Feds Threaten To Pull More Than $9 Million In Special Education Funding From Wyoming

A spending mistake made by the Wyoming Department of Education means the federal government may revoke more than $9 million grant money from Wyoming.

Leo Wolfson

October 04, 20227 min read

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(Cowboy State Daily Staff)

By Leo Wolfson, State Political Reporter

The U.S. Department of Education is threatening to revoke more than $9 million of the money it gives to Wyoming’s special education programs.

The revocation comes in response to the way the Wyoming Department of Education apportioned funds to schools during the 2019 and 2020 fiscal years. 

“In my view, this matter is simply a misunderstanding on behalf of the U.S. Dept. of Education,” Wyoming Deputy Superintendent Chad Auer told Cowboy State Daily in an email Monday afternoon. “Understanding the unique intricacies of Wyoming’s school funding process requires deeper consideration by our friends in Washington, D.C.”

The department sent a notice to Brian Schroeder, Wyoming superintendent of public instruction, on June 1, informing him it plans to pull the money.

‘Something To Be Concerned About’

Federal laws require that a state fund its special education programs at the same or greater level of funding each year. The rule is in place to ensure that state funds are available for local educational agencies to meet their obligations to make public education free and available to any child with a disability.

It is the federal government’s perspective that Wyoming did not adequately fund its special education programs in 2019 and 2020, a situation that happened under former Superintendent of Public Instruction Jillian Balow.

State Rep. Landon Brown, R-Cheyenne, said although the federal government is unlikely to pull the funding due to the poor optics related to such a move, he said the threat is “something to be concerned about.”

A roughly $9 million cut to special education funding makes up about 3% of the annual special education expenditures in Wyoming. Including federal dollars, during the 2020-21 school year, $278.1 million was spent on special education in Wyoming. A total of $27.4 million came from federal grants through the Individuals with Disabilities Education Act program that year.

Education was funded on a nearly $400 million budget from the state of Wyoming last year, with federal money covering the rest of the roughly $1.7 billion cost.

The Wyoming Way

Prior to the 2019/2020 school year, special education was funded in Wyoming using a 100% reimbursement system, with the state government fully reimbursing all expenditures made by schools for their special education programs. Following action taken by the Legislature to put a cap on special education funding, schools now have to pay hundreds of thousands of dollars each year to support their programs.

This legislative change brought questions from the federal Office of Special Education Programs about the way WDE calculates its funding under the IDEA programs rule, which requires states to maintain a never-declining level of financial support. The IDEA program requires state, rather than local, money be at least maintained from one year to the next. 

Wyoming uses a foundation, or “base budget,” school funding formula, capturing the total amount of funding it deems necessary to educate a particular student, and then dividing that total between the state and local educational agencies. LEAs that generate more revenue than the “base budget” amount must return money to the state through a process known as recapture.


The state uses some of these recapture funds to offset the cost of low-revenue generating LEAs, while using the other portion of funds for other educational purposes.

Under current state law, the cost to run LEAs in Wyoming is reimbursed through the state and recaptured and not recaptured local funding – money that is paid for directly by schools.

WDE determined that recaptured and non-recaptured funds could be used for all education programs or to carry over funds to the next year, not just immediate reimbursement to local special education. 

In a September 2020 letter, OSEP, the special education federal agency, determined that local funds that are not recaptured and remain local cannot be counted toward the state’s allotment of special education funding. Because of this decision, OSEP determined the state underspent on special education by $2.5 million in fiscal year 2019 and $6.5 million in fiscal year 2020, decreasing overall funding from $163 million in 2018 to $157 million in 2020.

‘Exceptional Or Uncontrollable’

A state is allowed to waive the requirement that it maintain its funding if it can demonstrate “exceptional or uncontrollable circumstances such as a natural disaster or a precipitous and unforeseen decline in the financial resources of the state.” Whether a waiver is granted or not, a state must maintain free education for all children with disabilities.

In September 2021, WDE submitted waiver requests for both 2019 and 2020. The department argued it faced exceptional or uncontrollable circumstances due to positive fluctuations in “local revenue” that resulted in districts requiring less funding from the state. 

The state of Wyoming’s school funding and entire budget is highly dependent on mineral revenue. 

During the 2019 and 2020 fiscal years (ending in July), mineral revenue was generally productive in Wyoming. According to the U.S. Department of Education, WDE “conceded” the state did not experience a negative impact to its financial resources in those years. 

WDE countered that it did not decrease overall special education funding or availability because it relied on an increased portion of local revenue through non-recaptured funds. Wyoming argued it is under a constant state of exceptional or uncontrollable circumstances because of the instability in state and local funding sources spurred by the volatile nature of fossil fuel markets. 

OSEP determined it will not accept the WDE’s waiver request. In the June letter, the U.S. Department of Education explained that it is the amount of state financial support provided that determines whether it has met federal standards, not the total amount of special education available to LEAs from all sources.

“The state was aware that the ratio of ‘local revenue’ to ‘state support’ may shift each year due to some school districts collecting more local revenue than in previous years and consequently requiring less funding being distributed to districts,” the letter reads. “Because these variations are inherently part of the state’s own funding system, the Department cannot consider local revenue fluctuation to be “exceptional or uncontrollable circumstances.”

Will They Pull Money?

The U.S. Department of Education has determined Wyoming will not be eligible for $9,072,121 in IDEA funding in the future because of the way it spent money in 2019 and 2020.

Brown said he is skeptical the federal government will actually withhold money from Wyoming. He said typically in scenarios like these, the government works with state governments to alleviate problems for the future rather than take a more heavy-handed approach and issue a formal punishment.

WDE was instructed it could request a hearing to dispute the cuts within 30 days of the letter being sent. Auer said WDE is working with the Attorney General’s office to help advocate for Wyoming on the matter.

“I am confident that once all of the interested parties sit down and fully understand Wyoming’s process, the U.S. Dept. of Education will realize that we fully support ALL of our students, even though our funding process may look differently than other states,” Auer wrote.

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Leo Wolfson

Politics and Government Reporter