New Guidance from the American Rescue Plan ESSER III on Maintenance of Equity (MoEquity) at the District Level

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

Overview of MoEquity

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.

Key Points in Maintenance of Equity (MoEquity) at the District Level

■ Maintenance of Equity (MoEquity) is a new fiscal rule under ARP ESSER that limits funding or staffing cuts to certain schools in 2021-2022 and 2022-2023.

■ It applies even if an LEA is maintaining or increasing its overall budget.

■ ED expects LEAs to calculate MoEquity “once it has final appropriated and allocated amounts” for each school.

■ It applies to all LEAs that receive ARP ESSER funds, with limited exceptions

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.

For MOEquity determinations in FY 2022 only, the USDE recognizes that LEAs may face certain one- time implementation challenges due to the enactment of the ARP Act in March 2021— when LEA budgeting was already underway in many places—and the impact of the pandemic that has resulted in significant ongoing uncertainty about school-level enrollment for the 2021-2022 school year. Therefore, an LEA experiencing these circumstances may demonstrate that it is excepted from the MOEquity requirements for 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).

Updated FAQ 32. https://oese.ed.gov/files/2021/08/Maintenanceof-Equity-updated-FAQs_final_08.06.2021.pdf

Identifying a District’s High Poverty Schools for MoEquity

■ For MoEquity purposes, highpoverty 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)

■ SEAs determine which poverty measures LEAs should use.

■ SEAs may choose from among the following measures:

■ Census data,

■ Free and reduced-price lunch eligibility,

■ TANF eligibility,

■ Medicaid eligibility, or

■ A composite of the above measures.

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.)

What is Included in Calculating Staffing MoEquity?

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

■ Staff who split time between one or more school should be apportioned among the schools.

■ 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.

■ As with fiscal equity, the LEA cannot reduce per-pupil FTEs in high- poverty schools below the reduction in per-pupil FTEs in all schools.

■ As with fiscal equity, as things stand now, under ED’s guidance, if per-pupil FTEs in the aggregate for all schools across the LEA stays the same or goes up in 2022-2023 compared to 20212022, then LEAs will not be able to cut per-pupil FTEs in any high poverty school below its 2021-2022 levels.

Considerations for LEAs Regarding Staffing MoEquity:

Unintended Consequences

The current calculations for Staffing MoEquity are simply to divide the number of staff by the number of students in the school. ED has said it will consider exceptions but cautions there will be few circumstances that will qualify for an exemption. Situations such as these are concerning:

■ Increasing staff diversity. Staff in a high-poverty school retire or resign, and the LEA replaces them with more diverse but less senior staff. The school’s FTE levels will remain the same, but its per-pupil allocation may go down.

■ Program adjustments to improve services for high-need schools. An LEA decides to make program adjustments like replacing paraprofessionals with fewer but possibly higher-impact FTEs like reading specialists. Per pupil spending remains the same, but the school’s FTE levels will go down.

■ Integration initiatives. An LEA wants to change its attendance boundaries to reduce poverty concentrations and increase integration. Enrollment shifts will affect MOEquity calculations in ways that may be hard to predict.

For 2021-2022 only at this time, Exception for LEAs with No Funding Cuts

■ If an LEA can certify that it will not implement an aggregate reduction in state and local per-pupil funding in 2021-2022 compared to 2020-2021, then ED will consider that to be a qualifying exception to the MOEquity requirement for this year. (The exemption covers both the fiscal equity and staffing equity tests.)

ED Announced It Will Seek Input on the MoEquity Plan

■ ED announced it plans to release a Request for Information to invite public comment on MOEquity issues, which will inform ED’s future guidance (and potentially regulations).

■ It is important to hear from a diverse range of LEA staff – including perspectives from leadership, finance staff, data and reporting staff, program staff, etc.

■ The more ED understands how

LEA budgets, staffing, and programming decisions work, the better informed its guidance will be.

Educators Should be Diligent to Study and Respond to ED’s Offer for Input

■ Be informed about how MoEquity will affect Oklahoma schools.

■ When given the opportunity, provide input to guide ED’s understanding of the realities of schools’ fiscal and staffing decisions

■ Support the professional organizations who advocate for good policy (CCOSA, AASA, etc.) ■