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June 27, 2014 9:27 AM Report: Federal Special Ed Dollars Not Always Fairly Distributed

By Clare McCann

This week, the U.S. Department of Education announced a new framework to hold states accountable for the IDEA dollars they spend. But my new report, released today, asks a different question: How well is the IDEA funding formula even distributing that money to states and districts? The federal government’s second-largest PreK-12 program spends $11.5 billion a year on special education grants to states — and those dollars aren’t always being distributed all that wisely, we found in the report. And with every passing year that lawmakers fail to reauthorize the Individuals with Disabilities Education Act (IDEA), its flaws are compounded.

Federal Funding for Students with Disabilities: The Evolution of Federal Special Education Finance in the U.S. offers a brief history of special education finance in the U.S. The latest significant shift from lawmakers, codified in 1997, changed the mission of IDEA, from providing dollars directly based on the number of special education students to a new formula aimed at providing sufficient resources without encouraging the over-identification of students as requiring special education–mainly by cutting out financial incentives to do so. Since fiscal year 2000, funding has been provided to the states based on whatever level of IDEA funding the state received in 1999, with the remainder of funds split by the state’s share of population (85 percent of those dollars) and its share of poverty (15 percent). States allocate their federal dollars to school districts on the same formula: a 1999 base year, plus all remaining dollars on the 85 percent/15 percent population and poverty split.

But there’s a catch–a few of them, actually. The formula includes a set of three minimum award formulas, so small states generally fare better than most, in the end. There’s also a maximum award to ensure no state gets too much money, even if its share of population and poverty would otherwise earn it those dollars or if that state’s levels have changed significantly since 1999. And a hold-harmless provision requires every state’s allocation to be at least equivalent to its prior year’s allocation, unless Congress reduces the total appropriation — a guarantee that every state’s funding goes up nearly every year, even if its total enrollment has plummeted.

We found in our analysis that those factors have an on-the-ground effect in states and school districts. Using data available only through New America’s Federal Education Budget Project database, we reviewed district-level federal IDEA allocations for a sample of 39 states. And the results show some concerning aberrations, including:

  • Substantial variation in federal IDEA dollars provided to states and school districts across the country;
  • Higher per-child IDEA allocations in the lowest-enrollment districts, as well as districts within the lowest-enrollment states; and
  • Considerable differences in per-child IDEA funding across school districts with changed enrollment between the base year and today.

Those variations in spending mean real differences in dollars across school districts. Take Sedona-Oak Creek Joint Unified District in Arizona, where per-child IDEA allocations total only $159. Compared to Hartington Public Schools in Nebraska, where per-child IDEA funding totals $274, that’s 53 percent less per child. States and school districts are likely responsible for making up those costs as they work to comply with the federal guarantee of a “free, appropriate public education” for children with disabilities. Multiplied across thousands of districts, those differences add up.

There are some patterns in the disparities in IDEA per-child funding. For instance, high-enrollment districts receive noticeably less per student than do low-enrollment districts, likely thanks to the minimum award calculations that promise all states access to a certain level of funding, whether or not their enrollment demands it. Districts with fewer than about 300 students received median IDEA funding of $226. Meanwhile, those with more than about 3,700 students were allocated only about $199 per child.

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Districts located in the smallest states also fared better in per-child funding. School districts in Delaware, Idaho, Montana, New Hampshire, Rhode Island, South Dakota, West Virginia, and Wyoming had a median IDEA allocation of $230 per child. But in the largest states in the sample–Florida, Georgia, Illinois, North Carolina, New York, Ohio, and Texas–per-child funding was only $206 at the median.

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And districts’ changing enrollment also affects per-child IDEA funding. That’s because the base year of funding in the formula (fiscal year 1999) is now 15 years out of date. Although the base-year funding was based on special education identification within the state, that’s a component that has historically tracked overall enrollment. Where states had an especially big drop in overall enrollment from 1999 to 2011–greater than 17 percent–per-child IDEA funding totaled about $45 more than in other states. Among districts with declining enrollment since 1999, average IDEA allocations are higher than in districts with even or growing enrollment. The difference in some states between the two types of districts tops 50 percent.

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The Individuals with Disabilities Education Act, which expired in 2010, is one in a long line of education legislation overdue for reauthorization. But as the report shows, keeping the law on autopilot isn’t working for school districts or for students. It’s time for Congress to consider the ramifications of the law it last examined a decade ago–and to ensure the $11.5 billion in federal funds dedicated to special education are distributed equitably and efficiently.

Click here to read the full report.

[Cross-posted at Ed Central]

Clare McCann is a policy analyst with the Education Policy Program at the New America Foundation. Find her on Twitter: @claremccann

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