North Carolina special education funding utilizes a dollar allotment per identified student, applying a funding cap based on a percentage of district average daily membership. While representing an attempt to reduce over-identification of students with special needs the funding cap has led to large systematic disparities in district fiscal resources. Utilizing the equity framework for analysis of school finance resources developed by Berne and Stiefel and the theory of budget maximization articulated by Niskanen this article measures the scope of inequality of special education funding across districts. Results of the study indicate that over a 13-year period, 2005–2017 an average of 62% of North Carolina districts faced underfunding each year. Focusing on the top 10% of districts in terms of underfunding, the average amount of underfunding was $915.09, requiring an average of 37% of local revenue to eliminate the deficit. Nationally, while no two states have the same special education funding mechanism around 50% have some form of restriction on the amount of funding a district can receive. Therefore, as states struggle to balance budgets, dealing with finite resource allocations, this article reemphasizes the need for all states to provide equitable and adequate special education funding to all districts.


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