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South Carolina Files Motion to Stall $36 Million Special Ed. Penalty

South Carolina is trying another route to keep from losing about $36 million in federal special education dollars.

The state has been fighting with the U.S. Department of Education for months over its special education budget. For several years, South Carolina cut spending on special education, something the state must get permission to do from the Education Department. The requirement protects students with disabilities from ups and downs in budget cycles that could otherwise affect student services. If states make cuts to special ed. spending that the feds don't agree is justified, they face losing an equal amount of federal special education money.

Until recent years, such requests were almost unheard of from states. But the economic downturn has prompted several states to request such waivers, and the Education Department has granted many of them. The Education Department agreed with some of the roughly $162 million in cuts South Carolina made to special education from 2008 through 2011, but a $36 million cut during the 2009-10 school year remains a sticking point. The feds say the cut wasn't justified.

And recently, the Education Department denied South Carolina's request for a hearing over the issue. The penalty kicks in on Oct. 1—and it would permanently reduce South Carolina's share of federal special education dollars.

So this week, South Carolina filed a motion for a stay in the Fourth U.S. Circuit Court of Appeals to put off the penalty. The state argues that if, in the future, the federal Education Department agrees to withdraw the penalty, but the state has already restored the $36 million it stood to lose, its future obligations to special education will rise by that amount—permanently, anyway.

"A delay in the reduction of funds from the [Education Department] avoids this scenario," the motion for a stay says.

The budget increase would be passed forward to school districts, South Carolina says in its motion, and districts may not be able to keep spending levels that high going forward.

South Carolina says that because the Education Department already put off the penalty one year—it could have gone into effect on Oct. 1, 2011, the agency clearly has the authority to put it off until the matter works its way through the court system.

But the Palmetto State wants more than just another year of reprieve. It wants its hearing, wants the Education Department to agree that the $36 million it cut during the 2009-10 school year (on top of other funds) was justified, and the penalty shouldn't be one that carries forward permanently.

Stay tuned.

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