StudyofVermontStateFundingforSpecialEducation

LegislativeTestimony

January9,2017TammyKolbe,UniversityofVermont

KeyObjectivesForReport

• Developacomprehensiveprofileofspecialeducationcosts&describethefactorsinfluencingcosts

• Evaluatecurrentfundingformula&establishparametersforredesign

• Describeacensus-basedfundingmechanism&simulatehowitcouldbeimplementedinVermont

DataConsidered• Independentanalysisofspecialeducationandfinancialdata

– StatedataprovidedbyVermontAgencyofEducation– NationaldatafromU.S.DepartmentofEducation’sdatarepositories

• Policyanalysisofotherstatestudiesofspecialeducationfunding– Fundingadequacystudies– Fundingformulasummariesandevaluations

• Stakeholderinput,including:

– InterviewswithstateofficialsresponsibleforoverseeingandimplementingVermont’sspecialeducationfundingformula.

– Interviewswithsupervisoryunion,district,andschoolleadersabouttheirexperiencesimplementingtheState’sspecialeducationfundingformula.

– Interviewswithparentsofstudentswithdisabilitieswhocurrentlyreceivespecialeducationandrelatedservices.– Focusgroupswithrepresentativesfromorganizationsthatrepresenttheinterestsofeducationandsocialservice

professionals– bothgenerallyandspecifictostudentswithdisabilities– aswellasothercitizengroups(e.g.,parentandfamily-basedorganizations).

– Astatewidesurveywithspecialeducationadministrators(co-sponsoredwiththeVermontCounselofSpecialEducationAdministrators).

– Focusgroupswithteachers onwhether,andinwhatways,thefundingformulainfluencestheirprocessesforidentifying,classifying,andservingstudentswithandwithoutdisabilities.

SpecialEducationCostsinVermont

UnderstandingSpecialEducationCosts

• Thenumberofstudentswhoareidentifiedforspecialeducation&relatedservices

Identification

•Studentswithdisabilitiesareclassifiedaccordingto13federally-defineddisabilitycategories

Classification•IndividualizedEducationProgramincludesaplanforsupportsandservicesastudentmightreceive

Placement&Services

• FundsexpendedforFAPEforstudentswithdisabilitiesintheleastrestrictiveenvironment.

Costs

SpecialEducationChildCount(SY2015)

• ThepercentageofstudentswithdisabilitiesinVermontissomewhathigherthannationalaverage,butonparwithneighboringandpeergroupstates (ReportTable1,p.18)

Autism Spectrum Disorder

(ASD) Deaf-blindEmotional

Disturbance

Hearing Impairment (Including Deafness)

Intellectual Disability

Multiple Disabilities

Orthopedic Impairment

Other Health

Impairment (OHI)

Specific Learning Disability

(SLD)

Speech or Language

Impairment

Traumatic Brain Injury

Visual Impairment (Including Blindness)

(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)

Vermont 16.1 8.9 0.0 17.6 0.6 6.0 2.0 0.3 19.8 34.5 9.6 0.3 0.2

National Average 13.3 9.3 0.0 5.9 1.1 7.1 2.1 0.7 15.4 39.8 17.7 0.4 0.4

Selected Comparison StatesNew Hampshire 15.0 10.1 0.0 8.9 0.8 3.3 1.5 0.2 21.7 40.0 12.8 0.3 0.5

Maine 17.7 9.4 0.0 7.7 0.4 2.6 10.3 0.1 21.6 32.5 15.0 0.1 0.1Massachusetts 17.6 11.0 0.1 10.8 0.7 6.2 2.6 0.7 14.7 29.9 16.4 6.5 0.4Rhode Island 15.8 11.1 0.0 8.5 0.7 4.0 1.9 0.3 18.4 39.8 14.7 0.3 0.3

Delaware 15.3 8.1 0.2 4.7 1.1 8.4 0.0 1.2 14.1 51.8 9.7 0.4 0.4Kentucky 13.5 7.4 0.0 5.9 0.8 17.5 2.6 0.5 18.3 20.8 25.4 0.3 0.6

South Dakota 14.3 6.1 0.0 6.5 0.8 9.9 2.9 0.3 14.9 39.7 18.1 0.3 0.3

Percent of All

Students

Percentage of All Students With Disabilities

NumberofIEPsQualifyingforExtraordinaryCostReimbursement(FY2009-2017)

227 220 233 224 287

386 417 446

564

-

100

200

300

400

500

600

2009 2010 2011 2012 2013 2014 2015 2016 2017

• Since2014,therehasbeena75%increase(since2013)inthenumberofIEPsqualifyingfortheState’sextraordinarycostreimbursement(ReportFigure3;p.20)

StateSpendingonSpecialEducation

2013 2014 2015 2016StateSpending

ReimbursementFormula $138,178,560 $144,741,288 $149,478,388 $157,891,972%Year-to-yearChange 5% 3% 6%

Extraordinarycostreimbursement $10,992,045 $11,542,990 $12,299,063 $14,282,780%Year-to-yearChange 5% 7% 16%

