'Transaction Costs' and the IDEA
The reauthorization of the IDEA may provide only the illusion of a solution.
Congress is currently considering the reauthorization of the Individuals with Disabilities Education Act, providing us with an opportunity to fine-tune this legislation based on cumulative experience and current needs. One of the areas that sorely need revision is the act's adjudicatory dispute-resolution mechanism, which tolls a high price in what economists refer to as "transaction costs." On average, the direct costs of providing the services required by the IDEA—which do not include the exorbitant transaction costs—is twice that for educating the average nondisabled student. Yet, Congress' unfulfilled promise of "full funding" would amount to only 40 percent of that excess cost. At a time when education budgets are strained and accountability expectations are high, neither students with disabilities nor the rest of the education system are well served when the present adjudicatory mechanism grinds not only slowly, but also expensively.
Congress passed the original version of the legislation in 1975, to remedy the historic exclusion of students with disabilities from public schooling. In its landmark case interpreting the act's "appropriate" education requirement, the U.S. Supreme Court made clear that the purpose of the legislation was to provide access for students with disabilities: access to public schools for those who were totally excluded, and access to special education for those who were sitting idly in regular classrooms. As a result of this deprivation of liberty and property, Congress codified procedural due process in the form of: (1) an impartial due process hearing; (2) at the option of each state, an impartial hearing at the review-officer level; and (3) upon appeal by either party, judicial review. The legislative history makes clear that Congress intended this multiple-tiered adjudicatory system to be prompt. Recognizing the need for speed, the ensuing federal regulations call for due-process-hearing officers to complete the first stage within 45 calendar days of the initial filing for the hearing.
In the more than 25 years since the initial passage of the legislation, Congress has amended the act several times during successive reauthorizations. For example, in 1986, Congress provided that when parents prevail in the adjudicatory proceedings under the act, the district must pay for their attorneys' fees. In 2003, the odds of a child with a disability lacking any access to special education, much less to public schooling, are minimal. Yet, fueled in part by attorneys' fees, the number of hearing/review officer and court decisions under the IDEA has steadily increased to an all-time high, and the length of the process is far more than Congress intended. In terms of procedural due process, the weight of the property and liberty interest has significantly lessened, yet the formality of the hearing process has become ponderous and cumbersome.
The length of the initial, due-process-hearing stage nationally averages more than two to three times what the regulations specify. It is not at all unheard of to have multiple sessions that last a year or more, with thousands of pages of transcript and hundreds of pages of exhibits. In the 25 or so states that have opted for a second administrative level, the tradeoff to the taxpayer and the parties involved is additional time and expense, but nothing compared to the judicial level. The judicial-review process often entails additional witnesses and exhibits and—caught in the complexities and congestion of the courts—can be interminable.
As a result, it is not uncommon for a court's ultimate decision, which most often focuses on the appropriateness of the child's individualized education program, or IEP, to be either a final ruling or a remand two or three years after the disputed placement.
For example, in a 1999 decision, three years after the parents had filed for a due process hearing to challenge their child's proposed IEP for the 9th grade, the U.S. Court of Appeals for the 3rd Circuit remanded the case to the trial court to reconsider its decision that the proposed IEP was appropriate. And should the trial court decide upon reconsideration that the IEP was not appropriate, it was to determine whether or not the parents were entitled to tuition reimbursement for the specialized private school in which they unilaterally placed their child for the ensuing three years, and also whether they were entitled to compensatory education services for each of the previous eight years of the child's schooling in the district.
While the overall level of education litigation peaked in the 1970s and has gradually declined since then, the special education segment has steadily skyrocketed. Research reveals also that parents partially or completely win approximately half the cases, and that there is a limited relationship between the outcomes at the hearing/review officer and judicial levels.
Moreover, many of the court decisions concern individually specific applications of established legal principles. For example, the issue in a recent federal court case in Illinois was not whether the child had autism, or whether he was entitled to a specialized private placement. In the 1990 reauthorization, Congress had amended the IDEA to include autism as one of the recognized classifications of disability, and in the 1997 reauthorization, Congress had codified a long line of court decisions that spelled out the circumstances for private placements at public expense. Further, the courts had made clear that the child's entitlement includes any of a long list of related services that are necessary for the child to benefit from special education.
