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Legislative staff: special‑education costs exceed earmarked revenues; districts rely on permissive levies
Summary
OPI staff told the commission that quantifiable earmarked special‑education revenues (IDEA, state allowable cost payment, permissive tuition levies) fall short of reported special‑education expenditures statewide; staff noted difficulty tracing general‑fund and other federal funds to specific SPED costs and suggested revisiting the disproportionate‑cost mechanism and major maintenance/tuition fund policies.
OPI staff walked commissioners through a revenue‑v‑expenditure review of special education funding in Montana.
Presenters showed revenues they could reliably isolate (federal IDEA, state special‑education allowable cost payments including instructional and related‑services block grants, and locally run permissive tuition levies) and compared those to statewide reported special‑education expenditures. The chart showed a clear gap: quantified revenues are substantially lower than expenditures, a difference staff attributed to general‑fund spending and other federal or local sources that are not earmarked specifically for special education and therefore were excluded from the revenue tally.
Staff explained that permissive tuition levies — local property‑tax levies districts may run to cover excess SPED costs — have grown considerably since 2013 and currently are a significant share of how districts meet high special‑education costs. They also summarized how the state’s disproportionate‑cost threshold and reimbursement rules have evolved (thresholds rising over time) and warned commissioners that the current accounting and reporting systems make it difficult to trace which general‑fund dollars are subsidizing SPED costs in practice.
Several commissioners asked whether the state should increase its allowable cost payment or rework the high‑cost/disproportionate‑cost pool to be more timely and visible. OPI staff suggested multiple options: (1) increase the state payment and adjust distribution ratios, (2) study alternative high‑cost pool designs used in other states, or (3) reconfigure how permissive tuition levies and transfers are treated in statewide reporting. Commissioners requested that staff investigate models from other states and present options — including moving high‑cost reimbursements into a dedicated appropriation line for better visibility — at the next meetings.
