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Special Education Excess Cost Accounting Methodology and Reporting Requirements Preliminary Report to the Joint Legislative Audit and Review Committee

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Title: Special Education Excess Cost Accounting Methodology and Reporting Requirements Preliminary Report to the Joint Legislative Audit and Review Committee


1
Special Education Excess Cost Accounting
Methodologyand Reporting Requirements
Preliminary Report to the Joint Legislative
Audit and Review Committee
  • John Bowden and Keenan Konopaski
  • January 4, 2006

2
Excess Cost Study Overview
Over v i ew
  • Study Objectives
  • Special Education Background
  • How Methodology Operates
  • JLARC Analysis
  • Findings
  • Examples of Alternate Approaches
  • Recommendations

3
Excess Cost Study Objectives
Ob j ec t i ves
  • Analyze special education excess cost accounting
    methodology.
  • Incorporate State Auditor's Office review of
    appropriate and consistent application.
  • Examine opportunities for modifying.
  • Assess impact of modifications.
  • 2005-2007 Operating Budget, Sec. 103 and Sec.
    123

Preliminary Report Page 4
4
What is Special Education?
Background
  • Special education means
  • specially designed instruction, and related
    services, provided to an eligible student
  • designed to meet the unique needs of the student
  • in conformance with the students IEP
  • at no cost to the parents
  • provided in the least restrictive environment
    possible
  • WAC 392-172-035 through 392-172-080

Preliminary Report Page 1
5
Brief History of Special Education in Washington
State
Background
  • 1971 Education for All Act (HB 90) guaranteed
    access for all children.
  • 1981 Funding on full-cost basis
  • (14 categories of disability conditions).
  • 1995 Funding on excess cost funding no
    standardized accounting method required.
  • 2001 All districts required to use current
    standardized excess cost accounting methodology
    for special education expenditures.

Preliminary Report Page 2
6
What Are Special Education Excess Costs?
Background
  • Excess costs are those expenditures for
    special education and related services for
    special education students that exceed the amount
    needed to provide a basic education to those
    students.
  • The Accounting Manual for Public School
    Districts in the State of Washington

Preliminary Report Page 5
7
Legislative Intent Excess Costs
Background
  • Through budget proviso language, the
    Legislature has directed that
  • OSPI shall use the excess cost methodology
    developed and implemented for the 2001-02 school
    year to ensure that special education students
  • are basic education students first
  • as a class, are entitled to the full basic
    education allocation
  • are basic education students for the entire
    school day
  • The excess cost methodology shall be required of
    all school districts.
  • Similar language has appeared in each Operating
    Budget since 2001.

Preliminary Report Page 5
8
Different Excess Costs for Different Special
Education Students
Background
Special Education Student A
Special Education Student B
Preliminary Report Page 6
9
Special Education Expenditures
Background
2003-04 data from OSPIs on-line 5 Year
Special Education (Program 21) report.
Preliminary Report Page 1
10
How Are Special Education Teaching Costs Assigned?
Methodology
Background
  • Obtain prior years child count by service
    setting
  • Calculate approximate special education student
    FTE
  • Estimate regular education cost using 201
    student/teacher ratio
  • Subtract to get excess cost

Costs for Time in Special Education Classrooms
Special Education Classroom Costs
Total Education Costs
Costs for Time in Regular Education Classrooms
Preliminary Report Page 7
11
Special Education Students Spend 100 of School
Day in Special Education Classroom
Methodology
District A
60,000 Special Education Teacher Salary and
Benefits
Regular Education Classrooms
Preliminary Report Pages 9-11
12
Special Education Students Spend 50 of School
Day in Special Education Classroom
Methodology
District B
AM
PM
60,000 Special Education Teacher Salary and
Benefits
Regular Education Classrooms
Preliminary Report Pages 9-11
13
Possible That Excess Costs May Not Correspond
with Class Sizes
JLARC Analysis
Student/Staff Ratio by Location District A District B
Regular Classroom NA 241
Special Education Classroom 101 51
Average Special Education Student/Staff Ratio for Day 101 141
Average Per Student Reported Excess Cost 3,390 4,920
Preliminary Report Page 11
14
Identical Special Education Teacher Expenditures,
Different Assigned and Reported Costs
JLARC Analysis
Special Education Funding
Basic Education Funding
School District A (100 Pullout)
School District B (50 Pullout)
Funding Allocated to Each School District for 10
Special Education Students
Preliminary Report Page 10
15
Only Excess Costs Are Reported
JLARC Analysis
School District A (100 Pullout)
School District B (50 Pullout)
Preliminary Report Page 10
16
Findings Understandability
Findings
  • Finding 1 Excess cost accounting is
    complicated. Many school districts do not fully
    understand the underlying accounting principles.
  • Finding 2 Different from many traditional, more
    widely understood cost accounting practices we
    found no other state employing a similar
    methodology.

