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Cg, et al v. the Commonwealth of Pennsylvania Department of Education and

August 23, 2012

CG, ET AL., PLAINTIFFS
v.
THE COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF EDUCATION AND GERALD ZAHORCHAK, DEFENDANTS



The opinion of the court was delivered by: (Chief Judge Kane)

MEMORANDUM

The Court conducted a bench trial in the above captioned matter. The record is now closed, and the Court is prepared to render its judgment. This memorandum constitutes the Court's findings of fact and conclusions of law made pursuant to Rule 52 of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 52(a)(1).

I. PROCEDURAL BACKGROUND

Plaintiffs commenced this action in this Court on August 4, 2006, naming the Commonwealth of Pennsylvania Department of Education and its Secretary, Gerald Zahorchak, as Defendants. (Doc. No. 1.) Plaintiffs filed an amended complaint on September 1, 2006 alleging violations of: (1) the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq.; (2) Section 504 of the Rehabilitation Act ("Section 504"), 29 U.S.C. § 794; (3) Title II of the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101 et seq.; (4) the Equal Educational Opportunities Act of 1974 ("EEOA"), 20 U.S.C. § 1701 et seq.; and (5) the Due Process Clause of the Fourteenth Amendment, U.S. Const. amend. XIV. (Doc. No. 4.) Defendants filed a motion to dismiss, which the Court denied on February 25, 2008. (Doc. No. 31.) On November 3, 2008, the Court reconsidered the motion to dismiss and granted the motion as to Plaintiff G.J., concluding that Plaintiff G.J.'s claims must fail for lack of standing. (Doc. No. 55.) On September 29, 2009, the Court certified two classes in this matter. (Doc. No. 133.) The first class consists of special-needs students attending Pennsylvania school districts that have a seventeen percent or higher enrolled population of special-needs students and a market/value personal income ("MV/PI") ratio of .65 or greater. The second class consists of Limited English Proficiency ("LEP") special-needs students attending schools with a ten percent or greater population of LEP students.*fn1

On January 28, 2011, the Court granted in part and denied in part Defendants' motion for summary judgment and denied Plaintiffs' motion for summary judgment. (Doc. No. 190.) The Court held that insofar as Plaintiffs were pursuing relief against Defendant Zahorchak in his individual capacity, those claims were barred by the ADA and Section 504. In addition, the Court held that Plaintiffs' due process claim failed as a matter of law.

Trial in this matter was originally scheduled to commence on March 21, 2011. (Doc. No. 189.) However, during the pretrial conference, held on March 2, 2011, the Court continued trial and reopened discovery for the purpose of allowing Defendants to conduct depositions of some thirteen witnesses who were disclosed to Defendants for the first time in Plaintiffs' pretrial memorandum. (Doc. No. 206.) Following the close of the supplementary discovery period, the Court conducted a bench trial in the above captioned matter over the course of seven days between September 14, 2011, and September 23, 2011. The parties submitted amended proposed findings of law and conclusions of fact on January 23, 2012. (Doc. Nos. 276, 277.)

II. FINDINGS OF FACT

As was outlined briefly above, the instant matter is a class action suit challenging 24 P.S. § 25-2509.5, the Pennsylvania statute which apportions special education funding. Specifically, the classes of special education students allege that the funding formula results in an inequitable distribution of special education funds resulting in systemic violations of the IDEA, Section 504 of the Rehabilitation Act, the ADA, and EEOA. The following constitutes this Court's findings of fact.*fn2

A. Challenged Funding Formula

1. In accordance with the IDEA, the Commonwealth of Pennsylvania provides annual supplemental special education funding to school districts in the Commonwealth via a statutory subsidy. 24 P.S. § 25-2509.5.

2. During the 2009-2010 school year, this supplemental special education funding totaled approximately $1 billion. (Tr. at 745:2-5; Def. Ex. 91 cell 503N.)

3. In the 2000-2001 school year, the Commonwealth began implementing a "base/base supplement" formula to appropriate the supplemental special education funding. 24 P.S. § 25-2509.5(bb)-(zz).

