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Feds Threaten S.C. With $111 Million Cut to Special Ed.

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South Carolina may lose about $111 million in federal special education money for cutting its spending on students with disabilities for the last two years without the U.S. Department of Education's approval.

In a letter Friday, the state was warned that if it doesn't come up with the $111 million that it cut from special education budgets for the last two years, the federal government will penalize South Carolina by the same amount.

The Individuals with Disabilities Education Act's "maintenance of effort" rule that says states must keep special education spending the same from year to year, or increase it, regardless of the condition of their state budgets. If they can't, they must ask permission from the Education Department to cut their special education budgets to avoid being penalized by the same amount in federal special education dollars.

Until the current recession, such requests were rare, because only natural disasters or the most dire financial circumstances were justification for states to cut special education spending. But with states still struggling to make ends meet, the requests have become more common.

South Carolina is the only state to request the ability to cut spending on students with disabilities for three years in a row. For the 2008-09 school year, the department granted the state's request to cut special education spending by about $20 million, or about 5 percent. For 2009-10, the state got a partial reprieve and was allowed to cut the budget by about $31 million, or 7.6 percent, although the state wanted to cut another $36 million and was turned down.

The state's request to cut another $75 million from its special education budget of about $334 million for the 2010-11 school years was denied altogether. Alexa Posny, assistant secretary for special education, reasoned in her letter to South Carolina that the 2.5 percent cut in the special education budget was a greater percentage than the cut to the total state budget—which was less than 1 percent.

Somehow, in still tight times, the state will have to show it restored that $111 million—the $36 million from 2009-10 and the $75 million from 2010-11—or face a matching cut from the Education Department, Ms. Posny said.

On top of that, she said the federal government will be closely monitoring whether students with disabilities in South Carolina are still being served well and receiving free, appropriate public education as required by federal law.

A committee in South Carolina's General Assembly today approved a proposal that would boost special education spending by $75 million, said Jay W. Ragley, deputy superintendent for legislative and public affairs. The money comes from a combination of an uptick in state revenue and a drop in state spending on diesel fuel for school buses, he said. Although the school year is over, the money would be transferred to districts by June 30, in time to count for the 2010-11 school year.

As far as the remaining $36 million, the state plans to fight the Education Department's disapproval of that cut, he said. It's too late to restore money to a school year long over.

"We respectfully disagree with their decision," Mr. Ragley said. "State Superintendent (Mick) Zais intends to exhaust all of his administrative, legal, and legislative remedies so we will not be penalized that amount."

He noted that because the waivers were rarely used until recently, there is room to interpret what IDEA says about them.

"Frankly, we think the department is braving new legal ground. We look forward to braving that new legal ground with them," he said. The state hopes the dispute will be resolved before Oct. 1, the start of the federal fiscal year, to avoid the $36 million cut.

In her letter, Ms. Posny warned South Carolina not to count on permission from the federal government to cut its special education budget again.

"We also want to make clear to the State that, when making decisions about its level of State support for special education and related services in FY 2012, the State should not anticipate, or rely on, a waiver of the requirement to maintain State financial support for special education and related services," Ms. Posny wrote.

All of this may be little consolation to special educators, teachers, and parents in South Carolina, because the budget cuts already happened, and the school year is over. But if the state does restore some of the special education budget going forward, perhaps next school year might be more promising.

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