Minnesota schools face rising challenges related to Special Education. House lawmakers received an in-depth look at what’s changing in special education and how its impacting the cross subsidy this past week from Dr. Tom Melcher, director of school finance at the Minnesota Department of Education (MDE).

Key Changes

Growing in number

Students in special education have grown from 115,000 in 2003 to 147,000 currently. In 2019, SPED students represent 16.3 percent of the student population. All of Minnesota’s school districts are seeing increases except for the core cities of Minneapolis and St. Paul.

Highest concentration shifting

The highest concentration used to be in the core cities but now large and medium sized districts share large concentrations of special education students. Many district resident students are open enrolling to other school settings, be they charters, neighboring districts or other agencies that offer higher levels of services.

Younger students qualifying

More younger students in Minnesota are qualifying for special education with enrollment peaks around ages 10 and 11. Enrollment numbers decline as children get older. Special education students are eligible to receive services until the age of 21.

Changing disability types

Specific Learning Disability represented the highest area of enrollees at nearly 23 percent. Autistic Spectrum Disorder, Developmentally Delayed Disorder, other health disabilities and Emotional/Behavioral Disorders all came in at double digits ranging from 14 percent to over 11 percent. While there are some categories that have a very small percentage of enrollees, they are often times the most expensive in cost per student. Other primary disabilities that saw increases but at a much lower rate were speech, severely multiply impaired, visually impaired, deaf-blind, hard-of-hearing, and traumatic brain injury.

What Can Be Done?

Members of the House Education Finance Committee responded to the presentation on the trends with questions and a conversation about the federal share for special education costs.

Then, Melcher reviewed two key recommendations from the Education Finance Working Group, convened in 2012 by then Gov. Mark Dayton.

  • Increase state aid by $150-200 million a year to reduce cross subsidies
  • Replace the old formula with a new one that included specific changes as to how the state would reimburse districts for special education services

Those special education formula changes include:

  • Eliminating the statewide cap on special education aid
  • Allow special education costs not funded with federal aid, including fringe benefits, eligible for state aid
  • Calculate aid using prior year data
  • Allocate a portion of the aid based on student disability categories
  • Require the serving school district or charter schools with less than 70 percent IEP enrollees to cover 10% of unfunded costs for open-enrolled students

What’s Been Done?

Gov. Dayton urged adoption of the working group recommendations beginning in FY15 and proposed appropriation increase of $125.8 million in FY15, $158.9 million in FY16 and $167.2 million in FT17. Neither the House or the Senate included the governor’s recommendation in their initial education bills but the final legislation did include a portion of his request.

Legislators allocated $40 million to cover a portion of the cross subsidy for FY14-15. They passed a scaled-down version for a new formula starting in FY16 and increased funding by $38 million in FY16 and $41 million in FY17. They also passed the portion requiring serving school districts or charter schools to cover 10 percent of the unfunded costs for open-enrolled students starting in FY15. The new formula included about 25 percent of the governor’s recommended increase in funding.

The Legislature also made three changes:

  • Change the way initial aid is calculate by using the least of a student driven formula, a cost-driven formula based on the old formula excluding fringe benefits, or a cost-driven formula based on total non-federal expenditures including fringe benefits
  • Calculate excess cost aid based on the greater of that formula or an excess cost formula based on old formula expenditures
  • Added a hold-harmless provision to make sure that no district would receive less that it would have under the old formula based on FY16 data and an individual district growth cap was also included

Melcher shared that the current funding and new formula have a series of challenges. Learn more.

View MREA’s platform that includes Special Education

View full Special Education testimony that spanned two days:

House Education Finance Division
Thursday, January 31 2019 – Archive Video
00:40 – Special education and cross-subsidy related presentations
1:01:04 – HF207 (O’Neill) Monticello; school district special education adjustment modified
Runs 1 hour, 24 minutes

House Education Finance Division
Wednesday, January 30 2019 – Archive Video
00:17 – Department of Education presentations
– Mary Cathryn Ricker, Commissioner
– Tom Melcher, Director of the Program Finance Division
Runs 1 hour, 24 minutes.