Our Special-Ed System Favors the Rich (and Romney Has a Plan to Fix It)

Guest post by Dr. Manhattan, a lawyer in New York City who represents, among others, clients in the investment management industry.

Last week, Mitt Romney released a white paper detailing his (current) positions on education policy. One of its prominent features was a proposal to make federal funds allocated for special education under the Individuals with Disabilities in Education Act (IDEA) portable so that special-needs students can choose which school to attend and bring the federal funding along with them. This voucher-equivalent proposal would seem to go against the recent trends mentioned by Laura about how voucher proposals have lost much steam in education-reform debates, and there are plenty of legitimate concerns about how Romney's proposal could be implemented and how effective it would be. But it's worth noting that a quasi-voucher system already exists under IDEA for those families with the need and  -- less obviously -- the financial resources to obtain them. This leads to an overwhelming inequality in how children obtain special education services which is not well understood. If a version of Romney's proposal was enacted, it would be almost certain to decrease this inequality substantially and increase opportunities for poorer children to receive better special education services. For that alone, liberals should take it seriously.


Under the IDEA, when a student is diagnosed with special education needs, the student's family and school district are supposed to collaborate and formulate an "individualized education plan" (IEP) to meet the student's needs.  In addition, the IDEA provides (as interpreted by numerous court decisions, including some by the Supreme Court) that if the school district does not offer or provide appropriate educational services, the student can obtain appropriate private services, including a private school at public expense. As such, if a local school district cannot meet the educational needs of a special-needs student, IDEA grants that student a publicly funded exit option. It's the functional equivalent of a voucher -- a "shadow" voucher.

In theory, and often in practice, the IEP process functions exactly how it should and is the best feasible mechanism for making sure students with special needs can receive an appropriate education.

But what if the school district can't or won't provide the appropriate services?


In well-functioning school systems, the local schools usually can provide appropriate services for most special-needs children or recognize their inability to do so and refer the student to an appropriate private provider. In such systems, extended disputes between families and school districts are relatively rare.

Shockingly, many school systems are not well functioning. Their inability to provide an appropriate education for typical students is only mirrored more clearly when it comes to educating students with special needs. But because the latter have both a federal entitlement to an "appropriate" public education and an exit option to enforce that right, special education students have more ability to do something about the system's failures. In theory.

In practice, as another manifestation of their failures, malfunctioning school systems will often fight with all the bureaucratic resources they can muster effectively against families who attempt to use the rights granted under IDEA to obtain services which differ from what the system is offering. Thus, families will often need to fight the malfunctioning school systems to obtain services for their special-needs children. Those fights are necessary even for wealthy families, as children with extreme needs require services which can outstrip even the ability of rich families to pay entirely out of pocket.

My family has lived this reality for many years. We have a severely autistic son who has attended private schools which offer intensive behavioral therapy ("Applied Behavior Analysis" or "ABA," which is the only therapeutic methodology for which much evidence of effectiveness exists) with a student-teacher ratio of 1:1, and has also been receiving extensive ABA and other related services after school. Those schools and related services have enabled our son to make what progress he has been able to achieve. They are also necessarily and extremely expensive. But every single year, we have to "sue" NYC (technically it's not a lawsuit in a court but an impartial hearing as provided under IDEA, but it functions in very similar fashion) to cover the costs of such a school and services when they invariably recommend services far below what is necessary for our son to achieve any educational benefit. We have never lost one of our "suits" yet against NYC, but in the meantime we are required to front the cost of our son's school and services every year and seek eventual reimbursement from NYC. Very, very few families have the financial resources to do so. (And while we have enough resources to front the costs pending reimbursement, we are not nearly rich enough to bear the full costs of our son's school and services - those can exceed $170K per year.) Those that do not either have to move or make do with whatever the system offers, which is often far, far below what is necessary.

It should also be noted that the very malfunctions of large school systems such as NYC make it easier for families such as mine, who have enough resources to go through the battles every year, to obtain eventual public reimbursement for special education services. First, the IEP process described above presupposes intensive consideration of the student's individual educational needs. Large educational bureaucracies, such as NYC's, are not well equipped for that type of individual consideration. This leads to a tendency for the bureaucracies to offer services based on what's convenient and typical rather than what's appropriate for the student. Second, large school bureaucracies are not, to put it mildly, well renowned for their general administrative competence, and the IDEA imposes various elaborate procedural requirements on school districts that are regularly violated. A family can often demonstrate these two facts when necessary to enforce the IDEA against the school district, if they have the time and resources to spare.

The best article ever written about this dynamic can be found here. Since that article was published, we have seen NYC attempt to tighten its procedures...with respect to preparing for eventual hearings with families, not with respect to offering appropriate services. As such, the promise of the IEP process gets perverted into litigation-preparation from the outset. We have also seen NYC pour resources and effort into fighting families in the impartial hearing process; more on that below.

Part of NYC's refusal to recommend appropriate services is based on the fact that none of their public autism programs (with one charter-school exception) offer the intensive behavioral therapies with the 1:1 ratio required for the most severely autistic children like our son, perhaps because they consider it prohibitively expensive, thanks to their union-driven cost structure. Part of it is presumably based on a desire to save money. Our son's school costs over $100,000 a year; replicating it inside NYC's union-driven cost structure would presumably cost much, much more. But another part of it is almost certainly driven by a desire for control over resources: We have seen NYC refuse to approve private services which would have cost less than what they were offering, because the appropriate services were outside the system.

