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Civic
Report
No. 58 August 2009
How Special Ed Vouchers Keep Kids From Being Mislabeled as Disabled
Marcus A. Winters, Ph.D., Senior Fellow, Manhattan Institute for Policy Research
Jay P. Greene, Ph.D., Senior Fellow, Manhattan Institute for Policy Research
Executive Summary
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PRESS RELEASE
Study
Reveals Impact of Vouchers on Special-Education Growth
ANNOUNCEMENT
New
Study Reveals Impact of Vouchers on Students Diagnosed as
"Special-Ed"
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EVENT VIDEO
School Choice and Special Education, Heritage Foundation, 09-22-09
PODCAST
Summer Break, Education Gadfly, 8-20-09
Listen to Marcus Winters and Jay Greene discuss how vouchers in special-education
actually help reduce the financial incentives that exist in most states to inaccurately place low-achieving students in special-education.
OP-EDS
End the Special-Ed Racket, National Review, 10-5-09
Funding may push special ed labeling, Atlanta Journal Constitution, 09-24-09
Special Ed Vouchers Work for Everybody, Washington Examiner, 8-19-09
Special-Education Stigmatization, Forbes.com, 8-18-09
IN THE PRESS
Is School Choice the Right Choice?, Examiner.com, 12-09-09
The Case for Special Education Vouchers, Jay P. Greene and Stuart Buck, Education Next, 10-07-09
Special education gaps in Alexandria, Washington Times, 09-28-09
Cure by Voucher?, EducationNews.org, 09-08-09
Vouchers Control Special-Ed Growth, The Tampa Tribune, 9-03-09
On Special Education, Education Week, 8-20-09
Study
backs vouchers for special education, Washington Examiner, 8-18-09
Florida
vouchers reduce number of kids labeled as disabled, St. Petersburg Times's The Gradebook, 8-18-09
School
Vouchers: How do they Impact Special Education, South Florida Sun Sentinel’s South Florida Schools, 8-18-09
McKay
Scholarships keep some students from being labeled learning disabled, report says, Orlando Sentinel's
School Zone, 8-18-09
FROM THE BLOGOSPHERE
Opinion: School vouchers could solve special-education problems, SmartBrief , 8-19-09?
The Special-Ed DC Bubble, Education Next, 8-24-09
Special Education Vouchers Reduce Special Education Label, Reason Foundation, 8-21-09
Special ed vouchers cut disability diagnoses, JoanneJacobs.com, 8-19-09
Could Special Education Vouchers Help Solve Ohio's Budget Woes ..., BuckeyeBlog, 8-19-09
Study: Florida Vouchers Reduce Number of Kids Labeled as Disabled, AllFloridaBlog.com, 8-18-09
Who Will Think of the Children?, School Choice Virginia, 8-18-09
Georgia Parents of Special-Needs Students Love Their School Choice, Too, Ed is Watching, 8-18-09
Special Education Vouchers Could Cut Costs, Reduce Diagnoses, DisabilityScoop.com, 8-18-09
Vouchers and Identification Rates, LDBlog.com, 8-18-09
Group Calls for Special-Education Vouchers in D.C., SmartBrief.com, 8-18-09
Special Ed Vouchers Restrain Growth in Disabilities, Jay P. Greene’s Blog, 8-18-09
TV
Marcus Winters on FOX Business with Brian Sullivan, 9-25-09
RADIO
Marcus Winters on KXLs "The Lars Larson Show"
Jay Greene on WISN's "Upfront with Vicki McKenna", 8-20-09
SUMMARY
The authors examine how special-education vouchers can limit the number of misdiagnoses of struggling students and thus constrain the costly
artificial increase in special-education enrollments. The report, "How Special-Ed Vouchers Keep Kids From Being Mislabeled as Disabled," shows how
Florida’s McKay voucher program serves as a model program for other states as they seek to control costs and reform special education to properly
meet the needs of all students.
