PROPOSED ORDER OF THE
STATE SUPERINTENDENT OF PUBLIC INSTRUCTION
CREATING PERMANENT RULES
The scope statement fo
r this rule, SS
081-15
, was published in
Register No.
716B
, on
August 31, 2015
, and approved by
State
Superintendent
Tony
Evers, on
September 15, 2015.
Pursuant to
Coyne v. Walker
, the Department of Public Instruction is not required to obtain the Governor’s approval for the statement of scope for this rule.
Coyne v. Walker
,
2015 WI App 21
,
361 Wis.2d 255
.
The
state superintendent of public instruction hereby proposes to
create PI 49
, relating to
the Special Needs Scholarship Program
.
_____________________________________________________________________________________
ANALYSIS BY THE DEPARTMENT OF PUBLIC INSTRUCTION
Statute interpreted:
s.
115.7915
, Stats.
Explanation of agency authority:
Under s.
115.7915 (10)
, Stats., the department is required to promulgate rules to implement and administer the Special
Needs Scholarship program, including rules relating to: (a) eligibility and participation of eligible schools; (b) calculation and distribution of scholarships; and (c) application and approval procedures for students and eligible schools.
Related statute or rule:
N/A
Plain language analysis:
2015 Wisconsin Act 55
created the Special Needs Scholarship Program. The effective date of the program is the 2016-17 school year. Section
115.7195 (10)
, Stats., requires the department to promulgate administrative rules related to student and school application processes. This proposed rule creates procedures for administering the special needs scholarship program, including procedures related to the eligibility and participation of schools, the calculation and distribution of state aid paid for special needs scholarships, and the application procedures for students and private schools.
Summary of, and comparison with, existing or proposed federal regulations:
N/A
Comparison with rules in adjacent states:
N/A
Summary of factual data and analytical methodologies:
The proposed rule is needed to implement the Special Needs Scholarship Program provided under s.
115.7915
, Stats., that was created by the 2015-17 budget,
2015 Wisconsin Act 55
.
Analysis and supporting documents used to determine effect on small business or in preparation of economic impact report:
N/A
Anticipated costs incurred by private sector:
N/A
Effect on small business:
The proposed rules will have no significant economic impact on small businesses, as defined in s.
227.114 (1) (a)
, Stats.
Agency contact person: (including email and telephone)
Carl Bryan
Budget and Policy Analyst
Wisconsin Department of Public Instruction
(608) 267-9127
Place where comments are to be submitted and deadline for submission:
Comments should be submitted to Carl Bryan, Department of Public Instruction, 125 S. Webster Street, P.O. Box 7841, Madison, WI 53707-7841 or at
Carl.Bryan@dpi.wi.gov
. The Department will publish a hearing notice in the
Administrative Register
which will provide information on the deadline for the submission of comments.
_____________________________________________________________________________________
SECTION 1.
PI 49 is created to read:
PI
49
.01
Purpose.
Any qualified pupil in grades kindergarten to 12 who meets the requirements under s.
115.7915
, Stats., may attend any school participating in the
special
needs scholarship program
under s.
115.7915
, Stats. This chapter establishes
eligibility and participation
requirements
for schools participating in the
special
needs scholarship program
under s.
115.7915
, Stats.,
the calculation and distribution of scholarships
under s.
115.7915
(4m)
, Stats.
, and the application and approval procedures for pupils and eligible schools under s.
115.7915
, Stats.
PI
49
.02
Definitions.
In this chapter:
PI 35.02(5m)
(
1
)
“
Classroom records
”
means teacher-recorded test scores, teacher-originated report cards and progress reports, and teacher-originated attendance records.
(
2
)
“Count date” means the third Friday in September and the second Friday in January except as provided under s.
121.05 (3m)
, Stats.
PI 35.02(7)
(
3
)
“
Department
”
means the Wisconsin department of public instruction.
(4
)
“
Full scholarship pupil
”
means a pupil
who
was determined to meet the
application
requirements of
s.
115.7915
, Stats., and
this
chapter
,
and is eligible for a payment under s.
115.7915 (4m) (a)
, Stats.
(
5
)
“Eligible education expenses”
mean
s all direct and indirect costs associated with a private school
’s
educational programming for pupils enrolled in grades kindergarten to 12
.
(
6
)
“Financial audit” means the audit of a school required under s.
115.7915 (6) (e)
, Stats.
PI 35.02(9m)
(
7
)
“
Generally accepted auditing standards
”
means the auditing standards prescribed by the accounting examining board under s.
Accy 1.202
.
(
8
)
“Official attendance records” means a listing of all kindergarten through grade 12 pupils enrolled in the school by grade level.
(
9
)
“Parent”
has the meaning given in s.
115.
76
(12)
, Stats.
(1
0
)
“
Partial scholarship pupil”
means a pupil who was determined to meet the application requirements of s.
115.7915
, Stats., and this chapter,
and is eligible for a payment under s.
115.7915 (4m) (e)
, Stats.
PI 35.02(15m)
(
1
1
)
"Professional standards" means both of the following:
PI 35.02(15m)(a)
(a)
Standards established by the accounting examining board under ch.
442
, Stats.
PI 35.02(15m)(b)
(b)
Standards issued by the comptroller general of the United States for engagements in which the use of generally accepted governmental auditing standards is required.
(
1
2
)
“Reserve” means the difference betwe
en the revenue received under s
.
11
5.7915
, Stats., and the amount of net eligible education expenses for
special
needs scholarship program
pupils.
(1
3
)
“Scholarship” means
a
payment under s.
115.7915 (4m)
, Stats.
PI 35.02(18)
PI 35.02(19)
(
1
4
)
“
School term
”
has the meaning given in s.
115.001 (12)
, Stats.
PI 35.02(20)
(
1
5
)
“
School year
”
has the meaning given in s.
115.001 (13)
, Stats.
PI 35.02(1m)
(1
6
)
“
Special needs scholarship program administrator" means the person signing the
notice of
intent to participate form
under s.
PI 49.03 (3)
.
PI 35.02(5)
(
17
)
“
Special needs scholarship program
”
means the program established under s.
