State and Local Funding

In general, state contributions to special education spending have not kept pace with escalating special education expenditures. In 1987, state funding accounted for 56 percent of special education spending and local funding accounted for only 36 percent.[1] In 1999-2000, the average state share of special education spending had dropped to 45 percent, and the average local contribution had risen to 46 percent, based on data from 39 states.[2]

Local school districts have had trouble covering such a high percentage of the $50 billion spent on special education services. Heavily impacted districts with a disproportionate number of high-need, high-cost disabled students struggle the most, particularly if the district is small or rural. Of all disabled students, approximately one-half of one percent, or around 330,000 students, require more than $100,000 in special education services per year. Given that federal and state funding formulas do not take the distribution of high-cost disabilities into account, districts with concentrations of these high-need students have much more substantial spending obligations.

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The 2004 reauthorization of IDEA tried to alleviate the local fiscal strains associated with IDEA by allowing states to reserve 10 percent of their Part B "other state activities" funds (around 1 to 1.05 percent of the total grant) for "risk pools," or pools of funding specifically set aside for the services of high-need children. States can distribute funding from these risk pools to districts with high-cost students. In addition, some states have created their own "extraordinary cost" accounts with state funding to provide additional support to heavily impacted districts, although funding of those accounts is unsteady and often cut or eliminated in the case of a budget shortfall.


  1. See "Patterns in special education service delivery and cost," (M. T. Moore, E. W. Strang, M. Schwartz, & M. Braddock, 1988)

  2. There is wide variation in state and local support, with the state contribution ranging from 3 percent in Oklahoma to 90 percent in Wyoming, and the local contribution ranging from 0 percent in Wyoming to 80 percent in Arizona.