Individuals with Disabilities Education Act (IDEA): State Grant Formulas

Individuals with Disabilities Education Act (IDEA): State Grant Formulas

Order Code RL31480
Report for Congress
Received through the CRS Web
Individuals with Disabilities
Education Act (IDEA):
State Grant Formulas
Updated January 24, 2003
Richard N. Apling
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Individuals with Disabilities Education Act (IDEA): State
Grant Formulas
Summary
Congress is considering revisions to the Individuals with Disabilities Education
Act (IDEA), which is the major federal statute guaranteeing free appropriate public
education (FAPE) for children with disabilities and authorizing state grants to help
fund special education and related services for these children. Among the areas that
could be considered is the funding of the state grants programs — especially the “full
funding” of the Part B grants-to-states program. This report examines the formulas
for the three IDEA state grants programs: the grants-to-states program, which serves
mostly school-aged children with disabilities, the preschool program (Section 619),
which serves children with disabilities ages 3 to 5, and the infants and toddlers
program (Part C), which serves children from birth to age 2.
The report concentrates on the formula provisions of the Part B grants-to-states
program, which accounts for most of the funds appropriated for IDEA. After
providing for various set-asides amounting to about 2% of the total appropriations
for this program, the Secretary of Education allocates a base-year grant to each state,
which is the amount a state received for FY1999. Of the remaining amount ($3.3
billion for FY2002), 85% is initially allocated based on states’ shares of the
preschool- and school-age population, and 15% is allocated based on states’ shares
of children in the above age group living in poverty. Finally, when appropriations
are growing (as they have been in recent years) state allotments are adjusted so that
the growth rate of each state’s grant closely follows the growth in the overall
appropriations for the grants-to-states program. For example, total FY2002
appropriations for the grants-to-states program grew by 18.8%. The state formula
limited state grant growth rates to a range between 17.3% and 20.3%. The substate
formula for the grants-to-states program is based on similar principles, as are the state
and substate formulas for the IDEA preschool state grants program. The Part C
formula differs from and is less complex than the Part B formulas. Funds for Part C
grants are distributed based on states’ share of infants and toddlers — i.e., total
population below the age of 3. There is a one-half percent minimum state grant
amount for the Part C formula.
In recent years, Congress has been particularly concerned about funding for
special education, which has resulted in substantial increases in funding of the grants
to states program, from $2.3 billion in FY1996 to $7.5 billion in FY2002. Despite
recent increases, some Members of Congress have also been concerned that
appropriations are still far from providing full funding, i.e., maximum state grants
authorized by the statute. The Senate version of the No Child Left Behind Act would
have appropriated estimated full-funding amounts by FY2007. The final bill did not
contain this proposal, in part because some Members argued that IDEA needs to be
significantly revised before full funding could be justified. Those revisions are now
being considered. The report concludes with a discussion of possible unanticipated
and unintended consequences of providing full funding for grants to states. This
report will not be updated.

Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of Characteristics of State Formula Grants . . . . . . . . . . . . . . . . . . 1
Formula Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Minimum Grants or Stop Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Maximum Grants or Stop Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A Hypothetical Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The IDEA State Grants Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Part B Grants-to-States Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Impact of Changes in the IDEA Grants-to-State Formula . . . . . . . . . . 11
State Set-asides and Capacity Building Grants . . . . . . . . . . . . . . . . . . 13
Substate Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Preschool State Grant Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Infants and Toddlers State Grant (Part C) Formula . . . . . . . . . . . . . . . . . . . 18
Maximum Funding Under Part B Grants to States . . . . . . . . . . . . . . . . . . . 20
Background, History, and Rationale . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recent Full-Funding Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Possible Unintended Consequences of Full Funding . . . . . . . . . . . . . . 22
List of Tables
Table 1. Illustrative State Formula Based on 1990 and 2000 Total Population . . 4
Table 2. Provisions of IDEA Part B Grants to States Permanent Formula . . . . . . 8
Table 3. Recent IDEA Part B Grants to States Allocations . . . . . . . . . . . . . . . . . 9
Table 4. Percentage Change in State Grants Based on Three Alternatives
to the Current Grants-to-States Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. Example of Calculating State Set-Asides
(for Alabama for FY2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 6. Example of Calculating State Capacity Building Grants
(for Alabama) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 7. Recent State Allocations for the IDEA Preschool Program
(Section 619) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 8. Recent State Allocations for the IDEA Infants and Toddlers Program
(Part C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Individuals with Disabilities Education Act
(IDEA): State Grant Formulas
Overview
Congress is considering whether to make revisions to the Individuals with
Disabilities Education Act (IDEA), which is the major federal statute guaranteeing
free appropriate public education (FAPE) for children with disabilities and
authorizing state grants to help fund special education and related services for these
children.1 Among the areas that could be considered is the funding of the state grants
programs — especially the “full funding” of the Part B grants-to-states program.
This report examines the formulas for the three IDEA state grants programs: the
grants-to-states program, which serves mostly school-aged children with disabilities,
the preschool program (Section 619), which serves children with disabilities ages 3
to 5, and the infants and toddlers program (Part C), which serves children from birth
to age 2. As background to the discussion of specific IDEA formulas, the report
begins with an overview of the basic characteristics of federal state grant formulas.
The report then outlines the three IDEA state grant formulas. It concentrates on the
Part B grants-to-states formula (funding programs mostly for school-age children
with disabilities) because it is the most complicated and deals with the most money.
The report concludes with a discussion and current status of the debate over “full
funding” of the grants-to-states formula, i.e., the provision of maximum state grants
under this formula.
Overview of Characteristics of State Formula Grants
Formula Factors. In general, federal grant formulas have one or more factors
that are used to make initial allocations. (As discussed below, these initial grants are
then usually adjusted before making final allocations.) These factors usually reflect
the grant’s target population or populations and might include, for example,
population and poverty for a targeted age group. Initial allocations are made to states
based on their shares of each formula factor. For example, suppose a state formula
allocated $1 billion based on total population, with no other requirements. If
California has 12% of total population, California would receive 12% of the funds
or $120 million. If Vermont has 0.2% of total population, Vermont would receive
0.2% of the funds or $2 million.
1 For an overview of IDEA, see CRS Report RL31259, Individuals with Disabilities
Education Act: Statutory Provisions and Selected Issues, by Nancy L. Jones and Richard
N. Apling.

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Minimum Grants or Stop Loss. Formulas often specify minimum grant
provisions so that, assuming funds are sufficient, no grantee receives less than a
certain amount. These minimums tend to range from 0.25% to 0.5% of the total
allocation. If the above example included a minimum grant of 0.25%, Vermont,
Wyoming, and a few other states would have their grants boosted to $2.5 million.
If the minimum were at 0.5%, other, somewhat larger, states (for example, New
Hampshire, which has about 0.45% of total population) would see higher grants (in
New Hampshire’s case going from $4.5 million to $5 million).
Another reason for minimum grants in formulas is to prevent sudden program
dislocations and accompanying political controversies when a new formula goes into
effect or when formula factors are updated, e.g., when new census figures become
available. Sometimes this is a guarantee (if funds are sufficient) of a prior year grant
amount or a percentage of a prior grant. In other cases, it is tied to the overall
percentage change in appropriations. These minimum grants are sometimes called
hold harmless provisions, because they hold grant recipients harmless at some
previous grant level.
Because money to raise states to minimum grant levels almost always comes
from the states’ grants that are above the minimum,2 Congress sometimes puts
constraints on minimums so that the full minimum grant is not received. This is
illustrated in the example discussed below.
Maximum Grants or Stop Gain. Less often except with respect to
minimum grants, formulas constrain how much states’ grants can grow from year to
year. The main reason for such provisions is to further dampen the impacts of a new
formula going into effect. One approach is to limit the percentage gain from one year
to the next, which is discussed in the following example.
A Hypothetical Example. Table 1 shows a simple hypothetical example of
how a state formula (based on total population) might be constrained by a small state
minimum (0.25%), a hold harmless (95%) of a prior grant, and a maximum grant
(110% of a prior grant). To illustrate the effects of these formula alternatives, Table
1 presents states’ percentage shares of total appropriation, rather than dollar amounts.
A state share can be translated into dollars by multiplying the share by the total
allocation. For example, California’s population accounts for about 12.036% of total
U.S. population, as determined by the 2000 census. If total population were the only
formula factor with no adjustments and $1 billion were allocated, California would
receive 12.036% of $1 billion or $120.36 million. Wyoming’s share of 2000 total
population is 0.175%. From a $1 billion allocation with no minimum grant,
Wyoming would receive $1.75 million.
2 Specifically the total amount needed to bring states up to the minimum grant level is
determined. Then that amount is obtained by reducing all other states’ allocations
proportionally.

