The Impact of Special Education Funding Distribution Methods on Ohio s School. Districts DISSERTATION

Transcription

1 The Impact of Special Education Funding Distribution Methods on Ohio s School Districts DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Charles Andrew Milligan Graduate Program in Educational Studies 2016 The Ohio State University Dissertation Committee: Dr. Scott Sweetland (Advisor) Dr. Ann Allen Dr. Tiffany Wild

2 Copyrighted by Charles Andrew Milligan 2016

3 Abstract The founding theorists of school finance equity recognized that state funding should increase to assist districts with costly programs. Equity occurs when districts receive funds to meet the high costs of ensuring each student with disabilities receives a free and appropriate public education. While researchers have examined the funding levels for students with disabilities at the state level, there is limited research examining the impact of the distribution method on funding levels at the district level. The purpose of this study was to examine the relationship between the state-selected equity funding distribution method and the impact of funding levels on Ohio s school districts. Using fiscal year 2015 funding, enrollment, and disability data from the Ohio Department of Education, I applied the three special education funding distribution methods to 609 school districts in Ohio to examine if a distribution method yields higher funding levels for particular types of districts. I calculated the percentage and proportion of students with disabilities in each district and the proportion of funding provided to each district under three distribution methods, and I developed a funding ratio to measure the funding levels of each typology comparatively under the three distribution models. The results revealed that the selected state distribution model greatly impacts the resources provided to districts. The results of this study equip state and school leaders with a new understanding of the fiscal influence a specific state distribution method has on special education funding levels. ii

4 Table of Contents Abstract... ii List of Tables...v List of Figures... vi Chapter 1: Purpose and Overview...1 Introduction...1 Conceptualization...2 Problem Statement...5 Statement of Purpose...6 Research Design...6 Simulation 1 Flat Grant Funding...7 Simulation 2 Census-Based Funding...7 Simulation 3 Pupil-Weighted Funding...7 Overview...8 Chapter 2: Literature Review...10 Cubberley: A Call for Equity...11 Strayer and Haig: Foundation Model...16 Mort: Weighted Pupil...18 The Emergence of Students with Disabilities in Public Education...22 iii

5 State Special Education Finance Models...26 Census-Based Funding...26 Flat Grant Funding...27 Weighted Pupil Funding...28 Chapter 3: Methodology...31 Simulation 1: Flat Grant Approach...40 Simulation 2: Census-Based Approach...41 Simulation 3: Weighted Pupil Approach...42 Chapter 4: Results...46 Chapter 5: Summary and Conclusions...63 Major Results...64 Implications...66 Further Research...69 Conclusion...71 References...73 Appendix A: District Typology by Name...77 Appendix B: District Typology by Category...89 Appendix C: District Typology by Grant Type iv

6 List of Tables Table 1. Ohio Department of Education Fiscal Year 2015 Summary Funding Report...35 Table 2. Ohio Department of Education Fiscal Year 2015 Detailed Funding Report...36 Table 3. Ohio School District Typologies: Dimensions, Measures, and Descriptors...38 Table School Districts Typology...40 Table 5. Ohio Weighted Pupil Funding: Category, Disability Type, and Amount...43 Table 6. Typology State Funding Totals under Census-Based, Flat Grant, and Weighted Pupil Approaches...45 Table 7. Typology, Number of Districts, Enrollment, and Funding Proportions...46 Table 8. Fiscal Year 2015 State Special Education Funding Level by Typology...47 Table 9. Typology, Number of Districts, Average Overall Proportion of Students with Disability, Proportion, Disability Category, Disability Rates, and Median and Mean District Size...53 Table 10. District Funding Ratio Distribution by Ratio and District Type, Ordered by Median District-Type Disability Rate...55 v

7 List of Figures Figure state special education funding levels by typology...50 Figure 2. Funding ratio of flat grant: Census-based by typology...57 Figure 3. Funding ratio of weighted pupil: Census-based by typology...59 Figure 4. Funding ratio of weighted pupil: Flat grant by typology...60 vi

8 Chapter 1: Purpose and Overview Introduction The school finance concept of equity is the unequal treatment of unequals (Alexander, Salmon, & Alexander, 2015, p. 173). Under funding equity, states provide additional resources to districts to offset the cost of expensive student programs. The state views its distribution of funds as fair and just and it remains a centerpiece in state school funding formulas (Alexander et al., 2015, p.173). Since 1975, districts have had to ensure that each student with a disability receives a free and appropriate public education, regardless of the severity of disability or cost of education (Education of All Handicapped Children Act [EHCA], 1975). States have adopted various equity distribution methods of providing special education funding to districts. Three methods of distributing special education funding to districts include the flat grant, census based and weighted pupil (Verstegen & Jordan, 2009). Researchers have attempted to project levels of funding adequacy, or general state funding levels (Sweetland, 2014). However, there is limited research identifying how a selected distribution method impacts resources for school districts. The purpose of this study was to identify the impact of state special education funding distribution methods on school districts in Ohio, utilizing district typology. Using fiscal year 2015 school funding data, I: 1

