Researchers recommend changes to special ed funding under state formula review
The recommendations from the Maine Educational Policy Research Institute, a nonpartisan wing of the University of Maine System that works with legislators, are part of an ongoing effort to update the two-decade-old formula, which the Legislature initiated last year. Many education leaders and lawmakers say that it fails to account for growing needs like special education, multilingual learners and homeless students.
The research group, known as MEPRI, kicked off its presentations last month with data trends and superintendent perspectives and continued Wednesday morning with briefings on two specific aspects of the formula: regional salary adjustments and special education funding.
SPECIAL EDUCATION
One of the issues that education leaders have been most vocal about is special education, which has evolved significantly since the formula was created.
Maine spent about $517 million on special education in 2023, which accounts for about 20% of all education spending. More and more Maine students are in need of special education, with rates of autism rising by 86% over the past decade, and the state's overall special needs student rate rising from 16% to 20%. Maine also has one of the nation's highest rates of special education students.
The current special education funding model starts with the number of students with Individualized Education Plans (IEPs), then makes additional adjustments for students with more intense needs or those who attend out-of-district specialty programs. But then that number gets compared to the district's total special ed spending from the previous year, and if it's higher than the calculated value, the district just gets that higher amount.
"At the end of the day, for many districts — not all — it's based really on how much they're spending," Amy Johnson, co-director of MEPRI, said.
Superintendents have critiqued this model as allowing wealthier districts that are able to spend more on special education to inherently received greater state funding. Johnson said the model has several outdated elements, and the expenditure-driven model raises equity concerns.
"More money goes to districts that probably have more ability to pay," Johnson said.
The wealthiest districts are getting much more funding per pupil than the poorest districts. The wealthiest third of districts get an average of $3,839 per students, while the poorest third of districts get $1,307 for each student, according to 2020 data Johnson presented.
That's why MEPRI is suggesting a funding model based on different weights for students with different levels of need. Johnson proposed dividing students into two tiers based on the intensity of need.
She said MEPRI needs more comprehensive data to suggest exactly what those weights should be and is still developing a model to suggest to lawmakers. That proposal, Johnson said, will be in the final report.
REGIONAL ADJUSTMENTS
The current funding formula also accounts for regional differences in salary in an effort to provide adequate staffing resources to districts in both high- and low-cost areas.
Those adjustments are based on a "labor market area" model, wherein Maine is divided into different markets (like Greater Portland and Bangor) and each is assigned an adjustment — either higher or lower than the baseline — based on salary data in the area.
"The reason that this is important is, if you are in a high-salary area of the state, you need more resources to be able to pay those salaries," said Johnson. She also said low-salary areas benefit from those adjustments to keep their tax rates down.
But, Johnson explained, those labor markets are based on data from when the formula rolled out in 2005. She said MEPRI has recommended changes to the regional adjustments five times, but they've never been implemented because of legislators' fears that some districts will be negatively impacted while others will benefit.
In the current report, the researchers compared five different adjustments to that model, including updating the salary data and introducing a floor or cap for the adjustments.
Johnson said MEPRI prefers a scenario where the data is updated and both a floor and cap are added because it would keep the adjustments affordable and fair while accounting for shifts that have happened over time.
But an even better method, she said, would be to switch to a model based on cost of living rather than on salary costs themselves. That information is already calculated and updated regularly by several outside agencies at a county level.
"We believe that switching to cost of living is an improvement, partly because of the practical reasons of being able to tie it to an external index that can be updated over time, but also because we believe that using only salaries is capturing ability to pay, and not just labor market issues," she said.
MEPRI has divided its report into five presentations that are being delivered to the Education and Cultural Affairs Committee over the course of the session. The next funding formula presentation, on districts' ability to pay, will be next month. The final report should be out by the end of April.
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