Original Notice.

     Preproposal statement of inquiry was filed as WSR 05-17-109.

     Title of Rule and Other Identifying Information: WAC 392-140-600 through 392-140-685, state special education safety net funding.

     Hearing Location(s): Old Capitol Building, 600 South Washington Street, Olympia, WA 98504-7200, on November 22, 2005, at 9 a.m.

     Date of Intended Adoption: November 22, 2005.

     Submit Written Comments to: Legal Services, Office of Superintendent of Public Instruction, P.O. Box 47200, Olympia, WA 98504-7200, fax (360) 753-4201, by November 18, 2005.

     Assistance for Persons with Disabilities: Contact Sheila Emery by November 18, 2005, TTY (360) 664-3631 or (360) 725-6271.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Remove language requiring "other" available revenue be included in the calculation determining need on Worksheet A; add the federal definition of high need student to the rules; establish a common threshold to be determined annually for all high need student applications; and change voting membership status of the state oversight committee member representing the office of the state auditor.

     Statutory Authority for Adoption: RCW 28A.150.290.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: , governmental.

     Name of Agency Personnel Responsible for Drafting: Mary Ellen Parrish, Office of Superintendent of Public Instruction, (360) 725-6086; Implementation: Calvin W. Brodie, Office of Superintendent of Public Instruction, (360) 725-6300; and Enforcement: Jennifer Priddy, Office of Superintendent of Public Instruction, (360) 725-6292.

     No small business economic impact statement has been prepared under chapter 19.85 RCW.

     A cost-benefit analysis is not required under RCW 34.05.328.

October 13, 2005

Dr. Terry Bergeson

Superintendent of

Public Instruction

OTS-8379.3

AMENDATORY SECTION(Amending WSR 04-08-118, filed 4/6/04, effective 5/7/04)

WAC 392-140-600   Special education safety net -- Applicable provisions.   The provisions of WAC 392-140-600 through 392-140-685 apply to the determination of safety net allocations of Individuals with Disabilities Education Act (IDEA) federal funds for the ((2003-04)) 2005-06 school year and thereafter.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-600, filed 4/6/04, effective 5/7/04; 03-02-053, § 392-140-600, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 01-04-023, § 392-140-600, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290(2) and 1999 c 309 § 507(7). 00-03-015, § 392-140-600, filed 1/7/00, effective 2/7/00. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-600, filed 9/18/96, effective 10/19/96.]

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     (2) An interdistrict cooperative of at least fifteen districts in which all excess cost services for special education students of the districts are provided by the cooperative is eligible to apply for special education safety net moneys. The cooperative and the participating school districts shall be treated as a single school district for the purposes of this chapter. Participating school districts are not eligible to apply for safety net moneys individually.

     (3) The Washington ((state)) school for the deaf and the Washington state school for the blind are eligible to apply for high ((cost individual)) need students under WAC 392-140-616.

[Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-602, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-602, filed 9/18/96, effective 10/19/96.]

     (1) School districts may make application for safety net funding for ((high-cost individual)) high need student(s). The school district making application for safety net funding shall certify that:

     (a) The district recognizes that differences in costs attributable to district philosophy, service delivery choice, or accounting practice are not a legitimate basis for safety net awards.

     (b) The application complies with the respective safety net application standards of WAC 392-140-616;

     (c) The application provides true and complete information to the best of the school district's knowledge;

     (d) The district understands that safety net funding is not an entitlement, is subject to adjustment and recovery, may not be available in future years, must be expended in program 21 or program 24 as specified in the award letter, and certifies that federal Medicaid has been billed for all services to eligible students;

     (e) The district is making reasonable effort to provide appropriate services for students in need of special education using state funding generated by the basic education apportionment and special education funding formulas and federal funding;

     (f) The district's special education services are operated in a reasonably efficient manner;

     (g) Indirect costs included for purposes of determining safety net allocations do not exceed the allowable percent for federal special education program plus one percent;

     (h) Any available state and federal funding is insufficient to address the additional needs;

     (i) The costs of any supplemental contracts are not included for purposes of determining safety net awards. Supplemental contracts are those contracts made pursuant to RCW 28A.400.200(4) excluding extended school year contracts (ESY) required by an IEP; and

     (j) The costs of any summer school instruction are not included for purposes of making safety net determinations excluding extended school year contracts (ESY) required by an IEP.

