THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BROWNE, DINNIMAN, WASHINGTON, STACK, ERICKSON, RAFFERTY, SOLOBAY, COSTA, FERLO, VANCE, BRUBAKER, WAUGH, YUDICHAK, KASUNIC, HUGHES, SCHWANK, FARNESE, WILLIAMS, PIPPY, LEACH, FONTANA, GREENLEAF, ARGALL, SMUCKER, MENSCH, BOSCOLA, TOMLINSON, TARTAGLIONE, BAKER AND BLAKE, JUNE 16, 2011

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, MAY 22, 2012   

AN ACT

Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An

act relating to the public school system, including certain

provisions applicable as well to private and parochial

schools; amending, revising, consolidating and changing the

laws relating thereto," further providing for definitions;

and providing for the distribution of special education

funding for student achievement and instruction of eligible

students and for special education accountability.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2501(26) of the act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949, added

July 9, 2008 (P.L.846, No.61), is amended and the section is

amended by adding clauses to read:

Section 2501.  Definitions.--For the purposes of this article

the following terms shall have the following meanings:

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(26)  "Actual Spending." An amount equal to a school

district's total expenditures to include General Fund

expenditures in all functional classifications, as designated in

the Manual of Accounting and Related Financial Procedures for

Pennsylvania School Systems, except for:

(i)  actual special education spending;

(ii)  adult education;

(iii)  higher education;

(iv)  student transportation;

(v)  community services;

(vi)  scholarships and awards;

(vii)  facilities acquisition;

(viii)  construction and improvement services; and

[(ix)  other expenditures and financing uses; and]

(x)  tuition from patrons revenue.

* * *

(31)  "Actual Special Education Spending." An amount equal to

a school district's total annual expenditures for special

education as established by the Department of Education and

designated in the Manual of Accounting and Related Financial

Procedures for Pennsylvania School Systems. The amount shall not

include expenditures that are exclusively for gifted students

who do not receive special education pursuant to an

individualized education program.

(32)  "Eligible Student." A student who has been identified

as a student with a disability who is in need of special

education under Federal and State law.

(33)  "Performance Indicators." Measurable annual objectives

established by the Department of Education pursuant to section

612(a)(15) of the Individuals with Disabilities Education Act

(Public Law 91-230, 20 U.S.C. § 1412(a)(15)) to assess progress

toward achieving State goals for the performance of eligible

students.

(34)  "Public Notice." Full and timely release of information

and documents for public access at a minimum through publication

by the Department of Education:

(i)  in the Pennsylvania Bulletin;

(ii)  on the department's publicly accessible Internet

website for no less than a duration of twelve (12) months; and

(iii)  through the department's timely issuance of a related

Statewide press release.

(35)  "Regular Classroom." A classroom in a regular school

operated primarily for students who have not been identified as

students with disabilities who are in need of special education.

(36)  "Regular School." A neighborhood school, magnet school

or other public school operated for all students, not solely

eligible students, in a school district.

(37)  "Special Education Plan." A comprehensive plan as well

as revisions, updates and amendments for all special education

personnel, programs, services and supports provided by each

school district for eligible students, filed by each district

with the Department of Education under this act and other

applicable Federal and State law.

(38)  "Commission." The Legislative Commission on Special

Education Funding.

(39)  "Base Year." Fiscal year 2010-2011 or another year

designated by statute.

(40)  "Special Education Allocation." The amount of special

education funding received by a school district from the

Commonwealth.

Section 2.  The act is amended by adding sections to read:

Section 2509.13.  Special Education Funding for Student

Achievement and Instruction of Eligible Students.--(a)  The

General Assembly shall, through the annual appropriations

process, determine the level of State funding for special

education and the amount of any change in funding. The special

education formula developed under this section shall determine

only the distribution of any increase in special education 

funding among the school districts of this Commonwealth above

the amount of special education funding in the base year and

shall not be used for any other purpose.

(b)  Notwithstanding any provision of law to the contrary,

for the 2012-2013 school year and each school year thereafter,

any State funding for special education in an amount that does

not exceed the amount of State funding for special education in

the base year shall be allocated in the same manner as the State

funding was allocated in the base year.

