SPECIAL EDUCATION FINANCE AT THE 

 FEDERAL, STATE AND LOCAL LEVELS

HEARING

BEFORE THE 

SUBCOMMITTEE ON EDUCATION REFORM 

OF THE 

COMMITTEE ON EDUCATION AND 

THE WORKFORCE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

HEARING HELD IN WASHINGTON, DC, APRIL 18, 2002 

Serial No. 107-59 

Printed for the use of the Committee on Education 

and the Workforce

82-133 pdf 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 

 FAX: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 
ii

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN A. BOEHNER, Ohio, Chairman 

THOMAS E. PETRI, Wisconsin GEORGE MILLER, California 

MARGE ROUKEMA, New Jersey DALE E. KILDEE, Michigan 

CASS BALLENGER, North Carolina MAJOR R. OWENS, New York 

PETER HOEKSTRA, Michigan DONALD M. PAYNE, New Jersey 

HOWARD P. “BUCK” McKEON, California PATSY MINK, Hawaii 

MICHAEL N. CASTLE, Delaware ROBERT E. ANDREWS, New Jersey 

SAM JOHNSON, Texas TIM ROEMER, Indiana 

JAMES C. GREENWOOD, Pennsylvania ROBERT C. “BOBBY” SCOTT, Virginia 

LINDSEY O. GRAHAM, South Carolina LYNN C. WOOLSEY, California 

MARK E. SOUDER, Indiana LYNN N. RIVERS, Michigan 

CHARLIE W. NORWOOD, JR., Georgia RUBEN HINOJOSA, Texas 

BOB SCHAFFER, Colorado CAROLYN McCARTHY, New York 

FRED UPTON, Michigan JOHN F. TIERNEY, Massachusetts 

VAN HILLEARY, Tennessee RON KIND, Wisconsin 

VERNON J. EHLERS, Michigan LORETTA SANCHEZ, California 

THOMAS G. TANCREDO, Colorado HAROLD E. FORD, JR., Tennessee 

JIM DeMINT, South Carolina DENNIS KUCINICH, Ohio 

JOHNNY ISAKSON, Georgia DAVID WU, Oregon 

BOB GOODLATTE, Virginia RUSH D. HOLT, New Jersey 

JUDY BIGGERT, Illinois HILDA L. SOLIS, California 

TODD RUSSELL PLATTS, Pennsylvania SUSAN DAVIS, California 

PATRICK J. TIBERI, Ohio BETTY McCOLLUM, Minnesota 

 RIC KELLER, Florida 

 TOM OSBORNE, Nebraska 

 JOHN ABNEY CULBERSON, Texas 

 JOE WILSON, South Carolina 

 Paula Nowakowski, Chief of Staff 

 John Lawrence, Minority Staff Director

 SUBCOMMITTEE ON EDUCATION REFORM 

 MICHAEL N. CASTLE, Delaware, Chairman

BOB SCHAFFER, Colorado, Vice Chairman DALE E. KILDEE, Michigan 

THOMAS E. PETRI, Wisconsin ROBERT C. “BOBBY” SCOTT, Virginia 

MARGE ROUKEMA, New Jersey LYNN C. WOOLSEY, California 

JAMES C. GREENWOOD, Pennsylvania RUBEN HINOJOSA, Texas 

MARK E. SOUDER, Indiana CAROLYN McCARTHY, New York 

FRED UPTON, Michigan LORETTA SANCHEZ, California 

VAN HILLEARY, Tennessee HAROLD E. FORD, Jr., Tennessee 

VERNON J. EHLERS, Michigan HILDA L. SOLIS, California 

THOMAS G. TANCREDO, Colorado SUSAN DAVIS, California 

JIM DeMINT, South Carolina MAJOR R. OWENS, New York 

JUDY BIGGERT, Illinois DONALD M. PAYNE, New Jersey 

TODD RUSSELL PLATTS, Pennsylvania TIM ROEMER, Indiana 

RIC KELLER, Florida RON KIND, Wisconsin 

TOM OSBORNE, Nebraska DENNIS J. KUCINICH, Ohio 

JOHN ABNEY CULBERSON, Texas 

JOE WILSON, South Carolina 
iii

Table of Contents 

OPENING STATEMENT OF CHAIRMAN MICHAEL CASTLE, SUBCOMMITTEE ON 

EDUCATION REFORM, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. 

HOUSE OF REPRESENTATIVES, WASHINGTON, D.C.......................................................... 2 

OPENING STATEMENT OF RANKING MINORITY MEMBER DALE E. KILDEE, 

SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. ..................... 4 

STATEMENT OF JAY G. CHAMBERS, DIRECTOR, SPECIAL EDUCATION 

EXPENDITURE PROJECT AND SENIOR RESEARCH FELLOW, AMERICAN 

INSTITUTES FOR RESEARCH, PALO ALTO, CALIFORNIA................................................. 6 

STATEMENT OF PAUL GOLDFINGER, VICE PRESIDENT, SCHOOL SERVICES OF 

CALIFORNIA, INC., SACRAMENTO, CALIFORNIA, AND ON BEHALF OF THE 

COALITION FOR ADEQUATE FUNDING FOR SPECIAL EDUCATION.............................. 9 

STATEMENT OF JOHN R. LAWRENCE, PRESIDENT-ELECT, AMERICAN 

ASSOCIATION OF SCHOOL ADMINISTRATORS AND SUPERINTENDENT, TROY R-III 

SCHOOL DISTRICT, TROY, MISSOURI ................................................................................. 11 

APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN MICHAEL CASTLE, 

SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. ................... 35 

APPENDIX B - WRITTEN OPENING STATEMENT OF RANKING MINORITY MEMBER 

DALE E. KILDEE, SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, 

WASHINGTON, D.C................................................................................................................... 39 

APPENDIX C - WRITTEN STATEMENT OF JAY G. CHAMBERS, DIRECTOR, SPECIAL 

EDUCATION EXPENDITURE PROJECT AND SENIOR RESEARCH FELLOW, 

AMERICAN INSTITUTES FOR RESEARCH, PALO ALTO, CALIFORNIA ........................ 49 

APPENDIX D - WRITTEN STATEMENT OF PAUL GOLDFINGER, VICE PRESIDENT, 

SCHOOL SERVICES OF CALIFORNIA, INC., SACRAMENTO, CALIFORNIA, AND ON 

BEHALF OF THE COALITION FOR ADEQUATE FUNDING FOR SPECIAL EDUCATION

...................................................................................................................................................... 95 

APPENDIX E - WRITTEN STATEMENT OF JOHN R. LAWRENCE, PRESIDENT-ELECT, 

AMERICAN ASSOCIATION OF SCHOOL ADMINISTRATORS AND SUPERINTENDENT, 

TROY R-III SCHOOL DISTRICT, TROY, MISSOURI........................................................... 109 
iv

Table of Indexes.......................................................................................................................... 119
1

HEARING ON SPECIAL EDUCATION FINANCE 

AT THE FEDERAL, STATE AND LOCAL LEVELS 

________________________________________________________

Thursday, April 18, 2002 

U.S. House of Representatives, 

Subcommittee on Education Reform, 

Committee on Education and the Workforce, 

Washington, D.C. 

 The committee met, pursuant to notice, at 2:00 p.m., in Room 2175, Rayburn House Office 

Building, Hon. Michael N. Castle [chairman of the subcommittee] presiding. 

 Present: Representatives Castle, Hilleary, Tancredo, Biggert, Osborne, Kildee, Scott, 

Woolsey, McCarthy, Solis, Davis, Roemer, and Kind. 

 Ex officio present: Representative Miller. 

 Staff present: Blake Hegeman, Legislative Assistant; Charles Hokanson, Professional Staff 

Member, Patrick Lyden, Professional Staff Member; Krisann Pearce, Deputy Director of Education 

and Human Resources Policy; Deborah L. Samantar, Committee Clerk/Intern Coordinator; Heather 

Valentine, Press Secretary; John Lawrence, Minority Staff Director; Charles Barone, Minority 

Deputy Staff Director; Ruth Friedman, Minority Legislative Associate/Education; Maggie McDow, 

Minority Legislative Associate/Education; Alex Nock, Minority Legislative Associate/Education; 

Joe Novotny, Minority Staff Assistant/Education; and Dan Rawlins, Minority Staff 

Assistant/Labor. 

Chairman Castle. Good afternoon, everybody. The Subcommittee on Education Reform will 

come to order. 

 We are meeting today to hear testimony on how special education finance works at the 

federal, state and local levels. Under Committee Rule 12(b), opening statements are limited to the 

chairman and the ranking minority member, Mr. Kildee, of the subcommittee. Therefore, if other 
2

members have statements, they may be included in the hearing record. 

 With that, I ask unanimous consent for the hearing record to remain open 14 days to allow 

member statements and other extraneous material referenced during the hearing to be submitted in 

the official record. 

 Hearing no objection, that's so ordered. 

OPENING STATEMENT OF CHAIRMAN MICHAEL CASTLE, 

SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF 

REPRESENTATIVES, WASHINGTON, D.C.

 Let me just say good afternoon to our witnesses, who have been jerked around a little bit 

because of our schedule changes. Believe me, I am having my problems today, too. I consider this 

subcommittee hearing to be of extraordinary importance, and I am going to have to come and go 

because of previously scheduled things, too. We appreciate your circumstances. We had hoped to 

go this morning and we could not. 

 We thank everybody here for joining us in a series of hearings that this subcommittee will 

be holding on issues related to the reform and re-authorization of the Individuals with Disabilities 

Education Act, better known as IDEA. 

 Over the next few months, this subcommittee will explore ways of reforming the IDEA to 

ensure that every student with special needs receives access to a high quality education as the 

President and Congress continue their efforts to improve America's schools. 

 As successful as the IDEA has been in guaranteeing access to a free, appropriate public 

education for students with disabilities, IDEA is not without its problems. This subcommittee will 

be addressing these problems during the re-authorization, and we begin that process this afternoon 

by examining special education finance issues. 

 Looking at special education finance is important because Congress has dramatically 

increased federal spending on special education. In fact, since 1995, Congress has nearly tripled 

funding for IDEA. More recently, the House of Representatives passed the fiscal year 2003 

budget, which provides a $1 billion increase in funding for IDEA Part B next year and a 12 percent 

increase every year after that for the next nine years. 

