ED 391 272

AUTHOR

TITLE

INSTITUTION

SPONS AGENCY

PUB DATE

CONTRACT

NOTE

PUB TYPE

EDRS PRICE

DESCRIPTORS

IDENTIFIERS

ABSTRACT

DOCUMENT RESUME

EC 304 521

Montgomery, Deborah L.

The Impact uf the Kentucky Education Reform Act on

Special Education Programs and Services: Perceptions

of Special Education Directors. State Analysis

Series.

American Institutes for Research in the Behavioral

Sciences, Palo Alto, CA. Center for Special Education

Finance.

Special Education Programs (ED/OSERS), Washington,

DC.

Dec 95

H159G20002

32p.; For a related paper, see ED 381 931.

Reports Evaluative/Feasibility (142)

MF01/PCO2 Plus Postage.

Administrator Attitudes; *Disabilities; *Educational

Finance; Elementary Secondary Education; Expenditure

per Student; Expenditures; *Financial Policy; Income;

Regular and Special Education Relationship; Resource

Allocation; *Special Education; *State Legislation;

State School District Relationship; State

Standards

*Funding Formulas; Kentucky; *Kentucky Education

Reform Act 1990

This paper describes the views of special education

directors in 17 Kentucky school districts concerning effects of a

1990 law, the Kentucky Education Reform Act (KERA), which called for

systemwide change in education and instituted a finance system,

Support Education Excellence in Kentucky (SEEK), which uses a pupil

weighting system. The study addressed cost questions comparing

statewide expenditures with revenues generated for special education

services, analyzing special education expenditures and revenues by

types of school district, and comparing the three pupil weights used

under KERA with actual costs of serving various categories of

students. Overall, interviewees viewed the SEEK funding system as an

improvement over the previous funding mechanism and approved the

greater flexibility resulting from the blending of special and

regular education funds. Directors also identified concerns with the

new system, including insufficient state and federal funds to support

appropriate placements, related services, staff development,

materials, transportation, and facility modifications. Continuing

issues of concern also included the burden of paperwork, mandated

caps on class size, regulations governing the use of technology

funds, and reimbursement for transportation. Policies encouraging

incusion were seen as having contributed to better use of special

education resources and personnel but also have resulted in increased

needs for instructional support and related service personnel, staff

development, building modifications, and materials, equipment, and

transportation funds. An appendix explains the SEEK formula. (DB)
A it

111111111.__

U S DEPARTMENT OF EDUCATION Office of Educatmnal Research and Improvement EDUCATIONAL RESOURCES INFORMATION

CENTER (ERICI

/4 This document haS been reproduced as

received from the person or organization

onginating it

Minor changes save been made to improve

reproduction duahty

Points of view or opinions stated in this docu

ment do not necessarily represent official

OEM position or pohcy

State

Analysis Series

The Impact of the Kentucky Education

Reform Act on Special Education

I Programs and Services:

Perceptions of Special Education Directors

. a, , Deborah L. Montgomery

December 1995

CSE

Center for Special Education Finance

2 BEST COPY AVAILABLE
I State

Analysis Series

_

The Impact of the Kentucky Education

Reform Act on Special Education

Programs and Services:

Perceptions of Special Education Directors

Deborah L. Montgomery

December 1995

AMERICN INS1ITUTES FOR RESEARCH

The Center for Special Education Finance (CSEF) is part of the John C.

Flanagan Research Center at the American Institutes for Research (AIR),

l'alo Alto, California.

I he Center tor Special Education Finance (CSEF) is supported through a cooperative

agreement with the U.S. Department of Education, Office of Special Education Programs

(H I 5( i20002). Points of view or opinions expressed in this paper do not necessarily represent

the offkial agency positions ot the U.S. Department ot Education or our network of advisors

and professional organizations.
The Center for Special Education Finance (CSEF) was established in October

1992 to address a comprehensive set of fiscal issues related to the delivery and

support of special education services to children throughout the U.S. The

Center's mission is to provide information needed by policymakers to make

informed decisions regarding the provision of services to children with disabilities, and to provide opportunities for information sharing regarding

critical fiscal policy issues.

CSEF Staff

Jay Chambers, Co-director

Thomas Parrish, Co-director

Ixtlac Dueñas

Christine Hikido

Brian Hilton

Deborah Montgomery

Viviane Schaller

Robert Vergun

Ann Win

Jean Wolman

OSEP Project Officers

Scott Brown

Lou Danielson

Advisory Board

B. Joseph Ballard, Council for

Exceptional Children

Stephen Chaikind, Gallaudet

University

Robert Feir, Pennsylvania 2000

Martha Fields, National

Association of State Directors

of Special Education

John Heskett, Missouri

Department of Education

For Information

Center for Special Education Finance (CSEF)

American Institutes for Research

1791 Arastradero Road

P.O. Box 1113

Palo Alto, CA 94302

Phone: 415/493-3550

Fax: 415/858-0958

e-mail: CSEFaAlR-CA.ORG

Margaret McLaughlin,

Institute for the Study of

Exceptional Children and Youth

Celane McWhorter, United

Cerebral Palsy

Trina Osher, Con:ultant

Virginia Roach, National

Association of State Boards

of Education

Robert Van Dyke, Council

of Administrators of Special

Education

Edward (Lee) Vargas, Santa

Ana Unified School District
Acknowledgments

Staff at the Center for Special Education Finance (CSEF) wish to express gratitude

to a number of individuals who contributed to the completion of the Kentucky

finance study. First, and foremost, our sincere appreciation goes to Kyna Koch,

Kenneth War lick, Robert Kennoy, Sally Nes ler, and Chris Thacker of thi

Kentucky Department of Education, who were always eager to provide

information and accommodate our requests. We would also like to thank the

state data programmers, Kentucky Regional Representatives, and members of the

Project Steering Committee for their assistance and consultation on many aspects

of this study.

