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Battle Brewing Over How To Pay for Spec. Ed. in N.J.

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A battle is shaping up over how to pay for special education in New Jersey and over why the state has the nation's second-highest rate of students classified with disabilities.

A new report on the issue by a state legislative task force rejects the remedies favored by Commissioner of Education Leo W. Klagholz.

Mr. Klagholz fired the first volley in November when he addressed special-education costs as part of a larger school-finance overhaul. The commissioner's report said the special-education funding system subtly encourages inappropriate labeling of some students as disabled as a way to get more state money. More than 14 percent of students in New Jersey public schools are classified as disabled, a proportion second only to that of Massachusetts.

The state education department recommended that the state provide special-education funding under a formula similar to that used for general education aid. Such an approach would essentially result in a cap on full funding of special-education costs limited to 10 percent of a school district's student population. If a district had more than 10 percent of its students in special education, those costs would be partially reimbursed at a declining rate.

"A new funding approach should include a realignment of the incentives and disincentives that are inherent in any method of awarding funds," the commissioner's report said.

But the legislative task force takes a different view in its report issued last month.

"The task force opposes any artificial ceiling or classification rate for funding purposes," says the report by the panel, which included representatives of Gov. Christine Todd Whitman, legislative leaders, and the state's major education groups.

Areas of Agreement

Instead, the task force recommends that districts be reimbursed for almost all of the actual costs of special-education programs. A percentage would be required from districts to encourage cost containment.

"We saw the answers to some of the problems differently than the commissioner," said Brenda G. Considine, the panel's vice chairwoman and a policy consultant for the Arc of New Jersey, an advocacy group for people with disabilities. "But the task force agrees with the commissioner that New Jersey classifies children at a rate much higher than the rest of the nation."

The task force and the commissioner also agree that the current funding system has no incentives to encourage the full inclusion of students with disabilities in regular classrooms. The school-funding formula does not provide any extra aid for such situations.

Frank Belluscio, a spokesman for the New Jersey School Boards Association, said the task force's recommendations, which cover many other special-education issues besides funding, are sound.

The school boards' group and several special-education advocacy groups have criticized the commissioner's proposal of a cap on full funding.

"Placing an artificial limit is merely going to discourage school boards from providing needed services to students," Mr. Belluscio said.

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