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| Table
of Contents: |
| Executive
Summary |
| About
the Authors |
| Introduction |
| Competing
Views |
| The McKay Scholarship Program |
| Specific
Learning Disability |
| Empirical Method |
| Data |
| Results |
| Conclusion |
| Endnotes |
| References |
In the last three decades, special-education programs in the United States have grown at a tremendous pace. Much of this growth reflects a growing incidence of students diagnosed with the mildest form of learning disability, called a Specific Learning Disability (SLD), and thus the hardest to distinguish from an ordinary cognitive deficit. Between 1977 and 2006, the proportion of public school students diagnosed with SLD trebled, from 1.8 percent to 5.6 percent. By the end of that period, 40.7 percent of all students enrolled in special education had been identified as having an SLD. A limited but growing body of research suggests that financial and other incentives may be responsible for a portion of these increases.
The question examined in this report is whether special-education
voucher programs change the likelihood that students will be diagnosed
with an SLD. Voucher programs allow disabled students to attend
a private school, which receives payments in the form of full or
partial tuition that would have otherwise been directed to the transferring
student’s public school. Special-education voucher programs
appear to reduce a local public school’s financial incentive
to diagnose a marginal student who is merely struggling academically
as suffering from an SLD by offering him the chance to leave the
public school, enter a private school, and take all of his funding
with him.
Four states—Florida, Georgia, Ohio, and Utah—have these
programs. They are the fastest-growing type of school voucher program
nationwide. We made Florida’s, the first of them, the focus
of our research.
It has been argued that voucher programs cause nominal disability
rates to increase because parents with a preference for private
education lobby to have their child diagnosed with SLD. If parental
pressure was the factor responsible for skyrocketing rates of disability
classification, we would expect the introduction of a voucher program
to accelerate this trend. We find, however, that fourth- through
sixth-grade students in public schools with an average opportunity
to participate in Florida’s special-education voucher program
during the 2005-06 school year, based on the relative proximity
of private schools willing to accept the vouchers, were about 15
percent less likely to be newly diagnosed with an SLD than they
would have been in absence of the program. This finding points to
another explanation—namely, the link found by prior research
between financial incentives and the rate at which students were
designated as disabled.
We contend that the reduction in SLD classification observed in
the Florida schools after the introduction of a voucher program
results from denying public schools what they understand to be the
economic benefit of receiving a supplemental payment from the state
for every additional child designated as suffering from an SLD.
Thus, special-education vouchers appear to constrain costly growth
in special-education enrollments.
About the Authors
MARCUS A. WINTERS, Ph.D., is a senior fellow at the Manhattan Institute.
He has conducted studies of a variety of education policy issues
including high-stakes testing, performance pay for teachers, and
the effects of vouchers on the public school system. His research
has been published in the journals Education Finance and Policy,
Economics of Education Review, Teachers College Record,
and Education Next. His op-ed articles have appeared in numerous
newspapers, including the Wall Street Journal, the Washington
Post, and USA Today. He received a B.A. in political science
from Ohio University in 2002 and doctorate in economics from the University of
Arkansas in 2008.
JAY P. GREENE, Ph.D., is endowed chair and head of the department
of education reform at the University of Arkansas and a senior fellow
at the Manhattan Institute. He has conducted evaluations of school
choice and accountability programs in the state of Florida, and
the cities of Charlotte, Milwaukee, Cleveland, and San Antonio.
He has also recently published research on high school graduation
rates, social promotion, and special education. His articles have
appeared in policy journals, such as The Public Interest,
City Journal, and Education Next; in academic journals,
such as the Teachers College Record, the Georgetown Public
Policy Review, and the British Journal of Political Science;
and in major newspapers, including the Wall Street Journal,
the Washington Post, and USA Today. Greene is the
author of Education Myths (Rowman & Littlefield, 2005).
Greene received his B.A. in history from Tufts University and his
doctorate in political science from Harvard University.
Acknowledgments
The authors gratefully acknowledge the Walton Family Foundation
for the support of this paper, and Josh Cowen for his comments.
INTRODUCTION
Special-education programs in the United States have been growing
at a tremendous pace. Between 1977 and 2006, the percentage of students
enrolled in federally supported disability programs increased by
more than 66 percent, and such programs now serve 13.8 percent of
public school students in the United States. Much of this growth
can be attributed to a single special-education category—Specific
Learning Disability (SLD)—which increased during that same
period from 1.8 percent to 5.6 percent of all public school students
and now accounts for 40.7 percent of disability diagnoses.[1]
Some have speculated that a sizable amount of the growth in special
education may not reflect a true increase in the incidence of disabilities.
