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CTNewsJunkie: Setting The Record Straight On A Special Education Co-op

Katie Roy, School + State Finance Project

March 15, 2017 - 6 minutes

In his March 15 op-ed, “Confronting the Scheme to Gamble With Connecticut Special Education Funds,” Robert Cotto Jr. makes a number of factually inaccurate claims, and uses a “greatest hits” compilation of logical fallacies, to argue against the creation of a Special Education Predictable Cost Cooperative, which will protect students, improve cost predictability, and increase equity for our state’s school districts and communities.

The Special Education Predictable Cost Cooperative (the Co-op) is a special education finance system that allows the state and local governments to share in special education costs. Our organization, the Connecticut School Finance Project, in partnership with the University of Connecticut’s Goldenson Center for Actuarial Research and Neag School of Education, developed the model to help increase stability and predictability in special education funding for school districts, while ensuring decisions in service delivery and identification remain local.

For Connecticut’s more than 74,500 students with disabilities, the services and resources they need (and deserve) vary significantly, and often pose difficult planning and financial questions to Connecticut’s public schools and municipalities. Adding to this difficulty is the fact that Connecticut is one of only four states with no system for funding all of its special education students.

Together, these factors have made it difficult for districts and municipalities to plan budgets that meet the needs of all the students they serve. School districts throughout Connecticut face fluctuating special education costs that can wreak havoc on local budgets and force districts to dip into general education funds, or hinder their abilities to provide special education students with the resources they need. While Cotto disputes this (citing no data source), an analysis of district special education spending across Connecticut clearly shows this unpredictability.

And as we’ve traveled across the state speaking in communities about school finance, concerns about special education funding have consistently been raised by a wide array of stakeholders. These concerns, along with feedback from parents, educators, and policymakers, led us to develop the Co-op model for funding special education; a model that is based on sound actuarial principles, benefits all students, and ensures adequate funding for students with disabilities—no matter what their needs are.

Among the factual inaccuracies in his op-ed, Cotto conflates Governor Dannel Malloy’s budget proposal for a new Special Education Grant with the Co-op and incorrectly ties the two proposals together. The Co-op is not what the governor has proposed, and the details distinguishing the two plans are not “murky” as Cotto suggests.

The governor’s Special Education Grant proposal reimburses local public school districts for their special education costs on a sliding scale from 0 to 53.93 percent, based on a town’s relative wealth. Although the proposal is structurally equitable, it falls short of meeting identified best practices for funding special education, fails to address the unpredictability of special education costs that continues to impact communities across the state, and may result in the misidentification of students as requiring special education services. The Connecticut School Finance Project has repeatedly criticized this plan (and the governor’s proposed changes to the state’s school finance system) in both testimony before the Appropriations and Education Committees and in a Connecticut Mirror op-ed.

The Co-op, on the other hand, does meet identified best practices for funding special education and is designed with three important goals in mind:

  • Protecting students. The Co-op protects students with disabilities by ensuring adequate funding is available for the services they need and deserve—no matter what their disabilities may be. Additionally, all students benefit from the Co-op, whether the require special education services or not, because predictable special education funding helps stabilize general education funding and ensure districts don’t have to resort to dipping into their general education funding to pay for necessary special education services.
  • Improving predictability. The Co-op would allow all districts and municipalities to know what their total special education costs will be in the prior year, when they are creating their budgets, allowing for better budget planning. Then, during the school year, districts would be reimbursed for 100 percent of their actual special education costs.
  • Increasing equity. The Co-op takes into account a district’s ability to pay for the special education services its students need. While under the Co-op every school district would receive some state aid for special education, and be reimbursed for 100 percent of their actual special education costs, districts with greater student need would receive greater state aid.

The Co-op is able to achieve these goals by aggregating special education costs together at the state level to leverage the fact that, on a statewide basis, special education costs are predictable, even though they are frequently volatile at the district level.

The Co-op would be funded by contributions from the State and municipalities. The State’s contribution would come from reallocating to the Co-op its current state support for special education (i.e. the portion of the Education Cost Sharing grant that is assumed to be attributable to special education, as well as funding for the Excess Cost grant), while municipalities would contribute by making a Community Contribution for each special education student who lives in their town. A Community Contribution would be calculated for each town using a formula that takes into account the town’s number of special education students, past special education costs, and the community’s ability to pay based on its wealth. Additionally, all communities’ contributions will be lower than their actual per pupil special education costs because every community will receive some state aid.

Under no circumstance would the Co-op “confiscate” special education funds to set up a “private investment/insurance fund to pay for any future cost increases,” as Cotto erroneously states.

In his op-ed, Cotto also takes issue with the potential structure of the Co-op and plays loose with the facts once again. A pre-existing structure, called a captive insurance company (CIC), could meet the governance and oversight needs of the Co-op. A CIC is an entity wholly owned and controlled by its members and its primary purpose is to insure the risks of its members.

Using this structure for the Co-op ensures 1) the Co-op will be a nonprofit and concerns of profiteering or corporatization will not be an issue, and 2) the Co-op will be wholly owned and governed by its members, which will be towns, school districts, and the State.

Additionally, under this structure, the Co-op would be regulated by the Connecticut Insurance Department, and a board of directors—made up of representatives from member school districts, local governments, and state government—will oversee the Co-op and perform tasks such as:

  • Ensuring the Co-op is administered in a fiscally responsible manner and maintains fiscal solvency.
  • Selecting an administrator to oversee the day-to-day operations of the Co-op and perform the functions of assessing Community Contributions and processing reimbursements to districts.
  • Soliciting advice and recommendations from all Co-op members and practitioners when making policy changes and governance decisions.

Furthermore, the CIC structure allows for all Co-op funds to be held outside of state government in an entity that is fully owned by its members. This will alleviate fears of the “sweeping” of funds that sometimes occurs in statutorily-created pools and trust funds, and ensures all Co-op funds are being used solely for special education services for Connecticut’s students.

It is also important to note that nothing about the Co-op, or its structure, prevents Connecticut from “increase[ing] funding for general and special education,” districts from “partner[ing] for more regional efficiencies,” or greater attention and support from being given to early intervention and Pre-K to help “reduce the need for outplacements.” All are worthy efforts that will not be impacted by the Co-op.

Finally, contrary to Cotto’s claims about who benefits from the Co-op and his red herring about vouchers (it is also important to note the Connecticut School Finance Project opposes the use of vouchers), the Co-op has only two beneficiaries: students and communities.

The time has come for Connecticut to adopt a real solution to its special education funding challenges. The Co-op model is not a gamble but a solution that benefits all of Connecticut’s students and communities.

View the full op-ed at

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