9 1. Applied three special education funding distribution methods to 609 school districts in Ohio. Specifically, I examined whether the selected distribution method yields higher funding levels for particular types of districts. 2. Calculated the proportion of students with disabilities within each district, including the proportion of funding for each district typology under the selected distribution method. 3. Developed a funding ratio to make a comparative measurement of the funding levels of each typology under the three distribution models. Over 100 years ago, distribution methodology was a foundation of state equity funding theory (Cubberley, 1905). However, many continue to view special education state funding as a student-specific funding measure, without examining the larger impact equity funding may have on particular school districts. The findings of this study may impact the field of school finance by identifying relationships between distribution models and funding levels for types of districts in Ohio. Furthermore, state policy makers may better understand the implications state distribution models have on school districts in Ohio. Conceptualization The school finance concept of equity developed in the first part of the 1900s and broadened to recognize the different fiscal needs of districts across states. Specifically, state finance models incorporated an equity measure to provide additional funding to districts with costlier students and programs. Cubberley, Strayer, Haig, and Mort, as pioneers of equity finance theory, advocated for making equity funding a component of a state school finance model (Verstegen, 2011). Today, the school finance concepts of equity and distributing funds to align with the unique fiscal needs of districts serve as prerequisites for effective school finance formulas. The concept of equity has strong 2

10 support among researchers and policymakers, but the distribution method continues to be a complex and debated concept. The lack of agreement concerning distribution methods is evident, as states propose various approaches to provide equity funding to districts. The founding theorists of equity recognized that funding levels must increase to assist districts with costlier students and programs. However, the emergence of students with disabilities in public education has increased the legal mandates and financial expenditures across districts. Under the Individuals with Disabilities Education Act (IDEA, 1990), all public schools must ensure each student receives a free and appropriate public education, including individualized educational services, and receives this education with regular education peers to the maximum extent possible. The legal and financial responsibility of school districts is evident in the zero-reject principle. Specifically, districts must educate all students with disabilities, regardless of the severity of the disability or the cost (EHCA, 1975), The basic funding approaches from the turn of the 20th century, while providing the foundation for equity, did not encompass the emerging expenditures placed on districts to ensure students with disabilities receive a free and appropriate education. However, special education from the last half of the 20th century to today has been the most visible vertical need program with every indication of continuing far into the future as a powerfully political and legal force (Thompson, Crampton, & Wood, 2008 p. 92). Despite the need to examine funding equity for special education, finance policies of education have remained largely constant since their inception (Verstegen, 2011). Furthermore, the funding of such programs represents an important, but often overlooked, theoretical concept in the analysis of state education funding systems (Vesely & 3

11 Crampton, 2004). While equity funding is a common component of school finance, the distribution method needs examination to identify the impact of special education funding on school districts. It is through such an analysis that the authorities can better understand the development of funding equity theory in the 21st century. Specifically, there is a need to identify the relationship between state special education funding distribution and funding levels across districts in Ohio. Due to the emergence of students with disabilities, states distribute additional funding using various methods. Three methods of distributing special education funding to districts include the flat grant, census based and weighted pupil (Verstegen & Jordan, 2009). The census-based method assumes that all districts have the same percentage of special education students and provides state aid on the basis of a fixed percentage of total district enrollment, not the specific number of special education students (Baker & Ramsey, 2010). Under the census-based approach, states multiply the state percentage of students with disabilities by the number of students enrolled in a district. They measure the total number of students by average daily membership (ADM). The census-based approach does not differentiate for specific differences in student needs or costs (Baker & Ramsey, 2010). Pennsylvania uses the census-based method (Verstegen, 2011). The flat grant method recognizes that special education students are not equally distributed across the state (Verstegen, 2011). Therefore, some districts face the challenge of serving a higher concentration of students with disabilities. Under a flat grant approach, the state divides the annual state special education funding amount by the ADM of special education students in the state. It provides funding to districts depending upon the number of students with disabilities (Verstegen, 2011). Washington uses the flat grant 4

