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Federal Special Education Funds

How Are They Generated?

Districts and charters apply for federal funds primarily in two grants: Funds for students with disabilities ages 3-21 and Preschool funds for students with disabilities ages 3-5.

Both grants pre-determine how much a district or charter receives using a formula outlined in law. The formula has three parts:

The Base part of the formula uses the number of students with disabilities served in Texas schools as of 1998 (3-21 year olds) and 1996 (3-5 year olds) when setting how much money each charter or district will receive. The Population and Poverty formulas use total district/charter enrollment (ALL students) from the prior year October Child Count. Population means how many total students enrolled—with and without disabilities. Poverty looks at the number of students identified as living in poverty. These amounts are more current and can increase or decrease the amount of federal dollars received in the upcoming year.

More About the Formula

Special Education federal funding does not increase when new students are identified as needing special education.

The child counts used in the formula were set in the 1990’s. The formula is in the federal special education law and would require revision by Congress to change.

IDEA Full Funding Amount Not Met

The federal share for educating students with disabilities has never reached the 40% promised.

When Congress originally passed the federal special education law, it authorized the federal government to pay 40% of each state’s ‘excess cost’ of educating children with disabilities. That amount –called the IDEA Full Funding Amount— is calcu-lated by taking 40% of the national average per pupil expendi-ture multiplied by the number of children with disabilities served under IDEA in each state. This act was later modified and became the Individuals with Disabilities Education Act. USDE Special Education Grants to States Program.

District Allocations

Federal Special Education Funds are generated with the district or charter’s total student population, with the special education student population, and with all students identified as living in poverty.

Did you know?

The federal share of public school funding in Texas has dropped from 16.4% in 2010 to a projected 9.5% in 2019.

Parents may believe the federal government provides funding and some may even assume special education is entirely funded by the federal government. But, state and local funds are mainly responsible for the cost of a free appropriate education for students with disabilities.

Legislative Budget Board: Comptroller of Public Accounts, “Fiscal Size-Up: 2018-2019 Biennium

How Are The Funds Used?

Federal Funds are used to identify and provide a free appropriate public education (FAPE) to students with disabilities who are eligible for special education and related services. The funds help schools develop individualized education programs (IEPs) to meet the needs of students with disabilities and prepare those student for further education, employment, and independent living. Federal funds:

  • Supplement and, in no way supplant (or take the place of), other local and state funding.
  • Must not be used to pay for all the costs of running a special education program.
  • Cover the extra or ’excess cost’ of the services and programs.

Allowable Special Education Staff Positions

  • Special Education Teachers
  • Paraprofessionals
  • Evaluation Specialists (Educational Diagnosticians and/or Licensed Specialis in School Psychology)
  • Specialized Teachers (Visual and Auditory Impairments)
  • Speech Therapists and Related Service Providers (Occupational, Physical, Music Therapists)
  • Behavior Specialists
  • Special Education Counselor

Contracted Services

  • Instruction
  • Related Services
  • Evaluations
  • Professional Development
  • Program Planning
  • Program Evaluation

Materials, Supplies, & Equipment

  • Special materials, supplies, and equipment related to the students’ Individual Education Programs (IEPs). Routine classroom and office materials must not be purchased with state special education funds.

  • Specialized equipment: instructional and assistive technology and computers for instruction or assessment purposes.


  • Excess cost in certain situations.

Funds for Students Not Currently in Special Education

The district or charter may choose to spend up to 15% of the federal funds for services to students without disabilities. This is called Coordinated Early Intervening Services (CEIS). CEIS is for students in K-12th grade who are not currently identified as need-ing special education, but who need additional academic and behavioral support to succeed in a general education. If the district or charter decides to use federal funds this way, services might include: teacher training, evaluations, and direct services to students. Schools must set aside this amount for CEIS if the district or charter is cited for having significant disproportionality for race and ethnicity when looking at special education eligibility, discipline actions, and others indicators.

Want to Know More?

Dig Deeper and learn more about the special education process in Texas using the following resources:


Federal special education funds come from Part B of the Individuals with Disabilities Act (IDEA). Part B of IDEA talks about Services for Schools -Aged Children.


Live Binder

The Special Education Funding Live Binder is a resource special education directors and school business managers use to understand special education funding.


Quick Reference

The Special Education quick reference guide covers local, state, and federal revenue sources, budgeting, allowable expenditures, and fiscal compliance.


Did you know?

Part of the school’s federal funding goes to students with disabilities whose parents have placed them in private schools or provide their child’s education at home?

The federal law requires districts to spend a part of their federal money on providing services to students with disabilities in private school or home schooled. Districts talk with private school and home representatives when developing the grant application each year. Students may receive a different amount of services than children with disabilities in the district. An Individual Service Plan, not an IEP is developed for the student.

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