Disproportionately impacts students in high-poverty and majority-minority districts

October 11, 2022

  • Wisconsin’s low reimbursement rate for special education left school districts on the hook for $1.25 billion, forcing them to divert funds intended for general education for all students.
  • High-poverty districts were forced to divert $1,818 per pupil from their general fund to subsidize the State’s underfunding of special education, compared to $1,266 in the lowest-poverty districts.

These are the key findings in Education Law Center’s new report, Wisconsin’s Special Education Funding Crunch: How State Underfunding Disproportionately Harms Students in High-Poverty Districts, released today. The report calls on the State to significantly boost the reimbursement rate for special education to enable districts to retain revenue in the general fund and increase spending on essential programs and services for all students.

Wisconsin is among a handful of states using the cost reimbursement method for funding special education. Over the last decade, the State has reimbursed school districts for less than a third of their actual special education costs. Because these programs and services are mandated by the federal Individuals with Disabilities Education Act (IDEA), the state’s low reimbursement rate forces school districts to use funds slated for the education of all students to cover the shortfall in special education funding.

The ELC report finds that Wisconsin school districts reported special education costs exceeding $1.82 billion for 120,000 students with disabilities in the 2019-2020 school year. After accounting for state special education reimbursement and federal IDEA funds, districts were left with a bill of $1.25 billion in unfunded special education costs.

Wisconsin’s high-poverty and majority-minority race districts face higher unfunded special education costs because they tend to have higher rates of students with disabilities. The resulting diversion of resources leaves Wisconsin’s highest-poverty districts with less general education funding than the state’s wealthiest districts, despite research showing that these districts need more funding to support their students.

“Fixing Wisconsin’s outdated, inequitable and inadequate approach to special education funding is a meaningful first step toward modernizing the state’s school funding formula,” said Julie Underwood, former dean of the University of Wisconsin School of Education. “This change would benefit students in every district, especially those in high-poverty urban and rural districts where school funding is most inadequate.”

The latest request from the Department of Public Instruction (DPI) would increase the reimbursement rate to 45 percent for FY24, then 60 percent in FY25. Online interactive charts accompanying ELC’s report model these and other reimbursement rates ranging from 45 – 100 percent to show how an increase in this rate would increase funding to districts using 2019-20 special education costs.

“The request from the DPI to increase the reimbursement rate to 45% is a needed start,” said Chris Thiel, Legislative Policy Manager, Milwaukee Public Schools. “And as DPI points out, that increase comes nowhere near addressing the unfunded special education costs incurred by districts. A much higher rate is required to keep funds from being pulled from districts’ general education budgets.”

“Increasing the reimbursement rate to 90% would require an investment of $1 billion in new state funding and mostly eliminate the state’s underfunding of special education costs,” said Mary McKillip, ELC Senior Researcher and the report’s author. “With a current budget surplus in the billions, this investment is both possible and necessary. Wisconsin lawmakers must take this step.”

Access interactive data dashboards to view the impact of special education underfunding at the district level and model general and special education funding under various reimbursement rates.

Education Law Center, founded in 1973, works to protect and strengthen the
constitutional right of the nation’s school children to equal educational
opportunity. ELC’s innovative advocacy is driven by the pursuit of equity and
diversity to ensure all students an education that effectively prepares them to
participate as citizens in a democratic society and as valued contributors to
vibrant communities and a robust economy.

Press Contact:

Mary McKillip, Ph.D.
Senior Researcher
973-624-1815, x 290


Share this post:

Press Contact:
Sharon Krengel
Director of Policy, Strategic Partnerships and Communications
973-624-1815, x240