States that run afoul of federal rules for special education funding will be punished—though not forever—under a technical, but important tweak to state maintenance of effort under the Individuals with Disabilities Education Act. The change, which was crafted with the help of the U.S. Department of Education, was included in the giant spending bill for the rest of this fiscal year (better known in Inside the Beltway as a continuing resolution, or CR) that Congress passed this month.

Under maintenance of effort—or MOE, in wonky Washingtonspeak—states can’t cut their own education spending below whatever amount they spent the previous year and still tap federal dollars for special education under the Individuals with Disabilities Education Act, unless they get special permission from the department.

Keeping up special education spending is usually not a problem for states, but it became an issue during the recent budget recession.

The most prominent example by far? South Carolina, which has actually sued the Education Department in connection with this issue. The department withheld $36 million in special education funding from the Palmetto State last October. And that reduction was slated to stay in place permanently, until Congress and the administration intervened.

The Obama administration and lawmakers on Capitol Hill, including U.S. Sen. Tom Harkin, D-Iowa, the chairman of the panel that oversees education spending, added a provision to the recent spending legislation clarifying that while states that are out of compliance with the law will still see their funding reduced, that cut won’t be in place in permanently. Instead, the reduction would just be for the year (or years) that the state was out of compliance and didn’t get a waiver. Once the problem had been fixed, the state could go back to its regular spending levels.

The new provision goes on to explain that the reduced funding would still go to IDEA, just not to the offending state. Any money that’s taken away from a state that doesn’t keep up its end of the spending bargain would be split among states that do, as a kind of bonus. But states that get the extra funds would have to understand that this would be a one-time thing—they wouldn’t be able to count on the extra funding forever.

“Without this language, these funds for special education and related services would lapse and be unavailable for the children with disabilities they are intended to serve,” said Michael Yudin, the acting assistant secretary for special education and rehabilitative services, in an email.

South Carolina isn’t the only state that this language helps. Kansas lost $2 million in IDEA funding last year, for similar reasons. And New Mexico and New Jersey may find themselves in similar straits if their pending requests for waivers from MOE aren’t approved.

Needless to say, the change made Mick Zais, the state chief in South Carolina, very happy. In fact, he issued a press release thanking his congressional delegation for their help.

“Congress, led by the South Carolina federal delegation, has
heard my plea for common sense regarding the federal government’s penalty imposed on South Carolina’s children,” he said. “Today’s action repeals the absurd perpetual penalty that withheld $36,202,909 in funds used to provide services to students with disabilities. This is a victory for students with disabilities in South Carolina and across the nation.”

Nancy Reder, the deputy executive director of the National Association of State Directors of Special Education, is pleased with how things turned out too. “It’s absolutely a good compromise,” she said in an interview.

Advocates for students in special education are happy, too. The Council for Exceptional Children, for instance, supported the change.

“CEC supports the compromise because it supports what is really important: ensuring that money helps states and schools serve children and youth with disabilities,” said Lindsay Jones, the senior director of policy and advocacy services in an email. “We can’t afford to lose one penny that can help provide our nation’s children and youth with disabilities the appropriate supports and services they deserve under the law.”