Legal Updates


NEW GUIDANCE FROM THE DEPARTMENT OF PUBLIC INSTRUCTION ON ACTUAL COSTS FOR PROVIDING SPECIAL EDUCATION AND RELATED SERVICES TO OPEN ENROLLED STUDENTS

July 30, 2019

As the Wisconsin legislature and Governor Tony Evers focused on the 2019-2021 Biennial Budget, the Department of Public Instruction (DPI) issued new guidance on open enrollment funding for special education students adopted in the 2017-2019 Biennial Budget (2017 Budget).  Before the 2017 Budget, nonresident school districts received a flat aid payment per open enrolled special education student regardless of the actual cost of providing special education and related services required by the student’s individualized education program (IEP).

The 2017 Budget created an exception to the flat aid payment for open enrolled special education students based on the actual costs of provide special education and related services.  Beginning with the 2018-2019 school year, nonresident school districts may file an “Open Enrollment Financial Statement for Special Education Actual Costs” (financial statement) to DPI showing the actual costs of providing required the special education and related services to special education students.  Wis. Stat. § 118.51(12).  DPI must then adjust the aid payment for the open enrolled special education student in the following school year based on the actual costs set forth in the financial statement.  The resulting aid payment for an open enrolled special education student may not exceed $30,000.

DPI’s guidance confirms that nonresident school districts are not required to provide financial statements for all open enrolled special education students, and the per-pupil aid payment for any students that the nonresident school district does not submit a financial statement for will be the standard flat amount.  However, filing a financial statement may cause the per-pupil aid payment to be more or less than the standard per-pupil aid payment. 

DPI requires school districts to submit the financial statements using the Open Enrollment Application Log (OPAL).  Nonresident school districts may submit financial statements each year between the first weekday in August and the last weekday in September.  Thus, the "Submission Period" for 2019 is August 1, 2019, to September 30, 2019.  Nonresident school districts may also revise submitted financial statements anytime during the submission period.  Financial statements may not be revised once the Submission period ends, but school districts may withdraw a submitted until 4:00 p.m on the second Monday in October.  The deadline to withdraw a financial statement this year is October 14, 2019.

The new aid payment provisions are not limited to newly open enrolled students.  Thus, a nonresident school district may submit financial statements for all open enrolled special education students.    The aid payment adjustments apply to aid payments for the year after they are submitted and each subsequent school year as long as each student continues to be open enrolled in the nonresident district.  Thus, financial statements submitted for actual costs in the 2018-2019 school year will first impact the aid payment for the 2019-2020 and following school years.  Additionally, DPI will prorate the aid payment for students whose open enrollment status changes during a school year.  

The resident school district is entitled to view the financial statements submitted by nonresident school districts where their residents are enrolled.  However, the statute does not provide any mechanism for resident school districts to object to the financial statements or to deny continued open enrollment based on the actual costs.  Additionally, a resident school district is not entitled to review an open enrolled student’s IEP without written consent from the parent.

The actual costs reported on the financial statement must be allowable costs under the Individuals with Disabilities Education Act (IDEA) formula grants.  Thus, the actual costs must be excess costs that the school district would not incur but for its obligation to provide special education students with a free, appropriate public education.  The actual costs cannot include costs that the nonresident school district would incur regardless of the nonresident student’s enrollment.  The actual cost aid transfer payment will be a special education fund 27 expenditure from the resident district and a special education fund 27 revenue for the nonresident school district.

The actual cost aid transfer payment will also impact both school districts’ maintenance of effort requirements under the IDEA.  For resident school districts, the aid transfer will increase their local costs for maintenance of effort calculations.  Thus, resident school districts should closely monitor changes in open enrolled students’ status to apply appropriate exceptions to the maintenance of effort calculations when an open enrolled special education student graduates/ages out, returns to the resident district or changes residency.  For nonresident school districts, the increased revenue to special education fund 27 will decrease their local costs.  Thus, the nonresident school district may fail the maintenance of effort tests if it does not account for the additional revenues with offsetting expenditures. 

School districts should act quickly to analyze the actual costs for nonresident open enrolled special education students.  The submission period and the 2019-2020 school year are quickly approaching.  Superintendents are well-advised to discuss the potential aid transfers with the school district’s Business Manager and Special Education/Pupil Services Director.  Each school district should consider which, if any, open enrolled students may qualify for an actual cost aid transfer.  Additionally, the school district should analyze whether any resident special education students open enrolled in a nonresident school district may create an actual cost aid transfer expenditure.

For question regarding this article or other special education topics, please contact the author, Attorney Chad P. Wade (email: cwade@strangpatteson.com; telephone: 833-654-1176), or your Strang, Patteson, Renning, Lewis & Lacy, s.c., attorney.

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