Michigan’s budget, passed early Friday, includes a major overhaul of how the state funds special education, a change lawmakers said is meant to stem chronic underfunding of special education services.
For years, school leaders have said underfunding of special education led them to take money away from their general education budget to cover special education costs. A 2017 report commissioned by then-Lt. Gov. Brian Calley found that special education was underfunded by $700 million.
This budget allocates a total of $1.9 billion for special education, an increase of $312 million from last year.
Erik Edoff, superintendent of L’Anse Creuse Public Schools, said the change helps address the shortfall identified in the 2017 report.
“It’s a significant step in the direction of equalizing support for special education students,” he said. “We’re really appreciative.”
State Rep. Thomas Albert, R-Lowell, helped craft the plan.
He said Thursday night that this is one of the biggest changes for school finance in Michigan since voters approved Proposal A in 1994, which completely changed how the state funds public schools.
“It’s a very big deal,” he said.
Nikolai Vitti, superintendent of Detroit Public Schools Community District, wrote in an email to the Free Press that he hopes this overhaul will last, and that state leaders will eventually fully fund special education services.
“We are hopeful and expect that this special education funding increase is permanent and reoccurring rather than short-term and one-time,” he wrote.
David Arsen, a professor of education policy at Michigan State University, said the change moves the state in the right direction, but will still not fully fund special education requirements.
“It moves us in the direction of something that is more desirable,” he said.
How funding has changed
About 203,585 students in Michigan receive special education services. Special education funding is very complex and can vary based on needs and classification.
The current funding system reimburses schools for about 30% of special education expenses, plus 70% of transportation costs. The reimbursement rate stems from a 1980 lawsuit that led a state court to mandate that the state must pay at least 28.6% of special education costs.
Generally, Michigan funds schools at a rate of about $9,000 per general education student, depending on the year, which is called a foundation allowance. Under the current system, the state counts the reimbursed special education expenses toward a special education student’s foundation allowance, instead of on top of it.
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This vastly undercalculates how much it costs to provide equitable services to students with disabilities, superintendents say.
The other portion of the costs fall on the district or charter school to cover, usually prompting them to dip into general education funds. Schools also get federal funds to cover special education expenses, but just about 10% of the cost of special education services, said Arsen.
Arsen said this system of funding perpetuates inequities in the ways schools educate students with disabilities.
“It’s a system that powerfully creates incentives for districts to scrimp, to economize as much as they can,” he said. “It provides no incentive to try to attract these students.”
Few states fund special education through a reimbursement system, according to a 2019 report from Michigan State University. And of the few states that do use a reimbursement method, Michigan reimburses at one of the lowest rates, Arsen said.
Most states use a weighted method of funding special education, which provides a higher per-student foundation for students with disabilities.
Lawmakers did not opt to switch to a weighted system, which Arsen and other experts recommend. The new system will fund special education students based on the foundation allowance, plus 28% of their special education costs. Lawmakers plan to phase the new funding system in over two years.
Special education services are federally mandated: Schools must provide them or face legal repercussions.
Edoff said his district often had to dip into general education funds to cover special education expenses. With boosted special education funding, Edoff said he wants to look into providing more mental health services to all students, adding counselors and social workers.
“That’s where we were really thin,” he said.
The change comes as district and charter schools address learning loss created by pandemic closures and chaos.
When asked whether he’d heard from special education educators about funding issues and other special education needs, Albert, the lawmaker, replied, “I have been hearing from a special education teacher my entire life.”
Albert’s dad is a special education teacher.