The 2022-23 Budget: Special Education Proposals

The 2022-23 Budget: Special Education Proposals JANUARY 2022 Summary. This post provides background on under the “Special Education Finance” section of various special education programs, describes the our 2019 report Overview of Special Education Governor’s proposals related to these topics, and in California.) offers associated recommendations and issues for State Provides Remaining Funding Through the Legislature to consider. Other Programs. Roughly 16 percent of state special education funding is provided outside of the Background AB 602 base through various programs based on California Provides Most Special Education other formulas and/or for specific types of special Funding Based on Overall Student Attendance. education services. The largest of these programs The state allocates most special education allocates funding ($396 million Proposition 98 in funding (84 percent in 2021-22) through a base 2021-22) to SELPAs for mental health services. rate formula commonly called AB 602 (after its Funding for the program was initially restricted to enacting legislation). This funding is allocated to mental health services for students with disabilities. Special Education Local Plan Areas (SELPAs). The 2020-21 budget package subsequently SELPAs are typically a regional consortium of expanded the use of these funds for all student local education agencies (LEAs)—school districts, mental health services. charter schools, and county offices of education State Has Two Extraordinary Cost Pools to (COEs)—that coordinate special education funding Address Certain High-Cost Services. The state and services, with large districts often serving as provides a total of $6 million ongoing Proposition 98 their own SELPA. The way funds are allocated to run two extraordinary cost pools ($3 million within a SELPA is locally determined by the SELPA’s each) to reimburse SELPAs for high-cost student governing board, consisting of representatives from services and placements. One extraordinary its member LEAs. The formula distributes funding to cost pool reimburses small SELPAs (those with SELPAs based on two components: (1) total SELPA fewer than 15,000 students) for high-cost mental student attendance in Transitional Kindergarten health services. Typically, funding requests from through grade 12 and (2) a per-student base rate. the extraordinary cost pool for small SELPAs do With regard to attendance, AB 602 funding is not fully exhaust available funding. Provisional provided to SELPAs using the highest attendance language in the annual budget typically authorizes of the most recent three years (the current year or any remaining funding to be made available to the previous two years). Regarding the per-student second extraordinary cost pool, which provides rate, most SELPAs receive funding using the same reimbursement for high-cost student placements in base rate—$715 per student in 2021-22. (For nonpublic schools exclusively serving students with historical reasons, a small number of SELPAs have disabilities. Requests for this latter pool consistently higher base rates.) This rate reflects significant exceed available funding, in which case SELPAs base augmentations provided in recent years, receive a prorated portion of their request. In largely due to concerns over schools’ growing 2019-20, the nonpublic school extraordinary cost special education costs. (More information about pool reimbursed funding requests around $0.22 to recent special education cost trends can be found the dollar. 2022-23 Budget Series 1 State Has Funded Several Special Education accessible instructional methods, English learners Studies to Inform Future Reforms. The state with disabilities, and disproportionate identification recently funded several work groups and studies of certain student groups for special education. aimed at reforming different aspects of the special The current special education resource leads were education system. The 2020-21 budget provided a awarded five-year contracts, which will expire total of $600,000 one-time federal funds to convene June 30, 2023. The state has the option to renew or two work groups. One work group was required replace the existing resource lead contracts. to develop a statewide individualized education Governor’s Proposals program (IEP) template that LEAs could use to focus on capturing student strengths and improving Provides $500 Million to Increase Base Rates student outcomes. (An IEP is a legal document for Under Modified Formula. The Governor proposes students with disabilities that specifies the supports to increase the base rate for most SELPAs from they will receive to support their education. The IEP $715 per student to around $820 per student—an is developed by a team that includes the student’s increase of nearly 15 percent. In addition to the teachers, parents, and school administrators.) base augmentation, the Governor’s budget modifies The second work group was required to provide the existing base formula to calculate total student recommendations to expand access to a regular attendance at the LEA level, rather than the SELPA high school diploma for students with disabilities, level. Specifically, rather than funding the highest including recommendations related to developing year of SELPA-level attendance across three years, an alternate pathway for students with significant the Governor proposes to fund the highest year of cognitive disabilities (as allowed under federal law). attendance for each respective member LEA across Both work groups submitted their final reports to three years. Funds would continue to be allocated the Legislature on October 1, 2021. to SELPAs. This formula modification is one of several Governor’s proposals that would generally State’s Accountability System Includes Local support shifting funding allocations from SELPAs Planning Requirements and a Statewide System of Support. California made major changes to its to LEAs. school accountability system starting in 2013-14, Includes $400,000 One-Time Federal Funds in tandem with significant changes to the state’s to Convene Stakeholders to Further Develop school financing system. Under the current system, Two Previously Funded Studies. Of the total LEAs are required to annually adopt a Local Control amount, $200,000 is provided to continue work and Accountability Plan (LCAP) that sets goals in on the statewide IEP template by convening key state priority areas and specifies actions they stakeholders to provide feedback and further refine will take to achieve these goals. In developing its the template. The remaining $200,000 would be for LCAP, an LEA must seek feedback from school developing alternative coursework and activities employees, students, and parents. The state also for teachers to use with students with disabilities has a school dashboard that reports school and pursuing a high school diploma under the state district performance based on measures aligned minimum graduation requirements as an alternate with the state priority areas. A district that is diploma pathway. identified as low performing based on the school Proposes Other Policy Changes to Special dashboard is to receive targeted support from its Education. The Governor’s budget also includes COE. In providing this support, COEs sometimes several other special education funding and policy consult with other regional and state partners proposals, as described below: known as resource leads. Since 2018-19, the state • Allocates Mental Health Funding to LEAs. has