THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY STURLA, McILVAINE SMITH, ROEBUCK, McCALL, KOTIK, BRENNAN, BRIGGS, BUXTON, CALTAGIRONE, CARROLL, D. COSTA, DALEY, DeLUCA, DePASQUALE, DeWEESE, J. EVANS, FABRIZIO, FREEMAN, GIBBONS, GINGRICH, HALUSKA, HARKINS, HORNAMAN, JOSEPHS, KIRKLAND, KORTZ, KULA, LEVDANSKY, MAHONEY, MANDERINO, MANN, MATZIE, MILLARD, MILNE, MURPHY, MUSTIO, M. O'BRIEN, PARKER, PASHINSKI, PAYNE, PAYTON, READSHAW, SANTONI, SIPTROTH, K. SMITH, SONNEY, SWANGER, WANSACZ, YOUNGBLOOD, LENTZ, CURRY, COHEN, HESS, JOHNSON, WAGNER, M. SMITH, MURT, MICOZZIE, GRUCELA, D. O'BRIEN, HOUGHTON, BROOKS, WALKO, GALLOWAY, YUDICHAK AND DEASY, APRIL 27, 2009

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 22, 2010   

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," in reimbursement by Commonwealth and

between school districts, further providing for definitions;

and providing for special education funding for student

achievement and instruction of eligible students in regular

classrooms and for special education accountability to

Commonwealth taxpayers.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2501(29) 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:

* * *

(29)  "Location Cost Metric." An index of geographic cost

differences for each county as published by the department on

its publicly accessible Internet website [on February 5, 2008] 

in February of each year. The index shall be published in the

Pennsylvania Bulletin no later than thirty (30) days after the

effective date of this clause.

* * *

(31)  "Special Education Average Daily Membership." Shall be

computed to determine the number of eligible students in each

school district in accordance with rules of procedure as

established by the Secretary of Education. For the purpose of

calculating the special education funding allocation under

section 2509.13, the computation shall be adjusted for each

level of instruction for eligible students as follows:

(i)  Half-time prekindergarten and half-time kindergarten:

0.50.

(ii)  Full-time prekindergarten, full-time kindergarten and

prekindergarten or kindergarten level totaling full-time through

multiple placements: 1.00.

(iii)  Elementary and secondary: 1.00.

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

a school district’s total annual expenditures for special

education in all functional classifications for students with

disabilities, as designated in the Manual of Accounting and

Related Financial Procedures for Pennsylvania School Systems.

(33)  "Base Cost per Student." The cost of educating an

average student in Pennsylvania without special needs to meet

State performance expectations as originally determined in the

final revised Statewide Costing-out Study of 2007 performed

pursuant to section 2599.3 and as adjusted annually for the

fiscal year in the formula for basic education funding.

(34)  "Eligible Student." A student with a disability

eligible for special education under Federal and State law.

(35)  "Modified Special Education Average Daily Membership"

or "Modified SEADM." The sum of the following products:

(i)  fifty-two one-hundredths (0.52) and the school

district’s special education average daily membership in the

funding year;

(ii)  twenty-six one-hundredths (0.26) and the school

district’s special education average daily membership in the

school year prior to the funding year;

(iii)  thirteen one-hundredths (0.13) and the school

district’s special education average daily membership two (2)

school years prior to the funding year;

(iv)  six one-hundredths (0.06) and the school district's

special education average daily membership three (3) school

years prior to the funding year; and

(v)  three one-hundredths (0.03) and the school district's

special education average daily membership four (4) years prior

to the funding year.

(36)  "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.

(37)  "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 its publicly accessible Internet website for no less

than a duration of twelve (12) months; and

(iii)  through its timely issuance of a related Statewide

press release.

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

operated primarily for students who are not eligible for special

education.

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

or other public school operated for all students, not solely

eligible students, in a school district.

(40)  "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, including 22 Pa. Code 14.104

(relating to special education plans).

(41)  "Student Achievement." Outcomes 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.

