State tries to appeal loss of $36 million in federal money for special education

COLUMBIA — South Carolina schools chief Mick Zais has asked for a speedy hearing on the U.S. Department of Education’s decision to withhold $36 million from the state for not spending enough on special education in 2009-10.


Last month, the federal agency delayed punishment until October 2012 to give the state time to prepare for the funding cut, rather than start the reduction next month.

But Zais appealed the ruling. His latest motion asked for an expedited hearing or direct ruling, noting he must turn in his budget request for 2012-13 to Gov. Nikki Haley by Sept. 30.

The “funding reduction has a direct and significant impact on this funding request,” he wrote in the motion filed Friday with the federal agency’s Office of Hearing and Appeals and obtained by The Associated Press. “A timely resolution of this matter is essential to ensuring adequate funding is available to support the educational needs of the children of South Carolina.”

In his appeal, Zais argues the entire penalty should be waived, or at the very least be a one-time cut, rather than continue.

As of Tuesday afternoon, the state had received no response, said Zais spokesman Jay Ragley.

A U.S. Department of Education spokeswoman said Tuesday the agency had no comment. A woman answering the phone for the Office of Hearing and Appeals said it did not have a separate spokesperson and could not comment.

Zais notes that Education Secretary Arne Duncan believes his decision can’t be appealed.

If the appeals office can’t rule or schedule a hearing quickly, Zais seeks a direct response from Duncan, which Zais says he would use to take his case to federal court.

The $36.2 million punishment is what’s left from an initial threat in June to reduce the state’s special education money by $111.5 million for not spending enough on special education over the past three years, due to budget cuts. The cut would come from the $183 million the state would otherwise receive for special needs students. Federal law bars states from spending less money on special education from one year to the next, though states can apply for an exemption.

The federal government approved a waiver for 2008-09, a partial waiver for 2009-10, and forgave the entire shortfall for 2010-11 after the agency rushed, as required, to distribute $75.3 million to districts before South Carolina’s fiscal year ended June 30. The money came from better-than-expected sales tax collections and lower-than-expected prices for school bus diesel fuel.

Part of Zais’ argument in the appeal is that the agency’s 16-month delay in issuing a decision on the state’s waiver request for the fiscal year that ended June 30, 2010 made it impossible to rectify that shortfall.

In a separate issue, South Carolina also missed out on $144 million in federal bailout money.

South Carolina is the only state not to receive its share of $10 billion approved by Congress in August 2010 specifically to save teaching jobs in the past and current school years. With South Carolina missing the Aug. 15 deadline to apply, that $144 million is being distributed to other states.

Education advocates criticized Zais as fighting for one pot of federal money while refusing another.