As federal and state lawmakers pursue new education policies in 2025, special education stands at the crossroads of opportunity and uncertainty. Legislative proposals at both levels aim to address persistent underfunding, teacher shortages, and systemic inequities—but the potential impact varies widely depending on geography and political will. This white paper explores key proposed legislation, how it affects special education funding, and what it means for school districts in South Carolina, North Carolina, and Virginia.

The Federal Landscape

At the national level, the Individuals with Disabilities Education Act (IDEA) remains the cornerstone of special education funding. Despite its original intent to cover 40% of the excess costs for students with disabilities, actual federal contributions have hovered around 13% for decades (U.S. Congress, 2025). The IDEA Full Funding Act (H.R. 2598 / S. 1277), reintroduced in 2025, aims to correct this gap by incrementally increasing federal support over the next decade.

Supporters argue that full federal funding would provide substantial relief to districts, enabling them to expand services, hire specialized staff, and invest in professional development (National Education Association, 2025). Endorsed by national organizations such as the NEA and the Council for Exceptional Children (Council for Exceptional Children, 2025), the bill represents a rare bipartisan effort to stabilize special education funding.

Yet not all federal proposals align with this vision. Some policy platforms suggest converting IDEA into a block grant, reducing oversight and potentially jeopardizing protections for students with disabilities. Such proposals have raised alarms among advocates who fear a rollback of decades of progress.

South Carolina: Building Local Voice

Proposed legislation in South Carolina focuses on enhancing local governance and parental involvement. Bill H.4468 would establish local advisory councils of educators, parents, and community stakeholders to guide district-level special education policy (South Carolina General Assembly, 2025). This approach emphasizes grassroots input and accountability.

Meanwhile, the state continues to expand educational choice through mechanisms like the Education Scholarship Trust Fund. While not explicitly targeted at students with disabilities, such policies may divert public funds away from traditional special education programs (South Carolina General Assembly, 2025).

Budget proposals for FY2026 include increased support for infrastructure and permanent funding streams for special education, reflecting a growing recognition of the need for stability in service delivery (South Carolina General Assembly, 2025).

North Carolina: Breaking the Cap

North Carolina has long relied on a capped funding formula that reimburses districts for special education costs based on a maximum percentage of total student enrollment—currently set at 13%. Districts that exceed this threshold receive no additional state funding for those students, placing a disproportionate burden on high-need communities (North Carolina Department of Public Instruction, 2025).

Recent legislative proposals aim to increase the per-pupil funding rate and remove the cap altogether. If successful, these reforms align state funding with actual service needs, allowing districts to plan more effectively and equitably.

However, progress remains slow, and many districts struggle with inadequate resources, particularly in rural and economically disadvantaged areas (North Carolina Department of Public Instruction, 2025).

Virginia: Funding Reform and Procedural Overhaul

Virginia has emerged as a leader in experimenting with funding reform. Proposed legislation, such as HB 1954, would allocate state dollars based on actual costs rather than capped percentages. HB 2606 addresses procedural fairness in due process hearings by allowing officers to dismiss baseless complaints (Virginia Department of Education, 2025).

Other recent legislative efforts include HB 1806 and SB 1126, which strengthen IEP protocols and ensure better documentation and training for assistive technology use. These bills have already passed in amended forms, signaling strong bipartisan support (Virginia Department of Education, 2025).

The state budget for FY2025 includes $134 million in extended school year (ESY) grants and bonuses for instructional support staff, with advocacy organizations like the Virginia PTA pushing for an additional 6% "Special Education Add-On" to base funding (Virginia PTA, 2025).

Following a federal corrective process completed in 2024, Virginia is also working to improve oversight and compliance, reflecting a broader trend toward data-driven accountability (Virginia Department of Education, 2025).

Implications for District Leaders

Across these three states, the message is clear: special education is gaining legislative attention, but the outcomes depend heavily on follow-through and funding execution.

District leaders should monitor federal legislation closely and advocate for the IDEA Full Funding Act, which offers the most direct path to systemic relief. At the state level, leaders must push for reforms that align funding with actual student needs, rather than arbitrary caps or flat formulas.

Strategic planning, stakeholder engagement, and external partnerships—particularly with private EC staffing solutions—will be essential in managing services during this transition period. States like South Carolina are emphasizing local voice, while Virginia focuses on cost-based funding and procedural safeguards. North Carolina’s push to remove funding caps could prove transformative if enacted.

Conclusion

Special education stands at a pivotal moment. With the IDEA Full Funding Act gaining traction and several state legislatures proposing meaningful reforms, cautious optimism exists for a more equitable and sustainable funding system. However, realizing this vision will require persistent advocacy, innovative planning, and a commitment to putting students with disabilities at the center of policy decisions.

References

- U.S. Congress. (2025). H.R. 2598/S. 1277 IDEA Full Funding Act. https://www.congress.gov- South Carolina General Assembly. H.4468 and Education Scholarship Trust Fund legislation. https://www.scstatehouse.gov- North Carolina Department of Public Instruction. Exceptional Children Division Reports. https://www.dpi.nc.gov- Virginia Department of Education. Legislative Summaries and Budget Reports. https://www.doe.virginia.gov- Virginia PTA. (2025). Special Education Add-On Proposal. https://vapta.org- National Education Association. (2025). Advocacy for IDEA Full Funding. https://www.nea.org- Council for Exceptional Children. (2025). Legislative Updates. https://www.cec.sped.org