Texas has recently made a significant cut of over $607 million annually in federal funding for special education programs, a decision that local school district officials warn could exacerbate the already delicate budget situations for students with disabilities.

The School Health and Related Services (SHARS) program is vital for many school districts, as it provides substantial funding for essential special education services, reimbursing costs associated with nursing, therapy, counseling, and transportation for children eligible for Medicaid.

As reported by the Texas Education Agency, more than 775,000 students in Texas benefit from special education services. However, the exact number of these students who qualify for Medicaid remains unclear, although school officials indicate that many of the beneficiaries come from low-income families.

In the past year, the Texas Health and Human Services Commission, which oversees the program at the state level, implemented stringent regulations limiting the types of services for which school districts could seek federal reimbursement. Consequently, these alterations have led to the estimated $607 million reduction in expected SHARS funding annually.

Officials from various school districts and advocates for special education express confusion over the abrupt changes, citing a lack of communication regarding the reasons behind such a drastic restructuring.

Katie Abbott, who heads special education for a coalition of East Texas school districts, pointed out that there is an increasing number of students requiring more individualized care. “And yet, what are we doing?” she expressed, concerned about the implications of these cuts.

In response to local concerns, Texas has shifted responsibility, attributing the need for changes to federal requirements. A federal audit conducted in 2017 highlighted that Texas had been incorrectly billing for unapproved services under the SHARS program, resulting in a requirement for the state to return nearly $19 million—a small fraction of the current funding loss. The audit’s conclusions necessitated compliance with federal guidelines.

In efforts to contest the findings, the state health commission submitted numerous requests without success. Texas officials later indicated that the changes were part of measures to regain federal compliance. Nevertheless, federal appeals officers noted that Texas failed to provide adequate evidence to challenge the auditors’ conclusions regarding improper billing practices.

Moreover, federal representatives clarified that Texas is not mandated to implement specific changes to the SHARS program, as long as it operates within general federal parameters. Nonetheless, local officials accuse Texas of overreacting to the audit and neglecting the expectation to manage the program with minimal restrictions.

Many school districts are appealing the funding reductions, while rural schools are opting out of the SHARS program due to the administrative burdens caused by the recent changes. Those that continue in the program remain hopeful that the next legislative session might bring relief to their financial shortfalls, a challenging expectation given Texas’ inconsistent history in administering Medicaid and catering to students with disabilities.

Karlyn Keller, division director with the Texas Association of School Boards emphasized the gravity of the situation, stating, “We can’t afford to continue to make these huge clawbacks in funding when we’ve got kids that need the service.”

The Texas Education Agency projects that the gap between special education expenses for district schools and the revenue from federal and state sources could escalate to roughly $1.7 billion annually as a result of the SHARS funding cuts.

In the Shiner school district, which has around 700 students, close to 10% are special education students. The district anticipates losing more than $79,000 in its funding, according to the state health agency. Superintendent Alex Remschel warned that this funding loss will eventually impact the district’s capacity to hire and retain staff necessary for providing individual and small group special education services. Currently, the district relies on three special education teachers and around six aides, supplemented by a cooperative resource-sharing arrangement with eight other districts.

For Remschel, each funding cut translates into real implications for students. “When I look at the dollars we have, I see faces of kids,” he lamented, noting that decision-makers often overlook the personal impact of such financial decisions.

Jason Appelt, who leads the special education cooperative that includes Shiner, questioned why Texas is not fully utilizing the funding it could receive from the federal government. Previously, the cooperative received around $1 million in SHARS funding, but that figure has been halved, now accounting for nearly 20% of their operational budget.

Appelt noted that the unexpected reduction leaves districts in a tough position, especially since they are typically cautious with budgeting. “If something doesn’t change with this, it’s gonna be really tough on all these districts,” he forewarned.

Even larger districts, like Katy, which services about 96,000 students with nearly 18% receiving special education, are not immune to the fallout of these funding changes. Assistant Superintendent Gwen Coffey explained that the district is facing a reduction of almost $8 million and that recent administrative changes have made participation in the SHARS program increasingly burdensome.

New billing guidelines for personal care services introduced on October 1 have created requirements for extremely detailed documentation that many educators find unmanageable given their responsibilities. Coffey questioned the motives for these changes, asking, “If the purpose is to ensure that funding and services are being delivered to those students who require them, how does this accomplish that?”

Concerned about a perceived trend of the Texas Health Commission prioritizing caution in the face of federal audits, Kami Finger, Lubbock’s assistant superintendent, highlighted the pervasive issues this creates. “We’re too fearful that we’re not going to do it the right way to begin with,” she said, noting that her district is losing over $5.4 million due to the recent cuts.

The federal audit itself, which scrutinized Texas’s billing practices during the 2010-2011 timeframe, indicated that overbilling was a significant issue due to failure to adhere to established procedures. An accompanying appeal revealed that Texas did not utilize opportunities to refute the audit findings effectively.

Consulting firms like MSB School Services offer support to many participating districts within Texas’s SHARS program and have been vocal about their observations. CEO Tabbatha Callaway noted that while there were indeed issues identified in the audit, she has yet to see documentation demonstrating that Texas was required to implement the drastic funding cuts it has made. She believes that solutions exist to recover lost dollars, and greater collaboration with school districts is essential.

The Texas health agency, for its part, stated it is working to ensure districts are informed about SHARS and has introduced a Medicaid training team to increase transparency and support. However, with the significant changes already enacted, many districts are reconsidering their participation in the program, while others are opting out altogether.

Legislators and advocates maintain hope that the Texas Legislature will increase funding for special education and develop a more effective funding model that aligns with the specific needs of each student, potentially providing some relief amidst the daunting cuts.

Nevertheless, funding for public schools has been constrained recently due to political battles, such as those surrounding Governor Greg Abbott’s efforts to implement a school voucher program that diverts public funds to private schooling.

Past scrutiny and fines concerning Texas’s handling of special education create a backdrop of concern for advocates attempting to navigate the political landscape while pushing for reform. Yet, optimism persists.

Andrea Chevalier, director of governmental relations for the Texas Council of Administrators of Special Education, remarked that special education funding stands as one of the few bipartisan issues among legislators.

Following recent discussions where the health agency presented justifications for the funding reductions, Representative Mary González has joined fellow lawmakers in exploring whether the state is excessively restricting itself in this area and is advocating for enhanced communication and transparency.

Katie Abbott echoed the sentiment for better funding, emphasizing that the essential services the SHARS program supported remain critically needed, regardless of any additional assistance. “We’re passionate about what we do for kids,” she concluded, underlining the urgency of addressing these funding challenges.