Special Education Funding Proposal

PA Association of School Business OfficialsOctober 23, 2013www.pasbo.org

A New Special Education Funding Formula Should:

• Use existing data to avoid an overwhelming and costly new state mandate.• Address the current inequities in state special

education funding.• Provide additional targeted funding to address

extremely high cost students. • Recognize that the budget impact of special

education costs varies by a school district’s financial capacity.

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Category 1 Proposal: Rebalance Special Education

Funding (SEF)• The range in SEF to school

district is $1,464 to $7,327 per special education student. • Act 3 mandates retention

of hold-harmless in new funding system. • Rebalancing of future

increases in SEF is needed. The current distribution data is known, verifiable and reliable.

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Category 1 Proposal: Special Education Incidence Rate

• The incidence rate is determined by Individualized Educational Plans (IEPs). As the number of special education IEPs increases, the cost to the district increases.• The current SEF distribution

harms those with the highest incidence rates because it assumes a 16% incidence rate. • This indicator is known,

verifiable and reliable.

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Category 1 Proposal: Calculation

• Factors: Using actual 2011-2012 data, we identified school districts that were both above the statewide average in special education incidence rate (greater than 15.1%) AND below the statewide average of state per student special education funding ($3,882.27).

• Approximately 200 school districts (about 40% of districts) met both criteria.

• Distribution: Using 2011-2012 data, we divided the total dollar amount available for Category I by the total number of special education students in all the school districts that met both criteria. This gave us a per student amount that was distributed based on the number of special education students in each eligible school district.

• Example: If there were $10 million for distribution and the eligible districts served 110,517 (our estimate) special education students (about 42% of total special education students), each eligible district would receive $90.48 per special education student.

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Category 1 Example: School District A

• Urban district, Southeast PA• Total enrollment=3,145 • Special education

funding per student=$3,340.60• Special education

enrollment=609• Special education

incidence rate=20.3%

• Because District A is both below the state average for per special education student funding AND above the state average for special education incidence rate, the district would receive $90.48 for each special education student, or $55,104.64, under Category 1.

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Category 1 Example: School District B

• Rural district, Central PA• Total enrollment=5,472• Special education

funding per student=$4,190.04• Special education

enrollment=774• Special education

incidence rate=14.3%

• Because District B is above the state average for per special education student funding and below the state average for special education incidence rate, the district does not receive any additional funding under Category 1.

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Category 2 Proposal: Target Higher Cost Students

• Special education students categorized as severe is an indicator of higher special education costs.• Penn Data categorizes all

students as severe except for students with a specific learning disability or emotional disturbance educated in the school district and a portion of students with mental retardation or speech impairment.

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Category 2 Proposal: Focus on Total Cost

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• Special education expenditures may be placed into categories of high, median and low for statistical purposes by what really matters is TOTAL special education cost.

• Total special education cost includes:• Special education instruction • Legal Services

• Guidance Services • Medical Services

• Psychological Services • Nursing Services

• Psychological Testing Services • Transportation Services

• Assessment Services • Social Work Services

• Speech Pathology/Audiology Services

• Placement Services

• Instruction/Curriculum Development Services

Category 2 Proposal: Focus on Total Cost

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• Total special education expenditures on annual basis are now reported to the PA Department of Education in the Annual Financial Report (AFR) and also used for Act 1 exception filings.

• Wealthier districts may have resources for funding special education services that less wealthy districts do not have. Therefore, relative wealth and ability to pay must be included as factors.• We used equalized personal income: A school

district’s total taxes collected and remitted divided by its total personal income.• We used equalized personal income because it

avoids the assessment/STEB issues inherent in equalized millage and measures the relationship between tax effort and the personal income of district residents.

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Category 2 Proposal: Consider District’s Ability to Pay

• Use a school district’s relative wealth as measured by equalized personal income for special education.• Equalized personal income

for special education captures total special education costs AND the relative wealth of the district taxpayers. Higher special education tax burden creates higher equalized personal income for special education.

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Category 2 Proposal: Consider District’s Ability to Pay

Category 2 Proposal: FactorsSeverity of Special Education Need: Using 2011-2012 data from the Penn Data System, we identified:

• The number of special education students with severe special education needs in each school district.

• Each districts’ percentage of special education students with severe needs to the district’s total special education population.

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Disability

Public School

Separate Facility Residential

Correctional Facility

Hospital/ Home

Bound

Instruction in

the Home

Hearing Imp Including Deafness Svr Svr Svr Svr Svr Svr

Visual Imp including Blindness Svr Svr Svr Svr Svr SvrEmotional Disturbance Mild Svr Svr Mild Svr SvrOrthopedic Impairment Svr Svr Svr Svr Svr SvrOther Health Impairment Svr Svr Svr Svr Svr SvrSpecific Learning Disability Mild Svr Svr Mild Svr SvrDeaf-Blindness Svr Svr Svr Svr Svr SvrMultiple Disabilities Svr Svr Svr Svr Svr SvrTraumatic Brain Injury Svr Svr Svr Svr Svr SvrAutism Svr Svr Svr Svr Svr Svr

Exceptions to the above assessment are as follows:Mental Retardation: No. of "Severe" Students = [Total Public Enrollment] x (0.00174); No. of "Mild" Students = (Total for MR) - (No. of "Severe" Students)Speech Impaired: No. of "Severe" Students = (Total for "Full Time" Regular SI students) + (Total for "Full Time" Non-Regular SI students); No. of "Mild" Students = (Total for SI students) - (No. of "Severe" SI Students)

Category 2 Proposal: Factors

Net Special Education Expenditures as a Percentage of Total District Expenditures: Using 2011-2012 AFR data, we determined the total special education expenditures in each district. This number includes all special education instructional costs, as well as all other related special education costs. We then subtracted out the state reimbursement to each district to get each district’s net special education expenditures. Using 2011-2012 AFR data, we then found the percentage of the net special education expenditures in each district to district total expenditures.

