Texas school districts hopeful lawmakers will help plug $1.7 billion gap in special education funding

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Texas school districts are hoping changes under consideration at the Texas Legislature will help them keep up with the rising number of Texas students in special education programs — and the costs to support them.

Education advocates and school administrators say the proposals would help narrow the large funding gap between what Texas and the federal government provide schools for special education services and what public school districts have to pay themselves. That gap stands at about $1.7 billion, according to the Texas Education Agency.

Under changes proposed in the Texas House and Senate, the amount of funding a school receives for special education for each student would be based on students’ individual needs.

That approach would be a significant departure from the current system, which directs special education funding to schools based on how much time a student spends in a particular setting. For example, two students who are placed in the same classroom but require different levels of support receive the same dollars under the current settings-based funding model.

Proponents say the new system would better serve special education students with widely varying needs — a deaf student, for example, may require a different level of support than a student with attention deficit disorder or dyslexia — and provide schools more funding to pay for those services. In some states that already have a “tier-based” funding system for special education, schools receive more money to support students who require one-on-one instruction than for children who need more periodic help.

Other changes in the bills include giving partial reimbursements to schools when they initially evaluate students’ special education needs, which can sometimes cost school districts thousands of dollars per student. The demand for initial special education evaluations has skyrocketed in recent years.

In addition, House Bill 2 — the Texas House’s priority school finance bill this session — would include an additional $615 million in special education funding for the 2025-26 school year. Senate Bill 568, a more narrow special education funding bill advancing in the Senate, does not outline similar additional funding.

District leaders welcome the potential changes, which they say are much needed to provide relief to Texas schools that have been increasingly burdened with budget deficits and inflation-related cost hikes. Schools in Texas and across the country are required by law to provide special education services to students who need them. They often have to pull money away from other programs if they don’t receive enough funding from the state and federal government.

“We would welcome, appreciate and encourage any additional funding provided by the state for our special education students,” said Bryan Guinn, the chief financial officer for Fort Bend Independent School District, the sixth-largest school district in the state. “They’re the students that have the greatest needs.”

Special education cost pressures on schools

The number of Texas students receiving special education services has grown rapidly in the past decade. During the 2014-15 school year, 8.6% of all Texas public school students participated in these programs. Almost 10 years later, that figure has gone up to about 14%, representing close to 800,000 Texas children last school year.

Much of that growth occurred after 2017, when the Texas Legislature ended an unofficial TEA policy that effectively prevented schools from providing special education services to more than 8.5% of their students.

In Fort Bend ISD, just southwest of Houston, the number of students in special education programs has more than doubled since the 2014-15 school year, according to a 2023 report by the Texas Council of Administrators of Special Education. Last year, more than 11,000 students in the district were enrolled in special education programs, representing almost 14% of all students and a more than 6,500-student increase from almost a decade ago.

Though Fort Bend ISD receives substantial funds from the state and federal government to pay for special education services required by law, they were not enough to cover the costs.

This past school year, state and federal funding covered close to three-quarters of the district’s special education costs, but Fort Bend ISD was left on the hook to pay the remaining $33.6 million, Guinn said. Footing the rest of the bill has become a trend in recent years, he added. Since the 2019-20 school year, Fort Bend ISD has had to pay about $28 million each year for special education services out of its own pocket, Guinn said.

Higher special education costs in recent years have come as the district has had to hire more diagnosticians, speech-language pathologists, licensed school psychology experts and other aides to support the growing number of students in these programs, Guinn said.

Like many other school districts in the state, Fort Bend ISD also provides personalized special education programs. These services sometimes require multiple school employees to work with the same student at the same time, Guinn said. He believes the changes lawmakers are considering, which would base the special education funding schools receive on students’ individual needs, will better help with his district’s costs.

In addition, Guinn was pleased with HB 2’s proposal to help schools cover the costs of special education evaluations they conduct. Like in many other Texas school districts, Fort Bend ISD staff evaluate children and decide whether they require special education services. Students generally receive these evaluations, with parental or guardian consent, before districts decide whether they need special education services.

HB 2 would reimburse schools $1,000 for every initial special education evaluation they conduct. Guinn said that amount might not cover the full cost of every evaluation but “any funding is going to be helpful.” His district conducted more than 1,000 special education evaluations in the past year, he said — including follow-up evaluations that would not be covered by the House or Senate’s proposals. Schools are generally required to cover the costs of these evaluations — not parents of students. The Senate proposal, SB 568, would reimburse schools $500 per initial evaluation.

