Iowa special education providers seek new funding model after ESA program approved

As Iowa’s Area Education Agencies prepare to navigate the rising costs and needs of special education on a reduced budget, they’re hoping to shift to a more sustainable funding model in future legislative sessions.

Administrators at Iowa’s AEAs are now deciding how to best allocate their newly diminished resources. In the final days of session, lawmakers voted to cut funding for Iowa’s nine AEAs by almost $30 million in the upcoming fiscal year. The regional agencies provide specialized assistance for students with Individualized Education Programs (IEPs) in public and private schools and assist special-needs children who are not yet in school.

Funding for the agencies has decreased by at least $7.5 million annually since 2001. But the $22 million in additional reductions for fiscal year 2024 was agreed upon by Republican lawmakers in closed-door meetings. House Republicans said the larger cut is a consequence of the 3% increase to State Supplemental Aid that House lawmakers backed, which will provide public schools with roughly $107 million more in per-pupil funding.

That increase means all but one of Iowa’s AEAs will actually receive more funding than in the previous year. Only the Mississippi Bend AEA in eastern Iowa will see a net decrease, losing $32,000 in funding from their $22.5 million budget, Rep. Taylor Collins, R-Mediapolis said.

Iowa AEA Chief Administrator John Speer said the AEA system is put in a bind not just by budget cuts, but timing. The agencies’ budgets are due in the winter, and staffing contracts are finalized in April, often before the Legislature finishes its own budgeting process. Speer, who heads Grant Wood AEA, which serves parts of eastern Iowa including Iowa City and Cedar Rapids regions, said his agency was expecting to receive $800,000 in the upcoming school year, but will receive $160,000 under the new budget cuts.

Speer said the reduction in new funding means the AEA is not able to fill open positions, despite an increased demand for service.

“The cut always comes to us in the area of special education,” Speer said. “That is the area that honestly we could least afford to have that cut because districts are clamoring for support in the area of special-education students with mental health needs. So at a time when that population is growing, we continue to receive cuts to our special-needs, special-ed services budget, so that’s very hard.”

AEAs currently serve a total of 72,000 Iowans ages 3 to 21, and 3,000 from birth to 2 years old.

The Mississippi Bend AEA, the only agency receiving a net cut in the upcoming fiscal year, is looking at cutting costs in the few spending areas not already fixed or under contract, Chief Administrator Bill Decker said. While the cuts will not mean a reduction of services from AEAs in the upcoming 2023-2024 school year, the Iowa school districts may see less special-needs assistance in the following year, Decker said.

But that reduction in available services does not mean Iowa students will special needs will not receive assistance. The Individuals with Disabilities Education Act guarantees students with disabilities the right to a “free, appropriate public education.”

AEAs send staff to Iowa schools to help students with special needs to address requirements for individualized education. The agencies employ specialized, often highly educated staff in fields including speech-language pathologists, school psychologists, school social workers, occupational and physical therapists and audiologists.

Decker says he sees school districts across the state border, in Illinois that have to hire additional staff for their district at greater cost to the state because they do not have AEAs. A school may only need a school psychologist for 12 hours a week, he said, but would have to hire a full-time staff member to meet that requirement. Iowa is able to save money by having AEAs employ school psychologists that can fill the requirement at multiple schools.

“Any service that the AEA is forced to take off the table, school districts will still have to provide that service,” Decker said. “… If a district has to try to find a way to provide that service which is required by law without the AEA providing it, it will cost the district more, and therefore it’s going to be a net increase in cost to the state.”

Private school scholarships add additional cost

Iowa’s AEAs already provide special-needs services to students in accredited, nonpublic schools across the state. But the agencies are expecting to see an influx of private school students in the upcoming year, when Education Savings Account program funds are available.

Gov. Kim Reynolds’ signed the ESA program into law in January, allowing families to create accounts of roughly $7,600 in public funds for each child to pay for private school tuition and associated costs. An estimated 14,000 students will move to private schools using those funds in its first year, according to a Legislative Services Agency report.

If a student with special needs uses an ESA to move from public to private school, an Iowa AEA will likely still provide the assistance they need. But the current funding model for the agencies does not take into account the private school students their staff are assisting.

“The number of accredited nonpublic students with IEPs, who will need our services, will increase,” Speer said. “This cut comes at a terrible time, because we’re going to need more staff, we believe, to respond to this. Because anytime you take students who used to be concentrated and you kind of dispersed them in a larger area, it’s harder — it’s harder to be as efficient.”

Decker said AEAs are figuring out how to provide holistic services without funding that accounts for all the students served, as well as how to take on the additional cost of sending staff to more locations.

“Under current law, we’re gonna get more kids in more buildings — so meaning more travel to get to them, more time — And yet, that’s a category that, right now, we receive no compensation for,” he said.

There have been discussions about changing the funding model to account for these students. Speer said AEA administrators and advocates have talked with lawmakers about legislation to count private-school students with special needs in developing AEA funding just as the state does with public school students.

“It seems to be fair and equitable to do that way,” Speer said. “We’ve been delivering services for free. We all have very good relationships with our accredited non-public schools. And that actually gained quite a bit of traction with legislators both Democrat and Republican, so we’re hopeful that that will be part of our discussions with the legislature and the governor’s office about a predictable funding source moving forward.”

The cuts are not final yet. Reynolds still needs to sign off on the appropriations bill. Iowa Sen. Janet Petersen, D-Des Moines, called for the governor to use her veto power to strike the $22 million in cuts to special education services.

“If the state can afford $107 million to subsidize exclusive private schools, it can also afford $22 million to ensure quality special education services continue in every Iowa community,” Peterson said in a news release this week.

The governor said she’s still looking at the bill, adding that she does not believe signing the proposed cuts into law will impact the AEAs’ ability to provide special education services.

“We appreciate what they do and we don’t foresee any delays in the services they provide,” Reynolds told reporters Tuesday.

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