TotalStateSpending(ReimbursementFormula&ExtraordinaryCosts) $149,170,605 $156,284,278 $161,777,451 $172,174,752%Year-to-yearChange 4.8% 3.5% 6.4%

LocalSpending $103,863,779 $109,167,010 $112,780,331 $116,074,894%Year-to-yearChange 5.1% 3.3% 2.9%

TotalState&LocalSpending $253,034,384 $265,451,288 $274,557,782 $288,249,646%Year-to-yearChange 4.9% 3.4% 5.0%

See:ReportTable5,p.25

• Statespendingforitsreimbursementformulaincreased14%sinceFY2013,and6%forFY2016

• Stateforitsextraordinarycostreimbursementformulaincreased29%sinceFY2013and16%forFY2016

State&LocalExpendituresPerIEP

• Onaverage,forFY16,supervisoryunionsandschooldistricts,spentanadditional$21,840perstudentwithanIEP (ReportTable7,p.27)

• SinceFY2014,averagespendingperIEPhasincreased8%

SpendingComparison

• ForFY2016,Vermont’sactualaveragespendingperIEPwasabouttwotimegreaterthanwhatispredictedusingnationalestimatesforspecialeducationcosts(Table13,p.53)

• Vermont’saveragespendingperIEPexceeded thenationalaverageandotherpeerstates

CostDrivers1. AdministrativerequirementsandrulesdefiningallowablecostsundertheState’s

existingspecialeducationfundingformula createinefficienciesinservicedeliverythatcontributetohigheroverallspending

2. Thenatureandextentofstudentneedhasgrownmoremorecomplex

3. Weakfundingforcomprehensiveandearlysupportsystemscreatesincentivestoidentifymorestudentsforspecialeducationto accessadditionalfundingfromState

Vermont’sExistingSpecialEducationFundingFormula

FundingSpecialEducationinVermont

• State– Reimbursementmodel

• Onaverage,thestatereimburseslocalitiesforabout60%ofqualifyingexpendituresforstudentsidentifiedforspecialeducation

– Extraordinarycostprovision• Statereimburseslocalitiesfor90%ofqualifyingexpendituresforanindividual

student,inexcessof$50k

• Federal– IDEAPartB(School-agedchildren)

• Local– Remainder(afterstateandfederalcontributions)

CritiquesofExistingSystem

• Voicesfromthefield:– Administrativelycostly(forStateandlocalities)– Fundingismisalignedwithpolicypriorities,particularlyMTSSandPBIS

–Misplacedincentivesforstudentidentification,categorizationandplacement

– Discouragescostcontainment– Unpredictableandlackstransparency

ImplementingaCensus-basedFundingMechanism

inVermont

Census-basedFundingMechanism• Amountofspecialeducationfundingadistrictreceivesis

basedonnumberofnon-disabledstudentswithinaschooldistrict(e.g.,ADM/ADA)– Lumpsumisnotbasedonvariationbetweenindividualschooldistricts

• Pros:– Simple/transparent– Flexibilityinhowfundingcanbeused– Alignedwithpolicypriorities(servingstrugglingstudentsacrossthe

general/specialeducationservicedeliverysystems)– Predictable

• Cons:– Possibleincentivesfordistrictstolimitservices– Potentialcostliabilityfordistrictsifcensusgrantamountissettoolow

CalculatingaCensusGrant

• Censusgrantamountiscalculatedas:

• Percapitagrantamount=(NumberK12studentswithIEPs*ExcesscostperIEP) *StateshareofspendingK12ADM

• Keyassumptions:– Thenumberofstudents(statewide)withIEPs– Theexcess(ormarginal)costperIEP– Thenumberofstudents(statewide)enrolledinK-12education(i.e.,K12ADM)– Thestate’sshare/responsibilityforspending(e.g.,60%)

PerStudentSpendingAmountEstimates

• Perstudentspendingamountsfallbetweenabout$1,467and$3,062• Spendingamountsreflect100%oftheanticipatedspendingforspecialeducation

onapercapitabasis(currently,theStateshareofspecialeducationspendingis60%)

Spending Based on Actual Number of IEPs in Vermont

Spending Based on Reducing Number of

IEPs to National Average

(Col 1) (Col 2)

Actual ExpendituresAverage Supervisory Union/District Expenditures (FY2016) $3,062 $2,905

SEEP Adjusted Per IEP Costs

VermontDisability-specific Weights $1,547 $1,467

Maryland Adequacy Study

All Disability GroupingsResource Costs* $1,641 $1,557

Disability Grouping Weights $1,970 $1,869

Mild/Moderate Disabilities OnlyResource Costs* $1,209 $1,161

Disability Grouping Weights $1,457 $1,400

Per Capita Spending Equivalent (K12 ADM)

Inourreport,wecalculatedpossiblegrantamountsbasedondifferentassumptionsfor:

