Annysa Johnson

Milwaukee Journal Sentinel

Wisconsin school districts spend about $1 billion a year on special education costs not reimbursed by the state, forcing them to dip into general funds intended for all students, according to a new report by the Wisconsin Policy Forum.

The low reimbursement rates, it said, place "a considerable burden on local districts," particularly those with high numbers of poor and minority students, where they exacerbate already existing inequities.

The report comes as Gov. Tony Evers is preparing his 2019-'21 budget, which is expected to include a significant increase in special education funding, and as a legislative panel and a growing number of school districts are calling for an increase in the reimbursement rates for special ed services.

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"The way we fund education in Wisconsin creates a tension between regular education students and special education students, and we need to figure out how to address that," said Anne Chapman, who authored the report for the forum.

"We're about to enter a new budget year with a new governor. ... There are a lot of ideas floating around about how to address (the issue). And we wanted to shed light on the dynamics at play."

According to the report:

Wisconsin schools enrolled 118,546 students with disabilities in 2017-'18, down almost 5,600 students from a decade earlier. That amounts to 13.8 percent of its student population, slightly above the 13 percent national average.

Special education costs in Wisconsin rose 18.3 percent to about $1.4 billion from 2007-'08 to 2017-'18. At the same time, the state's primary funding source has remained flat at about $369 million. That has pushed the reimbursement rate from 28.9 percent to about 24.5 percent in 2018-'19.

Wisconsin schools received $186.3 million in federal funds for special education in 2017-'18, not counting Medicaid dollars, which cover about 12 percent of special ed costs. Federal funding for special education has remained flat for the last decade, except for a spike in 2009-'10.

For most districts, the dollars needed to close the shortfall in special education funding amounts to about 10 percent of their per-pupil revenue limits — the amount of money they can raise in state and local taxes — but it was much higher in some others. It ranged from 16.8 percent to 24.9 percent in 10 districts with the highest special ed costs as a percentage of per-pupil revenue limits.

That included Milwaukee, at 17.3 percent, but also several rural districts across the state. Three of those districts — Menominee Indian, Lac Du Flambeau No. 1 and Bayfield — serve the state's largest populations of American Indian students.

"This isn't just a Milwaukee problem," Chapman said. "It happens in districts large and small all over the state."

The report raises significant policy questions, including whether the state can maintain an increase in special education funding indefinitely. Federal law requires states receiving special ed dollars to maintain or increase spending on those services annually.

It also touches on the state's Special Needs Scholarship Program, which has tripled in size since it launched in 2016-'17, as another drain on school districts' revenue. Under the program, participating private schools receive $12,431 per student with the potential for resident school districts to pick up almost $19,000 of the costs this year and the state to cover the remainder up to 90 percent of the costs.