1Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An
2act relating to the public school system, including certain
3provisions applicable as well to private and parochial
4schools; amending, revising, consolidating and changing the
5laws relating thereto," in preliminary provisions,
6establishing the Special Education Funding Commission; in
7reimbursements by the Commonwealth and between school
8districts, further providing for definitions; and providing
9for the distribution of special education funding for student
10achievement and instruction of eligible students and for
11special education accountability.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 10, 1949 (P.L.30, No.14), known
15as the Public School Code of 1949, is amended by adding a
16section to read:

17Section 122. Special Education Funding Commission.--(a)
18There is hereby established a Special Education Funding
19Commission.

20(b) The Special Education Funding Commission shall review
21and make recommendations related to special education funding as

1provided in this section.

2(c) (1) The commission shall consist of the following
3members:

4(i) The chair and minority chair of the Education Committee
5of the Senate and the chair and minority chair of the Education
6Committee of the House of Representatives, or their designees.

7(ii) Two (2) legislators from each of the four (4) 
8legislative caucuses, to be appointed by the President pro 
9tempore of the Senate and the Speaker of the House of 
10Representatives, in consultation with the Majority and Minority 
11Leaders of the Senate and the Majority and Minority Leaders of 
12the House of Representatives.

13(iii) The Secretary of Education, or a designee.

14(iv) The Secretary of the Budget, or a designee.

15(v) The Deputy Secretary for Elementary and Secondary
16Education, or a designee.

17(2) The commission shall appoint a member to serve as chair
18of the commission.

19(d) The commission shall hold its first meeting within
20thirty (30) days of the effective date of this section,
21regardless of whether the Governor or all legislative caucuses
22have actually approved members to the commission.

23(e) The commission shall hold meetings at the call of the
24chair.

25(f) The members may not receive compensation for their
26services, but shall be reimbursed for all necessary travel and
27other reasonable expenses incurred in connection with the
28performance of their duties as members of the commission.

29(g) The General Assembly shall provide administrative
30support, meeting space and any other assistance required by the

1commission to carry out its duties under this section in
2cooperation with the department. The department shall provide
3the commission with data, research and other information upon
4request by the commission.

5(h) The commission shall develop a special education formula
6and identify factors that may be used to determine the
7distribution of a change in special education funding among the
8school districts in this Commonwealth.

9(i) The commission shall have all of the following powers
10and duties:

11(1) Review and make findings and recommendations related to
12special education funding in this Commonwealth.

13(2) Consult with and utilize experts to assist in carrying
14out the duties under this subsection.

15(3) Receive input from interested parties, including, but
16not limited to, charter and cyber charter school operators, and
17gather information on the identification of children as eligible
18students by charter and cyber charter schools. The commission
19shall also receive input and gather information on charter and
20cyber charter school funding reimbursements regarding eligible
21students. The commission shall draft proposed regulations and
22proposed legislation based on its findings.

23(4) Hold public hearings in different regions of this
24Commonwealth.

25(5) Issue a report of its findings and recommendations to
26the Governor, the President pro tempore of the Senate, the
27Majority Leader and Minority Leader of the Senate, the Education
28Committee of the Senate, the Speaker of the House of
29Representatives, the Majority Leader and Minority Leader of the
30House of Representatives, the Education Committee of the House

1of Representatives, the Secretary of Education and the State
2Board of Education not later than September 30, 2013.

3(6) Determine the factors under this paragraph that may
4include all of the following:

5(i) Three (3) cost categories of eligible students,
6established so that students with disabilities typically
7requiring the least-intensive range of services would comprise
8Cost Category 1, students with disabilities typically requiring
9a middle range of services would comprise Cost Category 2 and
10students with disabilities typically requiring the most
11intensive range of services would comprise Cost Category 3. The
12commission shall determine a description of and parameters for
13each of the three (3) cost categories.

14(ii) A student count for each school district averaged for
15each of the three (3) most recent years for each cost category
16of eligible students. For Cost Category 3, the number of
17eligible students residing or enrolled in the school district
18and classified in Cost Category 3 shall be calculated in a
19manner that limits the potential incentive for school districts
20to overidentify, except for the number of eligible students who
21are placed by the school district and served in public or
22private separate schools, residential placements or homebound or
23hospital placements.

24(iii) A weighting factor that differs for each of the three
25(3) cost categories of students with disabilities based on the
26typical range of services for each cost category.

27(iv) Adjustments for any of the following:

28(A) The market value/personal income aid ratio averaged for
29each of the three (3) most recent years for each school
30district.

