Special-education funds aid schools with fewest in need

PLC Arts Academy at Scottsdale has $5,000 more to spend per student than Pine Strawberry Elementary School 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 smartboard 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.”

The gaps in some cases are striking, according to an analysis by The Arizona Republic of data from the 2015-16 school year, the most current data available, compiled by the Arizona School Boards Association and the 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 that of 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-thanaverage 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 School 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. Those in “Group A” are students the state believes have more mild needs, such as a speech impairment or dyslexia, while those in “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 annually 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.

But the addition of charter schools, out-of-district enrollment, online schools and other school-choice options has 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 schoolfunding policies to reflect school choice,” said Anabel Aportela, research director with the Arizona School Boards Association and the 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 all charter schools.

But Phil Handler, Basis’ vice president of communications and public relations, said that’s not a fair assessment.

“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.

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.

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 chil-

dren.

“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-ofdistrict 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 specialeducation 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.

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.”

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 Queen Creek Unified School District. It is among those with a positive gap.

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.

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.

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

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

» Mesa Unified School 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.

Arizona Autism Charter School in central Phoenix serves about 180 students in grades K-8, and Diaz-Harrison hopes to gradually add high-school grades starting next school year.

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

The school in fiscal year 2016, according to the data, had a slightly higherthan-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. She said the additional funds go toward facilities, teacher recruitment and other administrative costs.

“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.”

In Pine Strawberry Elementary School District, 22 percent of its students are labeled Group A and 2.8 percent 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 add 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.

No quick solution

Gov. Doug Ducey’s Classrooms First Initiative Council spent a significant amount 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 hotbutton issue. We just don’t have the votes.”

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

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 the George Washington Academy charter school in Snowflake, unsuccessfully attempted to remedy the situation with legislation early this year requiring an updated state audit of special-education costs.

“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.”