Published Online: June 15, 2010
Published in Print: June 16, 2010, as States Seek Waivers For Special Ed. Cuts

States Seek Federal Waivers to Cut Special Education

At least three states have asked for permission to cut back on the money they provide districts for special education, under a built-in escape clause in the federal special education law that is aimed at financially struggling states.

Iowa and Kansas have both been granted a waiver, which under the Individuals with Disabilities Education Act can be given out in “exceptional or uncontrollable circumstances such as a natural disaster or a precipitous and unforeseen decline in the financial resources of a state.”

South Carolina has requested a waiver, but the U.S. Department of Education has asked the state for more information before making a decision. Both the waiver requests and the department’s responses were reported earlier this year by the blog IDEA Money Watch, a project of the Washington area Advocacy Institute, which supports parents of children with disabilities.

Special education advocates say this is the first time they’re aware of economic-hardship waivers being granted.

The IDEA tries to insulate funding for children with disabilities from the ebb and flow of state financial woes. States generally must fund special education at the same amount or more from year to year, which in federal terminology is called maintenance of effort. There are penalties for making cuts without a waiver, and the waivers are granted only for one fiscal year at a time. After a waiver expires, a state must go back to the same funding level that existed before the cut was granted.

More to Come?

Michael Griffith, an education finance expert with the Denver-based Education Commission for the States, said that more waiver requests may be coming. The financial outlook for states remains grim, and special education costs have grown at a faster rate than general education costs. States may not have asked for waivers before because they knew their requests would likely be denied, he said.

“There are all sorts of waivers, and some are given out fairly easily. This one has been pretty clear—don’t come to us unless you’re in dire straits,” Mr. Griffith said. “IDEA has traditionally been a very protected area. Even when we had the economic downturn after September 11, no one asked for it. They clearly knew they weren’t going to get it.”

Although the economy was in a shambles last year, federal stimulus dollars allowed states to plug some budget holes. But, Mr. Griffith added, “last year was not as bad as this year. And next year will be worse.”

Luann L. Purcell, the executive director of the Council of Administrators of Special Education, a group that represents district-level officials, says the maintenance of effort and waivers are a widespread topic of concern. “This is an issue everywhere I go,” she said.

But the concerns may be overblown, said Nancy Reder, the deputy executive director for governmental affairs for the National Association of State Directors of Special Education, in Alexandria, Va. She took an informal survey of state special education directors that turned up no one who said they were contemplating asking for a waiver. “I think this is not a big issue, because the statesare aware they’d be denied,” Ms. Reder said.

That perception did not prevent Iowa and Kansas, however, from successfully making the case that their states are hurting so much that the cuts are necessary for a year.

In Iowa, the budget picture once looked rosy enough that the state planned to give more money to special education in fiscal 2010 compared with the previous fiscal year. But then an agency that estimates state revenues gave the governor bad news: In just five months, the budget had gone from balanced to deeply in the red.

The state furloughed employees, and the governor mandated an across-the-board spending cut for all state agencies. As a result, Iowa’s special education department went from planning for an increase to requesting a waiver in January that would allow it to cut about $38 million in fiscal 2010—a 7.25 percent decrease in spending from fiscal 2009.

Lana Michelson, the state’s special education director, noted that in Iowa, local school boards are allowed to make up the missing revenue by raising property taxes. The districts appear to be choosing that option, which is cushioning the blow for districts, she said. The Iowa economy is slowly improving, but she said she would not be surprised to have to make another waiver request for fiscal 2011.

“It’s better,” Ms. Michelson said. “But we don’t think it’s that much better.”

Kansas’ Request

Kansas made its waiver request in May 2009, just a few months before Alexa E. Posny, then the state’s commissioner of education, was nominated to be the assistant secretary for the federal office of special education and rehabilitative services. She signed off on the waiver request, then was nominated for federal office in July 2009 and confirmed in October.

In March 2010, the federal department of education granted the state a waiver for about $44 million for fiscal 2010, representing about a 10 percent decrease in special education funding compared with the previous fiscal year. Department officials said Ms. Posny recused herself from consideration of the Kansas waiver.

Dale M. Dennis, the deputy commissioner of education for Kansas, said school districts won’t feel the pinch because of federal stimulus dollars from the American Recovery and Reinvestment Act.

“We backfilled [the cut] with ARRA money, which we could legally do, and the result was a 1 percent cut. It wasn’t a major issue or a major problem,” he said.

However, Kansas has since gone back to the department, asking for permission to cut state aid by an additional $14 million. That would represent a total of about $58 million cut from special education in fiscal 2010, a 13.6 percent decrease from the prior year. The continuing bad economy is to blame, Mr. Dennis said in a letter to the department.

Call for Transparency

The federal Education Department doesn’t provide a waiver request template. However, the successful requests and response letters from the department offer clues to what it is looking for from states. For one, special education can’t face a larger percentage cut than other education programs. Anthony W. Miller, the U.S. deputy secretary of education, has written a letter telling both Iowa and Kansas that they may face additional monitoring to make sure the state is still providing the backbone of the IDEA—a free, appropriate public education to students with disabilities.

Advocacy groups are sympathetic to the states’ financial bind, but they’d like to see more transparency in the department’s decisionmaking process, said Katherine Beh Neas, the vice president for government relations for Easter Seals, a disability advocacy organization in Washington.

Ms. Neas said she understands that a 10 percent budget cut is severe, but says she doesn’t know what would happen if a state were facing a smaller shortfall.

“If you’re going to do these things, there needs to be some clear benchmarks that states need to meet,” she said.

The state waivers may end up not affecting school districts as much as another provision in the law, which was triggered when the federal government provided a large infusion of cash through the federal stimulus program.

The IDEA allows school districts to cut back on the amount of money they provide to special education if more federal dollars flow in, as long as the freed-up money is used for education. According to a January report from the Government Accountability Office, a congressional watchdog agency, at least 44 percent of school districts planned to reduce their local spending, though the percentage varied from state to state.

But unlike the state funding waivers, which are granted only for a year at a time and require states to go back to the original funding levels, these cuts to local spending can be permanent. The money won’t come back unless the district chooses on its own to increase funding; the federal government has no power to tell the districts to spend more. However, the district may face penalties if it doesn’t provide a free, appropriate education as the IDEA requires.

The provision in the law that allows these reductions assumes that if the federal government provides more money to special education, the increases would be gradual and permanent—exactly the opposite of what the federal stimulus funding turned out to be.

“The local situation is worse in the long run,” said Candace Cortiella, the director of the Advocacy Institute. “The reduction in local spending poses much more significant problems for student services than the waivers.”

Vol. 29, Issue 35, Pages 1,31

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