DETAILS

Fall 2004 Status Report

On November 29, 1975, PL 94-142 (later, to become IDEA) was passed. Prior to that, special ed students were not given a right to attend public school across the nation. Laws pertaining to special education and disabilities are civil rights laws intended to guarantee equity. In Wa State, HB 90 had already been passed, but only a few years before. Funding in this state was based on an excess cost model. Later, the funding formula became very confusing and convoluted though a complicated ABCD formula based on disability label and very few people understood how it worked. Learning Disabled students were only funded to a certain percent, which was not only a cap, but when districts went above that cap, the state took money away from the LAP program. The WSSEC sued due to this infraction of students civil rights.

The Doran II lawsuit clearly stated that special education, remedial education, vocational education and ELL are all part of a student’s basic education and must be funded in order to meet the “paramount duty” requirement of the Wa State constitution.

In 1995-96, after much research and many studies, a new special ed funding formula was implemented. The new formula was based on each special ed student generating 1.0 FTE of the basic ed allocation PLUS .9309 of special ed excess cost dollars PLUS the federal allocations. In other words, every special ed student generates about 2 times the amount of a basic ed student. (This reflects all national studies of districts all over the country, according to the Center for Special Ed Finance) Districts (LEA’s) are supposed to count expenditures against ALL revenue, not just the .9309. Unfortunately, this is still not clearly understood and there is still no way to track the basic ed money. It should also be noted that when the basic ed allocation goes up, so does the special ed excess cost funding since it is based on a ratio. (1.0 FTE + .9309 of 1.0 FTE)

LEA’s were not required to use the same accounting system to collect data to use for Safety Net application until 2001, after advocates lobbied the legislature for a number of years. It was impossible to track expenditures at the local level. Every district had there own system of accounting. There were no state rules. The SAO, JLARC and others, were unable to find any consistency or even make educated judgments on the actual cost of programs. Documentation of these efforts is available from SAO, OSPI, JLARC and the Evergreen Public Policy Institute. Districts are still not required to account for the basic ed revenue generated by ANY student population. Errors in coding are found on a regular basis. A $1 million coding error was just found by parents in Olympia. If one or two million dollars were suddenly “found” for the districts that have filed suit, there is NO REQUIREMENT THAT THE MONEY BE USED IN SPECIAL EDUCATION.

Prior to the 1995-96 funding system, on average, 45% of the basic ed allocation that a special ed student generated was “backed out” and added to the district’s special ed excess cost allocation, for use by the special ed department. Currently, districts are supposed to use the “1077 method” for accounting (developed in 2001), but it is pretty much up to the LEA to decide how much of the basic ed funding to allocate to the special ed department. In 1994, districts loved this idea because it gave them “more flexibility.” Special Ed Directors were fearful, and for many years complained of having to “arm wrestle” the Superintendent or Business Manager. Advocates supported the new system because it treated special ed students as if they were basic ed students first (which they are) and did not allocate different amounts based on different disability labels. It recognized that districts need additional funds to educate students who need special ed, but the formula was neutral from a civil rights standpoint. Unfortunately many people have forgotten the formula is based on 1.9309 FTE + federal money. It was never intended to be based on excess cost revenue only.

Many districts have chosen to put levy dollars into the special ed department instead of basic ed funds. Currently, districts, on average, are only using a maximum of between 20% and 30% of the basic ed allocation for special ed. According to the data put together by the Superintendents who recently filed a law suit regarding special ed funding, 86 districts are actually over-funded and do not use all the special ed excess cost dollars they are allocated. Should the state collect it and redistribute it?

According to Bill Freund, consultant to WASA and past Senate education budget analyst, the total special ed revenue for 2002-03 is $595.7 million. Freund confirms this does not include any basic ed dollars. He states that the total expenditures were $775.9 million. At first glance this would seem to reflect a $180.2 million shortfall. However, 122,000 (approximate pop. of special ed students) times $8500 (a very conservative avg. of the total revenue available per student) equals over $1 billion 37 million. That leaves over $262 million, of additional dollars. Where is this money, specifically?

The “new” special ed funding system is a two-tiered system that allows districts to identify students in need of special education, up to the 13% index (state average for 2001 was 12.08%) and receive 1.9309 FTE in funding. There is no extra accountability required of them. This is not a cap. If LEA’s do not receive enough funding through the basic ed allocation and the special ed excess cost allocation + federal dollars, they should apply for Safety Net funding. The WSSEC believes that it is not only their right to apply for Safety Net funds; it is their responsibility. There is accountability required to receive safety net dollars. The most important requirements are 1. you must show a need (in other words you must show you spent what was allocated) and 2. you must have properly formulated IEP’s to show this. 3. the district must show that it is making an effort to operate within the formula. (this is from the court decision)

According to Doran III, “…the State will obviously have to be satisfied…that the district requesting the funding beyond the funds generated by the formula are in fact operating a reasonably efficient program of education for the handicapped students, that the IEPs are properly prepared and formulated, and the district is otherwise making an effort to provide the program requested within the funds generated by the formula.”

Unfortunately, there are no longer any separate, individual special ed audits done by the state. The information that is collected is part of the district-wide audit that is done every three years for most districts. The Safety Net Committee is made up of local district representatives of various types, representative of the Leg., the SAO and OSPI. There is a full time staff person at OSPI, assigned to help districts with the process in addition to the special ed staff and the budget and apportionment staff. The Safety Net Committee meets five times during the school year so that districts can reapply if they made an error or need to get more information. While audit findings can delay a district’s receipt of safety net funds, there is no requirement that districts pass special ed compliance monitoring, have few or no citizen complaints or have few or no due process hearings.

There have been a number of changes to the safety net process since it’s inception. There will surely be more. The process should not be effortless, but should be reasonable and reflect true accountability as close as possible. Currently the only category to apply under is the High Cost Student category. This should cover everyone though because a district that is over the 13% index would certainly have one or more High Cost Students and would easily meet the threshold of $7500 if they spent all of their allocation. An area that needs adjustment is the requirement of local funds being used when an LEA makes a safety net application. The rationale for requiring some levy money was to ensure that special ed students benefited to the same degree that non-special ed students benefit from levies. This can and should be done differently, and is fairly easy to adjust.

The Safety Net has never been completely used. Money has gone unused every year. If more money was needed, the OSPI would have to come up with. This can be done in a variety of ways, including cancellation or cuts in grants, if that became absolutely necessary.

There is no doubt that public school districts in Wa State need more money, especially since we have some of the highest assessment standards and graduation requirements in the country. It is unconscionable to pit one categorical program against another. We should all be working together to assure adequate and appropriate funding for all, including LAP, ELL, etc. (See attached bar graph showing other BEA + excess funds for LAP, etc.) We must not pit parents, educators and students against each other. There are other programs and students who are in even greater need and it is completely inappropriate to disregard or diminish their needs.

We must assure that schools have a transparent and easy to understand accounting system so that we can work together to help the public understand why and where we need more money. We must advocate for committees to review the literature and the research and make recommendations to OSPI and to the legislature for changes to our total funding system. Unless we are prepared to demand a completely accountable system, we will all lose.