A r c h i v e d  I n f o r m a t i o n

To Assure the Free Appropriate Public Education of All Children with Disabilities - 1995

Formula Grant Programs

This section provides a brief overview of two major Federal programs that have provided States with financial assistance to educate school-age children and youth with disabilities--the IDEA, Part B State Grant Program, and Chapter 1 of ESEA (SOP). Two other formula grant programs authorized under IDEA--the Early Intervention Program for Infants and Toddlers (Part H), and the Part B, Section 619 Preschool Grants Program--are described in Chapter 2.3

The Part B State Grant Program

The Part B program distributes funds to the States according to the total number of students with disabilities aged 3-21 reported by the States as receiving special education and related services. Each State educational agency (SEA) conducts an annual child count on December 1 of each year and submits it to OSEP. The State's Part B grant for the next fiscal year is based on that count. Although States must serve all eligible children with disabilities, in general funds are provided only for up to 12 percent of the State's total school-age population.

Table 1.1 summarizes the amount of Part B funding appropriated to States for FY 1977 through FY 1994. Funds appropriated under Part B have increased steadily from $251,770,000 in FY 1977 to $2,149,686,000 in FY 1994. During the same period, the average per child Part B allocation increased from $71 to $413.


TABLE 1.1 Part B State Grant Program: Funds Appropriated, 1977-94
  Appropriation              Part B                  Per child      Year                State Grants a/             Allocation
                                                 1977                $ 251,770,000               $  71      1978                  566,030,000                 156       1979                  804,000,000                 215         1980                  874,190,000                 227      1981                  874,500,000                 219      1982                  931,008,000                 230      1983                1,017,900,000                 248      1984                1,068,875,000                 258      1985                1,135,145,000                 272      1986                1,163,282,000                 279      1987                1,338,000,000                 316         1988                1,431,737,000                 332       1989                1,475,449,000                 336      1990                1,542,610,000                 343        1991                1,854,186,000                 400      1992                1,976,095,000                 410         1993                2,052,730,000                 411        1994                2,149,686,000                 413 

a/These figures include amounts appropriated to Micronesia and the Marshall Islands. The data in Appendix Table AG1 do not include these figures.

Source: U. S. Department of Education, Office of Special Education Programs, Data Analysis System (DANS).


At least 75 percent of a State's Part B funds must be distributed to local educational agencies (LEAs) and intermediate educational units (IEUs) to assist in the education of students with disabilities (34 CFR 300. 706). The LEAs and IEUs are required to ensure that these funds do not supplant State and local expenditures, and that they are used for the excess costs of providing special education and related services to students with disabilities. SEAs are permitted to set aside up to 25 percent of the Part B grant for their own use. Of these set-aside funds, States may use up to 5 percent of the grant, or $450,000, whichever is greater, for administrative costs. States may use the remaining 20 percent of the set-aside funds for two purposes: providing direct and support services for children and youth with disabilities or paying the administrative costs for monitoring and compliance investigations, to the extent that such administrative costs exceed the costs of administration incurred during FY 1985.

Chapter 1 (SOP) Program for Children with Disabilities

Chapter 1 of the Elementary and Secondary Education Act (ESEA) had provided funds to the States to assist in the education of children with disabilities in State-operated or State-supported programs (SOPs) since 1965. A 1975 amendment allowed States to count children who had transferred from SOP programs to LEA programs. Table 1.2 shows the total amount of funds distributed and the average per child allocation for Chapter 1 (SOP) and its predecessor programs for FY 1966-94.