115.7915
, Stats.
PI 35.02(23)
(
1
8
)
“
State superintendent
”
means the state superintendent of public instruction.
PI 35.03
PI
49
.03
School requirements.
(1)
PRIVATE SCHOOL. A school participating in the
special
needs scholarship program
shall be a private school as defined in s.
11
5.001
(3r)
, Stats.
PI 35.03(1)
(2)
SPECIAL
NEEDS SCHOLARSHIP PROGRAM
ADMINISTRATOR. The
special
needs scholarship program
administrator shall be one of the following:
(a)
A
n
owner of the school
.
(b)
PI 35.02(1m)(b)
A
n
individual appointed as the school
’s
special
needs scholarship program
administrator by the governing body of the organization operating the school.
(3)
NOTICE OF INTENT TO PARTICIPATE.
Annually by
March
1
, a school that intends to participate in the special
needs scholarship program
in the following school year shall submit to the department a notice of intent to participate. The notice shall include
all of
the following:
(a)
Down
Up
PI 35.03(1)(b)
The number of spaces the school has available for
new applicants to the program
.
(
b
)
The number of
full scholarship pupil
s
and
partial scholarship pupil
s
that will continue to participate in the
special
needs scholarship program
. The school
shall
include all
special
needs scholarship program
pupils on the 2
nd
Friday in January count report
submitted
under s.
PI 49.06 (5)
unless the school has received
written correspondence
from the parent withdrawing the pupil from the
special needs scholarship
program.
The
school may only identify
a
pupil as
a
partial scholarship pupil
if the
pupil
’s
individualized education program team has determined that the
pupil
is
no longer a child with a
disability
as specified under s.
115.7915 (4m) (e) 1.
, Stats.
, prior to the date the school
submits
its notice of
intent to participate
to the department
.
(
c
) The school
’s
special education program profile required under s.
115.7915 (6) (g)
, Stats.
(
d
)
The signature and mailing address of the
special
needs scholarship program
administrator.
(e)
The school
’s
agreement that it will use the plan established by the department for ensuring that it will select pupils on a random basis as required under s.
115.7915 (3) (b)
, Stats., from a new pool of applicants each school year. The school may give preference to siblings of pupils who
are
attend
ing
the school
at the time the pupil applies
.
Note:
The notice of intent to participate
and special education program profile
may be obtained at no charge from the Wisconsin department of public instruction
’s
webpage at
http://sms.dpi.wi.gov/
.
(4)
BACKGROUND CHECKS
. The school shall conduct
a
criminal background check prior to employing any individual
at
the school. The school shall conduct the criminal background check for all employees
, including contracted individuals
.
The school
may
not employ
any of
the following individuals:
(a) Individuals who have engaged in immoral conduct as defined under
s.
115.31 (1) (c)
, Stats.
(b) Individuals who
are
not eligible for a teaching license under
s.
118.19 (4)
, Stats.
(5)
CERTIFICATE OF OCCUPANCY.
(a) By May 1
prior to
the first year a school participates in the special
needs scholarship program
, a school shall
submit
one of the following to the department for
each of the
locations of the school:
1. A
certificate of occupancy
issued by the municipality within which the
building
is located.
2. If the municipality within which the
building
is located does not issue certificates of occupancy, a certificate of occupancy issued by the local or regional governmental unit with authority to issue certificates of occupancy.
3. A letter or form
from the municipality within which the
building
is located that explains that the municipality does not issue certificates of occupancy.
(b)
If
a
school moves to a new location or adds a new location, the school shall submit
to the department one of the following
before
pupils attend
the new location
:
1. A certificate of occupancy issued by the municipality within which the
building
is located.
2. If the municipality within which the
building
is located does not issue certificates of occupancy, a certificate of occupancy issued by the local or regional governmental unit with authority to issue certificates of occupancy.
3. A letter or form
from the municipality within which the
building
is located that explains that the municipality does not issue certificates of occupancy.
(c)
A temporary certificate of occupancy does not meet the requirement of this subsection.
(6)
Accreditation Requirements.
Annually by August 1, a school participating in the special
needs scholarship program
shall provide to the department a letter from the school
’s
accrediting agency stating
that
the school is accredited
as of the date of the letter.
The letter shall
meet
all of
the following requirements:
(a) The letter shall include the following information:
1. The school
’s
name.
2. The school
’s
address for each location included in the accreditation.
3. The grades accredited.
4. A statement that the school is accredited as of the date of the letter.
(b) The letter shall be dated no earlier than the beginning of the school year.
(c) The letter shall be signed by an authorized member of the accrediting agency.
PI 49.
04 Financial information and surety bond
.
(1)
BOND REQUIREMENTS.
The department shall
calculate the
amount of
scholarships
expected to be received by
each school based on
the nu
mber of pupils included in
a school
’s
notice of
i
ntent to participate
submitted
under s.
PI 49.03 (3)
. If
a school expects to receive
at least $50,000
in scholarships
, the school shall
do one of the following
:
(a)
Annually by June 1 prior to the school year, p
rovide
a bond payable to the state of Wisconsin equal to 25
percent
of the total amo
unt of
scholarships
expected to be received by the school during the school year
.
(b)
Annually by March 1 prior to the school year,
submit
financial information
to the department
that demonstrates
that the school
has the ability
to pay an amount equal to the
total amount of
scholarships
expected to be received by the school during the school year, including all of the following:
1.
A budget and cash flow report, on a form provided by the department, for the ensuing school year
that
contains all of the following:
a. A
nticipated enrollments for all pupils enrolled in the school
.
b. Anticipated enrollment
s
for
special
needs scholarship program
pupils
.
c. E
stimated total revenues and costs
.
d. E
stimated
special needs scholarship program
revenues and costs
.
e
. A
schedule of anticipated beginning and ending net program assets
.
2.
A statement
of
whether the school has
any past due amounts, interest
,
or penalties due to the U.S. internal revenue service,
the
Wisconsin department of workforce development, or
the
Wisconsin department of revenue
.
