California governor and lawmakers at odds over new special education funding

May 28, 2019

A child with Down Syndrome draws a picture.

Gov. Gavin Newsom and legislative leaders agree that the state should significantly increase funding for students with disabilities. But, in one of the biggest disagreements over next year’s state budget, they head into negotiations far apart on how they would spend the new money.

Newsom is proposing an additional $696 million in ongoing funding for special education in his budget for next year. Last week, the Assembly Budget Committee rejected outright the new formula that the Department of Finance has proposed for divvying up that additional money. The 21 percent increase for students with special needs would be the largest in decades. But critics — and they are numerous — point out fewer than a quarter of the state’s school districts would qualify for any of the new money and once they get it, they could spend it however they want.

Instead, the Assembly committee’s proposal for an additional $593 million instead would pay for services for students with disabilities in preschool — an age group that currently gets no state funding — and equalize funding for the regional special education agencies that administer funding and services on behalf of school districts and charter schools. This is the approach that a past state task force on special education urged and the Coalition for Adequate Funding for Special Education and associations representing school boards and school administrators are endorsing.

The Legislative Analyst’s Office also panned Newsom’s new program in its review of the May revision of the state budget and the Senate Budget Committee has created a united front for negotiations by making funding equalization and preschool funding of special education its priorities, too. However, it would attach restrictions not in the Assembly’s version.

Districts bear bulk of costs

Newsom’s program wouldn’t affect the current funding system, in which the state funnels its portion of special education funding through the 134 agencies that work with districts and charter schools, called Special Education Local Planning Agencies, or SELPAs. Funding for the agencies is based on the total number of students, not just students with disabilities, enrolled in the districts served by SELPAs. SELPAs are funded at disparate rates per student under a 40-year-old, outdated formula, creating further inequities.

The federal government’s share of special education funding has declined significantly over the past decade and the state’s share stagnated under Gov. Jerry Brown, who made funding of the Local Control Funding Formula, governing K-12 spending that is separate from special education, his top priority. As a result, the state and federal government contribute less than 40 percent of the $13.2 billion in special education spending in California, with school districts paying the rest out of their general budgets.

School districts cite pressures from mandated costs of special education and retiree pensions for their difficulties in granting teacher raises, lowering class sizes and expanding programs like summer school and the arts. Overall student enrollment statewide is declining, but the proportion of students with expensive-to-treat disabilities, primarily autism, has exploded from 1 in 50 special education students in 2001-02 to about 1 in 8 in 2016-17.

Recognizing districts’ financial plight, Newsom proposed raising special education funding by $576 million in his January budget, then added $120 million in the May revision.

Three years ago, the Brown administration floated an idea to eliminate SELPAs, based on a report by the Public Policy Institute of California that was sharply critical of their operations. Special education would be funded directly through districts through the Local Control Funding Formula, which steers extra dollars based on the proportion of English learners and low-income, foster and homeless children. Students with disabilities would join the student groups entitled to extra funding. Districts would have more flexibility to shift special education money to special needs students in preschool, where early treatment and intervention, particularly for students with mild learning and speech disabilities, are most effective.

The idea went nowhere amid opposition from SELPAs and parents of students with disabilities, who distrusted how districts would spend the money. But elements of the concept have re-emerged in Newsom’s plan.

Newsom, in effect, would create a hybrid, keeping SELPAs and the current funding structure intact while steering the new money to districts under a new formula. Only about 420 districts,  charter schools and county offices of education with both a high percentage of low-income students and of special education students would get any of the $696 million,  according to estimates by the Legislative Analyst’s Office and School Services of California, a consulting company that is working with the Coalition for Adequate Funding for Special Education.

Money would be allocated based on the numbers of special needs students in a district, charter school or county office above the statewide average of 11 percent. The amount would be about $14,500 per student. That would include Los Angeles Unified, the state’s largest district and biggest beneficiary of the formula, but exclude Fresno Unified, the fourth-largest district with a larger percentage of poor children than L.A. but fewer students with disabilities than the statewide average.