12 approach (Verstegen, 2011). The weighted pupil approach is a measure of educational need that offers an extra weight where the true cost per pupil of a given educational offering is high (King, Swanson, & Sweetland, 2003). States provide funding to districts dependent on both the ADM of students with disabilities and the severity of their disabilities. Ohio uses the weighted pupil approach (Verstegen, 2011). In 2013, the Ohio Department of Education (ODE) established the Ohio School District Typology. School districts in Ohio fall into typologies dependent upon specific characteristics. Specifically, the state assigns typologies based upon the following features: district size, school poverty, socioeconomic composite, location composite, race and ethnicity, and tax capacity (ODE, 2013). Organizing 609 districts by typology provides researchers the opportunity to examine the impact of state policy and funding models on different types of districts. Using the state-defined typologies, equity funding research can move beyond individual student, specific school and singular district. Instead, researchers and policy makers are able to identify larger influences by measuring funding levels and the influence of school finance models across district types including suburban, urban, rural, and small town districts. Problem Statement Ensuring each student with a disability receives a free and appropriate public education is costly for districts. The majority of research and attention has concerned how much funding the state should provide. However, an equally important, yet infrequently noted, question is how should the state distribute the funding resources at hand to districts? As districts, with limited resources, strive to provide all students a free and appropriate public education, it is important to examine the educational realities of 5

13 the current state funding level. Therefore, I conducted a realistic what is analysis, instead of an idealistic what if analysis, to identify the impact of special education funding methodology on school districts. Relatedly, state school funding distribution models provide special education funding to align with the educational costs of educating students with disabilities without regard to the larger financial impact on the school district. If the intent of funding equity is to increase educational opportunities through funding inputs, policy makers must identify how the funding method impacts not only the specific students, but also the districts. Statement of Purpose The purpose of this research was to identify the impact of state special education funding distribution methods on school districts in Ohio. The research study addressed the following questions: What typologies receive the highest funding levels under the census-based distribution model? What typologies receive the highest funding levels under the flat grant distribution model? What typologies receive the highest funding levels under the pupil-weighted distribution model? To understand the impact of equity funding better, I used a proportional analysis to identify the concentration of students with disabilities and the share of state funding under the three state equity distribution methods. I used a funding ratio analysis to identify the extent to which district typologies benefit under each of the three state equity distribution methods. Research Design The purpose of this study was to identify the impact of state special education funding distribution methods on school districts in Ohio, utilizing district typology. Using the 2015 ODE Funding Report, I conducted a statistical simulation for each of the 6

14 609 school districts in Ohio under the three distribution methods. Through computer simulation, school finance researchers can determine how recommended changes or inputs in a funding formula affect the equity measures, and how district revenues will change as a result (Brock & Picus, 1994). Specifically, simulation pinpoints the impact of public policy changes by inputting different data and state funding parameters (Sweetland, 2001, p. 34). Using 2015 fiscal year data from ODE, I conducted a special education funding simulation for each of the three selected distribution methods. Simulation 1 Flat Grant Funding To identify the flat grant funding level, I divided the total amount of special education state aid by the 2015 fiscal year ADM for students with disabilities. The flat grant funding level was $3,737. I multiplied this special education funding level by the number of students with disabilities in each district for the 2015 fiscal year. Simulation 2 Census-Based Funding To simulate the census-based approach, I divided the total ADM for students with disabilities, grades k-12, by the total ADM for all students in Ohio, grades k-12. The state average was 13.37%. I multiplied this percentage by the total number of students in each district (ADM). The product represents the expected number of students with disabilities in the district. I multiplied this number by the flat grant funding level of $3,737. Simulation 3 Pupil-Weighted Funding I derived the pupil weighted funding level by multiplying the ADM within each disability category by the disability category funding amount established by the state. I 7

15 totaled the products of each category group to reflect the total amount of special education funding. Using the three distribution methods, the first analysis involved equity distribution funding level. What typologies receive the highest funding levels under the census-based distribution model? What typologies receive the highest funding levels under the flat grant distribution model? What typologies receive the highest funding levels under the pupil-weighted distribution model? Secondly, a proportionality analysis involves the equity distribution share across typologies. The proportionality analysis identifies the total proportion of funds provided to each typology under each distribution method. Proportionality includes the statewide share of students with disabilities by typology. The proportionality analysis identifies the slice of the pie each typology receives under each distribution method. Thirdly, I conducted a funding ratio analysis to examine what typologies benefit, and to what extent, from one distribution model compared to another. The funding ratio analysis identifies not only what typologies receive the most funding, but also how much more or less in relation to other distribution models. Overview The chapters that follow present this research in sequence of methodological operation. Chapter 2 reviews the literature on the development of equity as a school finance construct, the emergence of special education in public schools and the traditional distribution models of providing special education equity funding. Chapter 3 describes the use of funding simulations as the leading research tool in the study of school finance, explains the research design, and specifies the source and relevancy of funding data to 8

16 operate the funding simulation. Chapter 4 provides analysis and interpretation of the results from the research methodology presented in Chapter 3. Chapter 5 identifies and applies the key findings to the statement and purpose of the study; this chapter also reviews limitations of the study, and areas of further research to examine the impact of special education funding distribution methodology on Ohio s school districts. 9