Making IDEA funding portable would, at the least, reduce the harmful effects of malfunctioning bureaucracies' desire for control.


The existence of "shadow" vouchers under IDEA for families (such as mine) with enough resources to obtain them makes the usual concerns of income inequality -- and even the inequalities of our school systems generally -- seem picayune. It is bad enough for "typical" poor students to have as many disadvantages as they do; the consequences are only worse for students with special needs. And it is impossible to exaggerate the extent to which this inequality is created and accentuated by the school systems themselves. Presumably driven by budgetary concerns, we have seen NYC step up their efforts to fight families whose children require extensive services, only adding to the resources needed for families to obtain those "shadow" vouchers and excluding even more families who do not have that money. One example is worth noting: while in most circumstances IDEA requires families to front the cost of private educational services and seek reimbursement from the school district afterwards, in certain circumstances a school district can be required to pay those costs prospectively for poorer families (called "Connors" funding after the court case establishing this doctrine). 

Some of the intensive-services autism schools had admitted a certain percentage of students from "Connors" families in order to offer opportunities to students whose families could never afford to front the sticker price.  Apparently last year NYC refused to pay for services for numerous families whose entitlement to "Connors" funding was not in dispute. And as a result, some of those schools were forced to stop offering placement to "Connors" students because of the resulting gap in revenue, even telling students who were already attending that they could not continue unless they found alternate means of fronting the tuition.


Clearly, the Romney proposal is -- like most campaign proposals -- many details shy of workable policy. But if the details are fleshed out right, it at least has to the potential to actually reduce a massive inequality -- far more so than, say, the "Buffett Rule." Here are a few additional thoughts.

  1. In order for any such proposal to work, state and local special-education funding would have to be portable as well, as that is where most of the funding comes from. Perhaps that can be made a condition of the state receiving IDEA federal funding.
  2. As set out above, because of the expense in providing high-quality intensive special-education services, even private special-education schools ultimately receive most of their tuition from the public (see the New York magazine piece linked above). Offering a voucher for whatever such schools charge would provide incentives for them to...not be overly concerned with cost efficiencies. (See, e.g., the first few decades of Medicare, what has happened to college tuitions, etc.) But this problem could likely be ameliorated by capping the voucher at what the cost would have been for the student to receive such services in the public system. There can even be an element of explicit progressivity in the voucher amount, as well as mandatory co-payments for families other than the poorest. This will likely cost families such as my own more, on a net basis, than the current system where those who can afford to front the costs and navigate the system are likely to get the entire cost reimbursed. I'm all for it.
  3. Aside from the progressive impact, mandatory co-payments for most families should help dissuade families from encouraging dubious diagnoses of special educational needs. While most of us with special needs children are skeptical that families would want diagnoses of nonexistent special needs, diagnosis inflation almost certainly does occur at the margins and co-payments can help minimize that effect. It should also be noted that under the current system, schools may have the exact opposite incentive: Jay Greene and Greg Forster have argued that some of the increases in various special-needs diagnoses (at least through the 1990s; the effect may have slowed or ceased in the last decade) may be attributable to financial incentives for schools. In a response to Laura, they also noted that "the current system creates financial incentives for schools to label students as disabled and then not provide services. The label generates increased funding, but the services cost money. Schools therefore have a financial incentive to diagnose students and then not serve them - to "resist providing expensive services," as McKenna puts it." If Greene and Forster are correct, schools currently have an incentive to diagnose children with special needs and claim the additional funding from the state, skimp on the services the additional money is intended to cover, and pocket the spread. Just like a Wall Street bank! (Perhaps liberals will now be more sympathetic.)
  4. In regular education debates, voucher opponents often scoff at the claims that new schools will be formed to serve students looking to take their vouchers and leave the existing public schools. As Megan pointed out in a debate with Laura several years ago, the existing special education landscape falsifies those scoffs. The existing system of shadow vouchers has funded a network of extremely high quality schools for autism in the greater NYC area, which have extensive waiting lists and people moving across the country for a spot in one of them. Many jurisdictions have extensive limits on the ability of charter schools to open to serve the general populace, which contributes to the perception that new schools won't open to meet the demand. If limits are lifted with respect to schools servicing special-education students (whether separately or as part of a larger school), as Romney's proposal contemplates, there's no reason to think that the market won't clear. (These limits sometimes exist for separate special education schools as well, albeit for other reasons in addition to a desire to limit competition for resources. That would have to be dealt with in a fully fleshed-out policy.)
  5. As noted above, when school systems comprehensively fail to provide adequate special education services, that is typically a symptom of a larger problem providing an appropriate education for most of its students. It is no mistake that the system with the largest percentage of special education students attending private schools at public expense is the famously dysfunctional Washington DC, a system for which special education is the least of its problems. Laura has written about the resentment often directed at families of special needs children: while some of that is about a fear that those children drain resources from the overall system (a fear the school systems are typically all too happy to encourage), another part of it is about the unfairness of only certain families having a publicly funded exit option. And they're right; it is unfair. So while the Romney plan does not explicitly discuss vouchers beyond Title I and IDEA funding, if a viable system is in fact established for those students, it seems likely to lead to natural pressure to expand it to all students. I can think of worse things.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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