The misdiagnosis of special education costs: district practices have no bearing, but medical and social factors accelerate spending

School Administrator, March, 2003 by Sheldon H. Berman, David K. Urion

Local school districts nationwide are experiencing increases in special education costs. In states that are placing a high priority on education reform, the special education cost increases are rapidly compromising the ability of districts to effectively fund the implementation of these reforms. However, in searching for a way to address rising costs, policymakers often err in their diagnosis of the problem.

Policymakers point to two major causes of the increase in costs. First, they claim schools are funneling too many children into special education to ease the burden on the classroom teacher of addressing behavioral and learning problems. Second, they point to the increased advocacy on the part of parents and physicians.

Based on these assumptions, policymakers tend to recommend that states impose financial disincentives for increases in special education populations. They believe these disincentives will force school districts to apply more rigorously the eligibility requirements, leading to smaller special education enrollment and less special education spending.

Primary Factors

Although these two factors may play a minor role in the increase in special education enrollments, far more significant causes generally have been ignored. In a case study of cost increases in Massachusetts, we determined that the increases were not caused by school district policy and practice. In fact, just the opposite was the case.

School district policy and practice was effective in containing and even reducing the percentage of children who required special education services. We found that cost increases were primarily due to the increased number of children with more significant special needs who require more costly services.

The root causes of these increases were factors beyond the control of schools, such as advances in medical technology, the deinstitutionalization of children with special needs and privatization of services. Also contributing were economic and social factors, such as the rising number of children in poverty and the number of families experiencing social and economic stress.

Because the increase in special education enrollments reflects real increases in the needs of children in the overall population, the solutions recommended by policymakers only exascerbate the problem by making funding to serve these children more difficult to access. This produces a no-win situation for both regular education children and special education children whose interests too often are pitted against each other in funding debates.

These findings emerged from a study of special education cost increases in Massachusetts completed by a task force of the Massachusetts Association of School Superintendents. Although the results of the study draw from data in one state, the national data on special education suggest these factors may be influencing the increased number of special education children nationally.

The Cost Reality

The special education components of the school funding formula for education reform in Massachusetts were built on the assumption that school districts did not effectively contain costs and identified more children than necessary as having special needs. Specific elements of the formula were designed as disincentives to these practices. For example, in all areas other than special education, actual enrollment within a district is used to calculate state aid. Additional allocations are provided for the actual number of students who are from low-income families or who are in bilingual or vocational programs.

In contrast, allocations for special education are based on a preset percentage of children in special education, set at a rate lower than the state average. In addition, the cost allocations for providing services are set at levels well below the actual costs. These disincentives were designed to cause districts to be more rigorous in their use of the eligibility standards and to encourage more cost-effective placement of students.

Our analysis of the data for Massachusetts school districts, not including regional vocational schools, shows that these assumptions are not accurate. In fact, schools have done a good job containing costs. They rigorously have applied eligibility standards and provided regular education and inclusive programming for children as an alternative to special education services. The percentage of children enrolled in special education in Massachusetts reached a high in 1991-92 of 17.4 percent but declined to 16.3 percent in 2000-2001.

In spite of the districts' best efforts, costs have continued to increase as districts have enrolled a greater number of children with more serious needs. We found that between 1989-90 and 2000-01 per-pupil expenditures in special education escalated from $6,675 to $12,416, while they increased by only one-third as much in regular education from $4,103 to $6,177. This represents an increase of 86 percent in per-pupil special education expenditures in contrast to a 50.5 percent increase in per-pupil regular education expenditures.