Special Education Finance

Iowa Department of Education 1

Special Education Finance

Overview

SEAP

Friday, April 5, 2013


Iowa Funding of Special Education Foundation Formula Weighting Grants-in-Aid (IDEA) Medicaid Services Other State/Federal categorical aid & allocations


Foundation Formula

Iowa is one of 36 states with a foundation formula

Pupil driven system (Pupils x Cost Per Pupil = Regular Program Budget)

Sets spending limit/ceiling = budget authority

Praised for its equity


Goals and Principles

Equity in Expenditure Horizontal Vertical

Property Tax Relief Equalize Taxation Uniform State Aid

Allocation Formula Predictable Simple

Pupil Driven Provide for Local

Discretion/Incentives Establish Maximum

Spending Control One Funding Formula

AEA + K-12 Provides Adequate

Funding


Horizontal Equity

All students treated equally. All students are FIRST regular education

students. All students have equal funding behind

them. Referred to as “1.0” funding

Comes from October 1 certified enrollment count

Vertical Equity

• Iowa is one of 20 states that weights per pupil

• Creates weight (Pupil FTEs) based on need• Purpose is to equalize educational

opportunity• Provides additional funding for certain

populations of students



Weighted Enrollment Funding

Pupil Driven System

Weights “Adds” Pupils (FTEs)

Weights x District Cost Per Pupil =

Additional Categorical Funding


Weighted Enrollment Funding

Pupil Driven System Weights

– Provide funding to cover additional instructional cost

• Special Education

• English language Learners

• Shared Teachers/Students/Regional Academies

• At-Risk Students

• Called Categorical Funding

Vertical Equity in Special Education• 3 Levels of Special Education Weighting

• Level 1 = 0.72

• Level 2 = 1.21

• Level 3 = 2.74



Annual Growth to Cost Per Pupil

Allowable Growth

Allowable Growth Rate x State Cost Per Pupil = Growth Per Pupil

2012-2013

2.0% x $5,883 = $118 Per Pupil

$5,883 + $118 = $6,001


AEA Program Funding

AEA Funding– Pupil Driven– Flows Through Local District Budgets

– Special Education Support Services– Media Services – Educational Services


Revenue - Foundation Formula

Required Local Levy - Uniform Levy Minimum Local Tax Effort

State Aid Equalizing

Foundation Level Total funding is the same in all district—just source

changes (property tax or state aid)

Additional Levy


State Aid

Increase Funding for Districts

“Fair” Method to Distribute State Aid

Provide Property Tax Relief

Equalizes Effort


Foundation Formula

State Aid

Uniform Levy$5.40 Per$1000 Valuation

Additional Levy

Foundation Level

87.5% of State Cost ($6,001) = $5,251 Per Pupil


Foundation Formula

Property Rich District

Property Poor District

Uniform Levy$5.40

Additional Levy

State Aid

Uniform Levy$5.40

Additional Levy

State Aid

Foundation Level

Foundation Level


87.50% Foundation 79%

Level Foundation

Level

State Aid

AEA Special Education Support

Special Education Instruction

Additional Levy

Uniform Levy

Additional Levy

State Aid

State Aid

Additional Levy

Regular Program

Foundation Formula


SE is Unique Among Categorical Funding

• Student Count for SE weighting is late October rather than October 1 like all others• Results in possible 1.0 and wtg in different districts

• Requires a Local Match• Portion of the 1.0 becomes categorical

• Balance of 1.0 remains general purpose

• Different portions for each wtg level

• Makes it difficult to budget



• SE weighting is not the final amount like all others—more like an estimated advanced• Focus is SE is NOT on balance

• Focus is on meeting every IEP need

• May cost less than wtg—may cost more than wtg

• If less• “Use it or Lose it” is WRONG in SE

• Excess over 10% of receipts goes to other districts that need it—does NOT revert to the state



• If more• Called “deficit”

• District may levy additional property tax

• Unlimited funding—whatever it takes to meet IEP needs


SE is Unique Among Categorical Funding—Creates Issues

• If less:• Districts have “Use it or Lose it” concept

• Try to spend needlessly to prevent sharing with other districts

• If more:• Unlimited funding can cause district to lose incentive

to be good financial stewards

• Unlimited funding causes districts to be victims of those who perceive them as “deep pockets”—whatever the market will bear attitude


SE is Unique Among Categorical Funding -- AEAs

• If less:• Revert to the state treasury special education support

services balances greater than 10% of expenditures

• If more:• Iowa Code allows special education support services

to scoop funding from education services and media services to ensure that all special education support services needs are met


School Budget Review Committee’s Role in SPED

“Manage” Foundation Formula• Adjust Special Education Weights• Approve Positive & Negative Balances• Direct Payment of Supplemental Aid• Grant Authority to Charge Administrative

Costs to Special Education Weighted Funding


SBRC Action

• Special Education Deficits approved– More on this later

• Weightings did not change• Special Ed Admin Costs – generally ok

– More on this later


Special Education Reviews & Audit of Provider

• Special Ed deficits increased from $19 million in FY11 to $55 million in FY12.

• SBRC wanted to know more on the ground about this trend

• Visited four locations: Cedar Rapids, Dubuque, Waterloo, Atlantic

• Reviewed expenditure detail


SE Review (cont.)

• Findings– 1) Loss of ARRA funds negatively impacted

balances– 2) Little or no allowable growth magnified

deficits– 3) DE’s rubric for qualifying students pushes

more students toward a level II service vs. level I

– 4) High growth in paras


SE Review (cont.)

• Will always find some expenditures coded incorrectly

• Concerns with third party billings• Concerns with Special Education Admin• Iowa law does not allow any expenditures

for SPED other than instructional program expenditures pursuant to IEP


Audit

• Key finding – Third party provider was including nonpermissive items in billing

• Responsibility for both implementing special education programming (at any site) and to ensure legal spending lies with the district

• District must ensure there is enough detail to know whether billable expenditures are legal


What’s Next – SPED Issues

• General Deficit

– Property Taxes vs. state aid• SPED Counts

– SPED Counts vs. Actual Enrollment

– AEAs vs. direct to DE

– Certified Enrollment vs. SPED Count

– IMS vs. RTI• General Purpose Percentage

– General purpose costs are never accounted for on a student basis or student classification basis.



• Transportation– Only allowable if in IEP

• Carryover Provision– Limit of 10%

• Supplanting– SPED Students always general ed first, then

weighted next if IEP

• Claims and timing of revenues



• Rules – In need of updated guidance on SPED finance

• Mixed classrooms– Need for additional guidance

• Audits– Need for additional training of local auditors

• Look Back Rule– Already fixed – look back to October

Special Education Finance

Documents

Transcript of Special Education Finance