Fixing Special Education

Abstract

The current system of educating disabled students provides financial incentives to schools to overidentify students as disabled and underserve those that are identified. The incentive to overidentify is caused by providing schools with additional funds as more students are placed in special education categories that are ambiguous to diagnose and require relatively low additional expenditures to address. The incentive to underserve is caused by high information and transaction costs imposed on parents using the legal process to obtain desired services. An efficient alternative to the current system is to offer disabled students vouchers worth the cost of their education in public schools with which they can attend a private school if they wish. This article considers empirical analyses of the relationship between financial incentives and overidentification as well as the potential benefits of vouchers for special education. It concludes that vouchers for special education are a promising idea for improving the quality of education for disabled students while constraining growth in special education enrollments.

Notes

¹This cost estimate is based on an estimated additional expenditure per special education student of $5,918 in the 1999–2000 school year, calculated on behalf of the U.S. Department of Education by the Center for Special Education Finance. This figure represents spending on special education students over and above what is spent on regular students.