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Zack Hutchins
Director of Communications

September 1, 2005

Study: Two simple reforms could reduce spending and increase satisfaction with New York's special education system

Two simple reforms of New York’s special-education programs could reduce the programs' costs and enrollments while improving parental satisfaction with the system, according to a new report released today by the Manhattan Institute’s Empire Center for New York State Policy.

By changing the programs' funding formula from a “bounty” system to a “lump-sum” system, and implementing a voucher program for children with special needs, the program would see fewer students enrolled and better outcomes for these students and their parents, according to the report. The report, which is entitled Helping Kids, Saving Money: How to Reform New York's Special Education System, was written by Jay P. Greene, a University of Arkansas professor and Manhattan Institute senior fellow, and Marcus A. Winters, a Manhattan Institute senior research associate.

“The problem of increased number of children in special-ed is largely a self-inflicted one,” the report said. “There is little evidence to support contentions that increased disability rates are to blame.”

What is driving increased enrollment is the "bounty formula" system, the report said.

“Critics of the bounty system argue that it encourages over-inclusion of children in special education programs because school districts receive extra money for each child included. Thus, a district with a child who is a slow learner receives extra money to pay for items like extra tutoring if that child is classified as SLD, but nothing if she is not.”

There is evidence to suggest that these critics are right, the report said. The study found that states with bounty systems had a much higher rate of growth in special education than those with lump –sum systems. The authors estimated that about 62 percent of that additional growth was due to the bounty system.

“As of the 2001 school year, 17,715 additional students were classified as special education than would have otherwise been had the state shifted to a lump-sum system in the 1994-95 school year,” the report said. “These extra students cost state taxpayers $220 million—money that could be saved if the state changed its funding formula.”

The report also studied the outcomes of a voucher system in place in Florida. The McKay Scholarship Program gives the parents of every special-needs child enrolled in public school a voucher for 100 percent of the money the district would spend on that child for use at a private school.

Since its adoption in 1998, the program has enrolled more than 15,000 special-needs children at private schools, the study said.

“Parents who use a McKay voucher are overwhelmingly satisfied with their child's private-school experiences,” the report said. “Among the parents of students currently enrolled in McKay, 32.7 percent were satisfied with their previous public school. However, when asked about their McKay school, that number reached 92.7 percent.”