1(B) The equalized millage rate averaged for each of the
2three (3) most recent years for each school district.

3(C) Geographic price differences identified for each school
4district.

5(v) A proportional system for distributing the changes in
6special education funding among the school districts, based on
7factors listed in this section.

8(vi) Development and implementation by the department of
9improved systems for collecting and documenting student
10enrollment and membership in public schools, including revised
11methods for calculating average daily membership.

12(vii) Other factors related to the distribution of special
13education funding.

14(7) Review and consider special education funding factors
15utilized throughout the United States.

16(8) In developing the special education funding factors
17under subsection (h) and in completing the report required under
18this subsection, consider the impact these factors may have on
19the distribution of special education funding among the school
20districts.

21(9) Review the administration of State and regional special
22education programs and services to determine if cost savings may
23be achieved and make recommendations to implement the savings.

24(10) Consult with and utilize experts to assist the
25commission in carrying out the duties under this subsection.

26(11) Prior to recommending a special education formula under
27this section, consider nationally accepted accounting and
28budgeting standards.

29(j) The special education formula developed by the
30commission shall not go into effect unless the formula is

1approved by an act of the General Assembly enacted after the
2effective date of this section.

3(k) Every five years the commission shall be reconstituted
4in accordance with subsection (c) and shall meet and hold public
5hearings to review the operation of the special education
6funding provisions of this section, shall make a further report
7and shall issue the report to the recipients listed in
8subsection (i)(5). When in receipt of a further report
9recommending changes to the special education funding formula,
10the General Assembly shall consider and take action to enact the
11formula into law in accordance with subsection (j).

12(l) The General Assembly shall, through the annual
13appropriations process, determine the level of State funding for
14special education and the amount of any change in funding. The
15special education formula developed under this section shall
16determine only the distribution of any increase in special
17education funding among the school districts of this
18Commonwealth above the amount of special education funding in
19the base year and shall not be used for any other purpose.

20(m) Notwithstanding any provision of law to the contrary,
21for the 2013-2014 school year and each school year thereafter,
22any State funding for special education in an amount that does
23not exceed the amount of State funding for special education in
24the base year shall be allocated in the same manner as the State
25funding was allocated in the base year.

26(n) As used in this section, the following words and phrases 
27shall have the meanings given to them in this subsection unless 
28the context clearly indicates otherwise:

29"Base year." Fiscal year 2010-2011.

30"Commission." The Special Education Funding Commission

1established under this section.

2"Department." The Department of Education of the
3Commonwealth.

4Section 2. Section 2501(26) of the act, added July 9, 2008
5(P.L.846, No.61), is amended and the section is amended by
6adding clauses to read:

7Section 2501. Definitions.--For the purposes of this article
8the following terms shall have the following meanings:

9* * *

10(26) "Actual Spending." An amount equal to a school
11district's total expenditures to include General Fund
12expenditures in all functional classifications, as designated in
13the Manual of Accounting and Related Financial Procedures for
14Pennsylvania School Systems, except for:

15(i) actual special education spending;

16(ii) adult education;

17(iii) higher education;

18(iv) student transportation;

19(v) community services;

20(vi) scholarships and awards;

21(vii) facilities acquisition;

22(viii) construction and improvement services; and

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

24(x) tuition from patrons revenue.

25* * *

26(31) "Actual Special Education Spending." An amount equal to
27a school district's total annual expenditures for special
28education as established by the Department of Education and
29designated in the Manual of Accounting and Related Financial
30Procedures for Pennsylvania School Systems. The amount shall not

1include expenditures that are exclusively for gifted students
2who do not receive special education pursuant to an
3individualized education program.

4(32) "Eligible Student." A student who has been identified 
5as a student with a disability who is in need of special 
6education under Federal and State law.

7(33) "Performance Indicators." Measurable annual objectives 
8established by the Department of Education pursuant to section 
9612(a)(15) of the Individuals with Disabilities Education Act 
10(Public Law 91-230, 20 U.S.C. § 1412(a)(15)) to assess progress 
11toward achieving State goals for the performance of eligible 
12students.

13(34) "Public Access." Full and timely release of information 
14and documents for public access at a minimum through publication 
15by the Department of Education:

16(i) in the Pennsylvania Bulletin;

17(ii) on the Department of Education's publicly accessible
18Internet website for no less than a duration of twelve (12)
19months; and

20(iii) through the Department of Education's timely issuance
21of a related Statewide press release.

