Arizona shorting schools millions for special education

Arizona is shorting its school districts and charter schools an estimated $381 million a year in underfunded mandates for students with special needs. And it’s the students who don’t need special assistance who are paying the price.

Public district and charter schools are required by federal law to educate students with disabilities, and the state allocates money for the schools to provide those services. But a state audit from 2007 — the last time the Legislature agreed to fund a study of the issue — found schools weren’t given enough money to cover the services that the law requires them to provide. This shortfall forced schools to take money from other areas.

Educators say the costs have only exploded since 2007, as more students are diagnosed with special needs and the cost of services rises.

One district analyst calculated a $381 million gap between what the state provided and what it took to properly fund the education of students with disabilities last year. Others have estimated the gap has surpassed $400 million a year.

“For every dollar given out for special education, districts are really spending $1.50. If you don’t have a special-education student, you may not be inclined to think this is a big deal,” said Tempe Kyrene School District Chief Financial Officer Jeremy Calles. “But the child not getting the education they need and deserve is the regular education student. I have to take 50 cents from them and go use it on the special-education student.”

Solving this problem is among the recommendations Gov. Doug Ducey’s Classrooms First Initiative Council is considering as it overhauls the state’s byzantine 35-year-old school funding formula. The council has been charged with developing a plan to fund public school students equally, whether they attend district, charter, online or technical programs.

Currently, for example, charter schools get more state money per student, but don’t receive funding for things such as student transportation. Charters also can’t access local tax dollars through bonds and overrides the way district schools do.

Reworking how the state funds schools is long overdue, said Eileen Sigmund, president and CEO of the Arizona Charter Schools Association. The current system predates by years charter schools and other school choice options that have remade Arizona’s education landscape.

“The last time it has been updated was in 1980, when there was only one fax machine at the state Capitol,” Sigmund said.

The council will release its initial recommendations on Tuesday, and a more detailed plan in December.

The council is also expected to recommend which, if any, students need extra funding. Do students living in poverty need extra money to cover added expenses such as school supplies and health care? Should the state provide extra money for middle-school students to help give them a better start moving into high school? And how do you pay for students with special needs?

“If you are looking at ways to improve funding in public schools, for both districts and charters, it is very important to make sure special education is adequately funded,” said Chuck Essigs, director of government relations for the Arizona Association of School Business Officials.

But there’s no guarantee special-education funding will be among the recommendations. The proposal has been getting push-back from influential charter school leaders. Schools with fewer special-needs students benefit financially from the current formula.

“There are some charters who have a lot of pull who are very much against this,” Calles said. “I’d say the odds are 50/50, at best, that it will go forward.”

How money for special education is divided

Arizona places students with disabilities into two categories:

Group A students typically have more mild disabilities such as a speech impairment or dyslexia. This group includes 80 percent of all special-needs students.

Group B students typically have more severe disabilities such as a physical disability or an intellectual disability.

The state funds the two groups differently:

Group A: The state assumes these students are spread evenly among all schools and gives every district and charter the same amount of extra money per student regardless of how many students with special needs actually attend that school. This amounts to about $340 annually per high-school student and $513 for each K-8 student. So an elementary school with 200 Group A students among its 500 gets an extra $70,000 a year, as would a school with no Group A students.

Group B: The state gives a specific funding weight to each disability and districts receive money for each Group B student enrolled. For example, districts receive about $20,000 extra for each child with autism or a severe intellectual disability regardless of the services those children require. Districts get about $16,000 more per year for a child with a visual impairment.

According to the Arizona Department of Education, there were 109,685 Group A students and 21,856 Group B students enrolled in public schools last school year. That total of 131,541 is up from nearly 112,000 students with special needs documented in the 2007 audit.

Districts must accept all students within their boundaries but can turn away students from outside their boundaries if their special-needs programs are full. Charters can also turn away a student if they don’t have room in their special-education program.

“Charter schools and private schools are cherry-picking, and that’s become a problem,” said Sen. Steve Farley, D-Tucson, alleging that charter and private schools are choosing not to take special-needs students that cost more to serve. “There are more and more kids in district schools who are learning disabled.”

The data show that while traditional students may choose charter schools or cross boundaries to enroll in preferred out-of-district schools, students with special needs tend to stick to their neighborhood schools, leaving those schools with a higher percentage of such students.

