Tag: special education

K–12 Education and the New State Budget

The recently enacted 2019–20 budget allocates 28% of the total state budget for all K–12 education programs: $103.4 billion ($58.8 billion from the General Fund). Proposition 98, passed by the voters in 1988, establishes a minimum annual funding level for K–12 schools and community colleges. This year, the Proposition 98 funding level is $81.1 billion, bringing K–12 per-pupil expenditures to nearly $12,000. According to the Department of Finance, total per-pupil funding, including all federal, state, and local sources amounts to $17,423.

In addition, the rainy day fund requires the state to set aside savings for future education spending based on specific criteria, including General Fund tax revenue and Proposition 98 funding levels. This year, for the first time ever, the budget triggers a deposit into Public School System Stabilization Account at $376.5 million.

figure - K-12 Funding Is at a New High

The Local Control Funding Formula (LCFF) is the primary manner in which funds are distributed to support students. This year’s budget brings the total LCFF funding to nearly $63 billion, a $1.9 billion increase from last year, accounting for a statutory cost-of-living adjustment.

This year’s enacted budget also includes funding to address a wide range of concerns, including pensions, special education, and full-day kindergarten. For teacher pensions (CalSTRS), the budget pays down the state’s ($2.9 billion) and the districts’ share ($1.6 billion) of the unfunded liability. Another $500 million for fiscal year 2019–20 reduces by 1.03% school districts’ contribution rate to CalSTRS and CalPERS (pensions for public employees). The budget adds $350 million to reduce that contribution rate by an additional 0.7% in 2020–21.

The budget aims to mitigate rising special education costs to districts by adding more than $600 million to support students with disabilities.

A $300 million one-time payment goes to the Full-Day Kindergarten Facilities Grant program, which allows districts to construct new facilities or retrofit preexisting ones for the purposes of ensuring access to full-day kindergarten.

Despite the record funding level this year, two longer-term finance issues loom. The CalSTRS funding plan, as governed by AB 1469, has set school districts’ share of teacher pension costs to increase to 18.1% in 2019–20 and to 19.1% by 2020–21. While the budget’s funding toward the districts’ contribution rate will provide much-needed relief, growing pension costs will remain challenging.

Finally, in a time of growing costs, declining student enrollment is hampering districts across the state. Over the past five years, nearly half of all districts experienced enrollment losses—and this trend may continue over the next decade. Given that the state’s funding model is based on average daily attendance, declining enrollment is likely to persist as an important fiscal issue over the long run.

Budget Takes Baby Steps Toward Special Education Reform

The new 2019–20 state budget recently signed by Governor Newson provides significant new funding for K–12 special education programs. It also makes substantial revisions to the state funding model for services to students with disabilities—and signals policymakers’ intent to make even more extensive changes in this policy area next year.

Passage of the Local Control Funding Formula (LCFF) in 2013 generated questions about the fiscal and planning effects on local special education programs. Our work in this area (in 2016 and 2018) has found that district special education costs have risen much faster than state funding over the previous decade and has recommended several changes to make state funding more responsive to local costs. The new state budget includes two of our key recommendations:

  • Equalize special education funding. This year, $153 million was added to partially equalize per-pupil special education funding levels. Our report recommends equalizing local per-pupil funding rates up to the 90th percentile of current levels. Funding rates across Special Education Local Plan Areas (SELPAs) range from about $500 per pupil to more than $1,000. The new funding would bring the lowest local rate up to $557, which is about the 75th percentile of existing rates.
  • Fund early childhood special education. Another $493 million in this year’s budget will provide grants of about $9,000 for 3- and 4-year-olds who participate in special education preschool programs. State special education formulas fail to provide any state support for these children, and our reports conclude that the lack of funding could discourage districts from aggressively seeking children who could benefit from early services.

