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NEARLY a decade ago, state lawmakers tried to put the brakes on special education spending. They tightened the rules that determine which students qualify for special education and narrowed the standard for services that must be provided. Their goal was not only to save money but also to prevent the spiraling cost of special education entitlements from derailing the state’s education reform effort.

But no one ever checked to see if the brakes actually worked. Indeed, special education — the issue that galvanized debate on Beacon Hill in 2000 — is now largely forgotten. Government watchdogs pay little attention to it, and Gov. Deval Patrick’s Readiness Project, after 18 months of work, barely took notice of it.

A three-month investigation by CommonWealth found what few in 2000 anticipated: The number of special education students, after dropping sharply in 2001, rebounded to near its previous level even as overall school enrollment was shrinking.

Special education children, as a group, are falling further behind their regular education peers every year, and an achievement gap of large proportions has opened between special education students in wealthy and in poor communities.

The cost of special education in Massachusetts is approaching $2 billion a year, with roughly $436 million going for tuition to expensive private schools. The state’s private school tab is the third highest in the nation, according to the latest figures from the US Department of Education, trailing only the much larger states of California and New Jersey. Public school administrators say some of the special education students attending private schools could be educated in public schools at a fraction of the cost.

Officials at public schools across Massachusetts say special education — a federal and state mandate that has never been adequately funded by either branch of government — is caught in a spending spiral. In an era of escalating costs and shrinking revenues, local school officials find themselves funneling more and more money into special education, often at the expense of regular education. Educators and administrators say regular education students could find themselves in bigger classes with teachers unable to provide as much individual attention. As children on the margin in these classes fall behind, their parents are steering them to special education for the guaranteed services and mandated smaller classes, which causes costs to rise and the spiral to begin anew.

Paul Ash, the school superintendent in Lexington, plans to cut his budget by $1.8 million next year, but, like other school administrators, says that none of the reductions will come out of special education. “You cannot cut special education services,” he says. “How do you set up a class of human beings who are entitled to an education [while] everyone else gets what’s left over?”

A rising tide

Gayle and Brian Harrold of Westborough are the parents of four children, all of them diagnosed with disabilities. Three of the children receive special education services in the Westborough public schools, and the fourth is bused every day at taxpayer expense to a private school in Acton that specializes in children with emotional disabilities. Gayle says she had to push hard for each placement, especially the one at the private school. “It took a couple years to get that placement, but it was a year and a half too long to get to that place,” she says.

Her frustration is typical of parents of special needs children. They complain that special education laws and the inadequate funding that accompanies them inevitably pit parents seeking the best services for their children against school districts trying to contain costs. But Harrold’s frustration also demonstrates how far the struggle of parents of special needs children has come in a relatively short period of time.

Just four decades ago the Harrold children probably wouldn’t have been diagnosed, let alone treated. They would have been shunted away in hospitals, treatment centers, or separate classrooms in unused portions of school buildings where learning was never the prime objective. Children with more severe disabilities were warehoused in places like the Fernald School in Waltham and the Belchertown State School in the western part of the state.

“We would go to Belchertown and there would be all these kids in the back wards, just lying there…. I think that’s where the term ‘backwards’ came from,” says a half-joking Lawrence Kotin of Kotin, Crabtree & Strong, a Boston law firm that specializes in representing parents in special needs proceedings with school districts.

Kotin and his law partner, Robert Crabtree, were advisors to then-Gov. Francis Sargent when they undertook a study in 1971 to examine educational opportunities in the state for children with disabilities. It was, as Crabtree says, the tail end of the Civil Rights Era, and people with disabilities were the final group to enter that frontier.

Their work resulted in the trailblazing law known as Chapter 766. The state act mandated that school districts provide the services needed to ensure that children with disabilities had the same access to a publicly funded education as their regular education counterparts. Three years later, Kotin and Crabtree helped to develop a federal law, the Individuals with Disabilities Education Act (IDEA). Both measures gave parents the right to reject and challenge the decisions of school administrators.

“It’s not something that sits well with administrators,” says Crabtree of the strong parental role. Adds Kotin: “There’s been tension from day one.”

The tension came to a head in the late 1990s, when nearly 165,000 children statewide were in special education and costs were ballooning. House Speaker Thomas Finneran decried the Massachusetts law as the exemplar of a liberal mindset that promised everything to everybody no matter what the cost. A study done for the legislative leadership by the consulting firm McKinsey & Co. concluded that bringing Massachusetts’ standards in line with federal law — which guarantees a “free appropriate public education,” as opposed to Chapter 766’s promise of “maximum feasible” benefits — would reduce the number of special needs students by 30,000 and save $125 million or more annually. The numbers carried the day. The law passed and the Legislature moved on.