funded seven special education resource leads Rather than allocating special education ($10 million ongoing Proposition 98) to provide mental health funding to SELPAs, the statewide expertise and technical assistance in Governor’s budget allocates this funding the areas of system improvement, best practices directly to LEAs. to support students with autism, universally 2022-23 Budget Series 2 • Consolidates Extraordinary Cost Pools. member district with declining attendance. By The Governor proposes to consolidate the two contrast, the Governor’s proposed approach would existing special education extraordinary cost provide additional funding to reflect growth within pools into one single cost pool. a specific district, even if overall attendance in a • Requires Development of Special SELPA is declining. We think this is a reasonable Education Addendum to the LCAP. The approach, as it provides additional cushion for Governor proposes to direct the California SELPAs with some member LEAs experiencing Department of Education to develop a declining enrollment. Depending on how funds are new addendum to the LCAP focused on allocated within the SELPA, this cushion could allow special education. growing districts to receive more special education funding without requiring reductions to districts • Requires Resource Lead on IEP Best experiencing attendance declines. Practices. The Governor’s proposal requires that one of the existing special education Recommend Setting Clear Expectations and resource lead contracts be redirected to Time Lines for Activities Related to Previous focus on IEP best practices beginning in Work Groups. The proposed activities to continue 2022-23, when the current contracts will be up work from previous work groups lack specific for renewal. time lines. For instance, the Governor’s proposal does not specify a date by which the alternative Recommendations and Issues for coursework and activities for an alternate pathway to a diploma must be finalized or made available to Legislative Consideration teachers. In the report submitted this past October, Recommend Adopting Proposed Base Rate the alternate pathway work group suggested Increase. Given historical statewide increases in that districts be allowed to pilot the new alternate special education costs, we think using growth in pathways as soon as possible, with statewide Proposition 98 funding to provide special education implementation by 2023-24. It is unclear how the base rate increases is a prudent way to address proposed activities would affect this time line. local cost pressures. This approach would reduce Similarly, the administration has no deadline for the need for LEAs to rely on local general purpose when stakeholders must convene and refine the funding to cover growing costs. Furthermore, the statewide IEP template and no expectations for next base rate augmentation helps to offset reductions steps after the template has been refined. Should in special education funding that are driven by the Legislature be interested in funding additional decreases in overall attendance. (The base rate activities to implement the recommendations of formula is tied to overall student attendance, which these work groups, we recommend it specify clear has been declining for several years.) deadlines and reporting requirements to monitor Formula Modification Provides Additional the outcomes of these activities. To ensure these Funding Buffer for Some SELPAs. The proposed formula modification would benefit SELPAs that include a Figure 1 mix of growing and declining Comparing Governor’s Proposed Special Education member LEAs. (The proposed Base Formula Modification to Current Law change would have no effect on SELPAs where all members Total Student Attendance Funded Attendance are declining or growing, or on Current Governor’s Year 1 Year 2 Year 3 Law Proposal single LEA SELPAs.) As Figure 1 shows, under current law—where Member District 1 100 103 105 — 105 attendance is calculated at the Member District 2 100 95 90 — 100 SELPA Totals 200 198 195 200 205 SELPA level—a member district Note: Under both current law and the Governor’s proposal, funding is allocated to Special Education with growing attendance could Local Plan Areas (SELPAs). have their gains offset by another 2022-23 Budget Series 3 activities result in statewide policy changes, the or could make managing these programs more Legislature may also want to consider setting administratively burdensome (by requiring counties explicit deadlines for the state to adopt these items. to develop agreements with each LEA). The For example, by setting a date by which the State Legislature may want to further explore the potential Board of Education must adopt alternate pathways benefits of this proposal and determine whether to a diploma. these benefits outweigh the impact on regional Consider the Effects of Mental Health programs or partnerships. Proposal on Regional Programs and Impact of Consolidating Extraordinary Partnerships. Before adopting the Governor’s Cost Pools Unclear. We are uncertain whether proposal, the Legislature may want to better the proposal to consolidate the two existing understand how the mental health proposal might extraordinary costs pools would have any practical impact regionally coordinated programs and impact. Our understanding is that the administration partnerships. Although many SELPAs allocate intends to fund mental health services requests mental health funding directly to their member from small SELPAs first, and then make any LEAs, some SELPAs—especially those with smaller remaining funding available for high-cost nonpublic member LEAs—retain this funding and operate school placements. In practice, this is consistent regional mental health programs on behalf of their with how the extraordinary cost pools currently members. In some cases, the member LEAs would operate, because the mental health services not receive sufficient funding from the program funding is rarely exhausted. under the Governor’s proposal to hire mental health No Concerns With Developing Special staff and, hence, likely would still need to combine Education Addendum or Establishing an funds across the SELPA to ensure access to mental IEP Best Practices Resource Lead. A special health services when required by a student’s IEP. education addendum to the LCAP could increase Allocating funding directly to LEAs could also transparency regarding how LEAs spend special affect partnerships with county mental health education funding and facilitate more local input programs. The state has provided $235 million on actions to support special education students. one-time and $10 million ongoing funding for Designating a resource lead for IEP best practices school-county mental health partnerships since within the system of support could assist with 2019-20. Under such a partnership, a SELPA the implementation a statewide IEP template. could direct mental health funds to its county The Legislature may want to require the new mental health department, which then provides resource lead be involved in the development of widespread student services in schools throughout the IEP template, to ensure that statewide technical the county. Allocating funds directly to LEAs could assistance on IEPs is consistent with the final pose challenges for maintaining the existing levels statewide IEP template. of funding for regional mental health services, LAO PUBLICATIONS This post was prepared by Amy Li, and reviewed by Edgar Cabral and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 4