We thank the many teachers, principals, instructional aides, and district

administrators for their cooperation and participation in our data collection

effort. We particularly appreciate the contributions of the 17 district directors of

special education whose perspectives regarding the impact of the Kentucky

Education Reform Act (KERA) provided the basis for this paper.

We also wish to acknowledge the contributions of several CSEF staff who

contributed to this paper: Jay Chambers and Ixtlac Duefias, who co-authored UAL,

final report from which this paper was drawn; Jean Wolman, who provided

editorial and coordination support; Viviane Schaller, who provided production

support; and Debra Naeve, for the cover design and photographs of students in

the San Jose Unified School District in San Jose, California. Appreciation goes

disc) tl) several American Institutes for Research (AIR) colleaguesPhyllis

DuBois, Mette Huberman, and Jeanette Wheelerwho interviewed district

special education directors in Kentucky.
=4:

Contents

Background and Purpose 1 Study on the Impact of KERA 1

Study sample 2

Cost study 2

Impact on special education programs and services 3

Special Education Funding Under KERA 3

Perspectives on the Special Education Funding

System Under KERA 5

Major Strengths of the System 5

Major Concerns about the System 6

Incentives and Disincentives Associated with the System 8

Identification and classification 8

Placements 9

Services 10

Impact on Regular Education 1 I

lII. Recommendations for Change 13

Personnel 13

Staff Devel(Tment 14

Facilities

Transportation 16

Materials and Equipment .. 16
IV. Summary 19

References 23

Appendix - Kentucky Funding System Under KERA A-1

Table

Table 1. Description of district sample 2
I. Background and Purpose

In 1989, the Kentucky Supreme Court declared that the state's public elementary

and secondary educational system was unconstitutional. The state's educational

system was characterized as providing an inequitable and inadequate level of

resources for serving all children in the state. In response to this declaration, the

General Assembly enacted House Bill 940, also known as the Kentucky Education Reform Act (KERA), in 1990. This reform bill called for a systemwide

change in education that focused on areas of curriculum, governance, and

finance.

As a result of House Bill 940, the General Assembly entirely changed the general

school finance structure because it had ... no alternative but to increase overall

funding as well as to eliminate disparities in revenues among school districts"

(Executive Editor, 1989, p. 134). The resulting finance system, known as the

Support Education Excellence in Kentucky (SEEK) Program, essentially changed

the funding mechanism for special education from a unit-based formula to a

pupil weighting system, described later in this paper.

This paper briefly describes the special education system under KERA and

summarizes the findings from the study related to the impact of KERA on special

education programs and services, as perceived by district special education

directors.

Study on the Impact of KERA

In conjunction with the enactment of KERA, the Kentucky State Legislature

mandated a stud y td wview the new approach to funding special education and

to provide information to the Kentucky State Board of Education that would help

them develop recommendations for making any necessary revisions to the

Impart of KrRA on Programs and Scronces
I. Background and Purpose

funding mechanism for special education. As a result, the Kentucky Department

of Education, Divisions of Finance and Exceptional Children Services, contracted

with the Center for Special Education Finance (CSEF) at the American Institutes

for Research (AIR) to conduct this study during the 1993-94 school year.'

Study Sample

Although much of the data for this study came from statewide databases

provided to CSEF, selected data, as well as the interview data presented in this

paper. came from a stratified random sample of 17 Kentucky school districts.

These districts were stratified by size and special education identification rates,

and were selected with a probability proportional to total enrollment (i.e., larger

districts had a greater chance of being selected). Table 1 describes the dis;Tict

sample and defines the sampling strata used.

Table 1

Desciption of district sample

District Characteristics Number of

Number of Special education districts in

studeitts enrolled identification rate sample

Largest strata

Large strata

Small strata

Smallest strata

High incidence strata

> 10,000

5,001 - 10,000

1,000 - 5,000

< 1,000

< 5,000

3

3

Total 17 Cost Study

The Kentucky study primarily addressed cost questions related to (a) how

statewide expenditures compare with the revenues generated for special

education services; (b) how special education expenditures compare with

revenues in individual districts or types of districts; and (c) how the three pupil

weights used under KERA compare with the actual costs of serving various

categories of students.

Readers interested in a more detailet I description of the sample, data collection, analytical procedures,

aild results of this studY rrlaV request the 11111 report, Special Education Weight Project for the State ot

Kentucky (Chambers, Duefias, Monlgtumerv, Parrish, 1494) from the Center tor Special Education

Finance (CSEF) at the American Institutes tor Rewarch (AIR) in Palo Alto, California.

2 Impact of KERA on Programs mid Scrrn .cs
I. Background andlLmoss.

The results of the cost study showed that expenditures on special education are

approximately equal to revenues for the state as a whole. However, individual

districts vary considerably in the extent to which expenditures match revenues.

On average, revenues generated by the KERA weights approximate the cost of

services, but there is a considerable variation within the categories of students

covered by each of the three pupil weights currently being used.'

Impact on special education progra-ns and services

In addition to compiling and analyzing objective data related to the cost issues

described above, the study sought more qualitative information on the perceived

impact of the new funding system on special education programs and services.

To this end, senior researchers at CSEF conducted in-depth telephone interviews

with special education directors from the 17 districts in the study sample. The

directors shared their perceptions regarding the primary strengths and

weaknesses of the new funding system, the incentives and disincentives the

funding system provides, and the impact the system has had on regular

education programs and services. In addition, they offered recommendations for

changing the funding system to better meet their districts' needs in the areas of

personnel, facilities, staff development, transp ortation, and materials and

equipment.

Special Education Funding Under KERA

fhe SEEK funding system implemented under KERA is a foundation type

* program that establishes a basic allocation for each child being served. SEEK

comprises three distinct, but closely related components: Adjusted Base

Guarantee, Tier I, and Tier II. It establishes a guaranteed amount of aid per pupil

and uses a measure of district wealth or fiscal capacity to adjust state aid

allocations in inverse proportion to the district's ability to pay (O'Reilly, 1993'

Through Tiers I and II, the formula allows for "local leeway," which allows

districts to tax themselves above the mandated tax rate.