 Given our recent focus on IDEA, local school districts should have seen some benefit from 

the large increases in federal spending. Yet some districts, such as Los Angeles Unified, have said 

that these increases may only have marginally increased the federal share of special education 

costs. In fact, LA Unified has informed me that despite recent increases, federal dollars as a source 

of the district's funding for special education only increased approximately 25 percent, from 4.9 
3

percent to 6.1 percent. 

 As many of us know, under current law, federal money received by the states may not be 

used to supplant or substitute for state funds. Instead, federal dollars are required to be used to 

supplement or increase the funding of special education and related services, with the exception of 

the 20 percent reserved for administration and state level activities. More plainly, this requirement 

prohibits states from using their IDEA funds to relieve state and local-level financial obligations, 

and it ensures that funds will increase the level of expenditures on special education and related 

services.

 This requirement recently received some attention when Governor Gray Davis of California 

decided that, due to this year's budget crisis in his state, he would maintain, not increase, state 

funding for special education. Instead, he would use federal dollars as the sole source of increased 

special education funding next year and free up dollars that were expected to make up a state 

increase in special education funding for other budget purposes. 

 While this does not technically violate IDEA law, I am concerned that other states will 

follow his lead. His actions also raise questions in my mind, such as: Where does the money go? 

How have states and local communities used the significant federal funding increases provided for 

special education in recent years? Has all the money that was intended to get to the local level 

gone to the districts? And, has all special education funding actually been used for special 

education or even education generally? 

 It is my hope that our witnesses today will be able to provide some of the answers to these 

questions, especially as pressure continues for Congress to further increase its share of special 

education funding. 

 I might add, although it is not a subject of this hearing, that I am concerned that some of 

these funding shifts and manipulations, if you will, are occurring at other education areas beyond 

IDEA. This is not the tip of the iceberg; this is a pretty major iceberg. But it is a problem, I think, 

in terms of our ability to deliver services to children. 

 Today, we are fortunate to welcome three witnesses, all experts in special education finance 

at the federal, state and local levels. With their help, it is my hope that members will better 

understand the expenditures that states and local districts incur in providing special education 

services. In that way, they provide a valuable service as we seek to further our discussion on the 

re-authorization, as well as future appropriations increases. 

 In a moment, I will proceed with the introduction of our witnesses, but I will now yield to 

the distinguished Ranking Minority Member of the subcommittee, Mr. Kildee, for whatever 

opening statement he may wish to make. 

WRITTEN OPENING STATEMENT OF CHAIRMAN MICHAEL CASTLE, SUBCOMMITTEE 

ON EDUCATION REFORM, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. 

HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. – SEE APPENDIX A 
4

OPENING STATEMENT OF RANKING MINORITY MEMBER DALE E. 

KILDEE, SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON 

EDUCATION AND THE WORKFORCE, U.S. HOUSE OF 

REPRESENTATIVES, WASHINGTON, D.C. 

Mr. Kildee. Thank you. I am pleased to join with Chairman Castle on the first in a series of 

hearings on re-authorization of the Individuals with Disabilities Education Act. 

 I have been involved in this for many, many years back in Michigan and since 1977 here in 

the Congress of the United States. I am looking forward to finding a bipartisan consensus, no 

matter how difficult that may be. 

 IDEA is the cornerstone which ensures that children with disabilities receive a free, 

appropriate education. As many of you know, prior to the passage of 94 - 142, our disabled 

children were not provided with access to an education. Too many were literally kept in closets 

and shut out of schools. 

 I believe it is important to keep in mind that many of the problems we hear about IDEA are 

largely difficulties with implementation of the law rather than the statute itself. 

 I believe as we move forward on this re-authorization that we need to keep this thought in 

mind and ensure that we do not roll back protections for schools and disabled children alike simply 

for the sake of change. 

 To implement this law effectively, school districts and schools need resources. For us here 

in Congress, it means critically looking at how federal special education funding is provided and 

used by our states. But it also means honoring our commitment to fully fund IDEA by providing 

40 percent of the excess cost. We came very close this year in the Conference Committee on H.R. 

1 but did not quite achieve this goal. 

 In examining the finance systems that fund special education in our states and localities, I 

believe we need to ensure that Medicaid and other programs also are covering their appropriate 

share of costs. 

 Schools have historically had a difficult time in claiming legitimate administrative and 

medical costs from the Medicaid program. We need to make sure that both schools and Medicaid 

are required to work together to solve these difficulties. 

 We should also examine the impact that high cost disabled children have on the budgets of 

our school districts. Modern technology has kept alive children who many years ago would not 

have lived. This presents challenges for our schools, and many states have risen to that challenge 

for these very special need children among those with special needs. We should look at this need 

while also maintaining our commitment to full funding. 
5

 In closing, I want to thank the witnesses for coming here today. And I yield the balance of 

my time to Mr. Miller. 

WRITTEN OPENING STATEMENT OF RANKING MINORITY MEMBER DALE E. KILDEE, 

SUBCOMMITTEE ON EDUCATION REFORM, COMMITTEE ON EDUCATION AND THE 

WORKFORCE, U.S. HOUSE OF REPRESENTATIVES, WASHINGTON, D.C. – SEE 

APPENDIX B 

Mr. Miller. Thank you, Mr. Kildee, Mr. Chairman. Mr. Castle, Mr. Kildee, I want to thank you 

very much for your very strong support of IDEA. I just quickly want to mention a couple of things 

I am deeply concerned about, and that is that we - as you know, we tried to get full funding in H.R. 

1 last year. We were unsuccessful. 

 I was very disappointed that none of our Republican colleagues, even those who have been 

very strong proponents, vocal proponents of full funding, did not join us in this effort. We have 

had tremendous bipartisan success under Mr. Castle's leadership and others of increasing funding 

for IDEA, but we must get on the road to full funding. We've continued to fall behind. And I 

would hope that we would be able to do that. 

 At the same time, I want to echo what Mr. Castle just said about the concern about states 

starting to supplant the new monies that we are providing. Those monies were provided to increase 

the opportunities for children with disabilities and to make sure that we don't make other 

educational programs poorer. 

 I want to join Mr. Kildee in making sure that we don't weaken the rights of these children 

and these families in securing the reforms that many people are talking about. 

 And finally, I want to make sure that we understand that we've got to provide the full 

funding so that we don't have these programs and the necessary services come out of other 

educational programs that are just as necessary for the children participating in them. 

 So I look forward to this hearing. And again, Mr. Chairman, I want to thank you very much 

for holding it. 

Chairman Castle. I thank the distinguished Ranking Member of the full committee and the 

Ranking Member of the subcommittee. I think we all feel this is a highly important subject. 

 Let me try to explain the ground rules. You will each have five minutes, which will be 

reflected by the colors in that clock system in front of you. As you can imagine, they are green, 

yellow, and red. Yellow you start to wind down. Red you hopefully will start to wind up fairly 

swiftly. 

 And after all three of you have testified, then the individual members will have a round of 

questions. And depending on time, et cetera, you may even have an additional round of questions 

as people may want to ask questions. 
6

 And there is going to be a vote on the floor fairly soon. I'm going to have to leave fairly 

soon. And hopefully, we won't hold you up too long. We know this was delayed, so there's just 

one vote, as I understand. So, hopefully, we can vote and not take a 20-minute break or whatever, 

just break for five or 10 minutes and get right back to the testimony. 

 So with that, let me introduce the witnesses. 

 The first is Dr. Jay Chambers. Dr. Chambers is a Senior Research Fellow and Director of 

the Special Education Expenditures Project at the American Institutes for Research. In addition, he 

presently serves as a consulting professor at the Stanford University School of Education, 

President-Elect of the American Education Finance Association, and is a member of the President's 

Commission on Excellence in Special Education. Dr. Chambers holds a Ph.D. from Stanford 

University.

Mr. Paul Goldfinger is in the middle. Mr. Goldfinger is Vice President of School Services 

of California, Inc., a private school finance consulting firm. Prior to becoming Vice President in 

1989, he served the organization as a director and consultant. Mr. Goldfinger was a self-employed 

school finance consultant before joining School Services of California, Inc. Mr. Goldfinger holds a 

Master of Science degree from the University of California, Berkeley. 

 And the final witness is Dr. John Lawrence. Dr. Lawrence is President-Elect of the 

American Association of School Administrators and Superintendent of the Troy R-III School 

District in Troy, Missouri. He served two terms as the Chairman of the Missouri State High School 

Activities Association Committee on Public and Private School Relations. For his excellent work 

in education, Dr. Lawrence was named Missouri Superintendent of the Year in 1998. He holds a 

Ph.D. from the University of Missouri, Columbia. 

 We welcome all of you to what we consider to be a subject of some importance. And with 

that, Dr. Chambers, we'll turn to you for your testimony, sir. 

STATEMENT OF JAY G. CHAMBERS, DIRECTOR, SPECIAL 

EDUCATION EXPENDITURE PROJECT AND SENIOR RESEARCH 

FELLOW, AMERICAN INSTITUTES FOR RESEARCH, PALO ALTO, 

CALIFORNIA

Mr. Chambers. Thank you. Good afternoon, Mr. Chairman, Members of the Subcommittee. I am 

very pleased to be here today and honored to testify before you. I am testifying before you as the 

Director of the Special Education Expenditure Project, which every once and a while I will refer to 

as SEEP, S-E-E-P. That project was funded by the Office of Special Education Programs out of 

the one-half percent set aside that is provided under Part B and permits us to do the kind of large 

scale work reflected by this project. 

 This is the fourth study over the last four decades of its kind directed at trying to determine 

how much is being expended on special education services. Just to give you some background on 
7

the Special Education Expenditure Project, the project involves or is centered on data from 

approximately 10,000 students from approximately 300 school districts around the country, over a 

thousand schools, and includes data from 10,000 general education and special education teachers 

and related service providers. 

 Major questions that the study intended to answer were: How much are we spending on 

special education services? What additional expenditures are being provided to serve special 

education students? And how do federal funds support spending for special education? 

 I would like you to refer to the testimony Exhibit 1 if you will on page two of my written 

statement. I should point out that the data are for the 1999-2000 school year. These data are a 

snapshot, a point in time. During the 1999-2000 school year, we spent approximately $78.3 billion 

to provide educational services to special education students. That reflects that total expenditure 

required to provide services to these students, not just the special education portion. 

 Fifty billion dollars of that $78 billion was for services that are designated as special 

education services. That means instructional personnel, related service personnel and 

administrative and support personnel who are specifically designated as special education service 

providers.

