Funding Special Education by Capitation: Evidence from State Finance Reforms

Elizabeth Dhuey and Stephen Lipscomb (slipscomb@mathematica-mpr.com)
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Stephen Lipscomb: Mathematica Policy Research, Inc., Cambridge, MA

Education Finance and Policy, 2011, vol. 6, issue 2, 168-201

Abstract: This study examines responses to state capitation policies for special education finance between 1991–92 and 2003–4. Capitation refers to distributing funds based on the entire student enrollment. We find that disability rates tended to fall following capitation reforms, primarily in subjectively diagnosed categories and in early and late grades. The association appears immediately in less severe categories but gradually in severe categories. More frequent program exiting partly accounts for falling disability rates among high school students. Capitation also is associated with a rising local share and a falling state share of funding. The evidence supports an increased use of outside school placements among severe disabilities, consistent with an incentive-based response. We find weaker evidence of a relationship between capitation and higher request rates for dispute resolution. Finally, we present evidence of differential effects based on both the pre-reform funding system and the presumed strength of the policy change. © 2011 Association for Education Finance and Policy

Keywords: special education; capitation; state finance reform; disability rates (search for similar items in EconPapers)
JEL-codes: I21 I22 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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