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Education agencies settle dispute over recession-era cuts

August 25, 2016 GMT

COLUMBIA, S.C. (AP) — The state Department of Education will distribute $51 million to school districts to settle a dispute with the federal government over recession-era budget cuts.

The agreement announced Thursday by the U.S. Department of Education ends its five-year threat to punish South Carolina for not spending enough on students with disabilities in the years during and following the Great Recession.

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State education spokesman Ryan Brown said the agency is happy to finally resolve the issue, which spans three state superintendents.

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“This settlement is truly a victory for South Carolina’s students with special needs,” said state Superintendent Molly Spearman, who took office in January 2015. “My administration has worked diligently during our short time in office to put this issue to rest and we are pleased knowing that the funds set aside to meet the terms of this agreement will be used by local school districts to strengthen programs and initiatives that benefit our students.”

The agreement gives the state four years to pay, but districts should get their portion over the next year. It must be spent on special education, Brown said.

Anticipating a settlement, legislators set aside a combined $60 million in the 2015-16 and 2016-17 state budgets.

Federal law bars states from spending less money on special education from one year to the next. If they do spend less, their federal allotment is cut by a corresponding amount. States can apply for an exemption, but such waivers are limited.

The settled amount dates to the 2009-10 school year.

The federal agency initially threatened in June 2011 to permanently cut the state’s special education allotment by nearly $112 million because the state had not spent enough over the previous three fiscal years. Some of it was forgiven when the state quickly distributed money cobbled together from better-than-expected sales tax collections and lower-than-expected prices for school bus diesel fuel.

Then-Superintendent Mick Zais, who took office six months earlier, fought the remaining cut.

The federal agency initially dismissed his appeal. But in 2013, the 4th U.S. Circuit Court of Appeals ordered then-U.S. Education Secretary Arne Duncan to give the state a hearing.

South Carolina will receive about $180 million from the federal government this fiscal year for special education.