 An additional $27.3 billion was spent on regular education services for these students. And 

an additional approximately $1 billion was spent on other special needs programs such as Title I 

and programs for bilingual students. 

 It is important to remember that these data reflect expenditures as opposed to cost, and this 

will become more apparent when you look at the second exhibit. 

 On page three, I have an exhibit with two bars. I want to look at the first vertical bar first. 

This is another way of viewing these same dollar figures that I have just presented to you in terms 

of the $78 billion. 

 Let's look at it in terms of the typical special education student. How much are we spending 

in total to provide services to that student? The average was $12,639 including everything from 

administration to transportation to instruction and related services. 

 Special education services amounted to $8,080; regular education services, $4,394; and 

another $165 on other special programs. 

 However, another way of looking at that is trying to determine what the additional 

expenditure was to serve these children. The second vertical bar shows that same total, $12,639. 

And if I remove from that the expenditure necessary to provide services to the average regular 

education student, which amounts to $6,556, and I remove further from that the additional 

expenditure attributable to other special programs, the additional expenditure associated with being 

a special education student amounted to $5,918. 
8

 Now why are the regular education expenditures different in these two bars? In one 

instance, I am trying to get you to recognize the fact that some of what special education does is 

provide services and instructional programs that would have been provided by regular education 

were that student a regular student. 

 The spending ratios that come out of this suggest that we're spending about 90 percent more 

on the average special education student than we are on a regular education student. If you include 

the other special programs, that number is 1.93, about 93 percent more than a regular education 

student. If you remove the estimated costs of facilities, that ratio comes to about 2.08. The reason 

I remove that number is because often in local state school finance formulas, they regard capital 

facilities and total current expenditures as two separate components of total spending. 

 How are we spending the special education dollars? About nine percent of it goes for the 

preschool programs, 72 percent for school age programs, 1.6 percent for summer school programs, 

a total of about 10 percent for administration and support, and about $3.7 billion for transportation. 

 I already see I've got my red light here, so I'm going to finish up here very quickly. How do 

federal funds support the special education program? The amount of federal IDEA funds in 1999-

2000 was $4.5 billion, of which $3.7 billion reached the local education agencies. And that's what 

my analysis focuses upon, the dollars spent at the local level, not state dollars. 

 Looking at the incremental expenditure on special education students, the $3.7 billion 

amounts to about a little more than 10 percent of that additional total expenditure on special 

education students. If you add the amount for Medicaid, which was not included in that original 

federal expenditure, it brings federal funding up another 1.8 percent to a total of about 12 percent. 

 Finally, with regard to how federal funds are used, our numbers show that the relative 

allocation of federal funds is very similar to the allocation of total dollars for special education, that 

is the $50 billion, that the relative allocation among instruction related services in the 

administration is pretty much the same. 

 In closing, special education spending has changed over time. Our analysis suggests that 

the increases in special education spending are largely attributable to increases in the number of 

students identified and not on the basis of increases in the cost or the expenditure per pupil for 

services. Thank you. 

WRITTEN STATEMENT OF JAY G. CHAMBERS, DIRECTOR, SPECIAL EDUCATION 

EXPENDITURE PROJECT AND SENIOR RESEARCH FELLOW, AMERICAN INSTITUTES 

FOR RESEARCH, PALO ALTO, CALIFORNIA – SEE APPENDIX C 

Mr. Hilleary. [presiding] Thank you, Dr. Chambers. And I apologize for that dreaded red light, 

but we all have to live by that. I thank you for your testimony, and I apologize for the distraction 

while we change seats here. 
9

 I am Congressman Hilleary from Tennessee. I am very interested in your subject. Thank 

you for coming to testify. 

Mr. Goldfinger, you are welcome to testify. Thank you very much, and welcome to the 

subcommittee. 

STATEMENT OF PAUL GOLDFINGER, VICE PRESIDENT, SCHOOL 

SERVICES OF CALIFORNIA, INC., SACRAMENTO, CALIFORNIA, AND 

ON BEHALF OF THE COALITION FOR ADEQUATE FUNDING FOR 

SPECIAL EDUCATION 

Mr. Goldfinger. Well, thank you. Good afternoon, Mr. Chairman and members of the 

subcommittee. My name is Paul Goldfinger. I am Vice President of School Services of California, 

Inc., a school finance consulting firm. I am also representing the Coalition for Adequate Funding 

for Special Education. That is a coalition of California school agencies in California that advocates 

for increased funding for special education programs. I am a registered California lobbyist for this 

coalition.

 I have been actively involved with special education finance issues for almost 30 years. In 

1975, I was a strong supporter for the Education for the Handicapped Act. But today I see a system 

that is seriously flawed. 

 In short, we've gone from a system where, prior to 1975, disabled pupils had fewer rights 

than others, they could even be excluded from school, to a system where they have more rights. 

But the system is very much out of balance in my opinion. In fact, we have created a system that is 

so complicated and over regulated that 100 percent compliance is virtually impossible. It is 

certainly time for reform. 

 My remarks today focus on trying to create a more balanced system. In particular, schools 

do not have unlimited funding, and this is the reason that I am raising the following points. 

 Our primary issue is clearly that of funding. The Federal Government has mandated a very 

expensive program but has failed to pay its promised share. In California, the shortfall in special 

education funding, that is the difference between total expenditures and total revenues, is more than 

$1.3 billion per year. Increasing federal aid to the 40 percent level would dramatically reduce the 

strain on general education dollars and also allow for needed program expansion. But funding 

alone will not create a balanced system, and reforms are definitely needed especially in the 

following areas. 

 First, I believe Congress needs to clarify what is FAPE. That is four words, Free and 

Appropriate Public Education. And I believe only the first of those four words, ``Free'' is clearly 

understood. In particular, what is the dividing line is indicated by the Rowley case between 

appropriate and exceeds appropriate. A lot of conflicts could be avoided if this dividing line were 
10

clearer.

 And what are the limits to a school agency's obligation to provide educational services? 

Should schools have to pay for health and mental health services, or should other public agencies 

be required to step up and pay for those services? 

 And what about requests for some related services such as equestrian therapy or even 

dolphin-human therapy? 

 Second, there needs to be some cap put on legal reimbursement. In California, legal fees 

for special education cases are so lucrative that legal costs are dominating decisions. School 

districts are making decisions based on avoiding expensive litigation rather than on what is best for 

children. One school district recently spent $300,000 on legal fees for a 25-day hearing on which it 

won every point. 

 Congress has wisely set limits on legal fees for the District of Columbia school district. 

Shouldn't the same standard apply across the nation? 

 Third. Because schools have limited resources, every spending decision must be costeffective. And I'd like for you to consider an example. Suppose that a district offers a program 

with an annual cost of $40,000, but the parents request another program that costs $100,000. There 

is no evaluation as to whether this marginal cost of $60,000 is a good use of scarce resources, and 

nobody is considering the impact on the rest of the pupils in that school district if it spends the 

extra $60,000 on that one pupil. There is no other federal redirective program where costeffectiveness is not considered. 

 Under the Americans with Disabilities Act, an employer's responsibility is to provide 

reasonable accommodation. But under IDEA, there is no upper bound on accommodation. There 

needs to be a cap placed on school spending for special education. One form of a cap would allow 

a school agency to limit its total spending for special education to some percentage, say 15 percent 

of its budget. Another form of a cap would be a limit on the cost per pupil. Along with that, I 

believe there should be a federal safety net that would reimburse some percentage, such as 50 

percent or more, for the cost of individual placements in excess of that established limit. 

 Fourth. The issue of the differential standard in discipline needs to be addressed. The 

current system is being badly abused when for many students who are being subjected to discipline, 

the claim is made for the first time that they are disabled and shouldn't be punished. 

 I'd like to share the comments of Joe Gillentine, a special education director from Orange 

County, California. Joe said, ``I used to love working with teachers and parents to provide FAPE 

for disabled students. Today, FAPE has taken a back seat to litigation, and it is no longer fun or 

rewarding to me.'' 

 I believe it's time to restore balance to the system. Together, ideas I've discussed above and 

the others included in my written statement will serve to create a more balanced system, a system 
11

that works for disabled pupils and non-disabled pupils alike. Thank you. 

WRITTEN STATEMENT OF PAUL GOLDFINGER, VICE PRESIDENT, SCHOOL SERVICES 

OF CALIFORNIA, INC., SACRAMENTO, CALIFORNIA, AND ON BEHALF OF THE 

COALITION FOR ADEQUATE FUNDING FOR SPECIAL EDUCATION – SEE APPENDIX D 

Mr. Hilleary. Thank you very much, Mr. Goldfinger. Great testimony. 

Dr. Lawrence, thank you for coming. Welcome to the Committee. Please proceed. 

STATEMENT OF JOHN R. LAWRENCE, PRESIDENT-ELECT, AMERICAN 

ASSOCIATION OF SCHOOL ADMINISTRATORS AND 

SUPERINTENDENT, TROY R-III SCHOOL DISTRICT, TROY, MISSOURI 

Mr. Lawrence. Thank you, Mr. Chairman and members of the committee, for the opportunity to 

discuss the Individuals with Disabilities of Education Act. 

 My name is John Lawrence, Superintendent of Troy, Missouri Public Schools, a K-12 

district of just under 5,000 students. I am completing my 18th year as superintendent in Troy, and 

I've had the privilege of serving as a school superintendent for 26 of my 28 years in the profession. 

 Recently, I was elected President of the American Association of School Administrators, 

which is why I'm here today representing the over 14,000 AASA members across the country. 

 I'd like to begin with some general observations that we of AASA have gathered as we 

prepared for the re-authorization. Foremost is the fact that America's public schools serve 6 million 

children with disabilities, usually in general classrooms, who are succeeding in every sense of the 

word. Students who were once warehoused in state schools are graduating from high school and 

going on to college or training for rewarding careers. Yet, drafting a complex new service like 

special education out of the base of existing schools has been challenging. 

 The mission has been more acute because of countless additional needs placed on the public 

schools by our culture. The process of re-authorizing IDEA in the early stages is within the spirit 

of AASA. And in that context, we'd like to make some general observations of the current law in 

terms of its fiscal impact, and close with some recommendations for the re-authorization. 

 First, AASA perceives that inherent contradictions exist between the funding needs for all 

students to experience quality education and the occasionally staggering costs necessary to meet 

the requirements of IDEA for special education students. 

 Some school districts with fewer resources must drop programs for non-disabled students to 

accommodate special ed's costs. Whereas other school districts say no to services that special 

education parents really want because the requests are simply unaffordable in local mid-year 
12

budget cycles. 