22(35) "Regular Classroom." A classroom in a regular school 
23operated primarily for students who have not been identified as 
24students with disabilities who are in need of special education.

25(36) "Regular School." A neighborhood school, magnet school 
26or other public school operated for all students, not solely 
27eligible students, in a school district.

28(37) "Special Education Plan." A comprehensive plan as well 
29as revisions, updates and amendments for all special education 
30personnel, programs, services and supports provided by each 

1school district for eligible students, filed by each district 
2with the Department of Education under this act and other 
3applicable Federal and State law.

4(38) "Base Year." Fiscal year 2010-2011 or another year 
5designated by statute.

6(39) "Special Education Allocation." The amount of special 
7education funding received by a school district from the 
8Commonwealth.

9Section 3. The act is amended by adding sections to read:

10Section 2509.13. Special Education Funding for Student 
11Achievement and Instruction of Eligible Students.--(a) (1) The 
12Department of Education shall utilize the funds under section 
132509.8(e) in order to meet, to the extent that funds are 
14available, extraordinary special education expenses not 
15anticipated through the special education funding formula. 
16School districts and charter and cyber charter schools may apply 
17for resources through the fund under procedures established by 
18the Department of Education. The Department of Education shall 
19make payments from the fund in response to the applications.

20(2) The Department of Education shall issue a comprehensive
21annual report documenting use of the fund to the General
22Assembly and shall provide public access to the report.

23(3) As used in this subsection, "extraordinary special
24education expenses" shall mean expenses that result from needs
25and circumstances of an eligible student with significant
26disabilities which are not ordinarily present in a typical
27special education service and program delivery system and which
28have costs exceeding the school district or charter or cyber
29charter school funding for special education, in order to
30provide the student with an appropriate education in the least

1restrictive environment.

2(b) (1) To the extent that funds are appropriated any year 
3by the General Assembly, the Department of Education shall 
4establish and implement a competitive grant program for school 
5districts and charter schools meeting the following criteria:

6(i) Providing instruction within the regular classroom at 
7least eighty percent (80%) of the school day for at least sixty-
8five percent (65%) of eligible students, as averaged for the two 
9(2) most recent school years for which data are available or 
10increasing the number of eligible students receiving instruction 
11within the regular classroom by at least fifteen percent (15%) 
12in the most recent school year for which data are available.

13(ii) In the most recent school year for which data are 
14available, performance by eligible students on State academic 
15assessments in reading and math, averaged for the entire 
16district, meeting State standards for adequate yearly progress 
17by any method approved by the Federal and State governments, 
18such as by meeting the annual target, the confidence interval or 
19the safe harbor target or by appeal.

20(iii) Implementing programs or services that serve as a 
21model of excellence for meeting high standards for inclusion and 
22student achievement through quality special education.

23(2) The Department of Education shall develop guidelines for 
24the administration of the grant program established under this 
25subsection, which shall be allocated to school districts and 
26charter schools on a competitive basis.

27(3) The Department of Education shall issue an annual report 
28to the General Assembly documenting use of the grants issued 
29under paragraph (1) and shall provide public access to the 
30report.

1(4) Nothing under paragraph (1) or any other provision of 
2this act shall alter Federal or State law regarding the 
3protections provided to an eligible student for receiving 
4education in the least restrictive environment or shall alter 
5the legal authority of individualized education program teams to 
6make appropriate program and placement decisions for eligible 
7students in accordance with the individualized education program 
8developed for each eligible student.

9Section 2509.14. Special Education Funding for Eligible 
10Students with Disabilities in Cost Category 3.--(a) For the 
112014-2015 school year and each school year thereafter, the 
12Department of Education shall set aside an amount not less than 
13one percent (1%) of the State special education appropriation 
14above the level of the appropriation in the base year. The 
15Department of Education shall distribute this amount as provided 
16in subsection (b).

17(b) For the 2014-2015 school year and each school year
18thereafter, each school district in this Commonwealth shall
19receive a pro rata share of the amount set aside under
20subsection (a) based upon the number of eligible students
21residing or enrolled in each school district and classified in
22Cost Category 3 during the immediately preceding school year.

23(c) The funding provided under this section shall be
24accounted for as part of actual special education spending and
25as part of the special education allocation received by a school
26district, according to the definitions in section 2501. School
27districts shall also account for the funding provided under this
28section and the resulting services and supports for eligible
29students through the special education plans, revisions, updates
30and amendments required by section 2509.15.