Each district's basic allocation is adjusted bv a series of pupil weights to reflect

ihe added cost of serving certain special student populations including

These results are based on analysis of statewide databases in combination with data collected from a

stratified random sample of districts within the State of Kentucky for the 1993-94 school year. The

results of this cost study are desk rihed further in a companion to this paper, titled Impact of the Kentmku

rduration Reform Act on Special Education Costs and Eundmg (Chambers and Duefias, 1995.)

Impact of KLRA on Programs and Scrota's 3
I. Background and Purpose

exceptional students (i.e., special education), at-risk students, and students

receiving home and hospital services. Thus, funding for these various

populations is integrated into the general school finance formula in the form of

an exceptional child add-on. This add-on is intended to reflect the additional costs

over and above the base allocation associated with each special education child.

Each special education child also generates the same base level of funding as all

other students served by a district. In 1993-94, the base lev ..inding was 52,495.

Several important features of SEEK are the following:

The exceptional child add-on is based on the previous year's federal child

count for children served within a given district.

Funds generated by the exceptional child add-on are not targeted to special

education students. All dollars are allocated to all students under SEEK with

the requirements that needed services must be provided. Districts still must

adhere to federal requirements which specify that (1) districts must spend in

the current school year at least as much as they spent in the previous school

year for providing services to children with disabilities, (2) districts must

spend at least as much on every student with disabilities as on a student

without disabilities, and (3) districts must not use federal dollars to pay for a

program or service previously paid for or mandated by the state.

The exceptional child add-on has no relationship to existing state class size

standards for special education students. However, current state regulations

still apply regarding maximum allowable class sizes for special education.

The exceptional child add-on does not place a restriction on special education

teachers working with students without disabilities in a regular classroom or

collaborative (inclusive) setting. Of particular ink._ c the fact that funds

generated by the SEEK formula are not targeted to special education students.

While districts still must adhere to federal requirements, there are no

restrictions against special education teachers working with students without

disabilities in regular classroom settings.

The appendix to this report provi&s El more detailed description of lite SEEK

funding system and formula.

Kentucky uc e,. tlw wi,rd collaborative tem hing to refer to arrangemeni ,. that are more commonly

referred to lu,we prth Le., the mai Lice ot working with special education children within lw

regular classnmm environment.

4 Impact (1 KUM on Pwgrams and Serum,:
II. Perspectives on the Special

Education Funding System

Under KERA

Major Strengths of the System

The overriding response of the 17 special education directors from the study

sample of Kentucky districts was that the new funding system under KERA is an

improvement over the previous system due to its greater incentives for inclusion

and lack of incentives to label students with disabilities. In addition, most of the

interviewed directors viewed the regulations allowing the blending of funds and

the resulting flexibility in spending as major strengths of the system. These

directors believed that they are better able to integrate services, while

maximizing dollars and minimizing the bookkeeping burden often associated

with separate funding streams. They saw the ability to blend funds at the district

level as especially advantageous for staff development, for purchasing materials

and supplies, and most importantly, for being better able to meet the needs of

individual students. Special education teachers now serve other students a-. well.

which has led to greater collaboration in classrooms and perceived positive

changes in teacher certification requirements. In addition, these directoi s saw

the flexibility to use money where it is nt_eded most as an improvement over the

prior teacher unit system, from the standpoint of moving districts toward greater

funding equity.

The interviewed directors also claimed that the current system has reduced the

amount of time districts spend on yearly audits. Previously, annual audits "tie.1

ur staff for days" and involved excessive paperwork. With the current system,

I cal staff, special education administratois, and the district superintendent w, ,rl,

Impmq of KERA ou Programs am! :,e7
II. Perspectives on the Special Education Funding System

together to clarify budget issues and review the various reports required by the

state. As a result of the new weighting system, there is the perception that

labeling and placement decisions are being examined more closely aria carefully.

Several directors also mentioned that the regional centers under KERA provide

very useful technical assistance and support. Another director expressed

satisfaction with the state's responsiveness and with the way that funds are

disbursed immediately.

Major Concerns about the System

A majority of the interviewed directors identified insufficient state and federal

funds as the greatest area of concern related to the provision of special education

services. They viewed the current funding system as one based on the amount of

total available funds rather than on the actual costs of providing services

according to students needs. Although districts find it difficult to identify the

costs of special education due to the way funds may be blended to purchase

services, several directors noted that the actual costs for serving students with

severe or low-incidence disabilities far exceed the amounts allotted by the

formula. This problem is exacerbated by the fact that pupil counts often increase

after December 1, with no corresponding increase in funds. In addition, the use

of unduplicated counts for assigning children to one of three special education

funding categories often makes it difficult for districts to adequately fund

services for students with multiple needs. In fact, the data compiled for the 1993-

94 study showed considerable variation in the costs of serving special education

children even within each of the three funding categories (Chambers, Duerias,

Montgomery, & Parrish, 1994).

Some directors considered the overall shortage of funds to be restrictive, because

"new expenses abound" as districts move toward inclusive practices. Insufficient

funding for direct and related services (e.g., contract services, teacher aides and

instructional assistance, transportation, and occupational and physical therapy)

was especially problematic in the smallest districts and in districts with a high

incidence of students with disabilities. In a number of cases, regular education

funds have had to supplement inadequate special education funds. In small

rural districts in particular, inadequate funding to staff appropriate placements

(e.g., inclusive) for students with low incidence disabilities and intensive needs

vd,, d concern. Several directors stated they would have preferred the limited

exceptional child add-on funds to be specifically earmarked for special education

o Impact 1)1 kERA on Programs inhl i gcs
II. Perspectives on the Special Education Funding System

services, rather than blended with general education cunds at the district level, as

is characteristic of the current system.

