New Fiscal Test Required in the American Rescue Plan ESSER III: Maintenance of Equity (MOEquity)

By Kathy Dunn, CCOSA Director of Professional Learning for State and Federal Programs

Just when we begin to understand Maintenance of EFFORT, there’s a new MoEQ in town! Maintenance of Equity is a new fiscal test required of school districts based on guidance in the American Rescue Plan. Based on the stated exemptions for districts (below), only about 70 Oklahoma districts are required to complete the MOEquity report. Of those required to complete MOEquity, some may qualify for an additional one-time exemption given only for the FY22 school year.

Overview of MOEquity at the District Level

In FYs 2022 (SY 2021-2022) and 2023 (SY 2022-2023), LEAs may not reduce:

■ Per-pupil state and local funding to high poverty schools more than the total reduction in per-pupil funding to all schools (ED calls this “funding equity”), AND

■ Per-pupil FTEs to high-poverty schools more than the total reduction in per-pupil FTEs in all schools (ED calls this “staffing equity”).

■ LEAs must satisfy both tests.

Districts who are Exempt from Calculating Maintenance of Equity

LEAs that are exempt from MOEquity are:

■ LEAs with a total enrollment of less than 1,000 students,

■ LEAs that operate only one school, and

■ LEAs that have only one school per grade span

■ LEAs that demonstrate an exceptional or uncontrollable circumstance, such as unpredictable changes in student enrollment or a precipitous decline in the financial resources of the LEA as determined by the Secretary

Fewer Than 70 Oklahoma LEAs NOT Exempt from the MOEquity Requirement

The Oklahoma LEAs that do not qualify for one of the exemptions above are listed in the Oklahoma State Department of Education (OSDE) MOEquity Toolkit located on the OSDE webpage for COVID-19 Resources at: https://sde.ok.gov/newsblog/2020-03-12/ coronaviruscovid-19-faqs-oklahoma-publicschools

The listed schools are required to complete the MOEquity report pages found in the Toolkit; however, the US Department of Education has given a one-time exemption for FY22 for LEAs who meet certain conditions.

One Time Exemption for FY22 Only

An LEA is exempt from the MOEquity requirements for only FY 2022 by certifying to the Department that it did not and will not implement an aggregate reduction in combined State and local per-pupil funding in FY 2022 (i.e., is not facing overall budget reductions). The Certification of Exemption form for this one-time exemption is located in the Oklahoma State Department of Education MOEquity Toolkit on the last tab.

Key Points in the MOEquity Calculation

■ For MOEquity purposes, high-poverty schools are the poorest 25% of schools in the LEA, with the USED rounding up for any decimal. For example, a district with 9 schools would have to consider 3 schools in the top 25% (rounding up from 2.25).

■ Districts may identify “high-poverty” schools by district-wide basis or by grade span. If identifying schools by grade span, the LEA still must include 25% of the district’s total number of schools by taking the highest poverty schools in each grade span.

■ For Staffing MOEquity, if an employee splits time between 2 or more buildings, then each site served would count only the portion of time spent serving that site.

What is Included in Calculating Fiscal MOEquity?

State and local funding includes all sources of state and local funds the LEA has available for “current expenditures for free public education.”

■ This is a term defined by ESEA (Sec. 8101(12)).

■ It includes administration, instruction, attendance and health services, pupil transportation services, operation and maintenance, fixed charges, and net expenditures to cover deficits for food services.

■ It excludes community services, capital outlay, and debt services.

■ It does not include federal funds or charitable contributions.

■ LEAs can exclude one-time disbursements for a specific purpose, like a revenue surplus that was distributed only for one year. (New option as of 8/6/2021.)

■ The OSDE Toolkit clearly delineates which OCAS codes are included in the calculation and which codes are not included, as shown below.

What is Included in Calculating Staffing MOEquity?

■ Includes all employees and contracted staff who perform school-level services.

■ Calculations should be done once enrollment and staff decisions are “final for a specific school year.”

■ LEAs do not have to recalculate based on unpredictable changes in enrollment or staff assignments later in the school year.

Resources for Completing the MOEquity Requirement

https://sde.ok.gov/newsblog/2020-03-12/coronaviruscovid-19-faqs-oklahoma-public-schools

The OSDE COVID-19 Resources webpage contains the following resources which posted on November 12, 2021:

■ The MOEquity Webinar

■ The MOEquity Webinar Slides

■ The MOEquity Toolkit

■ For Questions and Guidance on MOEquity: Michelle Dunn and Thomas Kirk from the OSDE Office of Federal Programs will provide assistance for determining exemptions for MOEquity and for understanding and completing the MOEquity Toolkit.

Thomas Kirk

Director of Compliance and Monitoring

Thomas.Kirk@sde.ok.gov

405-521-4878

Michelle Dunn

Executive Director of Professional Learning and School Success

Michelle.Dunn@sde.ok.gov

405-522-6369