Cost Impact on Local Districts - Individuals With Disabilities Education Act

It is well-established that special education enrollment and aggregate costs have increased markedly in recent years. At the same time, there have not been proportionate increases in federal special education (IDEA Part B) appropriations or state education spending. Regardless of federal and state special education funding, however, local communities under IDEA must provide a free appropriate public education in the least restrictive environment to children with disabilities, no matter how high or low those costs are in the case of an individual child or how high they are for a group of children with disabilities. As a result, special education spending by local districts has consumed a large portion of increased education funding nationally -- 40 percent of the increase by one estimate -- since the late 1960s.

Growing Population of Students with Disabilities

The population of students identified as disabled has grown twice as quickly as the general education population. During the twenty year period between the 1984 and 2004, the special education population increased by 36 percent. In contrast and during that same period, the general education population increased by only 20 percent, almost half as quickly. Students with disabilities grew from 11.1 percent to 13.8 percent of the total school population.

A significant portion of the increase in special education enrollment is the result of more students with disabilities from birth to age five being identified and participating in new preschool and early intervention services. Congress widened the definition of "disabled" in 1997 to include the population of "developmentally delayed" children ages three to nine. In addition, growth has been fueled by the increase in identification of grade school level children with learning disabilities. In 1976, the percentage of public school children identified as learning disabled was 1.8 percent. Today, children identified as learning disabled equal approximately 5 percent of the total public school population.

In other words, almost half of students served by IDEA are classified as learning disabled. In fact, there is concern that schools and teachers may over-identify children with learning disabilities. Claims of over-identification have focused on subjective diagnostic processes, which allow schools to place low-performing students in special education. At the same time, a growing understanding of learning disabilities and early intervention services has legitimately expanded the prevalence of these more mild disability classifications since IDEA’s enactment. And the trend of rising identification has leveled off: in the past five years, the number of students with learning disabilities served by IDEA has decreased by approximately 4 percent.

Primarily because of the quickly expanding population of children with disabilities, special education spending has increased at a much faster rate than general elementary and secondary education spending. During the 1999-2000 school year, the United States spent $50 billion on special education "support" services and an additional $27.3 billion on regular education for disabled students ($77.3 billion in total).[1] Special education support costs accounted for 12.4 percent of the $404.4 billion total spending on elementary and secondary education. With regular education expenses included, students with disabilities accounted for 19.1 percent of total national elementary and secondary education spending in 1999-2000, an increase of 13 percent from the 1977-78 school year.

Rising enrollment, not rising per pupil costs, has been the primary driver of special education spending. It is true service costs associated with some high-need disabilities have increased. However, the main expansion of the children with disabilities population has been in the lower-cost developmental disability categories. The annualized growth rate of spending per pupil for children with disabilities between 1985-86 and 1999-2000 was 1.7 percent after inflation, lower than the 2 percent growth rate in spending per pupil for all students.

In general, state contributions to special education spending have not kept pace with escalating special education expenditures. In 1987, state funding accounted for 56 percent of special education spending and local funding accounted for only 36 percent.[2] In 1999-2000, the average state share of special education spending had dropped to 45 percent, and the average local contribution had risen to 46 percent, based on data from 39 states.[3]

Local school districts have had trouble covering such a high percentage of the $50 billion spent on special education services. Heavily impacted districts with a disproportionate number of high-need, high-cost disabled students struggle the most, particularly if the district is small or rural. Of all disabled students, approximately one-half of one percent, or around 330,000 students, require more than $100,000 in special education services per year. Given that federal and state funding formulas do not take the distribution of high-cost disabilities into account, districts with concentrations of these high-need students have much more substantial spending obligations.

The 2004 reauthorization of IDEA tried to alleviate the local fiscal strains associated with IDEA by allowing states to reserve 10 percent of their Part B "other state activities" funds (around 1 to 1.05 percent of the total grant) for "risk pools," or pools of funding specifically set aside for the services of high-need children. States can distribute funding from these risk pools to districts with high-cost students. In addition, some states have created their own "extraordinary cost" accounts with state funding to provide additional support to heavily impacted districts, although funding of those accounts is unsteady and often cut or eliminated in the case of a budget shortfall.