A closer look at Special Education funding in Wisconsin—Part three of a series

This is the third of a series of blog posts that takes a look at special education requirements and funding, including both state and federal funding. This post focuses on state funding.

At one time, Wisconsin statutes directed that special education categorical aid reimburse 70 percent of a school district’s eligible aidable costs.  Today, special education categorical aid  reimburses scarcely more than 25 percent of eligible aidable prior year costs.  This blog post traces this decline.

Chapter 89, Laws of 1973 re-codified Wisconsin’s laws pertaining to special education of children with exceptional educational needs and established a percentage reimbursement method for distributing state special education categorical aid.  Under this method, the state reimburses local school districts for a percentage of eligible special education costs. Special education-related costs not covered by categorical aids are made up through a combination of state school aids–which until the recent advent of per pupil categorical aid were entirely comprised of general (equalization) aids–and local school levies (property taxes).

The 1973 law specifically authorized the payment of state aids to local school districts to reimburse 70 percent of the amount expended by a school district in the preceding school year for:

  • special books and equipment used in programs for children with exceptional educational needs (i.e., special education programs);
  • salaries of full- or part-time certified teachers, as well as certified consulting teachers to work with any teacher of regular education programs who has a child with exceptional educational needs in a class and paraprofessionals, and (subject to certain specified limitations ) the salaries of certified coordinators of special education, certified school social workers, certified school psychologists, and any other personnel approved by the department (DPI);
  • in-service training for any teacher who has a child with exceptional educational needs in a class and any other services approved by the department (DPI); and
  • other expenses approved by the state superintendent.

The statutory reimbursement percentage remained at 70 percent for several years until it was lowered to 68 percent in the 1981-83 biennial state budget act (Chapter 20, Laws of 1981).  The reimbursement percentage was again reduced from 68 percent to 63 percent in the 1983-85 biennial state budget act (1983 Wisconsin Act 27) in recognition that the amounts being provided were not meeting the statutory target.  Indeed, the last year the special education categorical aid appropriation achieved the relevant reimbursement rates was 1984-85.

Despite the amounts provided continually falling far short of the statutory target, the reimbursement rate language was maintained in the statutes at 63 percent of the amount expended in the preceding year (except in 1987-88 when the specific percentages were repealed for one year).  This was true even after the state enacted a statutory commitment to fund two-thirds of school costs statewide. (Although it should be noted that the shift to two-thirds funding caused an increase in general aid and thus an increase in the share of costs not covered by special education categorical aid that we made up by general aid.)

In 1998-99, for example, special education categorical aid funded approximately 34 percent of most eligible special education costs, far less than the 63 percent reimbursement rate established under state law.

The 63 percent statutory reimbursement target (along with other reimbursement targets) was finally removed with the enactment of the 1999-2001 state biennial budget (1999 Wisconsin Act 9) as requested by then-Governor Tommy Thompson.

This legislative change was prompted in part by two major reports that had recently been completed regarding special education costs and funding in Wisconsin.  In July 1998, the State Superintendent’s Special Education Funding Task Force issued recommendations related to modifying state funding for school district special education services. In May, 1999, the Legislative Audit Bureau (LAB) released a report that analyzed special education funding in light of school district revenue limits, the state’s commitment to fund two-thirds of partial school revenues, increasing special education costs and enrollments, and the tension between funding for special versus regular education.

One problem school districts face is that special education costs tend to increase faster than both regular education costs and increases in special education categorical aid.

Prior to the imposition of revenue limits on school districts by the state, school districts had the option of increasing local property tax levies to offset the costs associated with rising special education costs not covered by categorical aid.  Revenue limits effectively eliminated this option.  Local districts facing increasing  costs to meet special education mandates, were left with little choice but to make cuts in general education programs.

When per pupil revenue limit amounts were being regularly adjusted for inflation, this was not as great a problem as it has been in recent years. However, revenue limits have not been adjusted on a per pupil basis since the 2014-15 school year providing, effectively, no ability to increase local revenues except via the passage of a referendum.  Further,  since the special education categorical aid appropriation has been frozen since the 2008-09 school year, no additional funding was being earmarked by the state to assist school districts with increases in special education costs.

In recent years,  the triple combination of frozen special education categorical aid, relatively slow growth in state aids to schools, and frozen revenue limits has left many Wisconsin school districts with little choice by to  pay for their special education programs by pirating resources from their regular education programs.

As noted,  state statutes provide that, if the categorical aid appropriation is insufficient to fund all eligible costs, state aid payments are to be prorated, which (as also noted above) has been the case each year since 1984-85.

The following chart shows the extent of this proration for each school year since state-imposed revenue limits took effect.

Fiscal Year State Special Education Categorical Aid  Total Eligible Aidable Costs State Categorical Aid Proration %
1993-94  $ 261,330,400  $       585,879,900 44.6%
1994-95  $ 275,548,700  $       625,111,900 44.1%
1995-96  $ 275,548,700  $       661,269,000 41.7%
1996-97  $ 275,548,700  $       698,164,300 39.5%
1997-98  $ 275,548,700  $       747,324,700 36.9%
1998-99  $ 275,548,700  $       799,556,100 34.5%
1999-00  $ 288,048,700  $       839,923,200 34.3%
2000-01  $ 315,681,400  $       880,915,600 35.8%
2001-02  $ 315,681,400  $       936,788,000 33.7%
2002-03  $ 315,681,400  $       989,101,500 31.9%
2003-04  $ 316,466,900  $    1,037,592,000 30.5%
2004-05  $ 320,771,600  $    1,069,514,900 30.0%
2005-06  $ 320,771,600 $    1,110,784,300 28.9%
2006-07 $ 332,771,600 $    1,157,850,900 28.7%
2007-08 $ 350,192,500 $    1,213,607,500 28.9%
2008-09 $ 368,939,100 $    1,285,385,300 28.7%
2009-10 $ 368,939,100 $    1,322,974,700 27.9%
2010-11 $ 368,939,100 $    1,312,271,300 28.1%
2011-12 $ 368,939,100 $    1,385,983,300 26.6%
2012-13 $ 368,939,100 $    1,343,053,700 27.5%
2013-14 $ 368,939,100 $    1,359,647,100 27.1%
2014-15 $ 368,939,100  $    1,375,000,000 26.8%
2015-16 $ 368,939,100 $    1,393,000,000 26.5%
2016-17 $ 368,939,100 $    1,408,164,500 26.2%
2017-18 $ 368,939,100 $    1,435,356,008 25.7%
2018-19* $ 368,939,100 $    1,456,886,300 25.3%

Bottom line:  Special education categorical aid has been stuck at the same overall level since 2008-09.   Although special education costs not paid by federal or state categorical aids are eligible for reimbursement from state general aids or, in recent years, per pupil categorical aid funding, it should also be noted  that costs included under general aids are controlled by state-imposed revenue limits, which have not been adjusted since 2014-15. Therefore, districts increasingly find they have little choice but to reduce regular education spending in order to fund special education services mandated by federal and state law.  This plight was heard time and time again by the Blue Ribbon Commission on School Funding, and must continue to be heard as the next state budget is being shaped.