(c)  The Department of Education shall distribute special

education funding according to the calculations under

subsections (a) and (b).

(d)  The Legislative Commission on Special Education Funding

is established and shall develop a special education formula

that will be used to determine the distribution of any change in

special education funding among the school districts of this

Commonwealth. The formula shall include all of the following:

(1)  Three (3) cost categories of eligible students,

established such that students with disabilities typically

requiring the least intensive range of services shall comprise

category 1, students with disabilities typically requiring a

middle range of services shall comprise category 2 and students

with disabilities typically requiring the most intensive range

of services shall comprise category 3. The commission shall

determine a description of and parameters for each of the three

(3) categories.

(2)  A student count for each school district averaged for

the three (3) most recent years for each category of eligible

students to be calculated as follows:

(i)  For category 3, calculate the number of eligible

students residing or enrolled in the school district and

classified in category 3, except that the number of eligible

students included in this calculation who are placed by the

school district and served in public or private separate

schools, residential placements or homebound or hospital

placements shall not exceed three and one-half percent (3.5%) of

all eligible students with individualized education programs

residing or enrolled in the school district or the target

established in the Part B State Annual Performance Plan filed by

the Department of Education under the Individuals with

Disabilities Education Act (Public Law 91-230, 20 U.S.C. § 1400

et seq.), whichever is less. The reference in this paragraph to

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the target established in the Part B State Annual Performance

Plan shall be used solely for the purpose of determining the

student count for category 3, without limiting the use of this

target for other purposes pursuant to the Part B State Annual

Performance Plan. Eligible students exceeding this target shall

be part of the other cost categories within the special

education formula. Neither the reference to the target nor any

other provision of this act shall be construed to alter Federal

or State law regarding the protections provided to an eligible

student for receiving education in the least restrictive

environment or alter the legal authority of individualized

education program teams to make appropriate program and

placement decisions for eligible students in accordance with the

individualized education program developed for each eligible

student.

(ii)  For category 2, calculate the number of eligible

students classified in category 2 determined by taking the

product of:

(A)  the number of eligible students in the school district;

and

(B)  the Statewide percentage of eligible students classified

in category 2.

(iii)  For category 1, calculate the number of eligible

students classified in category 1 determined by taking the

product of:

(A)  the school district's modified average daily membership;

and

(B)  the Statewide percentage of modified average daily

membership classified in category 1.

(iv)  The two (2) Statewide percentages of modified average

daily membership which shall be designated as category 1 and of

eligible students which shall be designated as category 2 shall

not exceed the actual proportion of students in this

Commonwealth classified in categories 1 and 2 in the most recent

year for which data is available.

(3)  A weighting factor that differs for each of the three

(3) categories of students with disabilities and that accurately

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reflects the costs of educating students in each category based

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on the typical range of services for each category.

(4)  Adjustments for:

(i)  The market value/personal income aid ratio averaged for

the three (3) most recent years for each school district.

(ii)  The equalized millage rate averaged for the three (3)

most recent years for each school district.

(iii)  Geographic price differences identified for each

school district.

(5)  A distribution ratio based on the factors listed in

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paragraphs (1), (2), (3) and (4), in which the calculated total

for each school district is divided by the aggregation of

calculated totals for all school districts in this Commonwealth.

(6)  A calculation of the change in special education funding

to be provided for each school district, in which the

distribution ratio under paragraph (5) is multiplied by the

Statewide total change in special education funding.

(5)  A proportional system for distributing the change in

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special education funding among the school districts, based on

the factors listed in paragraphs (1), (2), (3) and (4).

(7) (6)  Other factors related to an accurate distribution of

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special education funding.

(e)  Prior to development of the special education formula  

required under subsection (d), the commission shall:

(1)  Consider nationally accepted accounting and budgeting

standards.

(2)  In a timely manner, hold no fewer than three (3) public

hearings in different regions of this Commonwealth to receive

input and testimony from interested parties, which may include

the Secretary of Education and other individuals representing

the Department of Education, parents of eligible students,

teachers, school administrators, school board members, higher

education faculty and existing State committees, advisory panels

and task forces established under Federal or State law,

regulations or court orders.

