Committee hears broad testimony on special-education funding; bills would boost high-cost disability money and remove 11% cap

The House Committee on Revenue held an informational session and public hearing March 13 focused on K-12 school funding equalization and special-education weights. Committee staff and Oregon Department of Education analysts presented data showing an increase in identified students with disabilities and a funding gap for high-cost special-education services; dozens of parents, teachers, school leaders and disability advocates testified in support of legislation to increase funding.

Representative Courtney Neron, sponsor of House Bill 2448A, told the committee: "This bill'increases the annual transfer to the high cost disabilities fund from the state school fund from $55,000,000 to $155,000,000." She also said the bill would increase the general fund appropriation to the State School Fund from $150,000,000 to $200,000,000. Neron framed the request as aimed at ensuring districts can meet legal obligations and provide services "without having those needs denied because of costs."

Legislative staff and ODE staff provided the committee's technical briefing. Dave Beck of the Legislative Writing Office summarized how equalization formulas and special-education weights work and said the committee's presentation focused on a subset of the formula: "Students with disabilities ... identified students with disabilities ... 81,257," and that currently about 66,000 students are receiving the additional weight in funding. He noted that if Oregon strictly applied the 11% cap to district caseloads, the number of funded IEP students would fall to roughly 59,000 and that waivers currently add about 7,000 more funded students.

Vanessa Clark, State School Fund Program Manager at the Oregon Department of Education, updated the committee on high-cost disability reimbursements and preliminary data for 2023-24: "The preliminary data we had for 23-24 had eligible costs at around $111,000,000," she said, adding that ODE saw a roughly $20 million increase in eligible costs over the previous year and that reimbursement rates had been about 40 percent in 2022-23 and were preliminary and lower for 2023-24. Beck and ODE staff also explained that the high-cost disabilities grant reimburses eligible costs above a $30,000 per-student cutoff and that the set-aside for that grant was $55,000,000 per year.

Representative Jamie Kate and Representative Neron led sponsor remarks for House Bill 2,953, which would remove the 11 percent cap on the share of a district's students who are eligible for the added special-education weight. Neron called the 11 percent cap "arbitrary and inequitable," saying districts now average about 15 percent of students requiring special-education services and that the cap both fails to reflect actual need and can disincentivize accurate identification. She asked the Revenue Committee to forward the bill to Ways and Means so funding needs can be addressed there.

More than two dozen individual witnesses testified in favor of both bills and in support of lifting the cap and boosting the high-cost disability fund. Testimony combined personal stories and district budget examples: a coalition of disability advocates and nonprofits urged lawmakers to "fully fund" the high-cost disability account to avoid districts having to choose which students receive needed services; school administrators and boards described districts spending millions from their general funds to cover special-education shortfalls; teachers and parents described individual students who required one-to-one supports and district strain in providing those supports.

Examples and clarifying figures presented to the committee included: Beck's identification of 81,257 students with disabilities statewide and 66,000 funded with double-weight; the current $55,000,000 high-cost disabilities set-aside and the $30,000 per-student cutoff for eligible costs; ODE's estimate of eligible costs above $30,000 at $135,000,000 for 2022-23 (Beck) and preliminary 2023-24 eligible-cost figures of about $111,000,000 (Vanessa Clark); and testimony from school officials and coalitions estimating that districts are covering hundreds of millions of dollars of special-education costs from their general funds.

No committee vote was taken on either House Bill 2,448A (increase high-cost disabilities funding) or House Bill 2,953A (remove 11% cap) during this meeting; the session functioned as an informational briefing and public hearing. Sponsors explicitly requested that the revenue committee pass the bills to Ways and Means for funding consideration.

Why it matters

Committee and witness testimony portrayed a widening gap between the state funding allocated specifically for high-cost special-education needs and the costs districts report incurring. Witnesses and ODE staff said the current high-cost set-aside and formula caps result in prorated reimbursements and that districts frequently use general-fund dollars to meet federally mandated services. Advocates said lifting the cap and increasing the high-cost fund would reduce reliance on local general funds and better align resources with student needs.

What happens next

Sponsors asked the Revenue Committee to approve the measures for referral to Ways and Means so that funding levels and possible offsets can be evaluated. Committee staff and members said the Revenue Committee's role is to validate formulas and produce revenue estimates and that actual additional funding decisions are made in Ways and Means. Committee members emphasized that changing the distribution formula without adding funds would change how the existing pot is divided among districts.