Special Ed Vouchers Restrain Growth in Disabilities

Marcus Winters and I have a super-awesome study released today by the Manhattan Institute.  It shows that offering disabled students special education vouchers reduces the likelihood that public schools will identify students as disabled.

This isn’t what Andy Rotherham and Sara Mead expected.  They claimed in a 2003 report for the Progress Policy Institute that: “special education vouchers may actually exacerbate the over-identification problem by creating a new incentive for parents to have children diagnosed with a disability in order to obtain a voucher.”

It didn’t. The reason special education vouchers restrained growth in disabilities, rather than exacerbate it, is that the vouchers check public schools’ financial incentives to identify more students as disabled.  Public schools may get additional subsidies when they shift more students into special education, but if they then make students eligible for special education vouchers, they risk having those students walk out the door with all of their funding.  It makes the public schools think twice before over-identifying disabilities for financial reasons.

And outside of the DC bubble, schools control the process of whether students are identified as disabled — not parents.  So, if we can check the positive financial incentives that public schools have for over-identifying disabilities, we can significantly slow growth in special education.

Nearly 1 in 7 students nationwide is now classified as having a disability.  That’s 63% more than three decades ago.  It’s clear that this huge increase in disabilities was not caused by a true increase in the incidence of disabilities in the population.  No plague has afflicted our children over the last three decades to disable two-thirds more of them.

Instead, non-medical factors have been driving special education enrollments higher.  Chief among these is the financial incentives we offer schools in most states to shift more students into special education by providing additional subsidies for each student classified as disabled.

Some states have reformed their special education funding formulas to end these financial rewards for higher special education rolls.  Greg and I reported in a 2002 study that states that continued to pay schools per student identified as disabled had much higher rates of growth in special education than states that had reformed their funding formulas.  Elizabeth Dhuey of the University of Toronto and Stephen Lipscomb of the Public Policy Institute of California have confirmed these findings.

Julie Cullen of UC San Diego has found that “fiscal incentives can explain over 35 percent of the recent growth in student disability rates in Texas.”  And Sally Kwak, a student of David Card at UC Berkeley and now a professor at U of Hawaii, finds a significant slow-down in special education enrollments when California reformed its funding system.

The new study Marcus and I released today builds upon this growing research by showing yet again that public schools strongly consider non-medical factors when deciding whether to classify students as disabled.  I don’t mean to suggest that all school officials are conscious of these incentives or acting with evil intention.  But it is clear that the system in which they operate and their actions are shaped by these financial incentives.

If we discovered that hospitals were filling their beds with healthy people who just felt a little tired in order to obtain additional government subsidies, we would be outraged and demand dramatic reforms.  Public schools are doing the same and it is time we get outraged and demand reforms.

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19 Responses to Special Ed Vouchers Restrain Growth in Disabilities

  1. [...] Jay Greene shares more about the study on his blog today, and gives some insight into the findings. The reason special education vouchers restrained growth in disabilities, rather than exacerbate it, is that the vouchers check public schools’ financial incentives to identify more students as disabled.  Public schools may get additional subsidies when they shift more students into special education, but if they then make students eligible for special education vouchers, they risk having those students walk out the door with all of their funding.  It makes the public schools think twice before over-identifying disabilities for financial reasons. [...]

  2. Matthewladner says:

    Your health care point is dead on. Former Secretary of Education Rod Paige layed it out in Congressional testimony:

    <>

    Misclassifying children into special education isn’t doing them any favors. Special ed is not remedial ed, and the idiotic way we identify kids now not only misidentifies kids in that shouldn’t be there, but also misses kids who could be helped.

  3. Matthewladner says:

    Ooops, Paige quote didn’t take.

    For minority students, misclassification or inappropriate placement in special education programs can have significant adverse consequences, particularly when these students are being removed from regular education settings and denied access to the core curriculum. Of particular concern is that, often, the more separate a program is from the general education setting, the more limited the curriculum and the greater the consequences to the student, particularly in terms of access to postsecondary education and employment opportunities.

    The stigma of being misclassified as mentally retarded or seriously emotionally disturbed, or as having a behavioral disorder, may also have serious consequences in terms of the student’s self-perception and the perception of others, including family, peers, teachers, and future employers.

  4. [...] On a related note, Jay Greene reportsthe Manhattan Institute has released a new super-awesome study he co-authored showing that a special-needs voucher program “reduces the likelihood that public schools will identify students as disabled.” [...]

  5. Lori says:

    I’ve always been confused by the Rotherham/Mead assertion that parents would get their kids labled SLD to get them out of the public schools. Parents simply don’t have that kind of power in the typical public school systems. Don’t get me wrong – it’d be great if they did have that kind of power – but they don’t. Just like it’s next to impossible for parents to fight for/against an IEP, it must be that difficult to actually get an IEP when the district knows that they could keep the student (and the cash) in a voucher situation. Interesting work, Jay and Marcus. Keep up the great work!

  6. Thanks, Lori!

    And great quote from Paige, Matt!

    And check out the cool posts from Ed and School Choice VA.

  7. [...] What is the cost? Is it a good business opportunity? All these questions are great questions. Special Ed Vouchers Restrain Growth in Disabilities – jaypgreene.com 08/18/2009 Marcus Winters and I have a super-awesome  study released today by the [...]

  8. Patrick says:

    One Nevada senator proposed a special needs voucher program this year and it went nowhere (in 2007 it passed the senate but the Assembly ignored it).

    In reading the committee minutes http://www.leg.state.nv.us/75th2009/Minutes/Senate/FIN/Final/372.pdf (starts on page 12) I noticed that the school districts and the teachers union opposed on technical grounds – that kids wouldn’t get their IEP and therefore wouldn’t be protected by IDEA and therefore wouldn’t get a good education.