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Column 1 of Table 1 shows each state’s share of the total allocation based on
its share of total 1990 population. Column 2 shows the 2000 shares.3 The next
column (column 3) shows the result when a minimum grant of 0.25% of the total
allocation is required. That is, no state would receive a share of the total allocation
that was less than 0.25% of the total allocated amount. In the case of a $1 billion
total allocation, this would result in no state receiving less than $2.5 million. This
can be seen in the box at the bottom of the table in which the five smallest states,
which originally had shares ranging from 0.175% to 0.228%, now have shares of
0.25%. The funds to raise these five states to the minimum are taken proportionally
from the other states. Note that other states have slightly lower shares. For example,
California’s share is reduced from 12.036% to 12.011%.4
In addition to minimum grants to ensure that grants to smaller states are large
enough to be effective, federal formulas often have minimum state grant amounts
(i.e., hold harmless levels) to ensure that no state loses an unacceptable amount when
a new formula takes effect or when updated data (for example, when more recent
census data) become available. Column 4 of Table 1 shows one such example. Here
the minimum share a state can receive is the greater of the 0.25% minimum or 95%
of the state’s share of total population in 1990. The data for New York illustrate the
impact of the latter provision. In column 3, New York’s share is 6.729%. In column
4, its share is increased to 6.872%, which is 95% of its 1990 share of 7.234%. Again
funds to raise New York and other states to this ‘hold harmless’ level come from all
other states, except from those at the 0.25% minimum. Notice, for example, that
California’s share again is slightly reduced while Wyoming’s share remains at
0.25%.5
Besides the minimum grants discussed above, column 5 shows the impact of a
formula provision that restricts a state’s growth. In this case, no state receives a
percentage share that is more than 110% of its 1990 share. This restricts increases
for states experiencing high population growth, such as Georgia, Arizona, Nevada,
and Colorado. For example, Georgia’s 2000 share under the previous formulas
ranged between 2.91% and 2.875%. However, these shares are more than 110% of
Georgia’s 1990 share of 2.6%. So under the formula shown in column 5, Georgia’s
share is reduced to 2.865%, which is 110% of its 1990 share. In addition to
constraining increases for high growth states, a cap, ceiling, or maximum grant can
reduce the impact of a small state minimum requirement. This effect can be seen for
some of the states that would receive 0.25% of total appropriations without any
restriction on growth of a state grant (see the box at the bottom of column 5). If a
3 These state shares are based on total population from the 1990 and 2000 census and were
obtained from the Census Bureau web site at
[http://www.census.gov/population/cen2000/phc-t2/tab01.pdf].
4 The states that are slightly larger than these five smaller states appear to have the same
shares in columns 2 and 3. In fact, their shares are lower in column 3, but these reductions
do not show up because only 3 decimal places are shown. For example, South Dakota’s
share is reduced from 0.26823% to 0.26767%.
5 The states held harmless are the slowest growing states West Virginia, Pennsylvania,
Connecticut, Maine, Rhode Island, Ohio, Iowa, New York, Massachusetts, Louisiana, and
Michigan.

CRS-4
0.25% share is greater than 110% of the 1990 share, a state’s final share is reduced
to the 110% cap (as it is for Alaska, Vermont, and Wyoming). If the 110% cap is
greater than 0.25% share, the state retains that share (see North Dakota and the
District of Columbia).
Table 1. Illustrative State Formula Based on
1990 and 2000 Total Population
(States are sorted according their shares of total 2000 population)
(Numbers in boxes illustrate points made in the text)
Percentage share
Percentage
based on 2000
share based
population with
on 2000
minimums of
Percentage
population
either 0.25% or
Percentage Percentage share based
with
95% of the 1990
share of
share of
on 2000
minimums of share but no share
total
total
population
either 0.25%
greater than
population population
with 0.25% or 95% of the 110% of the 1990
State
(1990)
(2000)
minimum
1990 share
share
column numbers
1
2
3
4
5
California
11.966%
12.036%
12.011%
11.896%
11.992%
Texas
6.830%
7.410%
7.394%
7.323%
7.382%
New York
7.234%
6.743%
6.729%
6.872%
6.872%
Florida
5.202%
5.679%
5.667%
5.613%
5.658%
Illinois
4.596%
4.413%
4.404%
4.366%
4.397%
Pennsylvania
4.777%
4.364%
4.355%
4.538%
4.538%
Ohio
4.361%
4.034%
4.026%
4.143%
4.143%
Michigan
3.737%
3.532%
3.524%
3.551%
3.551%
New Jersey
3.108%
2.990%
2.984%
2.955%
2.979%
Georgia
2.605%
2.909%
2.903%
2.875%
2.865%
North Carolina
2.665%
2.860%
2.854%
2.827%
2.850%
Virginia
2.488%
2.515%
2.510%
2.486%
2.506%
Massachusetts
2.419%
2.256%
2.251%
2.298%
2.298%
Indiana
2.229%
2.161%
2.156%
2.136%
2.153%
Washington
1.957%
2.094%
2.090%
2.070%
2.087%
Tennessee
1.961%
2.022%
2.018%
1.998%
2.014%
Missouri
2.057%
1.988%
1.984%
1.965%
1.981%
Wisconsin
1.967%
1.906%
1.902%
1.884%
1.899%
Maryland
1.923%
1.882%
1.878%
1.860%
1.875%
Arizona
1.474%
1.823%
1.819%
1.802%
1.621%
Minnesota
1.759%
1.748%
1.745%
1.728%
1.742%
Louisiana
1.697%
1.588%
1.585%
1.612%
1.612%
Alabama
1.625%
1.580%
1.577%
1.562%
1.574%
Colorado
1.325%
1.528%
1.525%
1.511%
1.457%
Kentucky
1.482%
1.436%
1.433%
1.420%
1.431%

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Percentage share
Percentage
based on 2000
share based
population with
on 2000
minimums of
Percentage
population
either 0.25% or
Percentage Percentage share based
with
95% of the 1990
share of
share of
on 2000
minimums of share but no share
total
total
population
either 0.25%
greater than
population population
with 0.25% or 95% of the 110% of the 1990
State
(1990)
(2000)
minimum
1990 share
share
column numbers
1
2
3
4
5
South Carolina
1.402%
1.426%
1.423%
1.409%
1.420%
Oklahoma
1.265%
1.226%
1.224%
1.212%
1.222%
Oregon
1.143%
1.216%
1.213%
1.202%
1.211%
Connecticut
1.322%
1.210%
1.208%
1.256%
1.256%
Iowa
1.117%
1.040%
1.038%
1.061%
1.061%
Mississippi
1.035%
1.011%
1.009%
0.999%
1.007%
Kansas
0.996%
0.955%
0.953%
0.946%
0.952%
Arkansas
0.945%
0.950%
0.948%
0.939%
0.947%
Utah
0.693%
0.794%
0.792%
0.784%
0.762%
Nevada
0.483%
0.710%
0.709%
0.702%
0.532%
New Mexico
0.609%
0.646%
0.645%
0.639%
0.644%
West Virginia
0.721%
0.643%
0.641%
0.685%
0.685%
Nebraska
0.635%
0.608%
0.607%
0.603%
0.606%
Idaho
0.405%
0.460%
0.459%
0.454%
0.445%
Maine
0.494%
0.453%
0.452%
0.469%
0.469%
New Hampshire
0.446%
0.439%
0.438%
0.434%
0.438%
Hawaii
0.446%
0.431%
0.430%
0.426%
0.429%
Rhode Island
0.403%
0.373%
0.372%
0.383%
0.383%
Montana
0.321%
0.321%
0.320%
0.317%
0.319%
Delaware
0.268%
0.278%
0.278%
0.275%
0.277%
South Dakota
0.280%
0.268%
0.268%
0.266%
0.267%
North Dakota
0.257%
0.228%
0.250%
0.250%
0.250%
Alaska
0.221%
0.223%
0.250%
0.250%
0.243%
Vermont
0.226%
0.216%
0.250%
0.250%
0.249%
District of
0.244%
0.203%
0.250%
0.250%
0.250%
Columbia
Wyoming
0.182%
0.175%
0.250%
0.250%
0.201%
Totals
100%
100%
100%
100%
100%
The IDEA State Grants Formulas
This section deals with the three IDEA state formulas: the Part B grants-to-
states formula, which funds special education mostly for school-age children with
disabilities, the Part B preschool state grants (Section 619), and the infants and