 Accordingly, at some point in the school year, nearly every school district is out of 

compliance with IDEA. That is why AASA's delegate assembly and executive committee have 

made getting the federal share of IDEA funding up to the original 40 percent promised our highest 

legislative priority. 

 Money is not in and of itself the complete answer, but it is critical to providing the level of 

education desired by No Child Left Behind and required by IDEA. However, full compliance with 

the provisions of IDEA is not possible under current fiscal support. When parents and their 

advocates tell you that America's schools are not wholly implementing the IDEA and its 

regulations, regretfully they are correct. We are not because we cannot. We cannot because 

children with disabilities often require related services utilizing highly specialized healthcare 

professionals. We cannot because disabled children sometimes need unique transportation and 

continual facility modifications required by changes to student IEPs. WE cannot because the 

enormous cost often incurred for even one high-need student served by in-district programs and the 

equally expensive cost when schools use alternative private placements. We cannot simply 

because the money isn't there to do the job right. 

 When I return home, one of my first decisions that I'll make is to determine whether or not 

to develop an on-campus program for a highly aggressive autistic student in space with our 

growing district that I don't have and at a projected cost I cannot defend to parents of non-disabled 

students.

 We estimate the cost of serving this student, including multiple therapies and structural 

equipment, the teacher and personal assistant for his physical restraint and his diapering needs to be 

$73,000. However, contracted services in nearby St. Louis are only slightly less at $50,000, and 

this excludes necessary transportation comprised of the school van and the bus driver and the 

accompanying paraprofessional all in place, so that Bobby - and that's not his name, but we'll call 

him that here - so that Bobby can ride to school an hour-and-a-half each day. 

 Now please don't read any lack of compassion in this account. Bobby needs the best we can 

give him, but so do a great many others who have a per-pupil student cost of $68,000 in our district 

less than his. In this light, we must turn to you to provide the resources necessary to bring IDEA to 

near full compliance everywhere in the following steps. 

 One. Elevate the federal share to 40 percent as soon as possible. We project at AASA the 

fiscal need over six years to be $2.45 billion per year increases. Conversely, the prospect of 

appropriation increases in the neighborhood of a billion dollars per year ultimately generates to the 

schools only $125 per student. And in Troy, the process and costs of the IEP alone is $400. Thus, 

at that rate of only $1 billion annual allocation increase, it will take three years of surplus per diem 

capital per student to pay for a single IEP, not just the services but the planning process which 

leads to those services. 

 As a result, unless the Federal Government appropriates funds to reach the 40 percent 

benchmark, a greater and greater fiscal burden will fall upon the local schools. To illustrate this 
13

point, I'm offering the following data from my home state of Missouri indicating that from January 

1, 1992 to January 1, 2002, special ed. costs increased $379 million. 

 Now, during that decade, the state support increased by only $22 million, whereas the 

Federal Government contributed $88 million to the equation. But of the total $379 million 

increase, $269 million of that expense was shouldered at the local schoolhouse door. 

 Second, and finally, we ask that state maintenance of effort language be strengthened.

Rigid guidelines assure the local public schools that increases in federal funding will result in a true 

net gain for schools and not be simply a window for states to reduce the respective prior fiscal year 

support.

 In the interest of brevity, I would like to add that AASA has several other recommendations 

that we will provide to the appropriate staff member. And I thank you very much for the 

opportunity.

WRITTEN STATEMENT OF JOHN R. LAWRENCE, PRESIDENT-ELECT, AMERICAN 

ASSOCIATION OF SCHOOL ADMINISTRATORS AND SUPERINTENDENT, TROY R-III 

SCHOOL DISTRICT, TROY, MISSOURI – SEE APPENDIX E 

Mr. Hilleary. Thank you, Dr. Lawrence, for your testimony. 

 What I would like to do is start the questioning. You've heard all the beeps going on. We 

have some votes on the House floor right now as well, but we have decided to carry on as opposed 

to adjourning for a few minutes. I would like to begin the questioning and direct a question to all 

three of you, and I wish all of you would take a stab at it. 

 You know, we have had some fairly significant increases in IDEA funding. Not enough, I 

think people will agree, but it has been better in the last several years than it was for the many years 

prior to that. How do you feel like the state and local communities have utilized those funds? Have 

they done it well? And have we had problems in our local communities of those funds being used 

for something besides special education? I hear that on occasion from some of my local schools. I 

will start with Dr. Chambers. And if anybody has a comment, please chime in. 

 Thank you very much for your testimony, all three of you. 

Mr. Chambers. Well, I'm hoping in the near future we'll be able to answer that question. 

Unfortunately, the data that we currently have, as I mentioned earlier, is a snapshot at a point in 

time. We don't really have time series data. 

 However, we have been discussing, I guess up until recently, post 1999-2000, the increases 

in federal funding haven't been substantial enough to really track. It's awfully difficult to track how 

those funds are used at the local level. The funds often become blended with other funds. Many 

districts can't answer that kind of a question. 
14

 However, we are in the process of trying to develop some approaches to addressing these 

questions on a smaller scale, and more specific studies tailored to address that issue given the major 

increase that has occurred. We are in discussion with folks at OSEP to do just that. 

Mr. Goldfinger. I can really only speak to the experience in California. In California, special 

education funding is essentially one big pot, and the federal aid, plus the state aid, plus the - in 

some cases local property taxes earmarked for special education are considered one pot of funds - 

and so it's very hard to track what is federal and non-federal. People really don't think of it that 

way.

 I do want to comment on the issue that Chairman Castle mentioned in his opening remarks 

about California Governor Gray Davis. The coalition that I represent shares the concern that the 

dollars that the Federal Government allocated as an increase in federal aid for special education for 

California is being used instead to offset what would be normally a state cost for funding of costs 

of living adjustments, COLAs, and growth in this next budget year. 

 I recognize California has to have a balanced budget and is facing a budget shortfall of 15 

billion, 17 billion. If it hits 20, I think we ought to sell. 

 [Laughter.] 

Mr. Goldfinger. And it's just a huge issue. But education has this piece that's protected in 

California under a constitutional measure known as Proposition 98. And so education gets a 

certain number of dollars out of the state budget. What the government's proposal is doing, in 

effect, is saying that we're going to use the federal dollars to save state dollars that we would have 

otherwise provided for COLA and growth for special education, and those dollars must be spent for 

education, but we're going to spend them on other educational programs. They're not going to go 

into highways or welfare, they will stay within education. The problem is they don't stay within 

special education. 

 And just as we're looking to the Federal Government to increase funding to resolve some of 

the imbalance, we are lobbying hard at the state level. And we ask for any help that you at 

Congress can give in that regard to say, Governor Davis, we respectfully disagree. We would 

support your help in that regard. 

Mr. Hilleary. I hope that some of these reforms will make it through this year. And Dr. Lawrence, 

I am going to yet again apologize. I am going to have to go vote. Congressman Osborne is going 

to sit in the chair and preside. He is a former coach out at Nebraska, and they have routinely beaten 

the University of Tennessee. So I am glad he is here instead of there. 

 Thank you very much for your testimony. And I will read the answer to my question in the 

minutes. Thank you very much. 

Mr. Lawrence. Thank you. 
15

Mr. Osborne. [presiding] I apologize for the delay here. We had to do some votes. 

 I appreciate you gentlemen being here today. Dr. Lawrence, did you have a response? 

Mr. Lawrence. I did. And I'll first say that the University of Nebraska beats more schools than 

just simply Tennessee, being from the Big 12 Conference in Missouri. 

 [Laughter.] 

Mr. Osborne. We were pretty lucky one time. Is that what you were trying to get around to? 

 [Laughter.] 

Mr. Lawrence. The question originally dealt with whether or not there was any misuse of the 

IDEA subsidy. And I would say to that very clearly to my knowledge there certainly is not. The 

concern here is that the demand for expensive services, in my mind, is simply escalating at a 

quicker pace than even the recently approved allocations that we've received from Congress. And I 

know school superintendents and administrators truly from across the country, and I just know of 

no one that would not try to, at an optimum level or certainly at a level beyond appropriate, provide 

services to meet the needs of kids. 

 There is, however, Mr. Chairman, an associated issue that I think is important and that deals 

with Medicaid. Medicaid not only connects public education and the delivery of related services 

and depicts that we can certainly all work together for the common need for children, but it also 

provides, especially recently, an emerging source of revenue that's critically important to us as 

well. So we would ask further considerations of Medicaid itself to continue to grow as it relates to 

a fiscal component within meeting the needs for these very special children. 

Mr. Osborne. Thank you for that response. I'm going to ask another general question. Any of you 

or all of you can answer this. Can you explain why some states are so slow to draw down their 

current and past fiscal year appropriations under Part B despite constant lobbying for more Part B 

funds? Is that an unanswerable question, whoever would like to take a shot at it. 

Mr. Lawrence. Mr. Chairman, it's unanswerable by me. I cannot respond. I don't know the 

answer to that. 

Mr. Osborne. It must have been a tremendous question. 

Mr. Goldfinger. I would ask the Department of Education in California that very question. I know 

some years it's very, very late in the school year before the Department of Education releases the 

federal funds, and this clearly causes cash flow problems at the local levels. So I share your 

concerns, sir. 

Mr. Osborne. So it's more the timing that is the problem. Is that what you see? 
16

Mr. Goldfinger. That's my understanding. Yes, sir. 

Mr. Osborne. Dr. Chambers? 

Mr. Chambers. Sorry, I don't have an answer to that question. 

Mr. Osborne. I'm afraid I don't, either. This is a question for Dr. Chambers. How much variation 

is there among states regarding the cost of educating the average student eligible for special 

education? And what explains that variation? 

Mr. Chambers. We are in the process of looking at that right now. The SEEP report that you have 

is one of numerous reports that will be eventually coming out. So we have, at this point, we have 

not completed that analysis. However, I can say to you that in some of the states that we have 

looked at where we have information at the - of representative districts at the state level - the ratio 

of average special education expenditures to regular education has ranged from 1.6 to 2.6 or 

thereabouts.

 I think what that says is less that those ratios tell you anything about the cost of providing 

special education services as much as what we are spending on special education services. And I 

think that's an important distinction. Because whenever you say it costs 90 percent more to serve a 

special education child, you're telling me that you have some concept of what it means to educate 

that child, and I don't think we've defined that yet. 

