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

20(b) The Special Education Funding Commission shall review

1and make recommendations related to special education funding as
2provided in this section.

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

5(i) The chair and minority chair of the Education Committee
6of the Senate and the chair and minority chair of the Education
7Committee of the House of Representatives, or their designees.

8(ii) Two (2) legislators from each of the four (4) 
9legislative caucuses, to be appointed by the President pro 
10tempore of the Senate and the Speaker of the House of 
11Representatives, in consultation with the Majority and Minority 
12Leaders of the Senate and the Majority and Minority Leaders of 
13the House of Representatives.

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

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

16(v) The Deputy Secretary for Elementary and Secondary
17Education, or a designee.

18(2) The commission shall appoint a member to serve as chair
19of the commission.

20(d) The commission shall hold its first meeting within
21thirty (30) days of the effective date of this section,
22regardless of whether the Governor or all legislative caucuses
23have actually approved members to the commission.

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

26(f) The members may not receive compensation for their
27services, but shall be reimbursed for all necessary travel and
28other reasonable expenses incurred in connection with the
29performance of their duties as members of the commission.

30(g) The General Assembly shall provide administrative

1support, meeting space and any other assistance required by the
2commission to carry out its duties under this section in
3cooperation with the department. The department shall provide
4the commission with data, research and other information upon
5request by the commission.

6(h) The commission shall develop a special education formula
7and identify factors that may be used to determine the
8distribution of a change in special education funding among the
9school districts in this Commonwealth.

10(i) The commission shall have all of the following powers
11and duties:

12(1) Review and make findings and recommendations related to
13special education funding in this Commonwealth.

14(2) Consult with and utilize experts to assist in carrying
15out the duties under this subsection.

16(3) Receive input from interested parties, including, but
17not limited to, charter and cyber charter school operators, and
18gather information on the identification of children as eligible
19students by charter and cyber charter schools. The commission
20shall also receive input and gather information on charter and
21cyber charter school funding reimbursements regarding eligible
22students. The commission shall draft proposed regulations and
23proposed legislation based on its findings.

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

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

1House of Representatives, the Education Committee of the House
2of Representatives, the Secretary of Education and the State
3Board of Education not later than September 30, 2013.

4(6) Determine the factors under this paragraph that may
5include all of the following:

6(i) Three (3) cost categories of eligible students,
7established so that students with disabilities typically
8requiring the least-intensive range of services would comprise
9Cost Category 1, students with disabilities typically requiring
10a middle range of services would comprise Cost Category 2 and
11students with disabilities typically requiring the most
12intensive range of services would comprise Cost Category 3. The
13commission shall determine a description of and parameters for
14each of the three (3) cost categories.

15(ii) A student count for each school district averaged for
16each of the three (3) most recent years for each cost category
17of eligible students. For Cost Category 3, the number of
18eligible students residing or enrolled in the school district
19and classified in Cost Category 3 shall be calculated in a
20manner that limits the potential incentive for school districts
21to overidentify, except for the number of eligible students who
22are placed by the school district and served in public or
23private separate schools, residential placements or homebound or
24hospital placements.

25(iii) A weighting factor that differs for each of the three
26(3) cost categories of students with disabilities based on the
27typical range of services for each cost category.

28(iv) Adjustments for any of the following:

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


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

4(C) Geographic price differences identified for each school

6(v) A proportional system for distributing the changes in
7special education funding among the school districts, based on
8factors listed in this section.

9(vi) Development and implementation by the department of
10improved systems for collecting and documenting student
11enrollment and membership in public schools, including revised
12methods for calculating average daily membership.

13(vii) Other factors related to the distribution of special
14education funding.

15(7) Review and consider special education funding factors
16utilized throughout the United States.

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

22(9) Review the administration of State and regional special
23education programs and services to determine if cost savings may
24be achieved and make recommendations to implement the savings.

25(10) Consult with and utilize experts to assist the
26commission in carrying out the duties under this subsection.

27(11) Prior to recommending a special education formula under
28this section, consider nationally accepted accounting and
29budgeting standards.

30(j) The special education formula developed by the

1commission shall not go into effect unless the formula is
2approved by an act of the General Assembly enacted after the
3effective date of this section.

4(k) Every five years the commission shall be reconstituted
5in accordance with subsection (c) and shall meet and hold public
6hearings to review the operation of the special education
7funding provisions of this section, shall make a further report
8and shall issue the report to the recipients listed in
9subsection (i)(5). When in receipt of a further report
10recommending changes to the special education funding formula,
11the General Assembly shall consider and take action to enact the
12formula into law in accordance with subsection (j).

