Flint, MI—Flint Community Schools has taken Genesee Intermediate School District to court over what they said is an illegal and unfair disbursement formula for special education funds.

FCS filed an objection in February, alleging that the current formula for how special education funds are doled out does not provide adequate financial support to Flint students with special education needs. Attorney Kendall Williams, who represented FCS at the hearing, proposed a new formula and called for change. GISD attorneys Lorie Steinhauer and Jeremy Chisholm argued the formula was legal and that GISD was under no obligation “to distribute funds at all.”

At present, the GISD Mandatory Plan allocates $3.8 million dollars of Act 18 Millage Funds to local districts for special education reimbursement. GISD distributes the money between its 21 districts and 14 charter schools based on a three-part, blended student formula:

  1. Total special education full-time equivalency (FTE)  headcount (or students who must be educated in a special education classroom for the majority of the school day).
  2. Total number of students who receive special education services (this includes special ed FTE and students who receive “push in and pull out” services, which means they are pulled out of general education classrooms for services, like speech therapy, and don’t spend the majority of their time at school in special education classrooms).
  3. Total student headcount adjusted for part-time enrollees (the general student body population).

Superintendent of GISD Lisa Hagel testified it was “equally important to reimburse” all three components of the formula, but Williams argued the formula favors districts with higher general student populations over those with the most need.

Courtesy of The Williams Firm

In the 2019-2020 academic year, FCS counted approximately 264 special education FTEs, a number disproportionately higher than any other school district in the county. Under the formula, FCS received 6.67% of the $3.8 million, a total of $253,456. In comparison, Grand Blanc Community Schools had 153 special education FTEs and received 12.89% of the $3.8 million, a total of $ 489,911. Grand Blanc’s total student population is double that of Flint’s.

Administrative Law Judge Michael St. John, who presided over the hearing, performed his own calculations to determine if the three components held equal dollar weight within the formula.  “It looks to me like Act 18 money under this formula is reimbursing the actual education of students in special ed classrooms at a rate of approximately 2% of the money, push-in and pull-out services at 11.5 % of the money, and [general population] at 85.5% of the money,” he said.

“That is the way the superintendents want the formula set up,” Hagel responded.

St. John said that while he was not an expert in special education, a special education funding formula that bases 85.5% of its total dollar amount on a school’s general student population seems unfair. “Does that seem unfair to you as an expert in special education?” he asked Hagel.

“No,” Hagel replied, “because it’s distributed equally to every district in the same manner.”

Flint Affected by Michigan’s Terrible Special Education Funding Model

Michigan uses a “percentage reimbursement approach” to help local districts supplement their special education costs, said Dr. David Arsen, a professor of education policy at Michigan State University who testified on behalf of FCS. Michigan reimburses local districts 28.6% of their total special education expenditures – one of the lowest special education reimbursement rates in the country. Local districts also receive 10% reimbursement at the federal level. The remaining special education costs, roughly 60%, must be paid by the local districts, Arsen said.

Under Proposal A, passed in 1994, local school districts cannot levy millages to pay for school operations, Arsen said. However, intermediate school districts can levy millages for special education funding and are required by law to help local districts provide special education services. How the funds are dispersed between local districts is at the discretion of the ISD.

In 2019-2020, FCS did not receive enough state or ISD funding to cover their special education costs. To make up this difference, FCS used $8.2 million from their general education funds.

“The ISD plan for special education violates no federal or state statute, rule or regulation. The plan was developed and established in cooperation with the constituent districts,” Chisholm said.

The GISD Mandatory Plan and Act 18 Revenue

Act 18 millage generates approximately $23.5 million in total revenue, of which $3.8 million is directed back to local districts. “Eighty-four percent of millage dollars go directly to center-based programs. The $23.5 million does not cover center-based program costs,” Associate Superintendent of GISD Steven Tunnicliff said during his testimony.

The GISD Mandatory Plan does allow for adjustments and changes to the formula. Superintendents of local districts can bring their concerns before the Superintendent Association at any of the monthly meetings, Hagel said.

Former Superintendent of FCS Derrick Lopez raised concerns but did not attend the meetings in December 2019 or January 2020 when the funding issue was scheduled for discussion. FCS has signed off on the plan, which defines the Act 18 special education formula, each year. It has not been modified since 2013.

Special Education Numbers Increase at Flint Community Schools

The special education state average is 11-13% of a district’s total student population. FCS’ numbers are 10% higher, said Melinda Carroll, director of learning support services for FCS. Over the past few years, Carroll has documented a decrease in student IQ levels, something she said she believes is due to lead poisoning.

“Special education needs increased by 10% in the last six years. Behaviors have become much more extreme. Particularly for students with sensory needs,” she said.

Students often run out of classrooms, shout random things and become physically aggressive with teachers, Superintendent of FCS Anita Steward said.

FCS has also seen a significant drop in the student population over the last several years. Seventy percent of school-aged children living in Flint attend schools outside of FCS. 200 of these students receive special education services within those districts.

FCS does not receive Act 18 funding for transporting special ed students, but they are still responsible for the costs. “GISD invoices us for each student that’s transported,” Executive Director of Finance for FCS Carrie Sekelsky said. For the 2019-2020 school year, the total bill was around $380,000, she said.

Hagel said that Flint’s high special education FTEs is a matter of programming. “Charter schools are trying not to put their children in special ed all day, that’s why their numbers are so small. Their programming is completely opposite of what Flint is doing. Flint is putting their children in special ed longer hours of the day…if your programming is such that you’re putting children in special ed for so many hours it costs you tons of money. That’s the whole problem here.”

A ‘Criminal’ New Formula

 At the hearing, Williams proposed a new formula based solely on special education FTE. If adopted, each special education FTE student would receive the same amount of dollars, $2,663 per head. Applying this formula to the 2019-2020 school year, FCS would have received a total of $705,125 in special education funding (instead of $253,456, the amount they actually received).

Courtesy of the Williams Firm

“Seventy percent [of districts] will stand to lose money under the Flint plan and that doesn’t include PSAs. It’s absolutely criminal to do that. Every child in this county is equally important,” Hagel said.

GISD counsel argued that Flint’s proposed formula incentivizes districts to keep special education students in more restrictive environments to secure more funding.

“We did the most that we could do,” Williams said following the hearing. “We have to make arguments that these are the reasons why we believe this type of unfair formula in the mandatory plan is illegal.”

Act 18 does not require that funds be distributed according to a “plan that is deemed ‘best’ or ‘fairest’ by either Mr. Williams or anybody else,” Chisholm said.

In his final remarks, St. John said he believed that the formula wasn’t fair but reminded the court that what’s fair and what’s legal are different concepts and rarely coincide.

The judge will submit his recommendation to State Secretary Michael Rice in late August. Rice will make the final decision as to whether the formula is illegal or requires revision in early September.

Carmen Nesbitt is a journalist with diverse experience in news reporting and feature writing. She wrote for Hour Detroit and SEEN Magazine before joining the Flint Beat news team as an education and public...