Court Upholds $33 Million Penalty Against TEA For Reducing SPED Funding

The Fifth Circuit has ruled that the Texas Education Agency violated the Individuals with Disabilities Education Act (IDEA) when it reduced state special education funding in 2012. On January 17, 2017, the United States Department of Education (“Department”) issued a proposed determination that the Texas Education Agency (“TEA”) was ineligible for $33,302,428 of its Individuals with Disabilities in Education Act (“IDEA”) Part B grant in a future year because of its failure to meet the maintenance of State financial support requirement in that amount in state fiscal year (“SFY”) 2012. After an agency Administrative Law Judge (“ALJ”) affirmed the Department’s proposed determination, TEA appealed.

To be eligible for federal funds under Part B of the IDEA, States must meet certain conditions, including maintaining its level of financial support year over year (“MFS clause”).  States must not reduce financial support made available for special education and related services below the amount of such support for the preceding fiscal year. The Department of Education claimed that TEA did just that in 2012 by more than $33 million.

In its petition for review, TEA challenged the Department’s decision that the State is ineligible for approximately $33.3 million of its IDEA Part B grant due to the 2012 drop in funding.  According to TEA, the State’s aggregate and per capita spending on special education programs fluctuates from year to year, even though its financial support on a weighted-student basis never wavers. TEA maintains that in 2012, the State experienced a total per capita spending decrease of more than $33 million–because the students in Texas special education programs required fewer cost-intensive services. The Department of Education, thus, concluded that the State must in turn forfeit over $33 million in federal IDEA funding.

The Fifth Circuit agreed, stating: “the relevant inquiry is not whether a state has adequately provided for the special needs of disabled children, but whether it has maintained the same amount of monetary aid.”  According to the appeals court, TEA’s “weighted-student model contravenes the plain meaning of the MFS provision by allowing a state to reduce its special education funding based on its unsupported claim that the needs of its disabled students have declined.”  The Fifth Circuit upheld the decision of the Department of Education that will require a reduction of federal special education funding in a future year by $33 million.

Texas Educ. Agency v. United States Dep’t of Educ., No. 18-60500, 2018 WL 5817072, at *4 (5th Cir. Nov. 7, 2018)

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