(f)  (1)  Membership of the commission shall include twelve

(12) members, consisting of the chairman and minority chairman

of the Education Committee of the Senate, the chairman and

minority chairman of the Education Committee of the House of

Representatives and two (2) legislators from each of the four

(4) legislative caucuses, to be determined by the leadership of

each caucus and to be replaced at the discretion of the

leadership of each caucus. The commission may perform its duties

regardless of whether all four (4) legislative caucuses have

actually appointed members to the commission. The commission

shall choose a chairperson and utilize legislative staff for

assistance in developing the special education formula. The

Department of Education shall provide the commission with data,

research and other relevant information, upon request by the

commission.

(2)  Members of the commission shall be appointed within

forty-five (45) days of the effective date of this section. The

commission shall hold its first meeting within ninety (90) days

of the effective date of this section. The commission shall

develop the special education formula required under subsection 

(d) within one hundred twenty (120) days of the effective date

of this section, and shall issue a report of its findings to the

Governor, the President pro tempore of the Senate and Minority

Leader of the Senate, the Speaker of the House of

Representatives and the Minority Leader of the House of

Representatives, the Education Committee of the Senate and the

Education Committee of the House of Representatives, the

Secretary of Education and the State Board of Education.

(g)  Upon completion of the commission's report, the State

Board of Education shall draft proposed regulations to implement

the special education funding provisions of this section using,

without alteration, the special education formula as developed

by the commission. If the commission does not issue the required

report within the required time period or if the commission's

report does not designate the special education formula required 

under subsection (d), the State Board of Education shall in a

timely manner promulgate proposed regulations to designate the

special education formula through the regulatory review process.

(g.1)  In developing the special education formula required

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under subsection (d) and in issuing the report required under

subsection (f), the commission shall address the distribution of

any change in special education funding among the school

districts but shall not recommend the annual level of State

funding which, under subsection (a), shall be determined by the

General Assembly through the annual appropriations process.

(h)  In every fifth year subsequent to the initial

promulgation of the regulations implementing the special

education formula, the commission shall be reconstituted

pursuant to subsection (f)(1), shall meet and hold public

hearings to review the operation of the special education

funding provisions of this section, shall make a further report

and shall issue the report to the bodies and individuals listed

under subsection (f)(2). When in receipt of a further report

recommending changes to the special education formula, the State

Board of Education shall promulgate proposed regulations through

the regulatory review process to implement, without alteration,

any changes developed by the commission in the special education

formula.

(i)  The commission shall receive input from interested

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parties, which shall include, but not be limited to, charter and

cyber charter school operators, and gather information on the

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identification of children as eligible students by charter and

cyber charter schools. The commission shall also receive input

and gather information on charter and cyber charter school

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funding reimbursements regarding special education eligible 

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students. The commission shall draft proposed regulations and

proposed legislation based on their findings.

(j)  The commission shall consider the development, by the

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Department of Education, of improved systems for documenting

student enrollment in public schools, including new methods for

documenting average daily membership. The commission, either

initially or when reconstituted in every fifth year, shall draft

proposed legislation based on its consideration of these issues

to update the special education formula as needed to maintain

accurate student counts for eligible students.

(j) (k)  (1)  The Department of Education shall set aside one

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percent (1%) of the total State special education appropriation

in each year for extraordinary special education program

expenses under section 2509.8. The department shall utilize the

funds under section 2509.8(e) in order to meet, to the extent

that funds are available, extraordinary special education

expenses not anticipated through the special education funding

formula. School districts and charter and cyber charter schools

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may apply for resources through the fund under procedures

established by the department. The department shall make

payments from the fund in response to the applications.

(2)  The Department of Education shall issue a comprehensive

annual report documenting use of the fund to the General

Assembly and shall give public notice about the report.

(3)  As used in this subsection, "extraordinary special

education expenses" shall mean expenses that result from needs

and circumstances of an eligible student with significant

disabilities which are not ordinarily present in a typical

special education service and program delivery system and which

have costs exceeding the school district or charter or cyber

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charter school funding for special education, in order to

provide the student with an appropriate education in the least

restrictive environment.

