Special Education Funding Proposal

1. Special Education Funding Proposal PA Association of School Business Officials September 20, 2013 www.pasbo.org

2. 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. • Restructure the special education calculation for charter schools.

3. Category I Proposal: Rebalance inequitable distribution of state 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.

4. Category I Proposal: Focus on 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.

5. Category I Proposal: Calculation • We identified school districts that were above the statewide average in incidence rate (more than 15.1% of students) AND below the statewide average of State Special Education Funding/Student ($3,882.27). • New state funding is directed to this group (about 40% of districts) to rebalance the current inequities. • All of this data is known, verifiable and reliable. • Calculation: Determine the total amount of special education students in these districts and divide into the dollars available in the formula. • Ex: If districts serving 110,517 (our estimate) special education students (about 42% of total special education students) and $10 million was allocated in this category, then an eligible district would receive $90.48 per special education student.

6. Category I Example: Pottstown School District • Montgomery County • Total enrollment=3,145 • Special education funding per student=$3,340.60 • Special education enrollment=609 • Special education incidence rate=20.3% • Because Pottstown SD 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 I.

7. Category I Example: Mifflin County School District • Mifflin County • Total enrollment=5,472 • Special education funding per student=$4,190.04 • Special education enrollment=774 • Special education incidence rate=14.3% • Because Mifflin County SD 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 I.

8. Category II 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.

9. Category II Proposal: Focus on total cost • Special education expenditures may be placed into categories of high, median and low for statistical purposes by what really matters is TOTAL cost. • Total special education cost includes:

10. Category II Proposal: Focus on total cost • 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.

11. Category II Proposal: Consider district’s ability to pay • Wealthier districts may have resources for funding special education services that less wealthy districts do not have. Therefore, ability to pay as measured by equalized mills for special education is a needed factor. • Equalized mill definition: “A school district’s total taxes collected and remitted divided by its total market value as certified by the Pennsylvania State Tax Equalization Board.” (From PDE)

12. Equalized Mills for Special Education Includes Two Important Measures • A school district’s tax capacity and ability to pay as measured by equalized mills for special education (the district’s net special education expenditures as a percent of the district’s total expenditures multiplied by equalized mills). • Equalized mills for special education captures total special education costs AND tax burden on district taxpayers. Higher special education tax burden creates higher equalized mills for special education.

13. Category II Proposal: Calculation • Uses severity percentage, equalized mills, and net district special education expenses to establish a basis for distribution—all known, reliable, and verifiable data points. • Calculate % of severe special education students as a portion of total special education students from Penn Data information. • Calculated total special education costs from 1200 category on AFR and special education schedule on AFR (had to estimate schedule for 11-12 as that data has not yet been released)

14. Category II Proposal: Calculation • Subtracted State Special Education Revenue to get Net District Special Education Expenses • Determined % of Net District Special Education Expenses as a portion of Total District Expenses • Multiplied by 2010-11 Equalized Mills (11-12 just released) to get Special Education Equalized Mills • Calculated a weighting factor of Special Ed Equalized Mills * Number of Severe Students * % of Severe Students as a portion of all Special Education Students • Distributed $10 million using the above product

15. Category II Example: Pottstown School District • Number of special education students with severe needs=153 • Percentage of special education students with severe needs=25.12% • Net special education expenses=$10,719,745 • Net special education costs as a percentage of total expenses=20.2% • Equalized mills=29.3 • Equalized mills for special education=5.92 • Because over 25% of Pottstown SD’s special education population has severe special education needs and the district has high equalized mills for special education, Pottstown SD would receive $68,559.61 under Category II.

16. Category II Example: Mifflin County School District • Mifflin County SD is below the state median for the percentage of special education students with severe needs, and their equalized mills for special education are relatively low. They would receive $7,085.69 under Category II. • Number of special education students with severe needs=115 • Percentage of special education students with severe needs=14.86% • Net special education expenses=$5,595,570 • Net special education costs as a percentage of total expenses=9.1% • Equalized mills=15.1 • Equalized mills for special education=1.38

17. Category III Proposal: Target state funding for extraordinary special education costs • Extraordinary costs for special education services, which often are private placements, can have severe budget effects. • These extraordinary costs are now addressed through the Contingency Fund. PASBO believes that Category III should replicate the current Contingency Fund but substantially increase the amount of funding available. • The current funding level of 1% coupled with the current eligibility standards results in a relatively small amount of funding being widely distributed, which provides minimal relief. • We believe a reduction in eligibility and an increase in funding would provide actual relief for very high cost special education services.

18. Category III Proposal: Fund the most extreme special education costs • These costs can be tracked on a per student basis in large part because there are specific service providers assigned including approved private schools and residential facilities. • The current eligibility for the Contingency Fund should be modifiedfor Category III.

19. 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

20. 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 ed­ucation, 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 class­room 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.org Jeffrey Ammerman, Director of Technical Assistance, jammerman@pasbo.org Hannah Barrick, Director of Advocacy, hbarrick@pasbo.org