17 Chapter 2: Literature Review The struggle to distribute state funds fairly to schools is evident in the development of school funding equity theories. The founding theorists, Cubberley (1905), Strayer and Haig (1923), and Mort (1924) advocated for the state to address the costs of more expensive students and programming. Cubberley (1905) recognized that different neighborhoods struggled to generate funding for schools. Therefore, it was necessary for the state to identify different types of districts when distributing state funds. Currently, the Ohio School District Typology identifies different types of districts. Strayer and Haig (1923) conceptualized the foundation approach to funding equity, as the state provides more funding to particular types of districts to ensure all receive a basic or foundation level. Today, the foundation approach serves at the basic tenet of state funding models, including that of Ohio. Mort (1924) recognized the weighted pupil, or providing more state funding depending upon the needs of a particular type of student. Currently, the weighted pupil approach is the selected adjustment method to identify costlier students in Ohio (Verstegen, 2011). Cubberley (1905), Strayer and Haig (1923), and Mort (1924) advocated for a fair and just distribution method. However, they did not provide a measurable way to identify the impact on particular districts. Instead, they viewed funding distribution as an isolated endeavor, targeted for a specific neighborhood, foundation level, or type of student. From reviewing the contribution of these theorists, it is possible to identify the 10

18 missing piece, and the focus of this study, which is also the most vital to our understanding of funding equity. Specifically, it is possible to identify an objective and accurate way to measure the impact of state funding equity distribution on districts. It is only after we broaden our examination to the impact on districts that the historical call for fair and just funding can come to fruition. Cubberley: A Call for Equity The call for school funding equity surfaced in the early 20th century. Unlike today s complex state school funding formulas, most people viewed public school finance as a local issue throughout the 19th century. Generally, there was no single approach or guiding conceptual theory of state aid for schools (Ward, 1987). According to Cubberley (1947, p. 212), local control, as an administrative and taxing unit, was well suited to the primitive needs and conditions of our early national life. Furthermore, Communities or neighborhoods which wanted schools and were willing to pay for them could easily meet and organize a school district, vote to levy a school tax on their own property, employ a teacher and organize and maintain a school. (p. 213) However, full local responsibility for school funding became both an unreasonable and unrealistic school funding approach (Cubberley, 1947). The environment for the administration and financing of public schools began to change in the late 19th century, as did the larger environment for the public sector in general (Ward, 1987). At the beginning of the 20th century, the industrialization of the nation had created great inequalities in wealth among school districts (Johns & National Educational Finance Project, 1971, p. 24). Districts with low capacity could not finance an adequate program even with high taxes (Ward, 1987). 11

19 Inequities surfaced across districts and the states expanded the scope of their funding for schools to meet their obligation to provide a thorough and efficient education (Johns & National Educational Finance Project, 1971). As today, there was disagreement concerning state funding plans to address the different funding needs of schools (Thompson et al., 2008). The development of state aid plans involved ways to make educational opportunities more equivalent through the use of money (Thompson et al., 2008). American concerns for fairness and equal rights, under a constitutional and legal order, were mirrored in equity concerns in school finance (Ward, 1987, p. 475). However, establishing a funding guarantee of equity was a political decision based on total revenue rather than a rational determination of education needs and costs (Swanson & King, 1991, p. 157). Collectively, while funding equity theorists increased the scope of state aid to districts, the states based the selected distribution method upon what they believed to be fair (Thompson et al., 2008). Based on a belief in fairness, Cubberley s equity theory was dedicated to the principle of equality of educational opportunity for all (Brimley, Garfield, & Burrup, 2002, p. 173). Cubberley examined the growth of education, the legal requirements provided for public education, and the impact of the Industrial Revolution on the distribution of wealth and schools (Johns & National Educational Finance Project, 1971, p. 3). Cubberley, as the pioneer advocate of state school support theory recognized inequity within states, and catalyzed serious consideration of state apportionments of funds to local school districts (Brimley et al., 2002, p. 177). Cubberley s work sparked an entire growth industry as scholars undertook similar studies examining the potential role of the state in distributing resources more fairly to schools (Thompson et al., 2008). 12