(k) (l)  (1)  To the extent that funds are special education

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funding is appropriated in the 2013-2014 school year and any

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subsequent school year by the General Assembly above the amount

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of special education funding in the base year, the Department of

Education shall establish and implement a competitive grant

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program for school districts or and charter schools meeting the

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following criteria:

(i)  Providing instruction within the regular classroom at

least eighty percent (80%) of the school day for at least sixty-

five percent (65%) of eligible students, as averaged for the two

(2) most recent school years for which data are available or

increasing the number of eligible students receiving instruction

within the regular classroom by at least fifteen percent (15%)

in the most recent school year for which data are available.

(ii)  In the most recent school year for which data are

available, performance by eligible students on State academic

assessments in reading and math, averaged for the entire

district, meeting State standards for adequate yearly progress

by any method approved by the Federal and State governments,

such as meeting the annual target, the confidence interval, the

safe harbor target or by appeal.

(iii)  Implementing programs or services that serve as a

model of excellence for meeting high standards for inclusion and

student achievement through quality special education.

(2)  The Department of Education shall develop guidelines for

the administration of the grant program established under this

subsection, which shall be allocated to school districts and

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charter schools on a competitive basis.

(3)  The Department of Education shall issue an annual report

to the General Assembly documenting use of the grants issued

under paragraph (1) and shall give public notice about the

report.

(4)  Nothing under paragraph (1) or any other provision of

this act shall alter Federal or State law regarding the 

protections provided to an eligible student for receiving 

education in the least restrictive environment or shall alter

the legal authority of individualized education program teams to

make appropriate program and placement decisions for eligible

students in accordance with the individualized education program

developed for each eligible student.

Section 2509.14.  Special Education Funding for Eligible

Students with Disabilities in Category 3.--(a)  For the

2014-2015 school year and each school year thereafter, the

Department of Education shall set aside an amount equal to one

percent (1%) of the State special education appropriation above

the level of the appropriation in the base year. The Department

of Education shall distribute this amount as provided in

subsection (b).

(b)  For the 2014-2015 school year and each school year

thereafter, each school district in this Commonwealth shall

receive a pro rata share of the amount set aside under

subsection (a) based upon the number of eligible students

residing or enrolled in each school district and classified in

category 3 during the immediately preceding school year.

(c)  The funding provided under this section shall be

accounted for as part of actual special education spending and

as part of the special education allocation received by a school

district, according to the definitions in section 2501. School

districts shall also account for the funding provided under this

section and the resulting services and supports for eligible

students through the special education plans, revisions, updates

and amendments required by section 2509.15.

(d)  Amounts set aside by the Department of Education from

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the State special education appropriation shall not exceed the

following:

(1)  one percent (1%) of the total State special education

appropriation for extraordinary special education program

expenses pursuant to sections 2509.8 and 2509.13(k)(1); and

(2)  one percent (1%) of the State special education

appropriation above the level of appropriation in the base year

pursuant to subsection (a).

Section 2509.15.  Special Education Accountability.--(a)  (1)  

The Department of Education shall determine the form and manner

in which school districts shall submit a special education plan

and revisions, updates and amendments to the special education

plan under this section. The special education plan shall be

consistent with other existing plans and reports required by the

department to the greatest extent possible. Special education

plans shall be written in a manner that is easy to use and

understand by parents and the public, including a general

summary.

(2)  The Department of Education shall:

(i)  review the special education plans and revisions,

updates and amendments;

(ii)  provide recommendations and technical assistance to

school districts;

(iii)  approve or disapprove the plan within ninety (90)

calendar days of receipt; and

(iv)  provide a written explanation when disapproving a plan.

(3)  The Department of Education shall approve a special

education plan and revisions, updates and amendments that in the

determination of the department:

(i)  meet the requirements of this section;

(ii)  address the academic and developmental challenges for

eligible students identified in the school district's most

recent student achievement results and pursuant to performance

indicators, with specific focus on individual schools, grade

levels and populations of students that demonstrate inadequate

levels of student outcomes and with student achievement for

eligible students as measured by academic performance whenever

possible in the general education curriculum, acquisition of

knowledge and skills, progress toward graduation, accomplishment

of individualized education program goals, including appropriate

functional skills, and other factors;

(iii)  describe programs and strategies that are most likely

to improve student outcomes in the school district;

(iv)  describe any programs offered by the school district

and strategies of the school district for children from birth

through five (5) years of age and five (5) years of age through

seven (7) years of age designed to reduce the need for special

education services; and

(v)  describe policies of the school district to ensure that

a student identified as having a disability is no longer

identified as such if the student no longer qualifies under 22

Pa. Code Ch. 14 (relating to special education services and

programs), or any successor regulation.

