Concord — The legislative commission to study special-education costs spent its most recent meeting probing how Education Freedom Accounts (EFA) identify students with disabling conditions, how EFA differentiated aid is spent, and which cost drivers are pushing local school budgets upward.

Chair Rick Ladd opened the session by reminding members of the commission's statutory mandate in SB 57 and the July 1, 2026 deadline for findings. The panel heard presentations from Matt Southerton, director of policy and compliance for the Children's Scholarship Fund (CSF), and Rebecca (Becky) Ferdette and staff from the Department of Education's special-education finance bureau.

Southerton told the commission CSF, the state contractor that administers EFAs, uses two pathways to qualify a child for differentiated aid: verification from a public-school evaluation or IEP, or a Medical Certification of Disability (MCD) signed by a medical professional. "We would accept the determination by a medical professional licensed to practice in any state," Southerton said, describing CSF's STU 16/19 policies for accepting documentation and noting adjudicators ask for additional materials when needed to evaluate allowable expenses.

Several commission members expressed concern about the relative rigor of the two pathways. "ED 1107.04 has absolutely very little to do with EFAs," said Dr. Jennifer Dolliff, a longtime special-education administrator. She warned that the MCD pathway is less rigorous than the school-district IEP process and said state numbers may be inflated as a result. Dolliff asked DOE and CSF to separate counts of students who qualify through district documentation from those identified solely by MCDs.

Southerton and panelists gave preliminary counts appearing on committee handouts: about 890 EFA recipients are recorded with disabling conditions, roughly 240 have documentation tied to an IEP or district evaluation, and "over 600" are identified through the MCD pathway. Southerton confirmed families must requalify each year and that CSF requires a signed, credentialed document for MCDs. "We say in our parent agreement that you have to use your insurance," he added when asked whether families must exhaust insurance before EFA funds pay for services.

Members asked whether differentiated aid—identified in handouts as roughly $2,000,000 for disabling conditions—must be spent only on disability-related items. Southerton and Chair Ladd said differentiated aid to school districts is non-targeted; parents who receive EFA funds may spend on allowable EFA items, including tuition at private schools. "There's no requirement" that parents spend the differentiated portion on items strictly tied to a disabling condition, Southerton said, though CSF reviews purchases for EFA allowability.

The committee also reviewed administration and oversight. Southerton said the CSF nonprofit typically runs under the 10% statutory administrative cap but operates at about 7.9% and returns excess funds to scholarship recipients. He said CSF is audited annually and posts its 990 publicly.

DOE staff described the DOE 25 district reporting form as the primary source for detailed special-education spending by district and cost category (wages, benefits, contracted services, transportation, supplies). "Each district has to submit one," said Zach Jacques, office administrator for finance and data in the Bureau of Special Education, and the reports are publicly accessible. DOE staff agreed to extract district-level DOE 25 data on special-education cost categories for the commission to use in pricing and trend analysis.

Transportation and contracted-service costs drew particular attention as rapidly rising cost centers. Members shared vendor invoice examples showing wide variability—daily charges ranging from about $124 to more than $600 or flat monthly contracts exceeding $7,000—driven by a limited vendor market, long routes, specialized vehicles and prevailing staffing shortages. "If you do that, you might be denying FAPE," one district official said, describing pressure to procure expensive contracted services to meet students' needs.

Commissioners also discussed a bill-labor-scheduling request (LSR) under consideration that would change the catastrophic-aid threshold (the committee discussed lowering the local cap from roughly $70,000 to $60,000 and also referenced a $160,000 cap used in other states' models). Using current-year submissions (about $133 million of invoiced special-education costs and 894 students submitted for catastrophic review), DOE's modeling shows the change could shift roughly $4 million in costs from the state back to local districts for the students currently in the data set; DOE cautioned the estimate does not account for behavioral changes or additional students that could be added under new rules.

DOE staff said they are building a new student information/finance system (NSS2 / NESIS work) that can capture richer IEP, trip and financial data and could be built to exchange data with DHHS Medicaid-to-Schools billing if state agencies agree, but the finance portion is not yet implemented and timelines have slipped into 2026–2027 to ensure requirements are correct.

Chair Ladd asked members to submit policy ideas and priorities by email, requested DOE produce district-level DOE 25 extracts and counts of residential/out-of-district placements, and directed staff to return with updated analyses at the next meeting, with potential dates discussed in mid-December. No formal legislative votes were taken on policy proposals during the session.

What comes next: the commission asked DOE for district-level cost breakdowns (DOE 25 supplemental sections), counts of students in residential/out-of-state placements, and details on which students currently trigger catastrophic aid. Those data will inform whether to recommend changes to the catastrophic-aid threshold, creation of in-state residential capacity, or other interventions to constrain costs while preserving services required by IDEA.