One of the largest districts identified paperwork as one of their biggest costs in

terms of the time it takes to complete the complex list of "must do" items

between identification of students and the provision of services. The director

stated that "more and more time must be spent on paperwork," meaning less

time to teach and serve children. A director from one of the high-incidence

districts (< 5,000 students and identification rate > 16%), remarked that the

placement procedures "take so long and have so many requirements" that

regular classroom teachers may sometimes be disinclined to refer students for

special education services.

Another area of concern among the interviewed directors was that no funds are

targeted specifically for related services, and that the demand for related services

is greater than what can be provided with existing funds. This is especially true

for children with low-incidence disabilities and for small rural districts. Small

rural districts, and especially those in the smaller cooperatives, suffer also from a

shortage of available certificated service providers, such as occupational and

physical therapy staff and counselors oi interpreters for the deaf. These districts

are often forced to send students far away to large cities for services, and may

lose money as a result of these out-of-district placements. District directors

repeatedly cited funding for transportation of special education students as

another major concernparticularly the fact that districts only receive state

reimbursement for a portion of the travel expenses for students attending out-ofdistrict special schools.

In addition, since the state requires districts to match funds for costly assistive

technology, districts have found these services difficult to afford and provide. In

both large and small districts, directors acknowledged that although required by

federal law and considered worthwhile, assistive technology and equipment such

as computers can be extremely expensive. In some cases, district directors felt

they were unable to afford the state-mandated district match; and in others, they

considered the state guidelines regulating how technology money may be used to

be too restrictive.

Another major concern expressed by district directors was the need for staff

development and instructional materials. Several directors suggested the need

for guidelines and technical assistance for implementing new approaches such as

Impact ol KERA on Programs and Services 7

4
II. Perspectives on the Special Education Funding Sustem

inclusion and collaboration. Others stated that the funding system needs to

reflect changing service delivery models such as community-based education.

Incentives and Disincentives Associated with the

System

The 17 special education directors were asked to comment on whether or not

they believed the funding system under KERA (intentionally or unintentially)

provided incentives or disincentives for identifying or classifying students with

disabilities or for providing particular types of special education programming or

services. Although it is generally accepted that no funding formula can be

completely "incentive-free," it was of interest whether special education directors

believed any of the provisions of the funding formula were inconsistent in actual

practice with state and district policy goals.

Identification and classification

With regard to identification of students with disabilities, there was general

conensus among the interviewed directors of special education that the current

system can encourage overidentification, especially toward the categories that

generate the most money (e.g., multiple disabilities), and particularly for

"borderline cases." However, directors perceived strict state auditing procedures

as an effective check on the tendency to overidentify. In fact, some believe that

new and more strict definitions for learning and speech disabilities have made it

harder to identify these children, and have led to lower counts in one of the

smallest districts. Conversely, directors from one large and one small district

predicted that new regulations enabling identification of students with attention

deficit disorder as "other health impaired" will probably lead to an increase in

identification rates in this category. A director of one of the high-incidence

districts (<5,000 students and identification rate >16%) reflected that "it seems

when funding is low, the requirements to identify become more stringent, and it

tends to eliminate students... who really need help." Another concern related to

identification was that the December 1 child count did not accurately reflect the

number of students in need of special education services, since districts identify

children all Year long. A director of one of the largest districts cited February and

March as the time of year when their counts are actually the highest.

District directors of special education discu,:sed how the t.urrent funding system

may have impacted classification. Five of the 17 directors interviewed believed

8 Impact of KFRA on Programs and Service,:
II. Perspectives on the Special Education Funding System

that the funding system created an incentive to label children as more severely

disabled in order to receive more funds. Two others said that the system does

not affect classification because the regulations are "pretty strict and well

specified," although it can be hard to keep up with new and changing labeling

parameters. A number of directors spoke about the desirability of focusing on

the needs of students rather than on the use of labels, recognizing, however, that

"we seem to be stuck with them." This director added, "We should label all

students because all are special in some way."

Placements

When asked whether the current system provided any incentives or disincentives

for particular placements of students with disabilities, a majority of the

interviewed directors from larger districts said that the weighted formula itself

had not affected placements. They attributed a lack of funding and a need for inservice training for regular teachers as the major disincentives to collaboration

and inclusive placements. In one small rural district, the special education

director said that the more restrictive the environment, the more expensive it is,

which might be interpreted as a fiscal incentive toward less restrictive

placements. However, higher costs for less restrictive environments were cited as

a disincentive by another director, due to the need for additional staff or aides to

accompany special education students. The unavailability of regular classroom

teachers who were trained and willing to teach special education students ;11 an

inclusive setting was cited as a deterrent to providing inclusive placements in

Smaller districts. Yet, one director from a small district said that placement has

not been affected by the funding system, while another said that the system

promotes inclusion "by not penalizing mainstreaming." Previously,

reimbursement for special education was based on a count of full-time equivalent

students in resource rooms; but with the current system, "you can have children

where it is best for them" and still be reimbursed on a "per head" basis. This

director alluded to a further incentive to do what is best for the child, due to the

flexibility staff have in deciding placement options. While citing "no real

incentives or disincentives" of the current funding system, a director from one of

the smallest districts said that there is some encouragement under KERA to

include special education children in regular education settings and that they are

trying out collaborative practices.

However, the smallest districts often do not have enough children or teachers to

readily provide collaborative/inclusive environments, since funding is based on

the number of identified students. A further concern of districts in the "small,"

Impact of KPRA on Programs and Services 9
II. Perspectives on the Special Education Funding System

"smallest," and "high incidence" categories was that out-of-district placements

are very expensive, and valuable funds are lost when money does not follow the

student.

