How is special education funded?

Although special education is created by a federal law, the Individuals with Disabilities Education Act (IDEA), very little funding for special education comes from federal sources. In most states, education is paid for by local property taxes, which are relatively stable. States may also supplement property taxes with funds that come from state income taxes, capital gains tax, and sales taxes.

Local school districts are primarily funded by the Local Control Funding Formula (LCFF). This formula allocates funding to the districts by topping up local property taxes to ensure that the quality of education isn't dependent on local property values. The funding is allocated based on Average Daily Attendance (ADA), the number of kids who show up to school each day. The LCFF also allocates supplementary funds based on the number of children who live in poverty, are foster kids, or are English language learners. This funding goes into the school district's general fund, and the Board of Education determines how it is spent through the Local Control and Accountability Plan (LCAP).

Schools get some state funding for special education through a system called AB602. Funding is not based on the number of students with IEPs. The money is distributed to districts through Special Education Local Planning Areas (SELPAs) based on total student attendance (ADA). In multi-district SELPAs, different formulas decide how the funds are split among districts, sometimes taking into account numbers of IEPs and high-needs students. There’s also extra state funding for low-incidence students with specific disabilities, like visual impairments (VI), deafness or hearing loss (DHH), and other qualifying conditions.

The federal government also provides grants to the states under IDEA. When the law was originally passed, the proposal was that the federal government would give the states 40% of the average cost of public education per student with an IEP. However, in reality, the federal funding has never exceeded 18% of this figure.

For more details and citations, see our article Who Pays for Medi-Cal and Other Disability Benefits for Kids in California?