CRS-6
toddlers program (Part C). The Part B grants-to-states formula is the focus here
because it allocates by far the largest share of the IDEA appropriation ($7.5 billion
of an $8.7 billion appropriation for FY2002) and is the most complex of the three
IDEA formulas.
Part B Grants-to-States Formula. Prior to the 1997 Amendments,6 Part
B funds were distributed to states essentially based on state shares of children with
disabilities served. Testimony during reauthorization by the Inspector General of the
U.S. Department of Education (ED) raised concerns that the formula created
incentives to over-identify children with disabilities.7 The solution to this problem
was to change to a “census-based” formula. The decision was to base the formula
mostly on population (and to a lesser extent on poverty, because there is at least some
relationship between poverty and the incidence of disabilities). However, switching
completely to such a formula would have significantly redistributed IDEA funds. So
the Congress decided to delay implementation of the permanent formula until overall
Part B funds surpassed $4.9 billion, which happened in FY2000. Congress also
included various provisions to dampen the impact of the formula change, once it
went into effect.
Table 2 illustrates how the IDEA “permanent” formula works under current
conditions when appropriations are growing. The left-hand column shows the
formula provision; the right-hand column shows the resulting amount or percentage
for FY2002. The overall FY2002 appropriations for Part B grants to states is about
$7.5 billion — an 18.8% increase over the FY2001 amount. This percentage increase
is important to keep in mind for purposes of the formula.
Prior to allocating funds to the states, the Secretary first reserves funds from
total appropriations for the outlying areas,8 for the Secretary of the Interior for
services for children with disabilities attending Bureau of Indian Affairs (BIA)
schools, and for studies and evaluation. The combination of these set-asides
currently amounts to less than 2% of the total appropriation for the grants to states
program or about $132 million.
After accounting for these set-asides, the Secretary allocates for each state the
amount it received in FY1999. This is the base-year part of the grant because
FY1999 was the last year before the permanent formula went into effect. These
amounts will not change unless appropriations drop drastically but will account for
less and less of the total grant if appropriations grow significantly. The total amount
is about $4.2 billion, which is about 57% of the amount allocated to states for
FY2002. Of the remaining amount ($3.3 billion for FY2002), 85% is initially
allocated based on states’ shares of total population within the age range in which the
state provides FAPE to children with disabilities. Thus the age range for the
population (and for poverty) vary from state to state depending on the age at which
6 P.L. 105-17.
7 This was a concern in 1975, and Congress put a limit on the number of children who could
be counted for purposes of the formula — but not regarding who must be served.
8 The outlying areas are American Samoa, Guam, Northern Mariana Islands, Virgin Islands.

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services cease (all states begin services at 3).9 The remaining 15% is allocated based
on states’ shares of children in the above age group living in poverty. The initial
allocation then is the base grant plus the 85% allocation based on population plus the
15% allocation based on poverty.
There are several minimum grant constraints — not all of which come into play
under current conditions when appropriations are growing significantly. Assuming
sufficient funds are appropriated, no state shall receive a grant less than the greater
of the following amounts (that is, the minimum grant amount — subject to further
formula provisions discussed below — is the largest of these values):
1.
A state’s prior year grant — with current large increases, this
minimum will be less than other minimums and will not have an
impact.
2.
A state’s base year grant plus one-third percent of the increase
between the current year (FY2002, for this example) and the base
year (FY1999). This adds about $10.7 million to the base grant for
FY2002. This would increase grants of the smallest states by as
much as 50%, but these increases are capped by the maximum gain
discussed below.
3.
An increase not less than the overall percentage increase minus 1.5
percentage points (for FY2002 this is 18.8% - 1.5% = 17.3%)
4.
An increase that is not less than 90% of the overall percentage
increase. For FY2002 this is 18.8% times 90% = 16.9%, which is
less than the 17.3%; so this minimum grant is superseded under
FY2002 appropriations. However, if the Bush Administration’s
proposed increase of $1 billion over the FY2002 amount were
adopted for FY2003, this would be about 13.3% increase, and this
minimum would come into play (that is, a minimum growth rate of
11.95% rather than 11.8%, which would be the minimum increase
under number 3 above).
9 Two states have a maximum age of 18, two states have 19 as the maximum age, 26 states
have a maximum age of 20, and 22 states have a maximum age of 21.

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Table 2. Provisions of IDEA Part B Grants to States Permanent
Formula
Formula provision
Relevant data for FY2002
From amounts appropriated under Section 611(j)
$7,528,533,000
(18.8% increase over FY2001
total)
Secretary to reserve certain amounts for outlying areas,
$132,767,773
Indians, and studies and evaluations
Allocate the remainder to the states as follows:
$7,395,765,227
1. Allocate to each state its FY1999 grant (base grant)
$4,212,274,136
2. Of the remainder, allocate 85% based on each state’s
$2,705,967,427
share of total population within the age group 3 to 21
for which the state provides free appropriate public
education (FAPE)
3. Of the remainder, allocate 15% based on each state’s
$477,523,664
share of population living in poverty within the age
group 3 to 21 for which the state provides FAPE
4. Ensure that no state receives a grant which is less than
the largest of these amounts:
a. Its prior year grant
With large increases, this is
unlikely to have an effect
In FY02 this is the base grant +
b. Its base year grant plus one-third percent of the
$10.7 million. Is likely to be
increase in total appropriations between the
reduced by the maximum grant
current year and the base year
discussed below
c. A grant amount that increases not less than the
increase in overall appropriations minus 1.5
Not less than a 17.3% increase
percentage points
(18.8% -1.5%)
d. A grant amount that increases not less than 90%
Not less than a 16.9% increase
of the increase in overall appropriations
(18.8% times 90%). Only comes
into effect when percentage
growth of appropriations is less
than 15%. Would be particularly
important if appropriations were
to grow by only 2% or 3%
5. Ensure that no state receives a grant which is more than
the lesser of these amounts:
a. A grant amount that increased not less than the
increase in overall appropriations plus 1.5
No more than a 20.3% increase
percentage points
(18.8% +1.5%)
The national total level for this
b. A state’s maximum grant may not be more than
ceiling for FY2002 is estimated
40% of the national average per pupil
to be $18,203,992,000. This
expenditure (APPE) times the number of
provision has no effect for
children with disabilities served ages 3 to 21.
FY2002.