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 in Regular

Classrooms.--(a)  The Department of Education shall determine a

special education adequacy target for each school district by

calculating the sum of the following:

(1)  A special education supplement determined by calculating

the product of:

(i)  the base cost per student;

(ii)  the school district's Modified SEADM; and

(iii)  one and thirty one-hundredths (1.3).

(2)  An adjustment for geographic price differences

calculated as follows:

(i)  Multiply the amount under clause (1) by the school

district's location cost metric or one (1), whichever is

greater.

(ii)  Subtract the amount under clause (1) from the product

under subclause (i).

(b)  The Department of Education shall determine a State

special education funding target for each school district by

calculating the product of:

(1)  the difference between the school district's special

education adequacy target determined under subsection (a) and

its actual special education spending for the funding year, or

zero, whichever is greater;

(2)  the school district's market value/personal income aid

ratio for the school year in which funding occurs;

(3)  the lesser of one (1) and the school district's funding

year equalized millage divided by the equalized millage that

represents the seventy-fifth percentile of the equalized millage

of all school districts in the funding year; and 

(4)  one and fifteen one-hundredths (1.15) for school

districts meeting the following criteria:

(i)  either 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 is

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 is available; and

(ii)  in the most recent school year for which data is

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,

including, but not limited to, meeting the annual target, the

confidence interval, the safe harbor target, or by appeal.

Nothing in this subsection or any other provision of this act

alters Federal or State law regarding the right of an eligible

student to receive education in the least restrictive

environment or alters the legal authority of Individualized

Education Program (IEP) teams to make appropriate program and

placement decisions for eligible students in accordance with the

IEP developed for each eligible student.

(c)  The Department of Education shall submit a report to the

Governor and General Assembly recommending increased standards

for the criteria in subsection (b)(4), and the General Assembly

shall consider legislation revising the criteria, in any year in

which seventy-five percent (75%) of all school districts meet

the criteria and qualify for the one and fifteen one-hundredths

(1.15) factor for funding.

(d)  In furtherance of the General Assembly's commitment to

provide adequate special education funding that will ensure

equitable State and local investments in special education in

public schools, and in order to enable eligible students to

attain applicable Federal and State academic standards and to be

educated in regular classrooms when appropriate, it is the goal

of the Commonwealth to review and meet State special education

funding targets by fiscal year 2014-2015.

(e)  The Commonwealth shall pay to each school district a

special education funding allocation for the 2010-2011 school

year which shall consist of the sum of the following:

(1)  an amount equal to the district's special education

funding allocation for the 2008-2009 school year under section

2509.5; and

(2)  (i)  For a school district with 2007-2008 equalized

millage that is greater than or equal to twenty-four (24), which

represents the eightieth percentile of the equalized millage of

all school districts as of the effective date of this section,

for the 2008-2009 school year, sixteen and seventy-five one-

hundredths percent (16.75%) of the State special education

funding target determined under subsection (b).

(ii)  For a school district with 2007-2008 equalized millage

that is less than twenty-four (24), which represents the

eightieth percentile of the equalized millage of all school

districts as of the effective date of this section, for the

2008-2009 school year, ten percent (10%) of the State special

education funding target determined under subsection (b).

(f)  The Department of Education shall provide additional

funding for the 2010-2011 school year to any school district

where the amount under subsection (e)(2) provides an amount less

than the percentage increase in the school district's special

education funding allocation for the 2008-2009 school year under

section 2509.5. The amount of the additional funding shall be

the amount required so that the sum of subsection (e)(2) and

this subsection is at least equal to the percentage increase in

the school district's special education funding allocation for

the 2008-2009 school year under section 2509.5.

(g)  (1)  The Commonwealth shall appropriate additional

funding in each year for extraordinary special education program

expenses under section 2509.8. The appropriation for the fund

shall be at one and fifty one-hundredths percent (1.50%) of the

total of special education appropriations made pursuant to

subsection (e) and shall be made in addition to such total.