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Category 2 Proposal: Factors

Equalized Personal Income for Special Education: Using 2011-2012 data, we first divided each school district’s total taxes by the district’s total personal income to get the equalized personal income for each district. We then multiplied the district’s equalized personal income by the district’s net special education expenditures as a percentage of total expenditures. This results in the district’s equalized personal income for special education.

NOTE: We have also run calculations using equalized millage rate in each district to account for tax burden in place of equalized personal income.

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Category 2 Proposal: Calculation

• We calculated a weighting factor by multiplying the following three factors:• Total number of students in each district with severe special

education needs• Percentage of special education students with severe special

education needs to all special education students in each school district

• Equalized personal income for special education (could also use equalized millage for special education)

• We assumed that there was $10 million available for distribution under Category 2, which was distributed proportionally to districts based upon the weighting factor.

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Category 2 Example: School District A

• Number of special education students with severe needs=153

• Percentage of special education students with severe needs=25.12%

• Net special education expenses=$10,867,361

• Net special education costs as a percentage of total expenses=20.2%

• Equalized personal income=82.9

• Equalized personal income for special education=16.97

• Because over 25% of District A’s special education population has severe special education needs and the district has high equalized personal income for special education, District A would receive $75,069.87 under Category 2.

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Category 2 Example: School District B

• District B is below the state median for the percentage of special education students with severe needs, and their equalized personal income for special education is relatively low. They would receive $7,350.25 under Category 2.

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• Number of special education students with severe needs=115

• Percentage of special education students with severe needs=14.86%

• Net special education expenses=$5,669,114

• Net special education costs as a percentage of total expenses=9.2%

• Equalized personal income=40.5

• Equalized personal income for special education=3.74

Category 3 Proposal: Extraordinary Special Education

Costs• The Contingency Fund currently provides limited

resources to some school districts and charter schools with extraordinary special education costs. • With only approximately $10 million to distribute

under the fund, a cap of $150,000 for each district or charter school, and no predictability from year to year, the fund does not provide any meaningful relief to districts or charters with very high cost students.

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• Provide additional funding to school districts or charter schools for every special education student costing greater than $50,000 per year.• Require the state to pay 50% of the special

education costs over $50,000 or the district’s aid ratio, whichever is greater.• Do not cap the amount of money available to each

school district.

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Category 3 Proposal: Extraordinary Special Education

Costs

Category 3 Proposal: Extraordinary Special Education

Costs• Implementation: Category 3 would modify the current

Contingency Fund application process to require school districts and charter schools to apply for funds for each eligible student based on actual costs, not based upon estimates or predictions.• Using 2011-2012 Act 16 reports, there were 4,054 special

education students costing school districts over $50,000 a year. • These costs can be tracked on a per student basis in large

part because there are specific service providers assigned to each student, including approved private schools and residential facilities.

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Category 3 Example: School District A

• Aid Ratio: 0.6402• Number of students

costing over $50,000-$75,000: 3• Number of students

costing over $75,000: 3

• Assuming District A would apply for additional funds for all eligible students, the state would cover 64% of all special education costs above $50,000 for each eligible student. They would receive approximately $120,000 under Category 3.

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Category 3 Example: School District B

• Aid Ratio: 0.6621• Number of students

costing over $50,000-$75,000: 6• Number of students

costing over $75,000: 0

• Assuming District B would apply for additional funds for all eligible students, the state would cover 66% of all special education costs above $50,000 for each eligible student. They would receive approximately $50,000 under Category 3.

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Charter school special education tuition costs to districts also

drive special education expenditures

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The PASBO proposal is a work in progress. We value comments, suggestions and feedback. Our goal is a new funding formula that does not mandate new reporting and utilizes current special

education data that is known, verifiable and reliable.

Questions and Answers

ABOUT PASBOwww.pasbo.orgSmart Business + Informed Decisions = Great SchoolsThe Pennsylvania Association of School Business Officials (PASBO) is a state wide association, 3,000 members strong, devoted to helping the business of schools stay on the right track through ed ucation, training, professional development and timely access to legislative and policy news. Our membership base covers school professionals working in finance, accounting, operations, facilities, transportation, food service, technology, communications, human resources, purchasing and safety services. While diverse in areas of specialty, all members share a common goal - to support class room learning in schools during good and bad economic times through smart business practices. PASBO helps make that goal a reality.

Jay Himes, Executive Director, jhimes@pasbo.orgJeffrey Ammerman, Director of Technical Assistance,

jammerman@pasbo.org Hannah Barrick, Director of Advocacy, hbarrick@pasbo.org

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