BIRMINGHAM, Ala. – Alabama lawmakers will meet today to continue examining whether the state’s 1995 formula for funding education is still adequate. Special education costs, which are rising rapidly, play a significant role in the debate.
School officials are identifying more students in need of special education services than they did five years earlier: 13% of all students in 2018 versus 18% in 2023 according to federal report card data. Providing these services – from assessments to additional teachers – comes at a high cost.
According to data produced by the Alabama Department of Education, in the 2022-23 school year, Alabama spent $891 million on special education for 131,000 students with disabilities. These costs – for teachers, services, transportation, testing and supplies – are in addition to the expenses of general education programs that children with disabilities participate in.
Federal funding from the Individuals with Disabilities Education Act (IDEA) covered just $179 million, or 20%, of the total.
The remaining $712 million had to come from state and local funding, with $36 million of that provided through temporary federal pandemic relief funds.
This heavy reliance on state and local funding underscores a key question lawmakers face: Is Alabama’s current funding system equitable and enough to meet the needs of all students?
Federal funding falls short
Many assume that IDEA, as a federal law, comes with significant federal funding. However, the reality is starkly different. Nationally, federal funding covers only around 14% to 17% of the actual costs of special education according to funding experts, leaving states and localities to shoulder the rest.
There’s also a common misconception that Congress promised to fund 40% of special education costs. Tammy Kolbe, a special education funding expert and researcher with the American Institutes for Research, clarified this misunderstanding.
Kolbe said the 40% figure – the most the feds were expected to pay for special education – is actually based on the count of students with disabilities during the 2004-05 school year. And the figure used for the base per pupil amount was the national, not state or local, average per pupil expenditure.
The rest was always up to the states and localities, she said.
Local wealth drives inequities in funding and outcomes
The reliance on local funding creates significant disparities between districts. Wealthier districts with higher tax bases can allocate more resources to special education than poorer districts can.
For instance, Mountain Brook City schools spent $9.5 million on special education last year for 700 students with disabilities. Local funding covered 62% of those costs, while federal IDEA funds contributed just 9%.
This financial flexibility likely contributes to better outcomes: 55% of Mountain Brook’s students with disabilities reached proficiency in English language arts, compared to just 17% statewide.
The gap in math was nearly as wide. In Mountain Brook, 40% of students with disabilities reached proficiency, compared to 9% statewide.
By contrast, Eufaula City schools spent $2.7 million on special education for 1,100 students with disabilities. Local funding accounted for only 2%, while IDEA funds covered half the total. Student outcomes reflected these resource gaps, with just 13% of students with disabilities reaching proficiency in English language arts and 3% reaching proficiency in math.
“Money matters,” Kolbe said. “And if, in fact, a school district doesn’t have access to adequate funding – and adequate funding includes general education and special education funding – our research suggests that they’re less likely to identify a child for special education.”
The cost of delay
Delays in identifying disabilities and providing needed services can have long-term consequences for children. Nancy Anderson, director of the Alabama Disabilities Advocacy Program, stressed the urgency of early identification.
“Look at the energy and resources Alabama is putting into ensuring children are reading by third grade,” Anderson said. “Why is the state doing that? To avoid future school failure among children who haven’t learned reading basics.”
“The same logic applies to students with disabilities. When they aren’t timely identified and supported, they are similarly at risk of falling behind—and many of those children will never catch up.”
Alabama’s current formula
Alabama’s Foundation Program formula – the mechanism for distributing state funds for basic needs – does not directly account for the cost of special education. Instead, it assumes that 5% of students in each district require special education services.
This estimate is far below reality. In the 2022-23 school year, the proportion of students with disabilities statewide was 18% and ranged from 8% to 28% across districts according to federal report card data.
The Foundation formula provides additional funding based on the assumed 5%, leaving districts with higher percentages of students with disabilities struggling to cover costs and provide needed resources for students.
The state does offer some targeted support. A $17.4 million high-needs reimbursement fund is available for districts to apply for when the cost to educate a particular student is exceptionally high. But this fund is only a drop in the bucket compared to actual needs.
Is weighted funding the solution?
Alabama lawmakers are considering changes to the state’s education funding formula, including adopting a weighted student funding model. This approach could provide more equitable resources for special education by directly linking funding to the actual number and needs of students with disabilities.
Under a weighted model, students with disabilities would receive additional funding based on their level of need. For example, a student with mild disabilities might receive 120% of the base funding, while a student requiring intensive services might receive 200%.
Kolbe explained the potential benefits. “The varying costs of serving students with different needs is something that should be accounted for in a state funding formula,” she said. “This is why many states use multiple weights for students who receive special education.”
Bellwether, the consulting group analyzing a WSF model for Alabama, presented initial scenarios to lawmakers in November. These scenarios suggested that a weighted model could allocate $128 million to $168 million in additional funding for students with disabilities—nearly 10 times the $17.4 million currently available through the high-needs grant program.
The joint legislative task force will meet Monday to review a detailed model with specific dollar amounts, offering a clearer picture of how funding could change.
Regardless of funding challenges, schools remain legally obligated to provide a “free and appropriate education” (FAPE) to all students with disabilities.
“What’s important to remember is whether or not the state provides funding, school districts are still required to provide special education services without any cost to children or families,” Kolbe said.
While there are likely exceptions to the idea that more money means better services means better outcomes, Anderson said, “I have more confidence in a well-funded district being able to provide needed services than a poorly-funded district.”
The table below shows each district’s total spending for special education for the 2022-23 school year. Click here if you are unable to see the table.