Because the new funding helps districts pay for their existing special education programs, these appropriations provide welcome fiscal relief. But the budget attaches a giant question mark to the long-term future of these new appropriations. Specifically, in 2020–21, the budget makes the two new grants conditional on broader special education reforms, and even holds out the possibility of revising those grants. Issues for further discussion include:

  • More changes to special education funding. Problems with the main special education funding formula were not addressed in this year’s budget. We have suggested the state peg annual budget increases to a better predictor of future costs, such as LCFF increases or past changes in special education costs.
  • Refining the role of SELPAs. We have also suggested giving districts greater leeway in determining how students with disabilities are educated, consistent with LCFF’s local control focus. SELPAs perform a wide range of services locally, including planning how students are served and supporting district special education programs that exhibit sub-par performance.
  • Improving local special education programs. The budget identifies two specific areas for attention: serving more students in their regular classroom (rather than in separate special education classes) and ensuring that student subgroups are not identified for special education in disproportionate numbers. By including this issue in the budget language, policymakers are signaling they want faster progress in these areas.

Video: Californians and Education

Last week in Sacramento, Alyssa Dykman outlined the key findings from PPIC’s 15th annual survey on Californians and K–12 education, which tracks opinions on educational quality and school funding. This month’s survey was the first ever to be conducted with a fully online methodology.

A strong majority of Californians want Governor Newsom to prioritize K–12 public education, and majorities support many of the governor’s education-related budget proposals—including the expansion of special education and full-day preschool and kindergarten. Solid majorities also support teacher strikes for higher pay.

But Californians have mixed views on charter schools: most say they are an important option for parents in low-income areas, but many express concern about charters diverting funding from traditional public schools.

Other survey highlights:

  • Most Californians think the level of state funding for local public schools is not adequate.
  • More than half of residents across regions say teacher salaries in their community are too low.
  • Majorities of adults and likely voters would vote for a ballot measure that would amend Proposition 13 to create a “split roll” property tax system and direct some of the revenue to K–12 education.
  • Many parents think the goal of K–12 public education should be to prepare students for college—but many worry about the affordability of a college education.

Testimony: Special Education Finance in California

Paul Warren, research associate at PPIC, testified today (March 28, 2019) before the Senate Education Budget Subcommittee, as part of a hearing on district financial conditions. Here are his prepared remarks.

The committee asked PPIC to help them understand why district special education costs are rising so quickly.

First, some background. The AB 602 formula provides about $500–600 in state special education funds per student in each district, based on average daily attendance (ADA). The number of students with disabilities in a district does not affect state funding amounts. Each year, that amount is increased by the change in ADA and by a cost-of-living adjustment.

In the PPIC report, Special Education Finance in California, my colleagues and I identified several reasons why AB 602 funding has not kept pace with district costs:

  • Changes in the rate and type of disabilities. We estimated that these changes increased annual district costs by around $1.1 billion. The state formula is currently based on average district costs from the late 1990s.
    • The share of students identified with disabilities increased by 5.7 percent from 2010–11 to 2015–16.
    • Disabilities that are, on average, expensive to address have increased. Autism, in particular, continues to increase as a share of students with disabilities.
  • Growth in preschool for children with disabilities under the age of 5. This population grew about 10 percent from 2005 to 2015. The AB 602 formula does not adjust district funding for changes in this group, as pre-school children with disabilities do not count toward ADA.
  • Higher district salaries since the Great Recession. The large LCFF increases during the economic recovery shaped salary negotiations. But AB 602 did not adjust to the higher costs for special education teachers and administrators.

In a report from last year, Revisiting Finance and Governance Issues in Special Education, we provide two options for modifying the AB 602 formula:

  • Increase AB 602 by the same percentage amount as LCFF funding. This makes sure that state funding for special education increases at the same rate as LCFF.
  • Increase AB 602 by the actual increase in special education costs. This would hold the state share of special education costs constant over time.

We also recommend caution when considering proposals to base state special education funding on counts of students with disabilities. Differences in district identification practices affect the share of students identified for special education services. We found that the county with the lowest rate of students with disabilities reported that about 8.8 percent of students were in special education. In contrast, the county with the highest rate reported that about 17.6 percent of students were in the program. This disparity strongly suggests that district practices affect district caseloads, and basing state funding on the number of students with disabilities could create financial incentives to identify more students.

Our two options would avoid this identification problem while better aligning state funding for special education with LCFF and district costs.

Thank you for the opportunity to discuss these important issues.

