SC denied special education hearing

Feds penalized state $36 million for not spending enough on students; Zais will seek remedies through courts, Congress

The Associated Press June 5, 2012 

The U.S. Education Department denied South Carolina’s request to further appeal a $36 million penalty for not spending enough on special education during the economic downturn, meaning the cut could continue indefinitely.

U.S. Secretary of Education Arne Duncan dismissed the case in a six-page order sent to state officials.

South Carolina schools chief Mick Zais said Monday he’s left with no choice but to pursue solutions through the courts and Congress.

“This entire process has been symbolic of Washington-style red tape,” Zais said. He called the order a “poor decision which could harm children for years to come. … It now seems even our students with disabilities are not safe from the over-reach of this administration.”

The cut in federal money is a punishment for the state not spending enough on students with disabilities in the 2009-10 school year. It reflects what’s left of an initial penalty of $111 million issued last June, after other amounts were forgiven. The $36 million partial penalty was initially set to start last October. But the federal agency delayed the punishment by a year.

Zais, a Republican who took the agency’s helm in January 2011, appealed the partial penalty in August 2011 and asked for a hearing. He also asked for another one-year delay pending a final decision. But federal officials denied that request in April, noting it gave the delay precisely so the state could prepare for the loss.

That prompted Zais to ask senators to add $36 million to the 2012-13 budget for special education to avoid additional penalties. The Senate’s spending plan includes that money.

In his appeal, Zais argued that the entire penalty be waived, or at the least be a one-time cut, rather than continue perpetually.

In his order, Duncan backs up the decisions of lower-level staff and said he fully considered the state’s position that it’s entitled to a hearing.

“When there is no basis to proceed at all in an administrative action, and the only function remaining is that of announcing that fact, the matter should be dismissed,” Duncan concluded in the order signed May 22 and received at the state education department Friday.

The state spends $410 million on South Carolina’s nearly 100,000 special needs students in public schools — 14 percent of the entire student population, according to the education agency. Local districts provide additional funding.

The cut comes from the $183 million the state would otherwise receive from the federal government for students with various disabilities. Federal law bars states from spending less money on special education from one year to the next, though states can apply for an exemption.

The $36 million punishment is what’s left from an initial threat last June to reduce the state’s allotment by $111.5 million for not spending enough on special education over the previous three years, due to budget cuts during and following the Great Recession.

The federal government approved a waiver for 2008-09, a partial waiver for 2009-10 and forgave the entire shortfall for 2010-11 after the agency rushed to distribute $75.3 million to districts days before South Carolina’s fiscal year ended last June 30. The money was cobbled together from better-than-expected sales tax collections and lower-than-expected prices for school bus diesel fuel.

Part of Zais’ argument for a hearing was that the agency’s 16-month delay in issuing a decision on the state’s waiver request for the fiscal year that ended June 30, 2010 — referring to the June notice — made it impossible to rectify that shortfall.

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