Audit traces special education costs to poor oversight

The state’s lack of a clear definition for which children are eligible for help under the Felix consent decree is opening the floodgates for services and driving up costs, according to a report released yesterday by the state auditor.

While the report finds that the Department of Education and Department of Health have made significant progress in improving special-education services, its authors are highly critical of several areas, including faulty identification and inappropriate services for students, inconsistent cost reporting and lack of independent oversight.

The report comes at a time when lawmakers are asking hard questions about the mounting costs of special education, which are threatening to curtail other education and state programs. Hawai‘i’s spending on special education has increased about 500 percent since 1992. The price tag for the next two years is more than $700 million.

Auditor Marion Higa said the main concern is that the state still has no "working" definition of a "Felix-class" child, which leads to open-ended entitlement.

"In other words, there is no limit to what people can get in terms of services, what kinds of services and for how long," Higa said.

The result is higher costs for the state, she said.

The court-appointed monitor who is overseeing the state’s efforts to improve special-education services said the report found no evidence that children are being inappropriately identified. Ivor Groves also said Hawai‘i’s special-education system is changing so rapidly that the report already is outdated.

Driving the state’s spending is a federal court order — the Felix consent decree — that requires the state to improve by December its special-education services for children with mental disabilities. The state already has been found in contempt of court for failing to meet an earlier deadline.

The auditor’s report, prepared by consultants from the Center for the Study of Youth Policy at the University of Pennsylvania, finds Hawai‘i’s focus is on getting the consent decree lifted, meaning less concern about whether the services are effective and whether Felix children are making progress. In addition, it notes a lack of independent oversight on the quality of programs being put in place.

The audit also criticizes the two departments for not "consistently" reporting Felix costs. For example, it points out that the DOE mixes costs for Felix-class children with those for other special-education children.

"When all other services and special-education categories are put under the name of Felix, then you’re implying that anything and everything that people want must be funded — and that’s not so," Higa said.

Unclear perceptions

At a recent legislative briefing, lawmakers asked the department to break down the special-education budget request so they could see which costs went specifically for Felix-class children.

Groves said legislators tend to try to separate out Felix costs from other special-education costs in an attempt to keep the price tag down. But he said the state decided in 1994 that it could not fix Felix without fixing all of special education.

"I’m concerned with the amount of misconception that is out and about the impact of Felix," Groves said. "My perception is schools are better overall as a result of what Felix has wrought."

Doug Houck, who heads the DOE’s special-education program, said he couldn’t blame legislators for seeking ways to curtail the cost. The federal government has not provided the money it promised to help enforce its special-education law, he said, leaving states holding large bills.

But Houck said the consent decree and federal law require Hawai‘i to meet the needs of all special-needs students, not just those in the Felix class.

Reaching equity

State Schools Superintendent Paul LeMahieu has acknowledged concerns about the spiraling cost of Felix and the growing number of children identified as special education — from 13,000 in 1994 to nearly 23,000 today.

But he said that after years of neglecting children with special needs, Hawai‘i is only just reaching the national averages in spending and identification.

LeMahieu also disputed the report’s claim that the definition for Felix-class children does not work. The problem is that school staff need more training to make the correct diagnoses and recommend the best treatments, he said.

And while he believes there has been no misidentification of students, LeMahieu said some children have been getting services beyond what they need.

"There is a tendency to overtreat, to give too much," he said, resulting in higher costs and more intrusive remedies for children. The department is working on resolving those issues, he said.

In a written response to the report, LeMahieu and Health Department director Bruce Anderson and Attorney General Earl Anzai said the report was flawed because the consultants and auditor were not sufficiently qualified to review the areas involved.

Both state officials and the consultants agree on one thing, however: If the state fails to meet the court’s deadline a second time, the consequences could be dire.

U.S. District Court Judge David Ezra could appoint a monitor to take over parts of the education system, and that person would have a blank check to get the job done, Houck said. The judge also could divert any federal money coming into the state into special education.

What is the Felix decree?

The Felix consent decree stems from a 1993 federal class-action lawsuit for students, including Jennifer Felix of Maui, that accused the state of violating federal laws requiring adequate mental health, education and other services for special-needs children.

The decree, issued in 1994, requires the state Departments of Education and Department of Health to better identify special-education students in Hawai‘i who also need mental health services, and to treat and educate them in the "least-restrictive environment."

In May 2000, Ezra found the state in contempt for not improving services as he had ordered. The state now faces a December deadline.

Since 1994, the state has increased the number of special-education children from 13,000 to nearly 23,000, accounting for 12 percent of Hawai‘i’s student population. That is comparable to the percentage of special-education students in the nation’s 77 largest school districts.

[back to top]