An
amount must be
disclosed
even if it is
in dispute.
If
a
school has past due amounts
, interest, or penalties due
to a government entity,
the school
shall
do
all of the following:
a.
Disclose to the department t
he outstanding amount owed
.
b.
Submit to the department
statements or other correspondence from the government entity stating the amount the
government
entity claims is due, the amount in dispute, and nature of the amount due.
3.
The most recent balance sheet and income statement for the legal entity of the school.
4.
Bank statements for all cash and investment accounts
included in
the balance sheet
required under subd. 3.
5.
Any o
ther information required by the department to determine the financial position of the school.
Note:
The budget and cash flow report may be obtained at no charge from the Wisconsin department of public instruction
’s
webpage at
http://sms.dpi.wi.gov/
.
(
2
)
FINANCIAL INFORMATION REVIEW.
The department shall review the financial information provided by
a
school
under
sub. (
1
)
(b)
and
any
other information available to the department to determine if the school
meets the requirements under
s.
115.7915 (6) (f) 2.
, Stats
.
In making a determination, t
he department shall remove the special
needs scholarship program
revenue from the
school
’s
budget to determine if any of the following indicators exist
:
PI 35.048(1)(a)
(a)
The school has inadequate revenues and other financial resources to fund current operations
in the budget submitted under sub. (
1
)
(b)
.
(
PI 35.048(1)(b)
(b)
The school has n
egative cash flows in any month in the budget submitted under sub. (
1
)
(b)
.
(c)
The school has a negative net asset balance
in the financial audit or in the budget submitted under sub. (
1
)
(b)
.
(d) The school has a negative net current obligation in its financial audit or in the budget submitted under sub. (
1
)
(b)
. The net current obligation shall be calculated as the current assets less the current liabilities.
(e)
The school has a net operating
loss in the financial audit or in the budget submitted under sub. (
1
)
(b)
.
(f)
The audit opinion statement included in the financial audit contains a qualification as to the school
’s
ability to continue as a going concern.
PI 35.048(1)(c)
(g)
The school failed to make payments
to vendors as required by written agreement or
, if there is no written agreement, within 90 days of invoice or payment request
.
The department shall consider this
an indicator even if the school has entered into a payment plan with the vendor to pay the past due amount.
(h)
PI 35.048(1)(d)
The
school
has past due amounts with government agencies, including payment of employee withholdings
.
The department shall consider this
an indicator even if the school has entered into a payment plan with the government agency to pay the past due amount.
(i) The school failed to pay its employees as required by
ch
.
109
, Stats.,
or written agreement with the employee.
(
3
)
INSUFFICIENT FINANCIAL INFORMATION.
The department shall determine
that a school does not
meet the requirements under
s.
115.7915 (6) (f) 2.
, Stats.,
if any of the indicators under sub. (2) exist.
A school that does not meet the requirements under
s.
115.7915 (6) (f) 2.
, Stats.,
shall
provide a surety bond that meets the requirement
s under
sub. (1) (a) by June 1 prior to the school year.
(4)
BOND CALL PROVISIONS.
The
department may call a
bond
submitted by a school under this section
for any of the following
reasons
:
(a)
The school fail
ed
to timely file the
financial audit or the
reports required under s.
PI 49.07 (1)
.
(b)
The school fail
ed
to timely refund
the department
any amount certified due from the school under s.
PI 49.07 (4)
.
(c)
The school fail
ed
to timely
refund the department
the reserve balance as prescribed under s.
PI 49.09
.
(d)
The school
failed to timely refund the department any other money owed
to the department for any other reason under this chapter or s.
115.7915
, Stats.
PI
49
.05
Pupil application requirements.
(
1
)
RESIDENCY ELIGIBILITY. A school shall obtain one of the
residency
documents specified by the department
from
a
parent
on the application
that shows the applicant resides at the address on the application at the time of application. The residency document shall be
dated no earlier than three months prior to the start of the open application period in which an applicant applies. If a school receives a lease agreement as
a
residency document, the lease term shall include the date the application was received.
The document shall contain the name
of the parent on the application
and match the address on the application.
(
2
)
ADDRESS VERIFICATION.
A
school shall verify that the address on
a pupil
’s
application is in the Wisconsin school district listed on the application using the state of Wisconsin
’s
Statewide Voter Registration System or another manner permitted by the department.
(3)
APPLICATION RECEIPT.
A
school may only receive an application during an open application period
on the
notice of
intent to participate submitted under s.
PI 49.03 (3)
. The school shall receive all documentation, including the d
ocumentation required under sub
. (
1
), during the same open application period in which the school receives the application.
(
4
)
EXPLANATION OF RIGHTS.
When
an
a
pplicant
applies
to a school
, the school shall provide the
applicant
’s
parent with
all of
the
following:
(a)
An
explanation of the rights of a
child
with a disability
and his or her parent
in a public school compared to
the
rights of a
child
with a disability
and his or her parent
at a school participating in the special needs scholarship program
on a
document
provided by the department under s.
115.7915 (4) (a)
1.
, Stats.
(b) The
profile of the school
’s
special education program provided under
s.
PI 49.03 (3) (
c
)
.
(5)
CURRENT INDIVIDUALIZED EDUCATION PROGRAM OR SERVICES PLAN.
A
school shall ensure the pupil has an individual
ized
education program or services plan that is in effect
at the time of application
.
(
6
)
INELIGIBLE APPLICATIONS. An application shall be determined ineligible if
any of the following apply:
(a)
The application
does not comply with this section
or s.
115.7915 (2)
, Stats.,
and a correction of the application under sub. (
7
) is not allowable.
(b) The
application contains contradictory information.
(
7
)
CORRECTING APPLICATIONS. A school shall correct an application in the
following
circumstances and manner
:
(a)
The school shall correct an application by December 15 for applications received during an open application period prior to the third Friday in September and by May 1 for applications received during an open application period after the third Friday in September. If the school does not correct the application as required in this subsection by the specified date, the application is ineligible.
(b) The school
shall
obtain
additional
residency documentation
after the open applic
ation period in which the application was received that meets the requirements in sub. (1)
if
all of the following apply:
1.