Instead, it may be the result of financial and other incentives
that spur school systems to classify struggling students who may
not truly suffer from a mental or physical disability as learning-disabled,
and thus entitled, under various state and federal mandates, to
receive more than ordinary attention, for which the school systems
in question are compensated.
The question examined in this report is whether special-education
voucher programs change the likelihood that students will be placed
in special education. Such programs offer students with disabilities
the opportunity to attend a private school charging fees that are
paid with some or all of the resources that would have been spent
on those students at a public school. Four states—Florida,
Georgia, Ohio, and Utah—have these programs, and they are the
fastest-growing type of school voucher program nationwide.
Special-education vouchers might reduce future growth in special
education by denying public schools the economic benefit to be gained
from diagnosing as disabled students who are simply struggling academically.
On the other hand, the recognition that a voucher can be the route
to a private school education for their child might cause some parents
to push for the child’s classification as disabled, thereby
increasing nominal disability rates.
Andrew Rotherham, cofounder of the research organization Education
Sector, and Sara Mead, a senior research fellow at the New America
Foundation, expressed the latter concern in a paper they prepared
for the Progressive Policy Institute (2003). They wrote:
[S]pecial education vouchers may actually exacerbate the over-identification
problem by creating a new incentive for parents to have children
diagnosed with a disability in order to obtain a voucher. In fact,
if special education identification led to funding for private school
attendance, it would be unusual if this did not create an incentive
to participate in special education in many communities, particularly
those with low-performing public schools.
If special-education vouchers accelerated growth in special-education
enrollments, which have already become quite large, we would have
reason to be leery of programs offering them. We find instead that,
for a student in the average Florida public school in 2005-06, special-education
voucher options reduced by about 15 percent the likelihood that
he would be placed in special education. This evidence suggests
that special-education vouchers place some constraint on growth
in special-education enrollments and the costs that accompany such
growth.
COMPETING VIEWS
Rotherham and Mead’s theory depends upon the assumption that
parents, in large numbers, have a decisive influence over the designation
of students as candidates for special education. That assumption
does not appear to be well-founded. Public schools, not parents,
determine whether students are classified as disabled.
It is true that parents may challenge the decisions that schools
make, but as the U.S. Supreme Court recently acknowledged in Forest
Grove School District v. T.A., “administrative and judicial
review of a parent’s complaint often takes years,” mooting
the effectiveness of such interventions. And the empirical research
on the outcomes of special-education disputes has found that school
districts win the majority of legal disputes with parents.
According to Mayes and Zirkel’s (2001) review of the literature,
“schools prevailed in 63% of the due process hearings in which
placement was the predominant issue.” In cases where the matter
went beyond an administrative hearing and was actually brought to
court, one study cited in Mayes and Zirkel’s review found that
“schools prevailed in 54.3% of special education court cases,”
which the authors say is in line with the findings of other studies.
In suits seeking reimbursement for private school expenses (because
a special-education voucher program is unavailable), Mayes and Zirkel
found that “school districts won the clear majority (62.5%)
of the decisions.”
If special-education vouchers don’t increase the number of
students identified as disabled, is there any basis for believing
that they decrease it? Research on the relationship between state
special-education funding systems and special-education enrollments
suggests that vouchers could reduce the incentive to identify students
as disabled. Though no one disputes that disabilities exist and
all declarations of disability are expensive, some recent work finds
that factors unrelated to the presence of an actual disability might
play a role in a school’s decision to place a student in special
education. For instance, Cullen and Reback (2002) and Figlio and
Getzler (2002) found that schools place low-performing students
into special-education programs in order to exempt them from taking
high-stakes tests, the results of which would be poorer and might
lead to sanctions on the affected schools if these students were
to participate.
