Jody Hauer, principal evaluator for the Office of the Legislative Auditor
An Interview with
2104 Girard Ave.S., Minneapolis, MN 55405 April 5, 2013 Review of special education
reveals difficult cost-control issues
Dave Broden, Pat Davies, Sarah Roberts
Delacueva, Paul Gilje (coordinator), Jody Hauer, Randy Johnson, Sallie
Kemper, Ted Kolderie, Dan Loritz (chair), Paul Ostrow, Jodi Munson
Rodriguez, Dana Schroeder, Clarence Shallbetter. By phone: Audrey Clay,
As of 2011, nearly 112,000 students in
Minnesota were receiving special education, 13.6 percent of all students
in grades K-12, according to Jody Hauer, principal evaluator for the
Office of the Legislative Auditor. Hauer, project manager for the
Auditor's March 2013 evaluation of special education, points out that
special education revenues in 2011 amounted to $1.8 billion. She discusses
the four main lines of inquiry of the evaluation: funding; state and
federal legal requirements for special education; legal compliance
monitoring and enforcement; and characteristics of the students receiving
special education. She reports that the per student costs for providing
services to children in 13 different disability categories vary widely by
category, from $2,583 to $47,252. Hauer also points out the rise in
special education costs and the impact of that increase on local school
districts. She also discusses major disincentives for school districts to
implement cost-control measures for special education and recommends ways
of adding cost-control incentives.
Hauer is principal evaluator for the Minnesota Office of the Legislative
Auditor, which is a nonpartisan research office under the direction of the
Legislature. Hauer was project manager for the Legislative Auditor's March
2013 evaluation report on special education. Sarah Roberts Delacueva and
Jodi Munson Rodriguez assisted in the evaluation.
Prior to her current position, Hauer worked for
two years as director of research for the State Auditor's Office. Before
that, she worked for eight years as a research associate for the Citizens
League, a private, nonprofit organization that conducts public policy
Hauer has a master of planning degree from the Hubert H. Humphrey
School of Public Affairs at the University of Minnesota and a bachelor of
arts in political science from the College of St. Catherine in St. Paul.
: The Legislative Auditor's
Office produces independent reports for the Legislature. Jody Hauer,
principal evaluator for the Office of the Legislative Auditor, began by
pointing out that the office is an arm of the Legislature. Every year the
Legislative Audit Commission instructs the legislative auditor to
investigate five or six topics. A year ago, one of those topics was
At that point, the Legislature's role in the
process is essentially done. The Legislative Auditor's Office takes
control of designing and conducting the research, pulling together
conclusions and recommendations, writing the report and then releasing it.
"Legislators have no say as to what goes into the reports," Hauer
explained. "They don't even see a draft of the report. It really is a
report of our office and it's to be seen as an independent, unbiased look
at whatever the topic is."
The reports are released back to the
Legislature, and it's up to them to decide what to do with the report's
conclusions and recommendations, she said. "It usually takes a year or two
before action is taken," she said. "But we find that they often pay
attention to what we say." The special education report was released in
March and several bills have been introduced in this legislative session
that embody recommendations from the report, Hauer said.
The full report may be found online
The special education evaluation had four main
lines of inquiry:
How is special education funded? What drives that
funding? How has that changed over time?
Legal requirements for special education.
How do the state
laws and regulations applying to special education compare with the
What is the process that the Minnesota
Department of Education uses to make sure school districts comply with
all the regulations?
Who are the students receiving special education,
and how has that changed over time?
Profile of special education students.
As of the 2010-2011 school year, nearly 112,000
students in Minnesota were receiving special education.
amounts to 13.6 percent of all students in grades K-12.
The number of students receiving special
education has increased every year since the 1999-2000 school year and
increased by 11 percent over the full 12-year time period covered by the
study, from 2000 to 2011. At the same time, the number of all K-12
students in the state decreased by three percent.
While the number of students receiving special
education has grown in Minnesota, the national trend is downward, Hauer
said. But the evaluation did not include comparisons with other states to
offer suggestions about why that is true.
Once students are found eligible for special
education, they are assigned a primary disability (even if they have
multiple disabilities) and then grouped with others into one of 13
Eight of the 13 categories showed an increase in the number of
students over the 12-year period (ranging from two percent to 613
percent growth); one category stayed relatively constant; and four
categories declined (ranging from an 11 percent to 22 percent decrease).
