Many California school districts have started taking back responsibility for providing special education programs for children with severe disabilities because of the large excess cost charge-backs they must pay to the intermediate units currently providing those services. State regulations not only allow this to occur but encourage it because districts are allowed to use the higher funding level of the intermediate unit to calculate their state reimbursement. This study shows that, rather than realize a fiscal gain, districts that take back these programs not only increase their own per-pupil costs but those of the intermediate unit programs for the remaining pupils as well. These findings have important policy implications for both state policymakers and local adninistrators.
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