 I heard Mr. Goldfinger refer to kind of defining the standard of service or what it means to 

provide education. So it's important to recognize that the numbers that we're providing are 

expenditures not cost figures. Because when I look at variations like 1.6 to 2.6, it's telling me more 

about what the states are doing than it is necessarily about what it really costs to provide a certain 

service to a certain child. 

Mr. Osborne. Thank you. This is for Dr. Lawrence. What should be done about high cost 

litigation that can have a devastating impact on a school director's budget? 

Mr. Lawrence. Well, certainly in many school districts that is critical, and my colleague, Mr. 

Goldfinger, certainly indicated one recently in California. I think your reference was to $300,000, 

and they won the case. 

 One of the difficult decisions I think that school administrators make is a very simple one. 

That is, sitting across the table from very caring parents and making a decision as to whether or not 

to expend money that might be, by that administrator, perceived to be outside of equity to other 

students, or perhaps in their own mind outside of even the special needs for these children, or to 

draw the line and, therefore, bring on almost certain due process and the litigation costs that you 

mentioned. 

 In our system, we've been very fortunate. We have had zero. And I would imagine there's 

not another school district that can say that. We have had zero due process cases. And as I 
17

indicated in my presentation, I've been there for 18 years. 

 I would, however, say that preparing to make the decisions now involve legal fees, not 

simply the litigation but the legal advice that's necessary to make the choices which will stand the 

future potential test of law. 

 Our legal expenditures have increased four or 500 percent over the last two years, and I 

would believe that in the last two years, we've spent in aggregate more than in the prior 16 years of 

my tenure. 

 So I think it gets down to quality decisions for kids and weighing the options. But the proof 

also may fall into occasionally agreeing to the services as long as it's not hugely disproportionate. 

These kids need the best that we can give them. And in that process, quite frankly, you're going to 

avoid that litigation. That's not buying out of it, that's just making a quality choice not only for the 

children but from a budgetary standpoint as well. 

Mr. Osborne. Thank you. 

Mr. Kildee? 

Mr. Kildee. Thank you, Mr. Chairman. Dr. Lawrence, how many special education students do 

you have in your district? You have a K-12 district? 

Mr. Lawrence. We have a K-12 district, sir. Sixteen percent of our 5,000 students are in special 

ed. categories. 

Mr. Kildee. Basically, what would the effect be if Congress did appropriate the 40 percent of 

excess cost? How would that affect a school district like yours? 

Mr. Lawrence. If our research is accurate, and I'm sure that it is, as I indicated in my testimony, $1 

billion when it's divided and disbursed among the some 56 million students in our country, after the 

state takes away their share, which is 20 percent by the Chairman's earlier comment, we would 

receive at $1 billion $125 per student. We're asking that to be increased to $2.45 billion. 

 Logistically, will it change the world with that proportionate increase? It will not. But 

what is happening in schools across America, I know of no states right now that are not looking at 

some form of reduction, small or large, that will come from state budgets as it relates to the overall 

funding that schools within those respective states would draw. And so now more than ever, when 

we have the economic problems that we have across states, all 50 in this country, this federal 

support, you know, is much more central to take its proper place as a revenue source. 

 But to directly answer your question, I don't believe, sir, that that would be an overnight 

renaissance within our system, but I do know that it's more critically needed now than ever due to 

the global economy. 
18

Mr. Kildee. There is no question that state legislatures are having a difficult time with revenue. 

Some of the revenue lost is due to what we have done here in Congress, elimination of the estate 

tax, for instance. There are some real problems out there in the states. 

 Let me ask you this. How can we improve the effect of Medicaid reimbursement, and how 

would that be shared with the local school districts? 

Mr. Lawrence. Until about 12 months ago, we did not participate in the Medicaid program, and 

we didn't initially because it was our perception, accurate or not, that the bureaucratic components 

of that were less than the inevitable return of funds. We were wrong in that assessment. I don't 

know whether or not there's been a streamlining or whether or not we just initially misjudged it. 

 We use the Maximus Organization, which I believe is a nationally active organization, 

taking a look at random moments for our people that work in those programs. We deal with direct 

reimbursables by basis of scrip. It's made an enormous difference to us in terms of overall revenue. 

Everything is relative. But I will say that it's brought forth slightly under $200,000 per year for us.

And even in the critical situation I mentioned a little bit ago, dollars, frankly, in a co-budgetary 

sense are just dollars. And I mentioned a very special case at 73,000 and that was very true. That 

was within dollars of total accuracy. Bringing in the Medicaid component certainly goes a long 

way to meeting those kinds of expenditures for children. 

Mr. Kildee. Some school districts are early and creative, and some were more than creative in 

generating some Medicaid dollars. But that certainly is a legitimate source, and I am happy that 

you're tapping that source because some of these children certainly qualify in the most strict 

interpretation of the Medicaid laws. So I'm very happy, and I do encourage school districts to draw 

from that source. 

Dr. Chambers, approximately 1,000 schools responded to your survey. Did you collect data 

from them regarding Medicaid? And do you know what percentage of these schools billed for 

Medicaid? 

Mr. Chambers. That's on a district basis. And actually, we do have information. For those 

districts that responded to the question, 44 percent of the districts reported recovering funds from 

Medicaid. It was a limited sample. Not everybody responded to the question. For those that did 

respond, it was an estimated 44 percent. 

Mr. Kildee. Again, I would encourage those school districts to tap into Medicaid because Congress 

wrote the legislation. The program is administered by the states, but federal dollars flow into that 

program. And these students certainly who qualify for Medicaid would be themselves - not only 

the school districts - but themselves be cheated if you are not drawing up on that. So I am happy 

that you are drawing on Medicaid. 

Mr. Goldfinger, you mentioned that we have capped the attorney fees in the District of Columbia. 

I know that's always a controversial issue, but actually that cap was repealed last year. The 

Appropriations Committee had included the cap in previous years, but they took the cap off last 
19

year.

Mr. Goldfinger. I'm sorry, I misunderstood. A colleague of mine was watching C-Span one day 

and heard the debate. 

Mr. Kildee. You have to watch us every day. We do it, and then we undo it. 

 [Laughter.] 

Mr. Kildee. Your mistake is very understandable. 

 Thank you very much, Mr. Chairman. 

Mr. Osborne. Mr. Tancredo? 

Mr. Tancredo. Thank you, Mr. Chairman. I thank the members of the panel for their interesting 

and elucidative testimony. 

 I taught in a different lifetime and a different age and different era. Public school - I started 

in 1970. So I recognize that my experiences, vis-à-vis special education, are probably not to be 

relied upon as indicative of what is happening today. 

 With that said and recognizing the fact that costs are driven by numbers, it was always 

intriguing to me when I sat in on a staffing when I was a teacher, and recognize the fact that all of 

the momentum at the table at the time of that staffing was directed toward putting the child in.

Whether it was the teacher who brought the attention or the parent who brought to the staff’s 

attention the child's particular problem or the special ed. teacher or the counselor, even someone 

from the administration, all the momentum was to put the child in. And in fact, every child was put 

in. As long as I was there, I do not recall a time in which we did not actually put the child who was 

being staffed into a program. 

 Now, I'm sure things have gotten better in terms of identification. And I pose this to you 

because your task is to help us deal with the problem of dollars and, as I say, dollars are driven by 

numbers. And so I am wondering if you have taken into consideration, and forgive me if some or 

all of this is redundant - I apologize, I wasn't hear when this was brought up. But I wonder if you 

can tell me to what extent a standardized process for staffing children into the program - nationally 

standardized process would be beneficial in terms of being able to - because as I say, I can go back 

now and I have talked to people in my own district and I know it's quite a bit different. I know 

there is a lot that happens before today. There is a lot that happens before that child ever gets to the 

point of being staffed that may be a windowing effect. 

 But I'm wondering, that's different everywhere. It's different in every district. It's different 

sometimes in every school. So that to me is a problem, at least I perceive it as such. And I'm 

wondering how you feel about that? Is it okay that every district has their own process for staffing? 

Doesn't that mean that some kids in one district will end up staffed in and in another would not? 

Do we know that the ones that were not don't need it or that they were being unfairly treated? 
20

What's your observation? Anybody and all of you actually. 

Mr. Lawrence. I'll jump in here, Congressman. And I think that what you're saying, first of all, 

has merit. It's a noble thought. 

 In public education on a state level and certainly on a local level, there is a great focus on 

autonomy, a great focus on the local district's ability to make decisions for their school district. 

And as a result, I think that's one of the reasons that we have such disparity as you mentioned. 

 I would indicate that in Missouri recently, to the first part of your comment to where you 

were indicating, and I think it historically true, that many, many children would be entering special 

ed. identities, for lack of a better term. In Missouri recently, we actually raised the qualifying 

standards to enter the program. I think they are still fair for kids, but it has had an effect on the 

number, even in our school district, of children that qualify for services. I don't think that same 

mantra could or would be shared necessarily in other states? 

Mr. Tancredo. Why not? 

Mr. Lawrence. Congressman, I think it would be like agreement on any of the other number of 

things that you deal with every day and reaching consensus in school issues is not any easier than 

the complexities of the legislation that you men and women deal with. 

Mr. Tancredo. Well, that is an absolutely accurate and candid response, but it doesn't suggest that 

we should not tackle it. I mean, if you're saying to me that the standards that you're using in 

Missouri are appropriate, you believe, for the majority of - for all of the children in your state.

Those who are getting served deserve it, and those that don't, aren't getting in. 

 If that's good, then I don't know why we wouldn't try at least to have that replicated 

everywhere so that we have some sense of what works, at least in this case and perhaps in a way 

that could be helpful to other states who are looking perhaps for that kind of guidance, although I 

wouldn't suggest that anybody look to the Federal Government for guidance. I'm saying that 

somehow or other we actually end up with a process that everybody agrees, at least to the greatest 

extent possible, is one that accurately identifies the children that need the help. 

Mr. Lawrence. Well, I would agree. And I wouldn't want to send the wrong message to 

individuals in other states that Missouri's current standards are the answer. We feel they're better 

than what we had, but I would certainly agree that dialogue between the states in some format to 

try to become more like each other - because when you really think about children, and with the 

mobility that we have today in this country as well, their basic core, their basic outlook, and 

certainly all of their futures are not that much different whether or not they reside in Florida, New 

Mexico or Missouri. So the idea of dialogue to try to arrive at a more consensus position I think is 

a very strong idea. And it's a response perhaps we should take. 