The first year after passage, the number of special needs students fell by 10,000, about 8 percent, but paradoxically the cost of the program rose by 8 percent, or roughly $100 million. Over the next eight years, the cost continued to climb, and the number of special needs students returned to more than 164,000. Today Massachusetts spends nearly 25 percent of its education budget on teaching and transporting special education students, who represent 17 percent of the student population. (The percentage devoted to special education may change as a result of federal stimulus money.) Nationally, special education students account for 13 percent of student enrollment, according to the annual education department report to Congress.

The hoped-for savings of 2000 never materialized for three reasons. First, the wording of the law changed, but the mindset of many parents and advocates did not. Second, lawmakers in 2000 used one hand to tighten eligibility standards and reduce benefits, but with the other hand they expanded the reach of special education to include several types of therapies previously divorced from education, such as speech therapy and occupational therapy. “We’ve got a lot of baubles that other states don’t have,” says Marcia Mittnacht, state director of special education.

Finally, the tide of special needs students keeps rising. Advances in medicine are keeping more babies alive, and many of these children are facing disabilities later in life. Massachusetts leads the nation in early intervention services to children between birth and 2 years old, with 5.5 percent of that age group, more than double the national average, receiving services under IDEA. Last year, the state Department of Public Health referred more than 6,000 children who turned 3 years old to special education programs.

Faced with shrinking revenues and expanding costs, school administrators are forced to fund mandated special education programs and cut everywhere else. Boston, for example, closed a fiscal 2010 budget gap with $62.5 million in spending cuts, but special education escaped virtually unscathed. Westborough plans to cut 50 school positions next year, but only a handful are coming in special education. In fact, the budget for private special education tuitions is rising by nearly $400,000.

Gayle Harrold, the Westborough mother of four special needs children, says some parents of regular education students are livid when they see school cuts that don’t extend to special education.

“We’ve literally had other parents say to us, ‘If we didn’t have to spend money on your special needs kids, we’d have more money for the rest of the schools,’” she says. “I think they don’t understand it. I don’t complain when we put in sports programs that we pay for that my kids can’t participate in.”

Taxpayer-paid private education

The Landmark School in the Pride’s Crossing section of Beverly looks out over the Atlantic Ocean and its yearly tuition of more than $44,000 matches the view. Students come from across the country and around the world to study at Landmark. In sports, they compete against elite private schools such as Concord Academy and Pingree School. In every sense of the word, Landmark is a prep school — except it caters exclusively to children with dyslexia, and roughly half of its 450 students are there courtesy of Massachusetts taxpayers.

Landmark is one of 165 private special education schools and programs in Massachusetts, more than in any state but Ohio and Pennsylvania. The schools vary from the world-renowned Perkins School for the Blind in Watertown to the 60-student Willow Hill School in Sudbury. Tuition can range from under $27,000 for a private day school to nearly $300,000 for a year-round residential program.

More than a fifth of special education spending in the Bay State goes to private schools to educate just 7 percent of the state’s special education students. The $436 million tab has tripled over the last nine years, with students in wealthier communities snaring more of the money on a per-capita basis. School officials say it’s a case of the squeaky wheel getting the grease, as wealthier parents are much more aggressive in pushing for services and programs for their children.

Local communities spend another $43 million a year — an average of $9,645 per child — to transport special education students to private schools and regional public collaboratives where school districts share the cost of educating special needs children. The transportation cost is so high because a relatively low number of students are being transported door to door, and many require aides to ride with them.

In Westborough, school officials in 2006 reached a settlement with the parents of one child to send him to a collaborative in Lexington for three school years through this coming June. Because the child suffers from cyclic vomiting syndrome, a rare disease that causes violent vomiting, Westborough officials also agreed to provide an aide employed by the transportation company who could administer oral medication if the child became sick on the 70-mile roundtrip to Lexington.

State Education Secretary Paul Reville says special education transportation costs are bordering on out-of-control. “I had one superintendent tell me he’d be better off paying for a house in another community rather than continuing to transport the child because the cost [of transportation] was more than $55,000 a year,” Reville says.