20 The challenge of funding equity, evidenced in today s funding models, is how state funding can balance educational opportunities across districts. Specifically, the challenge of equity is the attempt to equalize the advantages to all as nearly as possible with the available resources (Cubberley, 1947). In 1905, Cubberley devised state plans to provide equal opportunity for all students (Brimley et al., 2002). Cubberley favored the use of state funds for equalization of local school spending, rather than county funds, because of the state s revenue capacity, responsibility for the welfare of its citizens, and establishing educational criteria (Ward, 1987, p. 471). Simpson (1932, p. 148) described Cubberley s School Funds and Their Apportionment as the standard work in this field deducing the principles by which any state apportionment plan should be arranged. Cubberley studied whether or not the money now at hand is distributed in the best manner possible, and whether or not, by a change in the method of distribution, the burdens of support could not be greatly decreased and the minimum requirements at the same time be increased, and this without doing any real injustice to anyone. (Cubberley, 1905, p. 17) Historically, many viewed financing education as a local responsibility. Therefore, state aid for public schools had not yet undergone examination from a distribution model. Cubberley (1905) argued that state leaders focused on increasing funding totals while failing to examine how they shared funds across schools. Specifically, states were attempting to increase the state school tax, without any attempt to improve the apportionment plan under which all revenue from school taxation is distributed to the various school units of the state (Cubberley, 1905, p. 2). In addition, while the different forms of taxation for education must of necessity be considered, our primary concern will be rather with the methods of distribution (Cubberley, 1905, p. 13

21 18). Cubberley noted that however desirable and even necessary it may be to provide more money with which to maintain the schools of the state, a still more important question is how to distribute the money so as to secure the best results (Cubberley, 1905, p. 2). Cubberley (1905) attempted to identify whether the efforts of state funding addressed inequality. Cubberley (1905) examined state finance distribution schemes and found that three quarters of the states school finance structures were in need of reform. Cubberley s study of state funding to districts showed that allocations did not reduce, and may have actually increased, inequalities across schools (Brimley et al., 2002). State funds were distributed without recognizing the unique needs of neighborhoods. State distribution methods were only a rough method of approximately determining the number of children for whom education must be provided, and, hence, for who funds should be apportioned (Cubberley, 1905, p. 93). Cubberley concluded that few, if any, had met this demand because educational equality varied greatly and generally rose or fell in close tandem with local property wealth (Brimley et al., 2002, p. 8). Equity was limited, because the relationship between generating funds and district wealth led to a finance structure where a slight effort for one community is an average load for another and an excessive burden for a third (Cubberley, 1905, p. 201). Therefore, the state had a limited impact on addressing inequalities across districts. The positive relationship between district wealth and the distribution of state funds contradicted the fair and just principle of funding equity. For equity to occur, according to Cubberley (1905, p. 154), the excessive burdens should be in part equalized by the state. 14

22 Cubberley (1905), noted that the demands set by the states for maintaining minimum standards caused very unequal burden for different types of schools. Therefore, Any form of state taxation for schools fails to accomplish the ends for which it was created unless a wise system of distribution is provided. Furthermore, a reserve fund should be established for the relief of those communities which have made the maximum effort allowed by law and yet are unable to meet the minimum demands made by the state. (Cubberley, 1905, p. 17) Cubberley (1905, p. 86) identified general principles to equalize the advantages of education and to place a premium on more efforts which communities ought to be encouraged to make for themselves. Although it was the state s duty to secure for all pupils as high a minimum of education as possible, Cubberley cautioned against raising all education to this level; thus, local control of schools remained a priority (King et al., 2003, p. 183). The role of the state was to provide funding while also incentivizing districts to generate additional funds for specific programming. Specifically, Cubberley encouraged states to place a premium on those local efforts which will enable communities to rise above the legal minimum as far as possible; and to encourage communities to extend their educational energies to new and desirable undertakings (Cubberley, 1905, p. 17). Recognizing the state s limited efficacy to address inequality, Cubberley attempted to measure the needs of particular districts further (1947). Cubberley s plan was to provide more funds for those districts with more teachers and for those with schools with expansive school services (1947). However, Cubberley s reward for effort did not promote funding equity, because wealthier districts already had more programs and teachers (Brimley et al., 2002). The reward for effort plan was a benefit to them but 15

23 of little help to the poorer districts (Brimley et al., 2002, p. 82). Therefore, not only was Cubberley s reward for effort non-equalizing, but it also, on many occasions, increased the degree of inequality (Brimley et al., 2002). While Cubberley furthered the notion of equity, the impact remained elusive, partially due to an ineffective method of distributing and measuring the impact of state equity funds on districts (Brimley et al., 2002). Without measuring the impact on districts, equity funding was a general estimate of district needs, distributed through an ineffective model. Strayer and Haig: Foundation Model The vague relationship between the intent of state equity funding distribution and the impact on districts led to the development of the foundation model (Thompson et al., 2008). Strayer, in concert with Haig, theorized that concepts of equalization should result in a degree of measured basic educational opportunity (Thompson et al., 2008). Strayer and Haig identified deficiencies found in state finance systems, many built on Cubberley s philosophy (Thompson et al., 2008). Furthermore, what emerged was Strayer and Haig s foundation principle, envisioned to equalize educational opportunity for all students (Thompson et al., 2008). This foundation principle furthered the development of state funding equity and was an important benchmark in school finance theory (King et al., 2003, p. 83). In 1923, Strayer and Haig described the foundational level as one sufficient to furnish the children in every locality within the state with equal educational opportunities up to some prescribed minimum (Strayer, Haig, & American Council on Education, 1923, p. 173). Under the Strayer-Haig model, grants of money from the state, would address the differences between wealthy and poorer districts (Strayer et al., 1923). 16

