Bill would require districts to report actual special-education spending and shift most costs to state
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Summary
Rep. Alicia Gregg told committee HB 18-35 would require school districts to report actual special-education spending to the state and would reimburse districts for 80% of eligible costs; department analysts estimated large fiscal impacts and committee members asked for phased or targeted approaches.
Representative Alicia Gregg introduced HB 18-35 as an attempt to close a statewide funding gap for special education. Gregg told the committee that current state differentiated aid covers only a small share of special-education costs and cited a per-pupil funding shortfall; her bill would require districts to submit actual special-education spending and would provide 80% reimbursement on a quarterly basis.
Expert witnesses and department staff told the committee the fiscal implications are substantial. Andrew Balinski, who previously served as lead counsel in the Claremont school-funding litigation, described the cash-flow and planning problems districts face when high-cost placements materialize midyear. Department of Education staff presented high-level fiscal estimates: special-education spending by districts exceeded $1.0 billion for FY25, and an 80% reimbursement scheme would imply hundreds of millions in state-level fiscal exposure (the department's high-level estimate indicated a net FY27 impact in the high hundreds of millions after accounting for existing aid streams and federal sources).
Committee members recommended focusing on the highest-cost cases as a potential starting point and asked for more granular numbers for residential and out-of-district placements. Several members also argued for subcommittee work to refine timing, documentation and invoice-processing details before altering the funding formula. The department indicated invoices could be processed under an adapted schedule, but acknowledged operational and staffing needs for large-scale quarterly reimbursement.
The committee did not take action on final language; members asked the Department and affected districts for follow-up data, including the cost of exclusively out-of-district/residential placements and operational requirements to implement invoice-driven reimbursement.
