Legislature may finally be ready to fix special ed funding

(Calif.) State lawmakers signaled Wednesday that they are considering making changes to the distribution method of special education dollars to address long-standing complaints that smaller districts especially are inequitably funded.

A joint hearing between California’s Senate and Assembly education budget subcommittees saw lawmakers largely agreeing on flaws in the current allocation system that was adopted in 1998.

A common theme Wednesday was the idea of reforming the 20-year-old law commonly referred to as AB 602, after its enacting legislation.

“We would love to create a system that is more reflective of the true costs of what schools need to provide resources and supports for these students,” said Sen. Ben Allen, D-Santa Monica, and chair of the Senate Committee on Education said. “If we’re going to make tweaks to the system that creates a more equitable distribution of funds based on the needs out there, how do we make sure we don’t repeat the mistakes that led to the passage of AB 602 in the first place?”

Currently, an oversight body—the Special Education Local Plan Areas—receives special education state funding based on total student attendance, and distributes the money to districts.

Complaints often stem from the fact that funding is based on how many students are enrolled in each district in the SELPA, rather than how many are enrolled in special education, or without taking into account the cost of services children need based on their disability.

According to Ryan Anderson, fiscal and policy analyst for the nonpartisan Legislative Analyst’s Office, prior state models for special education funding were more complex. Between 1920 and 1980, the state had about a dozen disability-specific special education categorical programs, each with its own eligibility criteria and funding rules–and only a fraction were mandatory.

To simplify the funding system and expand services to all students with disabilities, lawmakers shifted in 1980 to using funding rates that varied based on classroom setting and staff used. So, Anderson said, a SELPA would receive a higher rate for a special day class having one teacher and one instructional aide, and a different funding rate for students served in mainstream classes.

One problem–and what prompted the adoption of AB 602–according to Anderson, was that this system incentivized schools to serve students with severe disabilities in special day classes at higher rates rather than in mainstream classes.

Now, the argument is that due the changes made under AB 602, schools are not receiving enough money to cover services, especially among children with severe disabilities.

For instance, the state does provide some supplemental—although modest–funding for what are referred to as ‘low-incidence disabilities,’ a category that includes students who are deaf and hard of hearing, those who are blind or visually impaired, and those who are orthopedically impaired. Anderson said the supplemental money is about $450 per-student, despite supports for such disabilities often requiring tens of thousands of additional dollars.

Ensuring more students are properly served, and that schools receive adequate funding, is tricky he said.

“There’s a careful balance that has to be struck between providing adequate fiscal support and ensuring that there are no inappropriate incentives,” Anderson said.

Sen. Richard Pan, D-Sacramento, said that while the education committees could analyze incentives and disincentives to help schools provide services without being able to take advantage of extra funding to students’ disadvantage, he was skeptical that the current method was ensuring the students who need any level of support are receiving it.

“I understand what you’re saying, but I also find it an interesting policy approach to say, ‘well, instead of appropriately funding based on need, we’re going to allow students who need services to get crowded out because others have high demands,’” Pan said.

A panel of district superintendents echoed that sentiment, with many noting that they would like to do more, or in some cases even just provide the basics, but that a lack of funding forces them to make choices that put students at a disadvantage.

Francisco Escobedo, superintendent of Chula Vista Elementary School District, said his large district is doing well in serving nearly every subgroup besides SWDs. He cited funding as a major roadblock. The district wants to emphasize early intervention, Escobedo said, but that involves costly training of general education teachers on how to handle students with disabilities in their classrooms, and how to spot and refer students who may need additional support services.

At the same time, Helio Brasil, superintendent of the small Keyes Union School District, said the current method of funding distribution doesn’t work in his schools either. Even if they only have one or two SWD in a school, finding specialists to serve those children can be not only difficult, but extremely costly. In some cases, students in rural areas may have to be bussed hours away from their homes to have access to services that the district has to contract out for.

And the smaller overall enrollment that dictates how much funding rural SELPAs receive means funding is nowhere near high enough to meet the cost needs.

Maureen Burness, co-executive director of the statewide special education task force, told lawmakers that there currently exists a straightforward solution.

In a 2015 task force report, recommendations included revising the special education funding formula so that the growth or decline in the mainstream enrollment of multi-district SELPAs be based on the growth or decline of ADA for each individual district, charter school or county office of education, rather than in the SELPA as a whole.

The task force also recommended increasing the amount allocated per ADA so that SELPAs are more equitably funded.

That recommendation was provided again in a 2016 report from the Public Policy Institute of California, which suggested funding be equalized to the 2007 per-ADA rate. The PPIC report called on lawmakers to make the AB 602 formula more consistent with the Local Control Funding Formula principle of equity by pushing for greater equality in local funding rates.

Despite an increase to per-student funding for SELPAs with below average rates adopted more than 15 years ago, the LAO also noted that large differences among SELPA rates remain.

“The Legislature has not, since that 2007 budget cut, done anything of significance in the area of special education funding,” Burness said Wednesday. “If you look at the ADA rate–and the idea of LCFF is that everybody gets an ADA rate–our ADA rates in special education are unequal, and that’s where the fix is.”

Sen. Allen asked that the LAO examine how lawmakers might craft a bill that addresses equity issues while ensuring the state doesn’t repeat old mistakes.