By ALEX BAUMHARDT/Oregon Capital Chronicle

SALEM — Lawmakers got a three-hour crash course last week on fixes that are needed to Oregon’s education funding formula to improve student learning and direct money toward the highest needs kids.

Among the most consequential findings was that Oregon’s formula for how much money leaders send to schools to support students with disabilities leaves them under-resourced.

Oregon is one of seven states that cap spending on special education, and it has the lowest cap of all, according to the Virginia-based American Institutes for Research researchers, who discussed their analysis on Oregon’s education funding during a joint meeting of the House and Senate Education committees last week. Lawmakers are considering a proposal this session, House Bill 2953, sponsored by Rep. Courtney Neron, D-Wilsonville, that would remove the funding cap but Oregon also needs more thoughtful spending on special education, the researchers found.

In the 2022-23 school year, the state gave school districts about $696 million to meet the needs of students with special needs, such as physical, developmental and learning disabilities like autism and speech and language impairment. That was 25% more than schools got in the 2018-19 school year. But inflation wiped out the spending power of that additional money, the researchers found.

And it wasn’t enough.

In the 2022-23 school year, Oregon’s 197 school districts spent more than $1 billion to meet the needs of students with disabilities, officials from Oregon’s Department of Education said, forcing schools to cobble together the extra $375 million from other streams of funding, such as the Student Success Act meant to improve outcomes for underserved students.

The cap

In any of Oregon’s school districts, just 11% of the student body with disabilities are entitled to extra money from the state — about $9,000 additional dollars above general per-pupil costs, per student — regardless of the type of disability the student has. In the average Oregon district, about 15% of students have disabilities and require additional resources.

Districts can apply for additional funding from the state when their student population with disabilities exceeds 11%, and nearly 90% of districts – 167 – apply.

Districts that exceeded the funding cap received, on average, about $2,800 for each student above the cap in recent years. That’s about $5,300 less than what they would have received under the cap.

“Most districts in your state actually exceed your cap. And then even though they exceed the cap, they go on to get a waiver from the cap, which raises questions: what is the cap actually doing?” Tammy Colby, one of the American Institutes for Research researchers, asked lawmakers.

Jake Cornett, executive director of the nonprofit advocacy group Disability Rights Oregon, said eliminating the cap has been needed for years.

“Oregon needs to raise the special education cap and substantially increase funding that is directly tied to measurable outcomes for children with disabilities,” he said. “It’s past time for Oregon to hold school districts accountable for the money they receive.”

High-cost disabilities

The additional costs of providing a fair and equal education for a deaf or blind student are about $24,000 annually, according to the U.S. Department of Education. For a student with autism, it’s closer to $29,000 and for a student with a speech language impairment it’s about $11,000.

But in Oregon, every student with a disability receives the same amount of additional funding under the state’s funding formula. Because the state gives no special weight to funding schools based on the actual cost of the students’ disability, schools have to come up with the difference.

The percentage of students identified for special education in Oregon did not increase much between 2018 and 2023, the researchers found, but more of those students have high-cost disabilities. The state’s high-cost disability fund, an insurance policy that helps districts cover costs when serving a student costs more than $30,000 a year, also has a spending limit.

Despite legislative efforts to inject more money into the fund over the years, inflation has taken the power out of those dollars, and demand is outstripping supply, the research shows.

During the 2020-21 school year, the state put $50 million into the fund, which covered less than 60% of the requests for reimbursement from districts. Lawmakers have not raised appropriations to the fund in years, and today, it covers only about 40% of eligible expenditures from districts.

“Why is that a problem? Well, that means districts have to raise that revenue some other way,” Colby said. “It comes out of unrestricted revenue. It can encroach on other kinds of programs and services that a district can offer.”