Committee reviews special-education costs, data gaps as state aid lags demand

A House Education Committee work session on special education on Oct. 12 focused on why certain special-education categories have grown while statewide enrollment has fallen, how the state reimburses districts for high-cost students and where data gaps hamper policymaking.

The discussion centered on two funding mechanisms: differentiated aid and what the department and many legislators described as the program often called "special education aid" (previously referred to in conversation as "catastrophic aid"). Committee members and Department of Education staff discussed a shrinking overall student population — roughly 210,000 in 2000 versus about 167,000 in 2023 — alongside roughly 32,000 students currently identified as eligible for special education services in New Hampshire.

The topic mattered to the committee because state aid for high-cost special-education cases has recently been prorated and fell short of district claims by millions of dollars in the current budget cycle. Committee members said the FY25 appropriation left a roughly $17 million gap and that proration levels have varied widely in past years. The department confirmed it has prorated claims historically and that the most recent proration rate is lower than in many recent years.

State special-education director Becky Fredette told the group that category shifts — for example, an increase in students coded as autistic and in the developmental-delay category — likely reflect changing diagnostic practices and earlier identification rather than a wholesale change in the number of students with disabilities. "Autism has definitely increased," Fredette said, adding that teachers and evaluators are identifying needs earlier and that some students formerly listed under speech or specific learning disability are now coded differently as understanding of disabilities evolves.

Fredette and other staff emphasized the limits of the department's current analytics. "We have all of the data. It's just we haven't had somebody who can analyze it and do that until until next Friday," she said, describing a recently hired data manager the department expects will help produce more detailed breakdowns of costs and placements.

Committee members repeatedly pressed for more granular information. The department collects student-level disability categories, secondary and tertiary disability entries, listed services, and placement settings in the New Hampshire special education information system; it also reports federal Indicator 5 data about time in regular versus special-education settings. But the department said it generally does not receive invoices or other claims for students whose annual special-education costs do not exceed the threshold that triggers state reimbursement, meaning it cannot directly observe the distribution of costs for the larger population of special-education students below the current aid threshold.

That threshold is tied to a local share and multiplier formula discussed at the workshop: districts report costs to the department and, once a student’s submitted costs pass the local cap (discussed in the meeting as roughly the 3.5-times multiplier and an approximate $70,000 threshold), the state’s aid mechanism applies. The department provided a preliminary breakdown showing about 800 students statewide who submitted claims that fell into higher-cost brackets; the department said those figures can be disaggregated further by district and dollar amount on request, with redaction for small counts.

Practical questions emerged about what counts as an allowable reimbursable cost. Fredette said district invoices are compared to students' IEPs: if a provider billed for three speech units a week but the IEP authorized two, the department will pay only for the two units documented in the IEP. Related costs such as provider travel can appear either embedded in a single hourly contract rate or as separate line items. The department pays what is submitted and deemed allowable; if travel is a separate line item on an invoice, department staff said, they do not currently pay that separate travel line.

Becky Wilson of the New Hampshire School Boards Association, a former special-education director, told the committee that districts are required to provide services identified in an IEP and that, when districts lack in-house providers, they must contract with external providers. Wilson said contracts vary: "Some contracts between districts may say we're gonna roll all of this contracted provider's costs into an hourly rate, and that's the hourly rate. Some contracts have travel expenses separated out from their hourly rate for direct services." She added that only the direct-service portion of such contracts is counted toward the aid cap unless a district specifically includes other costs in an invoice it submits for reimbursement.

Committee members and department staff identified several follow-up items. The department said it can: provide district-level dollar totals for submitted special-education aid claims (with small-cell redaction), analyze historical proration rates and trends, and attempt model scenarios for how lowering the reimbursement multiplier would affect state costs for the students already submitted to the system. The department said it lacks, however, the routine invoice-level data for students who do not cross the reimbursement threshold and therefore cannot directly model the full distribution of lower-cost cases without additional reporting from districts.

Legislators raised policy questions the workshop did not resolve: whether a different design (for example, an "insurance-like" approach mixing base adequacy funding and a separate, earlier-triggering state share for special education) might produce more predictable results; whether transportation and out-of-district placements — often major cost drivers — should be handled separately in any redesign; and whether the department should be resourced to audit or analyze district IEP and invoicing practices more intensively. The session closed with the committee requesting specific data extracts and modeling from the department to inform upcoming bills and budget work.

The committee did not take formal votes at the work session; members said additional briefings and a follow-up session will be scheduled before early March to consider legislative options based on the requested analyses.