Services

Among the incentives and disincentives related to services, most of the

interviewed directors of special education cited the current funding system's

exclusion of related service funds as a fundamental concern, which may be

creating an incentive to label students as having more rather than less intense

needs. In all categories of districts, the high cost of staff, assistive technology,

and transportation services meant that special education funds were often

insufficient to provide needed services to students. In one of the larger districts,

the director discussed the "pressure to find staff who are younger, less expensive,

less experienced and sometimes, less well trained than others." Also due to lack

of funding, some of the "best practice" approaches are restricted, such as hiring

an adequate number of paraprofessionals and support personnel to assist

children in inclusive environments. Aside from the shortage of funds, however,

directors acknowledged that the local flexibility to allocate funding had

contributed to the districts incentive to more carefully provide students with the

services they needed.

State regulations that set caps for class size have created problems, such as

requirements to lower class size without extra funds to provide the required

number of teachers. In addition, these class size regulations create new problems

when students are included in regular classrooms because the students are

spread out and "the [special education] teacher can only be in one place at a

time." To alleviate this concern, one director stated that the regulations should

he based more on individual students' needs than on mandated student/staff

ratios for particular classifications of special education students.

Responses were mixed with regard to the availability and adequacy of

nonpersonnel resources. Some of the interviewed directors indicated that the

current funding system did not hinder the provision of nonpersonnel resources.

However, others indicated that there was a lack of flexibility in funding materials

and equipment, particularly for changing or adapting facilities and for using the

KERA technology money that was available separately. Regulations governing

the use of technology funds sometimes frustrated district special education

personnel.

10 Impact of KERA on Programs and Services
II. Perspectives on the Special Education Funding System

Impact on Regular Education

Inclusive, collaborative practices have greatly impacted regular education

teachers, with varying degrees of success. The policy of inclusion combined with

the mandated caps on regular education class sizes have had the biggest impacts.

The interviewed directors of special education generally agreed that regular

education teachers feel that inclusive practices add extra work and have a

negative impact where appropriate in-class supports are unavailable. Some

teachers feel that regular education students are sometimes underserved because

they do not have the same guaranteed protections as special education students.

Some reginar education teachers are having difficulties accepting special

education students in their classrooms due to inadequate teacher training and

support, and due to challenges sometimes associated with the time and effort

needed to collaborate with special education teachers. In addition, the number of

regular education students in their classes has decreased because of the grade

level caps on class size. Special education children are taking up limited student

"slots" even when there is an additional teacher (special education) in the

classroom.

Nevertheless, special education directors in some districts noted that because

special education has become part of regular education, it is not as isolated and

separate as it was before. The flexibility of the system has allowed better use of

special education teacher resources and has put special education teachers in a

more positive light. Regular education teachers who are part of the admission

and release teams have gained a greater understanding of special education

students and their needs.

A majority of the districts indicated that more of the regular education budget is

probably being used to support the'special education program each year.

Increased requirements, policies, and the time it takes between referral and

placement drain both personnel and money. In addition to educational costs,

court cases have required large sums of money that must often be taken out of

the general funds. The legal system was reported to have "created a nightmare"

of additional costs.

Inu,act of Kl:RA ou Programs and Services It
III. Recommendations for Change

The sample of district directors of special education were asked for their

recommendations for changing the funding system to better meet their district's

needs. This section of the report describes their recommendations in the areas of

personnel, staff development, facilities, transportation, and materials and

equipment.

Personnel

There was general consensus among the interviewed directors that more money

should be spent on certificated and noncertificated support personnel. They

reported that the present formula does not specifically address services that

many special education students need. Personnel for providing related services

and instructional assistance were most needed, including school psychologists,

occupational and physical therapists, and classroom aides. Certificated staff to

provide services for specific disabilities that are unique each year, such as lowincidence conditions, were always in need because the majority of special

education teachers are trained to work primarily with learning disabled students.

In general, interviewed directors reported that special education personnel were

difficult to find and retain due to low salaries and job burnout. One director from

a large district recommended the use of incentive packages for special education

personnel. This director noted that some special education teachers are not

strongly committed to working with special education students and have

obtained certification because special education jobs are easier to obtain at some

grade levels or in some subjects. A special education director from one of the

largest districts said that certification is "contradictory," adding that it sometimes

requires more specialization than is actually needed.

Impact of KC1RA on Programs and Services 1.3 in
III. Recommendations for Change

Across all types of districts, special education directors stressed the importance of

basing funding and staffing on need, rather than on student labels and

student/staff ratio requirements. The director of one small district specifically

expressed the desire for less pressure to specify the exact number of children per

teacher. The special education director from a high-incidence district

recommended that the funding system should allow for duplicated counts of

speech students so that districts could afford enough teachers to meet the needs

of students with multiple disabling conditions.

Staff Development

Staff development is an ongoing concern, as districts implement new state

guidelines and regulations in the face of high teacher turnover and limited

funding. The funding system under KERA allows for considerable local

discretion in the use of staff training funds. Although it does not earmark any

funds specifically for special education staff development, most of the

interviewed directors viewed the system as satisfactory. KERA provides four

mandated staff development days per year for all staff (e.g., general and special

education teachers, principals, administrators), and extra state and federal money

is also allocated for staff development. Mandated in-service training for all staff,

such as training on the development of Individualized Education Programs

(IEPs), has reportedly helped to raise staff awareness. However, a number of

interviewed directors said they would like to see more money directed to special

education staff development due to the magnitude of change dictated by an

inclusive philosophy, and to recently changed definitions related to the eligibility

of students with severe emotional disturbances and learning disabilities. A.

special education director from a small district suggested that state funding be

provided for release time as an incentive for districts to train noncertificated staff,

beginning, and veteran teachers. This would enable opportunities for teachers to

learn innovative methods through the observation of other teachers.

Most of the interviewed directors of special education said the state was doing a

good job with staff training, which was described as a "major thrust" under

KERA. However, these directors differed in their views regarding the adequacy

of state support for staff development. A director from a small district noted that

KERA mandates many helpful strategies such as cooperative and team teaching

approaches that require uniform planning times, but provides "no funds to back

up the districts as they make the changes." As a result, special ed tic ..tion and

inclusion are impacted because good teachrrs "woar out before they rust out!"

