Released: 6/30/2009
Author(s): Brian J. Gottlob
Parents of students with disabilities face perhaps the greatest challenges in finding the best education for their child. Any student identified as needing special education is guaranteed to receive a “free and appropriate public education” under federal law. However, decisions about what services each student will receive are largely in the hands of schools. Because the expense of educating special needs children exceeds the state and federal aid that is typically available, school districts often look to minimize the level of services provided. Often, neither the providers nor users of the special education system in public schools are satisfied with these services.
A special needs scholarship program funded by a tax credit would provide a desirable alternative for special education students enrolled in public schools that are not meeting their needs. By allowing parents to use a portion of the public funding associated with their child’s education at a private school of their choice, parents would be able to place their child in the best setting for their unique educational needs.
Our analysis examines the demographics of the special needs population in public and private schools in Oklahoma and estimates the impact on school enrollments providing tax credit funded scholarship grants for special needs students. We develop a model that shows how the expenditures of Oklahoma’s school districts vary with enrollment changes for both regular and special needs children, and show the state and local fiscal impacts of a special needs tuition tax credit program.
Key findings include:
- Over 96,000 public school children in Oklahoma require an Individualized Education Program (IEP). IEP’s are required by law to meet the educational needs of children with special requirements in Oklahoma’s public and private schools.
- About 60 percent of Oklahoma’s special needs children qualify for the federal free and reduced lunch program.
- On average, local school districts spend in excess of $5,000 more per student with an IEP than they do for a child without an IEP, although there is tremendous variation depending on the severity of a child’s disability. On average, the addition or loss of a student with an IEP changes local school district expenditures (variable expenditures, not including fixed expenditures2) by $10,169, compared to expenditures of $4,388 for a student without an IEP.
- Oklahoma provides about $3,479 per pupil in “foundation” aid based on enrollment levels to students without special needs. The average amount of aid for each special needs student is about $5,113.
- Local school districts receive about $1,600 more in state education aid and $2,931 from all levels of government, on average, for each special needs student, while their expenditures are higher by an average of $5,781 (higher for smaller school districts and lower for larger districts). As a result, local school districts receive a fiscal benefit and the per pupil resources available to remaining students is increased when special needs students leave a school district.
- We estimate demand for special needs tax credit scholarships among all special needs students in Oklahoma’s public schools will be:
- 3,443 for scholarships valued at $5,000 or about 3.6% of special needs students in Oklahoma’s public schools.
- 6,886 (7.1% of special needs students) at a scholarship value of $10,000.
- 10,329 (10.7% of special needs students) for $15,000 scholarships.
- One-half (50.5%) of the demand for special needs scholarships will come from children who are eligible for the federal free and reduced lunch program.
- The State of Oklahoma receives a net fiscal benefit for a special needs scholarship program with values of $5,000, but experiences net losses at scholarship values of $10,000 and $15,000. Much of the net fiscal loss for the state can be offset by adjusting aspects of the tax credit mechanism, and by adjustments in other program features.
- Local school districts always receive a substantial fiscal benefit from a special needs scholarship program, and as long as the value of special needs scholarships is less than $15,000, the total net fiscal impacts on state and local government will be positive. Although they lose some state education aid, they retain local and much of the federal aid associated with special needs students.
