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Expiring aid putting pressure on special education budgets

Lawmakers should approve both funding proposals Gov. Maura Healey rolled out in the past month to ease the burden on schools facing a jump in special education costs, not one or the other, a top administration official said Tuesday.

A sizable increase in tuition that schools pay to special education providers for services looms in the fiscal year 2024 as the expiration of grant dollars shifts costs onto districts. Some communities are bracing to pay hundreds of thousands of dollars, or even a couple million dollars, more to serve the same amount of students.

Bill Bell, chief financial officer at the Department of Elementary and Secondary Education, said Healey's state budget bill offers $20 million in relief to help districts deal with the jump. Healey also filed a mid-year spending bill on Mar. 17 that would put another $75 million on the table, which Bell said would provide a "contingent reserve" if districts need more than the annual state budget provides.

Bell told the Board of Elementary and Secondary Education the administration wants both measures to become law to ensure maximum flexibility to help districts navigate the rising costs.

"The administration heard the issue and has responded to it and is recommending the Legislature fund both the appropriation in the '24 request as well as the supplemental reserve," he said.

During the COVID-19 pandemic, the Baker administration launched a 19-month, $220 million grant program using federal funds to help private special education providers deal with significant staffing shortages. Officials are moving to keep those facilities funded at the same level, but with the grant money about to run out, districts will need to pick up a larger share.

"Effectively, there's a 14% factor in the tuition increase. That's significantly more than in prior years," Bell said.

Local leaders have been voicing concern about the impending change for months. In February, Revere Mayor Brian Arrigo said the higher rates will drive up his city's out-of-district special education costs by $2.1 million to serve the same number of students.

Bell said the added pressure could fuel an increase in claims to the special education circuit breaker account – which includes the $20 million reserve – that reimburses districts, though he said it might not "immediately translate." Healey proposed $504 million for the circuit breaker in her FY24 budget, a $53 million increase over the projected spending for FY23. House Democrats plan to release their redraft of Healey's budget in April.

Over the next year and a half, districts across Massachusetts will also need to shift to a new process for implementing individualized education plans, or IEPs, for students with disabilities or other special education needs.

DESE is releasing new IEP forms, which Commissioner Jeff Riley said in a memo have not been updated comprehensively since 2001.

The revised paperwork includes a much more clear, explicit section about English language learners, replacing what Deputy Commissioner Russell Johnston called a "passing nod" in the existing version, as well as a greater focus on transition planning and parent response.

Johnston's presentation to the board on Tuesday said training for districts will take place this year, followed by initial adoption at district discretion in fall 2023 and full statewide adoption in fall 2024.

The governor's first annual state budget bill fully funds the 2019 school finance reform law known as the Student Opportunity Act with $6.6 billion in Chapter 70 aid to districts, which Bell called "a new high-water mark."

Bell said the administration's budget would effectively hit the midpoint of what is now a six-year rollout of the Student Opportunity Act, following a one-year pause earlier in the pandemic.

Amid the ongoing ramp-up in state funding, many schools appear to be experiencing little growth in their student populations or outright decreases.

According to a budget memo Riley sent to board members, the "foundation enrollment" statewide increased 1,488, or just 0.16%, from FY23 to FY24. Foundation enrollment dropped year-over-year in 194 districts, while 162 districts saw increases.

Some districts, Bell told board members, remain concerned that the state's formula for distributing aid will require an increase in local contributions "at a rate that's making it difficult and not seeing corresponding increases in the aid as much."

"The administration has recognized that issue. I think it will have more dialogue with the Legislature, but there is a $10 million reserve requested in the bill to look at this issue," Bell said.



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