OAR 581-001-0111: Audit and Other Financial Appeals

(1)(a) This rule establishes the process to be used by the Department of Education to address the overpayment or underpayment of State School Fund monies related to changes in federal law under 16 U.S.C. 7112(f). (b) This rule applies only to school years 2017-18, 2018-19, and 2019-20. For purposes of this rule, a year is considered closed on June 30 in the year two years after the fiscal year began. For example, the fiscal year beginning July 1, 2018, is closed on June 30, 2020. (c) Other reports received by the department that may be the basis to determine that an overpayment or underpayment has been made include but are not limited to information provided by a district, school or program or information from a department investigation. (d) The department will only seek to recover payments or will pay an amount under this rule if the department received the audit or report that the overpayment or underpayment is based upon within seven years of the date that the year was closed. For example, for the fiscal year beginning July 1, 2018, the department will only seek to recover or make payments based on audits or reports involving that fiscal year that were received by the department on or before June 30, 2026. (e) The department will not seek to recover and will not pay amounts under this rule of $750 or less. (2) The department shall determine whether there has been an overpayment or underpayment of funds upon receipt of an audit or other report, and whether the department will seek an adjustment of funds based on the audit or report. The department shall consider the following when making its determination: (a) Applicable statutes, rules and policies; (b) Information from the audit or report and any recommendations made in the audit or report; (c) Any other relevant information received by the department relating to the overpayment or underpayment of funds. This may include information from an investigation conducted by the department; and (d) Prior determinations of the department on overpayment or underpayments of funds that involved the same statutes, rules or policies or similar facts. (3)(a) The department shall notify in writing the school district or education service district, at a minimum, of the following: (A) The department’s determination including the amount of the overpayment or underpayment; (B) The basis for the determination; and (C) The time period in which the overpayment or underpayment occurred. (b) The department shall include a copy of this rule with the notification. (4) The school district or education service district may appeal the determination made under section (3) of this rule to the department. The appeal must be received by the department within 60 calendar days of the date of the notice and must: (a) Be in writing; (b) State the reasons for the appeal; and (c) Be signed by the superintendent or other official with authority to make the appeal. (5) Within 60 calendar days of receiving the appeal, the department shall notify in writing the school district or education service district of the department’s decision regarding the appeal. (6) If the school district or education service district does not appeal the determination; or if the department renders a decision on an appeal that there has been an overpayment or underpayment of funds, the department shall notify in writing the school district or education service district of: (a) The amount of the overpayment or underpayment; (b) The time period for correcting the overpayment or underpayment; and (c) The method for paying or collecting the funds. (7) The department shall establish the time period for correcting any overpayment using the “Repayment Calculator” established by the School Finance Unit of the department. The department shall make the Repayment Calculator available upon request. (8) The methods for paying or collecting the funds may include, but are not limited to: (a) Invoices for payment. (b) Transferring funds. (c) In the case of State School Fund payments, adjusting subsequent payments from the State School Fund to the school district, education service district or program. (d) In the case of other state funds, adjusting subsequent payments from those funds to the school district or education service district. (9) The school district or education service district may appeal the determination of the repayment period or method of payment made under section (7) of this rule to the department. The appeal must be received by the department within 60 calendar days of the date of the notice and must: (a) Be in writing; (b) Establish through auditable, verifiable data that the repayment period or method of payment established in section (6) of this rule creates extreme financial hardship; (c) Contain a statement that the information is certified as being accurate and complete; and (d) Be signed by the superintendent or other official with authority to make the appeal. (10) The school district or education service district may propose in the appeal an alternative time period for repayment of the funds. (11) Within 60 calendar days of receiving the appeal, the department shall notify in writing the school district or education service district of the department’s decision regarding the appeal. The department shall consider the following when making its determination of the time period for repayment of funds: (a) Applicable statutes, rules and policies; (b) Information from the audit or report and any recommendations made in the audit or report regarding the repayment period or method of payment; (c) Any other relevant information received by the department relating to the overpayment or underpayment of funds; (d) The financial situation of the school district or education service district; and (e) Prior determinations of the department on overpayment or underpayments of funds that involved the same statutes, rules or policies or similar facts and were made following the process prescribed by this rule. (12) After the time period for the appeal has expired under section (11) of this rule or after the department has notified the school district or education service district of the department’s decision regarding the appeal, the department shall proceed to pay or collect the funds. (13) A school district or education service district may request in writing at the same time as when the district files an appeal under section (4) or (9) of this rule: (a) A public meeting with the department. If the department grants the meeting, the department will follow statutes and rules that apply to public meetings. (b) A mediation with the department relating to the issues that are the subject of the appeal. If the department agrees to the mediation, the mediation will be conducted by a mediator approved by the department and the department will not pay more than half the cost of the mediation. (14)(a) The Superintendent of Public Instruction delegates to the department the authority to make corrections to distribution from the State School Fund for any year that is closed based on ORS 327.120 and the process established by this rule. (b) The superintendent shall specify which department staff has the authority to make the determinations required by this rule. The determinations required in this rule may only be made by the superintendent or deputy superintendent. (15) This rule first applies to the overpayment or underpayment of state funds based on information received by the department in an audit or other report on or after January 1, 2017. (16) This rule expires on, and shall not have effect after, June 30, 2026.