New Hampshire schools likely surpassed $1 billion in special education spending for the first time last year, though the final numbers are still rolling in.

As special education costs have steadily risen since the pandemic, state aid has stayed roughly steady. The result: local school districts are left to pick up the ever-increasing bills.

In the wake of a letter sent earlier this month informing school leaders of a significant drop in the rate of reimbursement for one form of state special education aid, district administrators in local school districts this week sounded the alarm on the likelihood of sizable increases to residents’ local property tax rates come next year.

The reason for those anticipated increases boils down to the state’s special education funding system, which is complicated. Here’s a primer on the four funding sources and the way in which they’re calculated.

Special education adequacy aid

What it is: An additional lump sum payment for every student in a school district who has an individualized learning plan, or IEP.

How it is calculated: In the 2022-23 school year, the additional payment was $2,100 per student. The total payment for a district is calculated by multiplying the average daily membership, or ADM, of students with IEPs by $2,100.

Percentage of special education funding: 7.1% in 2022-23.

Number of students: In 2022-23, the statewide average daily membership of students with IEPs was 30,963.11 students.

How has it changed in recent years: The payment has increased from $1,956.09 in 2017 to $2,300 in 2024. The percentage of special education costs that this payment stream covers has stayed roughly steady, decreasing from 7.66% in 2017 to 7.10% in 2023.

State aid reimbursement (formerly called “catastrophic aid”)

What it is: Additional state aid for students who require particularly costly services.

How it is calculated: The state theoretically covers 80% of expenses between 3.5 and 10 times the cost of the state’s average cost per pupil and all of expenses over 10 times that average cost. In the 2023-24 school year, the average cost per pupil was $20,323, so this type of aid only kicked in when a student’s services were greater than $71,130.50, and it is only totally covered for any expenses that surpass $203,230.

The catch, however, is that the state only covers the amount of money it apportions, and typically that apportionment is lower than the total costs school districts are eligible to be reimbursed for. For the 2023-24 school year, districts will receive reimbursement for 67.5% of eligible costs, or $33.9 million of $50.3 million.

Percentage of special education funding: 3.7% in 2022-23; expected to be lower in 2023-24.

Number of students: In 2023-24, there were 870 students whose services were eligible, which is 0.5% of all students in the state and 2.3% of students with IEPs.

How has it changed in recent years: The percentage of special education costs that this payment stream covers has stayed roughly steady, fluctuating between 3.0% and 4.2% between 2017 and 2023. It will likely drop in 2024 because the amount of money eligible for reimbursement grew significantly – from $40.0 million to $50.2 million – while the amount of available funds remained unchanged at $33.9 million.

Federal reimbursement

What it is: The federal government funds special education via the Individual with Disabilities Education Act (IDEA) and Medicaid.

How it is calculated: The amount districts receive via IDEA is calculated on the basis of formula that takes into account the number of students with IEPs the district had in 1998 when the formula was set, along with the students the district has now and the number under federal poverty levels. Medicaid is calculated based on certain qualified services provided.

Percentage of special education funding: 7.0% in 2022-23.

Number of students: This data is not readily available.

How has it changed in recent years: The percentage of special education costs that this payment stream covers has dropped 1.5 percentage points from 2019 to 2023.

Local property taxes

What it is: What you pay via the “local education” portion of your property taxes.

How it is calculated: Any expenses that are not covered by the funding streams above are covered via local property taxes.

Percentage of special education funding: 82.2%.

How has it changed in recent years: Between 2020 and 2023, the years for which data from all funding streams are available, the percentage covered by local property taxes has stayed relatively steady, fluctuating between 80.5% in 2021 and 82.2% in 2023. With the state aid reimbursement percentage expected to go down in 2024, this percentage will likely increase.

Jeremy Margolis can be contacted at jmargolis@cmonitor.com.