TABLE 1.2 Chapter 1 (SOP) State Formula Grant: Funds Appropriated, FY 1966-94

  Fiscal Year         Chapter 1 (SOP)         National Average                        State Grants               Per child                                                  Allocation a/
     1966               $ 12,467,000               $ 243       1967                 15,078,000                 182                 1968                 24,747,000                 283      1969                 29,781,000                 309      1970                 37,483,000                 339      1971                 46,130,000                 379      1972                 56,381,000                 428      1973                 75,962,000                 481      1974                 85,778,000                 515      1975b/              183,733,000               1,028      1976                111,433,000                 592      1977                121,591,000                 604      1978                132,492,000                 592      1979                143,353,000                 635      1980                145,000,000                 620      1981                152,625,000                 626      1982                146,520,000                 604      1983                146,520,000                 596      1984                146,520,000                 593      1985                150,170,000                 587      1986                143,713,000                 572      1987                150,170,000                 588      1988                151,269,000                 578      1989                148,200,000                 557      1990                146,389,000                 545      1991                148,859,000                 561      1992                143,000,000                 524      1993                126,393,696                 432      1994                116,878,000                 387 
a/Actual per child allocations vary from State to State.

b/The Chapter 1 (SOP) funds for FY 1966-74 were for use in the fiscal year of appropriation. However, beginning in FY 1975, funds were to be used in the next fiscal year. As a result, the appropriation in FY 1975 was for funds to be used in both FY 1975 and FY 1976.

Source: U. S. Department of Education, Office of Special Education Programs, Data Analysis System (DANS).


This program was not reauthorized under the Improving America's Schools Act that reauthorized ESEA. Beginning July 1, 1995, funding for services to all eligible children and youth age 3 through 21 will be provided under IDEA, Part B.

Funding Levels for Part B and Chapter 1 (SOP)

Overall, combined Chapter 1 (SOP) and Part B funding increased by $87,440,304, or 4.0 percent, in FY 1994. Part B funding increased by $96,956,000, or 4.7 percent. Chapter 1 (SOP) funding decreased by $9,515,696, or 7.5 percent. The Chapter 1 (SOP) average per child allocation reached its peak in 1979 ($635). In 1994, the per child amounts for the States ranged from $317 (n=11 States) to $475 (n=9 States). The FY 1994 average per child allocation of $387 represents the third and final consecutive year of the phase-out of Chapter 1 (SOP) funding.

State Educational Agency Use of IDEA, Part B Set-Aside Funds

The National Association of State Directors of Special Education (NASDSE) validated the results of a July 1991 NASDSE study that examined SEAs use of IDEA, Part B State set-aside funds for support and direct services.

In November 1994, NASDSE sent a survey to State directors of special education in all 50 States. The first part of the survey listed the direct and support activities States reported funding with set-aside monies in the 1991 study. Space was available to add additional funding categories, if appropriate. Respondents were asked to indicate which of these activities were funded with the 1992 Part B grant award and to estimate the percentage of set-aside funds used for each activity. Six general questions were asked in the second part of the survey. These questions were related to the use of set-aside funds for reform and restructuring activities and to their use as "flow through" funds for local school systems. Of the 50 directors surveyed, 42 (84 percent) responded to NASDSE's request for information.

An analysis of the responses to the first part of the survey showed that SEAs continue to use set-aside funds to maintain the 23 direct and/or support activities identified in the 1991 study. Nine categories were reported as being used by at least half of the SEAs responding. These nine categories were:

An analysis of responses to the six general questions indicated little change in the use of Part B set-aside funds for reform activities. Twenty States reported that in 1992 they used set-aside funds for reform and restructuring, while 22 States reported no use of Part B set-aside funds for these purposes. This compared to 16 States reporting such use prior to 1992, and 23 reporting no such use of set-aside funds for those purposes prior to 1992.

Regarding the use of Part B set-aside monies as "flow through" funds, most of the States responding (31 of 42) indicated "flowing through" more than the required 75 percent of Part B dollars to local school systems. However, of the 31 States that have increased their "flow through," only 5 were mandated by State law or regulations to do so.

In summary, States report using Part B set-aside funds in a variety of ways that support the implementation of Part B. Both the ways that States use funds and the proportion of funds used for any particular activity vary considerably. Based on the results of the survey, SEAs appear to be using Part B set-aside funds to assist local school systems in providing services required by Part B.


3 These two programs will be referred to a Part H and the Preschool Grants Program throughout this report.
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[School-Age Students with Disabilities Served, Placement and Exiting Patterns, and Personnel Who Provide Special Education and Related Services] [Table of Contents] [Number of Children and Youth with Disabilities Served Under Part B and Chapter 1 (SOP)]