Arizona special-ed funding benefits schools with fewest special-ed students

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How does Arizona’s method of funding special education impact all students? Reporter Alia Rau explains.

PLC Arts Academy at Scottsdale has $5,000 more to spend per student than Pine Strawberry Elementary District north of Payson. 

It’s not because its students are in one of Arizona’s most well-to-do cities, or that they perform better on state tests, or that more kids are enrolled.

It’s a direct result of how the state funds education for students with special needs: Arizona’s spending on special education benefits schools with the fewest number of students who require it.

About one-third of Arizona students attend schools — most of which are charters — that receive more state money to serve students with special needs than those schools  actually spend for that purpose. 

The rest of the state’s students attend a mix of district and charter schools that spend more on students with special needs than they get, forcing the schools to spend less on their traditional students to make up the difference.

For those underfunded schools with 100 or more students, what some call the “negative funding gap” averages $253 per student.

In a classroom of 30 kids, that could be enough to give the teacher a $7,590 raise, buy a smart board and several laptops, or hire and equip a school nurse.

“Special-ed money isn’t going with the special-ed kid,” said Tolleson Unified School District Chief Financial Officer Jeremy Calles. “We, for the past decade, have allowed this to happen.”

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The gaps in some cases are striking, according to an analysis by The Arizona Republic of data from the 2015-2016 school year, the most current data available, compiled by the Arizona School Boards Association and Arizona Association of School Business Officials:

— The 16 Basis charter schools have some of the smallest percentages of special-education students of any other charter group or district in the state. Their rate of students with special needs is five times lower than the average school. Combined, the schools get $3.4 million more a year in state funding than they spend on students with special needs. That leaves them with an extra $315 to spend per student.

— The 12 Kaizen Education Foundation charter schools have a larger-than-average percentage of students with special needs. Its schools combined spend $731,005 a year more than they get for special education — requiring them to divert $253 from each traditional student to cover the gap.

— All but one of the state’s 20 largest school districts are in the red. Only Chandler Unified District has a positive funding gap. Paradise Valley and Peoria school districts each spend about $10 million a year more than they get for special education, requiring them to divert about $300 from each student.

“What the charters and districts are doing is completely legal, but it’s about whether or not it’s morally right,” Calles said. “And we’re creating systems to reward them for doing that.”

Doling out funds 

The state funding formula divides students with special needs into two categories: “Group A” are students the state believes have more mild needs such as a speech impairment or dyslexia while “Group B” are students believed to have significant hearing or vision impairments, autism or intellectual disabilities. 

The formula — created in the early 1980s before charter schools and other school choice options arrived in Arizona — assumes Group A students are spread evenly among all schools across the state. 

It gives every district and charter an extra chunk of money for each student enrolled, regardless of how many students with special needs actually attend that school. 

The extra amounts for students with special needs in fiscal year 2016 equated to about $241 annually per high-school student and $362 for each K-8 student. Schools also get additional Group A funds for a few other categories, such as gifted and bilingual students, but those amounts weren’t counted in this analysis. 

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But the addition of charter schools, out-of-district enrollment, online schools and other school choice options have thrown the balance out of whack. 

So now, an elementary school where all 500 students in 2016 were labeled Group A would get an extra $181,000 a year, as would a school of the same size with no Group A students.

The formula hasn’t changed to reflect the new education landscape.

“We have done a lot to change school-funding policies to reflect school choice,” said Anabel Aportela, research director with the Arizona School Boards Association and Arizona Association of School Business Officials. “But this is one glaring remnant of a previous system.” 

Haves and have-nots

The data includes the 523 public district and charter schools with 100 or more students — the vast majority of the state’s schools.

According to the data, the percentage of Group A students at each district or charter ranges from 0.3 percent at Basis Schools in Chandler to 32 percent at Hermosa Montessori Charter School in Tucson. 

The statewide average is 9.5 percent. 

