awarded under the grantback must be spent in

accordance with--

(1) All applicable statutory and regulatory requirements;

(2) The plan that the SEA submitted and any amendments to the plan

that are approved in advance by the Secretary; and

(3) The budget that was submitted with the plan and any amendments

to the budget that are approved in advance by the Secretary.

(b) All funds received under the grantback arrangement must be

obligated by September 30, 1994, in accordance with section 456(c) of

GEPA;

(c) The SEA will, not later than January 1, 1995, submit a report

to the Secretary that--

(1) Indicates that the funds awarded under the grantback have been

spent in accordance with the proposed plan and approved; and

(2) Describes the results and effectiveness of the project for

which the funds were spent.

(d) Separate accounting records must be maintained documenting the

expenditures of funds awarded under the grantback arrangement.

(e) Before funds will be repaid pursuant to this notice, the SEA

must repay to the Department any debts that become overdue, or enter

into a repayment agreement for those debts.

Dated: July 26, 1994.

Judith E. Heumann,

Assistant Secretary for Special Education and Rehabilitative Services.

(Catalog of Federal Domestic Assistance Number 84.027, Handicapped

State Grants)

[FR Doc. 94-18616 Filed 7-29-94; 8:45 am]

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