Researchers: NC needs to overhaul special education funding

North Carolina should fund special education based on the services required to do so, a nonprofit research group has recommended.

RTI International’s report, reviewed and approved by the North Carolina State Board of Education on Thursday, will now head to the General Assembly, which commissioned it last fall for $27,000.

State Board members didn’t discuss the report for long, though Vice Chairman Alan Duncan and Department of Public Instruction Exceptional Children Director Sherry Thomas both noted progress and continued need to leverage Medicaid dollars to reimburse schools for services.

The report is the latest in a string of reports urging the state to change how it funds special education, particularly to account for the highly variable and expensive costs of services. In other states, funding is often based on disability categories or tiers of need, rather than a flat rate for every student with a disability.

Since 2010, the North Carolina General Assembly has received a handful of reports from external and internal groups. The State Board of Education, as a part of the 28-year-old Leandro education adequacy lawsuit, has supported a weighted approach to funding special education and a removal of a funding cap. Implementation of that plan is being debated in the North Carolina Supreme Court.

Lawmakers have increased a cap on funding to 13%, up from 12.5%, but have not adjusted funding for disability categories or tiers of need.

Among RTI International's recommendations:

• Fund special education based on the level of service a student requires.
• Revisit a funding model worked on with the Friday Institute at N.C. State University in 2017.
• Help schools access Medicaid funds to reimburse for services.

The state should implement changes on a pilot basis and monitor the accuracy of service reporting, researchers said. They reported that 90% of the 99 North Carolina exceptional children and finance directors they surveyed said they supported the service level approach, as opposed to one that is based on the type of disability a student has.

The state identifies about 200,000 students as needing special education services, or about 13.4% of students, as of April. Funding for those students is a flat amount per student — $4,600, on top of basic education services — but school systems can only receive the funding for up to 13% of their overall student population. Of the state’s 115 school systems, 93 have identified more than 13% of their student populations as needing special education services.