MN Forecast Projects $188 Million Deficit; Special Education the E-12 Cost Driver

Last week, the Minnesota Management and Budget (MMB) Office released the November Budget and Economic Forecast for the state, which showed a $188 million projected deficit for the final year of the 2018 and 2019 biennium.

According to the forecast, the deficits are due to a reduced U.S. economic growth forecast and impacts of legislation enacted during the 2017 session. The forecast also noted, “At this time, it is unclear what tax law changes will emerge from the U.S. Congress and how those changes will affect the federal deficit and economic activity.”

This projected deficit is very different from the surpluses that the state has seen in recent years, including the 2017 February forecast which predicted a $1.65 billion budget surplus.

Cause for Alarm? Hardly.

It’s important to keep these numbers in context. With a biennial budget of about $46 billion, the projected $188 million deficit is less than half a percent of the state’s total budget. It's also important to be mindful that these are just preliminary numbers. Shortly after the legislature reconvenes on February 20th, they will receive updated numbers in MMB’s February 2018 forecast.

Additionally, the forecast includes $178 million in additional funding for the Children’s Health Insurance Program (CHIP), which the federal government has failed to appropriate funding for. In a statement, Governor Dayton noted, “...if Congress refunds the CHIP program, as they must, the projected deficit for the current 18/19 biennium drops from $188 million to $10 million.”

Special Education Costs Higher Than Expected, Drive E-12 Budget Increases

While the overall financial health of the state seems to be alright for now, the forecast did note one important thing: the rising costs of special education services. According to the forecast, “special education drives the increase of $121 million in E-12 education. Spending on special education services by school districts has increased at a faster rate than previously projected. Growth in the number of children receiving special education services and higher costs both contribute to the increased forecast.”

Over the past decade, the number of students receiving special education services has increased from just over 123,000 in 2007 to over 134,000 during the 2016-17 academic year, a 9 percent increase. In that same period, the number of students enrolled in public schools only increased by 2.3 percent, from 837,578 to 856,687. This shows that the proportion of students receiving special education services is increasing at a much faster rate than overall enrollment.

Early Interventions Can Help Struggling Students, Reduce Special Ed Identification

In the light of these dramatic special education budget increases, there are some proven strategies Minnesota policy makers and educators should consider to potentially reduce the need for special education services and do right by Minnesota’s students.

Education Evolving has long contended that if schools put in place intervention frameworks such as Response to Intervention (RTI) or Multi-tiered Systems of Supports (MTSS)—and use those frameworks both to provide extra support to struggling students and, only if needed, identify them as special education with a “specific learning disability” (SLD)—the rate of special education-identified students can be reduced.

Such an early intervention strategy is in contrast to the current “severe discrepancy” rule, which is still used by some schools and districts to identify students as SLD. Under the severe discrepancy rule, students must struggle and fall significantly behind before they are identified for additional support through special education.

We recognize that intervention reforms around special education is a complex topic and merits further coverage, which we plan to do on this blog in the coming months.

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