T
he school received
residency
documentation
from the parent
on the application
during the open application period in which the application was received
and the residency documentation contained an
address
and
the name of the parent
on the application
, even if the parent
’s
name is misspelled or is a different legal name for the parent.
2.
T
he
additional residency documentation is in the parent
’s
name, contains the
applicant
’s
correct address, and
meets the requirements in sub. (
2
)
.
Note:
The application may be obtained at no charge from the Wisconsin department of public instruction
’s
webpage at
http://sms.dpi.wi.gov/
.
PI
49
.06
School year enrollment.
PI 35.04(3)
(1)
PI 35.04(1)
APPLICATION ELIGIBILITY DETERMINATION. A school shall make application eligibility determinations based on the requirements
under
s.
PI 49.05
and s.
115.7915 (2)
, Stats
.
A
school shall make eligibility determination
s
and report
accepted
applications to the department prior to the next
open
application period or prior to the next count date, whichever occurs first.
A
school
shall
notify each applicant in writing whether the school accepted or denied the applicant
’s
application.
PI 35.04(4)
(
2
)
DOCUMENT
RETENTION.
PI 35.04(4)(a)
A
school shall retain
all of
the following records for at least 5 years from the end of the school year in which the pupil
applies or 5 years after the pupil
no longer attends the school
, whichever occurs later,
unless the department or a law enforcement agency requires the school to retain the records for a longer period:
(a) Copies of pupil paper applications
, individualized educ
ation program
s
or services plan
s
,
and supporting residency documentation required under s.
PI
49
.05 (
1
)
for all accepted and non-accepted
special
needs scholarship program
pupils who have submitted applications to the school.
(b) Copies of all notices to a pupil or pupil
’s
parent regarding acceptance and non-acceptance.
(c) Copies of all docu
ments required under s.
PI 49.12
.
(
3
)
SIMULTANEOUS
LY ENROLLED PUPIL.
PI 35.04(4)(b)A
A pupil participating in
the special
needs scholarship program
may not be simultaneously enrolled, in or out of Wisconsin, in another private school, a home-based private educational program, a charter school under s.
118.40 (2r)
or
(2x)
, Stats., or a public school district and receive a
scholarship
.
(
4
)
SEPTEMBER 1 APPLICATION AND CLASS LIST SUBMISSION. Annually by September 1, a school shall submit to the department in the online application system or other manner specified by the department all of the following:
(a)
A list of
pupils
participat
ing
in the special
needs scholarship program
at the school
that identifies if each pupil
was determined to no longer be a child with a disability under s.
115.7915
(4m) (e)
1
, Stats., in a previous year
.
(
b
)
A class list of all pupils participating in the special
needs scholarship program
enrolled in the school that includes the grade level for each pupil.
The class list may not include p
upils that have withdrawn from the school
.
(c) The
school
’s
start and end date for the current school year.
PI 35.04(6)
(
5
)
APPLICATION SUBMISSION AND PUPIL COUNT REPORTS. Annually by October 1 and February 1, a school shall submit to the department, using the online application system or other manner specified by the department, all of the following:
PI 35.04(6)(a)
(a)
A pupil count report stating
all of the following:
1.
T
he grade of each pupil participating in
the
special
needs scholarship program
on the immediately preceding count date
.
2.
W
hether each
pupil meets the requirements
under
sub. (
6
)
.
3.
W
hether each pupil is a
full scholarship pupil
or
partial scholarship pupil
.
4.
T
he total number of pupils in the school on the immediately preceding count date that meet the requirements
under
sub. (
6
).
(b) As part of the pupil count report for the third Friday in September, a school
shall do all of the following
for pupils that participated in the special
needs scholarship program
in the previous school year
:
1.
Obtain residency documentation for the
pupil
’s
address
on the third Friday in September
that meets the requirements of s.
PI
49
.05 (
1
)
and is dated between the third Friday in August and October 1.
2.
Determine the resident school district for the new address as prescribed under
s.
PI
49
.05 (
2
)
.
PI 35.04(7)
(
6
)
COUNT REQUIREMENTS.
PI 35.04(7)(a)
A school may include a pupil on its pupil count report under sub. (
5
) (a) only if one of
the
following
applies
:
Down
Up
PI 35.04(7)(a)1.
(a)
The
pupil
is
in attendance for instruction on the count date.
(b)
PI 35.04(7)(a)2.
The pupil
is
absent on the count date but attended the school for instruction at least one day during the school term prior to the count date and at least one day after the count date, and the pupil was not enrolled in a
nother
school in or out of Wisconsin, including another private school, a home-based educational program, a charter school under s.
118.40 (2r)
or
(2x)
, Stats., or a public school district, during the period of absence from the school.
PI
49
.07
Enrollment audits.
PI 35.04(9)(a)
(1)
REPORT COMPLETION AND SUBMISSION. A school shall engage an auditor to complete the enrollment audit for the school
’s
enrollment reported under s.
PI
49
.06 (
5
)
. The auditor shall compile the enrollment audit using agreed upon procedures that identify ineligible pupils for whom the school has received payment under s.
115.7915 (4m)
, Stats., and additional eligible
pupils qualifying the school for a payment. The school shall submit its third Friday in September enrollment audit to the department by December
15. The school shall submit its second Friday in January enrollment audit to the department by May 1.
PI 35.04(9)(b)
(2)
SCHOOL RECORDS. A school shall provide
its
auditor with the official attendance records and the original classroom records for the auditor
’s
use in conducting the enrollment audit. The official attendance records shall identify pupils participating in the
special
needs scholarship program
.
PI 35.04(9)(c)
PI 35.04(9)(d)
(3)
REQUIRED PROCEDURES.
An
audit
or shall complete the procedures specified in the department
’s
audit guide, including all of the following:
PI 35.04(9)(d)8.
PI 35.04(9)(d)7.
(a)
Determine the school
’s
process for preparing attendance records and accept
ing and reviewing applications.
(b)
Verify that any 4-year-old kindergarten program under s.