School districts send special needs children to private schools if they can’t provide the services internally or at regional public collaboratives. But determining what is a “free appropriate public education” for an individual student is a judgment call worked out between that student’s parents and school officials.

Last year, parents rejected more than 7,400 education plans proposed by school districts. About 15 percent of the disputes were resolved with a confidential written agreement or a decision by the state Bureau of Special Education Appeals or a court. How the remainder were handled is unclear because records are confidential or unattainable, but presumably parents either dropped their objections or reached some type of settlement.

Negotiations between parents and schools can get very expensive. Parents often spend thousands of dollars hiring lawyers and specialists to make their case, while school districts face similar costs plus the prospect of paying the legal fees of the parents if they lose.

The ultimate game of chicken is unilateral placement, where parents don’t even negotiate with school districts; they just put their child in a private school and then demand reimbursement from the school district. The practice is so controversial that the US Supreme Court is being asked to decide its legality. The court deadlocked 4-4 last year in a case involving a wealthy businessman who was demanding that New York City reimburse him for educating his disabled son at a $38,000-a-year private school. Another case, involving an Oregon boy who was unilaterally placed at a $65,000-a-year private school, is now before the court.

Beverly has seven unilateral placements, all at the Landmark School, according to Debra O’Connor, Beverly’s administrator of special education. O’Connor says wealthy parents have moved to Beverly from out of state or even out of the country, enrolled their children at Landmark, and demanded that the town pay.

“Unilateral placement is a game,” says O’Connor. “It’s like a poker game. You have to have money to play.”

Annemarie Cesa, head of the Beverly School Committee, says she recalls one family that moved to town with two special needs children. One ended up going to a residential school in Connecticut and the other to Landmark. The total annual hit for the school district: $150,000.

O’Connor says the students attending Landmark and a handful of other schools like it could be taught just as well in the Beverly schools. Her counterparts in nearby towns say the same thing; they even say the MCAS results of their students who attend Landmark are subpar. (MCAS results for special education students at private schools are not reported separately, only as part of the student’s public school districts.)

School officials say they often give in to demands by parents for private school placements because it’s very expensive to challenge the placements and very tough on staff, since parents try to prevail by pointing out how the public school cannot adequately teach their child.

Wayne Ogden, superintendent of Franklin schools, said the legal fees can easily top $20,000 for a single contentious case. “No matter how right we think we are, we have to think long and hard before we commit to that kind of money and that action,” he says. “I suspect there are communities who won’t fight.”

Some private special education schools don’t accept unilateral placements. Ryan Plosker, the founder of the New England Academy, a Beverly special education school that caters to children with social and emotional disabilities, calls unilateral placements an “end run” around the system. “I never want a school district to be blindsided by a unilateral placement,” he says.

Robert Broudo, the president and headmaster at Landmark, says he sympathizes with public school administrators — he says one described the flow of money as a “loud sucking sound from my community to your school” — and believes students should stay in their school if at all possible. “But I’d also be the first one to say don’t let a human life go to waste. Every family that comes through this door says, ‘I’m absolutely losing my kid,’” he says, referring to parents with children in public schools.

More than 70 Massachusetts public school districts are sending students to Landmark, and Landmark officials say applications are up 40 percent for next year. Broudo says Landmark is successful because it accepts only a narrow range of children who fit its target profile and then offers intense remediation in every course, something a public school dealing with all types of students can’t provide.

Broudo connected CommonWealth with a mother who says her son was on the verge of dropping out of his public school when he transferred to Landmark in the 10th grade. The mother, who declined to identify herself or her community, says her son is now preparing to head off to college after scoring high on his SATs.

The mother says her son showed signs of reading difficulties at an early age but she was always told, “He’s a boy, he’ll outgrow it.” In middle school, she says, her son’s problems increased. She worked long hours with him, but his grades deteriorated. She says his school district provided some supports and gave him more time to take tests, but by ninth grade he was failing most of his classes.

“You can give a kid more time to take a test, but if he can’t read, he can’t read,” she says. “He was miserable. We were miserable. He asked me, ‘What age can I drop out of school?’”

She had her son tested and discovered he suffered from dyslexia. The diagnosis angered her so much she began exploring private schools, a search that led her to Landmark. Once her son was accepted, she placed him there unilaterally, hired a lawyer, and began battling for compensation. The school district eventually settled with her; she declines to provide specifics because she signed a confidentiality agreement. “They don’t want anyone else in town to know about it and go after them for the same thing,” she says.

