Virginia School Divisions Repay Nearly $30 Million in Misused Special Ed Funds; One Division Disputes

Three school divisions charged with misusing federal funds intended for students with disabilities have made nearly $30 million in total repayments, according to the state Department of Education, which will be returned to the federal government. Still, one division is actively disputing the charge.

The Essex, Northumberland and Loudoun county school divisions’ misuse of federal money for special needs students became widely known after the Virginia Department of Education (VDOE) investigated Loudoun County Public Schools in May.

VDOE later confirmed to the Mercury that school divisions in the Essex and Northumberland counties had also been found in violation of the Individuals with Disabilities Education Act. This law requires school divisions to meet a Maintenance of Effort (MOE) obligation, which stipulates that spending on children with disabilities fueled by local or state funds not dip below the level of the preceding fiscal year.

Essex, required to pay around $450,000, is disputing the agency’s claim, asserting that the shortfall calculation was substantially misreported due to a terminated employee’s error, a letter from the division’s attorney states. The division is currently conducting a forensic audit, but in the meantime, has requested that payment be held in escrow pending review and reconsideration of the division’s request.

Essex schools responds, VSP investigation in Northumberland, Loudoun also navigating federal challenges

VDOE, in a letter to Essex, stated that it did not qualify for an allowable exception because the division was informed that it had previously received technical assistance, and if it had not met the MOE compliance, it would be required to repay the funds.

“Essex County Public Schools has paid its Maintenance of Effort penalty in protest, and is very hopeful that the Virginia Department of Education will either grant us an allowable exception or support our request for review of the penalty to the U.S. Department of Education,” said Scott Croxton, chairman of the Essex County School Board.

He later told the Mercury that the school division “doesn’t want to be on any list that implies that we’re not properly educating our special education population, because that’s just not true.”

Loudoun, the largest of the three, was hit with the most significant bill of $28,997,133. Essex, with $451,036, and Northumberland, billed $243,607.80, represent a fraction of the size of Loudoun’s enrollment.

A VDOE spokesperson stated that the agency had not received any direct appeals or hearing requests from the three school divisions. The department would be responsible for considering any such case.

However, Essex’s attorney wrote in a letter to the agency that the division is submitting the payment “under protest” and not admitting liability to begin the process of requesting a review through the USDOE’s General Education Provisions Act hearing process with the assistance of VDOE.

Croxton said VDOE was made aware that Essex lost five personnel through termination or departure who directly impacted the division’s special education program. The division said it also let the department know it has initiated an ongoing forensic audit in coordination with the Virginia State Police to investigate financial irregularities, including issues that may have affected special education spending and compromised the integrity and accuracy of the MOE data submitted.

“Despite these challenges, ECPS has an exceptional leadership team and instructional staff in place, and tremendous achievement gains are being made,” Croxton said. “We firmly believe that our transition to a County-School Centralized Services model for financial and human resources functions will be a key component for improved fiscal oversight and stewardship of taxpayer dollars.”

Northumberland’s case comes as the Virginia State Police Bureau of Criminal Investigation and Office of the Northumberland County Commonwealth’s Attorney conduct an “inquiry,” or preliminary review gathering and assessing information to determine if further action is warranted, according to Jessica Shehan, a VSP spokesperson.

In Loudoun, the school board agreed to repay its funds after reports revealed an accounting mistake that led to some of the funding being used for English Learner (EL) programs.

“Historical support of special education services has not been impacted nor will current and future special education services be impacted,” said Sharon Willoughby, LCPS chief financial officer, in a presentation to the school board at an Aug. 12 meeting, adding that spending on special education students continues year-over-year.

Willoughby said last spring was the first time VDOE conducted an in-person fiscal compliance review. The division was also surprised, given its years of successful compliance submissions to VDOE.

“I don’t know what the catalyst of that was, but that’s what started this whole process,” Willoughby said at the business meeting.

The repayment case has also raised concerns among school board members amid warnings the division could lose other federal funding after the U.S. Department of Education determined LCPS violated Title IX and retaliated against male students. That determination came after three male students expressed they felt “uncomfortable” when a student, who identified as male but was assigned female at birth, changed clothes in a boys’ locker room and recorded the event.

Loudoun, along with five other school divisions in Northern Virginia, is also being targeted for its transgender policies. School divisions in Alexandria, Arlington, Fairfax, and Prince William have also faced scrutiny.

The Mercury contacted Loudoun and Northumberland for comment, but they did not respond.

by Nathaniel Cline, Virginia Mercury

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