The Future of Special Education Funding

As Kansas and Missouri work through their education budgets and consider changes to how they fund schools, special education funding is getting long-overdue attention — and the conversation couldn’t come at a more important time. 

In Kansas, special education funding is at a crossroads. The House budget proposal includes just $10 million in new special education funding, short of what’s needed to get the state back on track toward meeting its statutory goal of covering 92% of excess special education costs by 2029. 

Right now, Kansas funds special education through a reimbursement system, where districts front the money, and the state pays part of it back later. This model was originally designed to give districts flexibility, but it also introduces funding unpredictability and does not fully account for long-term cost trends. As a result, some districts struggle with budget shortfalls while trying to meet the growing needs of students with disabilities, who now make up more than 17% of Kansas classrooms. The state does provide additional reimbursements for high-needs special education students as well, subject to funding availability.

Across the state line, Missouri is in the early stages of rethinking its school funding formula, and special education funding will almost certainly be a big piece of that discussion. Currently, the state provides districts with more than 13.30% of their student population receiving special education services 75% more funding per student. In addition, the state provides reimbursements to districts with especially high-needs special education students. With more than 13% of Missouri students also receiving special education services, there’s a growing need to rethink how the state funds services in a way that meets student needs while ensuring long-term sustainability. 

All of this is happening against the backdrop of major uncertainty at the federal level. Congress recently passed a federal budget resolution that directs the U.S. House Education and Workforce Committee to cut at least $330 billion to offset tax cuts. That could significantly decrease critical federal funding for Individuals with Disabilities Act, which both Kansas and Missouri rely on to help support special education services.

Aligned has put together a new policy brief — State Approaches to Special Education Funding — that highlights how other states are tackling these challenges. As Kansas and Missouri lawmakers look ahead to future changes in school finance, we encourage them to consider the lessons learned in other states, and to think about how to build a funding system that works for all students, especially those who need the most support.

Aligned's Take: We’ll be tracking these conversations closely, so stay tuned. In the meantime, check out our new brief for a deeper dive into special education funding.

Missouri Update

Dr. Pam Thomas exits Office of Childhood

​The Department of Elementary and Secondary Education (DESE) has announced a leadership change within its Office of Childhood. Effective February 24, 2025, Deputy Commissioner Kelli Jones will assume the duties previously handled by Dr. Pam Thomas, who led the department's implementation of the Office, which former Governor Mike Parson created through Executive Order 21-02 in 2021.

DESE also announced that the Office of Childhood (OOC) has completed its review of the childcare subsidy backlog, addressing family applications for assistance, provider subsidy contracts, and provider payment reviews through September. Payments will continue in the coming weeks, and by March, the OOC expects to process applications within its standard timeline.

Commissioner of Education Karla Eslinger acknowledged the teams' efforts to resolve system issues and thanked families, providers, and stakeholders for their patience. The backlog stemmed from technical challenges with the new Child Care Data System (CCDS) launch in December 2023, but since summer 2024, additional temporary staff has helped reduce delays.

By January 2025, the Office resolved outstanding technical issues causing backlogs. In 2024, the OOC paid over $204 million to childcare providers, processed over 39,000 family applications, and approved nearly 2,800 provider contracts. The CCDS now provides a web-based, near-real-time system for families and providers to manage childcare subsidy information, supporting approximately 22,000 children and 2,000 providers statewide.

Families seeking assistance can find more information here.

Kehoe signs order to eliminate DEI initiatives

​On Tuesday, Governor Mike Kehoe signed Executive Order 25-18, directing all Missouri state agencies to eliminate Diversity, Equity, and Inclusion (DEI) initiatives. The order prohibits using state funds for DEI-related activities and bars agencies from considering DEI factors in hiring decisions. It mandates equal protection for all individuals and requires each department to conduct a compliance review within 90 days to ensure adherence to the directive.

Aligned Priority Bills

Child Care Tax Credits for Child Care

Authorizes the "Child Care Contribution Tax Credit Act", the "Employer-Provided Child Care Assistance Tax Credit Act", and the "Child Care Providers Tax Credit", relating to tax credits for child care.