The proposed reimbursements also come at a time when the House’s school voucher bill — which would give families taxpayer funds to subsidize their children’s private education — would put more pressure on public schools to conduct special education evaluations. Federal law already requires public schools to fund and conduct evaluations for private school students under certain circumstances, but the House’s voucher proposal, House Bill 3, would mandate that public schools do so within 45 days.

Like in Fort Bend, Round Rock ISD Superintendent Hafedh Azaiez said high special education costs have become a heavy burden for his district. Last school year, nearly 6,100 students were receiving special education services in the district, an increase of about 25% from five years prior, according to a report from a consulting group. The cost of the special education services the district provided was $60 million, out of which Round Rock ISD had to pay about $20 million from its own pocket. The district has an “obligation to take care of the students, regardless of the cost,” Azaiez said.

The district has had to make some “difficult decisions” — like cutting several positions in the central office in recent years and increasing class sizes — to make up for rising costs from special education and other areas, Azaiez said.

“We have been creative in a way to offset the lack of adequate funding from the state,” he said. “But it’s getting harder and harder now to kind of make ends meet.”

Changes years in the making

Special education advocates have applauded the changes on the table this session. They have pushed harder for funding reforms like the ones in HB 2 and SB 568 as the number of special education students in the state has risen.

Two state special education task forces in recent years have recommended the state provide different levels of funding to schools depending on individual student needs.

Changes proposed in both major pieces of legislation are consistent with the main recommendations that one task force outlined in a 2022 report for revamping the special education funding formula: base funding on students’ individual needs and give schools more money to cover the cost of special education evaluations and transporting special education students.

Rep. Mary González, D-Clint, who was part of one of the task forces and who has filed her own bill to reform special education funding this year, said all of those recommendations made it into HB 2. She said her constituents have told her that the “state has been suffocating schools” by not adequately funding them.

HB 2 — the House’s priority public school finance bill — also proposes a broader funding boost that would increase the base amount schools receive for every student by $220. Some education advocates and school leaders recently said they’ll accept any new funding the state wants to provide, though others complained the proposed hike is too low and does not account for high inflation in recent years. The base amount of per-student funding that Texas schools get from the state has not been increased since 2019.

It seems unlikely that the Senate will propose its own increase to that base amount, which stands at $6,160 per student. Instead, senators have proposed a targeted funding increase that would raise teacher pay. Late last month, the Senate passed Senate Bill 26, which would establish pay raises for teachers based on years of experience.

But when it comes to special education, the proposed funding model would likely help close the current funding gap, according to Sabrina Gonzalez Saucedo, director of public policy and advocacy at The Arc of Texas, a disability advocacy group.

“In theory, with this new updated formula that considers all of these really important pieces, ISDs would be getting a more appropriate amount for providing the services that they’re already doing and are federally required to do,” she said.

Some advocates have said they worry the bills as written will put the new system in place too quickly. The changes to special education funding in both HB 2 and SB 568 would go into effect at the start of the 2025-26 school year. Andrea Chevalier, director of governmental relations for the Texas Council of Administrators of Special Education, said making the changes too hastily could result in a difficult transition for school districts.

“Our advocacy has been, ‘Please wait. Give us a year because there’s going to be a lot of new data elements and data collection,’” Chevalier said. “That would be the downside of it if the implementation piece of it is muddy, overly cumbersome or burdensome, and then it doesn’t actually lead to improvements — at least not right away.”

She also expressed concern that both bills delegate power to the TEA commissioner, an unelected official, to decide what the different tiers of funding based on students’ needs will be. The bills’ authors should consider incorporating public comment or an advisory committee into that decision-making process, Chevalier added.

Other criticisms have centered on changes the bill does not include.

At a Senate Committee on Education K-16 hearing Tuesday, Ryan Wheeler, executive director of special education at Channelview ISD, asked lawmakers to amend SB 568 to include reimbursements not just for initial special education evaluations but for follow-up ones. Under federal law, he said school districts like his own are required to reevaluate students in special education programs at least every three years.

Also Tuesday, several individuals — including special education advocates and school officials — called on lawmakers to end a funding “penalty” that causes schools to lose some general funds if students in special education programs spend time outside the general classroom.

Misty Odenweller, president of the Conroe ISD board of trustees, said her district would be able to recoup an additional $18.5 million without the penalty. That policy, she added, “disproportionately affects our ability to serve all students.”

Still, advocates are optimistic about the proposals and hopeful they will alleviate Texas school districts’ financial burdens.

“This is one of the most transformational bills this session,” Gonzalez Saucedo testified Tuesday. “These reforms are a crucial step toward ensuring equitable and adequate funding for students with disabilities across Texas.”

Disclosure: Arc of Texas has been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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