Other recent research finds a relationship between special-education
funding formulas and the proportion of a school’s or a state’s
students who are identified as disabled. In most states, school
systems’ budgets increase along with the number of their students
classified as disabled, giving such systems a financial incentive
to place marginal students in special education. Some school systems
have attempted to reduce this incentive by instead basing their
special-education funding on historical enrollments. Greene and
Forster (2002), Mahitivanichcha and Parrish (2005), and Dhuey and
Lipscomb (2008), using state-level panel data, each found that states
changing to what might be called a “census funding system”
reduce their rate of growth in special education. Other work recognizes
the same phenomenon when the financial incentive to identify students
as disabled differs district by district within states. Using district-level
data, Cullen (2001) found that financial incentives explained 40
percent of the growth in enrollments in special education in Texas
during the early 1990s, and Kwak (2008) found a similar result in
California.
Many people do not understand how public schools could benefit
financially from placing students in special education when they
would reasonably expect the special attention that disabled students
require to impose a significant financial burden. One reason is
that school finances are complicated and fairly opaque. While special-education
services impose costs on schools, they also generate subsidies that
school systems may know or believe exceed the cost of those services.
This is most likely to be true in the case of students with mild
disabilities, who may receive a degree of attention that is only
slightly greater than what ordinary students are provided because
they need only that much attention to achieve an acceptable level
of proficiency or because of their school’s interest in diverting
resources obtained for special education to some other purpose.
Even if the cost is not trivial, school officials who reclassify
marginal students as disabled may not be doing anything more questionable
than seeking additional resources for their neediest students.
Let’s say a number of students in a class are behind in reading.
A school could offer those students small-group instruction focused
on improving reading skills and pay for it with regular school funds.
But if schools claim that those students are behind in their studies
because they have an SLD (the mildest form of disability and thus
the one closest in character to a simple deficit in intelligence),
which affects how their brain processes information, schools would
provide similar small-group instruction for them but would receive
subsidies from the state and federal government to do so. In short,
costs might not rise much or at all, but revenue would, from identifying
lagging students as suffering from an SLD—the category that
has accounted for the bulk of the growth in special-education enrollments
over the last three decades.
Whether the revenue from state and federal subsidies for special
education exceeds costs and offers schools a sufficient financial
incentive to move students into special education who would not
have been moved there otherwise is not something that can be observed
directly. But we can infer the influence of those incentives from
schools’ behavior. Since we know from previous research that
schools increase special-education enrollments in response to financial
incentives, we have reason to believe that the additional revenue
that comes from identifying certain students as disabled exceeds
the additional costs and, by implication, that the schools know
that it does.
School voucher policies targeted at disabled students might undermine
these financial incentives. Under such policies, public schools
may still receive supplemental payments for each student they place
into special education. However, students also have the option of
enrolling in a private school, which would then receive not only
the extra special-education funding but also the basic, per-capita
educational stipend that goes to every student in every classification.
In this paper, we provide the first estimates (to our knowledge)
of how special-education vouchers affect the probability that public
schools will identify students as needing special education. We
do so by examining shifts in the availability of private options
under Florida’s voucher program for disabled students. We utilize
student-level panel data to evaluate the relationship between the
probability that an elementary school student has been newly diagnosed
as having an SLD—not only the mildest disability classification
but the one whose diagnosis is most influenced by subjective factors—and
the amount of competition for such students that his school faces
from private schools within a five-mile radius that accepted McKay
vouchers in the year in question. This method follows previous work
evaluating the responses of public schools to school choice policies.
Our results suggest that fourth- through sixth-grade students in
public schools facing average exposure to vouchers in 2005–06
were about 15 percent less likely to be newly diagnosed with an
SLD than they would have been otherwise.
THE MCKAY SCHOLARSHIP PROGRAM
The John M. McKay Scholarship Program for Students with Disabilities
(McKay) is a statewide program in Florida designed to provide parents
of disabled students with the resources necessary for their child
to attend a public or a private school of their choosing. Since
its adoption, McKay has served as a template for other programs
in the United States. Currently, voucher programs for disabled students
that were modeled on McKay are operating statewide in Arizona, Georgia,
and Utah. Ohio has adopted a similar voucher program specifically
for autistic students.
McKay scholarships are available to any student who was enrolled
in the Florida public school system during the previous year and
has been assigned an Individual Education Plan—essentially
a contract between the school system and each student diagnosed
with a disability. After a student uses a McKay voucher to attend
a private school, he retains the voucher until he decides to return
to the public school, graduates from high school, or turns twenty-two
years of age.