The data indicates that schools with fewer Group A students typically get more special- education funding than they spend, and that these schools are nearly allcharter schools.

But Basis Vice President of Communications and Public Relations Phil Handler said that’s not a fair assessment. 

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“It would only make sense to analyze Basis charter schools that way if our students with disabilities were categorically isolated from the rest of the student population, wholly taught in separate classrooms with separate teachers,” he said.

“The majority of our students with disabilities are educated alongside their non-disabled peers.”

And because students with disabilities are included in regular classrooms as much as possible, he said, the Group A funds are appropriately directed toward general classroom expenses.

That doesn’t explain the discrepancy among schools, however. It is standard practice in Arizona for all public schools to mainstream students as much as possible, and the data analyzed all the schools in the same way. 

Handler also said Basis schools are spending more to educate Group B students than they get. 

The available data did not separate out how much money schools were spending just for Group B students.

Higley Unified School District Superintendent Mike Thomason made a similar argument. His district has the largest overall funding gap in the state, getting $2.1 million more for special education than it spends. 
 
“Many of our special-education students are put into general-education classrooms to mainstream,” he said. “Those dollars are not specifically coded to special-education expenditures.”

He said the district has met or exceeded goals of educating students with special needs every year, saying the state has recognized the district for high performance of its students with special needs on standardized tests. 

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Higley has a slightly lower-than-average percentage of Group A students, and a higher- than-average percentage of Group B students. 

According to the Arizona Department of Education, districts must accept all students within their boundaries, and provide all necessary services to meet their needs — even if that requires them to hire additional special-education staff. 

Charter schools, which have no boundaries, must provide services for any student with special needs as any district does. But if the school is at enrollment capacity, it may turn away a student with special needs just as it may turn away any student.

A district can turn away out-of-boundary students with special needs if its overall enrollment is at capacity, just as it would turn away any student. 

Calles at the Tolleson Unified School District said some districts and charter schools take advantage of the formula, turning away Group A students by saying they are at capacity or discouraging parents from ever enrolling their children.

“When you have 1,000 kids in your system and none of them fall into this category? Seriously? You’re not taking them,” he said. “Then you pump that extra money right back into your regular education program and get to go around and say you have the best education in the state.”

And when an area has a lot of charters with low percentages of students with special needs, Calles said, that leaves the area district schools with higher percentages of those students — further widening the gap.

The same thing happens when neighboring districts pursue desirable out-of-district students, he said.

While there is a disproportionate number of charter schools with positive funding gaps, there are also charter schools with enormous negative funding gaps. 

“What you’re seeing is our funding formula,” said Arizona Charter Schools Association President and CEO Eileen Sigmund. “We know our students with special needs are increasing in Arizona. How do we address the problem?”

Sigmund is adamant that the special-education funding is not a district vs. charter problem.

She said data that shows charter schools with lower-than-average Group A weights or with lower special-education spending may reflect inconsistencies in how schools report the numbers. 

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She said it may also be a sign of success,saying many charter schools lower their Group A percentages by working with students who arrive with a Group A label to help them improve.

“We’re seeing a lot more success getting kids so they’re not needing resources,” she said. 

And she said charter schools don’t weed out students with special needs.

“You serve all students that come through your door and you make the numbers work,” she said. 

Size of the gap

According to the data, 318 districts and charter schools serving 332,436 students last year got a combined $49.3 million more for students with special needs than they actually spent on those students.

On the flip side, 203 districts and charters serving 726,944 students got a combined $129 million less for students with special needs than they actually spent.

“It’s a question of how much do you have to take out of non-special-education programs for every student to fill in the hole in special education,” Aportela said.

Federal law requires public district and charter schools to educate students with special needs, regardless of how much money the state and federal government pay to help them do that.

“To me, the story that’s most compelling is what the districts and charter schools have to do to make up that gap. Who is paying the price?” Aportela said. “It’s the (traditional) students who have the last claim on the dollar.”