She says her son’s turnaround at Landmark has been remarkable. “I’ll go to my grave saying that school changed not only my son’s life but our life,” she says. “I feel bad for the people who don’t have the funds to go that route.”

The haves and have-nots

There is little evidence the state’s nearly $2 billion investment in special education is paying off as hoped. According to federal data from 2000, Massachusetts ranked fifth nationally in graduating special education students and had one of the lowest dropout rates in the country. The most recent federal data, in part reflecting the advent of MCAS as a graduation requirement in 2003, show Massachusetts ranking 32nd in graduating special education students, and its dropout rate for those students is the sixth worst in the nation.

MCAS scores, the standard Massachusetts uses to measure progress, indicate that special education students have been treading water academically and falling farther behind students without disabilities. Special education students have showed almost no improvement in English over the last five years, with the number scoring proficient or advanced hovering around 26 percent. In math, the number scoring proficient or advanced has risen from 12.4 percent to 19.3 percent.

Using the same proficient-or-advanced yardstick, special needs children have lost ground to regular education students since 2003. The proficiency gap between students with disabilities and students without disabilities has grown from 43 points to 47 points in English and from 36 points to 44 points in math.

Special education programs were supposed to address the individual learning styles of disabled students no matter where they live, but children from poorer communities post much lower scores on standardized tests, drop out at a much higher rate, and are far less likely to be sent to private schools. Indeed, the lackluster results of special education students as a group are due primarily to the scores in poorer communities.

The achievement gap between special education students in wealthier and poorer communities is highlighted with the state’s Composite Performance Index (CPI), a number that allows researchers to compare the proficiency of students on MCAS tests with other states’ standardized tests. In 2008, the state’s 10th-grade students overall posted a CPI of 87 in English and 80 in math, while special education students scored nearly 21 points lower than the statewide average in both subject areas.

But special education students in the Bay State’s 30 poorest communities, who account for 23 percent of all special education students, scored 24 points lower than the statewide average for all students in both English and math. (Boston falls just outside of the Department of Revenue’s list of the 30 poorest communities.) By contrast, special education students in the state’s 30 wealthiest communities, who account for 11 percent of the state’s special education students, scored just 1.7 points below the overall statewide average for all students in English and beat the statewide average in math by 1 point.

Graduation rates tell the same story. The five-year graduation rate for Boston special education students was 40 percent in 2008, 30 points behind the city’s overall graduation rate. It was 39 percent in Fall River, 37 percent in Springfield, and 17 percent in Lawrence, ranging from 21 to 35 percentage points behind the districts’ overall graduation rates. By contrast, the five-year graduation rates in Wellesley, Weston, Cohasset, Harvard, and Hanover all exceeded 90 percent. Harvard and Cohasset graduated 100 percent of their special education students, and the other three rates ranged between 1 point and 7 points behind the districts’ overall rates.

Much attention has been focused on the achievement gap between students from wealthy and poorer urban communities, but the gap between special education students from those same communities is about 50 percent wider, according to state MCAS scores. Even within poorer communities, special education students trail much further behind their regular education counterparts than special education students do in wealthier communities.

The cause of the achievement gap — and how to close it — is difficult to pinpoint. Much of it can probably be traced to the poverty and language barriers endemic in less affluent communities. Education funding is another factor. The top third of communities ranked by wealth spend nearly 17 percent more per special education student than the bottom third.

There is also some anecdotal evidence that the makeup of special education students in wealthy and poor communities is different. Some school officials say poorer communities tend to have more severely disabled children concentrated in their programs, while wealthier communities have a much broader range of students.

Karla Baehr, a deputy commissioner at the Department of Elementary and Secondary Education and formerly superintendent of schools in Wellesley and Lowell, says identification for special education services can be relative, based on a child’s disability and lagging progress in the context of his or her peer group. In a carefully worded statement, Baehr said: “Some students identified for special education services in Wellesley may not have been identified for special education placement in Lowell.”

Ash, the Lexington school superintendent, says many special education students he sees are what he calls “curriculum disabled,” meaning their academic performance lags behind their peers. He says these students are often diagnosed as having a specific learning disability, a catchall category that encompasses anyone who has difficulty understanding or using spoken or written language. Statewide, nearly 40 percent of special education students have specific learning disabilities, although there is no major difference between wealthy and poor districts.

