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The Condition of Texas Special Education Finance and the Legislative Push to Fully Fund IDEA

Texas Special Education Finance and Legislative Funding

In 1975, the federal government passed Public Law 94-142, the predecessor of what would today become known as Individuals with Disabilities Education Act (IDEA).  Public Law 94-142 was passed with the sole purpose of insuring that all qualified students have special education and related services available to them.  Specifically, it set out to accomplish four goals: to ensure that special education services are available to children who need them; to guarantee that decisions about services to students with disabilities are fair and appropriate; to establish specific management and auditing requirements for special education; to provide federal funds to help the states educate students with disabilities.  It was no secret, even back then, that efforts to make special education services available to all, would be stifled by the lack of funding.  Acknowledging the need to resolve this problem, Public Law 94-142 created a funding formula that would provide each state with a maximum grant equal to the state’s number of children with disabilities receiving services multiplied by a percentage of the national average per-pupil expenditure (APPE).  As authorized, the APPE percentage was required to gradually increase from 5 percent in the fiscal year 1978 and increase to 40 percent in 1982.  The 40 percent APPE funding level has come to be known as the “full funding” amount of IDEA Part B.  Generally, IDEA Part B distributed funds to states under two sections: Section 611 provides funds for children ages three to twenty-one receiving special education in public schools and Section 619 provides preschool grants for children ages three to five.

How has the Individuals with Disabilities Education Act (IDEA) changed?

The IDEA has undergone several iterations and reauthorization since 1975.  The most significant and relevant reauthorization, as it pertains to finance, was the reauthorization that occurred in 1997.  Between 1987 and 1996, the number of children with disabilities being served had increased 33%.  Congress, out of concern that the established funding formula incentivized over-identifying students as needing special education, designed a new formula, moving away from a formula based on the number of children receiving special education in the state, to a formula based on the total population of children in each state and the percentage of those children who are living in poverty.  While this new formula was designed to resolve many of the over-identification concerns, it also renewed questions about insufficient resources.  

Fast forward to the reauthorization in 2004, and the IDEA now has two formulas for determining Part B grants to states: one for years when the appropriated amount available to states is greater than or equal to the amount available to states in the previous year, and one for years when the amount available to states is less than the amount available to states the previous year. However, the state’s grant amount is still based on the state’s share of the national child population and the national population of children living in poverty.  Additionally, the full funding amount of 40% of the APPE was maintained in the formulas adopted through the 1997 and 2004 amendments.  Despite all of the changes to the formulas, which were intended to better fund special education programs around the nation, the IDEA has never met the aspirational goal of 40% APPE.  Rather, IDEA appropriations for Part B have consistently accounted for, on average, approximately 13% of the national APPE between 1988 and 2017. 

To receive federal funding under the IDEA, all states, including Texas, must provide free and appropriate education (FAPE) and proper education services to all students in accordance with IDEA.  Federal dollars do not, however, make up the bulk of spending on special education services. A survey from the Center on Special Education Finance, conducted for the 1999—2000 school year, found that state dollars comprise about 45 percent of all special education dollars, with local dollars making up an effectively equal amount and federal dollars totaling only 9 percent of state dollars.  With that being said, it should be noted that IDEA Part B funds were intended to be used only to cover the excess costs of providing special education and related services to students with disabilities.  These funds are intended to supplement state and local funding of special education and not be used to supplant state and local funding efforts. 

While Texas ranks among the top states in the nation when it comes to school accountability, it is no secret that it has had its difficulties funding public education.  Many critics argue that this is due to the state’s controversial “Robin Hood” school finance system, which requires wealthy school districts to distribute money to support property-poor school districts, in turn causing property tax rates in wealthy school districts to increase substantially.  Others argue that the implementation of tax relief packages throughout the state are contributing to school finance difficulties.

In 2019, after media reports and a subsequent federal investigation showing the State’s violation of IDEA, the 86th Texas Legislature passed House Bill 3.  House Bill 3 is a very complex piece of legislation that, among other things, provides more money to support the special education needs of Texas districts.  The bill increased the basic allotment per student from $5,140 to $6,130, as well as increased the mainstream special education weight for special education students participating in mainstream instruction from 1.0 to 1.5.  This weight change represents an average increase of $970 per average daily attendance.  The most recent figures released by the Texas Education Agency show that special education funding has increased nearly $1 billion over a four-year period.  This increase in funding has resulted in an increase in the number of students with disabilities being served by 111,303 over a four-year period between 2016 and 2020.  The cash injection provided by the State has resulted in a significant boost in the number of children that a local school district is able to serve.  This financing has also increased the number of students being evaluated.

House Bill 3, in addition to providing increased funding, also created a new Special Education Allotment Advisory Committee for the purpose of making recommendations on how to improve the current system for funding special education services. In August 2020, the advisory committee released their findings and recommended the reformulation of the formula used to fund special education to take into account the intensity of supports and services provided to a student, rather than the current instructional arrangement system. They additionally recommended updating pieces of the current funding system in order to obtain more equitable and efficient levels of support. While these are merely recommendations, this report serves as ammunition for those advocating for education finance reform.

At the federal level, United States Senator Chris Von Hollen has introduced a bill into the House called “Keep Our Promise to America’s Children and Teachers (PACT) Act.”  This legislation calls for the federal government to finally fund IDEA at the full 40% of APPE. While Senator Von Hollen has proposed this bill multiple times without success, he believes that the change of administration will bring with it a favorable outcome this time. This bill presents an opportunity for the federal government to fulfill a promise that was made back in 1975, as well as reduce the financial strain on school districts.  The proposition of fully funding IDEA would not only allow for special education services to be made more widely available, but it would also allow for state and local education investments to go towards supporting a well-rounded education for all students.

Based on the current grant calculation structure of the IDEA, it seems like funding will always be a concern for the parents and the school districts of Texas. However, the most recent financial investment made by the Texas legislature and the potential for a federal bill that promises to provide more federal funding evidence a brighter future for special education in Texas. It is thanks to the generations of tireless special education advocates that laws such as the IDEA are even in existence today. These advocates fought for its amendments and evolution over the years, and I am certain they will succeed in their fight for more funding.

Ricardo Benavides, III, Associate Attorney; J. Cruz & Associates, LLC