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New Maintenance of Effort Provision Removes Protection for Special Education Students

Published:  March 26, 2013

A legislative provision, buried eight hundred pages into the continuing resolution passed by the House and Senate last week and signed into law by President Obama, could hold significance for states that have reduced their spending on special education in recent years.

Under the Individuals with Disabilities Education Act, the federal law that governs special education policy, states are required to meet maintenance of effort every year to continue receiving federal education spending. Maintenance of effort (MOE) forces states to provide levels of funding for special education that are at least equal to the prior year’s state spending levels. Unless they are granted waivers from the U.S. Department of Education, states that fail to comply see their federal special education allocations drop by the amount that they failed to provide at the state level – permanently.

But the new language in the continuing resolution says states that fail to meet maintenance of effort will no longer be held permanently liable for that drop in state spending. Instead, the Department of Education will only be able to cut a state’s federal allocation for one year. In the following year, and in every year thereafter, the state’s federal allocation will revert to the higher amount.

Additionally, in the year in which the Department of Education cuts a state’s federal IDEA allocation, the amount of federal funding that the state loses will be redistributed across all other states.  The funding will follow the same formula as regular IDEA spending, with 85 percent distributed according to the population of children ages 3-21 in the state and the remaining 15 percent according to the poverty rate of children ages 3-21. States will pass on the additional funds to school districts under the same statute as regular IDEA funds.  Any state that fails to meet maintenance of effort is not eligible to receive a portion of the extra funds.

The policy change is hardly hypothetical, as this post from Education Week’s Politics K-12 blog explains. South Carolina, whose congressional delegation was instrumental in pushing for the measure, currently stands to benefit the most. In each of fiscal years 2009, 2010, and 2011, South Carolina cut its special education budget. The 2010 cuts were a bridge too far. The Department of Education refused to grant the state a full waiver for its excessive cuts that year and vowed to cut the state’s IDEA allocation by $36 million, effective October 2012.

Kansas faced similar challenges from the Department of Education last year, and ultimately lost $2 million in federal special education funding. In both cases, the reduction in federal IDEA funding would permanently lower the state’s IDEA allocation, were it not for the new provision contained in last week’s continuing resolution.

In effect, the new IDEA provision is a win-win for states. Gone are the very serious punishments for states that do not preserve their special education spending levels every year. And if a state does fail to meet maintenance of effort, every other state benefits by sharing in the spoils of its rescinded funding. States have seen unprecedented challenges in filling budget shortfalls throughout the recession, and the new provision gives flexibility to states that have made significant sacrifices to other areas to preserve special education funding. Still, maintenance of effort has been a cornerstone of federal special education policy for years, requiring states to live up to their promises to kids with special needs and protecting those children from budget cuts. The new policy revokes that protection and instead gives states a pass when they fall on difficult budget times.

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