‘Unacceptable’: School leaders express frustration at state and warn of rising tax bills to cover special education costs

The Hopkinton School Board met on November 19, 2024 to discuss recent news that it would receive a lower reimbursement rate on special education expenses than in recent years. JEREMY MARGOLIS—Monitor staff
Published: 11-24-2024 1:00 PM |
Hopkinton School Board members erupted in anger at the state Legislature over news delivered earlier this month that school districts would receive significantly less money to cover certain special education expenses than they are eligible to receive.
“This is absolutely bull what the state is doing,” school board member Norm Goupil said during a meeting last week. “It’s unacceptable.”
The object of Goupil’s ire is the state’s education funding system, particularly the part designed to protect districts from incurring expensive special education services costs. While this class of expenses has risen significantly in recent years – from $34.5 million in 2021-22 to $50.2 million last school year – the state has declined to increase the amount of money it sets aside to reimburse school districts, holding its appropriation at $33.9 million for the last three years.
Each year, the Department of Education releases a proration rate, which is the ratio of eligible district funds to available state funds. This year, in a surprise to some district administrators, that rate dropped 19 percentage points, from 87% to 67.5%, the lowest it’s been since at least 2017, according to data from the state Department of Education.
As a result, the Concord School District will receive $55,000 less than anticipated; in Bow, the difference is $122,000. (Hopkinton Superintendent Michael Flynn didn’t say how his district’s projection compared to the amount it will actually receive back.)
The effect of the lower reimbursement rate is simple, said Bow Assistant Superintendent Duane Ford: “We raise more in taxes.”
Special education reimbursements, formerly called “catastrophic aid,” account for the smallest portion of four forms of special education funding in New Hampshire. During the 2022-23 school year, they amounted to 3.7% of the $915 million spent on special education expenses statewide. Because the state has yet to compile state-level results for last school year, it is not currently clear how much that percentage will drop.
But any money not funded by the state is downshifted to local school districts, which are required by law to provide these services. In New Hampshire, special education is funded by four sources: the aforementioned reimbursements, federal government funding via the Individuals with Disabilities Education Act and Medicaid, lump sum payments for students that have Individualized Education Programs called IEPs, which is called adequacy aid, and local property taxes.
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In 2022-23, local property taxes accounted for 82.2% of all special education spending, adequacy aid accounted for 7.1%, federal money accounted for 7%, and reimbursements accounted for 3.7%, according to an analysis of data from the DOE.
Though the reimbursements are the smallest bucket of funding, the costs they are designed to cover can be the most crippling and unpredictable for school districts, especially small ones.
The reimbursements primarily cover out-of-district school placements, which can soar as high as $572,000, according to state data, and routinely reach six figures. Districts are eligible to receive reimbursements on expenses that exceed 3.5 times the statewide average cost per pupil, a threshold which was $71,130.50 last school year.
Because only 2.3% of students with IEPs and 0.5% of students overall have services that surpass that threshold, the effect of the lower reimbursement rate varies significantly by district and by year.
In Hopkinton, school board members said the proportional reduction in state appropriations was emblematic of the state’s school spending tensions broadly.
“We have a massive disconnect on the part of the state in terms of their role and responsibility in funding education, and it’s just infuriating,” Hopkinton board member Rob Nadeau said.
Jonathan Cohen, another board member, questioned the timing of the release of the proration rate, which was shared through a letter from Education Commissioner Frank Edelblut to school leaders last week.
“I think it’s interesting that the letter was sent out after voting ended,” Cohen said.
School administrators in Bow, Concord and Merrimack Valley predicted in interviews this week that their school boards will be asked to fund more special education costs in next year’s budget than they had this year, though none had any specific projections yet. Historically, about a quarter of school district budgets have been devoted to special education services. Last year, it was the biggest or second biggest driver of budget increases outside of salaries and benefits in most school districts.
The news about the limited funds comes as area school districts have already had to make adjustments related to special education during the first few months of this school year.
In October, the Concord School District reallocated $600,000 in spending to cover additional special education expenses, deferring the planned full payment on district transportation and HVAC bonds. The district had previously budgeted $28 million, or about a quarter of its $107.9 million budget, to special education expenses for this year.
At around the same time, the Merrimack Valley School Board voted to transfer $500,000 from its special education trust fund to cover unforeseen expenses, leaving the trust fund virtually empty. The district had previously budgeted nearly $9 million, or about 20% of its $48.3 million budget, to special education expenses for the year.
Merrimack Valley Superintendent Randy Wormald said the drop in state special education aid will cost the district hundreds of thousands of dollars more than anticipated.
“Those are dollars that matter and matter to taxpayers,” Wormald said in an interview. “It’s tough when that reimbursement isn’t there.”
Wormald said the Merrimack Valley school district recently hired a director of special services to explore how to stabilize special education expenses. He does not have a sense of what the 2025-26 budget will look like yet, but he said taxpayers should expect a warrant article to replenish the nearly-empty special education trust fund, which is designed to cover expenses that were not previously budgeted.
“I know we’re not alone,” Wormald. “I know this is a very widespread issue, and it certainly hits some districts more than others, but I think it’s going to be a problem continuing, between the out-of-district placements and transportation.”
Jeremy Margolis can be contacted at jmargolis@ cmonitor.com.