Tax troubles: Special education component

By TOM BELL, Portland Press Herald Writer

Copyright © 2003 Blethen Maine Newspapers Inc.

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Weighing Maine's Tax Burden Stories The Facts Full Value Tax Rate: Valuations and rates for all municipalities Income Tax Revenue: Comparing individual and corporate collections Comparing Maine: How the state ranks Timeline: Maine's taxation history Question 1 1A Citizen Initiative: Do you want the State to pay 55% of the cost of public education, which includes all special education costs, for the purpose of shifting costs from the property tax to state resources? 1B Competing Measure: Do you want to lower property taxes and avoid the need for a significant increase in state taxes by phasing in a 55% state contribution to the cost of public education and by providing expanded property tax relief? 1C Against A and B: Reject the Citizen Initiative and the Competing Measure. In Depth: Tax Reform Special section examines the issues and history behind the efforts to change Maine's tax burden. The coverage also includes comments and opinions from readers about how to shift the burden. To top of story

The explosive growth of special education spending in Maine will only accelerate if voters approve Question 1A on Nov. 4, say state officials and several education and tax experts.

Critics say the referendum's passage would make it harder to reform the state's special education system, which now is among the most costly in the nation.

Simply put, critics worry that a spending plan that requires the state to pay 100 percent of the state and local costs of special education programs will encourage school districts to enroll more children in those programs.

"It's like giving one of your children a credit card and telling them to use it wisely on whatever they want, and you'll pay the bill," said David Silvernail, a University of Southern Maine professor who has been advising state officials on education spending issues. "In this case, the state gets stuck with the total cost."

The special education provision in Question 1A has received little attention during the campaign, but it's a huge part of the proposal. Forty percent of the new state education money would go to special education, and the percentage would grow to more than half by the end of the decade, state education officials say.

The competing ballot measure, Question 1B, does not address special education at all.

Supporters of Question 1A - which is being sold as a property tax relief measure - say the referendum's passage would force the state to establish uniform guidelines for special education, which is now provided unevenly across the state. Special eduction rates among Maine school districts vary from 6 percent to 36 percent.

"It's bad enough we have to pay for the mandate," said Dana Lee, who is leading the political action committee that is pushing Question 1A. "The state doesn't help us understand the mandate."

Nearly 25 years ago, Congress passed the special education law, now called the Individuals with Disabilities Education Act. It guarantees a free and individually planned education for millions of school-age children with physical, emotional and learning disabilities. Moreover, it says that children, as much as possible, should be in classrooms rather than institutions. When Congress passed the law, its intent was to cover 40 percent of the cost.

While local and state budgets have been forced to absorb the federal government's mandate, the costs for special education continue to rise.

Over the last 10 years, special education spending in Maine has increased by more than 100 percent. While regular education enrollments have fallen by 3 percent, enrollment in special education has jumped 28 percent.

Last year Maine spent $268 million on special education. Local school districts picked up 35.6 percent of the cost, the state 52.6 percent, and the federal government less than 12 percent.

The nation as a whole spends 13 percent of its education dollars on special eduction. Maine spends 17 percent.

The state money is distributed in part through a funding formula that funnels aid to districts with the least property wealth, with the poorest districts getting 100 percent of their costs reimbursed. The formula also takes into account the number of special education students in the district. However, once any school district reaches a minimum threshold for local spending on special education, the state picks up all the additional costs. Most districts in Maine reach that threshold.

A conservative research group, the Manhattan Institute, released a report this summer that said the number of special education students in Maine has risen faster than all but one state, and that Maine's funding formula encourages school officials to classify students as handicapped.

While the report may have overstated the problem, forcing taxpayers statewide to pick up the entire tab for special eduction would exacerbate it, says Jim Rier, policy director at the state Department of Education. It would remove any incentive, he says, for local school officials to be efficient in their administration of special education programs.

House Speaker Patrick Colwell, D-Gardiner, says many school districts already are putting children in special education programs so they can draw down more state and federal money.

"The kids get stuck with the wrong label," he said. "I don't think that serves anybody well."

Peter Mills, D-Cornville, an influential legislator on tax policy, agrees.

"Think about it," he said. "If you're a school superintendent and the parents say a kid needs help and are vocal about it, the political impetus is to say 'yes.' But somebody needs to make the hard decision and say, 'No, we will handle this in the classroom.' "

He says the municipal officials who drafted Question 1A were clever to add language about special education because many Mainers resent the program.

"It's not politically correct to talk about these things, but I'm telling you that provision is a stroke of genius," Mills said. "It taps into the unspoken resentment towards having to allocate resources to the unfortunate."

Lee, leader of the campaign in support of Question 1A, calls Mills' comments ridiculous.

The proposed measure violates a widely held principle of tax policy: that the agency that provides the service should also be accountable to taxpayers who pay for it, says Lynn Reed, research director for the Minnesota Taxpayers Association, a nonpartisan public interest research organization focused on tax policy.

In Minnesota, where the state and federal government pay for 80 to 85 percent of the cost of education, local school districts find that it's more politically rewarding to appease parents and teachers' unions than to control costs, he says.

