States Examine Costs of Classes for the Handicapped : Schools: A 17-year-old sacred cow is scrutinized in the light of looming deficits. Spending and enrollments have soared.

Budget problems are prompting many states to take a close look at special education--at its spiraling cost and its effectiveness.

The scrutiny is virtually unprecedented in the 17 years since Congress passed the Education for All Handicapped Children Act, entitling all youngsters to a “free, appropriate public education.”

With that mandate and steadfast political support from parents and lobbyists, special education in most states was held nearly sacrosanct even as other school programs came under the budget ax.

The question now is not whether the nation’s 4.6 million disabled school-aged children deserve equal opportunity to learn, even though their system costs more than regular schooling.

Some state education officials say that in the current economic climate, they fear a taxpayer backlash. Several states are considering cost-cutting measures, such as expanding class-size limits for the handicapped.

Other states, including Virginia, Kentucky, Iowa, California and New York, for the first time are compiling dropout and graduation rates to see whether their special-education programs are working.

Iowa is facing a $200-million shortfall and its legislators, alarmed over an $11-million special education deficit and the addition of 2,000 students to classes for the handicapped last year, are considering freezing that state’s special-ed budget at $250 million.

“I am anticipating a backlash and I’m trying to get ahead of the curve. I know there’s an increasing inquiry by legislators who are asking, ‘Why in the world are we seeing the increases in special ed?’ ” said William Lepley, Iowa’s education director, whose son was a special-ed student.

At least one governor--Pennsylvania’s Robert P. Casey--has spoken recently about putting the brakes on the cost of special education.

“State directors of special education are being asked to explain, defend, justify: How come? How come the numbers are so much bigger than last year?” said William Schipper, executive director of the National Assn. of State Directors of Special Education in Alexandria, Va.

Nationwide, handicapped enrollment has risen 24%, to about 4.6 million in 1988-89 (the latest school year for which federal statistics are available) from 3.7 million in 1976-77. Meanwhile, state, federal and local spending rose from about $5 billion in 1977 to $17 billion in 1986-87. Special education is expected to cost about $20 billion in the current school year.

Officials agree that the first wave of “crack babies,” youngsters suffering from congenital alcohol syndrome and other recently recognized limitations have added to special-education enrollment. Also, children with emotional problems stemming from crises in the home are winding up in special-ed classes.

Payroll costs are mounting as the 17-year-old special education system matures and teachers move up on the salary scale, administrators say.

Gov. Casey and others say that part of the expense is due to financial support systems that lack accountability and, in effect, reward school districts for placing the maximum number of children in classes for the handicapped.

Nearly 19% of Pennsylvania’s public-school enrollment is in special education, Casey said, compared to a nationwide average of about 12%.

In a recent study, the state directors group found that some states’ spending on special education has risen at a far faster rate than their spending on regular schooling.

From 1980 through 1988, Florida’s spending on all schooling rose 125.4% while special-ed spending was going up 210.2%, according to a report prepared for Congress by the state directors association.

During the same years, total education spending in New York rose 90.1% and special-education spending rose 186.4%. In Maryland, overall school spending rose 47.7% while special-ed costs were rising 135.8%. And in Massachusetts, overall education spending was up 47.7%, but special ed cost 135.8% more.

State officials insist that basic services will be preserved, but tight budgets have given rise to talk of enlarging classes for the handicapped and of teaching more and more special-ed children in regular classroom settings.

New York, facing a $6-billion deficit, is considering raising the limit on special-education class size from 12 to 15 pupils per class.

Frugality alone doesn’t account for the changes afoot in special education. The school reform movement has led regular and special-ed teachers to question the wisdom of placing the handicapped in separate “resource rooms” for instruction.

In Kentucky, where a year-old court order is forcing an overhaul of education, Linda Hargan, associate commissioner of the office of education for exceptional children, said it is likely that learning-disabled and mildly handicapped children will receive most or all of the extra help they need while in regular classes. Separate classes will be held only for severely disabled students.

“A lot of big-time players are looking at the efficacy of special education. It’s not just the researchers now, it’s elected officials and employment officials,” said Schipper.

Pennsylvania is facing a $300-million budget gap. Casey, a Democrat, warned that special education costs, now at $380 million, could rise by more than $1 billion in the next five years unless changes are made in the way funds are handled.

Casey says school districts have no incentive to hold down costs because special-ed expenses are fully reimbursed at the state level. He has proposed setting a limit on such reimbursements, beyond which individual districts will have to pay.

“The question isn’t why costs are so high, but why they’re growing at such an astronomical rate,” the governor said. “In some cases, we’re serving the same number of children.”

Iowa is in the third year of a wholesale restructuring of special education in 200 school districts, Lepley said. The plan is to allow the districts more flexibility in how special-ed funds are used, and to require proof that a disabled child cannot be taught in a regular classroom setting.

Bob Scalise, fiscal manager of New York state’s office of the education of children with handicapping conditions, said his state spends upwards of $3 billion a year on special education. Along with expanding classes, officials are considering cutting down the number of meetings held to develop individualized teaching plans for the handicapped and lifting the requirement that all candidates for special education receive psychological exams.