CRS-9
There are two maximum grant constraints:
1.
No state may receive an increase that is more than the overall
percentage increase in total appropriations plus 1.5 percentage points
(18.8% + 1.5% = 20.3% for FY2002) and
2.
The ultimate maximum grant for a state, which is 40% of the national
APPE times the number of children with disabilities served.
Only the first maximum is currently in effect. The ultimate maximum state grant
amount is discussed further below.
Table 3 shows final allocations for FY2000 based on appropriations of nearly
$5 billion, FY2001 allocations based on appropriations of $6.3 billion, and
preliminary allocations10 calculated by ED for FY2002 based on appropriations of
$7.5 billion. The column at the right shows the percentage change from FY2001 to
FY2002. Notice that many states received a 20.3% increase (about one-half of all
states). About one-quarter received a 17.3% increase. And the remaining states
received percentage increases between these two percentages. These changes reflect
the minimum and maximum grant provisions discussed above: the maximum
percentage change over the total change in appropriations (18.8%) plus 1.5
percentage points (20.3%) and the minimum percentage change of 18.8% minus 1.5
percentage points (17.3%).
Table 3. Recent IDEA Part B Grants to States Allocations
2002
2000
2001
Preliminary
% Change
State
Allocations
Allocations
allocations
from 2001
Alabama
$79,372,913
$100,426,123
$119,993,708
19.5%
Alaska
14,360,167
18,460,830
22,199,605
20.3%
Arizona
71,831,645
92,343,757
111,045,656
20.3%
Arkansas
46,925,276
59,842,674
71,962,298
20.3%
California
505,630,798
650,017,799
781,662,507
20.3%
Colorado
60,836,940
78,209,425
94,048,771
20.3%
Connecticut
60,621,805
76,114,202
89,245,788
17.3%
Delaware
13,161,054
16,919,300
20,345,877
20.3%
District of Columbia
6,617,417
8,507,074
10,229,967
20.3%
Florida
274,310,784
344,413,144
405,996,094
17.9%
Georgia
126,278,991
162,338,988
195,216,655
20.3%
Hawaii
16,598,674
21,338,561
25,660,148
20.3%
Idaho
22,338,848
28,717,888
34,533,972
20.3%
Illinois
222,970,401
283,066,424
336,544,669
18.9%
Indiana
115,783,816
145,373,315
170,908,661
17.6%
Iowa
56,057,887
70,383,938
82,526,911
17.3%
10 Some states will not get these exact amounts — most likely those not at the floor or
ceiling amounts.

CRS-10
2002
2000
2001
Preliminary
% Change
State
Allocations
Allocations
allocations
from 2001
Kansas
46,805,142
60,170,732
70,916,463
17.9%
Kentucky
69,988,093
88,537,364
104,534,421
18.1%
Louisiana
77,220,761
99,271,780
119,376,775
20.3%
Maine
25,125,639
31,546,701
36,989,288
17.3%
Maryland
88,552,235
111,365,477
131,488,699
18.1%
Massachusetts
130,345,374
163,656,198
191,890,947
17.3%
Michigan
168,624,335
216,776,390
260,222,966
20.0%
Minnesota
85,579,363
109,440,436
128,321,623
17.3%
Mississippi
49,937,502
64,197,563
77,199,160
20.3%
Missouri
103,938,330
130,959,742
153,553,541
17.3%
Montana
15,239,841
19,591,702
23,559,507
20.3%
Nebraska
34,286,654
43,048,888
50,475,888
17.3%
Nevada
27,013,687
34,727,666
41,760,879
20.3%
New Hampshire
21,791,090
27,359,981
32,080,256
17.3%
New Jersey
165,972,682
208,388,355
244,340,509
17.3%
New Mexico
41,240,344
52,531,899
61,594,953
17.3%
New York
342,212,717
429,667,970
509,444,136
18.6%
North Carolina
132,570,043
169,440,174
202,782,236
19.7%
North Dakota
10,686,617
13,738,268
16,520,608
20.3%
Ohio
186,600,288
239,885,523
288,468,284
20.3%
Oklahoma
64,473,544
81,913,464
98,502,970
20.3%
Oregon
56,238,461
72,297,813
86,419,290
19.5%
Pennsylvania
183,436,695
235,280,772
281,605,665
19.7%
Rhode Island
20,079,813
25,211,373
29,560,959
17.3%
South Carolina
78,237,560
98,231,807
115,463,825
17.5%
South Dakota
12,730,542
16,365,852
19,680,342
20.3%
Tennessee
101,635,101
128,733,463
154,805,179
20.3%
Texas
393,361,010
505,688,457
608,102,898
20.3%
Utah
44,372,041
57,042,839
68,595,427
20.3%
Vermont
10,303,939
13,246,313
15,929,020
20.3%
Virginia
121,999,520
153,996,278
181,315,881
17.7%
Washington
92,258,094
118,603,146
142,623,221
20.3%
West Virginia
34,872,055
43,783,893
51,337,699
17.3%
Wisconsin
92,662,516
117,131,369
140,642,706
20.1%
Wyoming
10,809,853
13,896,695
16,711,120
20.3%
American Samoa
4,956,510
5,127,424
5,286,455
3.1%
Guam
11,974,852
12,387,778
12,651,196
3.1%
Northern Mariana Islands
3,056,556
3,161,954
3,229,191
3.1%
Puerto Rico
43,909,097
56,447,698
67,879,755
20.3%
Virgin Islands
9,078,705
9,391,764
9,591,474
3.1%
Palau
0
0
0
—
Marshall Islands
0
0
0
—
Micronesia
0
0
0
—

CRS-11
2002
2000
2001
Preliminary
% Change
State
Allocations
Allocations
allocations
from 2001
Indian Tribe Set Aside
61,173,538
77,724,538
79,377,301
2.1%
Othera
20,636,845
23,244,059
21,629,000
-6.9%
Total
$4,989,685,000
$6,339,685,000
$7,528,533,000
18.8%
Source: ED Budget Service.
aIncludes funding for Studies and Evaluations and a competition for Pacific Basin Entities.
Impact of Changes in the IDEA Grants-to-State Formula. As noted
above, the new “permanent” formula for the grants-to-states program went into effect
in FY2000. Because overall appropriations for this program have been growing
significantly in recent years and because the formula constrains growth rates of
individual states’ grants, little notice apparently has been taken of changes resulting
from the formula change. FY2002 appropriations represent about a 51% increase
over the FY2000 amount and about a 75% increase over the FY1999 amount.
Because of constraints on growth rates under the new formula, increases in state
grants over the last 2 years have ranged from about 48% to about 54%.
At the same time, some states’ allocations could have been significantly
different under other formula alternatives. Table 4 shows estimated percentage
changes under three alternatives to the current formula. The first alternative shows
changes if the previous formula had been maintained, that is, if funds were
distributed based on states’ shares of number of children with disabilities served.
Under that approach several states, for example, a number of New England states,
would have received significantly larger grants. Some other states, such as Alaska,
Louisiana, Montana, and Texas, do better under the current formula than they would
under the pre-FY2000 formula.
The second alternative shows changes if the new formula were implemented
with no constraints on growth rates. That is, each state would receive its FY1999
grant amount plus 85% of the remainder distributed based on population and 15%
based on poverty. No constraints would be placed on how much or how little a
state’s grant could grow. This approach would benefit certain states, such as Arizona
and Colorado. Other states that do not benefit from a population-poverty formula
would have lower grant amounts — for example, Massachusetts and New Jersey.
The third alternative distributes 85% of all funds based on population and 15%
of all funds based on poverty, with no minimum or maximum grants. This approach
benefits states, such as California and Nevada but is less advantageous for states such
as Connecticut, Missouri, and Nebraska.