HB 269 (Shields) - H - Third Read and Passed - Y-120 N-34 and reported to the Senate and first time on 2-27-25

Restriction of Three-Cueing Approaches in Literacy Teaching

​Prohibits a "three-cueing system" approach in reading instruction, which encourages students to guess words based on context, sentence structure, and visual clues rather than focusing on decoding the letters and sounds of the words themselves. This bill would ensure reading instruction is based on more reliable, evidence-based strategies.

HB 941 (Lewis) - Public hearing completed – House – Elementary and Secondary Education on 2-19-25. No change from last week.

Open Enrollment

These bills allow students to attend public schools outside their assigned zones or districts, providing families with the flexibility to choose schools that best meet their children's educational needs. ​

• HB 711 (Pollitt) – Reported Do Pass 2-25-25 – House – Rules – Legislative
• SB 215 (Trent) – Pass as substituted – Senate Education. Placed on Informal Calendar. No change from last week.

Teacher Externships

Extends the sunset on the state's teacher externship program, which offers educators hands-on experience in industry settings, enabling them to integrate real-world applications into their teaching. ​

HB 267 (Shields) – Passed out of Executive Session by a vote of 18-0 on 2-26-25. Referred to House-Consent and Procedure.

Read our Missouri Education Policy update.

Read the full weekly legislative report.

Budget and Revenue

​The House Budget Committee has advanced HB 14, a supplemental appropriation bill allocating $2 billion to fund state agencies through the end of the fiscal year.

The bill includes $142.4 million to fund the school foundation formula, addressing increased requirements from SB 727, which passed last year, and to compensate for a shortfall in lottery revenue.

Additionally, funding for developmental disability and behavioral health services was adjusted to $80.8 million, reflecting updated projections of service needs by June 30.

The bill is scheduled for debate on the House floor next week.

In other news

• Proposed Medicaid cuts may cause Missouri budget shortfall
• MU opens research center to study AI sustainability
• MO lawmaker aims to reduce emphasis on standardized tests for accreditation
• University of Missouri examines teacher attrition causes
• Childcare tax credit package gains bipartisan support in MO House

Kansas Update

Property Tax Relief and School Funding

Kansas lawmakers are still considering a range of property tax relief proposals, each with potential implications for local budgets and K-12 education funding. With property taxes playing a significant role in supporting schools, these proposals could shift how Kansas funds public education in the years ahead.

Current proposals under consideration include:

• HB 2396: ASTRA Fund and Local Spending Oversight – Creates a $60 million state fund to reward cities and counties that keep annual spending growth within the inflation rate, accounting for new construction. The bill also establishes a protest petition process, allowing residents to challenge spending increases that exceed inflation formally. Petitions would be available at county treasurer offices, and 10% of qualified voters would need to sign to trigger further review. Mill levies for schools and the state would be excluded from the spending limits calculation.

• HB 2011: Statewide 1.5-Mill Reduction for Schools – Reduces the statewide property tax levy that helps fund K-12 education by 1.5 mills. While this would provide direct property tax relief, it raises concerns about how to backfill that lost revenue to ensure stable school funding in the future.

• SB 35: 1.5-Mill Reduction for State Institutional Buildings – Repeals the 1.5-mill statewide property tax levy that supports state facilities, including veterans’ homes, state hospitals, and public universities. This would remove the state’s presence from local property tax bills, further reducing property tax burdens.

• HCR 5011: Property Appraisal Cap (House Proposal) – Proposes a constitutional amendment to limit annual residential property appraisal increases to the lower of either a rolling six-year average of statewide home values or the current fair market value.

• SCR 1603: Property Appraisal Cap (Senate Proposal) – Proposes an annual 3% cap on residential property appraisal increases, using 2022 property values as the baseline.

What It Means for Education

Since local property taxes play a key role in funding school facilities, bond payments, and other local programs, cutting property tax revenue often shifts more pressure onto the state’s general fund to fill the gap. That shift makes school funding more dependent on state revenues, which tend to be less stable than property taxes, especially during economic downturns.

It’s important to note that HB 2396, which focuses on limiting city and county spending, would not affect school district property tax revenues.

