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Journal Issue: Special Education for Students with Disabilities Volume 6 Number 1 Spring 1996

Financing Special Education
Thomas B. Parrish Jay G. Chambers

Criteria for Reform

A critically important principle in developing funding mechanisms is that they support the state's instructional program objectives. Even the simplest funding systems contain incentives and disincentives that directly influence the orientation, quantities, and types of services provided at the local level. What criteria, then, should be used as a basis for designing and evaluating special education funding systems? Box 1 presents a set of criteria for use in evaluating alternative ways of allocating special education aid.

States attempting to forge new special education finance structures will repeatedly encounter tension between these types of competing policy criteria. A major focus on one criterion may come at the expense of one or more of the others. For example,

  • Provisions that increase flexibility will often decrease accountability and may also bring standards of program adequacy into question.
  • A formula that is easy to understand and that reduces the local reporting burden may not be the most effective at allocating limited special education resources where they are most needed.
  • A highly equitable system might be considered to be one that is tightly linked to variations in local costs of providing special education services. Districts that spend more on special education services because their resource costs are higher, because they serve more students, or because they serve students with more severe needs would receive more state aid in recognition of these cost differentials. On the other hand, such a system may also have a fairly substantial reporting burden, may lack flexibility, and may not be placement neutral.

In addition, it is important to recognize that, although changes in fiscal policy are necessary, they are not generally sufficient to result in program improvement. States reporting the most success in coordinating program and fiscal reform emphasize the need for financial incentives, or at least the removal of disincentives, along with the provision of a comprehensive system of professional development and ongoing support to educators and parents to effect the desired changes. (See the article by Hocutt in this journal issue.)