CRS-12
Table 4. Percentage Change in State Grants Based on Three
Alternatives to the Current Grants-to-States Formula
Formula
Formula
based on
Formula
based on
current
based 85% on
FY2002
share of
formula
population,
preliminary
children with without min.
15% on
State
allocations
disabilities
& max. grants
poverty
% Change with respect to FY2002 allocation
Alabama
$119,993,70
-3.4%
-0.9%
-3.5%
Alaska
22,199,605
-7.4%
-9.0%
-16.8%
Arizona
111,045,656
0.9%
11.2%
30.0%
Arkansas
71,962,298
0.5%
0.9%
2.3%
California
781,662,507
-4.1%
1.4%
7.3%
Colorado
94,048,771
-2.7%
3.3%
11.8%
Connecticut
89,245,788
-3.8%
-3.8%
-14.6%
Delaware
20,345,877
-4.3%
-3.7%
-4.5%
District of Columbia
10,229,967
19.9%
14.6%
38.1%
Florida
405,996,094
5.2%
-0.9%
-6.4%
Georgia
195,216,655
1.9%
4.9%
15.5%
Hawaii
25,660,148
8.4%
1.1%
6.6%
Idaho
34,533,972
-1.9%
2.3%
9.6%
Illinois
336,544,669
2.2%
-0.9%
-4.1%
Indiana
170,908,661
6.3%
-0.9%
-7.6%
Iowa
82,526,911
2.0%
-3.8%
-14.7%
Kansas
70,916,463
0.4%
-1.0%
-2.3%
Kentucky
104,534,421
5.1%
-0.9%
-5.1%
Louisiana
119,376,775
-4.7%
5.3%
16.4%
Maine
36,989,288
11.9%
-9.5%
-28.0%
Maryland
131,488,699
-1.0%
-0.9%
-6.3%
Massachusetts
191,890,947
-1.8%
-5.4%
-18.3%
Michigan
260,222,966
-1.1%
-1.0%
1.5%
Minnesota
128,321,623
-0.5%
-2.1%
-5.4%
Mississippi
77,199,160
-6.5%
-0.8%
2.1%
Missouri
153,553,541
3.9%
-2.9%
-12.0%
Montana
23,559,507
-5.7%
-4.3%
-6.0%
Nebraska
50,475,888
-1.5%
-3.0%
-12.8%
Nevada
41,760,879
6.2%
6.5%
19.2%
New Hampshire
32,080,256
7.4%
-2.0%
-10.0%
New Jersey
244,340,509
5.4%
-5.1%
-17.8%
New Mexico
61,594,953
-1.4%
-1.8%
-7.9%
New York
509,444,136
0.2%
-0.9%
-6.1%
North Carolina
202,782,236
3.2%
-1.0%
-0.9%
North Dakota
16,520,608
-4.0%
-2.1%
-0.6%
Ohio
288,468,284
-4.3%
-0.5%
3.0%
Oklahoma
98,502,970
0.9%
-0.7%
-0.2%

CRS-13
Formula
Formula
based on
Formula
based on
current
based 85% on
FY2002
share of
formula
population,
preliminary
children with without min.
15% on
State
allocations
disabilities
& max. grants
poverty
Oregon
86,419,290
-0.4%
-1.0%
0.1%
Pennsylvania
281,605,665
-1.1%
-1.0%
0.9%
Puerto Rico
67,879,755
12.1%
57.3%
137.2%
Rhode Island
29,560,959
20.7%
-4.7%
-16.7%
South Carolina
115,463,825
6.6%
-0.9%
-7.6%
South Dakota
19,680,342
-0.7%
-0.5%
3.0%
Tennessee
154,805,179
-5.6%
-0.8%
-2.6%
Texas
608,102,898
-6.1%
0.0%
3.8%
Utah
68,595,427
-8.7%
0.6%
5.6%
Vermont
15,929,020
8.6%
-1.4%
0.8%
Virginia
181,315,881
7.4%
-0.9%
-6.0%
Washington
142,623,221
-3.2%
-0.9%
1.5%
West Virginia
51,337,699
13.9%
-4.4%
-16.1%
Wisconsin
140,642,706
3.4%
-1.0%
-2.7%
Wyoming
16,711,120
-8.5%
-10.6%
-20.6%
State Total
$ 7,396,818,383
—
—
—
State Set-asides and Capacity Building Grants. States are permitted to
reserve funds from their Part B grants for administration and statewide activities,
which include funds for state monitoring, for meeting personnel needs, and for
providing technical assistance and training and development. Prior to the 1997
Amendments, the state set-aside for these activities had been 25% of the grant. The
1997 amendments altered this by requiring the amount for these state activities to be
calculated by increasing the prior year reserve by the percentage increase in the state
grant or the rate of inflation, whichever is less. In recent years, the increases have
been based on inflation because grants are growing considerably faster than inflation.
The effect of this in recent years has been to ensure state reserves have kept up with
inflation but that higher percentages go to the local level — closer to 85% rather than
75% under prior law. Of the total state set-aside, states may reserve up to 20% or an
adjusted dollar amount,11 whichever is greater, for administration.
Table 5 illustrates how the state set-asides are calculated, using Alabama as an
example. The increase over the FY2000 set-aside is based on the rate of inflation
(3.4%) because the overall growth in the state grant (26.5%) was larger. Increasing
the FY2000 set-aside of $13.7 million by 3.4% results in a total FY2001 state set-
aside of $14.2 million. Of this amount, Alabama may use up to 20% or $2.8 million
for administration. The remainder of Alabama’s FY2001 grant of $100.4 million
($86.2 million or 85.8%) is distributed to the local level.
11 This amount was $500,000 for FY1998 and has been adjusted for inflation each year
since.

CRS-14
Table 5. Example of Calculating State Set-Asides
(for Alabama for FY2001)
Amount of set-aside for administration and
$13.7 million
other statewide activities for FY2000
For FY2001, increase by the lesser of rate of
$14.2 million
inflation (3.4%) or percentage increase in
($13.7 increased by 3.4%)
grant (26.5%)
Up to 20% of state set-aside for
$2.8 million
administration
(20% of $14.2 million)
Amount for other statewide activities
$11.4 million
(80% of $14.2 million)
When Part B grants to states increase from one year to the next by more than the
rate of inflation, states are required to set-aside funds for local capacity building
grants (sometimes known as “sliver” grants). These grants are aimed at improving
LEAs’ special education programs. Specific uses include:
! Direct services for children with disabilities, including alternative
programs for those expelled from school,
! Addressing needs (such as personnel shortages) identified in the
state’s improvement plan, and
! Adopting effective technology, instructional practices, and materials.
The amount for a state’s capacity building grants is calculated by taking a
percentage of the state’s set aside for the previous year. The percentage is the growth
rate of the grant minus the inflation rate. If this amount is less than $100,000, then
the grants would not be made. Moreover, these grants only are made with increases
above inflation. If overall grants are not keeping up with inflation, no capacity
building grants are made. The logic behind this provision is that rather than
providing the full increase for state activities, funds for those activities (as discussed
above) are guaranteed at least an inflationary increase. But anything over inflation
in the overall increase in the state grant goes to the local level — in this case, as
capacity building grants. Table 6 illustrates this calculation for Alabama.

CRS-15
Table 6. Example of Calculating State Capacity Building Grants
(for Alabama)
FY2000 state set-aside
$13.7 million
Inflation rate
3.4%
Growth rate of state grant from FY2000 to FY2001
26.5%
Capacity building grants total based on prior year
$3.2 million
state set-side times growth rate of overall grant minus
(23.1% of $13.7 million)
inflation (26.5% – 3.4% = 23.1%)
Substate Formula
After the state set asides and the amount (if any) for capacity building grants are
removed, the remainder of the state grant is distributed to LEAs based on a formula
similar to the state formula. Once the trigger for the permanent formula went into
effect with FY2000 funding, states were required to use a similar substate formula.
The base grant is calculated for the year prior to the year in which the permanent
formula became effective (i.e., FY1999). These are not the actual FY99 LEA grants
but grant amounts that would have been made if the state allocated 75% of its total
grant that year. Thus these base grants will be somewhat higher than the actual FY99
LEA grants. Of the remainder, 85% is distributed based on LEAs shares of total
public and private school enrollments. The remaining 15% is distributed based on
shares of their “numbers of children living in poverty, as determined by the SEA.”
Unlike the state formula there are no minimum or maximum grant amounts for
LEAs.
Preschool State Grant Formula
Section 619 of IDEA authorizes state grants for services to children with
disabilities ages 3 to 5. Since the Part B grants to states program also permits
funding services for preschool children with disabilities, Section 619 is not so much
a separate IDEA program as a source of additional funds for this age group.12
The preschool formula (in Section 619) is similar to the grants to states formula
except:
! It went into effect immediately in FY1998 after the 1997
Amendments became effective. No appropriations trigger had to be
reached, as was the case with the grants to states formula.
! The base grant for each state is the FY1997 grant.
12 For further information on the IDEA preschool program, see CRS Report RL31273,
Individuals with Disabilities Education Act (IDEA): Early Childhood Programs (Section
619 and Part C), by Richard N. Apling.