As lawmakers debate these and other property tax proposals, Aligned will continue tracking how legislators balance tax relief with the need to ensure that Kansas schools have fair and sustainable funding.

Kansas Budget Update

The Senate Ways and Means Committee took up the House-approved FY 2026 budget (HB 2007) this week. Senators are considering an additional round of cuts, including reductions in higher education and workforce development initiatives.

Key Changes Affecting Education and Workforce Development:

Postsecondary Education Cuts – The committee removed $39.7 million in higher education funding that the House added, including:

• $14.3 million for two-year college apprenticeships, which help students gain hands-on workforce experience.

• $10.5 million for two-year college student success initiatives to improve retention and completion rates.

• $7 million for technical college operating grants, which support institutions that train workers in high-demand fields.

Blueprint for Literacy Program – The committee eliminated $2 million in funding for the bipartisan literacy initiative designed to improve reading proficiency across Kansas.

Child Care Infrastructure – A $2 million investment in a childcare facility in Dodge City was cut.

Aligned will continue tracking the budget process and its impact on education and workforce development as discussions move forward.

Read the legislative report

In other news

• Gov. Kelly skeptical Kansas House’s anti-tenure legislation will reach her desk
• Senate approves pronoun bill
• Former leaders of Kansas foster care provider negotiating plea deal in fraud case
• Career and Technical Education’s impact extends well beyond the classroom

As mentioned in previous newsletters, Aligned, in partnership with Georgetown University, is hosting the Certificate in Education Finance (CEF) program in Kansas City on June 10-11, 2025. This event will allow professionals to strengthen their expertise in education finance and learn how to make strategic spending decisions.

​Dr. Marguerite Roza, a leading expert in K -12 public education finance and Director of Georgetown University's Edunomics Lab, will lead the event. Her research has highlighted disparities in school funding, such as the mismatch between spending and student needs.

Her seminal work, Educational Economics: Where Do School Funds Go?, exposes how schools spend education dollars in ways that contradict the stated priorities of public school systems. ​

The program that Dr. Roza designed offers an interdisciplinary curriculum that combines finance, economics, and leadership with public policy and administration. Participants will gain practical skills in fiscal management, policy analysis, and financial leadership, which will help inform future spending decisions.

The program covers key areas such as:​

• Key cost drivers in education
• Funding allocation and accountability structures
• The impact of ESSA and state policies
• Practical strategies for financial leadership

Upon successful completion, participants will earn a Certificate in Education Finance from Georgetown University and 3.0 CEUs, 36 CPEs, or 30 PDCs. This program is invaluable for education policymakers, school leaders, analysts, and nonprofit professionals committed to driving strategic fiscal management and resource allocation in education.

We hope you join us in June to learn from one of the top experts in school finance in the country and connect with other professionals committed to education finance.

Register here to join the Kansas City cohort.

Sponsorship opportunities are available—reach out to learn more!

Thank you to our sponsors:

🏛 Venue Sponsor – Ewing Marion Kauffman Foundation

🏆 Platinum Sponsor – Missouri Charter School Association

🥇 Gold Sponsors – U.S. Engineering & Holland 1916 Inc.

🥉 Bronze Sponsors – JE Dunn Construction, KIDaccount and BMG Advisors,

Interested in sponsorship opportunities?

February made us shiver, with every newsletter we delivered...

We are happy to "March" forward!

Best,

Torree Pederson

President

Aligned

Torree@WeAreAligned.org

(913) 484-4202

Linda Rallo

Vice President

Aligned

Linda@WeAreAligned.org

(314) 330-8442

About Aligned

Aligned is the only state-wide non-profit, nonpartisan business group working in Kansas and Missouri on educational issues impacting the full development of our children, from supporting high-quality early learning to solid secondary programs that provide rigorous academic programs and real-world learning opportunities.

Our vision is that our public education systems in Kansas and Missouri have the resources and flexibility to prepare students to pursue the future of their choice.

We are currently focused on education policies that will strengthen early childhood education, teacher recruitment and retention, and school finance reform.

Learn more about our work.