24 Under a foundation program, the state would guarantee equality of educational opportunity to a selected level, while allowing districts to seek a better program through local tax-levy increases (Strayer et al., 1923). Collectively, local districts could raise funds in addition to the foundation amount. Strayer and Haig disagreed with Cubberley s notion of reward for effort to address funding equity (Brimley et al., 2002). Specifically, Strayer and Haig pointed out the inconsistency of the double purpose of equalization and reward for effort (Simpson, 1932). Studies of Strayer and Haig have shown that school finance programs based upon state aid distribution by teacher units favored the very rich and very poor localities at the expense of those which are moderately well off (Brimley et al., 2002, p. 177). Strayer and Haig recognized that state funding equity failed to align with the financial burdens of districts. Strayer and Haig emphasized the equalization of the tax burden to support schools as well as the equalization of educational opportunity (Johns, 1973, p. 9). The local effort required under the Strayer-Haig plan was to set the tax rate needed in the wealthiest district to raise the total amount needed to fund the program (Strayer et al., 1923). The wealthiest district would not receive any state funds (Strayer et al., 1923). Since the rate is uniform, this tax would be sufficient to meet the costs only in the richest district and the deficiencies would be made up by state subventions (Strayer et al., 1923, p. 174). However, districts could exceed the foundation program through local tax-levy increases unmatched by the state (Strayer et al., 1923). According to Strayer and Haig, equalization must establish schools or make other arrangements sufficient to furnish the children in every locality within the state with equal educational opportunities up to some prescribed minimum (Strayer et al., 1923). 17

25 However, Strayer and Haig proposed a satisfactory minimum program to be equalized, but they offered no suggestions concerning how to measure it (Johns & National Educational Finance Project, 1971, p. 10). Yet, the foundation program, developed by Strayer and Haig and based on the foundations set by Cubberley, became the fundamental approach to state equalization formulas (Thompson et al., 2008). The foundation model moved beyond the basic teacher unit proposed by Cubberley and recognized that specific types of communities do not have the ability to generate adequate resources for their schools. Mort: Weighted Pupil Despite the efforts of Cubberley, Strayer, and Haig, the model for funding equity continued to be an estimate of district need, largely because there was no objective way to measure the true educational costs of students. At the start of the 20th century, Mort noted that distribution methods should consider causes of variation in costs over which local communities had little or no control (King et al., 2003, p. 207). Mort pointed out that Strayer and Haig had provided a concept of a minimum program but provided no guidance about what the height of the benchmark should be (King et al., 2003, p. 335). According to Mort (1924), The educational need of a community is regarded as the composite of all those elements in the community that would affect the cost of the public educational offering (p. 421). If state aid would equalize opportunity for all students, it must subject the fundamental educational need of a community to analysis (Mort, 1924). Like Strayer and Haig, Mort found Cubberley s focus on reward for effort contradictory to the equalization concept (Mort, 1924). Instead, Mort questioned whether states should take surplus funding from the wealthy districts to achieve equalization 18

26 (Brimley et al., 2002, p. 181). Mort s The Measurement of Educational Need, published in 1924, challenged earlier studies utilizing broad measures of the educational needs of a community. As a result of his work with the Joint Committee on Taxation and Retrenchment, Mort proposed a complete plan of state aid for New York (Simpson, 1932). Mort s plan, focused on the measurement of need, proposed a minimum program in which the state would participate and related the local support of the minimum program to the community s ability to generate funds (Simpson, 1932). According to Mort, The equalization of burden is given first place only because it cannot be exercised without state aid; whereas, presumably, encouraging progress is not solely dependent upon the use of state aid (Mort, 1926, p. 97). Mort discovered that the state funding measures in use were inequitable, including in their treatment for variation of size of school and of districts of the same size (Johns & National Educational Finance Project, 1971, p. 12). As schools were financed through school district property taxes, minimal state aid and private contributions, equalization of opportunities (in terms of financial inputs) was only within, and not among, school districts (Swanson & King, 1991, p. 154). Mort recognized the state s responsibility to remove the inequalities of wealth and to equalize the educational burden of local efforts (Simpson, 1932). Mort conceived the weighted pupil approach in this analysis of early foundation plans and extended the minimum program concept (King et al., 2003, Thompson et al., 2008). Using the weighted pupil approach, Mort defined a minimally adequate education in terms of unique student needs, pupil-teacher ratios, cost variations, sparsity factors, and school facility and size (Ward, 1987, p. 474). Under this model, states scale their 19