(4)  Upon disapproving a school district's special education

plan, update or revision submitted under this section, the

Department of Education shall withhold the portion of the annual

State increase in special education funding which exceeds the

index until a written special education plan, update or revision

is approved.

(5)  The Secretary of Education shall involve as appropriate

in special education monitoring, support, intervention,

technical assistance and special education plan review by the

Department of Education, the staff in relevant offices, bureaus

and divisions of the department, as well as staff in

intermediate units and consultants, and shall neither delegate

nor limit these functions solely to the Bureau of Special

Education. The Secretary of Education shall have the authority

to contract for additional assistance with intermediate units

and consultants for these purposes, if the contracts do not

create a conflict of interest or supplant existing service or

program obligations.

(b)  (1)  By April 15, 2012 2013, and by April 15 of each

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year thereafter, each school district receiving an increase in

its State special education funding allocation of more than the

index shall update its special education plan based on overall

circumstances, shall also revise the special education plan to

show in detail how the increase above the index will be used and

shall submit the updates and revisions to the Department of

Education for approval under subsection (a). Unless a school

district decides to amend its special education plan more

broadly to reflect the receipt of new funding, the department

shall allow a district to meet the requirements of this section

by adding the mandated information as an appendix to the

existing plan.

(2)  School districts shall use State funds for programs and

supports that expressly benefit eligible students educated in

the least restrictive environment in accordance with Federal and

State law and contribute to achievement of performance

indicators.

(3)  The Department of Education shall issue guidelines for

the suggested use of State funds for programs and supports that

benefit eligible students and contribute to achievement of

performance indicators and address the following areas or

related areas:

(i)  curricula adaptation;

(ii)  coteaching;

(iii)  assistive technology;

(iv)  school-wide positive behavior supports;

(v)  supplementary aids and services;

(vi)  professional development;

(vii)  reading specialist services and supports;

(viii)  reducing caseloads for special education teachers and

related services personnel; and

(ix)  placing and serving eligible students in regular

classrooms with supports in accordance with the individualized

education program developed for each eligible student.

(4)  Nothing under this subsection shall be construed to

require school districts to implement only the programs and

supports included in the guidelines issued by the Department of

Education.

(c)  Accountability for the effective use of resources to

meet student needs shall also be provided in the following ways:

(1)  The Department of Education shall issue to the General

Assembly a comprehensive annual report on special education

funding, special education plans, the implementation of 22 Pa.

Code § 14.104 (relating to special education plans) and other

special education accountability issues for public school

entities serving eligible students and this Commonwealth.

(2)  Upon disapproving a school district's special education

plan, update or revision, the Department of Education shall

withhold the portion of the annual State increase in special

education funding which exceeds the index until a written

special education plan, update or revision is approved.

(3)  (i)  The Department of Education shall:

(A)  review and monitor implementation of all special

education plans, such as compliance with subsection (b) and 22

Pa. Code § 14.104;

(B)  provide support, intervention and technical assistance

in school districts failing to meet student needs based on

performance indicators or failing to comply with subsection (b);

(C)  identify at any time and at least annually all school

districts failing to adequately implement their special

education plans in compliance with Federal and State law,

failing to comply with subsection (b) or not making annual

progress to meet student needs based on performance indicators;

and

(D)  determine whether to withhold up to five percent (5%) of

all State special education funding for school districts

identified under this clause while the identified problems

remain unresolved.

(ii)  If the Department of Education determines that a school

district is making substantial progress toward resolving the

identified problems, it shall restore the withheld funding

retroactively and continue to monitor the district for an

additional two (2) years.

