Amid a deluge of financial challenges facing school districts, administrators received somewhat reassuring news about this year’s proration rate for special education aid reimbursement.
The state program, which covers a portion of the cost of the most expensive student services, has enough money to cover 90% of schools’ eligible expenses, up significantly from last year’s rate of 66%, according to a notice and data provided by the Department of Education.
Still, despite increasing funding for the program by $16 million this year to a total of almost $50 million, it will not cover all eligible expenses, leaving school districts on the hook for the remaining 10%.
The state follows a complex process to determine how much money schools receive back, relying on an eligibility formula and then setting a proration rate by dividing the amount districts are eligible to receive by the amount the state has allocated.
Last year’s proration rate, the lowest since 2017, left school districts scrambling to cover costs they had expected would come from state funding. It also prompted state lawmakers to implement a safeguard, requiring that the state fund at least 80% of eligible expenses going forward, regardless of the allocation.
Special education aid, formerly called “catastrophic aid,” has historically been the smallest of four sources of special education funding in New Hampshire. School districts also receive federal government funding through the Individuals with Disabilities Education Act and Medicaid, as well as additional adequacy payments for students who have Individualized Education Programs, called IEPs. The remainder of special education funding — 83% in 2023-24 — comes from local property taxes.
During the 2023-24 school year, $978 million was allocated to special education costs, about one-quarter of total education spending, according to the organization NH School Funding Fairness Project.
The special education aid program is designed to assist school districts in covering the most costly services, which typically stem from out-of-district placements. These services, which districts are required by law to provide, are among the most difficult to plan for because they revolve around the needs of relatively few students, which can shift unpredictably.
During 2024-25, the services for 907 students in the state exceeded $75,000 per pupil, according to the Department of Education. Among that group, 98 students’ services exceeded $215,000, ten times the average cost per pupil.