13(l) The General Assembly shall, through the annual
14appropriations process, determine the level of State funding for
15special education and the amount of any change in funding. The
16special education formula developed under this section shall
17determine only the distribution of any increase in special
18education funding among the school districts of this
19Commonwealth above the amount of special education funding in
20the base year and shall not be used for any other purpose.

21(m) Notwithstanding any provision of law to the contrary,
22for the 2013-2014 school year and each school year thereafter,
23any State funding for special education in an amount that does
24not exceed the amount of State funding for special education in
25the base year shall be allocated in the same manner as the State
26funding was allocated in the base year.

27(n) As used in this section, the following words and phrases 
28shall have the meanings given to them in this subsection unless 
29the context clearly indicates otherwise:

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

1"Commission." The Special Education Funding Commission
2established under this section.

3"Department." The Department of Education of the

5Section 2. Section 2501(26) of the act, added July 9, 2008
6(P.L.846, No.61), is amended and the section is amended by
7adding clauses to read:

8Section 2501. Definitions.--For the purposes of this article
9the following terms shall have the following meanings:

10* * *

11(26) "Actual Spending." An amount equal to a school
12district's total expenditures to include General Fund
13expenditures in all functional classifications, as designated in
14the Manual of Accounting and Related Financial Procedures for
15Pennsylvania School Systems, except for:

16(i) actual special education spending;

17(ii) adult education;

18(iii) higher education;

19(iv) student transportation;

20(v) community services;

21(vi) scholarships and awards;

22(vii) facilities acquisition;

23(viii) construction and improvement services; and

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

25(x) tuition from patrons revenue.

26* * *

27(31) "Actual Special Education Spending." An amount equal to
28a school district's total annual expenditures for special
29education as established by the Department of Education and
30designated in the Manual of Accounting and Related Financial

1Procedures for Pennsylvania School Systems. The amount shall not
2include expenditures that are exclusively for gifted students
3who do not receive special education pursuant to an
4individualized education program.

5(32) "Eligible Student." A student who has been identified 
6as a student with a disability who is in need of special 
7education under Federal and State law.

8(33) "Performance Indicators." Measurable annual objectives 
9established by the Department of Education pursuant to section 
10612(a)(15) of the Individuals with Disabilities Education Act 
11(Public Law 91-230, 20 U.S.C. § 1412(a)(15)) to assess progress 
12toward achieving State goals for the performance of eligible 

14(34) "Public Access." Full and timely release of information 
15and documents for public access at a minimum through publication 
16by the Department of Education:

17(i) in the Pennsylvania Bulletin;

18(ii) on the Department of Education's publicly accessible
19Internet website for no less than a duration of twelve (12)
20months; and

21(iii) through the Department of Education's timely issuance
22of a related Statewide press release.

23(35) "Regular Classroom." A classroom in a regular school 
24operated primarily for students who have not been identified as 
25students with disabilities who are in need of special education.

26(36) "Regular School." A neighborhood school, magnet school 
27or other public school operated for all students, not solely 
28eligible students, in a school district.

29(37) "Special Education Plan." A comprehensive plan as well 
30as revisions, updates and amendments for all special education 

1personnel, programs, services and supports provided by each 
2school district for eligible students, filed by each district 
3with the Department of Education under this act and other 
4applicable Federal and State law.

5(38) "Base Year." Fiscal year 2010-2011 or another year 
6designated by statute.

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

10Section 3. The act is amended by adding sections to read:

11Section 2509.13. Special Education Funding for Student 
12Achievement and Instruction of Eligible Students.--(a) (1) The 
13Department of Education shall utilize the funds under section 
142509.8(e) in order to meet, to the extent that funds are 
15available, extraordinary special education expenses not 
16anticipated through the special education funding formula. 
17School districts and charter and cyber charter schools may apply 
18for resources through the fund under procedures established by 
19the Department of Education. The Department of Education shall 
20make payments from the fund in response to the applications.

21(2) The Department of Education shall issue a comprehensive
22annual report documenting use of the fund to the General
23Assembly and shall provide public access to the report.

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

1provide the student with an appropriate education in the least
2restrictive environment.

3(b) (1) To the extent that funds are appropriated any year 
4by the General Assembly, the Department of Education shall 
5establish and implement a competitive grant program for school 
6districts and charter schools meeting the following criteria:

7(i) Providing instruction within the regular classroom at 
8least eighty percent (80%) of the school day for at least sixty-
9five percent (65%) of eligible students, as averaged for the two 
10(2) most recent school years for which data are available or 
11increasing the number of eligible students receiving instruction 
12within the regular classroom by at least fifteen percent (15%) 
13in the most recent school year for which data are available.

