Texas is slashing millions in Medicaid funding for students with disabilities

AUSTIN (AP) – Texas is clawing back more than $607 million per year in federal funding for special education services, a move local school district officials say will likely worsen already strained budgets for students with disabilities.

The School Health and Related Services (SHARS) program provides hundreds of school districts critical funding for special education services, reimbursing them for counseling, nursing, therapy and transportation services provided to Medicaid-eligible children.

More than 775,000 students receive special education services in Texas, according to the Texas Education Agency. It is not as clear how many of them are eligible for Medicaid, though school district officials say many of the kids who directly benefit from SHARS come from low-income families.

But in the last year, the Texas Health and Human Services Commission, which manages the program at the state level, began imposing strict limitations on the types of services for which school districts are able to request federal reimbursement. The changes have accumulated into a $607 million slashing to the money school districts typically expect to receive under SHARS per year, according to health agency estimates.

Bewildered by the sudden changes, school district officials and special education advocates say little has been communicated about why these drastic changes are happening.

“We’re seeing an increased number of students that need more and more individualized care,” said Katie Abbott, special education director for a coalition of six East Texas school districts. “And yet, what are we doing?”

In response to their concerns, Texas has blamed the feds.

A 2017 federal audit report found that Texas was improperly billing for services not allowable under the SHARS program. The report concluded the state would need to return almost $19 million, a fraction of the $607 million currently being left behind. It also required that the Texas health commission work to ensure it was complying with federal guidelines.

Afterwards, the commission submitted “every possible denial and request for the opinion to be overturned” but was unsuccessful, the agency told The Texas Tribune. The recent changes reflected an attempt to bring the state back into compliance, according to the commission.

But federal appeals officers, in a ruling last year, said Texas produced “nothing at all” to dispute investigators’ findings that the state billed for unallowable services. The ruling also condemns the state for attempting to submit evidence after the deadline to do so had already passed.

Further, federal officials dispute the notion that Texas is being required to make certain changes to the SHARS program. In a statement to the Tribune, the Centers for Medicare & Medicaid Services made clear that as long as states work within “broad federal parameters,” they have autonomy to make decisions about their programs.

School district officials say Texas has resorted to overcorrecting problems identified by the audit, flouting expectations from the federal government that the state administers the program using the least restrictive means possible.

Many school districts are formally appealing the funding cuts with the state, while other rural districts have decided to exit the SHARS program altogether because of the administrative burden recent changes have created. Those that remain are holding out hope that lawmakers will decide in next year’s legislative session to help fill the financial gaps left in special education services — a lofty expectation for a state with a poor track record in both administering Medicaid and serving students with disabilities.

“We’re talking about our most vulnerable kids,” said Karlyn Keller, division director of Student Solutions and School Medicaid Services for the Texas Association of School Boards. “We can’t afford to continue to make these huge clawbacks in funding when we’ve got kids that need the service.”