Special Education Funding

FINANCING SPECIAL EDUCATION IS A GROWING PROBLEM November 2006

The election is over and we are hearing encouraging words of cooperation to address state problems. One of the biggest continues to be special education. A review and analysis of special education funding in Wisconsin clearly shows that state officials have failed to fully and fairly finance the costs of serving disabled students. Initially the state categorical aid was established to cover 70% of special education costs. This year categorical aid is expected to cover about 28.6% of those costs and without any changes that would drop to 26.2% by 2008-09.

We are now in the 14th year of a five-year experiment with school district revenue limits and it is expected that they will remain in effect through the coming biennium and the experiment will be extended to 16 years. Since revenue limits have been in place the damage caused by non-recognition of unaided special education costs has spread to virtually everything a school district does. The following table shows what is expected in the 16 years that revenue limits will have been in effect if no changes are made in special education funding for the next biennium.

  • The population of disabled students will be 32% higher ñ an increase of 1.8% annually;
  • The cost of serving disabled students will increase 140% or about 5.7% annually;
  • Categorical aid has increased 29% or about 1.7% annually;
  • Categorical aid per pupil has decreased by $33 or about 1.3%;
  • The cost not covered by categorical aid will increase 246% or about 8% annually.

The amount of unaided, unrecognized special education costs will reach $939 million annually, an increase of $668 million since revenue limits have been in effect.

SPECIAL EDUCATION FUNDING
Population, Cost and Categorical Aid
While School District Revenue Limits Are In Effect
16 Year Period
Before
(1992-93)
Since **
(2008-09)
Change
% Change
Annual
% Change
Population 97,626 129,000 + 31,374 + 32.1% +1.8%
Cost $528.8* $1272.2* +$743.4* + 140.6% +5.7%
Cost Per Pupil $5417 $9862 +$4445 + 82.1%
Categorical Aid* $257.7* $332.8* + $75.1* + 29.1%Ý +1.7%
Aid as % of Cost 48.7% 26.2% - 22.5%
Aid Per Pupil $2640 $2607 - $33 - 1.3%
Unaided Cost * $271.1* $939.4* +$668.3* +246.5% +8%
* Millions ** DPI Budget Estimates

Some state officials will tell you that the unaided special education cost is covered by equalization aid and the state pays about 2/3 of school costs. But a look at the marginal effect of our system helps us to understand what really happens. At the margin any increase in the unaided cost is not recognized under the revenue limits so these costs must be paid for by shifting or reducing other local budget appropriations. Any aid on those costs would come at the tertiary level (positive or negative).

The table below is intended to show the way in which our system aids those costs.

EQUALIZATION AID FACTORS 2006-07
Primary, Secondary & Tertiary Levels
Level Costs Covered Per pupil Guaranteed Tax Base
Primary first $1000 $1,930,000
Secondary $1000-$8252 $1,291,886
Tertiary over $8252 $483,017

Only 11 school districts (where shared cost is less than $8252/pupil) now receive secondary aid on their unaided special education costs. All others would be subject to tertiary aid where the guarantee is set at the state average property value. So if your district valuation is below state average your district would receive some tertiary aid (but much less than 2/3 of costs). And if your district valuation is above state average it would be subject to the negative tertiary aid provisions.

DPI has estimated a special education cost increase of 4.6% for both 2007-08 and 2008-09. If correct, this would mean that special education costs would rise by $56 million in 2007-08 and $110 million in 2008-09. State Superintendent Burmaster has proposed a $25 million increase in special education aid for each year. Even if her recommendations are adopted, the net result for school districts would be another $91 million in budget shifts or cuts in other school district appropriations in the next two years.

The best way to resolve this issue is to build special education costs into the revenue limit base through pupil weighting based on the cost of services actually provided to disabled students. Such a system would be more accountable than the present system as it would directly address concerns with over-identification of disabled students. In addition, as part of the revenue limit base the aid will increase with inflation. The costs of services actually provided to disabled students would be calculated as an FTE pupil weighting and increase the pupil count for revenue limit and equalization aid purposes. Because the weighted FTE count would be higher the annual allowable increase would be larger. And a larger share of district costs would be aided at the secondary level.

Now is the time to discuss this problem and solution with the state officials who represent your district.