Sigmund said charter schools must — and do — accept students with special needs.

“It’s an urban myth that charters don’t accept special-education students,” she said. “Our charters follow the law. And if they don’t follow the law, there are reporting mechanisms.”

Officials left to estimate how much districts and schools are shorted

The 2007 audit of the state’s special-education program reported a $54 million gap between how much the state paid districts and charters for Group A students and what the districts and charters spent. There was no gap for Group B students overall, with the state paying an estimated $11 million more than schools spent educating those students.

The unlikely duo of Farley and Sen. Sylvia Allen, R-Snowflake, co-founder and administrative program manager of George Washington Academy charter school in Snowflake, worked together last session on legislation that would have required the state to audit special-education services every two years.

“Unless we really know the needs out there, we wouldn’t know how much we need to fund it,” Allen said.

Senate Republican leadership never gave Senate Bill 1303 a hearing or a vote.

Absent a more recent official study, Calles, the Kyrene district financial officer, did his own using a spreadsheet with data from the 2007 report to estimate the $381 million gap last school year. He said just under 8 percent of charter school students have special-education needs, while 12.5 percent of district students have such needs.

If the Legislature and Ducey were to boost special-education funding to cover the $381 million shortfall, the vast majority of both district and charter schools would see an increase in funding, he said. But about 17 percent of schools, representing about 5 percent of students, would see a loss from the status quo.

“But there are some pretty important charters in that 2 percent, and they happen to be pretty vocal,” Calles said.

Among the biggest losers would be Basis charter schools. More than a dozen Basis schools stand to lose over $100,000 a year each, according to Calles’ calculations.

The state’s largest districts would gain the most. Tucson Unified School district would get an extra $29 million; Mesa Unified School District would get an extra $25 million.

Essigs said one option is to redo the formula and reallocate the existing money.

But Calles said that proposal would be an even more difficult sell because so many charters and even some districts would lose money.

“Trying to do this in a cost-neutral way is going to have so many losers and it doesn’t do anything to make sure special-education students are adequately funded,” he said. “That will not make it through the committee.”

As a deadline looms, little agreement on a fix

As the Classrooms First Initiative Council prepares to make its recommendations, there seems to be a consensus that the state needs a new study to ensure it is fully funding the cost of educating Group B students, those with more severe disabilities.

But that’s where the agreement ends.

Some want a study of the costs associated with Group A students, while others don’t. Some have suggested eliminating Group A altogether, and simply rolling the extra money into the state’s overall per-pupil funding. Others are pushing to fund Group A students the same way Group B students are funded.

“Special education and its underfunding, to me, that’s the 800-pound elephant in the room,” said council co-chair Jim Swanson, president and CEO of Kitchell Corp., at a recent public meeting.

Sigmund, whose organization is among the council’s advisers, said the charter school association supports a new cost analysis of Group B, the more severely disabled students.

“If you have a student that comes in and costs $100,000, what does that do to your general student population?” she asked.

She said the group hadn’t taken a position on whether it would support changing funding for Group A students.

Becky Hill, representing the Arizona Chamber of Commerce and Industry as a consultant to the council, said another option might be to allow schools to request additional funding for this student population through the state’s exceptional needs fund, which hasn’t been funded since at least 2009.

Jenifer Kasten’s 9-year-old daughter struggles with dyslexia, one of the diagnoses that falls into the Group A category. She said it makes sense for the state to pay for what schools actually spend.

“There ought to be some logical relationship between the services that a child needs and the funding that goes with that child,” Kasten said.

For example, she said, her child’s needs as she learns to read are much higher than they likely will be when she’s in high school. “If they become a proficient reader, they are still going to have dyslexia, but at that point all they might need are accommodations that might cost no money,” she said.

She fears the current system creates a disincentive for schools to acknowledge a diagnosis for kids in the Group A category. She said tales of parents having to fight for a diagnosis and services are common.

“I know so many parents, including myself, who had to jump through multiple hoops to convince a school their child had a learning disability,” Kasten said. “I wonder, if the funding was there, there wouldn’t be so much pressure to be stingy with identifying these kids.”

But, she said, more money may not be the solution, “but a more careful expenditure of dollars.

“... I can’t think of a better use of education dollars,” Kasten said. “Kids who aren’t identified (as dyslexic) end up feeling dumb and frustrated, and many of them end up dropping out.”