121.004 (7) (cm)
, Stats., includes at least 87.5 hours of 4-year-old kindergarten outreach activities as documented by teacher logs.
(c)
Complete a fraud risk assessment.
(d)
If the school uses a
student information system
, c
omplete testing of the
system
.
If the auditor does not use the test plan provided by the department, the auditor shall annually submit the plan to the department
for approval
.
PI 35.04(9)(d)1.
(
e
)
Verify that the total
number of
pupils participating in the
special
needs scholarship program
on the official attendance records
match the total number of pupils
participating in the special needs scholarship program
based on the original classroom records
for each
grade.
(f) V
erify that the total
number of
pupils attending the school on the official attendance records match the total number of pupils based on the original classroom records for each grade.
PI 35.04(9)(d)3.
(
g
)
Verify the enrollment for all
special
needs scholarship program
pupils reported on the pupil count report under s.
PI
49
.06 (
5
) (a)
using
the school
’s
official attendance records.
(
h
)
Verify that all
special
needs scholarship program
pupils the school includes on its official attendance records are also included on the original classroom records. Also verify that all
special
needs scholarship program
pupils the school includes on the school
’s
original classroom records are included on the official attendance records.
(
i
)
Verify that
the
special
needs scholarship program
pupils meet the requirements of s.
PI
49
.06 (
6
)
.
(
j
)
Verify
that the school did not receive a payment under s.
115.7915 (4m)
, Stats., for any of the following:
1.
Pupils for whom the school is receiving a childcare payment for all day care.
2.
Pupils who are enrolled in a partnership or contract school of a public school district.
3.
Pupils participating in a program under s
s
.
118.60
or
119.23
, Stats.
(
k
)
PI 35.04(9)(d)5.
PI 35.04(9)(d)6.
Select a sample of at least 60 pupils not participating in the
special
needs scholarship program
from original classroom records and verify the school included the selected pupils in the pupil count report under s.
PI
49
.06 (
5
)
. The sample shall include pupils from each classroom. If the pupils are in different classrooms during the day, the auditor may select one period and select pupils from each classroom for that period. If the auditor identifies an auditing exception, the auditor shall increase the sample size in increments of 60 pupils until the auditor finds no additional exceptions or until the auditor verifies that all pupils have been properly included in reported enrollments. If the school has an enrollment of fewer than 60 pupils who did not participate in the
special
needs scholarship program
, the auditor shall examine records for all pupils
who did not participate in the special needs scholarship program
.
PI 35.04(9)(d)2.
(
L
)
Reconcile the enrollment the school reported to the department under s.
115.30 (3)
, Stats., with the official attendance records of the school.
PI 35.04(9)(d)4.
(
m
)
Verify that the applications for pupils participating in the
special
needs scholarship program
meet the requirements of s.
PI
49
.05
and s.
115.7915 (2)
, Stats
. If an applicant
participated in the special
needs scholarship program
in the previous year
, the auditor shall verify that the residency documentation obtained pursuant to s.
PI
49
.06 (
5
) (b)
meets the requirements of that paragraph.
(
n
)
Verify
that the employees of the school meet the requirements under s.
PI 49.
03 (4)
.
(
o
)
PI 35.04(9)(d)9.
Perform other auditing procedures as agreed upon by the auditor and the department.
(4)
PI 35.04(9)(f)
CERTIFICATIONS.
(a)
Upon review of the enrollment audits, the department shall certify an amount due from a school for payments made to the school for ineligible pupils or an amount due to the school for additional eligible pupils. If a school fails to provide an enrollment audit, the department shall determine that all
special
needs scholarship program
pupils are ineligible.
(
b
) The school shall refund to the department the amount certified as due to the department. If the school is currently eligible to receive
special
needs scholarship program
payments, the department shall reduce the payments made under s.
115.7915
(4m)
, Stats., by the amount owed. If the school is not currently eligible to receive
special
needs scholarship program
payments, the school shall refund the department within 30 days of the date of the certification letter.
(
c
) The department shall pay any additional amount due
to
the school for
eligible
pupils within 60 days of the date of the certification letter.
Note:
The Enrollment Audit may be obtained at no charge from the Wisconsin department of public instruction
’s
webpage at
http://sms.dpi.wi.gov/
.
PI 35.045
PI 49
.0
8
PI 35.045
Financial
a
udit
.
(1)
FINANCIAL AUDIT REQUIREMENT. Annually by October 15,
a
school shall provide a financial audit and financial audit supplemental schedule to the department. The financial audit shall be prepared in accordance with generally
accepted
accounting
principles
and shall comply with all of the following
:
(a) Except as provided under par. (b), the financial audit shall include
2
year comparative financial statements containing all of the statements r
equired by generally accepted accounting principles, including a
statement
of
financial position
, a
statement
of
activities
and a
statement
of
cash flows
.
(b) The first year a school completes a financial audit for the
special needs scholarship program
, the
s
tatement of
a
ctivities and
s
tatement of
c
ash
f
lows may only include the current school year.
(c) The financial audit shall include either the school-only balances and activity or shall be prepared at the consolidated level as permitted by generally accepted accounting principles.
(d) A school may provide a financial audit that includes a modified audit opinion due to fixed assets purchased in previous years not being included in the financial audit. A
financial audit that includes a modified audit opinion for any other reason does not meet the requirements under s.
115.7915 (6) (e)
, Stats.,
and this chapter
unless the modification is approved by the department.
PI 35.046(2)
(2)
COMPLIANCE WITH
PROFESSIONAL STANDARDS
.
An
auditor engaged by
a
school to provide the audit opinion in this section shall comply with
professional standards
,
including
all of
the following:
(a)
The auditor shall develop written audit programs identifying the steps and procedures to be followed in conducting the audit, including establishing the planning materiality that the auditor will use for the audit.
(b)
The auditor shall trace all entries on the financial audit to the trial balance provided by the school.
(c)
The auditor shall obtain sufficient appropriate audit evidence to conclude that the financial statements do not contain misstatements the effect of which, when aggregated with misstatements in other accounts and transactions, exceeds the planning materiality and result in a material misstatement in the financial statements or in the school
’s
net eligible education expenses. The auditor shall determine sufficient appropriate audit evidence based on the requirements of the American Institute of Certified Public Accountants.
