Department of Education / Special Education / The Circuit Breaker

Line Item	Description	FY01*	FY02*	FY03*	FY04	FY05	H1 for FY06
7061-0012	Special Ed Circuit Breaker**	61,941,239	62,497,427**	70,575,000	121,600,262	201,600,262	201,600,262

*     Prior to FY04, this account was called "special education residential schools."

**   Figures for all years subtract for emergency 9(c) set asides and cuts.

Special education services in Massachusetts are governed by a combination of federal and state laws. Education for all children is funded through a combination of state and local sources. At the federal level, the main piece of legislation is the Individuals with Disabilities Education Act (IDEA), first passed in 1997 and reauthorized in 2004. The state's special education law was first passed in the early 1970s and has been amended several times since.

An additional state statute, the Education Reform Act of 1993-often called simply "ed reform"-governs the provision of state aid to public elementary and secondary schools. It was created after the Supreme Judicial Court (SJC) ruled, in McDuffy v. Secretary of the Executive Office of Education, that the state was in violation of students' state constitutional right to an equal education, and was hence particularly impacting students in poorer communities. The Education Reform Act establishes a foundation budget that sets the minimum spending requirements for each school district and minimum requirements for each municipality's share of school costs. The state share of local education funding is generally referred to as "local aid."

All children in Massachusetts ages 3-22 who are in need of or enrolled in special education services are guaranteed the following procedural and educational rights:

·       An appropriate evaluation, with student and parental participation;

·       An Individualized Education Plan (IEP) developed by a team that includes the parents, teachers, physicians, specialists, advocates, administrators, and others;

·       A free and appropriate education (FAPE); and

·       An educational setting in the least restrictive environment (LRE), meaning that students with disabilities must be educated with their non-disabled peers to the maximum extent appropriate based on the student's needs.[1]

The Circuit Breaker is a line item in the state budget within the Department of Education (DOE). Funds appropriated to this account are specifically for reimbursements to districts for special education residential schools and other extraordinary special education costs.

FY05 OVERVIEW

The Legislature Increases Funding for the Circuit Breaker by $80 million-New Special Education Regulations to be Released in the Late Fall

According to the Massachusetts Budget and Policy Center (MBPC), total funding for education-local aid and DOE grants programs-is $3.7 billion in FY05, an increase of 5.7% in total, 2.3% for just local aid, and 32.6% for just Grants and Reimbursements. Unfortunately, local aid remains 6% below the FY03 appropriation when adjusted for inflation.[2]

The increase in reimbursements was good news for the special education Circuit Breaker. The allocation in this account alone was increased by $80 million (almost 66%) for FY05, making it very nearly fully funded (see the line item analysis section below). The governor had recommended level funding, but the legislature increased the appropriation-an important move for supporting the special education reform initiative the legislature initiated when they created the Circuit Breaker in 2000.

Special Education Policy-Another Sea Swell of Change?

This year, in addition to funding, another concern is the potential impact of changes to special education regulations on both the state and federal level.

In December 2004, the federal special education law-IDEA-was finally reauthorized and signed into law. The new law represents significant compromise. Legal Advocates hope it will add up to relatively minor changes in how special education services are provided in Massachusetts, but no one can be sure until the regulations are released late this fall.[3] Harsh disciplinary proposals were not adopted, and students with behavioral problems will continue to receive services. How discipline is handled and how it is seen to relate to a student's disability will be undergoing some changes. In addition, IEPs will look different. At this stage, it is all wait and see. Hearings have been taking place around the state in February 2005. The final regulations will tell the full story.[4] DOE plans to hold forums around the state to better communicate its goals. Any revision of state regulations is likely to be put on hold now until the new federal IDEA regulations are released later this year.[5]

Driscoll v. Hancock

The Hancock decision is also important news this year. On April 26, 2004 Superior Court Judge Margot Botsford ruled that Massachusetts is not spending enough to meet its constitutional obligations for the education of lower-income students. The ruling recommended that the Supreme Judicial Court (SJC) take action and cited the needs of special needs students, among other concerns.[6] The subsequent SJC case could have resulted in an overhaul of the foundation budget-as Judge Botsford recommended-at a potential expense of hundreds of millions of dollars.