    This is an anecdote, but when I worked in special education the schools HATED the IEP. If its a nationwide phenomenon I find it ironic that they would use them to as some benefit to fight against vouchers.

    • allen says:

      This is a political battle and the measure of victory is in funding levels. Any reduction is a loss so ought to be closely studied.

      For instance, the forces that’ve driven voucher law to passage in forty-four states may just be the result of a generalized public disaffection with the escalating cost, diminishing performance and endless excuses of the public education system but it sure would be nice to know for sure. What political forces have driven state legislatures to divert funding from the one, true religion of the school district to new entities like charter schools? Inquiring mind wants to know.

      • Patrick says:

        I noticed in the fiscal notes that several school districts claimed they would be harmed by the bill.

        When I read the bill the scholarship would be the sum of the Basic Support (the state’s per pupil appropriation to each district – this ranges from just under $5,000 to $17,000 but averages $5,250) plus whatever additional local/state/federal fund was available for special education.

        While the districts total appropriation would decrease the per-pupil funding would, in the worst case scenario, remain the same.

        They of course don’t want to lose a dime.

  9. The argument that special ed vouchers are bad because they lose the protection of an IEP is mistaken on two grounds (other than the hypocrisy you note):

    1) Students never lose whatever protection the IEP provides becuase they can always return to public schools and accept those services or pursue the legal process. All that the voucher does is give them an additional mechanism for obtaining the services they desire.

    2) According to an evaluation of McKay that Greg and I conducted in 2003 (see http://www.manhattan-institute.org/html/cr_38.htm )students were more likely to receive needed services when they switched to a private schools with a voucher. Even though they were legally entitled to those services in public schools, they often weren’t able to get them. And in the private schools, where they had no legal rights to specific services but did have market power, they were significantly more likely to get those services. Go figure.

  10. Patrick says:

    Good points, I’ll take a look at that study.

    I also found it interesting that someone in the minutes seemed to be against the bill but had the objection that it wouldn’t be fair to special needs kids already enrolled in private schools on the ground that kids could only be eligible for the voucher if they were on an IEP.

    One person believed that this restriction would mean the kid could only go to the private school for one year and then must return to the public school because the private school wouldn’t give an IEP.

    Another worried that private schools would take special needs kids just to get the income even though they didn’t have a program for special needs kids (aka parents are too stupid)

    Another worried that private schools didn’t have certified teachers *rolls eyes*

    And the Nye County School District did not like it because the children would not be subject to NCLB and therefore the private schools wouldn’t be held accountable to providing a quality education.

    …I guess NCLB is good if it prevents the competition from getting funding but its bad if it means you actually have to prove that the kids are learning.

  11. Pat wrote: “I noticed in the fiscal notes that several school districts claimed they would be harmed by the bill.”

    I thought schools complain that special education was a horrible financial burden on them. You would think they would be eager to push disabled kids out the door to save money.

  12. [...] Public schools identify fewer students as disabled if disability qualifies kids for a  voucher to attend another school, concludes a Jay Greene-Marcus Winters’ study released by the Manhattan Institute. . . . the vouchers check public schools’ financial incentives to identify more students as disabled. Public schools may get additional subsidies when they shift more students into special education, but if they then make students eligible for special education vouchers, they risk having those students walk out the door with all of their funding. [...]

  13. I write from the Florida special needs voucher trenches – I am both an attorney for parents of disabled public school students and a fierce proponent of the McKay Scholarship. I don’t doubt the results of Greene and Winters’ study which addresses those students with “marginal” disabilities. But special needs vouchers may provide an even greater benefit (to both schools and parents) for moderately disabled students.

    In my experience, the most severely disabled get expensive special education services, regardless of what the quality of those services may be. But there are few private schools (at least in South Florida) which can meet the needs of those students at a reasonable cost – even if a parent gets a $20,000 McKay Scholarship to private school!

    Because of the way Florida special education funding is structured there is no added incentive for giving special ed. services to the moderately disabled – the schools do not get more money for labeling or serving them than they get for the mild or marginally disabled. Yet, the moderately disabled are more difficult and expensive to educate. Thus, I have found that Florida parents of the moderately disabled tend to be less satisfied with the public schools which generally are not effectively educating them.

    If a parent of a moderately disabled student leaves public school with a McKay voucher worth let’s say $10,000/year, that money could put a good dent in a Florida private school tuition which may do a better job educating that child. At the same time, the school district still retains the federal special ed. funds for that child but is no longer responsible for the touch job of educating him or her.

    The bottom line is that while special needs vouchers may not decrease the financial incentive to label students who are moderately disabled, they may result in a win-win situation for both schools and parents. And the largest growth in the use of Florida special needs vouchers may come from those students.

  14. Thanks for the report from the trenches, Allison!

  15. [...] more this finding pans out, the more it could potentially roll back a broader unhealthy trend also identified by Greene: Nearly 1 in 7 students nationwide is now classified as having a disability. That’s 63% more than [...]

  16. NO MORE ILLEGAL ALIENS PLEASE says:

    One of biggest scams in educational waste is the serving to illegal alien students whom are often classifed as having a speech disablity called “articulation disorder” so they qualify for special ed, when in fact, they don’t have an articulation disorder. What they have is a “i can’t speaky english because my mom and dad just illegally entered USA last week” disorder, which can be cured with a bus trip back to Mexico for the kid and his law breaking parents. Adios and savings of upto 22 billion a year for CaLIFORNIA.

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