Dated March 17, 2005

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> OSEP 05-08

**[MEMORANDUM]{.underline}**

TO: State Directors of Special Education

FROM: Patricia J. Guard

Acting Director

Office of Special Education Programs

SUBJECT: Educational Expenses for Children in Private Residential
Facilities

As you may know, the number of children with disabilities in private
residential treatment programs continues to rise. For example, data
collected by the Office of Special Education Programs (OSEP) regarding
services under the Individuals with Disabilities Education Act (IDEA)
show that in the 2002-03 school year 21,673 eligible children received
special education and related services at public expense in those
facilities, compared to 15,941 children in the 1998-99 school year.[^1]
Such residential placements are often very expensive. In some cases, the
total annual cost for placement in a residential facility, including
room, board, therapies, and educational services, may exceed \$100,000
for a single child in a school year.

In meetings with representatives of the Youth Services Committee of the
National Association of Psychiatric Health Systems (NAPHS), these
representatives identified problems they periodically face when a new
child enters their facility \-- in determining the appropriate
educational agency responsible for providing (or paying for) special
education and related services, or for evaluating the child. Having this
information available at the outset is crucial to staff in residential
facilities, in order to ensure that service arrangements are effectively
established for the child with the responsible educational agency, and,
thus, that appropriate special education and related services are
provided to the child in a timely manner.

The statute and regulations for IDEA-Part B include a number of relevant
provisions that directly relate to the responsibilities of State
educational agencies (SEAs) and local educational agencies (LEAs) in
providing special education and related services to eligible children
who are placed in or referred to private residential facilities. We are
including with this memorandum a summary description of those key
provisions for your information and use (see [Attachment]{.underline}).

To the extent appropriate, we encourage you to share the attached
provisions with LEAs and other appropriate public agencies in your
State. We have also asked NAPHS to encourage its members \-- before
accepting a new child in their residential facilities \-- to communicate
with appropriate public educational officials about the child. Through
these efforts, written agreements can be developed in order to clarify
respective responsibilities regarding both financial matters and the
coordination or provision of services.

Establishing meaningful and effective communication "before the fact"
between personnel in all agencies and facilities that are involved with
a given child, including educational and non-educational public agencies
in the State (e.g., social service and social welfare agencies), if
applicable, as well as staff from private residential facilities, should
benefit all affected parties, but especially the children who have been
placed in or referred to those facilities.

If you have any questions or comments about this memorandum, please
contact your Part B State contact in OSEP, or the persons listed on page
one of this memorandum.

Attachment

cc: Chief State School Officers

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[Attachment]{.underline}

[Responsibilities for Serving Children with Disabilities in
Private]{.underline}

[Residential Facilities Under IDEA-Part B]{.underline}

The following is a description of the key provisions under Part B of the
Individuals with Disabilities Education Act (IDEA) [^2] regarding the
responsibilities of State and local education agencies and other public
agencies in providing for the education of children with disabilities
placed in or referred to private residential programs:

# Free Appropriate Public Education

Under Part B of the IDEA each State (through its State educational
agency (SEA)) must ensure that a free appropriate public education
(FAPE) is available to all eligible children with disabilities in
mandated age ranges residing in the State.[^3] FAPE is made available
through the local educational agencies (LEAs) and other public agencies
in the State, under the general supervision of the SEA. 20 U.S.C.
§§1402(8) and 1412(a)(l)(A); 34 CFR §§300.300 and 300.600.

If a public agency[^4] determines in an individual situation that an
eligible child cannot receive an appropriate education from the programs
that the public agency conducts, and, therefore, placement in a public
or private residential program is necessary in order to provide special
education and related services to the child, the program, including
non-medical care and room and board, must be at no cost to the parents
of the child. 34 CFR §300.302. In addition, each SEA must ensure that a
child with a disability who is placed in, or referred to, a private
school or facility by a public agency is provided special education and
related services in conformance with the child's individualized
education program (IEP), and with the standards that apply to education
provided by the SEA and LEAs (including the requirements of IDEA-Part
B). 20 U.S.C. §§1402(8) and 1412(a)(10)(B) and 34 CFR §300.401.

# Out of State Placements

For a child placed outside the State by an educational [or]{.underline}
non-educational State or local agency, the State initiating the
placement (i.e., the "**placing State**") is responsible for ensuring
that the child's IEP is developed and implemented. (Question 16,
Appendix A to Part 300).

It is the child's or parent's **residence** that defines "placing State"
and creates a State's duty under the Act and regulations,
[not]{.underline} the location of the school or facility in the State
where the child has been placed. As traditionally interpreted by the
Department, a child is a resident of the State in which (1) the parent
or guardian legally resides, or (2) the child is a ward of the
State.[^5] Where State law specifically addresses residency, such
provisions would apply.