     (2) Worksheet A shall be included with the application and must demonstrate the need for safety net funding. Worksheet A is used to determine a maximum amount of eligibility for a school district. Award amounts may be less than the maximum amount of eligibility determined on Worksheet A. School districts are encouraged and may be required to submit additional information designed to assist the state oversight committee in analyzing the application.

     (3) All ((high-cost individual)) high need student applications shall include worksheets "A" and "C" and summary published in the safety net application, and certification of standards and criteria pursuant to WAC 392-140-616.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-605, filed 4/6/04, effective 5/7/04; 03-02-053, § 392-140-605, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 02-05-036, § 392-140-605, filed 2/12/02, effective 2/13/02; 01-04-023, § 392-140-605, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290(2) and 1999 c 309 § 507(7). 00-03-015, § 392-140-605, filed 1/7/00, effective 2/7/00. Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-605, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-605, filed 9/18/96, effective 10/19/96.]

     (1) The IEPs comply with federal and state procedural requirements.

     (2) The delivery of specially designed instruction identified on the IEP complies with state ((standards)) and federal requirements (regularly scheduled teaching or training activities provided or designed by special education qualified staff).

     (3) The provision of special education services conforms with areas of need identified in the student's evaluation and/or reevaluation made pursuant to chapter 392-172 WAC.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-609, filed 4/6/04, effective 5/7/04; 03-02-053, § 392-140-609, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 02-05-036, § 392-140-609, filed 2/12/02, effective 2/13/02; 01-04-023, § 392-140-609, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-609, filed 9/18/96, effective 10/19/96.]

     (1) The IEP for the eligible special education student is appropriate, and properly and efficiently prepared and formulated.

     (2) All of the following criteria apply to the ((high-cost individual)) high need student:

     (a) Costs eligible for safety net consideration must be associated with providing direct ((expenditures for)) special education and related services ((required)) identified in the IEP.

     (b) In order to deliver appropriate special education and related services to the student, the district must be providing services which incur ((additional)) costs ((which exceed available district annual average per-pupil revenues, including state, federal and local revenues, by the published threshold. The threshold amount shall be adjusted annually thereafter based upon the increase in base salary and NERCs as budgeted in the Biennial Operating Appropriations Act and published in the safety net application. This)) exceeding:

     (i) The annual threshold as established by the office of superintendent of public instruction for state funding; then

     (ii) Three times the average per pupil expenditure (as defined in section 9101 of the Elementary and Secondary Education Act of 1965) for the state of Washington for federal funding. Threshold amounts shall be adjusted pro rata for students not counted or expected to be counted for special education services on all eight enrollment count dates (October through May). For example, for a student served and reported for only six of the eight count dates, the threshold amount shall be reduced to three-quarters of the full amount. ((The state safety net oversight committee may set a lower threshold for small school districts.))

     (c) The total cost of educational services must exceed any carryover of federal flow-through special education funding as of August 31 of the prior school year.

     (((d) The cost of providing special education services, as directed in the IEP, for this student would be detrimental to the school district's ability to provide necessary services to the other students being provided special education in the district.))

     (3) The state safety net oversight committee shall adapt the high ((cost individual)) need student application as appropriate for applications prepared by the Washington state school for the blind and the Washington ((state)) school for the deaf.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 03-02-053, § 392-140-616, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 02-05-036, § 392-140-616, filed 2/12/02, effective 2/13/02; 01-04-023, § 392-140-616, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-616, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-616, filed 9/18/96, effective 10/19/96.]

     (1) Application worksheet "A" shall demonstrate a fiscal need in excess of:

     (a) Any previous safety net awards for the current school year; and

     (b) All ((other)) available revenue for special education, including all carryover of state and federal special education revenue.

     (2) Awards shall not exceed the amount of need demonstrated on the worksheet "A."

     (3) Worksheets submitted with safety net applications are to reflect the state adopted excess cost method of accounting, consistently applied for both years presented.

     (4) The safety net oversight committee may revise the district's worksheet "A" submitted for errors or omissions or more current information.

     (5) The school district shall provide clarifying information as requested by the state oversight committee.

