Committee weighs lowering catastrophic special-education threshold, cites lack of data and proration risk

The Education Funding Committee spent the morning debating several bills that would change how the state shares the cost of high‑cost special‑education students and how the state budget would cover those claims.

The committee heard that the Department of Education lacks the student‑level information needed to forecast how many more students would become eligible for state reimbursement if the catastrophic threshold were lowered from 3.5 times the estimated average cost per pupil to 3.0 or 2.5. Lawmakers discussed options to hedge the state’s exposure, including changing the state’s percentage share and creating an Education Trust Fund warrant to avoid proration.

Why it matters: lowering the threshold for catastrophic aid would shift more of high special‑education costs to the state but could substantially increase the state’s liability and require more budgetary appropriations or changes to the funding mechanism. Committee members repeatedly warned that, without better data or transitional budget language, local districts or the state budget could face unpredictable costs and proration.

Mark Minganiello, identified as “of Bureau of School Finance” at the Department of Education, told the panel that the department only collects detailed claims data for students whose special‑education costs exceed the statutory reimbursement filing threshold. “Once you hit $70,000 in special education expenditures, you submit claims to this Bureau of Special Education for reimbursement. So we have data on any costs that are above 70,000 because you can get paid for it. Any cost below 70,000 wouldn't make its way to the Department of Education,” Minganiello said. He added, “But the basic answer is we don't know,” when asked whether the department can currently count how many students would fall into lower tiers such as 2.5× or 3.0× the average cost.

Committee members iterated several policy options discussed in public testimony: require districts to report per‑student special‑education costs (a voluntary survey was described), lower the catastrophic multiplier but reduce the state share for the new tier as a transition, or make catastrophic aid payable from the Education Trust Fund so that statutory state liability would not be subject to annual appropriation proration.

The panel and staff reviewed a quick modeling exercise offered by the Department of Education staff. Minganiello noted a baseline: about 800 students of roughly 31,000 with IEPs currently have per‑pupil special‑education costs above 3.5× the state average; those are the students that generate submitted claims above the $70,000 threshold. Representative Spilsbury asked whether that $70,000 threshold is how districts know to begin invoicing for reimbursement; Minganiello confirmed districts are alerted to that number in advance and local systems queue their invoicing accordingly.

Committee members also discussed budget mechanics and proration. The committee was told the statute sets a state's liability for catastrophic aid, but proration arises when appropriations fall short. The maker of budget modeling noted the state’s liability in current estimates is roughly $50 million while the current appropriation was near $34 million, producing a pro rata payment of approximately 68 percent this year. The governor’s budget proposal added $16 million, which would eliminate that specific shortfall if projections hold.

Lawmakers proposed bridging strategies: amend an early bill as a vehicle for the committee to act on March 4; add a transition tier funded at a lower state percentage (for example, 10 or 50 percent rather than 80 percent) so districts receive at least partial relief while the state collects better data; or grant the Department of Education authority to draw on the Education Trust Fund or an open warrant to cover any overflow so full statutory liability could be funded without proration.

Formal committee actions taken during the meeting included votes and next steps: - HB603: A motion to place HB603 on interim study/IPL passed (roll call recorded) with a unanimous roll call of committee members (18 yes, 0 no). The motion was made in executive session and seconded; committee discussion said the bill’s approach to a large increase in directed aid was not broadly supportable as drafted. - HB717 (catastrophic threshold change to 3.0×): The committee met in executive session and voted to recommend ITL (inexpedient to legislate) on HB717 (recorded roll call 18 yes, 0 no). Members cited lack of data to support a threshold drop at this time. - HB742 (draw catastrophic special‑education state aid from the Education Trust Fund): The committee voted to retain HB742 (18 yes, 0 no) so the committee can develop amended language that would adjust how catastrophic aid gets paid and consider open‑warrant language. - HB773 (proration mechanics): Committee leaders asked Representatives Spilsbury and Luno to draft amendment language and to bring it back; HB773 was not finalized and was scheduled for executive session on March 4 for a vote.

Committee members asked staff to pursue a short data‑collection effort with districts (voluntary survey) and directed a small group of representatives to draft an amendment that combines a lowered threshold or altered share with transitional funding language to protect districts from sudden unfunded liabilities. Several members explicitly cautioned against “leaping into the dark” without clearer counts of students in the cost bands between 2.5× and 3.5× the state average.

The committee did not adopt any permanent policy change at this meeting; members agreed to prepare and circulate amendment language before the March 4 executive session so the legislature can act with clearer draft statutory language and updated cost modeling.

Ending: The committee left the bills in play but took votes to table or retain vehicles so staff and a small group of lawmakers can prepare amendments that address both data collection and short‑term budget protections for local districts.