Jay P. Greene and Greg Forster, Center for Civic Innovation at the Manhattan Institute
December 2002
Reformers who want the upcoming reauthorization of the Individuals with Disabilities Education Act (IDEA) to focus on results rather than funding have a new piece of ammunition. The Manhattan Institute's prolific Jay Greene and Greg Forster have released a report arguing that the rapid rise in special education enrollments nationwide is largely due to perverse financial incentives created by the "bounty system" - whereby most states pay school districts more money for each student diagnosed with a disability. Greene and Forster reach their conclusion by examining the rates of special ed enrollment growth in states with and without the bounty system. Overall, they find that financial incentives account for 62 percent of the increase in special ed enrollments in bounty states during the 1990s. Interestingly, although nearly thirteen percent of all students are in special ed, enrollments for the most objectively diagnosed and expensive-to-treat disabilities have declined or remained flat over the past quarter century. The skyrocketing growth in special ed has been confined to the learning disability subcategory, which is least expensive to treat and most subjective to diagnose. The authors maintain that this is no coincidence. Their solutions? Dump the bounty system, have the federal government audit special ed placements (in districts with especially high or low enrollments of disabled kids) and provide vouchers to disabled students - a la Florida's McKay Scholarship Program - so that labeling a student "disabled" does not automatically translate to more money in school coffers. Just thirteen pages short, this report packs a powerful policy punch. You'll find it at http://www.manhattan-institute.org/html/cr_32.htm.