(2)  The Department of Education shall utilize the fund to

provide resources needed:

(i)  to partially meet extraordinary special education

expenses not anticipated through the special education funding

formula in this section for eligible students within the first

three (3) school years of eligibility for special education or

enrollment in a school district or charter school; and

(ii)  to the extent that the resources of the fund are not

issued to meet the needs determined by subclause (i), to provide

resources for school districts or charter schools implementing

programs or services that serve as a model of excellence for

meeting high standards for student achievement through quality

special education.

(3)  At least three-quarters of the fund shall be used for

the purposes under clause (2)(i) and no more than one-quarter

shall be used for the purposes under clause (2)(ii).

(4)  School districts or charter schools may apply for

resources through the fund pursuant to procedures established by

the Department of Education. The Department of Education shall

issue resources from the fund only in response to such

applications. The Department of Education shall give priority to

districts or charter schools with a relatively high percentage

of students in poverty, annually setting these criteria and

granting a higher percentage of the resources requested by such

districts or charter schools.

(5)  The Department of Education shall issue a comprehensive

annual report documenting use of the fund to the Governor and

all members of the General Assembly, and shall give public

notice about such report.

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

education expenses" are 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 funding for special

education, in order to provide the student with an appropriate

education in the least restrictive environment.

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

insufficient funds are appropriated for purposes of this section

for the 2010-2011 school year, each school district shall be

paid the amount it received during the 2008-2009 school year

under section 2509.5(zz).

Section 2509.14.  Special Education Accountability to

Commonwealth Taxpayers.--(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 pursuant to this

section. The special education plan shall be consistent with

other existing plans and reports required by the Department of

Education to the greatest extent possible, including those

required under 22 Pa. Code § 14.104 (relating to special

education plans). 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

(iii)  describe programs and strategies that are most likely

to improve student outcomes in the school district.

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

plan, update or revision submitted pursuant to this section, the

Department of Education shall withhold the portion of the annual

State increase in special education funding which exceeds the

index until such a time as 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, so long as such contracts do

not create a conflict of interest or supplant existing service

or program obligations.

(b)  (1)  By September 15, 2010, and by April 15 of each 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 pursuant to subsection (a). Unless a

school district decides to amend its special education plan more

broadly to reflect the receipt of new funding or for other

reasons, the guidelines and regulations developed by the

Department of Education pursuant to this section for plan

updates or revisions shall allow a district to meet the

requirements of this section by adding the mandated information

as an appendix to the existing plan. The special education plan,

update or revision shall document the challenges remaining and

progress made in addressing student needs and improving student

outcomes, shall be accompanied by a budget, timeline and

benchmarks for implementation, and shall incorporate other

existing plans and reports required by the Department of

Education to the greatest extent possible. The budget required

by this subsection shall be considered by the Department of

Education in evaluating the special education plan but is not

itself subject to approval or disapproval by the department.

(2)  (i)  Each school district receiving an increased

allocation above the index shall use these funds for one or more

research-based programs and supports that meet the following

basic criteria:

(A)  expressly benefit eligible students educated in the

least restrictive environment in accordance with Federal and

State law;

(B)  contribute to achievement of performance indicators; and

(C)  are approved by the Department of Education in

guidelines issued by August 15, 2010, and by February 15 of each

year thereafter.

(ii)  Department of Education guidelines for research-based

programs and supports meeting these basic criteria shall address

at least the following:

(A)  curricula adaptation;

(B)  co-teaching;

(C)  assistive technology;

(D)  school-wide positive behavior supports;

(E)  supplementary aids and services;

(F)  professional development;

(G)  reading specialist services and supports;

(H)  reducing caseloads for special education teachers and

related services personnel; and

(I)  placing and serving eligible students in regular

classrooms with supports in accordance with the Individualized

Education Program (IEP) developed for each eligible student.