     (6) After the close of the school year, the safety net oversight committee may review the worksheet "A" used to determine need for a district's award against the actual final school year enrollments, revenues, and expenditures reported by the district. Based upon the results of this review:

     (a) The safety net allocation for the school year may be adjusted or recovered; or

     (b) If the committee finds that a portion of the safety net allocation was not needed to balance revenues and expenditures, the committee may consider that portion of the allocation available to meet the needs of the ensuing school year.

     (7) The state safety net oversight committee shall adapt the worksheet "A" - Demonstration of Need as appropriate for applications prepared by districts participating in the pilot program according to the provisions of RCW 28A.630.015(4).

     (8) In accordance with the state of Washington Accounting Manual for Public School Districts and ((proposed)) statutory federal language, demonstrated need shall not include legal fees, court costs, or other costs associated with a cause of action brought on behalf of a child to ensure a free appropriated public education.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-626, filed 4/6/04, effective 5/7/04; 03-02-053, § 392-140-626, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 01-04-023, § 392-140-626, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290(2) and 1999 c 309 § 507(7). 00-03-015, § 392-140-626, filed 1/7/00, effective 2/7/00.]

     (1) The state oversight committee members will be appointed by the office of superintendent of public instruction.

     (2) The state director of special education shall serve as an ex officio, nonvoting committee member and act as the state oversight committee manager.

     (3) Members of the state oversight committee from school districts and/or educational service districts will be appointed based on their knowledge of special education program service delivery and funding, geographical representation, size of district(s) served, and other demographic considerations which will guarantee a representative state committee.

     (4) Alternate members shall be appointed. In the event a member is unable to attend a committee meeting, an alternate member shall attend.

     (5) Membership appointments shall be made for a period of one year. The oversight committee manager may replace a portion of the committee each year in order to enhance representation.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-640, filed 4/6/04, effective 5/7/04. Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-640, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-640, filed 9/18/96, effective 10/19/96.]

     (2) All applications received by the state oversight committee will be reviewed for completeness by the state oversight committee manager or designee. Applications must include all necessary forms, worksheets, and attachments described in the instruction bulletin published by the superintendent of public instruction. If applications are not complete, they will not be considered by the committee.

     (3) The state oversight committee manager will forward to the committee members copies of the applications in a timely manner.

     (4) The state oversight committee manager or designee will be responsible for presenting each application for consideration to the committee.

     (5) Committee members shall ((question)) review and discuss the application content for completeness, accuracy, and understanding of the reason(s) for the applicant's need for safety net funding.

     (6) The committee may request that a submitting school district provide clarifying information.

     (7) Committee members will individually indicate their agreement ((or)), disagreement, or abstention with the action of the committee pursuant to WAC 392-140-646.

     (8) A majority vote by the committee members will be sufficient to determine the committee action.

     (9) The state oversight committee manager will ensure that notes are taken which summarize the questions and discussion related to each application. A decision summary for each application shall include the amount of the initial request, funding adjustments recommended by the committee, the amount of any award to be made, and the reasons for and against the action taken by the committee.

     (10) Committee members shall each sign the decision summary.

     (11) The state oversight committee manager, on behalf of the committee, will notify the applicant school district in writing of the determination of the committee. The school district will be provided a copy of the decision summary.

     (12) All applications received by the state oversight committee will be retained by the superintendent of public instruction for use in the evaluation of the safety net funding process and to provide the superintendent of public instruction with information with which to make future decisions regarding the safety net process.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-643, filed 4/6/04, effective 5/7/04; 03-02-053, § 392-140-643, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-643, filed 9/18/96, effective 10/19/96.]

     (1) After the state oversight committee determines:

     (a) There are no unresolved audit examination issues related to special education that are material in nature;

     (b) There are no unresolved ((state)) child count verification issues which are material in nature; and

     (c) All corrections to state enrollment reporting, required for resolution of (a) and (b) of this subsection, are completed.

     (2) An application reviewed during an application cycle may be:

     (a) Approved;

     (b) Disapproved; or

     (c) Returned to the submitting school district, for possible resubmission at a later date during the school year, because information contained in the application is insufficient to establish a need for safety net funding.

     (3) The amount approved shall be equal to or less than the amount for which application was made.

     (4) The approval may be contingent on additional requirements imposed by the committee such as development of an action plan to resolve a specified problem prior to submission of any future safety net application to assure school district compliance with the criteria and standards set forth in these safety net regulations.