Mr. Tancredo. Mr. Chairman, I know I am out of time for questions, but with the indulgence of 

the Chairman, would it be all right to let somebody else answer if they have input? 
21

Mr. Goldfinger. Congressman, I think there were two issues that need to be resolved. One is who 

is eligible for special education, and the other is once they are eligible, what services should they 

be getting? And I hear very different statistics from different states. 

 In California, out of the school age population, about 10.2 or 10.3 percent are identified for 

special education. At the commission hearing, where I was with Dr. Chambers, there was 

somebody from Washington State indicating that there between 12 and 13 percent were eligible. I 

see a huge variation within California from district to district. Districts where I would say the 

demographics are similar, and I see a huge variation. 

 I think that's one issue. And I certainly support the President's educational reforms, and we 

have a great example in California. Oak Grove unified school district has implemented a program 

it calls ``Neverstreaming,'' which has provided a very high level of intervention at the first sign of 

failure rather than when failure gets to be so great that children are eligible for special education.

Their percentage, their incidence of pupils in special education, is among the lowest of the larger 

school districts in California. 

 But I think the other issue is that once students are eligible, what services should they get? 

And that's the crux of so much of the litigation that we have in California. 

Chairman Castle. Thank you. Oh, I'm sorry, somebody else was going to speak. 

Mr. Chambers. This is getting outside of my range of expertise very quickly as an economist in 

this field, but I would say that given what I've begun to learn on the commission and serving on the 

President's Commission on Excellence in Special Education, and the discussions I've had with local 

folks over the last eight to 10 years when I've been working in this field, is that we ought to be 

encouraging a lot more pre-referral activities across the United States. That's going on in numerous 

places under different names. But I would argue those are the kinds of processes that I would like 

to see happen so that, again, instead of waiting to fail, we can begin to address problems and issues 

of people who are having difficulty learning quite early before they get identified in special 

education.

Mr. Tancredo. Thank you. 

Chairman Castle. Thank you, Mr. Tancredo. 

Mr. Scott? 

Mr. Scott. Thank you, Mr. Chairman. Dr. Lawrence, were you - how long have you been in 

administration? 

Mr. Lawrence. I've been in administration 26 years. 

Mr. Scott. Did that include a time when disabled children often would not get any education? 
22

Mr. Lawrence. During the early years, Congressman, certainly the services that we were providing 

kids in this country were less than they should have been. 

Mr. Scott. And they are getting much better attention because of the federal mandate? 

Mr. Lawrence. I think they're getting much better attention because fortunately we've achieved an 

education and consciousness that all children are equally important. 

Mr. Scott. And the federal mandate kind of helped that conscience? 

Mr. Lawrence. It couldn't have hurt it. 

 [Laughter.] 

Mr. Scott. In your remarks, you mentioned the problem - I assume it would be particularly acute 

for small school systems of the high cost-low incidence disabilities. 

Mr. Lawrence. Yes. 

Mr. Scott. What should we do to accommodate those? 

Mr. Lawrence. Congressman, in the smallest of schools, there's probably not a funding vehicle 

that can assuredly protect the smallest of schools if indeed they are unfortunate enough to have an 

extremely high incident rate of very significantly needy kids. 

 Having said that, not just on the broad brush approach, but I really do believe, as also is 

stated in my testimony, that although the effort at increasing the allocation by $1 billion is 

certainly, based on the history of Congress, a step forward, full funding of IDEA, which goes back 

essentially to 1975 in terms of at least the perceived commitment by Congress, would over time do 

as much to protect those schools against critical needs, high expense situations as anything that 

Congress could embark upon. 

Mr. Scott. It seems to me that even at 40 percent for a small system, a 20, 30, $50,000 hit, you 

would have to raise countywide taxes to absorb that in a small school system. Is there some kind of 

insurance or pooling that may be appropriate for the high cost-low incidence situation, particularly 

for small school systems? 

Mr. Lawrence. Congressman, honestly, I don't know, but I do agree with what you said in terms of 

the magnitude of impact that would take place in a very small school if they were unfortunate 

enough to have a large incident rate of high need kids. 

 Without knowing the answer, it certainly does bode itself to be one of the areas that we 

need to get outside of the box in our assessment in Missouri and not just in Missouri. I know in 

New Jersey, it's perceived by many to be, especially out of the Midwest, a high population 

industrial state. I happen to know, because I have a lot of friends in New Jersey, that that's not 

really true. There are many small schools in that state as well. And so not just in our state but in 
23

many others such as that eastern one, three, four or five critical incidents in a student population of 

less than 1,000 - the economic ramifications are going to spiral throughout the organization and 

further impact the ability to deal with compensation issues needed by staff to maintain quality 

teachers.

 So I don't know the answer. I do agree with your assessment of the problem, and I think it's 

time that we get out of the box and look for some solutions. 

Mr. Scott. Perhaps, particularly for the small systems, some kind of insurance - I know in my area 

there are several school systems that pool the resources and everybody contributes their 

proportional share. Some smaller counties participate, and when they get hit, well, they are in the 

pool, so it doesn't hurt them any worse. I mean they are already in the pool. 

Mr. Lawrence. One of my really good friends once told me that teachers are great thieves. And I 

need to talk to you after this hearing to get an idea of how those dynamics works, because that's a 

good solution or at least a step that certainly makes sense in light of the problem. 

Mr. Scott. I think Mr. Goldfinger wants to answer. 

Mr. Goldfinger. Yes. I agree this is a problem. I think it's a problem not just for small school 

districts but also for large school districts. They get hit with a number of these children with 

exceptional needs, and it's very huge dollars for them as well. 

 One suggestion that's included in my written testimony is to have a federal safety net that if 

the 40 percent - if the Federal Government funds the 40 percent level and distributes that uniformly 

to states who then distribute it uniformly to school districts, it doesn't provide an insurance concept 

that you've talked about, sir. But if the Federal Government were to set aside some dollars for a 

safety net, an extraordinary cost pool for placements over some threshold, 20,000, 40,000 a year - 

in California, we have cases of 100,000 and people don't blink anymore. Two hundred and fifty 

thousand gets our attention. And so there are extraordinary needs there. And I would think that 

creating an extraordinary cost pool at the federal level and setting aside some of the hopefully new 

federal dollars that Congress will be appropriating in the coming year for that insurance pool would 

help to resolve this issue. 

Mr. Lawrence. Congressman, would you indulge me to add to my original answer, because I 

forgot something that I think is important. 

 In many states - again, Missouri being one, but I think there are many more that participate 

- there are extraordinary cost provisions within state support. Specifically in Missouri, when the 

cost per student achieves a level five times the amount of the average cost per student, the state 

then steps in to fund the balance of those expenditures. 

 Now again, though, what is happening is in the tight budgets that we see in the states across 

the country - and again using Missouri, because it's the one I know best, as the example - we're 

seeing next year's proposed allocation already approved, in fact, by the Missouri House to be less 

than the prior year. And yet, we know the incidence rates are going to be greater. So I'm afraid 
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that even that provision is going to be prorated because it would be under funded at the state level.

But states do have, and Missouri certainly is one that has that extraordinary cost provision that does 

aid on these critical cases if state funding is there to be able to pay for it. 

Mr. Chambers. Can I address that question as well. 

Chairman Castle. Certainly, Dr. Chambers. 

Mr. Chambers. First, I should mention that as a member of the President's commission and also a 

member of the task force on finance, that that issue is clearly under consideration by the task force.

We have not resolved how one might do this, but it is an issue that is on the table. So I just wanted 

to at least communicate that. 

 Second, with respect to high need, it is not a simple issue. It is one that leaves us in a 

quandary defining what we mean by ``high need.'' Where does one draw that line? 

 I think your concept of insurance makes a lot of sense, but at what level. Is that a national 

level? Is it a state level? I don't think we know the answer to that yet. We are still looking into it.

How do you implement that program? 

 And third, what kinds of districts might be targeted. You mentioned, and I think my 

colleague, Dr. Lawrence, mentioned that small districts might be most impacted by this. So we 

need to think very carefully through any recommendations as to how one might do this. 

 I can provide just some quick information that may be useful, as this has come up in our 

deliberations, and given the data set that I have as a result of SEEP, we have done some estimation 

of what the total additional expenditure associated with the top one percent and the top half of one 

percent of special education students. 

 In other words, if I took the 60,000 most expensive special education students 

approximately, we're talking about an additional expenditure of about $3.9 billion. It's not to say 

that that would be the obligation of the Federal Government, but it is an estimate of what that total 

expenditure might be between the two, state and federal. If we took the top half of 1 percent, that 

number is about 2.4 billion. 

 So I guess the issue is you've got to determine what the sharing arrangements are, what kind 

of contributions might be made by the states, the local, as well as the federal. 

Mr. Scott. Thank you, Mr. Chairman. 

Chairman Castle. Thank you, Mr. Scott. 

Mrs. Biggert? 

Mrs. Biggert. Thank you, Mr. Chairman. This question is for Dr. Chambers. And I think you 

were just getting into part of my question that you didn't address in your prepared statement, but I 
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understand that you and your colleagues at the Special Education Expenditures Project are 

preparing additional reports on special education finance issues that will delve more deeply into 

specific aspects of special education finance. And I wondered if you could tell us, the 

subcommittee, something about the following. 

 First of all, how does U.S. spending on special ed. vary across the types of public schools, 

districts, as well as students by disabilities, age level, and then functional disabilities? 

 And I've got two more parts, but maybe if you could start on that. 

Mr. Chambers. We will be addressing those issues in reports that are to come. 

Mrs. Biggert. We always want a preview, you know. 

Mr. Chambers. Variations across districts, we have looked at variations related to district size, 

urbanicity. And just in general, the strongest pattern that comes out of this, which I would not think 

of as causal, but you find that the smallest districts have higher ratios and higher expenditures per 

pupil which we assume are associated with the dis-economies of small scale operations, which in 

some cases are of no choice to the district because of remote locations. 

 With respect to other variables, well, higher income districts - the higher two-thirds in terms 

of income levels appear to show some higher spending. We haven't been able to control for other 

factors at this point. This is, again, more of a descriptive study at this point than an analytical 

study. We were hoping to delve in, after looking at some of the descriptive information, into more 

detail in that regard. 

 By disability, obviously, we've been talking about the typical special education student as if 

there was one. We've looked at variations across disability categories, and the ratio of expenditures 

ranges from about 1.6 to as high as 3.9, I believe. I'd have to check my data, and I'd be glad at 

some point in the near future to provide that information for you. 