1Section 2509.15. Special Education Accountability.--(a) (1)
2The Department of Education shall determine the form and manner 
3in which school districts shall submit a special education plan 
4and revisions, updates and amendments to the special education 
5plan under this section. The special education plan shall be 
6consistent with other existing plans and reports required by the 
7Department of Education to the greatest extent possible. Special 
8education plans shall be written in a manner that is easy to use 
9and understand by parents and the public, including a general 
10summary.

11(2) The Department of Education shall:

12(i) review the special education plans and revisions,
13updates and amendments;

14(ii) provide recommendations and technical assistance to
15school districts;

16(iii) approve or disapprove the plan within ninety (90)
17calendar days of receipt;

18(iv) provide a written explanation when disapproving a plan; 
19and

20(v) provide guidance related to plan resubmission.

21(3) The Department of Education shall approve a special
22education plan and revisions, updates and amendments that in the
23determination of the Department of Education:

24(i) meet the requirements of this section;

25(ii) address the academic and developmental challenges for 
26eligible students identified in the school district's most 
27recent student achievement results and pursuant to performance 
28indicators;

29(iii) describe programs and strategies that are most likely
30to improve student outcomes in the school district; and

1(iv) describe policies of the school district to ensure that 
2a student identified as having a disability is no longer 
3identified as such if the student no longer qualifies under 22 
4Pa. Code Ch. 14 (relating to special education services and 
5programs), or any successor regulation.

6(4) Upon disapproving a school district's special education 
7plan, update or revision submitted under this section, the 
8Department of Education may withhold the portion of the annual 
9State increase in special education funding which exceeds the 
10index until a written special education plan, update or revision 
11is approved.

12(5) The Secretary of Education shall involve as appropriate 
13in special education monitoring, support, intervention, 
14technical assistance and special education plan review by the 
15Department of Education, the staff in relevant offices, bureaus 
16and divisions of the Department of Education, as well as any 
17other resources as appropriate.

18(b) (1) Pursuant to the timetable set forth in section 218, 
19each school district receiving an increase in its State special 
20education funding allocation of more than the index shall update 
21its special education plan by attaching the district's special 
22education expenditures as reported on the annual financial 
23reports and shall submit the updates and revisions to the 
24Department of Education for approval under subsection (a). The 
25Department of Education shall allow a district to meet the 
26requirements of this section by adding the information as an 
27appendix to the existing plan.

28(2) School districts shall use State funds for programs and
29supports that expressly benefit eligible students educated in
30the least restrictive environment in accordance with Federal and

1State law and contribute to achievement of performance
2indicators.

3(3) The Department of Education shall identify resources for 
4programs and supports that benefit eligible students and 
5contribute to achievement of performance indicators and address 
6the following areas or related areas:

7(i) curricula adaptation;

8(ii) coteaching;

9(iii) assistive technology;

10(iv) school-wide positive behavior supports;

11(v) supplementary aids and services;

12(vi) professional development;

13(vii) reading services and supports;

14(viii) caseload management for special education teachers 
15and related services personnel; and

16(ix) placing and serving eligible students in regular
17classrooms with supports in accordance with the individualized
18education program developed for each eligible student.

19(4) The Department of Education shall make the resources 
20identified in paragraph (3) available to all educational 
21entities in this Commonwealth.

22(c) Accountability for the effective use of resources to
23meet student needs shall also be provided in the following ways:

24(1) The Department of Education shall issue to the General
25Assembly a comprehensive annual report on special education
26funding, special education plans, the implementation of 22 Pa.
27Code § 14.104 (relating to special education plans) and other
28special education accountability issues for public school
29entities serving eligible students and this Commonwealth.

30(2) Upon disapproving a school district's special education 

1plan, update or revision, the Department of Education may 
2withhold the portion of the annual State increase in special 
3education funding which exceeds the index until a written 
4special education plan, update or revision is approved.

5(3) (i) The Department of Education shall:

6(A) review and monitor implementation of all special
7education plans, such as compliance with subsection (b) and 22
8Pa. Code § 14.104;

9(B) provide support, intervention and technical assistance
10in school districts failing to meet student needs based on
11performance indicators or failing to comply with subsection (b);

12(C) post on its Internet website each school district's 
13progress on meeting student needs based on performance 
14indicators; and

15(D) determine whether to withhold up to five percent (5%) of
16all State special education funding for school districts
17identified under this clause while the identified problems
18remain unresolved.

19(ii) If the Department of Education determines that a school
20district is making substantial progress toward resolving the
21identified problems, it shall restore the withheld funding
22retroactively and continue to monitor the district for an
23additional two (2) years.