In order to participate in the program, private schools must meet
certain safety requirements and employ teachers with at least a
bachelor’s degree. Unlike many other school voucher programs,
McKay does not require private schools that want McKay funds to
accept the voucher amount as full tuition payment; and private schools
that accept the McKay vouchers from some students are not required
to accept all applicants under the program.
The McKay program has grown dramatically since it was first implemented.
In the period following its adoption statewide, in 2000–01,
the number of students using its scholarships increased from 970
to 18,273 in 2006–07, making it the largest school voucher
program in the United States.[2] Such growth
is in large part due to the increase, from 100 to 811, in the number
of private schools willing to accept the voucher.
McKay is distinguished from other voucher programs not only by
the number of eligible candidates but also by the generosity of
the scholarships it awards. Eligible students are provided with
a voucher carrying a value equivalent to the lesser of the total
amount of money that would be spent on the child in his current
public school or the cost of tuition at the accepting private school.
According to the Florida Department of Education, in 2006–07
the dollar value of a McKay scholarship ranged from $5,039 to $21,907,
with an average of $7,206.[3]
Previous research has found that students participating in McKay
appear to benefit from doing so (Greene and Forster, 2003). Recent
research has found that the academic achievement of disabled students
remaining in public schools rises when those students are given
an opportunity, in the form of a voucher, to enroll in private school
(Winters and Greene, 2008).
McKay also has implications for the funding of special education.
Like many other states, Florida funds special education on a per-student
basis according to a matrix reflecting the relative severity of
a student’s disability and the relative costliness of the services
needed to help him. A per-pupil funding system like this could provide
schools with an incentive to diagnose the marginal student as disabled
if the additional dollars brought in by so doing exceeded the cost
of the additional services provided.
By threatening to shrink the enrollments of public schools, forcing
them to forgo not only a disabled student’s special-education
subsidy but also the basic stipend that is provided per student,
regardless of classification, McKay may have the ability to discourage
schools from misclassifying students as disabled.
On the other hand, McKay might provide the many parents who want
a private education for their child, because they have been disappointed
with their public school’s performance so far, with an incentive
to push for a disability diagnosis. Though school systems have the
final say over a student’s diagnosis, parents are able to ask
for a disability evaluation for their child (involving both objective
and subjective elements)—and might put pressure on school systems
to provide a positive diagnosis. If parents did, in fact, have the
degree of power over the school system that Rotherham and Mead suspect
they do, we would expect McKay to lead to an actual increase in
disability diagnoses.
SPECIFIC LEARNING DISABILITY
Our analysis focuses on the impact of McKay on the probability
that students are diagnosed with a Specific Learning Disability.
We focus on SLD because it is more easily confused than graver forms
of mental disability with simple cognitive deficits that do not
arise from brain pathologies. This distinction also makes the diagnosis
of SLD more likely to be influenced by extraneous factors, and thus
to be more common than the medical realities themselves would indicate.
Moreover, SLD is by far the largest and fastest-growing special-education
category, and thus likely to dominate the formulation of policy.
According to the federal law known as the Individuals with Disabilities
Education Act (IDEA), SLD is defined as “a disorder in one
or more of the basic psychological processes involved [in] understanding
or in using language, spoken or written, which may manifest itself
in an imperfect ability to listen, think, speak, read, write, spell
or do mathematical calculations.”[4] Included
in the SLD category are conditions such as perceptual handicaps,
developmental aphasia, and dyslexia.
 SLD
is by far the largest special-education category in Florida, as
it is in the nation. Table 1 reports the percentage of all students
and all special-education students, by disability category, in our
statewide data set, which includes only those students who were
administered a standardized math and/or reading exam during the
1999–2000 school year, which was the year before the McKay
program was adopted statewide. The table shows that students identified
as having a diagnosis of SLD account for 61.2 percent of disabled
students and 8.5 percent of all students in Florida.
SLD is among the mildest of the disability classifications covered
under IDEA and, importantly for our purposes, is also the one whose
diagnosis is most dependent on subjective evaluations. A child’s
classification as SLD is determined by the classroom teacher and
at least one person qualified to conduct a diagnostic examination.