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Caroline Karcher’s son has a dyslexia diagnosis. She tried charter and district schools prior to enrolling him in a private school. Before that, he was in the Queen Creek Unified District. It is among those with a positive gap. 

She said she was surprised to hear some schools, including Queen Creek, were receiving more funds for special education than they spent. 

“I feel like people in that district did try, but you just get a very generic, basic plan … a very one-size-fits-all approach,” she said. “Unless you’re really pushy, you’re not going to get any of those things that are actually going to cost the district money.” 

She said she understands schools are at the same time facing significant overall funding gaps. 

“But if they’re getting that money for special education, it should go toward special education,” she said.

Meghaen Dell’Artino, the lobbyist for the Queen Creek school district, said the data doesn’t tell the full picture for large districts like Queen Creek that serve large numbers of students with special needs.

She said when extra transportation expenses for students with special needs are incorporated into district costs, the gaps may shrink. Districts get transportation funds per student, but don’t get extra for students with special needs, even though they may require more accommodating buses, aides on the buses, or more stops.

“We’re actually expending more revenue than we’re taking in,” she said.    

Charter schools generally don’t provide bus transportation for any students, and so don’t incur such costs.

Winners and losers

Here’s a closer look at the data, compiled from information the schools submitted to the Arizona Department of Education for the last school year:

— Of the 50 districts and charters with the largest positive funding gap per student — getting more money than they spend — 45 are charter schools.

— The schools with the largest positive funding gap per student tend to have a lower- than-average percentage of Group A students.

— Higley Unified School District in Gilbert has the largest overall positive funding gap, at $2.1 million. 

— PLC Arts Academy at Scottsdale has the largest per-student positive funding gap, at $1,046 per student.

— The 50 schools with the largest negative funding gap — spending more than they get — are evenly split between charters and districts. 

— The schools with the largest negative funding gaps per student tend to have an above-average percentage of Group A students. 

— Paradise Valley Unified District has the largest overall negative gap, at $10.3 million.

— Pine Strawberry Elementary District has the largest per-student negative gap, at $4,406 per student. 

— Mesa Unified District, the state’s largest district, has an overall gap of $4 million and a negative per-student gap of $66.

Closing the gap

Diana Diaz-Harrison started the state’s first charter school for children with autism in 2014 after getting frustrated with the options for her son, who is now 15.

She said even with state money from an Empowerment Scholarship Account, she still paid several thousand dollars a year to cover the cost of private-school tuition at a school that could meet his needs. 

Arizona Autism Charter School in central Phoenix serves about 180 students in grades K-8, and Diaz-Hernandez hopes to gradually add high school grades starting next school year. They have students from as far away as Anthem and Maricopa — and a waiting list.  

All of the school’s students have special needs, and are either Group A or Group B students.

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The school in fiscal year 2016, according to the data, had a slightly higher-than-average percentage of Group A, with the vast majority of students qualifying for significantly higher funding as Group B students.

According to budget documents filed with the state for last school year, it got more funding for special education than it spent — leaving the school an additional $1,727 per student.

She said she still struggles to meet the needs of her students and must find ways to make up for what she said is a lack of overall education funding in the state. 

“I’m a mother of a child with autism. I know what I would want for these kids, and it’s really hard to afford,” she said. “To be viable and have the quality we want, it takes a combination of state funding, private donations, corporate sponsorship and private grants.”

She said attracting teachers to do such challenging work is tough, as is providing for the varied needs of her students. 

“Our goal, just like any school’s goal, is to get our kids vocationally, college or career ready,” she said. “Investing in school-age children on the autism spectrum is a good investment. They would be more prepared to be self-sufficient and require less state services in the future.” 

In the Pine Strawberry Elementary District, 22 percent of its students are labeled Group A and 2.8 percent labeled Group B. Such numbers have a significant financial impact on a very small, very rural school district.