4. The Pennsylvania supplemental special education funding formula consists of four parts: (1) a base amount; (2) a base supplement; (3) an inflation index supplement; and (4) a minimum percentage funding increase. See generally 24 P.S. § 25-2509.5(mm)-(zz).

5. The base amount is equal to the total amount received by the school district in the prior school year pursuant to the supplemental special education funding formula. See, e.g., 24 P.S. § 25-2509.5(zz)(1).

6. The base supplement amount is calculated by: (1) multiplying the district's MV/PI ratio by sixteen percent -- where sixteen percent represents the average enrollment of special education students across the Commonwealth -- of the school district's average daily membership for the prior school year; (2) multiplying the resulting product by the Commonwealth's total available supplemental funding; and (3) dividing that product by the sum of the products of the MV/PI ratio multiplied by sixteen percent of the average daily membership of all school districts for the prior school year. See, e.g., 24 P.S. § 25-2509.5(zz)(2).

7. The Commonwealth also provides a special education contingency fund, which is used to provide additional support to school districts that have experienced higher levels of need in a given school year. (Tr. at 743:19-744:7.)

8. School districts must request contingency funds. (Tr. at 744:8-11.)

9. The maximum contingency fund available to each district in the past has always been $150,000. (Tr. at 255:10-25.)

10. The Commonwealth's special education subsidy does not include a variable factoring the cost of removing language barriers for special-needs LEP students.

24 P.S. § 25-2509.5.

11. The Commonwealth's special education subsidy comprises on average approximately 4.8 percent of the total revenue of school districts in the class and

4.0 percent of the total revenue of all school districts. (Def. Ex. 23; Tr. at 904:1-5.)

13. As explained by Ralph Girolamo, a school district's special education budget is comprised primarily of the district's basic education funding and local tax effort; the Commonwealth's special education subsidy serves to supplement the special education funds derived from each district's general funds. (Tr. at 745:10-24.)

13. There is no state funding specifically earmarked for schools to provide extended school year programming. (Pl. Ex. 135 at 3.)

14. The Commonwealth does not collect data on the number of students receiving extended school year services. (Pl. Ex. 139 at 4.)

1. Assumed Special Needs Population Component

15. The Commonwealth's special education funding formula assumes that sixteen percent of each school district's average daily membership is a special education student. (Tr. at 533:9-23.)

16. The majority of children in the Commonwealth are concentrated in districts with approximately fifteen percent of children classified as having disabilities. (Tr. at 542:21-543:2.)

17. The disability rates in school districts ranges from below ten percent up to above twenty-five percent. (Tr. at 543:2-5.)

18. The geographic distribution of children with disabilities is not uniform. (Pl. Ex. 5.)

2. MV/PI Component

19. The MV/PI ratio is a calculation used to measure the relative fiscal capacity of a school district to support and maintain its programming. (Tr. at 740:6:12.)

20. A high MV/PI ratio indicates a school with less capacity to support itself, whereas a low MV/PI ratio indicates a school is more self sufficient. (Tr. at 742:4-11.)

21. The MV/PI ratio is a statutory formula combining the market value aid ratio and the personal income aid ratio. 24. P.S. § 25-2501(14.1).

22. The MV/PI ratio for each school district is calculated annually. (Tr. at 740:13-15.)

23. The MV/PI ratio is designed to provide poorer districts with a greater share of state funding than the share received by richer districts. (Tr. at 741:2-11.)

24. Over time, the MV/PI ratio has the effect of allocating an increasingly greater share of funding to school districts with high MV/PI ratios because the base funding level is equal to the total prior year's funding level; as a result, the total special education funding includes each prior year's supplement, which is adjusted for the MV/PI ratio, in addition to the current year's supplement, which is adjusted for the MV/PI ratio. (Tr. at 741:14-743:2.)

25. Special education funding per special education pupil is not closely related to a school district's MV/PI ratio. (Tr. at 576:19-23.)