On February 15, 2005, the SJC dismissed the case in a 5 to 2 vote. The message was twofold. First, the SJC did acknowledge that some students are not receiving an adequate education. Second, the court said that the state is already taking appropriate actions to correct that problem, and the governor and the legislature should be given more time before legal action is necessary.

We can expect advocates of higher foundation budgets to use the first message as a strong hook for future efforts to improve students' educations.

H1 FOR FY06 OVERVIEW

Circuit Breaker Level Funded-Continued Under-Investment in Education

Advocates are concerned that H1 for FY06 proposes to continue the under-investment in education of the recent past, and cite concerns about large class sizes, cuts to art and music programs, and increasing fees assessed on families for educational services.[7] Indeed, special education funding-local aid and Grants and Reimbursements-under the governor's budget for FY06 would increase by a combined total of $96.2 million (2.6%),[8] about the same as the rate of inflation. H1 for FY06 recommends level funding for the Circuit Breaker for special education.

H1 proposes to increase local aid by $77 million (2.4%). Grants and Reimbursements would increase by about 5%, once the transfer of funding to the new Department of Early Education and Care (DEE&C) has taken place. In inflation-adjusted terms, that amount is still $76.3 million (14%) below the FY01 allocation and $254.3 million below that of FY02.

Other forms of local aid to cities and towns affect education spending as well. Lottery and Additional Assistance funding would improve by 2.4% under this budget, compared with FY05 spending, including the $75 million supplemental budget for FY05. However, Lottery and Additional assistance were cut 14.9% in FY04 as compared with original FY03 appropriations.

Line Item Analysis

Account:      Special Education Circuit Breaker

Line Item:   7061-0012

The Special Education Circuit Breaker account funds the Circuit Breaker reimbursement formula that the legislature created to help school districts cope with extraordinary special education costs. Under the Circuit Breaker, as many as 12,000 students triggered some form of reimbursement to their school districts in FY04. The Circuit Breaker formula is supposed to pay for 75% of special education expenses that are above 4 times the average per pupil foundation budget. In other words, any time a district spends more than $29,328 in a school year to educate a single special education student, 75% of the excess should be reimbursed to the district by the state (whether the student is in an out-of-district or an in-district program). Full funding of the Circuit Breaker was part of the promise of special education reform passed in FY01.

FY01-FY05 Impact

In FY04, the Circuit Breaker replaced the "Special Education Residential Programs" account (known as the 50/50 program). That program split the cost of placing a special education student in a private residential school between the school district the child came from and the state. The funds were specifically designated to offset the "non-educational costs" of the residential programs. The 50/50 program covered approximately 1,400 students in FY02.

Also in FY04, the Circuit Breaker-which is subject to appropriation-was grossly under-funded. Although the legislature provided over $51 million more than the previous program's allocation, DOE was able to reimburse just 40.2% of these extraordinary special education expenses to school districts. Of this money, $9 million paid for FY03 expenses, another $9 million funded a voluntary residential placement prevention program, and $7.5 million went to the Department of Mental Retardation (DMR) line item 5948-0012. An additional $105 million would have been necessary to fully fund the account at the promised 75% reimbursement level.

In FY05, the legislature provided $80 million more for the circuit breaker, although H1 for FY05 had recommended level funding. A reimbursement rate to districts of approximately 72% is projected, although the law promises 75% reimbursement. According to DOE, this appropriation is now running very close to actual costs. Also new for FY05 is a policy that bases payments to school districts on the previous year's costs. This keeps reimbursements lagging behind inflation, and presents new budgeting challenges. The FY05 budget has also made $3 million available for emergency expenses that are beyond the previous year's costs.

FY06 Needs

The Board of Education had sought a $215 million appropriation for this account in FY06. DOE now says level funding is sufficient.

H1 for FY06 Recommendation

H1 for FY06 recommends level funding.