CRS-16
! The remaining funds are distributed based 85% on states’ shares of
total population ages 3 to 5 and 15% on shares of those in that age
group living in poverty.
! The minimum and maximum grant provisions are similar to the
grants to states formula, except that the 40% maximum grant does
not apply.
! State reserves and the substate formula are similar except there is no
capacity building grant provision.
In practice, as Table 7 shows, the formula does not make much difference,
because appropriations have changed very little since 1997 (when funding was
$360.4 million) and not at all for the last 3 fiscal years (which have been level funded
at $390 million). So most of the grant is based on what was received in FY1997 —
amounts that are not adjusted for changes in children with disabilities or changes in
population.
Table 7. Recent State Allocations for the IDEA Preschool Program
(Section 619)
2000
2001
2002
% Change
State
Allocations
Allocations
Allocations
from 2001
Alabama
$5,730,375
$5,730,375
$5,730,375
0.0%
Alaska
1,294,380
1,294,380
1,294,380
0.0%
Arizona
5,545,066
5,545,066
5,545,066
0.0%
Arkansas
5,479,110
5,479,110
5,479,110
0.0%
California
39,848,701
39,848,701
39,848,701
0.0%
Colorado
5,073,769
5,073,769
5,073,769
0.0%
Connecticut
5,009,888
5,009,888
5,009,888
0.0%
Delaware
1,287,906
1,287,906
1,287,906
0.0%
District of Columbia
253,905
253,905
253,905
0.0%
Florida
18,917,454
18,917,454 18,917,454
0.0%
Georgia
10,077,250
10,077,250
10,077,250
0.0%
Hawaii
1,036,577
1,036,577
1,036,577
0.0%
Idaho
2,233,491
2,233,491
2,233,491
0.0%
Illinois
18,041,307
18,041,307
18,041,307
0.0%
Indiana
9,088,983
9,088,983
9,088,983
0.0%
Iowa
4,077,008
4,077,008
4,077,008
0.0%
Kansas
4,426,665
4,426,665
4,426,665
0.0%
Kentucky
10,431,998
10,431,998
10,431,998
0.0%
Louisiana
6,628,385
6,628,385
6,628,385
0.0%
Maine
2,567,159
2,567,159
2,567,159
0.0%
Maryland
6,824,190
6,824,190
6,824,190
0.0%
Massachusetts
10,103,890
10,103,890
10,103,890
0.0%
Michigan
12,853,643
12,853,643
12,853,643
0.0%
Minnesota
7,587,477
7,587,477
7,587,477
0.0%
Mississippi
4,321,339
4,321,339
4,321,339
0.0%

CRS-17
2000
2001
2002
% Change
State
Allocations
Allocations
Allocations
from 2001
Missouri
6,171,495
6,171,495
6,171,495
0.0%
Montana
1,215,398
1,215,398
1,215,398
0.0%
Nebraska
2,306,907
2,306,907
2,306,907
0.0%
Nevada
2,312,229
2,312,229
2,312,229
0.0%
New Hampshire
1,591,180
1,591,180
1,591,180
0.0%
New Jersey
11,621,386
11,621,386
11,621,386
0.0%
New Mexico
3,256,045
3,256,045
3,256,045
0.0%
New York
34,473,989
34,473,989
34,473,989
0.0%
North Carolina
11,554,652
11,554,652
11,554,652
0.0%
North Dakota
839,536
839,536
839,536
0.0%
Ohio
12,874,725
12,874,725
12,874,725
0.0%
Oklahoma
3,760,076
3,760,076
3,760,076
0.0%
Oregon
3,960,512
3,960,512
3,960,512
0.0%
Pennsylvania
14,293,994
14,293,994
14,293,994
0.0%
Rhode Island
1,707,269
1,707,269
1,707,269
0.0%
South Carolina
7,293,431
7,293,431
7,293,431
0.0%
South Dakota
1,496,640
1,496,640
1,496,640
0.0%
Tennessee
7,049,034
7,049,034
7,049,034
0.0%
Texas
23,676,158
23,676,158
23,676,158
0.0%
Utah
3,647,879
3,647,879
3,647,879
0.0%
Vermont
892,952
892,952
892,952
0.0%
Virginia
9,323,245
9,323,245
9,323,245
0.0%
Washington
8,343,791
8,343,791
8,343,791
0.0%
West Virginia
3,558,432
3,558,432
3,558,432
0.0%
Wisconsin
9,674,989
9,674,989
9,674,989
0.0%
Wyoming
1,090,450
1,090,450
1,090,450
0.0%
American Samoa
0
0
0
0.0%
Guam
0
0
0
0.0%
Northern Mariana Islands
0
0
0
0.0%
Puerto Rico
3,273,690
3,273,690
3,273,690
0.0%
Virgin Islands
0
0
0
0.0%
Palau
0
0
0
0.0%
Marshall Islands
0
0
0
0.0%
Micronesia
0
0
0
0.0%
Indian Tribe Set Aside
0
0
0
0.0%
Other
0
0
0
0.0%
Total
$390,000,000
$390,000,000
$390,000,000
0.0%
Source: ED Budget Service.

CRS-18
Infants and Toddlers State Grant (Part C) Formula
The general purpose of Part C is to aid each state to create and maintain “a
statewide, comprehensive, coordinated, multidisciplinary, interagency system that
provides early intervention services for infants and toddlers with disabilities and their
families.”13 The Part C formula differs from and is less complex than the Part B
formulas. After setting aside funds for outlying areas and Indian tribes, remaining
funds appropriated for Part C are distributed based on states’ share of infants and
toddlers — i.e., total population below the age of 3. There is a one-half percent
minimum state grant amount. Table 8 shows recent state allocations.
Table 8. Recent State Allocations for the IDEA Infants and
Toddlers Program (Part C)
2000
2001
2002
% Change
State
Allocations
Allocations
Allocations
from 2001
Alabama
$5,442,925
$5,567,271
$6,063,339
8.9%
Alaska
1,836,562
1,878,520
2,043,288
8.8%
Arizona
7,163,113
7,326,758
7,868,896
7.4%
Arkansas
3,300,402
3,375,801
3,716,598
10.1%
California
45,929,796
46,979,082
49,954,044
6.3%
Colorado
5,377,332
5,500,179
6,132,874
11.5%
Connecticut
3,992,165
4,083,368
4,478,645
9.7%
Delaware
1,836,562
1,878,520
2,043,288
8.8%
District of Columbia
1,836,562
1,878,520
2,043,288
8.8%
Florida
17,645,688
18,048,811
19,235,683
6.6%
Georgia
10,918,523
11,167,962
12,265,577
9.8%
Hawaii
1,836,562
1,878,520
2,043,288
8.8%
Idaho
1,836,562
1,878,520
2,043,288
8.8%
Illinois
16,151,859
16,520,855
17,822,071
7.9%
Indiana
7,655,126
7,830,010
8,666,617
10.7%
Iowa
3,369,461
3,446,438
3,851,252
11.7%
Kansas
3,433,291
3,511,726
3,884,393
10.6%
Kentucky
4,812,022
4,921,954
5,461,452
11.0%
Louisiana
5,894,220
6,028,876
6,549,059
8.6%
Maine
1,836,562
1,878,520
2,043,288
8.8%
Maryland
6,413,677
6,560,200
7,162,997
9.2%
Massachusetts
7,269,022
7,435,086
8,078,494
8.7%
Michigan
12,028,661
12,303,461
13,646,869
10.9%
Minnesota
5,931,008
6,066,505
6,710,076
10.6%
Mississippi
3,786,753
3,873,263
4,213,822
8.8%
Missouri
6,722,152
6,875,722
7,568,706
10.1%
Montana
1,836,562
1,878,520
2,043,288
8.8%
Nebraska
2,120,927
2,169,380
2,400,219
10.6%
13 Section 631(b)(1).