27 funding to local aid amounts and inversely to wealth (Ward, 1987). Therefore, aid should vary along multiple criteria based on trying to estimate true educational costs, rather than just granting aid in a neutral fashion (Thompson et al., 2008). Mort s weighted pupil units provided objective measures of educational need to give extra weight to the actual number of pupils in those situations where the true per pupil cost of a given educational offering is high (King et al., 2003, p. 175). The Strayer-Haig-Mort formula offers specific measures of need to examine the various costs of educating students (Johns & National Educational Finance Project, 1971). Specifically, educational needs are calculated in terms of weighted unit costs such as weighted pupils or weighted teachers which take into consideration necessary unit cost variations (Johns & National Educational Finance Project, 1971, p. 123). In reference to Mort, Simpson (1932) stated that the weighting of his elements was determined, the minimum program was expressed by reference to criteria which adhered steadfastly to equalization, and weighted pupil standards for measuring educational need were used in the determination of the cost of offering a reasonably equivalent educational program across communities. (p. 151) According to Mort (1924, p. 7), unusual expenditures for meeting the general requirements due to causes over which a local community has little or no control may be recognized as required by the equalization program (see also Johns, 1973, p. 10). Furthermore, some communities offer more years of schooling or a more costly type of education than is common; If it can be established that unusual conditions require any such additional offerings, they may be recognized as part of the equalization program. (Mort, 1924, p. 7; see also Johns, 1973, p. 10) 20

28 States later extended Mort s concept of weighting pupils to include pupils enrolled in vocational education, exceptional education, and compensatory education in order to provide for the extra costs of these special programs (Verstegen, 2011). Most foundation programs today use some form of the weighted teacher or weighted pupil measure (Verstegen, 2011). The weighted approach is a leading approach in funding students with disabilities that lead to higher than average costs. Most regard the concept of making allowance for necessary cost variations beyond the control of local boards of education as sound policy (Johns & National Educational Finance Project, 1971, p. 12). By 1972, 42 states had adopted Mort s weighted pupil and equalization approach (Johns, 1973). Throughout the last 100 years, the concept of funding equity has grown, as has the attempt to measure the impact of state funding to districts. Each of the founding theorists recognized the limitations of their predecessors and expanded the concept of equity, including how the efforts of state government may better align with the needs of districts. Strayer and Haig recognized that Cubberley s broad manner of estimating student need failed to provide equitable funding to districts (Brimley et al., 2002). Mort noted that the foundation principle of equity, proposed by Strayer and Haig, failed to recognize the specific needs of particular districts and types of students (Simpson, 1932). States can no longer afford, figuratively or literally, not to measure the true impact of funding equity on districts. Today, the desire to measure the impact of state equity objectively is of great importance. Specifically, it is necessary to ensure that each child with a disability receives a proper education. 21

29 The Emergence of Students with Disabilities in Public Education While education takes up the largest share of state and local government budgets and is a continuing concern of lawmakers, finance policies of education have changed little since their inception in the 1920s and 1930s (Verstegen, 2011). The first wave of school finance policies from the first half of the 20th century focused on regular education programs, without special adjustments to school aid formulas for students with disabilities (Thompson et al., 2008). Contrastingly, special education from the second half of the 20th century to date has been the most visible vertical need program with every indication of continuing far into the future as a powerfully political and legal force (Thompson et al., 2008, p. 92) Throughout the legal and educational development of students with disabilities in public education, state equity has addressed students and districts differently by providing more revenue to particular schools (Odden & Picus, 2000). However, spending functions have remained relatively consistent despite dramatic changes in student sociodemographic characteristics and categorical programs reflecting special needs students (Odden & Picus, 2000). Collectively, special education mandates and associated costs have expanded the need and immediacy of state aid equity. In 1954, the Brown v. Board of Education of Topeka ruling recognized that a separate education could not amount to an equal education. The ruling provided a legal framework for students with disabilities to access public education. Two court decisions in 1972, Pennsylvania Association for Retarded Children (PARC) v. Commonwealth of Pennsylvania and Mills v. Board of Education, District of Columbia impelled state and federal litigation addressing the education of children with disabilities (National Council 22

30 on Disability, 2000). Both cases established the standard for school districts, requiring that each child receive an individualized education and that districts place children, to the maximum extent possible, with regular education students. In 1965, The Elementary and Secondary Education Act (ESEA) shifted funding from general to categorical aid. ESEA marked the first major federal involvement in school finance and increased the role of state education agencies in distributing federal funds to districts. The Handicapped Children s Early Education Assistance Act of 1968 offered funding and programming to assist students with disabilities and removed barriers restricting access for students with physical disabilities. While the general frameworks of ESEA and Brown v. Board of Education of Topeka supported the growth of individuals with disabilities, Section 504 of the Rehabilitation Act of 1973 and the EHCA of 1975 furthered the financial and legal requirements to offer educational services to students with disabilities. Section 504 of the Rehabilitation Act of 1973 was the first federal law to target the civil rights of students with disabilities. In the context of access, the federal law stated No otherwise qualified handicapped individual in the United States... shall solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subject to discrimination under any activity receiving federal financial assistance. Section 504 of the Rehabilitation Act, as a civil rights law, provided assistance for students with disabilities across educational settings. Districts were obliged to ensure all students with a qualified handicap received modifications as part of their targeted education plan. 23