One way that a child is determined to have an SLD is by noting the
gap in performance between what a level of instruction subjectively
deemed to be adequate should have produced and what it did, in fact,
produce in the child’s case. In the words of IDEA, a disabled
child is one who “does not achieve adequately for the child’s
age or … meet State-approved grade-level standards … when
provided with learning experiences and instruction appropriate for
the child’s age or State-approved grade-level standards.”[5]
There is reason to believe that the subjective nature of the SLD
diagnosis has led to substantial overclassification of students
as having an SLD. MacMillan and Siperstein (2001) suggest that public
schools use low achievement alone in the diagnosis of SLD rather
than a real clinical diagnosis of a student’s problem in learning
material. Shepard, Smith, and Vojir (1983) estimated that over half
of the students identified as having an SLD in Colorado at that
time did not fit either federal or state definitions of the disorder;
Ysseldyke, Algozzine, and Epps (1983) and Ysseldyke, Algozzine,
Shinn, and McGue (1982) found that many SLD students are indistinguishable
from low-achieving regular-enrollment students. In the analyses
that follow, we look for evidence of whether such misclassification
of students as having an SLD is systematically related to the availability
of vouchers that permit students to withdraw from their present
public school and attend a private school of their choosing.
EMPIRICAL METHOD
We must first develop a measure of the degree of choice that students
attending a school covered by the McKay program enjoy. We follow
several other papers evaluating the systemic impact of school choice
programs on public schools by utilizing the number of voucher-accepting
private schools within a given radius of a public school as our
measure of exposure to the possible benefits of the program (see
Bettinger 2005; Booker et al. 2006; Buddin and Zimmer 2004; Bifulco
and Ladd 2006; Sass 2005; and Winters and Greene 2008). The idea
here is that schools near a student’s home afford ready access
but that schools farther away do not. We assume that public schools
with fewer voucher-accepting private schools within reasonable traveling
distance of them were affected less by the competition from the
program because students had fewer available options. We also assume
that parents with fewer voucher-accepting schools nearby would have
less reason to push for a diagnosis of disability for their child.
(Data were not readily available on the size of the private schools’
enrollments, arguably an important factor as well in determining
a disabled student’s scope of opportunity to use his voucher.)
 Our
criterion for measuring a public school’s degree of McKay exposure
is the number of voucher-accepting private schools within a five-mile
radius of it. Table 2 shows that during school years 2002–03
through 2005–06, the period of our analysis, there was a substantial
increase in the number of schools willing to accept McKay vouchers
as at least partial tuition payment.
We set out to measure whether the number of voucher-accepting private
schools within the stated radius is related to the probability that
a regular-enrollment student was newly diagnosed as having an SLD.
In order to focus entirely on new diagnoses, we limit our panel
data set to include only students who were not identified as disabled
in any way in the previous year.[6] We do this
because, unsurprisingly, in preliminary estimations we found that
an existing diagnosis of a disability is a nearly perfect predictor
of a diagnosis of disability the following year. Thus, we would
not expect even a significant policy change like the enactment of
McKay to decrease the probability that an already diagnosed child
would remain classified as disabled.
Using this restricted data set, we run a series of panel-regression
models to estimate the probability that by the end of the academic
year, a particular student will be identified for the first time
as having an SLD. The dependent variable is a binary indicator of
whether the student was diagnosed as having an SLD by the end of
the school year. The analysis controls for such independent variables
as student’s grade level, Limited English Proficiency status,
Free or Reduced Price Lunch status, race, ethnicity, gender, and
cubic functions of the student’s math and reading scores on
the state’s high-stakes standardized test, the Florida Comprehensive
Assessment Test (FCAT), in the previous year.[7]
We also include a series of fixed effects at the district, school,
or student level, depending on the model. The fixed effects account
for unobserved factors at these levels by allowing the variation
utilized in the analysis to occur within the district, school, or
student level. Finally, our variable of particular interest identifies
the number of McKay-accepting private schools within a five-mile
radius of any given public school in a particular year.