1) Thenumberofstudents(statewide)withanIEP

2) TheaverageamountspentperIEP

See:ReportTable16,p.58

Census-basedFormulaSimulations

Example1 Example2 Example3

ModifiedStatusQuo(FY16AverageSpending)

PredictionsforWhat“Should”Be SpentperStudentwithIEPinVermont

StudentswithDisabilitiesAssumption(VT2016) 11,218 11,218 11,218CostperIEPAssumption

Actual SpendingVermontDisability-

specificWeights(SEEP)ResourceCosts(MD

Adequacy)CensusGrantAmount(K-12ADM)

PerStudent $1,837 $928 $985

PerStudent,withPovertyAdjustment $1,881 $958 $1,008

AssumesStateShareofCosts 60% 60% 60%

EstimatedStateAppropriation(perFY)

BasedonK-12ADM $147,633,732 $74,684,055 $79,134,027

Differencefrom2016StateFormula(Reimbursement&BlockGrantOnly) ($10,258,236) ($83,207,913) ($78,757,942)

See:Report,Table18,p.62

ExtraordinaryCostReimbursementModelsModel1

FixedThreshold(StatusQuo)

Model3Two-stepThresholdModel

Description

StatereimbursessupervisoryunionsforIEPcostsinexcessof$50,000.

Thresholdamountsforreimbursementaretiedtowhetherastudentisplacedwithin- orout-of-supervisoryunion (e.g.,separateschoolresidentialplacement).

CostAssumpions

ThresholdAmount $50,000WithinSU:4.62xStatewideAverageRegular

EducationPerPupilSpending($51,051for2016)

OutsideofSU:5.9xStatewideAverageRegularEducationPerPupilSpending$65,195for2016)

StateReimbursementParameters 60%ofcosts<ThresholdAmount 60%ofcosts<ThresholdAmount

90%ofcosts>ThresholdAmount 90%ofcosts>ThresholdAmount

EstimatedCosttoState(perFY) $31,981,016 $36,191,554

ImplementationConsiderations• Afive-yearphase-inperiodfortransitioningtoacensus-basedmodel.

– Currentcostsreflectcurrentpractice– Simplyreducingspendingwouldlikelyresultinchildrengoingunservedandlocalities

notmeetingtheirobligationsunderfederalandstatelaw.– Supervisoryunionsandschooldistrictsneedtimetoadapttonewflexibilityinfunding

approachandtoresettheirservicedeliverysystems

• Additionaltechnicalsupportforlocaleducators.– Localitieswillrequiretechnicalassistancewithmakingappropriatechanges

thatresultincostsavings

OtherDesignConsiderations• Studentscountedforaidallocation

– K12vs.PK12ADM

• Categoricalvs.blockgrantfunding– Example:30%categorical&70%blockgrant

• Accountability– Performancemetricstoensurethattheneedsforstudentswithdisabilitiescontinueto

bemetandoutcomesimprove

• Maintenanceofeffortforfederalfunding– ReductionsinstateappropriationmaytriggerreductionstofederalIDEAPartBgrant

Summary• State&localspendingforspecialeducationhasincreasedinrecentyears.

However,thepercentageofstudentswithdisabilitieshasbeenrelativelystable,andonparwithotherNortheasternstates.

• Onaverage,VermontspendsconsiderablymoreperIEPthanrelevantcomparisonstatesorthenationalaverage.

• Existingstatefundingapproachmayincentivizelocalitiestoidentifystudentsforspecialeducation&discouragescostcontrol.

• Existingstatefundingapproachlackstheflexibilityneededtoimplementbestpracticesforaneffectiveandefficientservicedeliverysystemforstrugglinganddisabledstudents.

Summary• Acensus-basedfundingformulamaybeanappropriatefundingmechanismfor

Vermont.

• AssumingtheState’sexistingshareofspending(60%),acensusgrantamountof$930-985perstudentwouldbeanappropriatecensusgrantamount.

– ThisrepresentsapotentialannualFYsavingsof$79-83million,overFY2016Stateappropriationsfortheexistingreimbursementformula(excludingextraordinarycostreimbursement).

• Acensus-basedmodelshouldbepairedwithanextraordinarycostreimbursementmechanism.– Werecommendatwo-steppedthresholdmodelforreimbursinglocalities,withthresholdamounts

forwithinandout-of-districtplacements.

Summary

• Afive-yeartimelineforimplementingthenewfundingmodeltocoincidewithsimultaneouschangesinservicedeliverymodelsonthepartofsupervisoryunionsandschooldistricts.

• AdditionaltechnicalsupportandcapacitybuildingbyAOEtohelplocalitiesadjustservicedeliverymodelstorepresentnewfoundflexibilityandthepotentialforinnovationinhowstudentsareserved.

ContactInformation

• TammyKolbe,CollegeofEducation&SocialServices,UniversityofVermont– Email:tammy.kolbe@uvm.edu

• KieranKilleen,CollegeofEducation&SocialServices,UniversityofVermont– Email:kieran.killeen@uvm.edu