     (5) The approvals are subject to adjustment and recovery pursuant to WAC 392-140-675 through 392-140-685.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 04-08-118, § 392-140-646, filed 4/6/04, effective 5/7/04. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-646, filed 9/18/96, effective 10/19/96.]

     (1) The special education safety net allocation for an individual district shall be the smaller of:

     (a) The amount requested by the school district; or

     (b) The amount authorized by the state oversight committee.

     (2) Special education safety net allocations for ((high-cost individual)) high need students under WAC 392-140-605 (1) shall use appropriated federal moneys. If safety net awards to meet the extraordinary needs of one or more individual special education students exceed the general fund -- federal appropriation, the superintendent shall expend all available and otherwise uncommitted federal discretionary funds necessary to meet this need.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 03-02-053, § 392-140-660, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 01-04-023, § 392-140-660, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290(2) and 1999 c 309 § 507(7). 00-03-015, § 392-140-660, filed 1/7/00, effective 2/7/00. Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-660, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-660, filed 9/18/96, effective 10/19/96.]

     (1) For those districts not maximizing Medicaid billing for special education students under RCW 74.09.5255, special education safety net allocations shall be reduced by the estimated potential additional incentive payments for the school year if the district maximized Medicaid incentive payments. Potential additional incentive payments shall be estimated by the superintendent of public instruction based on the district's percent of Medicaid eligible students billed and a statewide average incentive payment per student determined by the superintendent in October of the school year. The average incentive payment per student shall be determined using the prior school year's statewide Medicaid billing data assuming fifty percent incentive payments for all school districts. The superintendent of public instruction shall update Medicaid billing adjustments to safety net allocations periodically during the school year and again in January following the close of the school year.

     (2) Special education safety net allocations for a school district may be adjusted to reflect changes in factors for which additional or revised information becomes available after the awarding of the initial safety net allocation. This means:

     (a) ((High-cost)) High need awards may be reduced or nullified when the school district's actual revenues and expenditures for the school year differ significantly from the estimates on which the initial safety net award was based.

     (b) A school district's safety net award may be adjusted by the safety net oversight committee based on the results of the review conducted by the special education program audit team pursuant to WAC 392-140-630.

[Statutory Authority: RCW 28A.150.290 and 1999 c 309 § 507(7). 03-02-053, § 392-140-675, filed 12/26/02, effective 1/26/03. Statutory Authority: RCW 28A.150.290. 01-04-023, § 392-140-675, filed 1/30/01, effective 1/30/01. Statutory Authority: RCW 28A.150.290(2) and 1999 c 309 § 507(7). 00-03-015, § 392-140-675, filed 1/7/00, effective 2/7/00. Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-675, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-675, filed 9/18/96, effective 10/19/96.]

     (1) Shall be recovered or awards reduced for the following reasons:

     (a) The application contains a falsification or deliberate misrepresentation, including omission of a material fact.

     (b) The allocation is unexpended for the purpose allocated including but not limited to situations where the student leaves the district or has a change in services. For students who transfer to another Washington public school district, expenditures for specialized equipment purchased with these funds shall not be recovered provided the district transfers the equipment to the other school district.

     (c) The IEP is determined at a later date, through state audit or child count verification, to be inappropriate or improperly prepared and appropriate and proper preparation would materially affect the justification or amount of need for safety net funding.

     (2) May be recovered or awards reduced for the following reasons:

     (a) The school district has carryover of state and/or federal flow-through special education funding from the school year for which the award was made.

     (b) The district's actual revenues are significantly higher than estimated revenues on which the award was based or the district's actual expenditures are significantly lower than the estimated expenditures on which the award was based.

     (c) The state oversight committee finds grounds for adjustment in the special education program audit team's review pursuant to WAC 392-140-630.

     Recovery adjustments not made in the current school year shall be added to the amount calculated pursuant to WAC 392-140-616 (2)(c) for the following school year. Such amounts reduce state and/or federal safety net awards in the following year.

[Statutory Authority: RCW 28A.150.290 and 1997 c 149 § 507(8). 98-08-013 (Order 98-05), § 392-140-685, filed 3/18/98, effective 4/18/98. Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), § 392-140-685, filed 9/18/96, effective 10/19/96.]

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