The most clear-cut difference between wealthy and poor communities is what they spend to send special education students to out-of-district private and regional public schools. Massachusetts communities ranked in the bottom third by wealth spend $17,005 on average per pupil on private school tuition, communities in the middle third average $23,861 per pupil, and the wealthiest third of communities spend $38,237 on average per pupil.

About half the money going to pay private school tuitions comes from the state under its circuit breaker program, which is designed to ease the burden of high-cost special education cases on cities and towns. Wealthier communities are apt to receive a greater share of reimbursement per pupil because they have more higher-priced placements.

School officials say wealthier parents push more aggressively for private school placements. Parents in poorer communities may both be working and have less time and resources to advocate for a private school. They may also come from cultures where the recommendation of a teacher or superintendent is unchallenged because of the authority their positions carry.

Cynthia Joyce spent 22 years as a special education administrator in down-and-out Holyoke before taking over in middle-income Saugus last summer. It didn’t take long to notice a difference. “I’d get calls from parents who’d say, ‘I’m calling to put my order in for a day placement for my kids,’” she says. “People were just used to making placements for their kids. I never, in 22 years as a special education administrator, came across it.”

In Gloucester, by contrast, special education administrator Joanne Reiss said she’s been trying to drum up interest in a state-mandated special education parent advisory council for 11 years. “I just can’t get anyone to show up,” she says. “They just aren’t interested.”

At the Landmark School in Beverly, students tend to come from wealthier communities. An analysis of the 2007 school roster indicates 65 percent of the 328 Massachusetts students came from the state’s wealthiest communities, more than 25 percent came from the middle third, and just 9 percent came from the bottom third.

“It’s haves and have nots. The haves have got to go to Landmark,” says Beverly’s O’Connor.

‘A runaway train’

When then-President Gerald Ford signed the federal special education bill into law on November 29, 1975, he was eerily prescient. “This bill promises more than the federal government can deliver, and its good intentions could be thwarted by the many unwise provisions it contains,” he said.

The federal government promised to provide 40 percent of the funding for special education, but its contribution has never risen above 20 percent. It’s even less in wealthier states like Massachusetts. In fiscal 2007, 55 percent of Massachusetts special education funds came from local communities, 35 percent from the state, and just 10 percent from the federal government.

President Barack Obama’s stimulus package is playing a little catch-up. About $12 billion is headed for special education, with Massachusetts expected to receive $280 million over the next two fiscal years and about 85 percent going to local districts. Another $168 million in stimulus money is going to help some struggling communities avoid steep cuts in their overall education

budgets this coming school year, and about $820 million more in stimulus money is expected for K-12 education over the next two years; the annual sum equals less than 5 percent of yearly education spending in the state. School officials say the one-time infusions of cash are badly needed, but they won’t resolve the long-term financing problems.

Former state education commissioner David Driscoll, who now works as an education consultant, says the changes made to the special education law in 2000 triggered no real reform and left policymakers with few viable options. “It’s very hard to find savings when you have a runaway train,” he says.

Many districts are investing heavily in their own special education programs in a bid to keep more children from going to expensive private schools. Lexington has had success in this area, spending nearly $800,000 to beef up internal special education programs to avoid having to spend an estimated $1.7 million on private school tuitions. More savings are expected this coming year as the number of special education students going out of district is forecasted to drop again.

Ash, Lexington’s superintendent, says this type of investment in special education is very difficult to do. He says the state could help by offering grants to communities that upgrade their programs.

Municipal officials are pushing state lawmakers to revise the circuit breaker formula to increase the amount of overall state funding for special education and to allow reimbursements for special education transportation. The officials also want restrictions on unilateral private school placements.

State officials are also reviewing legislation that would require health insurance plans to replace schools in covering many of the treatments for autism, the fastest growing special needs disability and one of the most expensive to treat.

Reville, the state’s education secretary and a father of two special needs students, says the state is well aware of special education’s financial burden on communities. “I’ve had meetings where superintendents have said, ‘Special ed costs are killing me,’’’ he says. But he adds that new major funding is unlikely.

“This condition of scarcity is likely to persist, and that’s likely to heighten the tension between regular education and special ed populations,” Reville said. “This is a legitimate financial challenge.”

Christine McGrath, the superintendent in Tewksbury, complains about the high cost of special education, but she says policymakers need to keep in mind that special education is pursuing a worthwhile goal.

“We’re doing the proper thing for that group of children,” she says. “Now we’ve got to figure out a way to do the proper thing for the rest of the population.”