CRS-19
2000
2001
2002
% Change
State
Allocations
Allocations
Allocations
from 2001
Nevada
2,652,976
2,713,585
2,970,642
9.5%
New Hampshire
1,836,562
1,878,520
2,043,288
8.8%
New Jersey
9,965,995
10,193,673
11,405,544
11.9%
New Mexico
2,442,953
2,498,764
2,682,058
7.3%
New York
22,320,520
22,830,440
25,063,710
9.8%
North Carolina
9,991,552
10,219,813
11,179,579
9.4%
North Dakota
1,836,562
1,878,520
2,043,288
8.8%
Ohio
13,648,077
13,959,873
15,361,800
10.0%
Oklahoma
4,398,814
4,499,306
4,901,951
8.9%
Oregon
4,068,712
4,161,663
4,544,414
9.2%
Pennsylvania
13,016,152
13,313,512
14,662,818
10.1%
Rhode Island
1,836,562
1,878,520
2,043,288
8.8%
South Carolina
4,752,400
4,860,970
5,456,933
12.3%
South Dakota
1,836,562
1,878,520
2,043,288
8.8%
Tennessee
6,863,518
7,020,318
7,697,334
9.6%
Texas
30,671,586
31,372,291
33,464,547
6.7%
Utah
3,997,116
4,088,432
4,423,421
8.2%
Vermont
1,836,562
1,878,520
2,043,288
8.8%
Virginia
8,373,127
8,564,414
9,470,434
10.6%
Washington
7,217,290
7,382,172
8,061,958
9.2%
West Virginia
1,836,562
1,878,520
2,068,052
10.1%
Wisconsin
6,078,934
6,217,810
6,961,718
12.0%
Wyoming
1,836,562
1,878,520
2,043,288
8.8%
American Samoa
589,812
603,278
616,106
2.1%
Guam
1,306,168
1,335,989
1,364,398
2.1%
Northern Mariana Islands
392,577
401,540
410,078
2.1%
Puerto Rico
5,782,773
5,914,883
5,986,306
1.2%
Virgin Islands
769,327
786,891
803,624
2.1%
Palau
0
0
0
0.0%
Marshall Islands
0
0
0
0.0%
Micronesia
0
0
0
0.0%
Indian Tribe Set Aside
4,629,630
4,735,395
5,148,148
8.7%
Other
0
0
0
0.0%
Total
$375,000,000
$383,567,000
$417,000,000
8.7%
Source: ED Budget Service.

CRS-20
Maximum Funding Under Part B Grants to States
Background, History, and Rationale. In 1975 when the current version
of federal involvement in special education began,14 Congress wanted to guarantee
the rights of children with disabilities to a free appropriate public education and to
help pay for the additional cost of this education. At that time, it was thought that on
average these children were twice as expensive to educate as were other children.
Congress wanted to pay some of this additional or excess cost — not the cost
associated with educating all children but the additional cost of educating children
with disabilities. The national average per pupil expenditure (APPE) was taken as
the measure of total excess cost. The final compromise in 1975 was for the federal
government to pay up to 40% of this excess cost or 40% of the national APPE.
Specifically the Act stipulates that a state’s maximum grant is 40% of the national
APPE times the number of children with disabilities served. Full funding of IDEA
Part B grants to states is determined by summing up all the states’ maximum grants.15
For FY2002 that amount was about $18.2 billion. It is important to note that these
estimates change — usually they go up, because the estimate of APPE and of the
child count are revised from time to time to reflect estimates of increased costs and
estimated increases in number of children served.16
Recent Full-Funding Proposals. In recent years, Congress has been
concerned about funding for special education. This concern can be seen in the
substantial increase in funding of the grants to states program, from $2.3 billion in
FY1996 to $7.5 billion in FY2002 (more than a 200% increase). Despite recent
increases, some Members of Congress have also been concerned that appropriations
are still far from providing full funding, i.e., maximum state grants authorized by the
statute. As a result, Congress has taken various actions. For example, resolutions
have been passed calling for full funding.17 Bills have been introduced to specify
authorization levels linked to full funding.18 Floor amendments have been offered
to shift appropriations from other education programs into IDEA funding.19
The Senate-passed version of H.R.1, which became the No Child Left Behind
Act, reauthorizing the Elementary and Secondary Education Act (ESEA), contained
14 For a discussion of congressional intent with respect to the 1975 Act, see CRS Report 95-
669, The Individuals with Disabilities Education Act: Congressional Intent, by Nancy L.
Jones.
15 It is important to remember that the maximum funding provision is relevant only to Part
B grants to states. There is no ‘full funding’ amount for the two other block grants.
16 For additional information on IDEA full funding, see CRS Report RL30810, Individuals
with Disabilities Education Act (IDEA): Issues Regarding “Full Funding” of Part B Grants
to States, and CRS Report 97-433, Individuals with Disabilities Education Act (IDEA): Full
Funding of State Formula, both by Richard N. Apling.
17 For example, see H.Con.Res. 84 in the 106th Congress.
18 For example, see S. 496 and H.R. 214 in the 107th Congress. Note that Section 611(j) of
current law would permit full funding to be appropriated at any time.
19 For example, see H.Amdt. 758 to H.R. 4577 The Consolidation Appropriations Act of
2001.

CRS-21
an amendment to IDEA that would not only have authorized estimated full funding
but would have appropriated specific amounts. The so-called Harkin-Hagel
amendment would have increased grants to states funding by $2.5 billion per year
beginning in FY2002 until estimated full funding was reached in FY2007. For the
next 4 years (through FY2011), the amendment would have appropriated estimated
full funding amounts. Beginning in FY2012, the bill would have authorized such
sums as may be necessary without appropriating funds.
The final conference report (H.Rept. 107-334), which was agreed to by both the
House and the Senate and signed by the President (P.L. 107-110) did not contain this
amendment to IDEA. Debate in the House and Senate outlined reasons for dropping
the amendment, with the intent to revisit the issue in the context of reauthorizing
IDEA. For example, Representative Roukema noted the following:
One of the major hurdles in this Conference was the issue of full funding of the
Individuals with Disabilities Act (IDEA). Everyone agrees that the federal
government is failing to pay its fair share of the costs of special education and
all sides agree on the need for more money for students with disabilities. The
problem is that this bill is not the appropriate vehicle to address the IDEA
funding problem because funding and reform must be linked.20
In the Senate, Senator Gregg maintained:
There has been some discussion — and I alluded to not agreeing with my
colleague on some of his opening statement — there has been some discussion
on the issue of IDEA. This is another area that needs significant attention. But
the bill we are dealing with today deals with the low-income child and the Title
I program, which is the most significant Federal program in the area of
elementary and secondary school education.
IDEA and special education is a separate issue and should be dealt with as a
separate issue because the IDEA issues are equally complex, maybe narrower,
maybe not as many, but certainly equally as complex and intensely felt as the
title I issues — in fact, more intensely felt in many instances. To merge the two
and try to solve both of those issues at the same time would have been a mistake.
We have put off the IDEA funding issue and the other major questions dealing
with IDEA such as overidentification, especially of minority groups, issues
involving discipline, issues involving excessive attorneys fees, issues involving
excessive bureaucracy being forced on the school systems, issues involving
whether or not a special education child has a right to move out of a public
school and into a private school and the payment for those activities. All those
programmatic issues which are very intricate and very difficult to address should
be brought up in the context of a full IDEA reform and reauthorization which
will occur next year.21
Some Members listed the dropping of IDEA funding as a reason for voting
against the bill. The 2nd session of the 107th Congress considered “reforming and
20 Congressional Record Daily Version, no.173, December 13, 2001. p. H10090.
21 Congressional Record Daily Version, no.175, December 17, 2001. p. S13327.

