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Arizona’s Special-Ed Pimlico
by Vicki Murray, The Goldwater Institute
25 August 2003

Arizona’s deeply flawed and racially discriminatory special education system can be reformed by eliminating the bounty funding formula and giving parents real options.

Like America’s horse of the moment, Seabiscuit, Arizona’s students may be underdogs, but they are not underachievers. In recently released Stanford 9 results, students surpassed national averages. Even students who have yet to cross the finish line are still very much in the race. And much credit is due to involved parents, committed principals, and dedicated teachers for encouraging children to perform.

Yet, as thousands of Arizona schoolchildren pull ahead, nearly one in three is falling behind. From 1992 to 1998, the Nation’s Report Card (NAEP) revealed that the achievement gap between white and Hispanic fourth grade reading scores was double the national average.

Research shows that if children do not receive proper reading instruction in the early grades, they will continue to fall further behind. This decline is even more pronounced among Arizona’s English language learners.

As of 1998, only 8 percent of Arizona’s Hispanic fourth graders were reading at or above proficiency levels. By fourth grade, Hispanic children wind up three years behind their white peers.

All too often, English language learners are placed in special education programs, not English instruction programs. In the case of Greenway Middle School, more than half of its ‘learning disabled’ population is Hispanic, and of these, 80 percent are English language learners, who are placed in special education programs where they typically receive little reading or English instruction.

Recent medical research by Dr. Reid Lyon of the National Institutes for Health found that with proper reading instruction in kindergarten through third grade, the number of students classified as learning disabled could be reduced by 70 percent. Nationwide, nearly two million children have preventable learning disabilities.

With so many English language learners mislabeled and placed in special education programs, their disability labels become self-fulfilling prophecies.

Such mislabeling may even threaten Hispanic children who are fluent in English and whose parents have been here for generations. This spring, the Goldwater Institute released a study by Dr. Matthew Ladner, which revealed that in predominantly white school districts, Hispanic children are 48 percent more likely to receive a disability label than in more racially integrated districts. White students, however, are 34 percent less likely to receive such a label.

Ladner found that race, rather than student poverty or low school spending, is the primary determining factor when assigning a disability label in Arizona’s predominantly white school districts. Behind this racial disparity are perverse financial incentives. Under Arizona’s special education “bounty funding formula,” the state pays school districts more money for each student classified as disabled. During the 1997 reauthorization of the Individuals with Disabilities Education Act (IDEA), Congress repudiated that system. Congress now distributes federal funds to the states in a lump sum based on a demographic profile to remove any perverse incentives to label children as disabled. Sixteen states have followed suit, but Arizona is not one of them.

Worse, Arizona law does not require that special education funds be used for special education programs.

Manhattan Institute education scholars Jay P. Greene and Greg Forster estimate that nearly 10 percent of Arizona’s disability labels are a result of the bounty system. That is, more than 8,400 students in Arizona have been wrongly classified as “learning disabled” because of financial incentives. Mislabeling costs the state an estimated $50 million each year, but the cost to mislabeled children is incalculable.

Seabiscuit was a challenging colt, so his handlers trained him to lose against more promising horses. But with proper training, Seabiscuit went to Pimlico and beat Triple Crown winner War Admiral.

In Arizona, 1,170 disabled students currently attend private schools at public expense to get the proper education—but only if a district consents, or if parents can afford to hire an attorney and sue for private placement.

Florida’s McKay Scholarship Program, however, gives all special needs children the option to attend another school, without additional budgetary costs or lawyers. And, the risk of losing students (and their per-pupil funding) forces districts to think twice before “gaming” the special education system.

No Arizona child should be relegated to the status of track trotter. By reforming the bounty funding system, and giving parents real options, we can give every child a chance to compete for the winner’s circle.

Vicki Murray, Ph.D., is education policy analyst with the Goldwater Insitute, a Phoenix-based policy research organization.

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