(4)  (i)  To discourage the inappropriate over-identification

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of children for special education, the Department of Education

shall automatically conduct a thorough review of the special

education plan of any school district with a substantially

higher ratio of eligible students in the district to its average

daily membership for all students than the State average, as

established by the department and of any district where the

ratio of eligible students in the school district to its average

daily membership for all students in the most recent school year

for which data is available has increased by more than ten

percent (10%) over the previous year or of any district where

the ratio has increased by an annual average of more than five

percent (5%) during the most recent five-year period.

Appropriate remedial action, including withholding up to five

percent (5%) of all State special education funding, may be

taken, unless the ratio or increase is determined to be

justified by the department after consultation with the school

district.

(ii)  Nothing in this paragraph or any other provision of

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this act shall be construed to alter Federal or State law

regarding the protections provided to an eligible student for

receiving education in the least restrictive environment or

alter the legal authority of individualized eduction program

teams to make appropriate program and placement decisions for

eligible students in accordance with the individualized

education program developed for each eligible student.

(d)  In rendering a decision or determining remedial action

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under this section, the Department of Education shall consider

extraordinary circumstances which a school district subject to

review is experiencing, including a substantial reduction in

Federal or State funds or other factors beyond the control of

the school district. The Department of Education shall issue to

any affected school district a notice specifying the

department's decisions and actions under this section and the

rationale for the decisions and actions. A school district may

file a written response to the department about the department's

decisions and actions regarding the district made under this

section. The written response must be submitted to the

department within thirty (30) calendar days of the department's

notice or within thirty (30) calendar days of receiving the

notice, whichever is greater. The department shall consider the

written response, consult with the school district and, within

thirty (30) calendar days after receiving the written response,

issue a written decision addressing the concerns and claims made

in the written response, explaining the judgment of the

department in response to these concerns and claims, and

specifying the opportunity to appeal this matter to the

Secretary of Education for a hearing under 2 Pa.C.S. Chs. 5

Subch. A (relating to practice and procedure of Commonwealth

agencies) and 7 Subch. A (relating to judicial review of

Commonwealth agency action) and 1 Pa. Code Pt. II (relating to

general rules of administrative practice and procedure). If

requested, the Secretary of Education shall convene a hearing

within thirty (30) calendar days after receipt of a school

district's hearing request. The Secretary of Education shall

render a written hearing decision within thirty (30) calendar

days following the hearing.

(e)  The Department of Education shall give public notice of

the decisions, actions and reports made under this section.

(f)  Nothing under this section shall supersede or preempt

any provisions of a collective bargaining agreement between a

school entity and an employe organization in effect on the

effective date of this section.

(g)  Notwithstanding any other provision of this section, if

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insufficient funds are appropriated for purposes of section

2509.13 for the 2011-2012 school year, the requirements of this

section shall be waived until the General Assembly appropriates

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special education funding above the amount of special education

funding in the base year and on the effective date of the

appropriation the requirements of this section shall apply for

that school year and for each school year thereafter.

Section 2509.16.  Data Collection.--Using existing resources

and data systems as well as nationally accepted accounting and

modeling standards, the Department of Education shall collect

data necessary for accurate functioning of the special education

formula developed under section 2509.13, including, but not

limited to, data necessary for the calculations related to

category 1, category 2 and category 3 as part of the formula

developed by the commission. The Department of Education shall

begin collecting such data upon the effective date of this

section.

Section 2509.17.  Restructuring.--(a)  The commission shall

study whether and the manner in which State and regional

administration of special education programs and services may be

restructured to reduce the cost of administering special

education programs and services by at least ten percent (10%) of

the cost of administering special education programs and

services in the base year and shall report its findings and

recommendations, including recommended legislation and options

to redirect administrative cost savings to school districts

through the formula developed under section 2509.13(d), to the

Governor and the General Assembly in the report required under

section 2509.13(f)(2).

(b)  Nothing under subsection (a) or any other provision of

this act shall alter Federal or State law regarding the

protections provided to an eligible student for receiving

education in the least restrictive environment or shall alter

the legal authority of individualized education program teams to

make appropriate program and placement decisions for eligible

students in accordance with the individualized education program

developed for each eligible student.

Section 3.  The Secretary of Education shall propose

regulations for promulgation by the State Board of Education

which implement this act.

Section 4.  This act shall take effect immediately.