Formally, the basic model for estimation takes the form:
(1) SLDist = b0
+ b1 Studentist
+ b2 Expist
+ yi + ps
+ ft + eist
where SLD is an indicator that equals 1 if student i enrolled
in school s is identified as having an SLD by the end of year t,
and zero otherwise; Student is a vector of time-varying observed
characteristics of the student; Exp represents the competitive
threat from the McKay program, which we measure by counting the
number of McKay-accepting private schools within a five-mile radius
of the public school; y, p,
and f represent student, school, and
year fixed effects, respectively; e is
a stochastic term clustered by school; and b0–b2
are parameters to be estimated.[8]
 Ideally,
we would follow students from the beginning of their public school
careers, that is, from preschool. However, since our data come from
administrative information linked to the state’s testing system,
we are unable to observe students prior to the third grade. Our
use of a lagged test score means that we are also unable to use
students in the estimation before they have entered fourth grade.[9]
This is problematic, since the majority of SLD diagnoses occur earlier
than the grade levels we observe. However, as Table 3 shows, there
are a meaningful number of new SLD diagnoses in the fourth through
sixth grades. About 1.5 percent of students who enter the fourth
grade without having been diagnosed as having an SLD are so diagnosed
by the end of the school year, and the number decreases to about
0.4 percent of undiagnosed students in the sixth grade. In all,
about 1 percent of fourth- through sixth-grade students are newly
identified as disabled during these years.
In sum, we maintain that the variation in the incidence of SLD
diagnosis is sufficient to allow us to proceed. We concede, however,
that the relationship between the chance to use a voucher and the
rate at which students are classified as having an SLD might be
different in the earlier grades from what it is in grades four through
six, reducing our capacity to estimate the total impact of McKay
exposure on all SLD diagnoses in the student-level model.
We estimate various forms of (1) that differ primarily in the way
that we account for the influence of student and school characteristics.
We estimate models utilizing a student fixed effect as well as models
that utilize a school fixed effect instead. Since the lowest-performing
students are the ones most likely to be identified as having an
SLD, we also estimate each model after first restricting the data
set to include only those students with math-test scores in the
previous year that were at least one standard deviation below the
mean in the state.
DATA
 For
the student-level analyses, we utilize a rich administrative data
set supplied by the Florida Department of Education. The data set
includes test-score and demographic information for the universe
of public school students in Florida in grades three through ten
in school years 2000–01 through 2004–05. As a consequence
of our relying on a lagged student test score, our student-level
analyses utilize observations of student diagnoses in school years
2001–02 through 2004–05. We also restrict the data set
to include only fourth- through sixth-grade students for the reasons
discussed above. Summary statistics for variables relevant to estimation
of (1) are reported in Table 4.
The Florida Department of Education also provided us with the names
and addresses of private schools that made themselves eligible to
receive McKay vouchers for school years 2001–02 through 2005–06.
We then used geographic information system (GIS) software to map
these private schools as well as every public elementary school
in the state by year in order to count the number of McKay-accepting
private schools within a five-mile radius of each public school.
RESULTS
The results from estimating various forms of (1) for students in
the fourth through sixth grade are reported in Table 5.
Each of the reported models—using a district, school, or student
fixed effect—finds an inverse relationship between the number
of private schools within a five-mile radius of a student’s
public school that accept McKay vouchers and the probability that
he is newly identified as having an SLD. The size of the coefficient
in each specification is also similar. Depending on the estimate,
we find that with the addition of each McKay-accepting private school
within a five-mile radius of the public school, the probability
that a child is identified as disabled decreases by 0.06 to 0.02
percentage points. The large number of both students and schools
in our data set provides confidence that our estimates are able
to measure such small effects accurately.
 The
table also reports results from estimations of (1) utilizing school
or district fixed effects when we restrict the model to students
whose previous year’s math score was below a standard deviation
from the mean for the state.[10] The impact
of a nearby McKay-accepting private school was larger for this restricted
sample than it was for the full sample, and it was statistically
significant. The preferred model in this restricted sample utilizing
a school fixed effect finds that the addition of another voucher-accepting
private school within five miles of a public school reduces the
probability that a child is identified as having an SLD by 0.204
percentage points.