CRS-22
reauthorizing” IDEA. Both the House and the Senate held hearings, and a
presidential commission made recommendations.22 No other action was completed
during the 107th Congress. Although some Members disagree on how much IDEA
needs to be changed,23 Congress is likely to continue considering IDEA funding and
other issues.
Possible Unintended Consequences of Full Funding. As Congress
debates IDEA funding issues, it is important to realize that providing funds for
maximum allowable state grants (i.e., fully funding IDEA Part B grants to states)
may have some unanticipated and unintended consequences. What follows is a
discussion of some possible results of full funding.
Determining Full-Funding Amounts in Future Years. As noted above,
the Senate amendment in H.R. 1 would have appropriated specific funds under
Section 611(j). The amendment would have increased IDEA Part B grants-to-states
appropriations by $2.5 billion per year until an estimated full-funding amount was
reached in FY2007. Beginning in that fiscal year through FY2011, the Senate
amendment would have appropriated specified amounts that were estimated to be full
funding for those fiscal years. Those amounts apparently were based on estimates
made by the U.S. Department of Education (ED) in late 2000 or early 2001. By the
end of 2001, new ED estimates were available for those fiscal years, which indicated
that the H.R. 1 appropriations would have been slightly short of full funding
(approximately 38% of APPE rather than 40%). If a future bill followed the same
strategy of appropriating specific amounts based on estimated full-funding totals,
similar results could occur.
Set-Asides from Total Appropriations. If funds are appropriated under
Subsection 611(j) (as the Senate version of H.R. 1 would have done), set asides for
outlying areas, BIA, and evaluation would come ‘off the top.’ This could raise two
problems. First, slightly less than the full-funding amount would be distributed to
states. Thus states would receive slightly less than their maximum grants. Second,
if current percentages were applied, very large amounts would go to BIA and could
go to outlying areas. Some, including ED, argue that these funds could not be
absorbed and could result in excessive amounts per pupil being provided. For
example, if the FY2001 full funding amount of $17.8 billion had been provided,
application of the statutory percentage would have allotted nearly $226 million to the
Department of the Interior for the BIA. Based on a child count of approximately
13,000 children with disabilities attending BIA schools,24 this would have amounted
to more than $17,000 per child; whereas the per child amount provided to states
would have been about $2,800 (40% of the national APPE of $7,006). Based on a
similar concern given the FY2002 increase in appropriations, ED apparently
22 For further information on the President’s Commission on Excellence in Special
Education (PCESE) see the Commission’s web site at
[http://www.ed.gov/inits/commissionsboards/whspecialeducation/index.html].
23 See Kildee Castle, “Split on Scope of IDEA Changes,” Education Daily, v. 35, no. 84,
May 3, 2002, p.1.
24 ED’s 23rd Annual Report to Congress on the Implementation of IDEA, Table AA1; data
for school year 1999-2000.

CRS-23
persuaded the Congress to override this required percentage through appropriations
language and determine the FY2002 amount for BIA by increasing the FY2001 by
the rate of inflation.
Incentive to Over-Identify Children with Disabilities. Full funding is
based on providing each state with its maximum allowable grant, which, as noted
above, the Act specifies as 40% of the national average per pupil expenditures times
the number of children with disabilities served. When funds were distributed based
on numbers of children with disabilities (the ‘interim’ formula in effect until FY2000
when the ‘permanent’ formula based on population and poverty went into effect),
there was a limit on how many children could be counted for the purpose of the
formula (but not on how many are served). Prior to the 1997 amendments, the Act
required that, for the purposes of allocations, children with disabilities ages 3 to 17
could represent no more than 12% of a state’s total population in that age group. In
1997, this provision was not included; however cross-reference to the prior law was
made with respect to the ‘interim’ formula. Apparently this reference does not apply
to the maximum grant provision. Thus there is currently no limit on how many
children with disabilities states could count for the purpose of determining full
funding. This could encourage ‘over identification,’ which both the previous Act
(under the 12% requirement) and current law (under the ‘census’ based ‘permanent’
formula) seek to avoid.
Constraints on Growth Rates. As appropriations for the grants-to-states
program grow, the ‘permanent’ formula constrains the growth rate for all states. If
the overall appropriation grows by more than 15%, state growth rates will fall within
a band between 1.5 percentage points below the overall growth rate25 and 1.5%
percentage points above the overall growth rate. These constraints are likely to cause
problems if (a) appropriations were to grow at a high rate from one year to the next
(for example, if Congress were to appropriate the estimated full funding amount all
in one year, rather than moving toward full funding in increments, as the Senate
version of H.R. 1 would have done), and (b) in the year in which full funding is
reached, even under an incremental approach (such as, increases of $2.5 billion per
year, as under the Senate version of H.R. 1).
For example, suppose total appropriations were required to grow by 10% to
reach full funding, even after several years of significant increases. Some states
would be very close (or even at) full funding in the prior year because, over time,
they had been receiving the higher growth rate (the 1.5 percentage points above the
total growth rate of the appropriations). Thus these states might need to increase by
only 2% or 3% to reach their maximum grants. But the minimum they could increase
would be 9.0% (10% times 90% = 9.0%), which would provide a grant higher than
the maximum grant provision would permit. Other states (those that had been
perennially receiving the lowest growth rate — the 1.5% percentage points below the
overall growth rate in appropriations) would have to increase by considerably more
than 10% to reach their maximum grants. However, the current formula limits their
growth rate to 11.5% (10% + 1.5%). One result of these problems would be that ED
25 If overall growth is less than 15%, the minimum growth rate for a state’s grant is 90% of
the overall growth rate.

CRS-24
would be unable legally to distribute all of the funds appropriated. In addition,
although sufficient funds would have been appropriated to provide maximum grants
(i.e., full funding) for all states, some could not receive the full amount because of
formula constraints.
Differential Benefits Among States. The full-funding provision reflects
congressional intent to provide up to 40% of the additional or excess cost of
providing special education and related services to children with disabilities. The
proxy for excess cost is the national APPE. However, state APPEs (and presumably
the excess costs of special education) vary widely. Thus provision of full funding
could result in providing substantially more than 40% of the excess cost in some
(lower cost) states and substantially less than 40% of the excess cost in other (higher
cost) states.
Diminishing Sliver Grants. Once full funding is reached, the local
improvement grants (the sliver grants–described above) could become modest or
disappear for some states because these grants are based on the difference between
the growth rate of the overall state grant and the rate of inflation. In the years prior
to reaching full funding, Part B appropriations presumably would be growing rapidly
— outpacing inflation and ensuring relatively large amounts for sliver grants. Once
full funding is reached, appropriations (if based on full funding) would grow more
slowly, because full funding is partially based on APPE, which in turn grows at rates
related to inflation. In some smaller states, the state could opt not to provide any
sliver grants at all if the total available is less than $100,000. In other states, the
amount available could be relatively modest.
Possible LEA-Level Consequences. Even when full funding for state
grants is reached, grants to LEAs will continue to be determined by the current
substate formula described above. The resulting substate distributions could have
several consequences at the local level. First of all, there is no maximum grant
provision for the substate formula. Thus some LEAs could receive amounts that are
greater than 40% of APPE; others could receive grants that amount to less than 40%
of APPE. Since the substate formula is based mainly on overall enrollment and does
not reflect local expenditures, some LEAs with lower incidences of children with
disabilities or lower costs could receive more funding than they can spend — for
example, more than the excess cost of providing FAPE might be covered. Since
there is a reallocation procedure in the Act (Section 611(g)(4)), which allows states
to redistribute funds if an LEA does not need all the IDEA money to ensure FAPE
for all children with disabilities, this may not become a problem if states exercise this
provision properly.
In addition, current law has state and local fiscal requirements to ensure that
maintenance of effort (MOE) for special education is preserved from year to year and
that the federal funds supplement, not supplant, state and local special education
funding. If the intent of Congress in providing full funding is to ‘free up’ state and
local special education funding for other purposes, these fiscal provisions could
prevent this from happening.