Mrs. Biggert. That would be great. Thank you. 

Mr. Chambers. We have some graphs that I do not have in front of me. And that focuses on 

school age population for children served within the public schools. That does not include those 

served in the non-public schools where the ratio increases substantially. 

Mrs. Biggert. How about age level? Is there a big difference in the finances? 

Mr. Chambers. I am not prepared to address that at this point, but I certainly - in our disabilities 

study, in the analysis by disability, we have information on preschool. The problem is, again, it's 

kind of talking about that typical student that really does not exist. 

 One thing that's important is to realize that disability as a classification system doesn't tell 

you a great deal about the expenditures or the needs of a child. There is a lot more in terms of 

functional abilities or needs that are not reflected by that classification. And I should point out that 
26

we are looking into that as well, because when we collected our data, we asked the teachers who 

were completing the surveys on behalf of students to tell us something about the functional abilities 

using a scale that has been developed at the University of North Carolina by Rone Simeonsson and 

Donald Bailey. So we will be able to report on that as well. 

Mrs. Biggert. How about, then, looking at what would be spent on identification, due process, 

transportation services and preschool programs? 

Mr. Chambers. We have estimates in report number one on expenditures. On the first of those 

elements, what we call expenditures on assessment, evaluation and IEP related activities, we spent 

about $6.7 billion on all of those activities combined out of the 50 billion, which averages out to 

about a little under $1,100 per special education student. 

 However, it is important to recognize that that doesn't necessarily reflect the cost for every 

single student. The denominator in that does not include students who may have gone through the 

process and were not considered eligible. But it is an average figure. 

 We are working on a report right now that gives us some information on what is being 

spent. I would call it more of a lower bound estimate of what is being spent on due process, 

mediation and litigation services. And the estimate there was something in the neighborhood of 

$150 million, which is less than a half of one percent of the total. 

 The reason I say it's a lower bound estimate is because we don't know how much time - we 

do - we estimated how much time central office staff and folks like that were spending on it and 

combined that with our expenditure data to estimate that number. And we had some information 

on the expenditures for legal services. What we don't have is how much time was spent by teachers 

specifically on due process, mediation, and litigation. 

Mrs. Biggert. And then transportation? 

Mr. Chambers. Transportation. We do have information on that. Let me refer to my figures. The 

average per pupil expenditure for special transportation was about $4,400 or approximately nine 

time what is required for regular transportation expenditures. That amounted to about 3.7 billion 

out of the 50. 

Mrs. Biggert. I see my time has expired. Could I ask just the third part of this question? 

Chairman Castle. Sure. Please, finish up. 

Mrs. Biggert. How does the special ed. spending vary across states classified by the funding 

formula, the student poverty and income levels? 

Mr. Chambers. That, I would like to get back to you on. I actually have run some numbers like 

that. I don't have them with me today. That report, I'm hoping, will be available in the next month 

or so, but I think we can provide some numbers with the permission of our monitors at OSEP. 
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Mrs. Biggert. Thank you very much. Thank you, Mr. Chairman, for your indulgence. 

Chairman Castle. Ms. Davis will be next. 

Mrs. Davis. Thank you, Mr. Chairman. If I may just note a personal privilege, in the audience is 

one of my constituents, Katie Roberson, who is a special ed. teacher, a principal of the VIP 

Preschool and also a board member of Coronado Unified. Good to have you here, Katie, thank 

you.

 And I also wanted to acknowledge and thank you all very much for being here. I had the 

privilege of working with Mr. Goldfinger in California, and I know that he's been such a strong 

advocate of education for kids and special education as well. 

 I wondered if I could just ask you to follow up with some of the work that we did in 

California. One of the important changes in the way we fund special education students there had 

to go from funding the people, basically the units, the personnel units who are engaged in special 

education to funding the child and having that funding follow the child. And I am wondering, in 

light of your testimony and what's been said today, whether that has really been a plus overall for 

students or whether it has exacerbated some of the concerns that you raised today? 

Mr. Goldfinger. It is a pleasure to see you, Congresswoman, and it was a pleasure to work with 

you in California. 

Ms. Davis was co-author of Assembly Bill 602, which was a landmark bill in California 

that changed the special education funding model from an old system that was driven by pupil 

count, loading factors, personnel units, obsolete funding rates, to a funding model that is based on 

K-12 population. And this change, I believe, has been very, very positive in that we have gotten 

away from the crazy incentives under the old funding model. 

 Now because dollars are given out based upon general education counts, it is no longer 

beneficial, if it ever was, to identify more pupils in special education. And also, those districts that 

are successful, through interventions focused on intensive reading programs and supplemental 

services, in keeping students out of special education don't suffer any financial loss. I feel that that 

is the major benefit of going to a neutral criteria like overall population for this funding model. 

 Also within California, under the old system, there were incentives to place pupils in nonpublic schools because districts got additional reimbursement. There were incentives to place 

pupils in a setting, whether it was a specialty class or some other setting, that may have generated 

additional funding. We have gotten away from all of that. We have the most incentive-free system 

that I've ever seen. I just wish we had some more money. 

Mrs. Davis. Yes. Well, that's the down side, I guess, of all of it. But I certainly was open to the 

down side as well and some of the more negative impacts, if any, that have occurred as a result of 

that and how we can, I guess, learn from that experience as well. 
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Mr. Goldfinger. In terms of negative impacts, the way that that legislation works in California is 

that the state is going to dedicate future growth in federal aid to fund equalization. We're going to 

equalize funding among the service regions in California where they're known in California as 

special education and local plan areas or SELPAs. And so for three years, all of the new federal 

money, about $200 million worth, went only to those SELPAs that had below average funding.

And to those that had average or above average funding, they didn't get any benefit of the federal 

dollars. They still got a funding advantage, but they didn't get any of the new money. 

 As we move forward, the coalition that I represent would like to see that all of the increases 

in federal dollars be automatically passed through to the SELPAs so that all SELPAs get the benefit 

of additional federal funds. 

Mrs. Davis. Thank you. If I could - just quickly to Dr. Chambers as well. And perhaps it is here 

in the notes, and I am trying hard to find it quickly. You talk about the additional expenditure for 

special education students. Do you all break down the percentage for specific healthcare under 

that? What percentage of the 5,918 - how much of that is directed at what we would call certainly 

for a non-special education students? We might identify those healthcare dollars. Where is - do 

you have a handle on that? 

Mr. Chambers. We are in the process of doing the analysis by disability. And in that analysis, we 

have broken the dollars down a little bit more finely. I don't have that. That report is not complete 

yet, but that is something that we are working on that I am hoping will be available shortly. It will 

give you a better idea - for example, now, in the current report, we can tell you how much was on 

instruction versus related services but, of course, some of related services are not necessarily health 

related. But we've broken down related services and more finely into the specific service provider, 

speech therapist, audiologist, nurses, physical/occupational therapists and so on. So we'll have a 

better idea. 

Mrs. Davis. Do you believe that it would be helpful to know that, even in terms of general 

education? I think that for the public, it is difficult to understand that schools are doing, as we 

know, much more today, and they are assisting children with health. And in fact, we know in many 

of our schools that the school is the primary care provider for that child. And I am just wondering, 

to the extent that it would be helpful and we might in time separate out those healthcare dollars for 

special ed as well as for general education. Or do you believe that in some way that would create 

more problems if we did that? 

Mr. Chambers. I guess my feeling is more information is always better than less information. 

And the more we can know about what the dollars are going for or how they are being used, I think 

the better off we are. I don't have any strong opinions or any value judgments about whether health 

expenditures are good for the schools or bad for the schools, but I think it's important that we know 

that so that those in Dr. Lawrence's position and those more on the ground can make assessments 

and judgments about what is appropriate and what is not. 

Mrs. Davis. Yes. Thank you very much. And thank you, Mr. Chairman. I think that would be 

helpful to have a better handle on that, because I think for the general public, people assume that all 
29

the money going into education is educational services, and that's just not the case. Thank you. 

Chairman Castle. It's not the case. And it is helpful to have that information. 

 Let me yield to myself for five minutes. Let me tell you what I'm going to try to do here. 

Let me make a disclaimer up front. You know, when you have a hearing like this and you ask hard 

questions about overidentification or whatever, and everyone says oh, my gosh, he's against 

educating kids with disabilities - which none of us here are as far as I can ascertain. And I think 

these recent Congresses have made a huge effort to try to increase the funding. I also realize that a 

part of your answers is if we had full funding from the Federal Government, it would help us 

greatly relieve some of the problems. That's a given. I understand that going into it. And I think 

ultimately this bill will at least go in that direction. 

 But having said that, it doesn't mean that we are as efficient as we could be. And it bothers 

me that when we ask hard questions, everyone points the finger and says you're just against special 

education. The bottom line is I am willing to spend the money, but I want it spent efficiently. And 

I want to ask you some questions along those lines, and I don't want all three of you to answer all 

questions or we might be here until six o'clock. 

 But I want to ask about overidentification in general. I want to ask about the cost of 

administration, legal decisions, developments and maintenance of the IEPs. I want to ask about the 

whole business of how we handle the legal aspect of all this, and should we have a more structured 

system for that. And I want to ask about the issue of overly expensive treatments. And I'll go back 

and ask them individually, but I just wanted to give you a preview so we could think about what 

you might want to particularly speak about. And I don't know who is an expert on what. You 

know, I have read your testimony, so I'm going to ask them generally, and perhaps one of you can 

answer, and perhaps another short answer so we can go on to the next question. 

 But let's talk about overidentification first of all. I was unfortunately out of the room for a 

lot of the questions, but there's been more and more discussion of overidentification of children 

with disabilities for a whole variety of reasons, some which may be economic or whatever. There is 

also a discussion of overidentification in the minority communities in this country of which there 

are many, many, many minority communities, sometimes with English as a second language being 

the barrier or whatever. 

 Is this an area with which we should be concerned, or are we going to down a blind alley 

that isn't going to do us much good in terms of savings, and do you truly believe there is 

overidentification or however else you want to address the area of overidentification. 

Mr. Lawrence. I'll address a part of that. The movement I think recently, as I indicated earlier, to 

raise standards and, therefore, reduce the size of the door might indirectly aid to what has been an 

overidentification concern. And I would be very candid to indicate that I think a decade or so ago, 

particularly, that a lot of public schools and public school teachers specifically would be looking at 

kids that were problematic within the classroom causing difficulties for others. And one of the 

easiest things to do is to shift that student down the hallway to a special program. That has 

changed immensely in my mind in the recent generation, which is a very good thing. But I think 
30

that as a result, we are pulling away from, in my mind, globally, the level at least, of 

overidentification that's been a part of our history. 

