Special Report
Special Education

The Funding Fix

By Joetta L. Sack — January 08, 2004 10 min read
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In the past decade, the number of students in special education—and the ensuing costs—have soared, straining state and local budgets and triggering a renewed pledge from the federal government to provide more money. The hefty costs have pushed what was once a relatively isolated segment of the education population to the forefront of many districts’ budget priorities—and rightly so, say advocates for children with disabilities.

Now, with a new wave of academic accountability spurred by the federal No Child Left Behind Act, state policymakers increasingly are thinking about what should be spent on special education. It’s an area in which needs at times seem limitless.

The biggest challenge, many policy experts say, is that states are struggling to educate students with severe disabilities who might not even have been in classrooms just a few years ago.

“The dilemma we have with special education is that we’re getting better at identifying and providing services. But in addition to that, we’re having increased costs for medically fragile students,” says Kory M. Holdaway, a state representative in Utah who is also a veteran special education teacher. As with all education programs, the Republican adds, “everyone is looking for ways to fund it.”

The funding issue resonates at many levels, from the child’s educational placement in school to infighting among politicians at state capitols. It causes tension between school administrators and parents, disability-rights advocates and general educators, and districts and states as they try to balance aid for general education and ensure that students with special needs receive the accommodations necessary for them to be educated.

So far, researchers say, nobody has come up with a perfect—or even a near-perfect—solution.

Services Vary

The amount of money available for a child’s special needs can have long-term ramifications. Those include whether the child is identified as having a disability, what sorts of services he receives, whether he’s placed in an inclusive or self-contained classroom, and whether he has access to the general curriculum, according to new research by Thomas Hehir, a lecturer at Harvard University and a technical adviser, for this year’s edition of Quality Counts.

In Massachusetts, Hehir has studied whether the money that districts have available affects students’ services and their access to the general curriculum. The study was prepared for plaintiffs in a school finance suit against the state, and it has not yet been published.

The study analyzes the scores on state exams of special education students from four low-wealth and three affluent districts. It found that a much higher percentage of students with disabilities in the low-wealth districts were failing the exams than in the high-wealth systems.

For instance, on the 4th grade Massachusetts Comprehensive Assessment System test in English/language arts, special education students’ failure rates in the low-income districts ranged from 48 percent to 56 percent. Failure rates for students with disabilities in the wealthier districts ranged from 9 percent to 18 percent. Failure rates in 10th grade mathematics in two of the wealthier districts ranged from 20 percent to 29 percent, while the low-income districts saw failure rates of 73 percent to 87 percent for students with disabilities.

Hehir and his colleagues contend that funding was “a significant factor” causing the disparities: The four low-income districts, they say, can’t provide proven best practices because of a lack of resources. The lower-wealth districts spent, on average, $12,403 per student in special education, while the wealthy districts spent an average of $15,985.

“The differences between special education implementation in high-income and low-income districts are quite startling,” says Hehir, who is a former director of the U.S. Department of Education’s office of special education programs. “The fact of the matter is, kids in poor communities don’t have the same thing—sometimes, it seems like a totally different program.”

A majority of students with disabilities should be able to pass Massachusetts’ high-stakes assessments, he adds. Statewide, general education students in the class of 2004 have a passing rate of more than 90 percent, while students in special education have a 67 percent passing rate.

Hehir also found that students in the four low-wealth districts were less likely to be identified as needing special services. And, if identified, the students were more likely to be placed in self-contained special education classrooms without access to the general curriculum, and were more likely to have ill-prepared teachers in larger classes.

“We found that inappropriately restrictive placement seems to be especially common for students with emotional disabilities,” Hehir writes.

That leads to a dramatically different special education experience for those students, he says. Further complicating the problem, research has found that students in high-poverty communities tend to be at greater risk for disabilities than their wealthier peers are. Factors such as poor prenatal care, exposure to lead paint and other environmental hazards, and lack of access to early-intervention services are more common in poor communities.

Financial Challenges

Several factors are fueling growing special education costs in districts and states across the country.

For one, educators have become better at identifying children with disabilities. Lawmakers also have expanded definitions of disabilities and added new categories, such as autism, in recent years.

Then there are those who maintain that the demands of standards-based education—including the expectations contained in the No Child Left Behind Act—have nudged thousands of low-achieving students, sometimes unnecessarily, into special education.

In addition, medical advances mean that many children with severe disabilities who once might have died soon after birth or been institutionalized are now attending school. Schools have seen the costs of providing health care and other medically related services for those and other students soar in recent years.

When Congress passed what was then called the Education for All Handicapped Children Act in 1975, guaranteeing children with disabilities a free, appropriate public education, many legislators and lobbyists believed that the federal government would chip in the excess costs for the new mandate on states. But the percentage of federal aid, then estimated at 40 percent above the costs of educating the average general education student, has never risen above 12 percent, according to the Department of Education.