(3)  According to standards established by the Department of

Education, the special education plan, update or revision shall

document that the increased allocation above the index is used:

(i)  for the purposes approved under clause (2);

(ii)  to supplement and not supplant other resources; and

(iii)  in ways that allow the school district to maintain its

effort for special education expenditures.

(c)  Accountability for the effective use of resources to

meet student needs shall 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 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 such a time as a

written special education plan, update or revision is approved

or conditionally approved.

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

(A)  review and monitor implementation of all special

education plans, including, but not limited to, 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 pursuant to 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)  To discourage the inappropriate over-identification of

children for special education, the Department of Education

shall automatically conduct a thorough review of the special

education plan of any school district where the ratio of its

special education average daily membership 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 (5) year period. Appropriate

remedial action, including withholding up to five percent (5%)

of all State special education funding, may be taken, unless the

increase is determined to be justified by the Department of

Education after consultation with the school district.

(d)  The Department of Education shall issue to any affected

school district a notice specifying the department's decisions

and actions pursuant to this section and the rationale for such

decisions and actions. A school district may file a written

complaint with the Secretary of Education about the Department

of Education's decisions and actions regarding that district

made pursuant to this section. The complaint must be submitted

to the Secretary of Education's office within thirty (30)

calendar days of the Department of Education's decision or

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

notice, whichever is greater. The Secretary of Education shall

consider the complaint, consult with the school district and,

within thirty (30) calendar days after receiving the complaint,

issue a written decision addressing the concerns and claims made

in the complaint, explaining the judgment of the Department of

Education in response to these concerns and claims, and

specifying the opportunity for a subsequent 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 Part II

(relating to general rules of administrative practice and

procedure). If requested, the Department of Education shall then

convene a hearing within thirty (30) calendar days after the

receipt of a school district's hearing request following its

written complaint decision. The Department 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 pursuant to this

section.

(f)  Nothing in this section shall supersede or preempt any

provisions of a collective bargaining agreement between a school

entity and an employee organization in effect on the effective

date of this section.

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

insufficient funds are appropriated for purposes of section

2509.13 for the 2010-2011 school year, the requirements of this

section are waived.

Section 3.  Within 60 calendar days following the effective

date of this act, or within a different time period if otherwise

specified in this act, 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.

Section 1.  Section 2501 of the act of March 10, 1949

<--

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

amended by adding clauses to read:

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

the following terms shall have the following meanings:

* * *

(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.

(32)  "Base Cost per Student." As determined under section

2502.48.

(33)  "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.

(34)  "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.

(35)  "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 its publicly accessible Internet website for no less

than a duration of twelve (12) months; and

(iii)  through its timely issuance of a related Statewide

press release.

(36)  "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.

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

or other public school operated for all students, not solely

eligible students, in a school district.

(38)  "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, including 22 Pa. Code 14.104

(relating to special education plans).

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

Education Funding established in section 2509.13(g).

(40)  "Base Year."  Fiscal year 2008-2009 or another year

designated by State statute.

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

education funding received by a school district from the State.

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, if any. The

calculations pursuant to this section shall determine only the

distribution of any increase in the funding among the school

districts of the Commonwealth and shall not be used for any

other purpose.

(b)  The Department of Education shall determine a special

education allocation for each school district in the year for

which funds are being appropriated by calculating the sum of the

following:

(1)  the special education allocation in the base year for

the school district;

(2)  the absolute value of the difference between the special

education allocation in the base year for the school district

and the highest annual level of the special education allocation

for the school district in the years subsequent to the base year

except for the year for which funds are being appropriated; and

(3)  the special education increase, if any, in the year for

which funds are being appropriated for the school district as

determined under subsection (c).

(c)  The Department of Education shall determine the special

education increase, if any, in the year for which funds are

being appropriated for each school district by calculating the

product of:

(1)  the difference between the total State appropriation for

special education aggregated for all school districts in the

year for which funds are being appropriated and the total State

appropriation for special education aggregated for all school

districts in the immediately preceding year, or zero, whichever

is greater; and

(2)  the special education distribution factor for the school

district determined under subsection (d).

