Special Education

Funding Formulas for Special Education Benefit Some Districts, Penalize Others

By Christina A. Samuels — June 27, 2014 2 min read
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The complicated formulas that govern how federal special education money is parceled out to states have not been adjusted in over a decade, with the result that small districts get more federal money per student than large districts, and school systems that are losing students end up with more funding than school systems that are growing.

These findings are part of a new policy brief released Friday from the Washington-based New America Foundation that tracks the evolution of Individuals with Disabilities Education Act funding.

Most conversations around special education funding focus on how much federal money goes to the states ($11.5 billion in fiscal 2014, or about 16 percent of the additional cost to districts of teaching a special education student compared to a student in general education).

Policy analyst Clare McCann dug into how the federal government determines how much each state will receive in “Part B” funds, which are used for students ages 3 to 21 and make up the bulk of special education funding.

The basic formula has not changed since 1997: States get 85 percent of their money based on that state’s share of all children and youth nationwide ages 3 to 21. Fifteen percent of the funds are awarded based on the state’s share of children living in poverty.

But then other complex calculations come into play that ensure that no state goes below a certain minimum or above a certain maximum, based on factors such as funding in prior years, or the percentage increase from year to year in the federal allocation.

There are also provisions such as a “small state minimum,” which helps states that otherwise might not receive as much money because they have fewer students. A “hold harmless” provision ensures that state allocations never go down, even if student population declines.

From the report, McCann noted that the Joliet High School District in Montana, which enrolled 136 students in the 2010-11 school year, received about $27,000 in IDEA funds, or $198 per student. The Dallas school district, with more than 157,000 students in 2010-11, received about $23 million in federal funds, or $147 per student. Essentially, growing districts face a penalty because the federal dollars have to be spread among more students.

“The federal formula operates on so much of an autopilot that a lot of people might not know this,” McCann said in an interview. But the formula could leave at a disadvantage the districts that, because of their size and enrollment, are facing the most challenges—and the Education Department announced this week that it is planning to hold all school districts to a higher standard for educating students with disabilities.

The IDEA was due for reauthorization in 2009, and the more time goes by, the more the funding formula will be distorted, because it is based on population numbers from more than a decade ago, McCann said.

However, Congress has shown no signs that it plans to take up the special education law any time soon.

Below: The New America Foundation has estimated the amount of IDEA funding each state and district receives on a per-pupil basis. Twelve states— Alaska, California, Colorado, Hawaii, Iowa, Kansas, Maine, Michigan, Minnesota, North Dakota, Pennsylvania and Vermont—plus the District of Columbia were omitted from the chart because of insufficient data.

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A version of this news article first appeared in the On Special Education blog.