In 1991-92, Pennsylvania changed the state’s system of funding special education from an excess cost formula to a census-based approach. In recent weeks, Education Commissioner Lucille Davy has touted this approach as a more efficient and stable way of funding special education programs, and Governor Jon Corzine is proposing New Jersey convert to the census method in his recently announced formula.

However, a study conducted by William Hartman at the Center for Special Education Finance in 2001 contains findings that raise serious concerns about the wisdom of using the census-based method. The Hartman study examined the impacts in Pennsylvania five years after the method was implemented.

The study found:

• The local share of special education funding increased. State funding did not keep up with increases in special education expenditures, and districts were forced to fund a growing share of special education costs. Over the five-year period of the study, the local share increased from 44% to 51%.
• Special education enrollments for children with disabilities grew steadily. While the general school-age population grew by only 4%, the number of students with mild disabilities grew at a rate of 8% and the number of students with severe disabilities grew by 25%. Thus, the census-based approach did little to slow classification rates as policymakers had hoped.
• While the census-based funding limited the state’s financial obligation, it had little relationship to district special education spending. The purpose of Pennsylvania’s census-based funding formula was to provide adequate aid to school districts to support special education costs. However, the amount of state aid was primarily related to available funds in the state budget, not to any logical, analytical or policy-driven connection to special education costs, number of special education students, or delivery of services.

Commissioner Davy claims the census method will reduce "over" classifications and provide a "predicable" level of special education funding. The Hartman study, however, documents increases in both the classification rates and the levels of local funding for special education. In fact, the Pennsylvania study strongly suggests that the State is the real "winner" by using the census method, since local property tax payers had to make up for the tight limits on state aid for special education.

Pennsylvania’s experience should be a "red flag" for New Jersey lawmakers. Disability advocates across the state, in calling for thorough and deliberative analysis before adopting the Governor’s proposal, have raised concerns similar to those found in the Pennsylvania study. Even Tom Parrish, the special education finance expert who testified before the Legislature last Fall, cautioned that the census approach had "limitations" that should be carefully considered.

Prepared: December 20, 2007

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