State Audit Again Questions Lack of Guidelines for Special Education Spending

Schools across Connecticut spend 7.2 percent of district budgets on tuition for special education students to attend alternative schools, according to a 2018-19 report released by the state Department of Education.

Tuition for these alternative schools makes up $667 million of the $9.2 billion spent on education in the state.

Despite that scale of the funding — some of it federal, some state and some local – a recent audit report by the Connecticut State Auditors of Public Accounts noted that it is not possible to determine whether these public dollars are properly spent, given that there are no guidelines in state statute or regulation. 

“For the areas audited, we determined there is no state statute or regulation that defines allowable types of costs and the use of written contracts between school districts and private special education providers is inconsistent,” the auditors concluded in a report released on July 21. “Therefore, it is not possible for us to determine whether certain expenditures by private providers were acceptable.”

Expenses without a check

Students attending outplacement schools cannot receive an appropriate education in district schools — a determination based on the outcome of an Individualized Education Plan process. These students include young people with serious mental illness, complex trauma, emotional and behavioral dysregulation, developmental delays and other learning challenges. 

Tuition for just one of these students can increase a school district’s budget by a quarter of a million dollars or more,  in addition to the costs of busing a child to schools often more than an hour away. 

Unlike almost every other decision made by a school district  – where budget and benefits are both weighed – the cost to the district, and therefore the taxpayers, cannot be part of a placement discussion.

“Districts do know that there are differences between the costs of various providers, but it is really hard if a family gets convinced of a particular program to change their mind,” said Patrice McCarthy, deputy director and general counsel for the Connecticut Association of Boards of Education. “Under state and federal law, they can’t consider it. They can’t bring cost in at all.”

Once an outplacement decision is made, the local board of education often then adjusts the overall budget for students and staff to free up funding, McCarthy explained.

The difficult balance between rising costs and the right of every child to a free, appropriate, public education is a challenge not just in Connecticut.

Across the United States, school districts struggle to meet the mandate of the Individuals with Disabilities Education Act and Section 504 of the Rehabilitation Act to provide an appropriate education for all students without considering cost, while at the same time often receiving little financial support for education from the state and federal governments.

In Connecticut, a district is only eligible to receive additional state funding for special education services, if the cost for the individual student is at least 4.5 times more than the district’s current per pupil cost.

In New London, for example, given a per-pupil cost of $15,897, according to state data, the individual student expenses would need to exceed $71,536 before state aid could be considered.

If the cost does exceed 4.5 times the current per pupil cost and the state grants the district additional funding then, and only then, are districts required to have and submit to the state an official contract with the outplacement facility. 

According to the state auditors, many outplacements made that do not receive this funding simply use the Individualized Education Plan, which does not define costs or exact services, as a contract with the outplacement facility. 

Where is the money going?

Some states, including New York, have sought to tackle the challenge of expanding special education costs by clearly defining allowable costs for providers of special education services. However, in Connecticut the suggestion made by the state auditors year after year has met with opposition from both the state Department of Education and advocates for special education.

“It’s very difficult to come up with a list of allowable costs when [planning and placement teams] determine what the required services for the students are,” explained Bryan Klimkiewicz, special education division director for the state Department of Education. “At the state level, we have not engaged in that. Whatever the [planning and placement team] determines, then that is an allowable cost.”

Although several invoices submitted by outplacement schools matched neither the needs specified by the planning and placement team or by an individualized education plan, according to the recent audit report, Kilmkiewicz did not see a list of allowable costs — as implemented in New York — as a viable alternative.

“Our fear is that any list we put out would be limiting,” said Klimkiewicz.

When the idea of a list of allowable special education costs was proposed in the legislature in 2018 in what elected officials called an attempt to provide better oversight to the rising state and local expenses, advocates for special education and parents, raised similar concerns. 

The bill, introduced by the Education Committee, and recommended by the auditors in a 2015-2016 report, proposed uniform statewide rates for services provided by outplacement providers – a measure also used by other states. The change would have reduced the wide variation in costs for districts for similar services. 

In testimony this proposal was met by concerns that the measure would hinder the ability of providers to effectively hire staff and provide a living wage.

“On the matter of rate-setting as written in Section 2, we believe we understand the drivers of such a proposal. We would respectfully ask that all stakeholders be part of any rate-setting development process. We ask that all providers of special education services outside of the local district be included in the cost study,” testified Oak Hill School, a provider of special education in Hartford. “Additionally, we believe rates need to be set in a way that enables us to pay a living wage to our talented and dedicated staff, as we compete in a very tight jobs market against other industries which have implemented a living age. This has not been the case in other rate-setting processes we have seen.”

According to Klimkiewicz, private provider costs not only vary by region in the state, but also by district size. He said that larger districts may be able to negotiate a better deal with outplacement providers or may have enough students to support staff to provide a comparable education within the district.

A regionalized solution

Although state officials contacted by CT Examiner were unenthusiastic about plans to introduce itemized services or price controls, despite rising costs, they were receptive to the opportunities for cost savings from regionalization.

“Regionalization is something that is at the forefront for superintendent and special education leaders,” Klimkiewicz said. “We have to move in that direction.”

In contrast to the significant opposition of many parents and elected officials to school regionalization proposals suggested by legislators in 2019, Klimkiewicz said that for services like special education, regionalized savings efforts are already underway.

“We see lots of towns, especially smaller towns, pooling together to purchase services. As a director I worked in Plainfield and we collaborated with other towns to afford a physical and occupational therapist,” said Klimkiewicz. “Districts are very creative and collaborative when it comes to those kinds of things.”