# Determining Local Residence

Determining the specific school district or LEA in a State that is
responsible for the cost of a residential placement is a matter of State
law, policy or practice. (Question 16, Appendix A to Part 300). Although
the IDEA does not address which LEA in a State is responsible for the
cost of a placement under Part B, the SEA must exercise general
supervision over [all]{.underline} educational programs for children
with disabilities residing in the State, and has ultimate responsibility
for ensuring the availability of FAPE to these children. 34 CFR
§300.600. Therefore, if there is a question regarding which LEA is
responsible for the cost of a placement, the SEA is responsible for
ensuring that the issue is resolved.

# Determining Covered Services

Under the IDEA, the term related services means transportation and such
developmental, corrective, and other supportive services as are required
to assist a child with a disability to benefit from special education,
and includes, among other things, counseling services; psychological
services; therapeutic recreation services; school health services; and
medical services for diagnostic or evaluation purposes (i.e., provided
by a licensed physician to determine a child\'s medically related
disability that results in the child\'s need for special education and
related services). Two Supreme Court decisions have set out the proper
analysis for determining whether certain services that are medically
related fall under the definition of related services in the IDEA.
*See*, [Irving Indep. Sch. Dist. v. Tatro]{.underline}, 468 US 883
(1983) and [Cedar Rapids Comm. Sch. Dist. v. Garrett]{.underline}, 526
US 66 (1999).

The determination of whether a child requires therapeutic and
habilitation services, including the therapeutic and habilitation
components of a residential treatment program, as related services under
the IDEA is made on an individual basis by the child\'s IEP team.

In situations where the IEP team determines that the child\'s
educational needs are inseparable from the child\'s other needs or the
child is determined, on an individual basis, to require the therapeutic
and habilitation components of a residential program in order to receive
a free appropriate public education, in general, these services would be
considered to be related services under the IDEA. In such cases, the SEA
is responsible for ensuring that the entire cost of the special
education and related services provided at the residential placement,
including the therapeutic and habilitation services, as well as room and
board, is provided without cost to the parents. (*See,* 34 CFR §300.302
and the discussion of financial arrangements in Item E, below.)

If, on the other hand, the IEP team determines that the child\'s
therapeutic and habilitation services needs are separate and distinct
from the child\'s educational needs, and the therapeutic and
habilitation components of the residential placement are not required in
order for the child to receive a free appropriate public education, the
responsibility of the SEA, LEA, or other public agency is limited only
to the special education and related services listed on the child\'s
IEP.

# Paying for FAPE---Methods of Ensuring Services

Each State may use whatever State, local, Federal, and private sources
of support are available in the State to cover the cost of serving an
eligible child who is publicly-placed in a residential program. However,
the State must ensure that there is no delay in implementing a child's
IEP, including any case in which the payment source for providing or
paying for special education and related services is being determined.
34 CFR §300.301(a) and (c).

Questions regarding which public agency is responsible for the cost of a
placement are to be addressed under the provisions of 34 CFR §300.142.
Under those requirements, the SEA must ensure that an interagency
agreement or other mechanism for interagency coordination is in effect
between the SEA and each non-educational public agency that is otherwise
obligated under Federal or State law to provide or pay for any special
education and related services necessary for ensuring FAPE to children
with disabilities within the State. 34 CFR §300.142(a).

If a public agency other than an educational agency fails to provide or
pay for these special education and related services, the LEA (or State
agency responsible for developing the child's IEP) must provide or pay
for these services in a timely manner. The LEA or State agency may then
claim reimbursement for the services from the non-educational public
agency that failed to provide or pay for those services, and that agency
must reimburse the LEA or State agency in accordance with the terms of
the interagency agreement or other mechanism. 34 CFR §300.142(b)(2).

[^1]: ^†^ This number includes children with disabilities who lived in
    private residential facilities during the school week, and received
    special education and related services for greater than 50 percent
    of the school day.

[^2]: Please note that statutory and regulatory citations are to the
    IDEA\`97 and its 1999 implementing regulations. The Individuals with
    Disabilities Education Improvement Act of 2004, which takes effect
    July 1, 2005, contains similar provisions, but some citations may be
    different.

[^3]: Children whose parents have placed them in a private school or
    facility even though FAPE was available are an exception to this
    rule.

[^4]: The term "public agency" includes the SEA, local educational
    agencies (LEAs), and any other political subdivisions of the State
    that are responsible for providing education to children with
    disabilities. 34 CFR §300.22.

[^5]: Although additional provisions apply in order to ensure that an
    impartial person acts on behalf of the child when he or she is a
    ward of the State, that child retains all rights under the IDEA.
    *See*, 20 U.S.C. §1415(b)(2); and 34 CFR §§300.20 and 300.515.