DPI sets special-education reimbursement at 35%; West Bend officials say district will need budget adjustments

Assistant Superintendent for Business Lenny Hanson told the West Bend school board on Nov. 24 that the Department of Public Instruction will allocate special-education aid at an effective 35% reimbursement rate based on the funds DPI received, not the higher percentage lawmakers discussed during budget debate. "On last week, Monday, DPI dropped a bombshell across the state when it said they will only commit to 35% based on the funds that are allocated," Hanson said.

Hanson outlined the arithmetic: at the 42% level cited in July the district would have received roughly $5.9 million in special-education aid; West Bend budgeted conservatively at 39.5% (about $5.5 million) and planned for roughly a $350,000 shortfall; returned DPI guidance at 35% now implies roughly $4.9 million in aid for the district — about $1.0 million less than the 42% promise and about $630,000 below West Bend’s conservative budget assumption. Hanson also said the statewide gap between what was touted in the budget and what DPI is allocating exceeds $130 million.

Hanson explained the technical cause: DPI allocates a fixed amount of dollars ("some certain" amount) and later calculates what percentage of statewide eligible costs those dollars cover. Districts submit prior-year expense data in September, and the ratio of allocated dollars to eligible costs determines the effective reimbursement percentage. "They allocate an x number of dollars. It is not a some sufficient amount," Hanson said.

The practical consequence for West Bend, Hanson said, is rapid budgeting work: the district will examine expenses that have not yet been incurred, identify possible adjustments, and consider transfers from the general fund to the special-education fund to cover the shortfall. Hanson warned the board that the shortfall is likely to affect planning for multiple years and urged near-term steps to refine projections. He said the district will continue to update the board as more state information becomes available and as the district finalizes internal planning.

Board members asked clarifying questions about why DPI’s percentage fell and how the district had built conservative assumptions into the budget; Hanson explained the state’s process and timing and that many districts statewide are now revisiting budgets.