State Rep. Mike Sturla has introduced legislation that would revamp Pennsylvania's special-education funding formula.

The Lancaster city Democrat is co-sponsoring House Bill 704, which would replace the current funding formula with one based on the 2007 "costing-out" study commissioned by the state Legislature.

That study found school districts were spending about $4.4 billion less than they need to each year for all students to meet Pennsylvania's academic expectations. The "adequacy gap" for special-education students was $380 million.

The study prompted the state Legislature last year to adopt a new formula for basic-education subsidies that is designed to reduce the overall funding gap by $2.6 billion over six years.

But the Legislature took no action on the 18-year-old special-education formula, which school officials have complained about for years. Sturla's bill would aim to close the $380 million gap.

Under the current system, legislators determine how much money the state has available for special-education programs each year without considering school districts' actual needs.

"It's a number we pick out of the air that we think we can afford," Sturla said. "It has nothing to do with the reality of the costs out there."

The money is allotted to schools based on their enrollments, assuming 16 percent of all students in each district need special-education services — regardless of actual percentages.

Districts with larger percentages tend to get shortchanged, while those with fewer disabled students may get more money than they need, Sturla said.

Increases in state special-ed funding have lagged behind inflation, ranging from 1.3 percent to 2.7 percent the past few years. For 2009-10, special-education subsidies aren't slated to increase at all in Gov. Ed Rendell's budget.

School officials have complained that state funding falls far short of what's needed, in light of the increased demand for special-ed services and the rising cost of specialized instruction.

House Bill 704 would increase special-ed subsidies statewide by about $32 million each year for the next six years to help close the state's share of the adequacy gap.

The legislation also would change the funding formula to one based on actual need — each district's average special-education enrollment from the previous five years.

For every disabled student, districts would receive funding equal to 1.3 times the base cost of educating a nondisabled student in the district.

The formula would be adjusted for inflation and based on the tax burdens and property values unique to each district. Highly taxed districts with low property values would get more from the state, per pupil, than wealthier districts with lower taxes.

Districts that put more special-education students in regular classrooms also would be eligible for more funding.

Under HB 704, Lancaster County school districts would get an additional $1.8 million in 2009-10, Sturla said.

Districts with smaller percentages of students with special needs would get smaller increases, in general, than those with larger numbers of special-ed students.

Columbia Borough School District, with a special-ed population of 21.2 percent, the county's highest, would get a 7.5 percent increase, while Manheim Township schools, with a disabled population of 10.9 percent, would get a 1.24 percent hike.

School District of Lancaster would see the biggest dollar increase — $792,108.

HB 704 would mandate that districts submit annual reports to the state documenting how they spent their special-ed funds. Currently, districts must submit comprehensive special-education plans once every three years.

Sturla said Pennsylvania could pay for the proposed special-education funding increases in HB 704 with federal stimulus funds in 2009-10 and 2010-11. In future years, the Legislature would have to find other revenue sources.

"Obviously, in this tight budget year, anything is a struggle," he said of getting the legislation passed. "But the worst thing we could do is to continue with funding formulas that are inherently unfair."

A new formula is long overdue, said Baruch Kintisch of the Education Law Center, a nonprofit group that advocates for students with disabilities.

"District officials often tell family members, 'Quite honestly, we don't have the resources to do what we want to do to help your child,' " he said.

"House Bill 704 is the relief that families have been waiting for for 15 or 20 years."

The legislation has been endorsed by the Arc of Pennsylvania, the Disability Rights Network, the Mental Health Association of Pennsylvania and more than 30 other advocacy groups.

Sturla said more than 60 cosponsors from both parties have endorsed the legislation.

The House Education Committee will hold hearings on HB 704 Wednesday.

If the committee recommends approval, the bill would go to the Appropriations Committee before coming up for a vote by the full House and Senate.

E-mail: bwallace@lnpnews.com