In order to increase general funding, many school districts have classified more students as disabled than they should.

• Student disability rates have increase by more than 50 percent in U.S. school districts over the past two decades.

• Since 1977, the proportion of students classified as disabled in grades K through 12 has risen from 8 percent to 12 percent.

According to a study by Julie Berry Cullen, a 10 percent increase in supplemental revenue from disabled students results in a 1.4 percent increase in the number of disabled students.

• More than 35 percent of the six-year increase in disability rates in Texas is due to fiscal incentives.

• When economic incentives were removed from Vermont's school district, the number of students receiving special education fell by 17 percent.

According to the study, minority students, students in districts that receive declining levels of state aid, and students in districts with more concentrated enrollments are more likely to be classified as disabled in response to economic incentives. This has large fiscal costs: special education cost taxpayers $32 billion in the 1993-1994 school year.

Source: Julie Berry Cullen, "The Impact of Fiscal Incentives on Student Disability Rates," National Bureau of Economic Research, June 1999.

For NBER Abstract:
http://www.nber.org/digest/sep99/w7173.html