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Special Ed and High-Needs Students Get Windfall in Budget Deal

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California schools, particularly those serving high-needs students, are being allocated a record amount of funding in the state budget. (iStock)

California schools are poised to get a record-breaking amount of money in the state budget to help students recover from 15 months of pandemic-related chaos, virtual classrooms, hybrid schedules and ever-shifting guidance.

Districts with lots of high-needs students, including those with disabilities, stand to get even more money.

Educators will use some of the extra funding to hire counselors who are better suited to address the mental health impacts of the pandemic. Lawmakers hope the unprecedented funding will also help address the pre-pandemic costs of special education and employee pensions.

“The pandemic hit everybody, and everybody could use more mental health support and counseling,” said Sara Noguchi, superintendent of Modesto City Schools. “But the pension costs each year are also significant. And that is just one of the areas that’s been difficult to manage.”

More Money Across the Board

The state will spend an unprecedented $93.7 billion from its general fund on education this year, with most California districts raking in millions of dollars in new funding.


Modesto’s district, for example, which has close to 30,000 students, is getting an extra $16.5 million this year. And that money comes with almost no strings attached and can be spent on anything from payroll to maintenance.

But that’s just the beginning.

The state calculates funding for school districts using what’s called the Local Control Funding Formula. Under the formula, all districts receive a base amount of money per student, and more money for foster children, English learners or those qualifying for free or reduced-price lunch. If any of those groups make up more than half of a district’s enrollment, the district gets additional money.

The budget deal also reflects Gov. Gavin Newsom’s proposal to direct $1.1 billion to districts with a high concentration of those vulnerable student groups; the Legislature had wanted to spread the money out over all districts that have high-needs students.

Extra Attention for Special Ed

Education experts are calling this fiscal year “the year of special ed,” with good reason: Not only are California lawmakers increasing state special ed spending by $656 million, President Biden’s administration has promised even more funding over the next several years.

“Special education funding has never, ever been the amount that is needed,” said Jonathan Kaplan, a senior policy analyst at the California Budget and Policy Center. “The federal government is the one that requires schools to provide an appropriate education, but they’ve never provided the funding. State dollars are provided to supplement what the federal government is providing.”

This year, California will provide a 4.05% cost-of-living adjustment for all special education programs.

In addition, the state will also provide another $550 million for “dispute resolution” for students who received little or no special education services during the pandemic.

Early Childhood Education

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The final budget deal also dedicates ongoing funding to transitional kindergarten, an intermediate grade level established to accommodate 4-year-olds who won’t turn 5 by Sept. 1, the cutoff for kindergarten admission.

The budget deal includes a timeline to implement transitional kindergarten for all 4-year-olds in California by the 2025-26 school year. The plan would cost $2.7 billion once fully implemented.

The state is also spending billions to expand child care subsidies. This year, $1.5 billion will go toward 120,000 additional kids, mostly those of essential workers. Next year, child care subsidy spending would increase to $2.7 billion.

“I’ve never seen such an expansion and an attempt to improve the quality of child care, really since the advent of pre-K in the 1960s,” said Bruce Fuller, a professor of education at UC Berkeley. “The expansion of early education, in sheer dollar amounts, rivals the increases in K-12.”

Easing the Fiscal Burden of Pensions

In past years, increases in overall education funding were dwarfed by the tens of millions of dollars some districts were required to pay to employee retirement funds. The cost of pension liability stressed district budgets, especially during the pandemic.

“Every year the pension costs continue to rise,” said Noguchi, from Modesto. “Last year, there was no cost-of-living adjustment but an increase in pension costs.”

The overall increase in funding this year would help districts with their pension liabilities, a fiscal burden that has pushed some districts into deficits.

More Teachers, More Class Time, More Meals

The budget deal also includes $2.8 billion in one-time funding to help school districts recruit, retain and train teachers. With a high number of teacher retirements this year, some districts face a looming staffing shortage. As the pandemic recedes, more teachers could keep class sizes low and allow students who fell behind to receive more one-on-one attention.

The state is also providing $1.8 billion this year as part of a multiyear $5 billion funding package to expand summer school and after school programs. Districts with more low-income students, foster children and English learners would get more funding.

In line with the Legislature’s proposal, the budget will also invest $54 million this year and $650 million in ongoing spending to pay for breakfasts and lunches for students.

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