If Maine voters approve Question 1A, Reed warns, special education expenses will skyrocket. "There will be no restraint. Suddenly, everything will be special."

But local school officials say parents are reluctant to put the special education label on a child. They say classifying a child as having a learning disability or emotional disorder is a clinical decision that involves a battery of tests, consultations with specialists and conversations with parents and teachers. It's not a political decision, they say.

"We have a pretty good idea of how to run the programs and how to handle the needs for all children," said Barbara Dee, director of student support services for Portland. "We are not going to misspend the money."

Dana Lee says the state needs better guidelines for who qualifies for special education, so the program can be administered more equally around the state.

"If (state officials) are footing the bill, they will suddenly become more involved in managing who belongs in special education and who does not," he said.

But it's not that simple, critics say. If Question 1A wins, the state will have to hire more workers to administer special education services, says Walter Harris, a professor of special education at the University of Maine. Even then, it would be difficult to bring special education costs under control, he says.

Question 1A requires the state to boost state education spending until it accounts for 55 percent of education spending in Maine. The additional special education funds would be included within that 55 percent. To raise that money, the Legislature would have to increase state taxes, institute new taxes, or cut existing programs.

Question 1B, the competing measure that the Legislature and Gov. John Baldacci put on the ballot, also boosts state education spending to 55 percent - but it does it so slowly that it won't reach 55 percent until the end of the decade. Question 1C is "none of the above."

The municipal leaders who crafted Question 1A inserted the special education provision to make sure that all municipalities qualify for the influx of state education money, Lee says. Without the provision, property-rich municipalities, such as Portland and South Portland, could not expect much tax relief.

That's because the additional money would go though the current funding formula, which penalizes school districts that have high property values and declining enrollments.

Question 1A would disperse more than $100 million in special education money without any regard to the value of the tax base. Much of that money would go to districts that now qualify for little state aid.

Portland, for example, would be getting $10.8 million in additional state aid this year if the referendum had been in effect. More than half of that money would have come from new special education money, according to figures provided by the Maine Municipal Association. In a couple of years, because of rapidly increasing values in the city, nearly all of Portland's state aid would come from special education money.

Question 1B won't help the city at all, says City Councilor Nick Mavodones Jr. Under that plan, Portland stands to lose $2 million in the first year, he says.

Portland in recent years has been losing about that much every year under the current formula and is expected to lose up to $9 million over the next two years, according to state estimates.

Under Question 1B's phase-in approach, it's impossible to say how much money the city would gain because nobody can predict future property values. A community's total value is needed to calculate how much money it gets.

Mavodones served on the committee that crafted the Question 1A language. He says there was wide consensus on the committee that special eduction spending is a significant burden on property taxpayers.

All communities, including property-rich ones like Portland, deserve tax relief, Lee says. Getting the state to pick up the tab for special education, he says, guarantees they get that relief.

While Portland's municipal officials all back Question 1A, members of the city's legislative delegation are either against it or undecided.

Question 1B is better for Portland in the long run because it reforms the much-despised funding formula while Question 1A keeps it in place, says Rep. Glenn Cummings, D-Portland, co-chairman of the Legislature's education committee.

Also, he says, requiring local districts to pay a share of special education costs is just sound policy.

"The local community has to have a stake in the game as well," Cummings said.

Special eduction spending is already increasing at nearly double the rate of regular eduction spending. If Question 1A passes, critics say, special education spending could balloon to the point where it will force cities and towns to raise taxes to pay for regular school operating costs.

It will consume a larger and larger piece of the state education budget, and there will be less state money to pay for all other K-12 education costs, Rier says. Indeed, by the end of the decade, assuming that special education costs increase at the current annual rate of 8 percent, local governments will have to raise taxes to pay for the non-social programs - even if the state is picking up 55 percent of the total tab, he says.

Reform of special education funding is long overdue, Rier says, and state officials are tackling it now. But Question 1A will make any effort to contain special eduction costs more difficult to achieve.

Maine already spends more money on special education than 47 other states, according to Census Bureau data.

It's hard to pinpoint the factors driving the growth in special education spending, says Harris, the UMaine special education professor. One reason, he says, is that many school districts rely on special education programs to help children with learning needs because they have no other alternative support programs.

"For many school districts, special education is the only game in town," he said.

Leonard Ney, chairman of the Maine School Superintendents Association funding committee, says that requiring the state to pay for 100 percent of special education is not the best policy. He likens the proposal to a cocktail party where guests consume more shrimp when it's free.

Still, Ney and his organization support Question 1A, because he says it would force the Legislature to reform the tax structure, which currently is too reliant on the property tax.

Ney, who is superintendent of SAD 64 in East Corinth, says the referendum would also force the state to create uniform guidelines to identify special needs students. In addition, it would compel the state to provide special education services more efficiently. He says that Wyoming pays 100 percent of special education costs, and yet has nearly the same percentage of special needs children as the national average.

The current system in Maine is not working, he says.

"We need a bigger effort on the part of the state to implement a more clear and uniform system of identification and accountability," he said.

Tom Bell can be contacted at 791-6369 or at: tbell@pressherald.com

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