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 - 1996

Formula Grant Program

The funding structure of the IDEA, Part B State Grant Program, which provides States and Outlying Areas with financial assistance to educate children and youth with disabilities, is reviewed in this section. 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 2.1

The IDEA, Part B program distributes funds to the States and Outlying Areas based on the total number of students with disabilities ages 3-21 reported by the States and Outlying Areas as receiving special education and related services. To obtain this count, each State education agency (SEA) conducts a child count on December 1 of each year and submits it to OSEP. The State's IDEA, Part B grant for the next fiscal year is based on that count.

The Improving America's Schools Act of 1994 amended IDEA in a number of ways:

On October 20, 1994, the Improving America's Schools Act of 1994 (IASA) was enacted. This Act reauthorized the Elementary and Secondary Education Act of 1965 (ESEA). However, the Chapter 1 Handicapped program,2 Subpart 2 of Part D of Chapter 1 of Title I of the ESEA, was not reauthorized. Beginning with the fiscal year 1995 appropriation, all children with disabilities are to be served under programs authorized by Part B and Part H of the Individuals with Disabilities Education Act (IDEA). The IASA included a number of amendments to the IDEA to provide for a smooth transition to serving all children under IDEA programs.

The IASA made a number of changes to facilitate the merger of the Chapter 1 Handicapped program with the Grants to States program under Part B of the IDEA. The major change is a hold-harmless provision under which no State may receive an allocation of less than the total it received from the fiscal year 1994 appropriation for children with disabilities aged 3 through 21 years old under the Grants to States and Chapter 1 Handicapped programs. In fiscal years 1998 or 1999, if the number of children with disabilities aged 3 through 21 years old served by a State declines below the total number of such children counted under the Grants to States and Chapter 1 Handicapped programs for that State for allocating the fiscal year 1994 appropriation (December 1, 1993 count), the hold-harmless amount would be reduced by the same percentage by which the number of children declined below the number in 1994. (OSEP, 1995)

The provisions of this merger that pertain to infants and toddlers are discussed in Chapter 2 of this Report.

The IASA also made changes to the cap in IDEA that are described below.

The IASA changed the cap in the IDEA pertaining to the Grants to States program which specified that children with disabilities aged 3 through 17 in excess of 12 percent of the number of all children in the State in that age range cannot be counted for the distribution of funds. The cap has been changed to the greater of 12 percent or the combined percentage of children counted for the purpose of making fiscal year 1994 allocations under the Grants to States and Chapter 1 Handicapped programs. (OSEP, 1995)

Table 1.1 summarizes the amount of IDEA, Part B funding appropriated to States and Outlying Areas for FY 1977 through FY 1995. Funds appropriated under IDEA, Part B have increased steadily from $251,770,000 in 1977 to $2,322,915,000 in 1995. During the same period, the average per child IDEA, Part B allocation increased from $71 to $418.

TABLE 1.1 IDEA, Part B State Grant Program: Funds Appropriated, 1977-95
       Appropriation                  IDEA, Part B                Per Child
Year                           State Grantsa/              Allocationb/  ----                            -----------                  ---- 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 1995                          2,322,915,000c/                  418          
a/ The figures from 1977 through 1994 include amounts appropriated to the Federated States of Micronesia and the Republic of the Marshall Islands. In 1995, those entities received no appropriations.

b/ The per child allocation excludes children and funds for the Outlying Areas and BIA and is based on the child count information available as of July 1 of the fiscal year.

c/ This amount includes $82,878,000 added to the Grants to States appropriation because of the elimination of the Chapter 1 Handicapped Program.

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

At least 75 percent of a State's IDEA, Part B funds must be distributed to local educational agencies (LEAs) to assist in the education of students with disabilities [34 §CFR 300.706]. The LEAs are required to ensure that these funds do not supplant State and local funds, 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 IDEA, Part B funds for State 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 State 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 for such activities during FY 1985.

1 These two programs will be referred to as Part H and the Preschool Grants Program throughout this Report.

2 This program will be referred to as the Chapter 1 Handicapped Program throughout this Report.

[Chapter 1] [Table of Contents] [Number and Disabilities of Children and Youth Served Under IDEA, Part B]