In the Illinois case, the individualized-education-plan team had placed the child with autism in a specialized residential school in Boston. The issue was how many trips—six, as the district maintained, or 12, as the parents argued—were appropriate in the child's IEP (with the airfare, hotel, meal reimbursement, car rental, parking, and the private school's charge for parental training thereby chargeable to the district). Inasmuch as the scope of these costs was not in dispute, does a federal judge, much less a panel of appellate judges if either side decides to appeal this decision, have more expertise than the original hearing officer to make this decision? Is it a wise use of public and private resources? Moreover, does it make sense to take until February 2003 (and later, if either party implements its right of appeal) for this decision concerning the number of trips for the 2000-01 school year?
In the interim, the IDEA requires, unless the parties agree otherwise, the maintenance of the status quo, also known as "stay put" placement. Depending on the case, the stay-put may be less or more than that which the final decision deems is the entitlement. Thus, extending the period of the decision may be against either the child's or the district's interest. Moreover, many court cases are limited to such incidental matters as to what is the child's stay-put or how much the parents are entitled to for attorneys' fees.
The proposed solution to this wasteful problem is relatively simple. Congress should amend the IDEA to provide for a much more expedited and economical mechanism for impartial dispute resolution where mediation and other alternative approaches to problem- solving are unavailing. Doing so does not deprive the child of 14th Amendment due process in light of the current context of access to public schooling and special education. If anything, one of the other problems is overidentification in terms of the expanding enrollments of special education, at least for certain classifications, such as "other health impairment" and "specific learning disability," and for racial-minority children.
Specifically, for the routine type of IDEA case, which typically is either the threshold issue of whether the child is eligible and, if so, what is the appropriate program or placement, the hearing would be limited to the first level, with the right of judicial review—similar to grievance arbitration—very limited. Also akin to arbitration, the hearing itself would typically be a one- day session; the current average for grievance arbitration cases is 1.1 days, and the issues, such as termination of a public employee, can be of similar severity and complexity to the appropriateness of a child's IEP.
For the exceptional case that requires resolution of a legal question, such as whether the "mapping" of a deaf child's cochlear implant is a related service under the IDEA (a federal judge recently decided this in the affirmative), the moving party would have a judicial right of appeal, with no additional evidence or other such sources of delay allowed. Finally, Congress should authorize the Department of Education to include in its regulations specific requirements for the selection, training, certification, and evaluation of hearing officers, so that they exhibit the requisite skills to conduct efficient hearings and render knowledgeable decisions.
Unfortunately, the House bill's proposed steps in this direction are too small to make a sufficient difference, and yet may yield the impression of doing something significant to resolve the problem.
First, HR 1350 proposes voluntary use of binding arbitration. The provision is only permissive, rather than mandatory, however, and the many entrenched interests of the present system would create a gravitational pull against widespread use of this limited option. Moreover, it carries no time limitations or specialized qualifications, thus having the potential for equally ponderous and inexpert decisions.
Second, the House bill proposes to eliminate the review-officer level of the IDEA's adjudicative mechanism. This step also does not come close to solving the problem, which is primarily at the hearing-officer and judicial-review stages. For example, in Pennsylvania, the hearing-officer stage takes, on average, triple the 45-day period specified in the IDEA regulations; the review-officer stage averages less than the specified 30 days; and the judicial stage lasts, in the average case, years.
Third, the proposed requirements of a prehearing resolution conference, a one-year statute of limitations for the hearing, and the prohibition of adding issues during the hearing are helpful at the front end, but they leave wide open the length of the hearing and the interminable judicial process, which currently has no restriction on additional evidence and no statute of limitations, for court review.
If Congress will not accept the proposed mandatory-arbitration-type model, it should at least close the remaining gaps by: (1) adopting a short (for example, 45-day) statute of limitations for the judicial stage; (2) adopting the traditional, deferential standard for judicial review; and (3) disallowing additional evidence at this stage.
Various special interests, such as special education lawyers, publishers, and related cottage industries that benefit from the current high transaction costs, support such token options, which give the illusion of resolution. Yet, the system needs an expedited, economical, and expert system of dispute resolution that resolves rather than fosters 'adversariality' and maximizes the limited time and resources for services to students with disabilities.
Perry A. Zirkel is the university professor of education and law at Lehigh University, in Bethlehem, Pa. He co-chairs the state of Pennsylvania's review-officer panel for cases brought under the Individuals with Disabilities Education Act.
Vol. 22, Issue 37, Pages 34, 44Published in Print: May 21, 2003, as 'Transaction Costs' and the IDEA