14(ii) In the most recent school year for which data are 
15available, performance by eligible students on State academic 
16assessments in reading and math, averaged for the entire 
17district, meeting State standards for adequate yearly progress 
18by any method approved by the Federal and State governments, 
19such as by meeting the annual target, the confidence interval or 
20the safe harbor target or by appeal.

21(iii) Implementing programs or services that serve as a 
22model of excellence for meeting high standards for inclusion and 
23student achievement through quality special education.

24(2) The Department of Education shall develop guidelines for 
25the administration of the grant program established under this 
26subsection, which shall be allocated to school districts and 
27charter schools on a competitive basis.

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


2(4) Nothing under paragraph (1) or any other provision of 
3this act shall alter Federal or State law regarding the 
4protections provided to an eligible student for receiving 
5education in the least restrictive environment or shall alter 
6the legal authority of individualized education program teams to 
7make appropriate program and placement decisions for eligible 
8students in accordance with the individualized education program 
9developed for each eligible student.

10Section 2509.14. Special Education Funding for Eligible 
11Students with Disabilities in Cost Category 3.--(a) For the 
122014-2015 school year and each school year thereafter, the 
13Department of Education shall set aside an amount not less than 
14one percent (1%) of the State special education appropriation 
15above the level of the appropriation in the base year. The 
16Department of Education shall distribute this amount as provided 
17in subsection (b).

18(b) For the 2014-2015 school year and each school year
19thereafter, each school district in this Commonwealth shall
20receive a pro rata share of the amount set aside under
21subsection (a) based upon the number of eligible students
22residing or enrolled in each school district and classified in
23Cost Category 3 during the immediately preceding school year.

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

1and amendments required by section 2509.15.

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

12(2) The Department of Education shall:

13(i) review the special education plans and revisions,
14updates and amendments;

15(ii) provide recommendations and technical assistance to
16school districts;

17(iii) approve or disapprove the plan within ninety (90)
18calendar days of receipt;

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

21(v) provide guidance related to plan resubmission.

22(3) The Department of Education shall approve a special
23education plan and revisions, updates and amendments that in the
24determination of the Department of Education:

25(i) meet the requirements of this section;

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

30(iii) describe programs and strategies that are most likely

1to improve student outcomes in the school district; and

2(iv) describe policies of the school district to ensure that 
3a student identified as having a disability is no longer 
4identified as such if the student no longer qualifies under 22 
5Pa. Code Ch. 14 (relating to special education services and 
6programs), or any successor regulation.

7(4) Upon disapproving a school district's special education 
8plan, update or revision submitted under this section, the 
9Department of Education may withhold the portion of the annual 
10State increase in special education funding which exceeds the 
11index until a written special education plan, update or revision 
12is approved.

13(5) The Secretary of Education shall involve as appropriate 
14in special education monitoring, support, intervention, 
15technical assistance and special education plan review by the 
16Department of Education, the staff in relevant offices, bureaus 
17and divisions of the Department of Education, as well as any 
18other resources as appropriate.

19(b) (1) Pursuant to the timetable set forth in section 218, 
20each school district receiving an increase in its State special 
21education funding allocation of more than the index shall update 
22its special education plan by attaching the district's special 
23education expenditures as reported on the annual financial 
24reports and shall submit the updates and revisions to the 
25Department of Education for approval under subsection (a). The 
26Department of Education shall allow a district to meet the 
27requirements of this section by adding the information as an 
28appendix to the existing plan.

29(2) School districts shall use State funds for programs and
30supports that expressly benefit eligible students educated in

1the least restrictive environment in accordance with Federal and
2State law and contribute to achievement of performance

4(3) The Department of Education shall identify resources for 
5programs and supports that benefit eligible students and 
6contribute to achievement of performance indicators and address 
7the following areas or related areas:

8(i) curricula adaptation;

9(ii) coteaching;

10(iii) assistive technology;

11(iv) school-wide positive behavior supports;

12(v) supplementary aids and services;

13(vi) professional development;

14(vii) reading services and supports;

15(viii) caseload management for special education teachers 
16and related services personnel; and

17(ix) placing and serving eligible students in regular
18classrooms with supports in accordance with the individualized
19education program developed for each eligible student.

20(4) The Department of Education shall make the resources 
21identified in paragraph (3) available to all educational 
22entities in this Commonwealth.