26. Although the special education funding formula includes an MV/PI component, that component makes up too small a share of the overall formula to overcome the district's difficulty in raising funding from its local tax base. (Tr. at 576:19-23.)

C. Adequacy of Funding

27. Plaintiffs' expert, Dr. Bruce Baker evaluated the effect of the Commonwealth's special education funding formula on school districts.

28. Dr. Baker did not examine individual school budgets. (Tr. at 680:4-10.)

29. Dr. Baker did not consider the manner in which individual schools allocated resources in his evaluation. (Tr. at 680:11-15.)

30. Dr. Baker did not consider capital expenditures or expenditures incurred on bond and debt funds. (Tr. at 680:16-19.)

31. Dr. Baker did not conduct a cost efficiency analysis to evaluate whether districts effectively used their funding. (Tr. at 680:20-24.)

32. Dr. Baker did not evaluate any educational programs or services within school districts. (Tr. at 680:25-681:3.)

33. Dr. Baker did not evaluate the availability of special education services in and out of the class districts. (Tr. at 681:4-9.)

34. Dr. Baker did not consider the relative caseloads of special education teachers. (Tr. at 681:10-12.)

35. Dr. Baker did not evaluate the timeliness, rigorousness, or appropriateness of IEPs in and out of the class districts. (Tr. at 681:13-21.)

36. Dr. Baker did not evaluate the implementation of IEPs in and out of the class districts. (Tr. at 681:22-24.)

37. Dr. Baker did not evaluate the relationship between the receipt of a free appropriate public education ("FAPE") and funding levels. (Tr. at 682:14-21.)

38. Dr. Baker did not evaluate the adequacy of services. (Tr. at 697:6-9.)

1. Benchmarks

39. Central to Dr. Baker's analysis of the adequacy of the funding formula was the use of benchmarks to determine proper funding levels. (Tr. at 563:13-25.)

40. In developing his benchmarks Dr. Baker relied upon: (1) the Augenblick Palaich studies; and (2) the Special Education Expenditures Project. (Tr. at 564:1-12.)

a. Augenblick Palaich Benchmark

41. In 2006, the Pennsylvania State Board of Education commissioned Augenblick Palaich to conduct a study to determine the per pupil cost of educating a student to meet the Commonwealth's academic standards. (Pl. Ex. 116 at ii.)

42. The study, published in December 2007, evaluated the base cost of educating a student who had no additional needs, such as special education needs. (Tr. at 637:22-24.)

43. The cost estimates in the report are based on the "single goal" of ensuring that "100 percent of students: (1) Master state standards in 12 academic areas; and (2) Score 'proficient' or above on reading and math assessments by the year 2014." (Pl. Ex. 116 at 3-4.)

44. The report acknowledges that "no state or country in the developed world has ever achieved" the goal identified in the basic education cost estimate report. (Pl. Ex. 116 at 57.)

45. The report concluded that the base cost for meeting the goal set by the report for students without any additional needs was $8,003 per student based on 2005-2006 costs. (Pl. Ex. 116 at iv.)

46. The report indicated that the cost of educating a special education student should receive a weight equal to 1.3 times the cost of educating a student with no additional needs, that is, $8,003 plus $8,003 multiplied by 1.3, which would equal $18,406.90, or an added cost of $10,403.90 per special education student above the base cost of that special education student. (Pl. Ex. 116 at 30, 32-34.)

47. One benchmark used by Dr. Baker is the Augenblick base weighted by 1.3 times the Augenblick base, as outlined in the preceding paragraph. The Court will refer to this benchmark as the "Augenblick benchmark." (Tr. at 561:22-25.)

48. The 2007 Augenblick special education weight was determined based on prior studies done across the country regarding the added costs required to educate students to meet state and federal performance standards, but did not include Pennsylvania-specific data. (Pl. Ex. 116 at 9.)

49. In 2009, a second Augenblick Palaich report was issued to address the costs of special education. (Pl. Ex. 117 at 3-4.)