14 Impact of KERA on Programs and Sm.:cc,:
III. Recommendations for Change

Also mentioned was the critical need to train general education teachers in

preparation for the inclusion of students with special needs in their classrooms.

The special education director from a high-incidence district said that "this is one

of the toughest areas to deal with," and that more money is needed to train both

general and special educators. In sum, across every type of district, there were

special education directors who felt that the current system was "satisfactory" or

"adequate" and others who felt that more resources for staff development were

necessary.

Facilities

The demand for classroom space has generally decreased as a result of more

collaborative and inclusive practices, and the accompanying change from pullout to in-class services for special education students. In high growth districts,

however, special education directors noted that space has been a bigger concern.

In some cases, temporary portable classroom arrangements have been necessary

to accommodate large influxes of new students. Most of the interviewed

directors acknowledged the high costs associated with building renovations

needed to provide total accessibility, and reported that many districts have only

been able to afford temporary or short-term building adaptations with the

available funds. Special education directors listed elevators, automatic doors,

accessible restrooms and changing areas, and running water in classrooms as

extremely expensive but necessary accommodations for total accessibility. They

agreed that more funding will be needed to pay for these expensive renovations,

particularly in districts with considerably older schools. Some communities have

already passed bond measures for this purpose. In larger districts, it has been

possible to anticipate students needs and encourage their enrollment in the

schools that are appropriately equipped and relatively close to their homes. In

smaller districts, more temporary and cost-saving solutions have been necessary

to make schools wheelchair accessible, such as moving inclusive classes from

second to first-floor classrooms. A special education director from one of the

smaller districts mentioned the need for funding school building renovations so

that students with severe disabilities who are currently receiving home-school

services could be served in appropriately equipped neighborhood schools. Other

directors called for closer supervision on the use of funds for providing adequate

facilities and suggested that some administrators may not fully understand what

is required to provide appropriate building accommodation:. for students with

special needs.

Impact of KERA on Programs and Services 15
III. Recommendations for Change

Transportation

Where special transportation arrangements or adaptations are necessary, costs

can be very high, particularly in large rural counties, or where students or

services are spread very thin. The state only partially reimburses the cost of

transportation, and some of the interviewed directors of special education felt

that local costs vary too much for the reimbursement formula to be uniformly

and fairly applied. Some directors expressed a preference to be reimbursed

according to the actual costs of transportation. Wheelchair lift-equipped buses

with aides are very expensive, and the general education fund must often cover

these additional costs. In one of the largest districts, transportation was

described as the biggest problem in the county. Some children must ride for up

to two hours per day. When buses are not available, parents are offered $.18 per

mile, although some parents will not drive for this amount. The expense must

then be paid to the lowest bidder, "even if that bid is excessive." In smaller

districts, directors acknowledged that neighborhood schools would likely reduce

transportation costs; however, the current emphasis on community-based

education for students with more severe disabilities (e.g., learning 'co shop, eat)

presents additional costs. Other directors felt that the move toward inclusion

would add transportation costs if students are more spread out and require

individual aides to accompany them. The high costs of transporting special

education students led directors to recommend more state funding, changes in

the reimbursement formula, and more accurate accounting of the actual expenses

incurred.

Materials and Equipment

Special education directors from the largest districts in the study sample cited

inadequate funds and high costs for special education materials and equipment.

Increased costs in one district were attributed to changing service delivery

models, particularly community-based education and authentic assessment, and

to the high costs of assistive technology and equipment for special facilities.

Another director reported a lack of funding to implement programs using new

technologies, and described how staff "beg and horror% " or save money by

making or buying materials themselves.

In one of the larger districts, the director pointed to the "fine line between

educational items and medical items" that needs to he examined more closely, so

that other agencies "hear their cline of these expenses." In addition, since the

16 Intpact qf !CERA on Pwgrams and Services

)
III. Recommendations for Change

requirements of the special education system necessitate close monitoring of

timelines for evaluation, assessment, and periodic reviews, this monitoring is best

accomplished by individual teachers with computers. A considerable amount of

money has been needed to equip staff with these computers for tracking students

and due process at each school. Expenses are also incurred when IEP committees

make recommendations for services and equipment for particular students which

the county must then fund. Often these expenses are paid with blended special

and general education funds at the district level. Both small and large districts in

the sample requested more state dollars for computers with specialized

adaptations and for "one-of-a-kind" specialized materials and equipment to

support students with severe or multiple disabilities. A director from a highincidence district suggested that the state textbook list should include more

functional textbooks for special education students. In one of the smallest

districts, a local trust fund has been established to help fund specialized

equipment needs. In general, districts had to be very creative to find ways to

fund materials and equipment for special education, and the needs invariably

appeared to be greater than the available funds.

Hpact of KERA on Programs and Semices 17
IV. Summary

Overall, interviewed special education directors viewed the new special

education funding system under KERA as an improvement over the previous

funding mechanism. They perceived the new system as having greater

incentives for inclusion and fewer incentives to label children than the previous

system. Most directors viewed increased spending flexibility at the district level,

resulting from the blending of special and regular education funds, as a major

strength of the funding system. This flexibility was particularly helpful in

providing opportunities for staff development and in purchasing materials and

supplies for school use. Many directors felt that the blending of funds was

moving districts toward greater funding equity, and an increased ability to meet

the needs of individual students. Due to more collaborative teaching practices,

they perceived that decisions related to the placement of students with

disabilities were being more carefully considered and examined.

When asked about their concerns with the new system, directors described

insufficient state and federal funds, and the way in which the new system was

based on total available funds rather than on the actual costs of providing

services. Other concerns included a lack of funding to meet the demand for

related services, and the sometimes prohibitive costs of the district match

required for assistive technology, especially in smaller districts. Additional

issues to be resolved included state-mandated restrictions on class size, the

increasing burden of paperwork, and the need for staff development and

instructional materials.

