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S.C.'s Penalty for Cutting Special Ed. Spending Delayed

The U.S. Department of Education won't cut South Carolina's share of federal special education dollars by $36 million—at least not yet—prompting questions about whether such penalties for states that cut education spending without federal approval are meaningful.

South Carolina faces the cut because it slashed special education spending by the same amount during the 2009-10 school year. But the department didn't think the reduction was justified. Federal rules say states must maintain special education spending amounts from year to year, or increase them, regardless of financial crises. The rule is intended to buffer students' with disabilities from the ups and downs of the budget and keep services and staff they need in place from year to year.

In recent years, several states have asked to be exempt from this rule because their budgets have taken a beating from the economic downturn, and some have been granted their requests. If states slash special education budgets without getting the OK, they face a matching cut in federal special education dollars.

The Palmetto State is the first to try to appeal this penalty, and one of only two states to even face one. (Iowa is the other.)

South Carolina won a reprieve for the 2008-09 school year. The state was allowed to cut special education spending by $20 million that year because of financial woes. For 2009-10, the state cut about $67 million, but the Education Department said in June that only $31 million of that cut was because of the state's financial plight. For 2010-11, the state cut another $75 million in spending on students with disabilities, which the department outright rejected. Before the end of the fiscal year, South Carolina scrambled to restore this money, saving itself from a $75 million annual penalty.

But with the 2009-10 school year long over, the state couldn't restore the $36 million cut from special education spending that year, and faced losing that much money by Oct. 1 and every year going forward.

At the time, the state said it would fight the penalty. In an Aug. 1 memo to state Superintendent Mick Zais, South Carolina Department of Education General Counsel Shelly Kelly said the federal government "abused" its authority and took too long to issue a decision about the 2009-10 school year. Also, Kelly wrote, the department found that South Carolina met its obligations under the Individuals with Disabilities Education Act, despite the reduction in spending.

Kelly went on to say the state should request that the cut be a one-time reduction, not a cut that would be repeated every year.

Then suddenly this week, the Education Department sent Zais a letter indicating that it would delay the cut to give school districts more time to prepare for a reduction in special education dollars.

"In order to provide the state, and its local educational agencies, additional time to take whatever steps are necessary to plan for the reduction and ensure that a [free appropriate public education] is available to all children with disabilities residing in the state, ... the reduction will occur" on Oct. 1, 2012, wrote Alexa Posny, assistant secretary for the office of special education.

South Carolina views the backpedaling as a victory.

"Dr. Zais' action on behalf of the state has apparently persuaded the U.S. Department of Education to postpone their $36 million cut a full year to allow a full and fair hearing of our appeal," said Jay Ragley, a spokesman for the South Carolina Department of Education.

For what it's worth, the U.S. Department of Education tells me they didn't know of South Carolina's appeal until after issuing a letter notifying them of the delay.

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