Special Education Costs Flood School Budgets

by Carol Kocivar | February 3, 2020 | 2 Comments
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Districts Struggle to Stay Afloat

The rising costs of special education services are overwhelming your school district budget. And we are talking big bucks. Nearly 800,000 students in California receive special education services — about one in every eight students.

According to 2019 estimates by the California Legislative Analyst Office (LAO), the average annual cost of educating a student with disabilities — $27,000 — is almost triple the cost to educate a student without disabilities — about $10,000.

Special education is funded by a combination of federal, state and local dollars, as described in the chart below. The federal portion is the smallest part: in the chart, it's represented by that small sliver of blue.

To qualify for these federal funds, California commits some state funds, shown on the chart as "state categorical." Notice, however, that the largest portion of the funds for special education services come from local district budgets — called “Local Unrestricted” on the chart. These costs are primarily paid out of your district LCFF funds, reducing funding for other services.

How does this work? Why are school districts — not the state and the federal government — footing most of the costs? Why are costs going up? Here’s what you need to know.

Federal Goals Unmatched by Federal Funds

Before the 1970s, many schools did not educate children with disabilities. Court cases and changes in public opinion led to change: in 1975 Congress enacted a bipartisan civil rights law later named the Individuals with Disabilities Education Act (IDEA). This federal law, last renewed in 2004, requires that special education services be individually provided for each child with disabilities.

The Target: 40%

Educating children with disabilities costs more than educating children without them. From the start, a combination of federal funding and dedicated state funding was part of the plan. The law set a target: for each student identified, federal funds would cover up to 40 percent of the additional costs.

Federal funding for special education has never come close to this 40 per cent target, which is commonly called “Full Funding.” (A lot of folks are confused by this term. I know I was. It just means meeting the federal 40 per cent target for funding, not funding ALL special education costs.)

The Reality: 15%

Just how much is the federal government short-changing the states? According to the California Legislative Analyst, “Actual federal funding to California schools has long fallen short of this target. It was $3.2 billion below the target in 2018-19.” The current national level of funding is just under 15 per cent, far below the 40 percent target.

State and District Funds Pay for Most Special Education Services

Though far less than promised, federal dollars for special education services still matter. IDEA has been reauthorized and modified several times, most recently in 2014.

To access federal IDEA funds, California dedicates funds for special education as part of the state's general fund budget. (It's counted as part of the Proposition 98 budget.)

In California, most of the state and federal funding designated for special education is disbursed to school districts and charter schools through a system of Special Education Local Plan Areas (SELPAs). These entities coordinate special education services within a geographic region or a group of school districts.

As with overall federal and state funding for special education, money is allocated to SELPAs on the basis of overall attendance in order to avoid creating an incentive to identify lots of students as disabled.

This approach has been a subject of debate because some school districts have higher costs and higher numbers of students with disabilities. An important study associated with Getting Down to Facts concluded that this system avoids creating financial incentives to over-identify and inappropriately place students in special education programs. (This is a particular concern for minority students.)

Governor Newsom, who struggled with dyslexia as a child, has indicated that he intends to make a priority of improving the state's funding systems for special education.

A Zero-sum Problem

Districts and charter schools must meet the needs of each student who qualifies for special education services. It's the law, regardless of whether sufficient federal and state funds have been specifically set aside for it.

The cost of providing special education services has risen significantly over time. Neither federal nor state funding has kept pace. The math is unavoidably zero-sum.

To pay for special education services, school districts and charter schools use unrestricted funds from LCFF, which reduces the amount of money available for other students and programs. The portion of the cost of special education that is locally funded has grown from 49 percent of the cost in 2007-08 to 61 percent in 2017-18.

Special Education Costs Are Up. How Much? Why?

Autism rates are rising

The cost of providing special education services in California has grown significantly over time. In 2017-18 the total cost was about $13 billion. According to the state Legislative Analyst Office this represented an increase of about 28 percent over a decade earlier, adjusted for inflation. The percentage of students receiving special education services jumped from 11 percent to 13 percent.

What happened? About two-thirds of the cost increases reflect the growing number of students with severe disabilities, especially autism. According to the Legislative Analyst Report LAO School District Funding 2020, “The share of students identified with autism has increased from 1 in 600 students in 1997-98 to about 1 in 50 students in 2018-19. Many medical experts expect autism rates to continue increasing, thereby placing continued cost pressure on schools.”

Quick Recap

  • Federal law requires states to provide special education services, but federal funding does not cover the costs at the intended level.
  • The state allocates categorical funds — dedicated money — to pay for special education services, but not at a level that matches growing costs.
  • School districts and charter schools are legally required to educate all students, including those who need special education services. As the cost of educating students with autism has risen, school districts have picked up most of the cost.

Dig Deeper

Read the Overview of Special Education in California 2019 from the California Legislative Analyst

Read the Governor’s Proposed Education Budget 2020-21. Read pages starting at 77 for a discussion of his funding proposals.

Read The Individuals with Disabilities Education Act (IDEA) Funding: A Primer from the Congressional Research Service.

Read the argument for IDEA Full Funding from the National Center for Learning Disabilities

Read Revisiting Finance and Governance Issues in Special Education from the Getting Down to Facts project

Read The Next Big Thing: Fix Special Education from the Ed100 blog

Questions & Comments

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user avatar
Brenda Etterbeek March 10, 2020 at 11:48 am
Is GATE under the umbrella of Special Ed?
user avatar
Jeff Camp March 26, 2020 at 11:59 am
The short answer is no. There is no dedicated funding for gifted education programs -- schools and districts are allowed to have them but not required to do so. There is no significant state or federal funding committed to them. I have never heard of giftedness being accepted as a basis for resources in an individual education plan. (That said, there are plenty of students that are "twice exceptional")
user avatar
Brenda Etterbeek February 18, 2020 at 12:54 pm
What happens when there is just no money left yet these needs are rising ....
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