Published Online: March 22, 2013

Special Education Penalty Won't Continue for South Carolina

South Carolina schools chief Mick Zais says congressional action averted the continuation of a $36 million federal punishment over special education spending.

A clause inserted in a stopgap spending bill given final approval Thursday by the U.S. House repeals the penalty slated to continue perpetually.

Zais praised Congress, particularly South Carolina's delegation, as hearing his plea for common sense.

The action "repeals the absurd perpetual penalty," he said. "This is a victory for students with disabilities."

The vote comes one day before the state Education Department is slated to argue in federal court that its challenge to the punishment over recession-era budget cuts deserves to be heard. Arguments will be before the 4th U.S. Circuit Court of Appeals at Washington and Lee University in Lexington, Va.

The hearing will continue, as Zais hopes to recover the $36 million lost in the current budget year.

But the provision slid in as the Senate debated the bill sidestepping threats of a government shutdown means the state's worst possible outcome is that the current reduction will stand. That is, provided that President Barack Obama signs the bill.

It also means the Senate has an additional $36 million to designate for 2013-14. The budget proposal approved by the House last week set aside $36 million in case Zais lost his court fight.

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U.S. Sen. Lindsey Graham initially put the repeal language in a bill last year that Congress didn't pass. Zais urged South Carolina's delegation to try again.

The penalty involves the state's failure to meet "maintenance of effort" during the economic crisis. Federal law bars states from spending less money on special education from one year to the next. If they do spend less, their federal allotment is cut by a corresponding amount.

The $36 million penalty is what's left of an initial threat in June 2011 of $111.5 million. Other amounts were forgiven, but the remaining cut stemmed from spending during the 2009-10 school year.

The reduction was initially set to start in October 2011. But the federal agency delayed the punishment by a year to give the state time to prepare for the loss. Zais' request for another delay was denied.

U.S. Education Secretary Arne Duncan dismissed South Carolina's case last May, rejecting efforts to challenge the remaining penalty. Though Zais ultimately wants the federal government to restore the $36 million, Friday's hearing is primarily to discuss whether the state can appeal an administrative decision.

The cut explains why South Carolina is receiving $140 million this fiscal year from the federal government for special education, compared to $176 million in 2011-12, Ragley said.

But South Carolina's school districts have not felt the loss, since the Legislature put $36 million in the current state budget to cover the cut.

The funding maintenance requirement exists to protect local school districts from fluctuations that leave them footing the bill for teachers and services for disabled students, according to the federal agency. States can apply for an exemption, but such waivers are limited.

The state spends $410 million on nearly 100,000 public school students in South Carolina with various disabilities—14 percent of the entire student population, according to the education agency. Local districts provide additional funding.

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