Many NC school districts face funding shortages in serving students with special needs

By: - October 28, 2022 5:55 am
Photo: Klaus Vedfelt, Getty Images

Student exoduses to homeschools and private schools, combined with impacts of low salaries and inflation are leaving local school systems in a bind

The public school system in Chatham County in an “OK spot” financially to meet the needs of the more than 1,200 children it serves in its exceptional children program, says Amanda Moran, assistant superintendent for academic services and instructional support.

Those students in the exceptional children program make up roughly 13.5% of the district’s nearly 9,000 students. North Carolina caps funding for exceptional children programs at 13% of a district’s enrollment. So, with state funding and a generous Chatham County supplement to cover the difference, the school district can comfortably cover the cost of special education services for its children,  Moran said.

“In my nine years in this role, that has not always been the case,” Moran said. “There’s been a few times that we’ve been off by 3% or 4% from the state, so when that has occurred, we’ve had to supplement our state EC [exceptional children] funding with local funding.”

This school year, districts receive $4,549 per eligible special needs student – on top of regular per-pupil funding – regardless of the level of services required. There are roughly 200,000 students in the state who have been determined to need special education services. Most of the state’s 115 school systems have identified more than 13% of their students as needing those services.

Moran has worked in other school districts where the county couldn’t afford to be so generous; those districts couldn’t make up the gap with local funding.

Amanda Moran – Chatham County Schools

“So, you might not be able to purchase resources that students might need,” Moran said. “You may not be able to fund positions that you might need and you might really have to max out caseloads, so you might have to really max out teachers as high as you can go on the number of students that they can serve.”

When that happens, Moran said, teachers are left stressed out and students receive diminished services.

State lawmakers recently raised the funding cap from 12.5% to 13% of district enrollment. But even with the increase, state funding often doesn’t align with the demand for services. That can be a big problem for smaller, rural districts that don’t have the tax base to supplement services.

“Chatham is fortunate in that our county commissioners have funded our district at a pretty high level,” Moran said. “We have more than a $1 million additionally [for special education services] that we provide locally, so even when there are funding dips, we’re able to cover them locally.”

A legislative fix could help

To ease the financial burden on districts, Department of Public Instruction leaders want state lawmakers to implement a major policy shift so that funding for special education students would be based on the services provided rather than the percentage of students enrolled.

Currently, the additional funding is the same for every special-needs student “whether they receive 30 minutes of speech once a week or they are in a self-contained classroom with a nurse, with occupational therapy, with speech therapy,” Sherry Thomas, state director of the Exceptional Children Division at NCDPI, told lawmakers during a Joint Legislative Education Oversight Committee meeting earlier this month.

Sherry Thomas, NCDPI

Historically, Thomas said, districts could cover the costs of providing special education services because they receive full state payments for “low-needs” students who don’t require expensive services. The money that was left over from those students would help to pay for the more intensive care and services that “high-needs” students require, Thomas said.

But now, the rising cost of services and the loss of “low-needs” students to private schools or homeschools have made it difficult for traditional schools to make up the difference. They are often left with a higher percentage of “high needs” students that require more expensive services, Thomas said.

An inflation-fueled increase in the cost of contracted services for occupational and physical therapy, psychologists and other professional services has made it even more difficult for districts to provide students with required services without asking for additional local money.

“Those contracts continue to rise at a cost per hour, reaching in some places to over $100 per hour,” Thomas said. “And in a small, rural district that cannot afford to hire one of those related service providers, their choice is to contract that service out, and so they’re paying in some cases twice as much as it would cost for an employee.”

Often the district can’t hire an employee to provide needed professional services because they don’t have enough students to justify hiring a full-time person. Also, some districts have no takers for those jobs, Thomas said. Many new graduates can earn better pay working for companies with which districts contract, she said.

Researchers endorse policy reforms

RTI International, an independent nonprofit research institute, was recently commissioned to examine how the state funds special education programs. It recommends that North Carolina pursue a funding model based on levels of service. The State Board of Education received the report at its September meeting.

RTI found that special education funding methods vary widely from state to state. Special education directors and other experts surveyed agreed, however, that there is a move toward funding models based on service levels.

The researchers said the advantages of such models are a more “accurate accounting” of special education costs and they align with the “efforts of Individualized Education Program” (IEP) teams and other staffers to focus on the unique needs of students, regardless of disability. IEPs are required to ensure students with disabilities receive specialized instruction and related services.

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Here are some of RTI’s key recommendations for funding special education:

  • To ensure that the funding model is feasible, RTI recommends that DPI pilot test a revised version of the matrix using a representative sample of PSUs. This would allow the state to identify any logistical difficulties or gaps before implementing the funding approach on a larger scale.
  • To increase the use of Medicaid reimbursements, RTI recommends that DPI continue to collaborate with the North Carolina Medicaid Division of Health Benefits to explore ways of allowing reimbursement for additional services—such as transportation—and expanding the eligible age range.
  • To provide additional support to charter schools, RTI recommends that DPI continue to provide targeted support and training to help charter schools develop a process for reimbursement and ways of collaborating to share costs involved in billing.

There is some concern that the proposed level-of-service model could lead to students being overidentified in the more costly high-needs category.

“However, research is mixed as to whether this actually occurs in practice and experts and practitioners note that the implementation of a monitoring system could prevent any unintended consequences of a funding model based on service level,” the researchers said.

Thomas told lawmakers that the overidentification of students for special needs services has not been a problem in North Carolina.

“Most of the state complaints that we receive are not because students have been overidentified [as special needs students] but students have not been identified in a timely manner,” Thomas said.

There are parts of the state where the percentage of students who need special needs services is higher than the norm, she said.

“Districts that have specialty schools just for special education, that always raises their numbers because parents will move into that area for that specialty school that’s designed for their student with a significant need,” Thomas said.

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Greg Childress
Greg Childress

Education Reporter Greg Childress covers all aspects of public education in North Carolina, including debates over school funding, curricula, privatization, and teacher pay and licensing.