IDEA MOE Adjustment Act

Amends the Individuals with Disabilities Education Act to alter the formula for reallocating the federal special education funding that is denied to states that reduce their level of special education funding from one fiscal year to the next.

Reallocates:

• 85% of those funds on the basis of each nonpenalized state's share of children aged 3 through 21 who are of the same age as children with disabilities for whom the state provides a free appropriate public education, and
• 15% of those funds on the basis of each nonpenalized state's share of those children who are impoverished.

Prohibits the Secretary of Education from considering those penalties or redistributions when calculating the amount of special education funds a state received in a preceding fiscal year for purposes of determining the state's current share of federal special education funds.

Limits the application of the penalty imposed on a state that reduces its special education funding from one fiscal year to the next to a reduction of federal special education funds (equal to the amount of the state shortfall) that is imposed: (1) the following fiscal year, or (2) over a multi-year period that is no more than five consecutive fiscal years. (Currently, that penalty may be imposed on a state for any fiscal year after the fiscal year the state reduces its special education funding.)