Chairman Castle. Well, let me ask it the other way, then, which I had not expected to ask. That is, 

are we underidentifying because there is pressure, either administratively or cost-wise, not to 

identify. Are you seeing that at all, or do you think it's a fair balance at this point? 

Mr. Lawrence. It would appear to me to be a fair balance. It's an extremely difficult question to 

answer. But the conditions, the external conditions of finance might have a tendency in a futuristic 

way to lead to an underidentification. 

Chairman Castle. I also realize that by state, by district there are going to be different answers, so 

I am cognizant of that. 

Mr. Lawrence. Exactly. 

Chairman Castle. Let me go on to my next question, which is the whole cost of all this - I hear 

this a lot from local people concerned with the whole cost of the administration of IDEA, the 

development of the IEPs, and the whole business of dealing with the legal costs. I want to ask a 

further question about the legal costs dealing with the hearings and then dealing with lawyers et 

cetera, and how costs really drain the program. Any comments on that? 

Mr. Goldfinger. Yes. If Congress were to address one aspect, that's the one I would wish 

Congress to address. 

 In California, we've seen so many cases where school districts weigh whether to challenge 

what the parents are asking for on the basis that they feel it's excessive, or they feel it's not in the 

best interest of the child, or they evaluate what will it cost us to go into a hearing, due process, 

litigation. And the legal costs are so staggering that even if they win, it is phenomenal. And of 

course, if they lose, they have to pay the opposing attorney and provide the placement. 

 Many times, over and over again, I have heard anecdotally people say it's just not worth it 

for us to say no. 

Chairman Castle. Let me ask my other question now, then. I have a theory. This is just a theory.

This is not something I am preaching at this point. And the theory is, I mean I practice law and you 

know, there are a couple of cards of liability cases. Well, maybe more than a couple. But the 

couple I'm familiar with are workman's compensation cases, which you may be familiar with. But 

basically, if a worker is injured and they injure their arm and they can't use it for two months, they 

receive so much compensation. They receive say $50 or $100 a week for eight weeks or however 

long it takes to cure it. And if you lose a thumb or hand or something, there's actually 

compensation for that. I mean so much - at least in Delaware where I am from, it's pretty 

statutorily done. As a result, the hearings are run by lay people. They are done relatively quickly.

There is legal involvement, but it is much more limited, or you can have just, you know, a regular 

medical liability or a liability suit where somebody is injured that may go on for months and run 
31

into the millions of dollars and that kind of thing. 

 It seems to me that a workman's comp type situation - I'm not trying to make too direct a 

comparison here - but just to show you a less expensive way of running the legal system versus the 

more expensive open-ended system makes some sense. Should we at the Federal Government be 

looking at what's happening across this country and be making a determination of how to reduce 

the cost of special education litigation and due process proceedings? We could eliminate the 

arbitrations and the legal matters, because it just seems to be scattered where you go in this 

country. There seems to be a different view of how to handle these different concepts. I'm not 

trying to dictate for the Federal Government's point of view, but would this be helpful to the whole 

disabilities community? Would it be helpful to us in terms of managing our finances, et cetera? Or 

am I way off base with this theory? 

Mr. Goldfinger. From the school/agency perspective, I feel that would be very, very helpful. As I 

indicated in my testimony, I've heard of cases going for 25 days. I've heard a murder trial is going 

for shorter. It just doesn't make any sense to me that these cases are dragged out for such a long 

period of time. 

 An attorney colleague of mine was saying in the San Francisco Bay area, if there are 

attorneys fees - because these are interpreted to be civil right cases - the prevailing rate for civil 

rights cases attorneys' fees is $400 an hour. It is so lucrative that people are pursuing these cases.

And the attorney-colleague said ``We, were ready to settle at an IEP.'' The opposing attorney said 

``But wait, I spent four days preparing for the IEP. I need $10,000 for my legal fees.'' And if there 

is no settlement at the IEP, it just goes on. 

 One case in Northern San Diego County where a school district said we have an appropriate 

program for children with autism. The parents felt that only a private placement would be 

appropriate. The school districts, the consortium of school districts in that area said we're going to 

stand up. They put up a legal defense of over half a million dollars and they want - so now it is 

deemed that they have an appropriate program for children with autism. 

 How do you justify this kind of expenditure or this kind of club hanging over the head of 

the school agencies to say, “If you don't agree with me, here's what it's going to cost you if you 

win.”

 It just doesn't make any sense to me, and this is an area where reform is very critically 

needed. If we can do it in a less controversial way, I am all for it. 

Chairman Castle. Let me throw my final point on the table. Anybody may wish to comment on 

all of these things. You sort of touched on it a little bit, Mr. Goldfinger, in your answer. But is this 

treatment too expensive? 

 Now, I well understand that if one has a child with disabilities, you want that child to 

receive the appropriate education. And it's going to be expensive in many incidences to make sure 

that happens, and it involves, frankly, a heck of a lot more than education to make that happen. 
32

 On the other hand, we are hearing incidences of cases of over $200,000 now, of incredible 

treatments, people traveling a long ways for treatments or whatever, and some of this is getting 

very expensive. And, you know, within reason I am willing to do that. But when it starts to detract 

from other kids with disabilities being educated properly or other children in general being 

educated properly, I start to have a problem with that. 

 I mean, we wrestle with finances and education, period. Every school district out there 

could use an extra $300 a kid or $500 a kid or whatever the heck it may be. And then all of a 

sudden we're putting huge sums of money into - and those are obviously an aberration. They're not 

all the cases, but they are enough cases that people are starting to raise some questions. So I throw 

that into the mix as well. 

 Is that an area that we have to legislate in? As you said, all this arose from civil rights to 

begin with. That's how all this began, civil rights. So there are a lot of civil rights elements in what 

we are dealing with here. And that makes it very difficult to do that. And I think that's about the 

last thing I think Congress really wants to do. But are we in a situation where things are running 

away from us so that we are having cost control problems and, therefore, the overall educational 

level is suffering as a result? 

 Do any of you want to take a stab at that? I've run badly over my time, so please try to help 

me by being fairly brief. 

Mr. Goldfinger. I certainly share your concerns, and I would request that the chair add to your 

time, sir. 

Chairman Castle. Except Mr. Kildee. 

Mr. Goldfinger. There is one area where there is a cap in special education, and that's for children 

who are placed voluntarily in private or parochial schools, where the federal regulations say to a 

school district, identify the pro rata share of the federal aid for the special education population 

attending those schools. That's all that you have to spend. And at that point, you can say no. And 

so school districts get together with the private and parochial schools, with parent groups, and 

figure out the most cost effective way of spending those dollars. They don't have to provide 

unlimited services. 

 I would ask that there be a similar approach for a school district to say we don't have 

unlimited resources. Yes, the parent of a disabled child wants the best for that child. The parent of 

the gifted child wants the best for that child. The parent of the bilingual child wants the best for 

their child, and so on. Every parent wants the best. And my concern is that when extraordinary 

dollars are being put behind certain children, then there's not enough for the others. And by setting 

an overall cap, it would say school districts and special education communities, you need to work 

together. Here are the dollars; let's spend them in the most cost effective way. And at that point, 

that's all the dollars that we have to spend. 
33

Chairman Castle. Dr. Chambers, you've looked at all this sort of economically. Do you have any 

comments on it or - Dr. Lawrence? You seem to want to touch it with a ten-foot pole the way -. 

Dr. Lawrence. I agree largely with Mr. Goldfinger, with the exception of the cap provision. I do 

think when I look at the general litigation arena that you bring forward - that two things come to 

mind. First of all, in one of the western federal courts in our state, a recent ruling within the last 45 

days moved the definition from appropriate to maximized opportunities when we're really making 

judgments on services for some of the kids with special needs. I think that's a whole new arena if 

that becomes more commonplace across jurisdictions to open up still additional litigation. 

 And when I think of the one thing that has always really amazed me, it is simply this. 

Taking nothing away from the needs of special kids - they need everything we can give them. But 

after all these years, I still cannot understand how more parents of non-disabled children have not 

brought litigation against us for disproportionate spending. I just don't see how that hasn't taken 

place. I think it's maybe a statement to the heart of the American people, but in terms of the 

logistics, it amazes me that that hasn't been more commonplace. 

Chairman Castle. Let me thank you. I am going to ask Mr. Kildee if he has any further questions.

But I just want to personally thank you for your answers. As I said, I don't have solutions for these 

things, but I think they are areas that we do need to ask questions about and delve in to. 

Mr. Kildee, do you have any further questions? 

Mr. Kildee. I have no further questions, but I do think, Mr. Chairman, that we have assembled a 

very, very helpful panel today. We are at a busy time of the year right now, but we decided we 

wanted to have this hearing. The Governor insisted upon it, and his decision was very, very good, 

and you've all been very, very helpful to us. And I thank you very much. 

Chairman Castle. Let me add my thanks also to you for your valuable time and testimony. Some 

of you come from afar, and for being here today, we appreciate that. It's a difficult subject matter. 

We understand that. There's a lot of interested people in this audience, as well as those of you who 

have testified, as well as the members of the subcommittee and the full committee, and we will 

continue to look at this in the next few weeks as we get ready to go into probably a markup on this. 

So if you have additional writings or information, feel free to correspond with us. 

 If there is no further business, the subcommittee stands adjourned. Thank you. 

 [Whereupon, at 3:42 p.m., the subcommittee was adjourned.] 
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Table of Indexes 

Chairman Castle, 1, 5, 21, 24, 26, 27, 29, 30, 31, 32, 33 

Mr. Chambers, 6, 13, 16, 18, 21, 24, 25, 26, 28 

Mr. Goldfinger, 9, 14, 15, 16, 18, 19, 21, 23, 27, 28, 30, 31, 32 

Mr. Hilleary, 8, 11, 13, 14 

Mr. Kildee, 4, 17, 18, 19, 33 

Mr. Lawrence, 11, 14, 15, 17, 18, 20, 21, 22, 23, 29, 30 

Mr. Miller, 5 

Mr. Osborne, 15, 16, 17, 19 

Mr. Scott, 21, 22, 23, 24 

Mr. Tancredo, 19, 20, 21 

Mrs. Biggert, 24, 25, 26, 27 

Mrs. Davis, 27, 28