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Osseo board hears that special‑education costs outpace state, federal funding; billing growth could help
Summary
District staff told the Osseo Public School District school board that average IEP costs exceed state and federal aid, producing a general‑fund 'cross subsidy' and that expanding Medicaid/third‑party billing and a new staffing task force are key tactics to close gaps.
Superintendent Kim Heil and district directors presented a detailed review of special‑education financing at the Osseo Public School District work session on March 10, saying the district covers a substantial portion of mandated services from its general fund.
Assistant superintendent Brian Bass opened the session’s funding overview and Sunny Burstein, director of student services, walked the board through revenue sources, staffing needs and enrollment trends. "While special education generates additional revenue, it does not fully cover the cost of services," Burstein said, and explained that state aid is reimbursement‑based and subject to a maintenance‑of‑effort requirement.
Burstein gave the district’s current average cost to educate a student with an IEP as $19,221, noting roughly $13,500 of that comes from state special‑education aid and the remainder is covered by the district general fund. She described that remainder as a cross subsidy the general fund must bridge to meet legal obligations. The presentation also said federal special‑education funding represents only a small portion of the district’s special‑education revenue (about 5.8 percent) and is allocated by child count and poverty indicators.
To reduce the local gap, the district plans to increase third‑party (Medicaid) billing and add administrative capacity to do so. Burstein said the district brought in "just over $1,000,000" last year from third‑party billing and that outside advisors estimate the district could grow that to about $3,500,000 annually if systems are maximized. The board heard that the district would create a dedicated billing position whose salary would be funded by projected additional revenue.
Presenters warned of state‑level risks: a Minnesota Blue Ribbon Task Force created under 2025 legislation is considering how to reduce special‑education spending by $250,000,000 statewide; Burstein said the district is monitoring potential effects and that the task force has until Oct. 1 to issue final recommendations. She also noted special‑education transportation aid has declined (from historically 100 percent to 95 percent this year and an anticipated 90 percent next year), which would shift more cost to local budgets.
Board members pressed for details on the billing growth assumptions and whether new revenue would relieve campus staff. Burstein described a conservative ramp (an initial roughly 25 percent increase while the position is established, with larger gains expected later) and said some newly billable services (social work) should provide new revenue but are not a direct substitute for clinical staff capacity.
The presentation closed by linking funding to staffing: the district will form a SEEDS task force to produce an enrollment‑driven staffing formula that accounts for disability categories and federal settings, and the board’s recent strategic investment was described as closing several staffing gaps more quickly than prior ad hoc hires. The board did not take formal action at the work session; presenters committed to follow‑up materials and to continue monitoring state policy developments.