In the late 1990s, pressure generated by Congress finally succeeded in pushing up the federal appropriation for state grants for special education. The allocation for those grants has risen from $2.3 billion in fiscal 1995 to $8.5 billion in 2003.

The 1997 reauthorization of the Individuals with Disabilities Education Act, the current name for the 1975 federal law, contains a “maintenance of effort” provision that stipulates states cannot use federal money to supplant their own contributions except in cases of extreme hard ship. But with lingering economic troubles, some states may be forced to cut their special education budgets, even if it means violating the IDEA requirements, says Michael Griffith, a policy analyst with the Education Commission of the States, based in Denver.

“We’ve seen a lot of states that have had to make some dramatic cuts to education, and lots of cuts around the edges that would affect special education students,” such as after-school and tutoring programs, Griffith says. “If we have to go through another round of cuts, it’s going to be really hard not to cut special education.”

Tom Parrish, the director of the Center for Special Education Finance, in Palo Alto, Calif., says lawsuits against state finance systems also have provoked states to pay more attention to the adequacy of special education funding.

Parent Pressure

Today, the amount and percent of funding states provide to their school districts for special education services vary radically from state to state.

Some local administrators struggling to pay for special education feel trapped: They are pinched by high costs, but are required by the IDEA and state laws to offer a high level of services.

And while districts appreciate the recent increases in IDEA state grants, the greatest challenge for states and districts has always been paying for the remainder of the costs of special education, says Beth P. Kellerhals, the superintendent of the 10,000-student Catoosa County schools in northern Georgia. The district serves about 1,400 students with disabilities.

“Georgia has tried to shoulder as much of that burden as it can,” Kellerhals says, “but with the current economic crisis we’re facing nationwide, we’re seeing reductions, yet we must provide the same level of services.”

Districts have little flexibility in paying for special education services, she adds, because the individualized education plans, or IEPs, for students with disabilities mandate the services they are to receive. When budgets decrease, she says, districts have two choices: find a new source of revenue or cut from general education.

“The shortfall must be made up at the local level, and for us, it’s resulting in a major property-tax increase this year,” Kellerhals says.

Recent statistics show that, in some cases, it’s the richer districts that identify higher percentages of students as having disabilities.

Different Approaches

Greenwich, Conn., one of the nation’s wealthiest communities, recently came under the spotlight because of its high rate of students with disabilities—as much as 20 percent of its school population in recent years, well above the national average of about 13 percent. The Greenwich school district enrolls 9,000 students.

Researchers say that in many well-to-do communities, savvy parents pressure administrators to classify their children as needing special services and accommodations to help them gain better test scores and, as a consequence, an edge in college admissions.

Many special education administrators also suspect that parents of children with disabilities gravitate to districts that offer the best services, says Bruce Hunter, a senior associate executive director of the American Association of School Administrators, located in Arlington, Va.

“Those programs act as a magnet, and it increases [the districts’] cost,” he says. “It’s a disincentive to have really good programs.”

According to experts, state systems for financing special education fall into six broad categories, with some states using hybrid models that draw from more than one system. (See story, this page.)

One of the most common assigns a weight to each special education pupil, which indicates that the state will provide additional dollars for that child’s education. In some cases, states provide multiple weights that supply even more money for those students whose education is expected to cost more, such as a youngster with severe disabilities who needs exceptionally expensive services.

State legislators have long debated the wisdom of such a funding formula, however, because of concerns that it encourages districts to overclassify some students as having disabilities in order to receive more money.

A December 2002 study, by Jay P. Greene and Greg Forster of the Manhattan Institute in New York City, provided support for those suspicions. It found that special education populations grew more than 1 percentage point higher in states that provided an allocation for each special education pupil, compared with states that gave a lump-sum contribution to districts.

As a result, some states use a “flat grant” or “census-based” formula that provides districts with a fixed amount of money or a lump sum. Under the census-based approach, the amount is based on a district’s total student enrollment, rather than on the number of special education students served.

Yet another approach is to reimburse districts for all or a specific portion of their actual special education costs. Finally, some states provide funding for specific resources for special education, such as teachers or curriculum.

Currently, states appear to be moving toward the resource-based model, says Steve Smith, a policy analyst with the Denver-based National Conference of State Legislatures.

That plan emphasizes services, says Smith. “It’s not as if a kid can have an IEP and then not get those services,” he points out.

Those states that have tried to increase their shares of special education funding have run into opposition from general education groups, says Hunter of the school administrators’ association, because there’s a limited pot of money for all educational programs.

“Nobody is funding both regular education and special education at a level that meets the requirements of an adequate education for all children,” he contends.

In March 2024, Education Week announced the end of the Quality Counts report after 25 years of serving as a comprehensive K-12 education scorecard. In response to new challenges and a shifting landscape, we are refocusing our efforts on research and analysis to better serve the K-12 community. For more information, please go here for the full context or learn more about the EdWeek Research Center.

A version of this article appeared in the January 08, 2004 edition of Education Week


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