Call for Funding Reform in NC

State education officials in North Carolina are aiming to revamp how funding is distributed for students with disabilities. They believe that this change could lead to more tailored and effective services for students with developmental delays, learning disabilities, and various intellectual and physical disabilities.

In March, the North Carolina Department of Public Instruction (DPI), which oversees the state’s public schools, submitted a proposal to state lawmakers to fund special education based on individual student needs. This represents a significant shift from the current model, which allocates a uniform amount for each special education student, regardless of their specific requirements. Currently, North Carolina provides approximately $5,300 per disabled student, capped at 13% of total student enrollment.

To illustrate, if a school district has 10% of its 10,000 students with disabilities, the state would allocate around $5.3 million for services for those students. Each student with a disability would thus receive the maximum funding of about $5,300, which supports various services such as special education classrooms, tutoring, therapies, and essential equipment.

However, if the percentage of students with disabilities in that district increases to 20%, the funding would only rise to about $6.9 million due to the 13% cap, leading to a diluted per-student allocation of under $3,500. This amount is roughly one-third less than the maximum funding available, which hampers the ability of schools to provide comprehensive services.

Most school systems in North Carolina exceed this funding cap, including many charter schools. Education officials have long urged lawmakers to remove the cap and reform the funding model to better support the more than 200,000 students with disabilities across the state. Despite these efforts, recommendations have yet to be implemented, regardless of the political party in power within the North Carolina General Assembly.

The new proposal seeks to eliminate the cap entirely and establish multiple levels of need, providing increased flexibility in funding distribution throughout the state. Although the proposal is still in its early stages, and no bill has yet been filed to formalize these changes, there is a growing recognition among lawmakers of the necessity for reform. This growing awareness is fostering hope among parents, disabled rights advocates, and education officials.

In 2021, lawmakers instructed DPI to examine this issue, leading to the development of a more dynamic funding formula that addresses student needs—a clear sign that some legislators are serious about making changes. Recent budgets have also seen gradual increases in the cap, moving from 12.5% to 12.75% and eventually to 13% in 2021.

As Corye Dunn, director of public policy at Disability Rights North Carolina, stated, “We’re further along in the conversation than we’ve ever been before.” Alan Duncan, vice chairman of the State Board of Education, echoed this sentiment, expressing appreciation for the legislative interest. “This is a really positive step … for our children that deserve so much of our attention,” he noted during a board meeting earlier this spring.

Currently, lawmakers are navigating a short legislative session focused on budget adjustments, with discussions around how to allocate a $1 billion surplus somewhat stalled due to differing priorities among leaders in both chambers. At this juncture, it remains unclear where special education funding falls on the list of legislative priorities.

The DPI’s proposal proposes to remove the funding cap and categorize students into three levels of need. The first tier encompasses students who require minimal therapy or other services and can primarily participate in a general education classroom. The second tier involves students who need additional assistance, including partial placement in a separate classroom. The third and most costly tier necessitates complete separation from general education, extending to “homebound” education, where the school must deliver both general and special education services at the student’s home.

DPI will assess which tier a student belongs to based on information provided by the school district. While funding for students in the first tier would fall below the current $5,300 amount, funding for those in the third tier would exceed that figure.

Importantly, the proposal does not provide an estimate of the actual costs associated with new services. Instead, it outlines a formula for redistributing existing funds within a system that advocates for special education have labeled underfunded. “It’s a step in the right direction toward recognizing we need to fund our students and our students with the most needs,” said Susan Book, a mother of a middle schooler with autism. Book has had to navigate years of struggles, extensive absences, and disputes to secure a full-time aide for her son, Emerson. After multiple school transfers, she credits a well-resourced school and trained staff for finally enabling Emerson to succeed and enjoy his education.

Book urges lawmakers to harness their power to bring about similar success for other students statewide. “If they don’t actually increase our public school funding, we won’t see drastic changes in how the daily lives of our students look,” she remarked, explaining that she and other parents have been sending postcards to lawmakers advocating for the new funding model.

The proposed weighted funding formula may not necessarily reduce overall state spending but is designed to ensure that students with disabilities receive the services they need, regardless of their school system. Dunn, the Disability Rights North Carolina policy director, explained, “Any time we talk about new funding structures in public programs, education, health care — you name it — there is a sort of a gleam in the eyes of a few who are hopeful that it will mean reducing the overall cost, and that is not likely to happen here. Not if we’re doing it well.”

In terms of fiscal commitment, North Carolina is expected to allocate $1.1 billion this year on special education from state funds, in addition to approximately $357.3 million from federal sources. Notably, after teacher salaries, special education stands as the largest K-12 education expenditure in the state.

Implementing the new model is estimated to incur an additional $223 million in costs. DPI officials have indicated that the exact amount of new funding required from lawmakers remains uncertain. They have noted that some funding sources not explicitly dedicated to special education may already be supporting this sector’s needs this year. For example, funds for general classroom teachers may also be covering expenses related to special education teachers.

The department plans to align the model’s costs with actual expenses to evaluate its effectiveness in reflecting real costs. Dunn emphasized that variations in costs stem from differing contractor expenses and school district sizes, noting that charter schools may experience higher costs due to limited administrative capacity compared to larger school systems.

“Cost is huge in getting our clients’ needs met in schools,” Dunn stated. “And while that shouldn’t be the case, the reality is that schools have to pay for the services and supports they provide. And so a weighted funding model would help protect especially those school systems operating with thinner margins, thinner budgetary cushions.”

Weighted funding would empower schools to provide necessary services for children without compromising on students’ needs or avoiding certain services out of fear of non-compliance with the law. Dunn pointed out, “They could actually just try to meet students’ needs instead of what we sometimes see, which is trying to recharacterize the student’s needs as lesser and then say, ‘Yep, we checked the box. We’ve met that need,’ because they are fearful of failing to comply with the law appropriately and they don’t actually have the resources at their disposal to meet the real needs of students.”

Looking ahead, the fate of these proposals remains uncertain. In the 2021 budget, lawmakers allocated $50,000 for hiring a consultant to examine special education funding, but previous studies and recommendations have often gone unheeded. The last major report recommending changes emerged from an agreement reached during the 30-year-old education lawsuit known as Hoke County Board of Education v. State of North Carolina, or Leandro. This agreement called for the elimination of the state’s funding cap on disabilities and a restructuring of the funding model based on actual costs, but it has yet to be implemented due to a conflict between the state’s executive and legislative branches, a dispute currently under review by the North Carolina Supreme Court.