24(4) (i) To discourage the inappropriate overidentification 
25of children for special education, the Department of Education 
26shall automatically conduct a thorough review of the special 
27education plan of any school district with a substantially 
28higher ratio of eligible students in the district to its average 
29daily membership for all students than the State average, as 
30established by the Department of Education, and of any district 

1where the ratio of eligible students in the school district to 
2its average daily membership for all students in the most recent 
3school year for which data is available has increased by more 
4than ten percent (10%) over the previous year or of any district 
5where the ratio has increased by an annual average of more than 
6five percent (5%) during the most recent five-year period. The 
7Department of Education may take remedial action, including 
8withholding up to five percent (5%) of all State special 
9education funding, if the Department of Education determines 
10that a school district has overidentified children for special 
11education.

12(ii) Nothing in this paragraph or any other provision of
13this act shall be construed to alter Federal or State law
14regarding the protections provided to an eligible student for
15receiving education in the least restrictive environment or
16alter the legal authority of individualized eduction program
17teams to make appropriate program and placement decisions for
18eligible students in accordance with the individualized
19education program developed for each eligible student.

20(d) In rendering a decision or determining remedial action 
21under this section, the Department of Education shall consider 
22extraordinary circumstances which a school district subject to 
23review is experiencing, including a substantial reduction in 
24Federal or State funds or other factors beyond the control of 
25the school district. The Department of Education shall issue to 
26any affected school district a notice specifying the Department 
27of Education's decisions and actions under this section and the 
28rationale for the decisions and actions. A school district may 
29file a written response to the Department of Education about the 
30Department of Education's decisions and actions regarding the 

1district made under this section. The written response must be 
2submitted to the Department of Education within thirty (30) 
3calendar days of the Department of Education's notice or within 
4thirty (30) calendar days of receiving the notice, whichever is 
5later. The Department of Education shall consider the written 
6response, consult with the school district and, within thirty 
7(30) calendar days after receiving the written response, issue a 
8written decision addressing the concerns and claims made in the 
9written response, explaining the judgment of the Department of 
10Education in response to these concerns and claims, and 
11specifying the opportunity to appeal this matter to the 
12Secretary of Education for a hearing under 2 Pa.C.S. Chs. 5 
13Subch. A (relating to practice and procedure of Commonwealth 
14agencies) and 7 Subch. A (relating to judicial review of 
15Commonwealth agency action) and 1 Pa. Code Pt. II (relating to 
16general rules of administrative practice and procedure). If 
17requested, the Secretary of Education shall convene a hearing 
18within thirty (30) calendar days after receipt of a school 
19district's hearing request. The Secretary of Education shall 
20render a written hearing decision within thirty (30) calendar 
21days following the hearing.

22(e) The Department of Education shall provide public access
23to the decisions, actions and reports made under this section.

24(f) Nothing under this section shall supersede or preempt
25any provisions of a collective bargaining agreement between a
26school entity and an employe organization in effect on the
27effective date of this section.

28(g) The requirements of this section shall be waived until 
29the General Assembly appropriates special education funding 
30above the amount of special education funding in the base year 

1and on the effective date of the appropriation the requirements 
2of this section shall apply for that school year and for each 
3school year thereafter.

4Section 2509.16. Data Collection.--Using existing resources 
5and data systems as well as nationally accepted accounting and 
6modeling standards, the Department of Education shall collect 
7data necessary for accurate functioning of a special education 
8formula developed under section 122, including, but not limited 
9to, data necessary for the calculations related to Cost Category 
101, Cost Category 2 and Cost Category 3 as part of the formula 
11developed by the commission. The Department of Education shall 
12begin collecting such data upon the effective date of this 
13section.

14Section 2509.17. Protections.--Nothing under the provisions 
15of this act shall alter Federal or State law regarding the 
16protections provided to an eligible student for receiving 
17education in the least restrictive environment or shall alter 
18the legal authority of individualized education program teams to 
19make appropriate program and placement decisions for eligible 
20students in accordance with the individualized education program 
21developed for each eligible student.

22Section 4. The Secretary of Education shall propose
23regulations for promulgation by the State Board of Education
24which implement the amendment or addition of the following
25provisions of the act:

26(1) Section 122.

27(2) Section 2501(26), (31), (32), (33), (34), (35),
28(36), (37), (38) and (39).

29(3) Section 2509.13.

30(4) Section 2509.14.

1(5) Section 2509.15.

2(6) Section 2509.16.

3(7) Section 2509.17.

4Section 5. This act shall take effect immediately.