PI 4
9
.
09
Financial
a
udit
s
upplemental
s
chedule
.
PI 35.045(2)
(1)
ELIGIBLE EDUCATION EXPENSES. The eligible education expenses included in the financial audit supplement schedule shall comply with all of the following:
(a)
E
ligible
education expenses may only include those expenses that already have or will result in a cash disbursement
.
(b)
Eligible education expenses may only include expenses that
are in
the
statement
of
activities
, except for
the cost of
land
. The amount that the school paid for land
shall
be included in the
first
year the land is used for educational programming.
(c)
An expense may only be included as an eligible education expense one time.
(d)
The following may not be included in kindergarten through grade 12 eligible education expenses:
1.
Contributed services, capital assets
,
or goods.
2.
Scholarship awards and financial support for pupils to attend the private school, including payments to parents or others on behalf of pupils.
3.
Daycare expenses except
expenses
for before or after school care
for
kindergarten through grade 12
pupils
that are
enrolled in educational programming
at the school
.
(2)
AUDITOR REVIEW OF ELIGIBLE EDUCATION EXPENSES.
An
auditor shall ensure
the eligible education expenses
a
school included in the supplemental schedule
mply
wit
h the requirements in sub. (1).
(3)
SUPPLEMENTAL SCHEDULE CALCULATIONS.
The supplemental schedule shall calculate
all of
the follow
ing
:
(a) Eligible education expenses exclusively for special needs scholarship program pupils.
(b)
Net eligible education expenses
for all pupils
as
follows:
1.
Determine t
he amount of e
ligible education expenses
, excluding eligible education expenses in par. (a)
.
2. Subtract
government assistance revenues.
(
c
)
The net eligible education expenses for
special needs scholarship program
pupils as
follows:
1.
Calculate
the percentage of pupils at the school participating
in the
special needs scholarship program as the special needs scholarship program pupils compared to the all pupils. The pupils at the school shall be determined based on the average of the pupils in the enrollment audits under s.
PI 49.07
.
2.
Multiply
t
he
amount
calculated
under
par.
(b)
by
the percentage under subd. 1.
3
. Add
the eligible education expenses in par. (a).
(
d
) The reserve balance as
follows:
1. Determine t
he
total
scholarships
received
.
2. Add the
prior year reserve balance
, if any.
3.
Subtract
the net eligible education expenses for
special needs program pupils
determined under par.
(c)
.
(
e
)
The school
’s
cash and investment balance that must be maintained as
follows:
1. Determine the
sum of
any remaining depreciation on fixed assets used by the school
and any land purchases
that have not yet
been included in eligible cost under sub. (1) (b)
.
2. Subtract the amount
under
subd. 1. from the
amount under
par. (d).
(
4
)
MAINTAIN RESERVE BALANCE.
The school shall maintain the reserve balance, if positive, for future eligible education expenses for
special
needs scholarship program
pupils. The school
’s
cash and investment balance shall be at least as much as
the
amount calculated
under
sub. (3) (e)
, if positive.
If the school is
also
participating in a program under
s
.
118.60
or
119.23
, Stats.
, the cash and investment balance shall be at least as much as the total required under this chapter,
and ch
s.
PI 35
and
48
.
(
5
)
FINAL FINANCIAL AUDIT.
If a school ceases to participate or is barred from participation in
the
special
needs scholarship program
under s.
115.7915
, Stats., it shall submit to the department the financial audit for the final school year in which it participated. If a school fails to submit the financial audit, the
department shall determine that the
school
’s
net eligible education expenses for the year
are
zero for purposes of determining the school
’s
reserve balance.
(
6
)
REFUND OF THE RESERVE.
If a school ceases to participate or is barred from participating in
the
special
needs scholarship program
under s.
115.7915
, Stats., and the
school
’s
reserve is positive, the school shall refund the reserve balance to the department. The school shall make the refund within 30 days of the date of the closure payment letter sent to the school by the department.
PI 49
.1
0
School financial requirements.
PI 35.046(1)
(1)
ENGAGEMENT LETTER. A school shall have a written engagement letter with each auditor providing services required by this chapter. The school or auditor shall provide a copy of the engagement letter to the department upon request. The written engagement letter shall contain all of the following:
PI 35.046(1)(b)1.
(a)
A statement that the auditor shall comply with generally accepted auditing standards and the requirements of this chapter.
(b) A statement
that the auditor shall comply with generally accepted governmental auditing standards if other governmental agencies providing funds to the school require it.
(
c
)
PI 35.046(1)(b)2.
The responsibilities of the school and the auditor in meeting the requirements of this chapter.
PI 35.046(1)(b)3.
(
d
)
The services the auditor provides to the school that are in addition to those audit and attestation services
required under
this chapter.
PI 35.046(1)(b)4.
(
e
)
The auditor
’s
acknowledgement that the department will rely on the auditor
’s
work to fulfill the department
’s
responsibilities under s.
115.7915
, Stats., and this chapter.
PI 35.046(1)(b)5.
(
f
)
The auditor
’s
compensation for the services the auditor provides to the school.
PI 35.046(1)(c)
(2)
FINANCIAL ACCOUNTING SYSTEM.
A school shall use a double entry financial accounting system
organized in a manner that enable
s
preparation of the
financial audit
.
A school shall balance the financial accounting system and provide the auditor with a trial balance of
the
account balances.
(3)
ADJUSTING ENTRIES.
A
PI 35.046(1)(e)AAA
school shall approve
adjusting entries
recommend
ed
by
an
auditor
before the entries are
recorded in the school
’s
financial accounting
system
.
PI 35.046(1)(f)
(4)
RECORDS RETENTION. A school shall retain all financial and pupil records relating to
the enrollment audits under s.
PI 49.07
and the financial audit
for at least 5 years from the due date of the financial audit for each school year
, unless
the department or a law enforcement agency requests
that
the school retain the records for more than 5 years.