The number of students in the specific learning capabilities
category went down by 22 percent over time. But in both 2000 (39.1
percent) and 2011 (27.3 percent), that category represented the
largest number of students receiving special education services.
Autism spectrum disorders was the disability category that
experienced the largest numerical growth between the 1999-2000 and
2010-2011 school years (11,462 students), a 555 percent increase.
Noting that students with learning disabilities
account for the highest proportion of students receiving special
education, an interviewer questioned whether the problem is with the
students or with the school-whether the students have disabilities or,
instead, a conflict with a particular teaching style. He asked whether
there is anything associated with schools that could explain the high
proportion of students in learning disabilities categories.
Hauer responded that the study didn't analyze
the huge body of literature about the problems of evaluating students for
There is a wide variation in expenditures per
student among the special education disability categories.
range from $2,583 per student for children with traumatic brain injuries
to $47,252 per student for children with severe/profound developmental
Minnesota is attempting to identify at a younger
age those students needing special education.
In response to a
question about using early childhood programs to lower the need for later
special education services, Jodi Munson Rodriguez said the state is making
an effort to identify students early. "A huge percentage of special
education students are identified in kindergarten or earlier," she said.
The number of minority students receiving
special education increased more on a percentage basis than in regular
There was a 75 percent increase over the 12-year
period in the number of minority students receiving special education and
a 44 percent increase in minority students in general education.
There are federal and state requirements that
special education students be in the least restrictive environment to the
maximum extent appropriate.
If students spend 80 percent or more
of their day in a classroom with their nondisabled peers, they're in
setting one, the least restrictive environment. The scale goes up to
setting eight, for students who are homebound or in a hospital setting.
Most children receiving special education in 2011 (61 percent) were in
During each year from 2000 to 2011, an average
of about 17 percent of special education students moved to a less
restrictive special education setting or exited special education
altogether (by means other than graduating). In response to a question,
Hauer explained that the majorities of students who moved to less
restrictive settings did so by exiting special education altogether.
Chartered schools may not refuse students
needing special education services.
In fact, Hauer pointed out,
some schools are chartered around special education needs, such as the
Fraser School, Metro Deaf School and Lionsgate Academy. Chartered schools
assess the costs back to the resident school district.
Funding of special education.
Revenues for special education in Minnesota
amounted to $1.8 billion in 2011.
Between 2000 and 2011, revenues
increased by 38 percent (in 2011 dollars). The revenues come from state,
federal and local school district funds. These figures do not include
additional services or treatments not delivered by school districts or
chartered schools that are paid for by private or public insurance or by
School districts must pay for the portion of
special education costs not covered by state and federal funding.
the 12-year period, state funding accounted for a majority of special
education revenues (a median of 56 percent). Federal revenues were a
median 11 percent. The remainder, a median of about one-third, came from
what school districts must pay beyond state and federal funding to cover
special education costs. This "cross subsidy" includes districts' use of a
portion of state general education revenues and/or of local operating levy
referenda to pay for special education expenditures. Hauer said districts
have had to use more general education revenues to pay for special
education costs, so those funds aren't available to pay for general
education costs for all students.
Between 2000 and 2011, the school district cross
subsidy increased 40 percent in 2011 dollars adjusted for inflation. Total
school district cross subsidies in the state amounted to $571.5 million in
For school districts across the state, the
average 2011 cross subsidy per student was $631. (The per-student subsidy
is determined across all students in a district, special education and general
education.) According to Hauer, some districts paid $105 per student; some
paid more than $1,000. Larger school districts and those located in the
metro area or regional centers around the state tend to bear the largest
school district cross subsidy burdens. St. Paul (at $36.3 million),
Minneapolis (at $34.0 million) and Anoka-Hennepin (at $30.9 million) paid
the largest cross subsidies in the state.
Lack of cost-control incentives.
There are three major disincentives to districts
being able to control costs of special education:
1. Decades ago federal courts established that
children with disabilities have a Constitutional right to an education.
with disabilities will get the services they need. School districts have
very little control over costs, because they can't say no to meeting
2. The school district where a child lives is
responsible for all special education costs, no matter where the child
A child can open enroll into another school
district or attend a chartered school and the district where the child
lives must still cover all special education costs.