(d)  The Department of Education shall determine the special

education distribution factor for each school district by

dividing the distribution subfactor for each school district

determined under subsection (e) by the sum of distribution

subfactors for all school districts.

(e)  The Department of Education shall determine the

distribution subfactor for each school district by calculating

the product of:

(1)  the difference between the school district's subfactor

quantity determined under subsection (f) and its actual special

education spending averaged for the three (3) most recent years,

or zero, whichever is greater;

(2)  the school district's market value/personal income aid

ratio averaged for the three (3) most recent years; and

(3)  the lesser of one (1) and the school district's

equalized millage averaged for the three (3) most recent years

divided by the equalized millage that represents the seventy-

fifth percentile of the equalized millage of all school

districts averaged for the three (3) most recent years.

(f)  The Department of Education shall determine the

subfactor quantity for each school district by calculating the

sum of:

(1)  An amount for student cost categories determined by

calculating the sum of:

(i)  An amount on behalf of eligible students with category 3

disabilities determined by calculating the product of:

(A)  the number of eligible students, averaged for the three

(3) most recent years, residing or enrolled in the school

district classified as having category 3 disabilities as

provided under subsection (g), provided 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 pursuant to the Individuals with Disabilities

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

whichever is less;

(B)  the weighting factor for students with category 3

disabilities as provided under subsection (g); and

(C)  the base cost per student.

(ii)  An amount on behalf of eligible students with category

2 disabilities determined by calculating the product of:

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

averaged for the three (3) most recent years;

(B)  the Statewide percentage of modified average daily

membership designated for category 2 disabilities as provided

under subsection (g);

(C)  the weighting factor for eligible students with category

2 disabilities as provided under subsection (g); and

(D)  the base cost per student.

(iii)  An amount on behalf of eligible students with category

1 disabilities determined by calculating the product of:

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

averaged for the three (3) most recent years;

(B)  the Statewide percentage of modified average daily

membership designated for category 1 disabilities as provided

under subsection (g);

(C)  the weighting factor for eligible students with category

1 disabilities as provided under subsection (g); and

(D)  the base cost per student.

(2)  An adjustment for geographic price differences

calculated as follows:

(i)  Multiply the amount under clause (1) by the school

district's location cost metric or one (1), whichever is

greater.

(ii)  Subtract the amount under clause (1) from the product

under subclause (i).

(g)  The Legislative Commission on Special Education Funding

is established and shall develop special education formula

components as follows:

(1)  The Statewide percentages of modified average daily

membership which shall be designated as category 1 and category

2 for purposes of subsection (f)(1), provided that the

designated percentage for each category shall not exceed the

actual proportion of students in this Commonwealth classified as

having such disabilities in the most recent year for which data

is available.

(2)  The weighting factors for students with category 1,

category 2 and category 3 disabilities for purposes of

subsection (f)(1).

(3)  A description of and parameters for category 1, category

2 and category 3 disabilities for purposes of subsection (f)(1),

provided that the categories shall be established such that

disabilities typically requiring the least intensive range of

services be categorized in category 1 and disabilities typically

requiring the most intensive range of services be categorized in

category 3.

(h)  Prior to the development of the special education

formula components specified in subsection (g) by the

commission:

(1)  The commission shall consider nationally accepted

accounting and costing-out standards in determining the special

education formula components specified in subsection (g).

(2)  The commission shall, in a timely manner, hold no fewer

than three (3) public hearings in different regions of the State

to receive input and testimony from stakeholders, 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.

(3)  Membership of the commission shall include three (3)

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 special

education formula components. The Department of Education shall

provide the commission with data, research and other relevant

information, upon request by the commission.

(4)  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 components specified in

subsection (g) within two hundred and forty (240) 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 chairman and minority chairman of the

Education Committee of the Senate and the chairman and minority

chairman of the Education Committee of the House of

Representatives, and the State Board of Education.

