IDEA is not "fully funded." In the IDEA legislation, Congress set a maximum target for the federal contribution to special education spending equal to 40 percent of the estimated excess cost of educating children with disabilities. Thus, if the program were "fully funded," the states would receive their maximum grants, calculated at 40 percent of the national average per pupil expenditure (APPE) times the number of children with disabilities served in the school year 2004-2005, adjusted for population changes. Under the act, the count of children with disabilities cannot exceed 12 percent of the state’s total school population.
For FY 2014, IDEA federal funding covered 16 percent of the estimated excess cost of educating children with disabilities, less than in FY 2008 when federal funding covered 17 percent of the cost and well below FY 2009 when additional funding through the American Recovery and Reinvestment Act covered 33 percent of the cost. IDEA Part B "full funding" for FY 2014 would have amounted to approximately $28.65 billion, or roughly $17.17 billion more than was actually appropriated. The shortfall in IDEA funding has been assumed by the states and local school districts.
Although IDEA is underfunded, it cannot properly be described as an "unfunded mandate" of the federal government. IDEA is a discretionary grant program in which states choose to participate. Though none currently opt out, states may forgo federal IDEA funds in order to avoid complying with IDEA’s due process requirements. In fact, New Mexico elected not to receive federal funds when the program was established in 1975. It finally decided to participate in 1984, but states continue to retain the "opt out" option.
The maximum amount that a state can reserve for administrative costs is the state’s FY 2004 maximum administration set-aside, or $800,000, whichever is greater. These numbers are adjusted for inflation each year. For "other state-level activities," after FY 2006 the maximum set-aside will be the maximum FY 2006 amount (up to 10 percent of the FY 2006 grant), adjusted by inflation each year.