50. The report does not appear to be commissioned by the Pennsylvania State Board of Education, as the 2007 report was, but rather appears to be an advocacy report funded by the Education Law Center, the Disability Rights Network, and The Arc of Pennsylvania. (Pl. Ex. 117 at 37.)

51. The 2009 Augenblick report explained that this added cost did not represent the cost of a "Cadillac" special education, but rather is a cost estimate for the resources needed for a fundamental quality education. (Pl. Ex. 117 at 8.)

52. The report does not clearly articulate what is meant by a fundamental quality education or the relationship between what the report defines as a fundamental quality education and the FAPE requirement in the IDEA.

b. Special Education Expenditures Project Benchmark

53. The Special Education Expenditures Project ("SEEP") benchmarks were developed by the Center for Special Education Finance. (Tr. at 564:1-12.)

54. The study evaluated the average expenditures on special education based on disability types and found that the average additional expenditures per pupil for children with disabilities was approximately double that of average expenditures per pupil for children without disabilities. (Tr. at 564:9-17.)

55. Specifically, the Special Education Expenditures Project found that the average spending on a special education student was 90 percent above the average spending on a non-special education student during the 1999-2000 school year, that is, $6,556 spent on a non-special education student plus $6,556 multiplied by 0.9 for a total average spending of $12,525.*fn3 (Pl. Ex. 19.)

56. The SEEP study was not concerned with whether the spending amounts are suitable or whether the spending amounts are sufficient to provide FAPE; it only measures what school districts actually spend on special education programming. (Tr. at 564:1-565:3.)

57. Dr. Baker used the 90 percent weight figure to develop a second benchmark, where he applied the 90 percent weight to the 2007 Augenblick base, that is, $8,003, which represents the amount the Augenblick study found should be spent on a student with no special needs, plus $8,003 multiplied by 0.9. (Tr. at 636:24-637:11.)

58. One benchmark used by Dr. Baker is the Augenblick base weighted by 0.9 times the Augenblick base, as outlined in the preceding paragraph. The Court will refer to this benchmark as the "SEEP benchmark." (Tr. at 636:24-637:11.)

59. It is not clear why Dr. Baker elected to use the Augenblick base with the SEEP multiplier to set the SEEP benchmark.

c. Ability to Meet Spending Benchmarks

60. The Court does not accept either benchmark provided by Dr. Baker as the amount that must be spent to satisfy the IDEA.

61. The Court does acknowledge that Dr. Baker's benchmarks may be useful in clarifying the relative spending levels of the class and non-class districts.

2. Relative Funding Levels

62. Dr. Baker found that the average special education subsidy per special education pupil in the class totaled $3,327, and the average special education subsidy per special education pupil in non-class districts totaled $4,108. (Pl. Ex. 18.)

63. Dr. Baker found that districts with higher shares of special education students receive systematically less state special education funding per special education child. (Pl. Ex. 16.)

64. Because of the manner in which the funding is distributed in Pennsylvania, those schools that have an above-average percentage of their average daily membership enrolled in special education tend to receive less special education funding per special education pupil from the Commonwealth's supplemental special education funding. (Tr. at 531:3-10.)

65. Special education funding per special education pupil declines systematically as special education funding rates increase. (Tr. at 585:11-17.)

66. Funding from the Commonwealth's special education subsidy accounts for approximately 35 percent to 40 percent of total expenditures on special education in Pennsylvania. (Tr. at 589:2-9.)

67. Funding from the Commonwealth's special education subsidy accounts for approximately 37 percent to 39 percent of special education spending by school districts in Class 1. (Tr. at 589:10-18.)

68. Funding from the Commonwealth's special education subsidy accounts for approximately 30 percent to 32 percent of special education spending in lower need and higher wealth districts. (Tr. at 589:10-18.)

69. The reason that the Commonwealth's special education subsidy accounts for a smaller share of non-class special education budgets, is that the budgets are significantly less reliant on state funds to support ...


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