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Texas school leaders are hopeful that a pair of bills making their way through the state legislature could help to close an estimated $1.7 billion special education funding gap and better equip schools to handle a dramatic rise in the number of children with disabilities in need of services. 

The measures are intended to address several longstanding issues that have plagued the state’s special education system. Since the 2015-16 school year, the number of students receiving services has increased by 67%, rising from 463,000 to 775,000. 

Funding has not increased proportionally, meaning schools must divert ever-increasing amounts of their overall budgets to make up the shortfall. Between the 2015-16 and 2023-24 school years, spending on special education increased from $5.6 billion to $9.1 billion.

In 2016, a Houston Chronicle investigation revealed that for years, the Texas Education Agency had improperly denied services to hundreds of thousands of children by imposing a cap on the number of special ed students districts could serve. Over the last decade, the rate at which Texas schools have identified children with disabilities has risen from 8.6% to about 14% — still slightly shy of the national average. 

Districts have scrambled to meet their legal obligation to identify students who started school over the last decade and should have been evaluated for services before the cap was eliminated. In 2015-16, Texas schools evaluated 80,000 children. In 2023-24, 180,000 were assessed. State education officials estimate each evaluation costs $1,000 to $5,000. 

Also adding to the increase: To better comply with the federal Individuals with Disabilities in Education Act, Texas now includes children with dyslexia in special education — adding to the number of students who need evaluations and individualized education programs, the legally mandated documents that spell out how their needs will be met.

Among numerous changes to education funding, House Bill 2 would increase special education funding by $615 million annually starting in the next school year. Senate Bill 568 does not set a dollar amount, but the latest budget measure contains an allocation of $700 million for both 2025-26 and 2026-27. 

The Senate bill proposes significant — and long sought — reforms to the way special education is funded and the expenses for which districts can seek reimbursement. Currently, districts’ special education funds are calculated based on the amount of time individual students spend in different settings, ranging from regular classrooms to specialized and segregated classes, hospitals and residential facilities. The proposed change — recommended by a state task force in 2022 — would allocate money according to the services each child needs. 

A number of states fund special education using weights or tiers that take into account the variation in services between students with multiple, profound challenges requiring full-time support and those whose needs can be met with simpler modifications to instruction, for example. 

Director of governmental relations for the Texas Council of Administrators of Special Education, Andrea Chevalier says her organization supports creating a tiered funding formula — which is based on weights adopted by Florida — but is concerned that the coming academic year is too soon for the new system to go into effect. Her organization would like the shift to be postponed for one year. 

“Our state education agency is kind of building the plane as it flies,” she says. “There are going to be a lot of changes to things like data collection. We’re going to have to see how it goes.” 

This month, the council released a detailed report outlining the history of the state’s shifting special education policies, the different revenue streams schools have depended on to pay for services and the rationale for moving to a tiered system. 

The measures would reimburse districts $250 to $1,000 for each initial evaluation but don’t allot funds for periodic reassessments required by law, says Chevalier: “At any given time, schools are re-evaluating a third of students, plus paying for independent evaluations for families who disagree with a district’s evaluation.”

The Senate bill contains a number of novel provisions intended to increase district accountability for special education students’ outcomes. If adopted, school boards would have to publicly discuss the performance of children with disabilities at least once a year and to track student progress on college, career or military readiness.

In 2003, Texas lawmakers slashed $1 billion from what was then a $30 billion overall education budget. The special ed cap was created the following year. Federal law says states and districts may only lower spending on special education in very narrow circumstances. 

State officials insisted fewer children needed disability services, but the U.S. Department of Education found Texas out of compliance in fiscal years 2012, 2017 and 2018, and levied fines each time. Lawmakers outlawed the enrollment caps in 2017 but did not send funds to schools to address the anticipated, corresponding increase in need. In the 2019 session, lawmakers approved a small increase in special education funding, much of it intended to cover the $277 million fine.

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