23(c) Accountability for the effective use of resources to
24meet student needs shall also be provided in the following ways:

25(1) The Department of Education shall issue to the General
26Assembly a comprehensive annual report on special education
27funding, special education plans, the implementation of 22 Pa.
28Code § 14.104 (relating to special education plans) and other
29special education accountability issues for public school
30entities serving eligible students and this Commonwealth.

1(2) Upon disapproving a school district's special education 
2plan, update or revision, the Department of Education may 
3withhold the portion of the annual State increase in special 
4education funding which exceeds the index until a written 
5special education plan, update or revision is approved.

6(3) (i) The Department of Education shall:

7(A) review and monitor implementation of all special
8education plans, such as compliance with subsection (b) and 22
9Pa. Code § 14.104;

10(B) provide support, intervention and technical assistance
11in school districts failing to meet student needs based on
12performance indicators or failing to comply with subsection (b);

13(C) post on its Internet website each school district's 
14progress on meeting student needs based on performance 
15indicators; and

16(D) determine whether to withhold up to five percent (5%) of
17all State special education funding for school districts
18identified under this clause while the identified problems
19remain unresolved.

20(ii) If the Department of Education determines that a school
21district is making substantial progress toward resolving the
22identified problems, it shall restore the withheld funding
23retroactively and continue to monitor the district for an
24additional two (2) years.

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

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

13(ii) Nothing in this paragraph or any other provision of
14this act shall be construed to alter Federal or State law
15regarding the protections provided to an eligible student for
16receiving education in the least restrictive environment or
17alter the legal authority of individualized eduction program
18teams to make appropriate program and placement decisions for
19eligible students in accordance with the individualized
20education program developed for each eligible student.

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

1Department of Education's decisions and actions regarding the 
2district made under this section. The written response must be 
3submitted to the Department of Education within thirty (30) 
4calendar days of the Department of Education's notice or within 
5thirty (30) calendar days of receiving the notice, whichever is 
6later. The Department of Education shall consider the written 
7response, consult with the school district and, within thirty 
8(30) calendar days after receiving the written response, issue a 
9written decision addressing the concerns and claims made in the 
10written response, explaining the judgment of the Department of 
11Education in response to these concerns and claims, and 
12specifying the opportunity to appeal this matter to the 
13Secretary of Education for a hearing under 2 Pa.C.S. Chs. 5 
14Subch. A (relating to practice and procedure of Commonwealth 
15agencies) and 7 Subch. A (relating to judicial review of 
16Commonwealth agency action) and 1 Pa. Code Pt. II (relating to 
17general rules of administrative practice and procedure). If 
18requested, the Secretary of Education shall convene a hearing 
19within thirty (30) calendar days after receipt of a school 
20district's hearing request. The Secretary of Education shall 
21render a written hearing decision within thirty (30) calendar 
22days following the hearing.

23(e) The Department of Education shall provide public access
24to the decisions, actions and reports made under this section.

25(f) Nothing under this section shall supersede or preempt
26any provisions of a collective bargaining agreement between a
27school entity and an employe organization in effect on the
28effective date of this section.

29(g) The requirements of this section shall be waived until 
30the General Assembly appropriates special education funding 

1above the amount of special education funding in the base year 
2and on the effective date of the appropriation the requirements 
3of this section shall apply for that school year and for each 
4school year thereafter.

5Section 2509.16. Data Collection.--Using existing resources 
6and data systems as well as nationally accepted accounting and 
7modeling standards, the Department of Education shall collect 
8data necessary for accurate functioning of a special education 
9formula developed under section 122, including, but not limited 
10to, data necessary for the calculations related to Cost Category 
111, Cost Category 2 and Cost Category 3 as part of the formula 
12developed by the commission. The Department of Education shall 
13begin collecting such data upon the effective date of this 

15Section 2509.17. Protections.--Nothing under the provisions 
16of this act shall alter Federal or State law regarding the 
17protections provided to an eligible student for receiving 
18education in the least restrictive environment or shall alter 
19the legal authority of individualized education program teams to 
20make appropriate program and placement decisions for eligible 
21students in accordance with the individualized education program 
22developed for each eligible student.

23Section 4. The Secretary of Education shall propose
24regulations for promulgation by the State Board of Education
25which implement the amendment or addition of the following
26provisions of the act:

27(1) Section 122.

28(2) Section 2501(26), (31), (32), (33), (34), (35),
29(36), (37), (38) and (39).

30(3) Section 2509.13.

1(4) Section 2509.14.

2(5) Section 2509.15.

3(6) Section 2509.16.

4(7) Section 2509.17.

5Section 5. This act shall take effect immediately.