Children generally are evaluated for special
education eligibility in the school district where they live. If they
attend school in a different district or at a chartered school and are
not already deemed eligible for special education, they can be evaluated
in their district of attendance.
Teachers, specialists, parents and
administrators develop an individualized education program (IEP) for
each child deemed eligible for special education. The IEP lays out what
services a child will receive, based on his or her unique needs. It also
contains goals and objectives for the child to meet. General education
students do not have IEPs.
If the child will be receiving services in the
school district where he or she lives, the IEP team members are all from
that home district. If the child is enrolled in another district or at a
chartered school, nearly all members of the team developing the IEP are
from the district or chartered school providing the services. Only one
member of the team is from the student's resident district.
So, the spending decisions for the child's
services are made in the school district or chartered school where the
child is enrolled, but the services are paid for by the district where
the child lives.
3. Every school district providing special
education services is subject to a federal requirement that school
districts must maintain their level of spending on special education
from year to year.
This is called the "maintenance of effort"
requirement. Districts can lose their federal funding if they don't
maintain their level of spending, unless there are special
circumstances, such as a decrease in the number of students receiving
special education services.
The report on special education recommends three
ways of introducing some cost-control incentives to school districts'
spending on special education:
The Legislature should consider reducing school districts' reliance
on their general fund revenues to pay for special education.
This would involve either increasing the state money going to special
education or transferring it from some other part of the budget.
The Legislature and the Minnesota Department of Education (MDE)
should work with school districts to identify cost control measures
districts are already using.
The Department should help other
districts understand and implement those measures that are effective. At
a minimum, Hauer said, MDE should provide comparative information among
districts to help districts understand how they compare to similar
The Legislature should make changes so that the district providing
special education services should bear some of the costs of the
services, so the whole burden doesn't fall on the resident district
That would align the decision on what services to provide with at least
some of the responsibility for paying for those services. Hauer said the
House version of the Omnibus Education Bill (HF630) includes a provision
that would limit to 90 percent the amount of unreimbursed special
education costs the resident district must pay for students attending
school in another school district or a chartered school.
State and federal requirements for special
Many of Minnesota's rules and statutes governing
special education exceed federal requirements.
According to Hauer,
three-fourths of Minnesota rules specific to special education exceeded
those at the federal level and 42 percent of such state statutes exceeded
"We didn't see any data to help legislators and
policymakers understand the costs and educational benefits of the state
requirements," Hauer said. The report recommended that the Legislature
should direct MDE to analyze the costs and education benefits of the
Minnesota-only requirements. Two bills introduced this legislative session
(HF 1698/SF 1552 and HF 1685) would require MDE to do such an analysis.
Both bills also provide that MDE develop ways to reduce teachers'
Evaluation and compliance.
Some students receiving special education
services made little progress towards reaching the goals and objectives
identified in their IEPs.
Districts must report three measures of
effectiveness for special education students: the dropout rates,
graduation rates and test performance of special education students. Hauer
said that the study looked at a small sample of students' IEPs (137) and
at progress reports on those students to see if they had met the goals and
objectives contained in the IEPs. While the results are not generalizable
to the whole state because of the small sample size, out of the 447 annual
goals for the 137 student IEPs studied, students met only eight percent of
the goals over the course of a year.
MDE's compliance monitoring to assure that all
school districts in the state comply with special education requirements
is often seen by school districts as confusing, inconsistent or trivial.
Legislative Auditor's report encouraged MDE to identify ways to improve
special education teachers' understanding of compliance requirements and
streamline required paperwork.
In conclusion, Hauer said the MDE agreed with the recommendations of
In a letter to the Office of the Legislative Auditor,
Commissioner Brenda Casselius commends the auditors who conducted the
research and produced a "valuable, fair and comprehensive report." She
states that MDE agrees with the six main recommendations of the report and
that she is "hopeful that this document will guide policy makers in
addressing this critical area...in order to help us fulfill our goals of
providing a high quality education to every Minnesota student so that all
can reach their highest potential."
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Core participants
include persons of varying political persuasions, reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
David Broden, Janis Clay, Bill Frenzel, Paul Gilje,
Jan Hively, Dan Loritz (Chair), Marina Lyon, Joe Mansky,
Tim McDonald, John Mooty, Jim Olson, Wayne Popham and