Published Online: July 29, 2009
Published in Print: August 12, 2009, as Stimulus Spurs Shifts of Special Education Funding
Updated: April 4, 2012

Stimulus Spurs Shifts of Special Education Funding

Some districts can use their own money for other budget priorities.

The increase in special education funding driven by the economic-stimulus law is bringing new attention to an unusual provision in the Individuals with Disabilities Education Act: Districts are allowed, in some cases, to cut back on the local funds they use to pay for special education programs when they get more money from the federal government.

The intent of the IDEA provision was to allow districts to scale back gradually on their own spending while using federal money to fill the gap. But when Congress approved the measure in 2004, lawmakers did not anticipate that they would later nearly double funding for special education in a short amount of time.

States are receiving $12.2 billion in IDEA funding over the next two years from the American Recovery and Reinvestment Act to spend on state special education grants, preschool programs, and programs for infants and families. That translates into dramatic increases in districts’ federal aid.

The prospect of being able to shift some local money from special education to other education needs at a time of severe budget pressure has prompted at least two states—Illinois and Missouri—to change the way they assess their districts’ performance with special education students. Under stimulus-funding rules, districts meeting requirements under each state’s federally mandated “state performance plan” get the spending flexibility, while those that need more help do not.

That’s an incentive to move more districts into the “meets requirement” category, and Missouri plans to do that for one year, said Heidi Atkins Lieberman, the state’s assistant education commissioner for special education.

“When we developed the criteria [for evaluating districts], we didn’t realize there would be a fiscal impact,” Ms. Lieberman said.

‘Going Backwards’

Missouri evaluates districts on such compliance issues as the percentage of children who receive special education evaluations in 60 days, as the federal government requires. But the state also added criteria for districts to meet, including specific graduation and dropout rates for students with disabilities. The federal government does not require states to use those measures to make final determinations for their districts, and those are the ones Missouri is suspending.

The change will allow every district in Missouri to meet requirements, and thus allow them to shift a percentage of the local money they spend for special education to other education programs. Without the change, nine districts wouldhave had lower ratings.

The local money that would have been spent on special education can be used to avoid cuts to other programs, pay for teachers, and finance systemic changes to improve schools for all students, Ms. Lieberman said.

The assistant commissioner, however, acknowledged that she has mixed feelings about the one-year change. “I am worried that people will get the wrong message,” she said. “We have shifted from a compliance-oriented focus to a performance one, so it’s sort of going backwards.” But the state could not pass up the prospect of increased spending flexibility, she said.

Illinois is also using different calculations to bring more districts up to standards. Under a new state formula for calculating compliance, the number of districts that need assistance has dropped from 321 to 159, according to a weekly message distributed to districts in June by state schools Superintendent Christopher A. Koch.

Elizabeth Hanselman, the assistant superintendent for special education and support services for Illinois, said her office has been

“firmly encouraging” districts that reduce special education funding to make sure they are using that money for purposes that will improve student performance.

“The guidance we’re giving out is you can use these funds for a multitude of areas,” she said. “Let’s make sure that you’re very careful in tracking how you do this.”

The blog IDEA Money Watch, a project of the Advocacy Institute, a nonprofit organization in Marshall, Va., has been tracking special education spending, including the changes in Missouri and Illinois, to keep the public apprised of how the money is being spent.

The spending flexibility is a concern to some special education directors, who don’t want to see local special education funding diverted to other uses as new federal money flows to districts.

Keeping Teachers

Mary Watson, the president of the National Association of State Directors of Special Education, based in Alexandria, Va., said state directors are in a tough position. They recognize the financial bind many districts are in, but the officials also feel pressure to show that stimulus funding can help provide a better education for children with disabilities, as was intended. “It’s been such a feeding frenzy,” said Ms. Watson, the director of the exceptional-chidren division of the North Carolina education department.

In North Carolina, 53 out of 115 districts can reduce the amount of local money they spend on special education, Ms. Watson said.

It’s unclear if all those districts will do that. The state has several successful initiatives under way, including programs to improve literacy and “tiered intervention” for academics and behavior at school. Those are all programs that could be continued, or expanded, using stimulus dollars.

But Ms. Watson is primarily getting questions from districts on how to retain teachers. “That leads me to believe that’s going to be the priority,” she said.

The spending-flexibility provision is part of the 2004 reauthorization of the IDEA. The law says that if districts receive an increase in federal funds for special educ

tion, they can reduce the amount they contribute by 50 percent of that increase. So, if federal money to a district increases by $1 million over the previous year, that district can reduce its local contribution to special education by $500,000.

Lower Ranks Excluded

There’s a second condition on the money that is linked to evaluations that states must make of each district annually, under the IDEA. Districts’ performance determines whether they “meet requirements” or receive a lower rank: “needs assistance,” “needs intervention,” or “needs substantial intervention.”

If a district receives one of those three lower ranks, it has to maintain its current level of local funding, losing the flexibility to shift local dollars to other needs.

Mabrey Whetstone, the directorof special education services for the Alabama education department, said the recovery act has heightened the importance of those evaluations.

In Alabama, 76 districts are allowed to reduce their local funding for special education because of the stimulus measure. Budgets are not final, so it is not clear how many will do so. Fifty-six districts do not have the flexibility, including the state’s largest school systems, Mr. Whetstone said.

Leaders of those districts have tried to get their designations changed. Mr. Whetstone said he has carefully explained why it is necessary to hold the line.

“We’re being very clear: There were reasons the stimulus money was given to us,” he said. “This is an opportunity to improve the programming that is provided to students with disabilities.”

Vol. 28, Issue 37, Page 9

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