Published Online: June 27, 2011
Published in Print: July 13, 2011, as End to One-Time Aid Squeezes Special Ed.
Updated: March 24, 2012

End to One-Time Aid May Squeeze Special Ed. Budgets

As one-time aid from the federal economic-stimulus program and the $10 billion Education Jobs Fund evaporates, states using that money to keep their special education budgets afloat are starting to come up short—in some cases putting other federal aid in jeopardy.

In South Carolina, for example, the U.S. Department of Education has threatened to cut $111 million in special education funding, an amount that matches state cuts over the past few years that the department believes were unjustified. The possibility of federal punishment has left the Palmetto State scrambling to come up with at least part of the money it previously cut.

“Next year is going to be rougher for states and school districts than any other year,” said Mike Griffith, a senior policy analyst with the Education Commission of the States, in Denver. “I will just lay money down on that.”

While states can trim most portions of their education budgets as they see fit, the federal “maintenance of effort” ruleRequires Adobe Acrobat Reader says they must keep special education spending the same from year to year, or increase it, regardless of the condition of their budgets. The requirement is intended to keep services for students with disabilities insulated from the ebb and flow of the budget cycle.

Only natural disasters or the most dire financial circumstances are legitimate reasons under the federal Individuals with Disabilities Education Act for requesting permission that would allow a state to cut spending and not be penalized by the same amount in federal special education aid. That high bar has long been a strong deterrent to state requests for such waivers.

Because of the economic downturn, however, the federal government has given some states approval to cut typically sacred special education dollars. For the 2009-10 school year, the Education Department granted requests by Alabama, Iowa, Kansas, New Jersey, South Carolina, and West Virginia to cut special education spending by amounts ranging from less than 2 percent to nearly 13 percent. As state budgets continue to struggle and stimulus dollars disappear, more waiver requests are expected, said Alexa Posny, the department’s assistant secretary for special education.

“It still is a concern; I would anticipate some others,” Ms. Posny said. Iowa and South Carolina also sought permission to cut special education spending for the 2010-11 school year.

No Sure Thing

But not all states now looking for a waiver will get one, no matter how dire their financial straits. The Education Department turned down Oregon and Iowa. It also turned down South Carolina's latest request and implied the state should think twice before asking again.

“We also want to make clear to the state that, when making decisions about its level of state support for special education and related services in [fiscal] 2012, the state should not anticipate, or rely on, a waiver of the requirement to maintain state financial support for special education and related services,” Ms. Posny wrote in the letter denying the state’s request to chop $75 million out of the special education budget for the 2010-11 school year.

South Carolina is the only state to request the ability to cut spending on students with disabilities for three years in a row. For the 2008-09 school year, the department granted the state’s request to reduce special education spending by about $20 million, or about 5 percent. For 2009-10, the state got a partial reprieve and was allowed to decrease the budget by about $31 million, or 7.6 percent, although the state wanted to cut another $36 million and was turned down.

Congress created the federal Education Jobs Fund, also known as Edujobs, in August of last year to preserve jobs by paying the salaries and benefits of teachers and other school personnel in the 2010-11 school year, including special education teachers and staff members.

The Education Department’s guidelines on using the Edujobs money to keep up special education were just issued in May, however, months after the funds were sent to most states. One rule: If states use the money to offset special education cuts, they will have to track it closely to ensure it was spent on students with disabilities.

“The key is whether it’s really supporting and serving kids with disabilities,” Ms. Posny said. “Materials or information—that’s not direct services.”

Also, states can only use Edujobs money for special education in proportionRequires Adobe Acrobat Reader to how much of their overall education budgets are used for special education.

Although the guidance is fairly new, states already have seized the opportunity to use Education Jobs Fund money to shore up special education spending.

In Iowa, for example, the state was granted a waiver in the 2009-10 school year to cut special education spending by about $38 million, part of about $239 million in cuts to education spending overall in that state during the 2010 fiscal year. The cut represented about a 7 percent drop in spending on students with disabilities, bringing that portion of the budget down to about $487 million.

The federal Education Department granted the state’s request to move forward with that cut, as long as Iowa restored special education spending to what it was before the cuts by the 2011 fiscal year.

But the Hawkeye State is still working to make ends meet, and asked for permission to cut special education spending again. This year’s waiver request was for far less—about $4 million.

That’s because the state used Edujobs money to prop up the special education budget, said Jeff Berger, the chief financial officer for the Iowa Department of Education. The aid “helped considerably,” he said.

Nevertheless, their request was denied. In a June 21 letter, Ms. Posny said the state has enough money to cover the $4 million it is seeking to cut from the special education budget.

Iowa—and every state permitted to cut special education spending—must restore spending to the amount it was before any cuts were made once the waivers expire, and each waiver is only good for a year.

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How such states will meet that stipulation remains to be seen, Mr. Griffith said.

“This coming year is going to be the most difficult one of all of the recession,” he said.

‘Braving New Ground’

With its request to cut special education spending denied, South Carolina was left to find $75 million to make the 2010-11 special education budget whole before the end of June.

A General Assembly committee on June 22 approved a proposal that would boost the budget for students with disabilities by that amount, said Jay W. Ragley, the deputy superintendent for legislative and public affairs. The money comes from a combination of an uptick in state revenue and a drop in state spending on diesel fuel for school buses, he said.

South Carolina turned down $140 million in Edujobs money because of large reductions it made to higher education, making it ineligible for the additional federal dollars. According to one estimate, the lost aid would have paid for as many as 2,600 teachers.

As far as the remaining $36 million cut out of the 2009-10 school budget but disapproved by the federal government, the state plans to fight the rejection, Mr. Ragley said. It’s too late to restore money to a school year long over.

Mr. Ragley noted that because the waivers were rarely used until recently, there is room to interpret what the IDEA says about them.

“Frankly, we think the department is braving new legal ground,” Mr. Ragley said. The state hopes the dispute will be resolved before Oct. 1, the start of the federal fiscal year, to avoid the $36 million cut.

Vol. 30, Issue 36, Page 35

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