The Individuals with Disabilities Education Act (IDEA) is one of the biggest drivers of what Vermont spends on schools—and one of the least understood.
IDEA guarantees students with disabilities a “free appropriate public education,” or FAPE. It also comes with a funding promise from Congress that has never been kept. The result is that local and state taxpayers, including Vermonters, pick up far more of the bill than federal law originally implied.
This piece looks at how IDEA and FAPE work, where the famous “40 percent pledge” came from, how far short reality falls, and what Vermont could do to better track and categorize costs—and push its federal delegation to shoulder more of the load.
What IDEA and FAPE Actually Require
IDEA is a federal grants law. In exchange for federal special education dollars, states must agree to provide FAPE to eligible children with disabilities. FAPE is defined as specially designed instruction and related services, provided at no cost to parents, that meet the child’s unique needs and follow an individualized education program (IEP).
In practice, that means specialized instruction, paraeducators and classroom aides, therapies such as speech and occupational therapy, behavioral and mental-health supports, and sometimes high-cost out-of-district or residential placements.
These services must be delivered if the IEP team determines they are necessary. The law does not say “if the district can afford it this year.” FAPE is a civil-rights obligation, not a budget option.
The 40 Percent Promise—and the Reality
When Congress first created this framework in 1975 (under an earlier name, the Education for All Handicapped Children Act), it authorized the federal government to pay up to 40 percent of the excess cost of educating students with disabilities. That intent was carried into IDEA as a ceiling for federal grants.
“Excess cost” is the additional cost of special education and related services above what a district already spends, on average, to educate a typical student.
In other words, Congress didn’t promise to cover 40 percent of all school spending. It promised to cover up to 40 percent of the extra costs created by disabilities.
Nearly 50 years later, federal appropriations have never reached that level. Analyses by national education groups and disability advocates put the current federal share at roughly 10–12 percent of those excess costs, less than one-third of the original target.
The gap between 40 percent and 10–12 percent is made up by states and local districts—often through property taxes.
The Consequences for Vermont
Take Rutland Northeast Supervisory Union’s FY27 budget as an example. The district is spending $9.2 million on special education—64 percent of its entire $14.4 million budget. Federal IDEA funding? Just under $700,000, or 7.6 percent of special education costs.
Vermont property taxpayers are covering the remaining $8.5 million. And that’s just one supervisory union.
The district employs 30 paraeducators in special education alone, plus speech therapists, psychologists, and specialized transportation staff totaling more than 90 full-time positions—75 percent of all staff.
Special education costs are also volatile. A small rural district that adds just a few students requiring intensive services or out-of-district placements can see hundreds of thousands of dollars in new obligations in a single year. With federal support stuck around 7–10 percent, those spikes are largely absorbed by Vermont’s Education Fund and, ultimately, property taxpayers.
A Blurry Picture of What Support Staff Actually Do
The financial story is complicated by the way work is labeled inside schools.
On paper, Vermont districts report staff under broad categories: special educators, paraeducators, behavior interventionists, school nurses, therapists. At the state level, budgets are coded by function such as “special education instruction” or “student support services.”
But in day-to-day practice, especially in small systems, many of the adults assigned to students with disabilities are doing hybrid work. A paraeducator may spend part of the day helping with reading or math, part de-escalating behavior or preventing elopement, and part assisting with feeding, toileting or medical monitoring.
Some of that is clearly instructional. Some looks more like behavioral health. Some is essentially long-term care delivered in a school building.
Vermont does not currently publish detailed statewide data that break paraeducator and related-service time into those functional categories. Most of the fine-grained logging that does exist sits in IEP and Medicaid billing systems, where staff record billable therapy minutes or nursing services for eligible students, not a full time-use picture.
Rutland Northeast’s budget notes provide a telling example: the district is “moving 4.0 Success Suite Behavior Interventionist positions to Medicaid funding.” That’s not gaming the system—that’s honest accounting of work that was always healthcare, not education.
That makes it hard to answer basic questions such as: How much of what we call “special education spending” is truly instruction, and how much is health care, behavior support or custodial care?
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Why Better Data and Recategorization Could Matter
Vermont law already directs supervisory unions to “maximize” Medicaid reimbursement for health-related services (16 V.S.A. § 2959a). But without clear data on what special education staff actually spend their time doing, it’s impossible to know whether schools are capturing all available Medicaid dollars—or whether some healthcare work is being funded through education budgets by default.
One step would be a time-use study in a sample of districts: Define categories such as instructional support, behavioral/mental-health, medical/care, and therapy support. Ask paraeducators and related staff to log their work by category over a representative period. Aggregate the results at the district and statewide level.
That information would allow policymakers to recategorize costs more accurately—distinguishing education from health and long-term care functions; target additional Medicaid billing for services that are genuinely medical or therapeutic and currently under-billed; and design statewide cost-sharing pools so that the intensive, care-heavy cases are funded from a broader base rather than landing entirely on individual districts’ property-tax shoulders.
None of that changes IDEA’s core promise. Students would still be entitled to an appropriate public education at no cost to their families. But it could change which bucket pays for which type of work, and how risk is shared among districts and taxpayers.
What Vermont’s Federal Delegation Could Do
On the federal side, the most direct step is already on the table: fully funding IDEA as originally envisioned.
Members of Congress from both parties have repeatedly introduced versions of an IDEA Full Funding Act, most recently in 2023 and 2024, to convert IDEA grants into mandatory spending and gradually raise the federal share of excess costs to the full 40 percent authorization.
Those bills would not resolve every tension in Vermont’s system. But if enacted, they would substantially increase federal support for special education and reduce the amount that states and local districts must cover from their own sources.
For a state like Vermont, where education funding leans heavily on property taxes, that could translate into meaningful relief. If Rutland Northeast’s federal share rose from 7.6 percent to even 20 percent—still half the promised amount—that would shift roughly $1.1 million off local property taxpayers in that single district.
Beyond full funding, Vermont’s delegation could support federal guidance that explicitly encourages states to separate instructional and care-related costs in their accounting; press for simplified Medicaid rules for school-based services, reducing administrative barriers to billing for legitimate health and therapy work delivered in schools; and push oversight hearings that make the IDEA funding gap visible state by state.
The Bottom Line
IDEA and FAPE were landmark civil-rights advances, opening the doors of public education to students who had often been excluded entirely. But the way they were financed—federal promises at 40 percent, federal appropriations closer to 7–10 percent in Vermont—has left states and local property taxpayers to quietly fill the gap.
Vermont cannot change federal law on its own. It can, however, start by being more honest about what work is being done under the label “special education,” how much of it is truly teaching, and how much is care. That kind of clarity would make it easier to tap the right funding streams—and to argue, with data in hand, that Washington should finally pay the share it said it would.
Dave Soulia | FYIVT
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