Some district directors expressed the belief that the new system may provide an

ucentive to classify students in categories that generate the most funds, while

others felt that strict and well specified .gulations provide an adequate check on

these incentives. Most directors believed the new system created greater overall

Impact of KERA on Programs and Services 19
IV. Summary

incentives to do what was best for the child. For example, they remarked that

districts were no longer penalized for mainstreaming, as had been the case under

the previous system which reimbursed districts only for full-time equivalent

students in special education. However, directors cited inadequate funding as

the biggest restriction to providing some of the "best practice" approaches they

would like to encourage.

To the extent that directors perceived appropriate in-class supports or adequate

teacher training and time for collaboration as lacking, they viewed special

education programming as having a negative impact on regular education

programs. Conversely, many directors indicated that inclusion had caused them

to make better use of special education teacher resources, and had resulted in

reduced isolation of special education departments in general. However, a

number of directors also reported that more of the regular education budget wa.:z

being used to support special education programs, and noted that the legal

system was creating a "nightmare" of additional costs.

Recommendations from the interviewed directors as to how the funding system

might be changed to better meet their districts' needs focused on the areas of

personnel, staff development, facilities, transportation, and materials and

equipment. Most directors agreed that more money was needed for certificated

and noncertificated support staff, particularly for providing related services and

.nstructional assistance. They saw the reliance on student/staff ratio

requirements as a basis for funding and staffing as being problematic. Due to

the ii..agnitude of change dictated by an inclusive philosophy, ongoing staff

development was a continuing concern; however, directors generally considered

continued local discretion in the use of staff development funds to be

advantageous. Across all types of districts, there were directors who felt the

current provisions for staff training were adequate, and others who felt that more

resources were needed.

Directors acknowledged the high costs associated with modifying facilities for

accessibility, and many districts were only able to afford temporary or short-term

adaptations. They generally agreed that more funds will be necessary for facility

modifications, particularly in districts with considerably older schools. Directors

stated that some local administrators needed a better understanding of the

requirements for providing appropriate building accommodations for students

with special needs.

Impad of URA on Proxrams and Services
IV. Sunnnary

Transportation costs were problematic for many districts, leading directors to

recommend more state funding, changes in the reimbursement formula, and

more accurate accounting of the actual expenses incurred. Funds for providing

appropriate special education materials and equipment were also considered

inadequate, with changing service delivery models and demands for assistive

technology on the rise. Additional state funds were requested by both small and

large districts for computers with specialized adaptations and for "one-of-a-kind"

specialized materials and equipment to support students with more severe or

multiple disabilities.

In summary, the interviewed special education directors were generally pleased

with the way the new funding system allowed for greater local discretion 2ind

provided increased incentives and opportunities for inclusion and collaboration

among special and general educators. Their greatest concerns focused on

insufficient state and federal funds to support appropriate placements, related

services, staff development, materials, transportation, and facility modifications.

Some directors considered incentives to overidentify students, particularly in

those categories generating the most funds, potential drawbacks, while others

believed that strict regulations and close monitoring were curbing this tendency.

Continuing issues of concern included the burden of paperwork, mandated caps

on class size, regulations governing the use of technology funds, and

reimbursement for transportation. Directors admitted that although policies

encouraging inclusion have contributed to better use of special education

resources and personnel and to the provision of more appropriate services for

children with special needs, tl-Qy have also resulted in increased needs for

instructional support and related service personnel, staff development, building

modifications, and materials, equipment, and transportation funds.

Impact of KI:RA on Programs and tienacc,. 21
References

Adams, 1. E. (Spring, 1993). School finance reform and systemic school change:

Reconstituting Kentucky's public schools. Journal of Education Finan..e, 18,

318-345.

Chambers, J. G., Duenas, I. E., Montgomery, D. L., & Parrish, T. B. (1994). Special

education weight project for the State of Kentucky. Palo Alto, CA: Center for

Special Education Finance, American Institutes for Research.

Chambors, J. G., & Duenas, I. E. (1995). Impact of the Kentucky Education Reform

Act on special education costs and funding. Palo Alto, CA: Center for Special

Education Finance, American Institutes for Research.

Executive Editor. (Fall, 1989). The Kentucky case introduction. journdl of

Educathm Finance, 15, 134-135.

Kentucky Department of Education. (October, 1993). Exceptional child pupil

weiNht status report. Frankfort, KY: Author.

Kentucky I )epartment of Education. (Handout, 1993). SEEK exceptional child

add-on. Frankfort, KY: Author.

) Reilly, F. (1993). Slate special education finance systems, 1992-93. Palo Alto, CA:

Center for Special Education Finance, American Institutes for Research.

Ingmet of KERA on Progrants and Serowe, 2.3
Appendix: Kentucky Funding System

under KERA

Three-tiered System

House Bill 940 called for public education in Kentucky to be funded through a

new school finance system known as the Support Education Excellence in

Kentucky (SEEK) Program.

State Adjusted Base Guarantee

SEEK is essentially a foundation program where the state provides a guaranteed

amount of revenue per pupil (i.e., base) to each school district. Biennially the

General Assembly derives a statewide guaranteed base funding level usually on

the basis of available funds. The base amount for the 1993-94 school year was

$2,495 per pupil.

The base funding level for each school district is also adjusted using a series of

add-ons which reflect the additional costs for at-risk students using a pupil

weight of .15; home and hospital which includes an additional $2,395 per pupil

served; and exceptional children using three weights applied to unduplicated

counts of low incidence, high incidence, and speech and language-only students.

An add-on is also provided for transportation services.

