Funding Early Childhood Special Education: What Does It Take?

Wyoming is considering revamping its funding formula for educating children with disabilities under age five. The state’s early childhood special education (ECSE) funding level stands in sharp contrast to its K-12 special education funding, at which Wyoming does “an extraordinary and exceptionally great job,” says Dr. Theresa Hawley, Executive Director of the Center for Early Learning Funding Equity (CELFE). State leaders brought in CELFE to help create a different, data-informed way of creating a predictable and dynamic funding formula to replace the existing, annual scramble for supplemental funding. The Wyoming Special Education Financing Work Group, in collaboration with CELFE, presented a report and recommendations to the Wyoming state legislature. (For details, read guest author Elliot Regenstein’s recent piece). I interviewed Dr. Hawley, Deputy Director Sessy Nyman, and Policy Analyst Autumn Hagstrom of CELFE to learn more about their work in Wyoming. They highlighted several factors that helped them provide recommendations for making the state’s ECSE funding formula standardized and better reflective of the true costs of providing services for children under age five and their families.

Consider unique characteristics of the state

Wyoming is unique in several ways. Because it is one of six states that does not fund a state preschool program, there are not typical classroom environments that can provide inclusive learning for young children with developmental delays and disabilities. Accordingly, Wyoming does not provide ECSE through its school districts. Instead, it provides early intervention (EI) and ECSE together in special purpose entities called Child Development Centers (CDC), which the state funds directly. (The responsibilities of CDCs are listed in the table below.) While the federal special education dollars through IDEA Part B and Part C flow to the Wyoming Department of Education (WDE), WDE then gives the money to the Division of Behavioral Health, which manages ECSE services. That division has a contractual relationship with the CDCs to deliver special education services. That creates “a little bit of a game of telephone” says Nyman, as the U.S. Department of Education has funding requirements for the WDE, the WDE moves the money to the Division of Behavioral Health, and then that division has to report back to the WDE, which reports back to the U.S. Department of Education. “Regardless of the governance structure, we know the current system of funding isn't providing the resources CDCs need to meet the needs of Wyoming's children in ECSE,” says Nyman.

“Preschool classroom education is the backbone of ECSE by and large,” says Dr. Hawley. When a three- or four-year-old with a disability has preschool placement on their individualized education plan, their CDC has to provide that setting. In order to provide a free and appropriate education, which is required by federal law, the CDC, when possible, aims to provide an inclusive preschool classroom where children with and without disabilities learn side-by-side. Determining whether each CDC had to pay for children’s general education experiences along with their special education services was key to CELFE’s approach.

This task was complex since placement options differ across CDCs, notes Hagstrom. For most children, the CDC runs the inclusion classroom or purchases a slot in a community-based program such as a home- or church-based early learning center. Some CDCs are Head Start grantees themselves, or work closely with Head Start grantees, but Head Start is not available throughout the entire state. There are several school districts that use TANF or Title I funding to provide publicly-funded preschool education. CELFE’s approach aimed to provide different funding approaches based on whether a CDC runs its own classroom, buys slots, or partners with Head Start or a district. This required figuring out the cost of each option.

Lay the groundwork for analysis

To get started on this work, Wyoming collected and analyzed data for understanding the challenge, including which students received how many minutes of what types of services. “All of that was done before we came in, laying the groundwork to say, ‘clearly, something needs to be done here,’” says Dr. Hawley.

CELFE’s creation was inspired by the need for much more tracking of early learning funding being invested at all levels of government. There is considerably more energy, expertise, knowledge, and history involved in the financing of K-12 systems than for zero to five education systems in the U.S., Dr. Hawley says. Practices that are common in K-12 are scant in early education, such as tracking where funding goes and the adequacy and equity of its distribution. While the primary problem in early childhood education is insufficient funding, she says, the second largest problem is a lack of understanding about the cost of early childhood education, which is an essential first step before understanding the cost of a state ECSE system that is meeting the needs of children.

Follow the flow of funding and understand true costs of a free and appropriate public education (FAPE)

CELFE aimed to create predictable, adequate funding for serving kids with disabilities birth to five in Wyoming. “To achieve that goal, we had to create a funding formula that had a chance of being stable,” says Dr. Hawley. That meant identifying a better way to count how many children were accessing services. CELFE wanted to make the funding calculation dynamic, rather than static, so that as administrative costs go up and services get more expensive, the funding level can calibrate. In most states, it is difficult or impossible to identify the true cost of ECSE because it is lumped together with K-12 and special education (ages 3-21) spending. Because of Wyoming’s unique setup with CDCs, CELFE was able to identify and quantify the individual cost drivers of ECSE. Wyoming had previously conducted a child count on December 1st, as required by the federal government, and also on May 1st. However, the state only used the May 1st child count to determine how much money each program would get the next year. CELFE recommended that the state use both time points (December 1st and May 1st) and a three-year running average calculation to determine program funding. As a result, funding year to year is more predictable and adequate.

Think developmentally about alignment of early childhood and K-12

Nyman says that the once-a-year child count is representative of the broader challenge in early childhood wherein states try to push a K-12 system down to the early years, which does not work well and makes the early childhood education system more complex. For instance, special education law determines a child’s services by age, which a once-a-year child count does not adequately capture. Children are typically provided early intervention services (IDEA Part C) until their third birthday, at which point they age into preschool special education services (IDEA Part B Section 619; see graphic below). Because children have birthdays every day of the year, children can potentially age into preschool special education services any day of the year. In Wyoming, a child who turns three in April would have been counted on May 1st for the state’s once-a-year child count; however, a child turning three in June would not be counted. This mismatch of the calendar and the aging in and out of special education translates into millions of dollars, Nyman says. Instead, the approach needs to be forward-facing when considering alignment and the relationship with our K-12 systems. “We just do not have a good way of dealing with that in our country, in our system. It's a challenge,” says Dr. Hawley.

Another sharp contrast between ECSE and K-12 special education is state reimbursement for special education services. Wyoming reimburses K-12 school districts dollar-for-dollar for special education. However, in ECSE, the state only reimburses programs a fixed amount, no matter how many services a program provides and how the amount of services may fluctuate year to year. This contrast means that K-12 districts have the security of knowing their special education costs will be met, while ECSE programs often have to find ways to stretch each dollar from their fixed amount of funding.

Build understanding with state legislators

The CDCs had worked for years to inform the legislature about ECSE funding challenges so that legislators understood the system and knew that challenges were due to structural problems. This understanding motivated the legislature to form the committee, which ultimately brought in CELFE to take the next step toward a solution.

“It is very clear that this committee has really stuck with this issue. They absolutely knew and understood the pain points. Those CDCs have been very, very good at building relationships with their legislators to help them understand why they come back every year with a shortfall in terms of their budget, and it is not because they're overspending. It is because they are underfunded. There's a difference there,” says Nyman.