(5)
PI 35.046(1)(g)
RECORDS AVAILABILITY.
A school shall furnish all financial and pupil records the auditor considers necessary to provide the audit opinion or agreed upon procedure reports.
Upon request by the department, a
school shall provide the department access to the records referenced in the auditor
’s
working papers and provide copies of such records to the department.
(6)
SCHOOL RESPONSIBILITY. An auditor
’s
failure to completely or properly perform the responsibilities set forth in s.
115.7915
, Stats., or this chapter is not a defense to any determination the department makes that there is an amount due from a school or to a school
under
s.
49.07 (4)
or
PI 49.09 (
6
)
.
PI 35.05(2)(c)
PI 35.05(2)(d)
(7)
AUDITOR BAR. A school participating in the
special
needs scholarship program
may not engage an auditor who fails to timely and properly fulfill the auditing and reporting requirements of this chapter
or
s.
115.7915
,
Stats., until such time as the auditor provides evidence acceptable to the department that the auditor has made procedural changes and has successfully completed professional development training that enables the auditor to comply with the requirements of this chapter.
PI 35.046(4)
PI 49
.11
Auditor requirements
.
(1)
INDEPENDENCE REQUIREMENTS.
An auditor engaged by a school shall comply with the standards of the American Institute of Certified Public Accountants, including all of following:
(a)
An
(a) TheTheTheAnA
auditor shall comply with the requirements of s.
Accy 1.101
.
PI 35.046(4)(a)
(b)
An
auditor shall obtain the school
’s
trial balance if completing compilation or review services.
PI 35.046(4)(b)
(c)
Except as provided in par. (d), an auditor may not post or prepare for posting typical reoccurring financial transactions to the school
’s
general ledger, including cash receipts and disbursements, invoices or billings for services, billings from vendors and suppliers, and payroll activity.
PI 35.046(4)(c)
(d)
An
auditor shall obtain written approval of the school
’s
management prior to posting adjusting, correcting, and closing journal entries to the school
’s
general ledger.
An
auditor
’s
working papers shall document evidence of management approval for all such entries resulting from a financial statement compilation, review, or audit.
PI 35.046(4)(d)
(e)
If
an
auditor assists in the preparation of
a school
’s
budget, the auditor shall
do all of the following:
1. Comply
with s.
Accy 1.201
, regarding forecasts.
2
.
I
dentify that such assistance was provided
,
if required by the department.
(2)
INQUIRIES. An auditor shall promptly respond to inquiries or requests made by the department. The auditor shall notify the school of any inquiries or requests made
by the department
and the auditor
’s
response.
PI 35.05(2)
(3)
WORKPAPER RETENTION.
An
auditor shall retain working papers relating to
the enrollment audits under s.
PI 49.07
and the financial audit
for at least 5 years from the due date of the financial audit for each school year
, unless
the department or a law enforcement agency requests
that
the auditor retain working papers for more than 5 years.
(3)
(4)
WORKPAPER
REVIEW. An auditor shall permit the department to review audit working papers prepared in support of the enrollment audits under s.
PI 4
9.07
and
the financial audit.
An
auditor shall promptly provide copies of working papers the department requests.
(5)
AUDITOR PEER REVIEW REPORTS. An auditor completing any of the audits and agreed upon procedure reports under s.
115.7915
, Stats., and this chapter shall submit the auditor
’s
peer review to the department within 30 days of report issuance.
(6)
LICENSE REQUIREMENT.
An
auditor completing the audits and agreed upon procedure reports under this
chapter
or s.
115.7915
, Stats., shall be
a firm licensed as a certified public accounting firm by the accounting examining board under c
h.
442
, Stats.
An
individual auditor who accepts the engagement shall be a licensed certified public accountant
.
(7)
AUDITOR BAR.
PI 35.05(2)(c)
PI 35.05(2)(d)
An auditor who fails to timely and properly fulfill the auditing and reporting requirements of this chapter or
s.
115.7915
,
Stats., shall not complete accounting, auditing, or other reporting requirements for any schools participating in the
special
needs scholarship program
until such time as the auditor submits to the department evidence acceptable to the department that the auditor has made procedural changes to the manner in which the auditor conducts an audit and has successfully completed professional development training that will enable the auditor to comply with the requirements of this chapter and
s.
115.7915
,
Stats.
PI 49.12
E
ducation
s
ervices
.
(1)
RECORD OF IMPLEMENTATION AND PROGRESS.
Annually by June 15,
a
school shall provide a record of implementation and progress form required under s.
115.7915 (6) (
h
) 2.
, Stats., for each
full scholarship pupil
participating in the
special
needs scholarship program
to the school board of
the
pupil
’s
resident school district.
Note:
The record of implementation and progress form may be obtained at no charge from the Wisconsin department of public instruction
’s
webpage at
http://sms.dpi.wi.gov/
(2)
QUARTERLY REPORTING.
A
school shall report to the parent of a
pupil
participating in the special
needs scholarship program
on the pupil
’s
academic progress
at least quarterly.
PI 35.05
PI
49
.1
3
State aid payment calculation.
PI 35.05(3)
The state superintendent shall make
the
payment
s
under
s.
115.7915 (4m)
, Stats.
, to schools participating in the special needs scholarship program.
PI 35.05(3)(b)
No aid may be paid to a school in the special
needs scholarship program
unless the school has met the requirements in this
chapter
and in s.
115.7915
, Stats.
The state superintendent shall determine the full-time equivalent
under this section
based on the requirements
under
s.
PI 35.06 (6)
.
The
state superintendent
shall make the payments as follows
:
PI 35.05(3)(b)1.
(1)
SEPTEMBER PAYMENT.
The
September payment shall be based on the
number of special
needs scholarship program
pupils at the school
reported
under s.
PI 49.06 (4)
.
The
state superintendent
shall calculate the September payment
as
25
percent
times
the total of
all of
the following:
(a)
(a0(
T
he number of
full scholarship pupil
s multiplied
by the
per pupil
payment amount
determined under s.
115.7915 (4m)
(
a
)
, Stats.