It has the state’s largest negative funding gap, requiring them to pull $4,406 from traditional students to make up the gap. 

“We are required to provide free, appropriate education to all students, including special-education students, regardless of what the costs might be to us,” said district administrative adviser Linda O’Dell. 

The school does get some extra funding from the state for being a small school, as well as some other state and federal education funds beyond the student baseline. 

“We are very fortunate for a small, rural school,” she said. “We are able to provide the services both for special-needs students and for general-education students without undermining or negatively impacting everyone.” 

But she said the school’s size and location adds significant costs to special-education services. She said they don’t have enough students to need some specialists full time, so they pay higher contract prices for hourly services on things like speech therapy, physical therapy and evaluations. 

“Those costs add up,” she said. 

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O’Dell said she was initially shocked to hear that some Arizona schools are getting more funds for special education than they need. 

“That doesn’t sound right,” she said. “I would not have imagined that.” 

But after thinking about it, she said it’s not surprising given that district schools aren’t getting sufficient funding in many areas. 

“We continue to express our concern not only about special education but about general education as well,” she said. “None of us receive sufficient funding.” 

No quick solution

Gov. Doug Ducey’s Classrooms First Initiative Council spent a significant portion of time discussing the Group A and Group B weights. There was consensus that they weren’t working, but little agreement on how to fix them.

Any change likely would negatively affect some of the state’s most prestigious — and politically influential — charter schools. 

“If you’re going to hurt the most popular charter systems in the state, it’s ‘no,’ ” Calles said. “It’s too much of a hot-button issue. We just don’t have the votes.”

Some suggested increased funding. Others suggested eliminating Group A weights entirely.

Sigmund said the issue needs closer study, but said she thinks funds should be aligned more directly to each student’s needs. 

“We need to better understand students’ needs, family needs and the resources they will need to move forward,” she said. “We should provide funding aligned with student needs.”

Aportela of the school business officials’ association said as long as the underfunding of Arizona schools continues, redistributing existing funds is not a solution.

Reworking the Group A weight makes sense for schools serving high percentages of students with special needs, she said, but it would create a financial hole for schools with smaller numbers.

“You’re taking from one group to give to another, but everyone’s already underfunded,” she said. “So even if we were to redistribute the funds, you haven’t really solved anything because everyone needs those dollars.”

According to the data, even redistributing the money not spent on special education leaves a $79.6 million overall hole in funding. 

In the end, Classrooms First recommended the state study special-education costs and identify ways to address any reported funding gap.

Sen. Sylvia Allen, R-Snowflake, who co-founded George Washington Academy charter school in Snowflake, attempted to remedy the situation with legislation early this year requiring an updated state audit of special-education costs.

“It’s a huge issue and it’s complicated, but we do need to address it,” she said. 

The Senate passed the bill unanimously but it never got a final House vote. Allen said the audit would have cost $400,000 and there were too many other more pressing funding demands this year. 

She also acknowledged the political fight state leaders will face if they start moving funds.

“People don’t want to give up whatever money they’re getting,” she said. “But if we can just be sure that money is directed in the right direction, then it’s worth it. These dollars are very hard to get and we don’t want to waste them.”

A little help from Prop. 123

A state audit from 2007 — the last time the Legislature agreed to fund a study of the issue — found schools weren’t given enough money to cover Group A students.

That year, according to the audit, schools faced a $54 million gap.

Educators have said costs have exploded since then, as more students are diagnosed with special needs and the costs of services rises.

According to Aportela’s analysis of the data, the gap had risen to $112 million by fiscal year 2015.

Prop. 123, passed by voters last year, shrunk the gap when it increased the base amount the state pays schools per student. 

According to this latest data, it was at about $79.4 million in fiscal year 2016.

“When the base amount goes up, the Group A weight goes up,” Aportela said. “So the overall funding gap was reduced after Prop. 123 because the base went up.”

 

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