As it was three years ago, criticism has been strong. In their letter to the Assembly budget subcommittee in response the proposed budget, two dozen county and district superintendents and leaders of several statewide education groups said that Newsom’s plan would encourage the perverse incentives that it claims to be against. They said it would encourage districts to overclassify students with disabilities to qualify for extra money while punishing those districts that identify and treat learning impairments early, before they manifest as more serious disabilities.

Instead of fixing funding disparities among SELPAs, the plan would “double down” on them by providing more money to districts that already get far more resources than districts in neighboring SELPAs, the letter states. Other critics point out that the districts could use the flexible dollars to shore up their budgets and not for preventive services or additional services not required by state or federal law, as the governor is encouraging.

“We urge the Assembly to reject this funding methodology while maintaining the $696.2 million” to fix funding inequality and provide money for preschoolers with disabilities, the letter states.

“The Newsom administration’s heart may be in right place, but it is essential to pay for core special education responsibilities before granting flexibility,” said David Toston, associate superintendent of El Dorado County’s two SELPAs and chair of the Coalition for Adequate Funding for Special Education.

The Department of Finance did not respond to several requests to comment on the criticism of the plan.

Senate and Assembly differences

The Assembly Budget Committee’s funding proposal is a lower-cost version of Assembly Bill 428, co-sponsored by Assemblymen Jose Medina, D-Riverside and Patrick O’Donnell, D-Long Beach, who also sit on the committee’s subcommittee on education. It would include the following elements:

Equalization of funding: Funding for SELPAs currently ranges from $488 per student to $936 per student, creating sharp disparities. The East County SELPA, serving 11 districts in San Diego County, for example, now funded at $522 per student, would receive $5 million more if it was funded at the same rate as San Diego Unified’s SELPA, said East County Executive Director Heather DiFede.

The committee recommends erasing the disparity for 90 percent of SELPAs by raising the funding level next year to $593 per student, at a cost of $333 million more per year. That’s far less than AB 428’s recommendation for nearly $800 million to equalize funding for 95 percent of districts, which would include Los Angeles Unified and a handful of additional large districts.

As the largest district in the East County SELPA, Grossmont Union High School District feels the impact of unequal special education rates, shouldering  70 percent of the special education budget, well above the state average, said Deputy Superintendent Scott Patterson. Equalization would bring the district about an additional $1 million in relief to the general fund, enough to reduce average class sizes of 37 to 38 by several students, he said.

But Grossmont, with 60 percent low-income and 14 percent special education students, would be a bigger winner under Newsom’s plan — eligible for about $9 million more per year.

“Selfishly the governor’s plan would bring Grossmont substantially more funding and I wouldn’t root against it,” Patterson said. But equalization for all is fairer and would be less volatile. Districts close to the qualifying thresholds might get the extra money one year but not the next, he said.

Preschool funding: Although state law says preschool-age students are entitled to special education services, school districts must cover the bulk of costs in their general budgets, with some federal aid. The budget committee is proposing $260 million — $533 for every 4-year-old in preschool, not just students with disabilities. AB 428 would have provided enough to cover 3-year-olds in preschool, too.

Medina said he hasn’t given up hope on adding more money in the final budget. “I am glad that AB 428 has sparked such interest in special education funding and look forward to more conversations around increasing funding,” he said.

The Senate Budget Committee took a different approach, proposing $200 million in preschool funding. Money would be distributed as proposed in Senate Bill 217 by Sens. Richard Roth, D-Riverside and Anthony Portantino, D-La Cañada Flintridge, targeting early intervention with $4,000 for every 3- and 4-year-old special education student whose treatment plan permits attending a mainstream class. Any 4-year-old with a disability who turns 5 during the school year could enroll in transitional kindergarten.


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