While the size of this effect is relatively small, it is larger
than it first appears. As shown in Table 2, in school year 2005–06
(the last year for which we have such data), there were, on average,
7.6 McKay-accepting private schools within the stated radius of
each of Florida’s public schools. Thus, we find that, on average,
McKay competition decreased the probability that a fourth-, fifth-,
or sixth-grade student was newly identified as disabled by about
0.15 percentage points in 2005–06. Recalling the summary statistics
in Table 4, we know that about 1 percent of students in our sample
are newly identified as having an SLD during the sample period.
This number translates into a 15 percent reduction in the probability
that a student in 2005–06 attending a school with average McKay
exposure for that year was identified as having an SLD.
CONCLUSION
In this paper, we find evidence that the introduction of special-education
voucher options leads to a reduced number of special-education diagnoses.
Our findings are consistent with a small literature indicating that
financial incentives play an important role in the decision whether
to diagnose a student as disabled.
While our finding of an inverse relationship between exposure to
McKay and disability diagnosis is robust, it is difficult to put
the magnitude of the impact of incentives into context. The primary
external-validity problem is our inability to observe diagnoses
of disability rendered before students enter the fourth grade, which
is when most such diagnoses are made. We are tempted to assume that
for every grade, our estimates of the size of the change in the
probability of diagnosis are close to each other and that we could
therefore safely apply the estimates found here to earlier grade
levels. However, we lack a real basis for that assumption. We would
be interested in seeing work addressing this issue in Florida and
elsewhere undertaken.
One could interpret the result that we and previous research found
in one of two ways: under McKay, there is less overclassification;
or, under McKay, schools respond to the risk of losing funding by
failing to diagnose as disabled some students who are in fact disabled.
Although we can only speculate at this point, the tremendous growth
in special education over the last few decades, along with the fact
that much of this growth has been confined to the mildest form of
learning disability—which happens to be the one in which subjective
diagnostic judgments play the largest role—leads us to believe
that the former interpretation is more likely.
At the very least, these findings give us enough confidence to
conclude that special-education vouchers do not contribute to the
growth of special-education enrollments. And our best evidence suggests
that the availability of special-education vouchers places some
constraint on the growth of special education, which has been quite
rapid.
Endnotes
- National Center for Education Statistics, Digest of Education
Statistics: 2007, Table 47. http://nces.ed.gov/programs/digest/d07/tables/dt07_047.asp.
- See www.floridaschoolchoice.org/Information/McKay/files/Fast_Facts_McKay.pdf.
- Ibid.
- See www.slc.sevier.org/ldoutl.htm.
- See www.ideapartnership.org/oseppage.cfm?pageid=44
- Because of this restriction, once a student in our data set
is identified as disabled, he will exit the sample.
- In models in which we exclude both student and school fixed
effects, this vector also includes a district fixed effect, which
in Florida is identical to a county fixed effect.
- In practice, computational difficulties stemming from the large
number of students and schools make direct estimation of (1) difficult.
Since most students in the elementary grade levels evaluated here
do not change schools, the school that a child attends is most
often a time-invariant characteristic, so we treat it as such
by excluding the school fixed effect when a student fixed effect
is utilized. However, we also report results from models that
replace the student fixed effect with a school fixed effect.
We estimate (1) via ordinary least squares (OLS), which results
in a linear probability model. For classical reasons, the limitations
of SLD as a binary variable suggest that a method such as Probit
is preferred. However, it is computationally quite burdensome
to include school or student fixed effects in Probit models when
conventional software is used. More important, use of a student
fixed effect in a Probit model estimated by maximum likelihood
(ML) forces the model to utilize only observations of students
judged to have moved from one diagnostic category to another,
because the fixed effect would be a perfect predictor of SLD diagnosis
of those students whose status does not change. This limitation
would severely restrict our sample and the interpretation of the
coefficients. The linear probability model utilizing OLS is computationally
manageable and does not suffer from the problem of being a perfect
predictor. Some other recent studies have also utilized OLS to
estimate linear probability models. (See, for example, Duggan
and Levitt 2002; and Heckman and Snyder 2002.)
- Third-grade students would have a prior test score if they
were held back at the end of the previous year. However, we exclude
such students because they are not representative of third-grade
students generally.
- When restricting the model to only very low-performing students,
we do not also estimate models with a student fixed effect because
by doing so, we would lose students whose test scores rise above
and sink below the one-standard-deviation limit.
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