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Once again, schools are forced to spend hundreds of millions of dollars to make up the difference between special education revenue and actual costs.

A new report from the Minnesota Department of Education shows state and federal aid failed to meet special education costs by $531 million in 2006. That amount is expected to jump to $603 million in 2007.

Federal and state governments have agreed to pay schools the cost of providing special education services. They do this because the government mandates the services. Schools cannot cut special education costs to meet budget targets.

In 1975, the federal government agreed to pay 40 percent of special education costs. So far, it has yet to pay more than 17 percent. In Minnesota, the state pays 68 percent of special education teacher and paraprofessional salaries. When the government revenue is insufficient, each school district makes up the difference by taking the amount away from general education.

MDE offers these figures:

• In 1999, state and federal funds came up $363 million short of special education costs. In 2006, that shortage was $531 million. In 2011, MDE projections show a $675 million shortage.
  
  
• In 1999, schools had to pay 61.3 percent of special education costs. Since then, state and federal reimbursements have come up as much as 66.7 percent and as little as 59.9 percent short.
  
  
• Projections to 2011 show schools paying 63.3 percent of costs - nearly identical to 1999 figures.
  
  
• Forecasts show that between 1999 and 2011, special education costs will have risen 96 percent, while revenues will increase 54 percent.
  
  
• The number of special education students in Minnesota has increased 12 percent between 1999 and 2006.

Jim Westrum, the Director of Business Services for Spring Lake Park Schools, said that in 2006, his district had a special education bill of $5.2 million. They received about $3 million from government, leaving a debt of $2.2 million, or 4.5 percent of its operating budget. That amounts to $402 per student to cover special education underfunding.

Westrum said 11 percent of the district's $44 million operating budget comes from property tax levies. Recouping $2.2 million owed by the government "means we could either give the taxpayers $2 million in relief, or it could allow us to redirect the funds to other educational programs," Westrum said.

But rather than using the $2.2 million to provide a better education, Spring Lake Park is "making budget adjustments" of $1 million, Westrum said. This would not be necessary if the state paid its bills.

In 2007, lawmakers tried to make a dent in the special education debt by appropriating $387 million for special education funding.

Educators say the money is welcome, but impotent against the problem. The extra money will drop underfunding from $603 million in 2007 to "only" $516 million in 2008. Underfunding will reach $675 million by 2011.

The biggest blow to funding came in 2003 when Governor Tim Pawlenty effectively raised taxes by capping special education funding. Because special education services cannot be cut, property taxpayers were forced to either increase taxes to make up for underfunding or watch as school districts made up the difference by cutting teachers, raising class sizes and closing buildings.

In 2007, the Minnesota Legislature rejected the cap and will allow state special education funding to grow 4.6 percent each year to keep pace with inflation.

The Governor's financial antics have had a lasting effect. Before the Pawlenty cuts, the state paid 65 percent of its bill. By 2007, that had dropped to 60 percent. While the 2008 cash influx will help for one year, government payments will return to 63 percent by 2010

While Pawlenty holds firm on his "no new taxes" pledge, school districts do the work for him by asking voters to raise taxes to pay for special education underfunding.

This is how underfunding has affected several school districts in 2006:

• St. Paul Public School District lost $29.8 million, or $635 for each student -- in 2006, voters approved a $593-per-student tax increase;
  
  
• Anoka-Hennepin School District lost $25.7 million, or $423 for each student -- in 2007, voters approved $84 and $338-per-student tax increases;
  
  
• Burnsville-Eagan-Savage Independent School District lost $7.8 million, or $643 for each student - in 2007, voters approved a $620 tax increase;
  
  
• Onamia Public Schools lost $680,647, or $783 for each students - in 2007, voters approved a $650-per-student tax increase;
  
  
• Worthington Independent School District lost $1.5 million, or $609 for each student; -- in 2006, voters approved a $1,000-per-student tax increase;
  
  
• Winona Area Public Schools lost $2.8 million, or $634 for each student - in 2005, voters approved a $1,065-per-student tax increase.

John Fitzgerald
Minnesota 2020 Fellow
john.fitzgerald@mn2020.org

RELATED LINK:  Special Education Trends at Parents United.

http://www.mn2020.org/index.asp?Type=B_BASIC&SEC=%7B0376F065-A45E-46AE-9DDC-B731E0FC8D4B%7D&DE=