SEEK also requires a minimum level of effort from local school districts. Each

school district is mandated to levy a minimum equivalent tax rate of 30 cents per

$100 of assessed property value. The Required Local Effort (RLE), the local

contribution to the adjusted base guarantee, can be reached by levies on property

and through other levies permitted for general school purposes (e.g., motor

Impact of KERA on Programs and Services A-1
Appendix: Kentucky Funding System under KERA

vehicle tax, utility tax). The difference between the RLE and the calculated base

(i.e., base plus the four add-ons) represents the state SEEK contribution to a local

school district. As a result, state aid will vary across districts, and this variance

ensures that state aid to districts is sensitive to local fiscal capacity due to

variations in local property wealth (Adams, 1993).

Tier I

Tier I is an optional component of SEEK that allows school districts to raise

additional revenue of up to 15 percent of the adjusted base guarantee. If a school

district chooses to levy this additional tax and its per pupil property wealth is

below 150 percent of the statewide average for per pupil property wealth, the

district receives state equalization funds. State equalization funds are provided

in order to guarantee that each participating district will receive that same

revenue per pupil when making the same tax effort. If a local board chooses to

levy a tax rate under this tier, the levy is not subject to an electoral vote with a

few exceptions.

Tier II

Tier II is another optional component of SEEK that allows school districts to raise

additional revenue of up to 30 percent of the amount generated by the adjusted

base guarantee and Tier I. Tier II differs from Tier I in that the district does not

receive state equalization funds and the tax rate levy is subject to an electoral

vote. As noted in the Exceptional Child Pupil Weight Status Report (1993), "Tier

II has the effect of placing a cap on the amount of revenue a local school district

can raise, thereby maintaining some control over the disparity in per pupil

revenues that might be available in local school districts" (Kentucky Department

of Education, 1993, p. 50).

Exceptional Child Add-On

Funding for the exceptional children program has been an integral part of the

general education finance system. However prior to SEEK, state aid for special

education was administe 19cl on the basis of classroom units, which provided a

fixed amount of money to cover the cost of the resources needed to operate each

classroom unit. Under SEEK, state aid for special education is calculated through

a pupil-weighted formula. Students with disabilities aged 5 through 21 generate

an exceptional child add-on based on categories of disability. The federal disability categories plus an additional category for developmentally delayed (for

A-2 Impact of KERA on Program ; and Services
Appendix: Kentucky Funding System under KERA

pre-school children) are grouped into the following three categories with the

corresponding -----il weights for the 1993-94 school year.

Categoff

Pupil

Weight

Low Incidence Category: Functional Mental Disability, Emotional

Behavioral Disorder, Deaf-Blindness, Hearing Impairments, Multiple

Disabilities, Visual Impairment, Autism, and Traumatic Brain Injury

2.34

High Incidence Category: Specific Learning Disability, Mild

Mental Disability, Other Health Impairment, Orthopedic/Physical

Disability, Developmentally Delayed

1.17

Speech or Language Impairment Only Category 0.24

This total count from the three pupil weight categories is then multiplied by the

base amount awarded for Average Daily Attendance (ADA) to get the district's

total exceptional child add-on. The following formula demonstrates how the

total district exceptional child add-on is calculated.

District's Total Exceptional Child Add-on (TE) for 1993-94.

TE = (NL x 2.34 x $2,495) + (NH x 1.17 x $2,495) + (NS x

0.24 x $2,495)

where $2,495 equals per pupil base allocation and the unduplicated special

education child counts for the previous year are represented by

NL = NH = NS =for the Low Incidence Category

for the High Incidence Category

for Speech or Language Impairment Onlv

Category

Impact of kERA on Programs and Serzwes A-3

3 0
Appendix: Kentucky Funding System under KERA

Explanation of the SEEK Formula

Calculation of State SEEK Contribution for. 1993-94:

TS = (TB + TA + TT+ TH + TE) TL

TS = State SEEK Contribution

TB = Total Base Allocation

TA = Total At-Risk Add-on

TT = Total Transportation Add-on

TH = Total Home and Hospital Add-on

TE = Total Exceptional Child Add-on

TL = Total Required Local Effort (RLE)

where:

TB = $2,495 x (92/93 District ADA)

TA = $2,495 x FLP x .15, where FLP is defined as children eligible

for the Free Lunch Program

TT = Prior year "graph adjusted" costs for transporting pupils

living a mile or more from school

TH = $2,395

TE = (NL x WL x PB) + (NH x WH x PB) + (NS x WS x

PB)described in detail below

TL = .30 (per $100 of district's assessed property value)

As presented in the above formula, the base amount remains constant for all

school districts. Each adjustment (i.e., at-risk students, transportation, home and

hospital, exceptional children) and the RLE will vary for individual school

districts. The total state Base SEEK contribution may also be adjusted by Tier I,

Tier II, a Vocational Education deduction, hold harmless contribution, and an

adjustment to the appropriation. The vocational education deduction subtracts

30 percent of the state-funded base for each student in ADA attending the state

vocational schools. Under hold harmless, districts are guaranteed the same per

pupil state funding they received in the 1991-92 school year. Even so, a reduction

in ADA could result in a district receiving fewer total state dollars. The SEEK

funding is proportionately reduced due to insufficient funds appropriated for the

A-4 Impact of KFRA on Programs and Scrinces
Appendix: Kentucky Funding System under KERA

1992-94 biennium. District funds cannot be reduced below the hold harmless

level. Finally, all SEEK calculations are made on a per pupil basis and calculated

amounts apply to each pupil in the district (Adams, 1993; Kentucky Department

of Education, 1993). The following formula demonstrates how a district's total

SEEK funding is calculated.

District's Total SEEK Funding:

TD = (TS + T1 + T2) TVE + THH + TAA

TD = District's Total SEEK funding

TS = Total State SEEK Contribution

T1 = Total for Tier I

T2 = Total for Tier II

TVE = Total Vocational Education Deduction

THH = Total Hold Harmless

TAA = Total Adjustment to Appropriation

Impact of KERA on Programs and Services A-5