31 In 1975, Congress passed EHCA, later known as IDEA. EHCA required all states receiving federal funding to identify, evaluate, and provide services to students with disabilities. Federal funding to state education agencies was contingent upon state compliancy. Compliancy measures under EHCA included evaluation, education, and due process safeguards for students with disabilities. IDEA obliged state and local education agencies receiving categorical funding to ensure that each student with a disability received a free and appropriate public education from the ages of A foundation of the current law is the zero reject rule, which mandates schools to meet the educational needs of all students with disabilities, regardless of severity or cost (EHCA, 1975). Part B of the law, the main program, authorizes grants to state and local education agencies to offset part of the costs of the k-12 education needs of children with disabilities. Section 611 of EHCA authorizes funding to students aged In 1990, Congress passed the Americans with Disabilities Act (ADA). ADA states that society has tended to isolate and segregate individuals with disabilities, and, despite some improvements, such forms of discrimination against individuals with disabilities continue to be a serious and pervasive social problem (Section 2 (a)(2)). Under ADA, state or local governments may not discriminate against qualified individuals with disabilities. In 1990, IDEA accentuated the importance of students with disabilities accessing the general education curriculum. IDEA mandated specific educational services particularly tailored to meet their needs, and in the least restrictive environment appropriate with youth who are not disabled (Section 612 (a)(5)). Congress reauthorized IDEA in The reauthorization stated, 24

32 Over 20 years of research and experience has demonstrated that the education of children with disabilities can be made more effective by having high expectations for such children and ensuring their access in the general curriculum to the maximum extent possible. (Section 601(a)(5)) Specifically, IDEA mandated education agencies to accurately and efficiently determine the special instructional, learning and behavioral needs of children with disabilities, especially within the context of general education (Section 671 (b)(c)). The IDEA Amendments of 1997 established placement neutral funding formulas (Section 612(a)(5)). A placement neutral funding formula is one that does not reward districts for segregating children who have disabilities. Specifically, the distribution of funding does not provide fiscal incentives for placing students with disabilities in separate settings in violation of the least restrictive requirements of the law. The 2004 IDEA amendments provided state education agencies clarity in terms of their responsibility to measure the performance of students with disabilities and clarified the amount of funds to be retained by the states. The federal government reduced spending on most education programs by approximately 5% due to the automatic spending reductions required under the Budget Control Act of 2011, also known as sequestration (ODE, 2014). Funding under IDEA has decreased by 0.2% under a continuing resolution from the 2013 federal budget (ODE, 2014). In 2013, the total IDEA funding level for all states was $436,958,357. In 2014, the total IDEA funding level for all states was $413,778,315, equaling a funding difference of $23,180,042 (ODE, 2014). When Congress enacted IDEA, it estimated that children with disabilities cost more than other children. Congress allowed the federal contribution to reach 40% of 25

33 state average per pupil expenditure (IDEA Full Funding Act, 1994). Although Congress authorized 40% of average per-pupil expenditure in the state, appropriations historically have ranged between 10% and 20% (IDEA Full Funding Act, 1994). Therefore, economic hardship has shifted to state education agencies. To address this economic pressure, states distribute a proportion of the IDEA funds to districts. Under the concept of state equity, increased funding helps to compensate for the rising cost of educating students with disabilities (Parrish, 2001). State Special Education Finance Models States distribute special education funding to offset the cost of expensive student programming. States continue to develop special education funding models to provide additional funding for students with disabilities. State finance formulas are tailored to provide different levels of funds to enable districts to offer programs appropriate to the learning abilities and educational needs of pupils (King et al., 2003, p. 207). States adopt two related forms of equity funding. Horizontal equity refers to the equal treatment of equals, aligning with the concept of equality (King et al., 2003). As stated by Odden and Picus (2004), When horizontal equity is used, one assumes that all students are alike. While this is a crude assumption at best, it is implied when it is argued that spending should be equal across all school districts or schools. Thus, horizontal equity has been widely used in school finance, despite its assumption that all students are alike. (p. 63) Contrastingly, under vertical equity, equal treatment for all is not always fair and just for pupils experiencing extraordinary conditions such as poverty or physical, psychological or mental disabilities (King et al., 2003 p. 307). If students have different educational needs, a vertical equity state funding system provides different levels of funding to meet 26