(5)  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 to the special education formula components

specified in subsection (g) 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 components specified in

subsection (g), then the State Board of Education shall in a

timely manner promulgate proposed regulations to designate the

special education formula components specified in subsection (g)

through the regulatory review process.

(6)  In every fifth year subsequent to the initial

promulgation of the regulations implementing the formula

components, the commission 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 such report to the bodies and individuals listed in

clause (4). When in receipt of a further report recommending

changes to the special education formula components specified in

subsection (g), 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 components specified

in subsection (g).

(i)  The provisions of this section represent the General

Assembly's commitment to provide adequate special education

funding that will ensure equitable Federal, State and local

investments in special education in public schools in order to

enable eligible students to attain applicable Federal and State

academic standards.

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

insufficient funds are appropriated for purposes of this section

for the 2010-2011 school year, each school district shall be

paid the amount it received during the 2008-2009 school year

under section 2509.5(zz).

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

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

in each year for extraordinary special education program

expenses under section 2509.8. The Department of Education shall

utilize the funds pursuant to 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 schools

may apply for resources through the fund pursuant to procedures

established by the Department of Education. The Department of

Education shall make payments from the fund in response to such

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 such report.

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

education expenses" are 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 school

funding for special education, in order to provide the student

with an appropriate education in the least restrictive

environment.

(l)  To the extent that funds are appropriated by the General

Assembly, the Department of Education shall establish a

competitive grant program for school districts or charter

schools meeting the following criteria:

(1)  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.

(2)  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,

including, but not limited to, meeting the annual target, the

confidence interval, the safe harbor target or by appeal.

(3)  Implementing programs or services that serve as a model

of excellence for meeting high standards for inclusion and

student achievement through quality special education.

(m)  The Department of Education shall develop guidelines for

the administration of the grant program, which shall be

allocated to school districts on a competitive basis.

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

to the General Assembly documenting use of the grants issued

pursuant to subsection (l), and shall give public notice about

the report.

(o)  Nothing in subsection (l) or any other provision of this

act alters Federal or State law regarding the right of an

eligible student to receive education in the least restrictive

environment or alters the legal authority of Individualized

Education Program (IEP) teams to make appropriate program and

placement decisions for eligible students in accordance with the

IEP developed for each eligible student.

Section 2509.14.  Special Education Accountability to

Commonwealth Taxpayers.--(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 pursuant to this

section. The special education plan shall be consistent with

other existing plans and reports required by the Department of

Education to the greatest extent possible, including those

required under 22 Pa. Code § 14.104 (relating to special

education plans). 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 the

provisions of 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 pursuant to this section, the

Department of Education shall withhold the portion of the annual

State increase in special education funding which exceeds the

index until such a time as 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, so long as such contracts do

not create a conflict of interest or supplant existing service

or program obligations.

(b)  (1)  By April 15, 2011, and by April 15 of each 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 pursuant to subsection (a). Unless a

school district decides to amend its special education plan more

broadly to reflect the receipt of new funding, the Department of

Education 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)  co-teaching;

(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 (IEP) developed for each eligible student.

(4)  Nothing in 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 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 such a time as 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, including, but not limited to, 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 pursuant to 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)  To discourage the inappropriate over-identification 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 (5) 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 of Education after consultation with

the school district.

(d)  The Department of Education shall issue to any affected

school district a notice specifying the department's decisions

and actions pursuant to this section and the rationale for such

decisions and actions. A school district may file a written

response to the department about the department's decisions and

actions regarding that district made pursuant to 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 Part II (relating to general rules of administrative

practice and procedure). If requested, the secretary shall

convene a hearing within thirty (30) calendar days after receipt

of a school district's hearing request. The secretary 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 pursuant to this

section.

(f)  Nothing in this section shall supersede or preempt any

provisions of a collective bargaining agreement between a school

entity and an employee organization in effect on the effective

date of this section.

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

insufficient funds are appropriated for purposes of section

2509.13 for the 2010-2011 school year, the requirements of this

section are waived.

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.