(b)
The full-time equivalent for
partial scholarship pupil
s
, as reported under s.
PI 49.06 (
4
)
(
a
)
, multiplied by the
per pupil
payment amount
determined under s.
115.7915 (4m) (e)
, Stats.
PI 35.05(3)(b)2.
(2)
NOVEMBER PAYMENT.
a.
The November payment shall be based on the number of special
needs scholarship program
pupils
reported
by October 1
in the school
’s
pupil count report required
under s.
PI 49.06 (5)
(a)
, unless a pupil is determined ineligible by the department
. The
state superintendent
shall calculate the November pa
yment as 50
percent
times the amount owed for eligible pupils
less the September payment received.
The
state superintendent
shall calculate the
amount owed for eligible pupils as the total of
all of
the following:
(a)
(a0(
The
number of
full scholarship pupil
s
multiplied by the
per pupil
payment amount
determined under s.
115.7915 (4m)
(a)
, Stats.
(b)
The full-time equivalent for
partial scholarship pupil
s, as reported under s.
PI 49.06 (4) (a)
, multiplied by the
per pupil
payment amount
determined under s.
115.7915 (4m) (e)
, Stats.
PI 35.05(3)(b)3.(c)(
(3)
FEBRUARY
AND MAY
PAYMENT
S
.
The February
payment
and May payment shall
each
be based on the number of special
needs scholarship program
pupils
reported
by
February
1
in the school
’s
pupil count report required
under s.
PI 49.06 (5)
(a)
, unless a pupil is determined ineligible by the
department. The
state superintendent
shall calculate the February and May payment
s
as 25
percent
times the total of
all of
the following:
(a)
(a0(
The number of
full scholarship pupil
s
multiplied by the
per pupil payment amount
determined under s.
115.7915 (4m)
(a)
, Stats.
(b)
The full-time equivalent for
partial scholarship pupil
s, as reported under s.
PI 49.06 (4) (a)
, multiplied by the
per pupil payment amount
determined under s.
115.7915 (4m) (e)
, Stats.
(
4
)
CEASED INSTRUCTION.
The
state superintendent
may not make a September, November, or February payment to a school that has ceased instruction prior to the payment date.
(
5
)
END PRIOR TO SCHOOL TERM.
The
state superintendent
may not make a May payment to a school that has ceased instruction prior to the end of its scheduled school term.
(5) (
PI 4
9
.
14
Department
authority.
PI 35.05(2)(a)
(1)
INQUIRIES.
T
he department may make inquiries to ascertain the accuracy and completeness of information contained in audits or reports
required under s.
115.7915
, Stats., and this chapter
. Schools and auditors shall promptly respond to inquiries
made by the department
.
(
2
)
TRAINING.
The department may provide training to school staff and auditors. The department may charge a reasonable fee for providing training
under this subsection.
(4)
(
3
)
PUPIL CONFIDENTIALITY. The
department
shall maintain pupil confidentiality at all times.
(
4
)
ORDER TO BAR.
The
department
may issue an order barring
a
private school
from
participating
in the special needs scholarship program
if the department determines that the school has done any of the following:
(a)
Failed to provide the financial
audit
in
two or more years by the date specified in
s.
PI 49.
08
.
(b)
Provide
d
a financial
audit
that does not comply with the requir
ements
under
s.
49.
08
or
49.
09
in two or more instances in the same year or in different years.
(c)
Excluded
liabilities
, whether or not the school disputes the amount owed, from the financial information
required
under s.
115.7915 (6) (f) 2.
, Stats.
,
and
s.
PI 49.04 (2)
.
(e)
F
ailed to
provide
a
bond required under
s.
PI 49.0
4
for three consecutive months after the date the bond is due.
(f)
Failed to conduct background checks
required under s.
PI 49.03 (4)
for two or more individuals
.
(g)
Employed
individuals
or contracted
with
individuals who did not
meet
the
requirements
under s.
PI 49.03 (4)
.
PI
49
.
15
Right to a request a hearing.
(1)
WHO MAY REQUEST. A person or school adversely affected by an action of the department under this chapter may request a contested case hearing on that action. A request for a contested case hearing shall be filed with the office of legal services within 14 days of the date of the department
’s
action.
Note: See s.
227.42
, Stats. A request for a contested case hearing may be filed with the office of legal services at the following address:
Office of Legal Services
Wisconsin Department of Public Instruction
125 S. Webster St.
PO Box 7841
Madison, WI 53707-7841
(2)
REQUEST FORM.
(a) A request for a contested case hearing under sub. (1) shall be in writing and shall describe all of the following:
1. The department action on which a hearing is requested.
2. The request
e
r
’s
substantial interest claimed to be adversely affected.
3. How the department
’s
action adversely affected the requester
’s
substantial interest.
4. The grounds for the hearing request, including each of the specific material facts or legal issues that are in dispute. Any material fact or legal issue that is not disputed shall be deemed admitted.
5. The relief sought.
(b) Upon the request of the department, the person or school who filed a request for a hearing under sub. (1) shall provide the department with any additional clarifying information the department determines is necessary to decide whether to grant or deny a hearing request.
(3)
GRANTING OR DENYING REQUEST.
(a) The department shall grant or deny a request for a contested case hearing under sub. (1) within 20 days after a request is filed, unless the person or school requesting the hearing agrees to an extension of time. The department may grant a request for a contested case hearing if, upon preliminary review, it appears that all of the following apply:
1. The department has jurisdiction over the matter.
2. The request for a hearing complies with the requirements under subs. (1) and (2).
3. The requestor is entitled to a hearing under s.
227.42
, Stats.
(b) Any action taken by the department which is contested under sub. (1) shall remain in effect until the state superintendent issues a final decision and order under s.
227.47
, Stats.
SECTION
2
. EFFECTIVE DATE:
The proposed rules contained in this order shall take effect on the first day of the month commencing after the date of publication in the Wisconsin Administrative Register, as provided in s.
227.22(2)(intro.)
, Stats.
Dated this _____ day of ____________, 201
6
__________________________________________
Tony Evers, PhD
State Superintendent