Preliminary Report Page 18
17
Findings Ease to Implement and Administer
Findings
  • Finding 3 While the OSPI accounting methodology
    for teaching staff may be hard to understand, the
    steps have been simplified making it easy to
    administer.
  • However, no simplified steps are provided to
    districts for assigning costs of contracted
    services and non-employee related costs.

Preliminary Report Page 19
18
Findings Ability to Capture Expenditures and
Assign Costs
Findings
  • Finding 4 Some assumptions made to simplify
    process can lead to inaccuracies in costs
    reported.

Preliminary Report Page 19
19
Findings Ability to Capture Expenditures and
Assign Costs
Findings
  • Finding 5 State Auditors Office found many
    districts not accurately and consistently
    assigning costs. For example
  • Numerous data errors regarding special education
    student service time and location.
  • Inconsistencies in how they interpret what types
    of expenditure must be split between special
    education and basic education programs.
  • Lack of awareness for how contracted service
    expenditures should be assigned.

Preliminary Report Page 19
20
Findings Ability to Capture Expenditures and
Assign Costs
Findings
  • Finding 6 The excess cost methodology does not
    report information about the total costs of
    serving special education students.
  • Therefore, cannot reliably compare total costs
    across districts and to program funding.

Preliminary Report Page 19
21
Findings Influence on Program Management and
Budgeting
Findings
  • Finding 7 The excess cost methodology can yield
    results that may appear counter intuitive to
    district staff and public
  • e.g., the more time special education students
    spend in a regular classroom, the greater the
    percentage of special education teachers costs
    are charged as an excess cost.

Preliminary Report Page 20
22
Findings Influence on Program Management and
Budgeting
Findings
  • Finding 8 District officials indicate that
    excess cost accounting methodology does not
    influence their budget or program management
    decisions. Excess cost methodology is viewed as
    an after-the-fact administrative exercise.
  • As a result, it does not provide evidence to
    ensure whether or not students receive an
    appropriate share of the basic education
    allocation.

Preliminary Report Page 20
23
Alternate Cost Accounting Examples
Alternatives
  • Standards-Based Specially designed
    instruction, related services, etc. are costed
    out with standard unit costs. This becomes a
    service plan and itemized record of every special
    education students expenses.
  • Full-Cost Accounts for all expenditures for
    serving special education students regardless of
    service setting.
  • Note See Figure 6 on page 24 of the report and
    pages 21-24 for comparative discussion of the
    alternate approaches.

Preliminary Report Pages 22-24
24
Recommendations
Recommenda t i ons
  • Legislature should decide whether the current
    accounting approach or an alternative best meets
    needs of state, school districts, and special
    education students.
  • Selecting an approach involves trade-offs
    between multiple criteria. The Legislature has
    not indicated the priority they place in each of
    these criteria. Therefore, choosing to change
    methods necessarily involves a policy decision.

Preliminary Report Page 29
25
Recommendations
Recommenda t i ons
  1. If current methodology is maintained, OSPI,
    assisted by stakeholders, should examine
    modifications to improve the accuracy of
    assigning and reporting excess costs.

Preliminary Report Page 29
26
Recommendations
Recommenda t i ons
  • If current methodology is maintained, OSPI should
    provide clear guidance and instruction on how to
    accurately and appropriately
  • Complete service setting child counts.
  • Assign costs of contracted services and
    non-employee related costs.

Preliminary Report Page 30
27
Recommendations
Recommenda t i ons
  • If current methodology is maintained, OSPI should
    require school districts to report all costs of
    serving special education students
  • (i.e., special education expenditures assigned
    to basic education should be reported separate
    from other basic education costs).

Preliminary Report Page 30
28
JLARC Staff to Contact for Further Information
I n f o rma t i o n / Co n t a c t s
  • John Bowden (360) 786-5298
  • bowden.john_at_leg.wa.gov
  • Keenan Konopaski (360) 786-5187
  • konopaski.keenan_at_leg.wa.gov
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