Commission flags $96 million gap in Connecticut special education excess‑cost reimbursements

At its June meeting the Blue Urban Commission on K–12 education funding and accountability opened a knowledge‑building session on special education spending, where ERS presenters laid out statewide trends and a funding gap in the state’s excess‑cost reimbursement system.

ERS analyst Jess said special education accounts for roughly 27% of all education spending in Connecticut and that statewide special‑education expenditures total about $3.3 billion. She described the Excess Cost Grant — Connecticut’s primary state mechanism for special‑education aid — as a reimbursement program that covers student costs above a threshold (in the example used, 4.5 times a district’s net current expenditures per pupil) and applies tiered reimbursement rates based on municipal wealth.

Using ERS’s figures, eligible reimbursements calculated by the formula summed to about $317 million while the state appropriation was roughly $221 million in the most recent year presented, leaving an approximate shortfall of $96 million. "When you hear folks talk about fully funded, it is this gap they are referencing," Jess said.

Presenters flagged that while staffing is the largest share of special‑education spending, tuition and transportation together account for roughly one‑third of the total and are rising faster than staffing costs after inflation. ERS also noted Connecticut’s relatively high use of separate‑school placements (reported at about 5.3% of students served in separate settings), which contributes to tuition and transportation demand.

Commission members and small‑group reportouts prioritized several policy responses. One small‑group representative said: "We recommend that the state fully fund both of those grants, the seed grant and the excess cost grant," and groups urged lowering the excess‑cost threshold so a larger share of student costs becomes eligible for reimbursement. Members also raised concerns about the sustainability of one‑time or short‑term appropriations and pressed for clearer multiyear funding commitments so districts can budget reliably.

ERS and commissioners emphasized that Connecticut’s model differs from many states: presenters noted that most other states use a multi‑part funding approach (weights or a primary weighted model) while Connecticut relies mainly on a high‑cost reimbursement structure. Commissioners asked ERS to return with comparative data (including Rhode Island’s practice) and with more detailed district‑level breakdowns of tuition and transportation spending where possible.

Next steps set by the commission include additional knowledge‑building sessions (notably July 16 by Zoom and July 30 in person), further analysis of the Excess Cost Grant mechanics and district impacts of threshold changes, and stakeholder engagement to surface implementation concerns such as workforce shortages, bilingual special‑education needs and differences between small and large districts.

The commission closed its session without a formal vote; members directed staff and ERS to return with follow‑up analyses and to catalog questions raised through Slido and the public survey for future meetings.