ODE tells House committee state school fund, caps and grants leave hundreds of millions unfunded for special education

The House Education Committee held an informational meeting Feb. 12 on special education funding shortfalls. Cara Williams, Director of Inclusive Services at the Oregon Department of Education (ODE), and Michael (Mike) Wilfong, administrator for school finance and facilities at ODE, told the committee that current funding formulas, caps and grant levels leave a significant portion of special education costs unfunded and borne by local districts.

ODE summarized three core components of state funding for special education: the second weight (commonly called the IEP weight and historically capped at 11 percent), the cap waiver mechanism, and the high‑cost disability grant. Wilfong said current calculations for the 2022–23 school year show roughly 79,000 identified special education weights statewide; an 11 percent cap would recognize about 59,500 weights in the state school fund, leaving roughly 19,500 weights unfunded. Under the department’s cap waiver formula the state identified about 7,000 additional weights, but the testimony characterized a remaining unfunded portion in the range of roughly 12,000 weights (numbers presented by ODE during the hearing).

ODE’s fiscal picture and estimates Wilfong described historical and formula work by a task force that recommended a funding formula for regional inclusive services and a funding target of approximately $122,400,000 for the 2025–27 biennium. ODE’s current service level (CSL) calculation for the same program was described as roughly $69,300,000 for the 2025 biennium; Williams said that difference (about $53,200,000) is why the department continues to request additional resources. For early intervention and early childhood special education ODE reported an Adequate Service Level (ASL) recommendation of $432,800,000.

Wilfong walked members through how per‑weight revenues are generated and how district spending compares to state revenues. He said the state school fund contributions for the three components (IEP weight, cap waiver, high‑cost disability) generate roughly $696,000,000 annually, while district and ESD spending for special education totals about $1,100,000,000 — leaving a reported annual gap of about $376,000,000 (roughly $750,000,000 on a biennial basis) that districts must cover from other local general fund resources.

High‑cost disability grant and reimbursement rates The high‑cost disability grant is intended to reimburse districts for exceptionally expensive individual students. Williams and Wilfong said the grant’s eligibility threshold was raised historically from $25,000 to $30,000 and that the annual appropriation for the grant is currently $55,000,000. ODE reported about 5,600 students meet the program’s eligibility in a typical year and that the grant pays a prorated share; Wilfong described how the program’s reimbursement rate (the share of eligible expenses the grant covers statewide after reconciliation) has varied over time and has fallen as low as about 30 percent in some years. He warned that small and rural districts in particular can be unable to absorb large, unanticipated high‑cost students.

Questions from committee members Committee members asked how eligibility is determined, whether districts follow uniform standards, and whether the 11 percent cap was originally intended to limit over‑identification. ODE witnesses said eligibility determinations are made locally under the Individuals with Disabilities Education Act processes (IDEA) with standard federal criteria, but implementation and paperwork happen at district and ESD levels. Wilfong said the cap was adopted in the early 1990s when statewide IEP rates were roughly 11 percent and that the cap has remained unchanged even as the statewide IEP rate has risen toward 14–15 percent. Members pressed ODE on risks and tradeoffs of raising the cap without additional funding; Wilfong said raising a cap without adding revenue would “thin the soup” — lowering the dollar amount per weight — and could jeopardize the state’s maintenance‑of‑effort calculations for federal funding.

Policy choices and tradeoffs Witnesses outlined options presented to the department and legislature: raise the cap to 13–15 percent (15 percent is the national average cited in testimony), increase direct appropriations to special education programs (CSL/ASL), and increase the high‑cost grant. Wilfong and Williams said an incremental approach that aligns cap changes with available funding would reduce the risk of reducing per‑weight dollars and causing winners and losers among districts. Committee members asked for district‑level modeling to show how 15 percent or other scenarios would affect districts with high concentrations of special education students.

Ending The committee did not take formal action; members were briefed on related upcoming hearings and bills (House bills on early intervention, the high‑cost disability fund and proposals to adjust or lift the cap). ODE staff said they will continue to provide data and models as lawmakers consider tradeoffs between cap changes and new appropriations.