Summary of North Carolina Senate Bill 960 (2025 Session)
Title: Modernized Children with Disabilities Funding
Sponsor: Senator Grafstein (primary), with co-sponsor Senator Grafstein listed
Purpose
- To reform and modernize state funding for children with disabilities (special education) in public schools.
- Aims to reduce the mismatch between student needs and state funding, ensuring districts have sufficient resources for students with disabilities and reducing the need to divert general classroom funds to meet mandatory special education obligations.
Key Provisions
1) Funding framework for children with disabilities (G.S. 115C-111.05, as amended)
- The State Board of Education shall allocate available funds for children with disabilities to each local school administrative unit (LSA or administrative unit) on a per-child basis.
- Each local unit shall receive funds for the lesser of:
- (i) all children identified as children with disabilities, or
- (ii) 13% (later stated as 16%) of its allotted Average Daily Membership (ADM) for the current school year.
- Change emphasizes a higher potential cap for funding per unit (see 16% in the text), reflecting a modernization of the prior 13% cap.
2) General fund appropriation for disability funding (Section 1(b))
- A recurring appropriation of $82,800,000 from the General Fund to the Department of Public Instruction (DPI) beginning with the 2026–2027 fiscal year for funding for children with disabilities.
3) High-Cost Disabilities Support Fund (HCDSF) (New statutory mechanism)
- Creation of a High-Cost Disabilities Support Fund within Part 1F of Article 9, Chapter 115C (new § 115C-111.11).
- Purpose: Provide funds to local school units and charter schools for extraordinary costs associated with educating children with disabilities who require intensive and specialized services.
- Authorized uses and objectives:
- (1) Provide additional state reimbursement for students whose special education services exceed a cost threshold determined by the State Board of Education.
- (2) Help districts support students with complex needs while maintaining budget stability.
- (3) Ensure districts do not incur undue financial hardship serving students requiring the most intensive services.
- State Board of Education responsibilities:
- Adopt rules governing the use of HCDSF funds, including:
- Eligibility to receive funds
- Reimbursement thresholds for specific uses of funds
- Reporting requirements for fund uses
4) Funding for the High-Cost Disabilities Fund (Section 2(b))
- Recurring appropriation of $15,000,000 from the General Fund to the Department of Public Instruction beginning in the 2026–2027 fiscal year for purposes specified in § 115C-111.11 (HCDSF).
5) Effective date and applicability
- Effective July 1, 2026.
- Applies to funds allocated for children with disabilities beginning with the 2026–2027 school year.
Background and Rationale
- The bill notes that under federal law (IDEA), districts must provide appropriate educational services to eligible students with disabilities.
- The current state funding formula caps funding for Exceptional Children services at 13% of a district’s ADM, which has not kept pace with districts serving higher percentages of students with disabilities.
- When funding does not match student needs, districts may divert funds from general education to cover mandated special education obligations. The bill seeks to prevent this by increasing the funding cap and creating a dedicated fund for high-cost/disproportionately expensive cases.
Potential Impact
- Financial: Increases in recurring state funding for disability services ($82.8 million/year starting 2026–2027) and an additional dedicated $15 million/year for high-cost cases.
- Distribution: Higher per-unit funding cap (potentially 16% of ADM) may better align allocations with actual student counts and needs.
- Operational: Establishes a new fund (HCDSF) with rules on eligibility, thresholds, and reporting to support districts facing intensive cases, aiming to stabilize budgets and reduce financial strain.
- Implementation: DPI and State Board of Education would implement rules governing HCDSF use, eligibility, and reporting; districts may need to adjust budgeting and reimbursement processes accordingly.
Note: The bill becomes effective for the 2026–2027 school year if enacted.