Improving Special Education in California

What are the most significant challenges in California’s K–12 school system today? A new report, Getting Down to Facts II, recently released comprehensive findings. PPIC was asked to weigh in on the topic of special education.

We contributed an update to our 2016 report, Special Education Finance in California. This report concluded that state funding for services to students with disabilities is inequitable, inadequate, and lacks transparency. It also fails to provide the same level of local control as other state funding programs. In addition, preschool services to infants and toddlers with disabilities are lacking.

Our new report, Revisiting Finance and Governance Issues in Special Education, expands the analysis of these issues. Overall, we suggest that weaving greater accountability into governance and finance of special education has the potential to improve equity for students with special needs.

Specifically, we find:

  • The state has several good options for revising the special education funding formula so that it better reflects district costs. However, we find that basing funding on the number of disabled students in each district could create negative incentives for districts.
  • Better funding for services to infants and toddlers with disabilities would encourage districts to increase the number of children receiving early services, which would improve behavioral and cognitive skills in some children.
  • Current accountability measures for student success do not acknowledge the unique program factors that can affect district performance data. We find the growth of individual student outcomes is a better measure of progress than the average group scores for all students with disabilities.

We also revisit the role of regional Special Education Local Plan Areas (SELPAs) in special education finance. SELPAs provide support to districts and students in a number of ways, including in the allocation of state and federal funds. We find that district superintendents strongly support their local SELPA, although they provided numerous suggestions for improvement. And we discuss ways that SELPAs could give districts greater autonomy when districts determine that SELPA financial arrangements do not meet local needs.

Debate over How Special Education Is Funded

Last month the state Department of Finance held meetings in Los Angeles, Sacramento, Fresno, and San Mateo to get input on improving special education, the state’s largest K–12 categorical program. The Department of Finance asked PPIC to kick off these meetings with a presentation of findings and recommendations from our recent report on special education financing. The report calls for folding state special education funding into California’s new Local Control Funding Formula as a means of improving local flexibility and accountability. Currently, state and federal funds are distributed to regional administrative entities known as Special Education Local Planning Areas (SELPAs).

The one consistent theme at the public meetings was a call for more money from local educators and parents. Beyond that point of agreement, though, these discussions did not lay out a clear path for the state to follow in its effort to improve services for disabled students.

Our report is not the only one to call for major changes in special education. A study published by the Statewide Task Force on Special Education in 2015 concluded that California’s special education program suffers from “systemic dysfunction.” It says that, too often, students miss opportunities to grow because they are served in separate programs outside the regular classroom. The task force encourages changes at both the state and local level to integrate special education with the programs that serve nondisabled students. The report also recommends earlier services to children with disabilities, an integrated state and federal accountability system for special education, and more funding for local programs.

The Department of Finance staffers made it clear that the reports were a starting point, and that they were looking for suggestions about how to make special education more effective and efficient. Many who attended the meetings argued that special education is underfunded by both the state and federal government. Many also commented on the need to improve the way infant and preschool services for children with disabilities are funded.

PPIC’s recommendation to send funds to districts rather than SELPA was mostly opposed by the educators, parents, and administrators who spoke at the meetings. These participants often voiced support for SELPAs, and worried that our recommendations would hurt small districts or the network of regional services that SELPA funding supports. Larger districts, on the other hand, noted that they may bear a disproportionate cost of these small district subsidies and regional services. Several parents also voiced concerns about the proposed shift in funding, because they believe district administrators are less supportive than SELPA staff.

The meetings demonstrated the difficulty of developing a funding system that will be effective in every district in our large and diverse state. They underscore the logic behind the Local Control Funding Formula: Improving performance requires giving school districts greater control over critical program and funding decisions, but that control must be balanced by a broad accountability system and monitored by parent and community oversight. As we argued in our report, only school districts can address the systemic dysfunction of California’s system, and the state needs to give them the control and accountability to do so.

With the March outreach meetings concluded, the ball is in the Brown administration’s court. It will be worth watching whether the governor proposes any program changes during budget discussions later this year or in next year’s budget.

Learn more

Read the report Special Education Finance in California