Special Education Reimbursement Reform in Connecticut: The Legal and Policy Case
I. Introduction
Every student with a disability is entitled to a free and appropriate public education (“FAPE”) under the federal Individuals with Disabilities Education Act (IDEA). In Connecticut, that right follows the student into any public school the family chooses, including a public charter school. When a charter school enrolls a student who needs special education, the charter delivers the services, and the student’s resident district reimburses the charter under General Statutes § 10-66ee(d)(7).
That framework should be simple. In practice, one phrase—“reasonable cost”—became the fault line. Two Connecticut districts treated “reasonable” as “whatever we decide to pay,” leaving charter schools to absorb shortfalls that reached into the millions. On May 20, 2026, our firm filed a consolidated appellee brief in the Connecticut Appellate Court defending the schools’ position and the state agency ruling that vindicated it. As final briefing proceeds, this post explains the framework, why the dispute matters beyond two cities, and why “reasonable cost” should mean the documented cost of required special education services.
II. The Framework: Who Pays for Special Education at a Charter School
Connecticut charter schools are public schools. They may not exclude students with disabilities or deny them FAPE. General Statutes §§ 10-66bb(d), 10-76d. For each student who needs special education, the resident school district convenes the planning and placement team (“PPT”) and writes the individualized education program (“IEP”). General Statutes § 10-66ee(d)(7)(A). The charter school participates because it must deliver the services the IEP requires.
The district writes the IEP. The resident district chairs the PPT and determines the services required.
The charter delivers the services. The charter implements the IEP for the enrolled student.
The district reimburses the cost. The resident district pays the charter for the required special education and related services, after accounting for other per-pupil funding.
After services are delivered, the district must pay the charter, quarterly, the difference between the “reasonable cost” of educating the student and the per-pupil funding the charter receives from other sources. § 10-66ee(d)(7)(B). The charter invoices only for special education and related services; ordinary per-pupil costs are funded separately. As the State Board recognized, there is no mystery about what the student is owed because the required services are largely set by the district in the IEP it wrote.
Districts also have a backstop that charter schools do not. Section 10-76g allows local and regional boards of education to seek state excess-cost reimbursement for special education costs above a statutory threshold, including amounts reimbursed to charter schools. Charter schools cannot access that pool. They depend on the district paying what it owes.
III. Where It Breaks Down: “Reasonable” Treated as “Discretionary”
The dispute arose between Brass City Charter School and the Waterbury Board of Education, and between Booker T. Washington Academy and the New Haven Board of Education. For years, each district controlled reimbursement by creating its own formula or setting a fixed annual figure before services were delivered.
Waterbury’s approach. Waterbury used a formula with no statutory basis. It started with its own per-pupil special education cost, subtracted all funding the charter received from other sources regardless of special education status, and then deducted what it unilaterally valued as “in-kind” services. SDE found the method “completely divorced from the actual costs of providing special education and related services.” By the close of briefing before the State Board of Education (2023), Waterbury owed Brass City $1,044,408.07, dating back to the 2018–19 school year.
New Haven’s approach. New Haven offered a fixed annual reimbursement through a memorandum of understanding, without explaining how it calculated the amount. In 2020–21, it proposed $57,963 against documented costs of $90,310.40. When Booker T. declined to sign, New Haven stopped reimbursing it altogether and ultimately owed $250,663.49.
Both practices persisted despite SDE’s 2021 guidance, which rejected methodologies untethered to “the actual costs incurred” and reminded districts that charter schools should have “neither a fiscal advantage nor disadvantage” when serving students with disabilities. Mediation failed. The schools then petitioned the State Board of Education for a declaratory ruling.
IV. The Declaratory Ruling and the Appeal
In Declaratory Ruling 23-01, the State Board unanimously held that “reasonable cost” under § 10-66ee(d)(7) means the actual costs charter schools incur implementing students’ IEPs, so long as the total does not exceed the school’s actual cost of serving all students with disabilities. The Board also held that reimbursable costs include the administrative and planning time charter staff spend delivering IEP-mandated services.
Waterbury and New Haven appealed to the Superior Court. The court denied their request for a stay, noting that the charter schools had already absorbed the financial burden and that districts, unlike charters, can seek state excess-cost reimbursement. After plenary review, the court (Cohn, J.) dismissed the appeal. It held that the State Board’s interpretation reflected legislative intent and that a declaratory ruling was a proper vehicle for providing it. The districts then appealed to the Connecticut Appellate Court, where the matter remains pending and where we filed the consolidated brief for the schools.
V. The Legal Case for Reading “Reasonable” as “Actual”
Connecticut courts begin with the statutory text and “its relationship to other statutes.” General Statutes § 1-2z. Courts look beyond that common sense reading only if the text is ambiguous or would produce absurd or unworkable results. Three points support the schools’ reading.
Context. “Reasonable cost” appears immediately after the statute’s description of the IEP and PPT process. In that setting, it means the cost of delivering the services the district prescribed, not a figure the payer invents later.
Related statutes. The same provision cross-references § 10-76g, which uses “one hundred per cent of the reasonable costs” for state reimbursement to districts. The implementing regulation ties eligible amounts to services provided under IDEA. In the surrounding statutory scheme, “reasonable” tracks actual, IEP-driven cost.
Agency deference and unworkability. Connecticut courts give substantial deference to an agency interpreting a statute it enforces, and SDE has the relevant expertise. Even without deference, the districts’ reading fails because each district defined “reasonable” differently. A standard that changes town by town and is untethered by the services delivered is unworkable.
The districts argued that actual-cost reimbursement would let charter schools inflate their bills. But the statute already contains the safeguard: the charter cannot unilaterally add services. The district controls the IEP through the PPT it chairs, and only IEP-required services are reimbursable.
VI. The Policy Case for Reform
The stakes extend beyond two balance sheets. Because charter schools cannot access the § 10-76g excess-cost pool, every dollar a district underpays comes out of the charter’s operating budget—and, ultimately, the services available to students with disabilities. The legislature designed the system so a charter would be left “neither better nor worse off” for serving these students. A reimbursement regime that lets each district set its own discount defeats that design and shifts the cost of a federal entitlement to the schools least able to absorb it.
There is also a broader lesson for school-choice funding. After Declaratory Ruling 23-01, the State Board submitted legislative proposals to codify the actual-cost standard, and clear statutory language tied to the IEP would remove negative incentives and reduce litigation. But a clearer standard answers only how much is owed. It does not answer the question this litigation exposed: what happens when a district simply declines to pay? However “reasonable cost” is defined, the resident district still cuts the check, and compelling legally mandated reimbursement through litigation is slow, costly, and beyond the means of most charter schools. Codifying the actual-cost standard may fix the formula but it will not fix the system.
VII. Takeaways for Charter and District Leaders
Invoice to actual cost. Tie each reimbursement request to the services and minutes in the student’s IEP. Average hourly rates and lump sums are the kinds of methodologies SDE rejected.
Remember who controls cost. The resident district chairs the PPT and writes the IEP. That is the built-in safeguard against inflated costs.
Do not treat pre-service offers as the ceiling. A take-it-or-leave-it annual figure set before services are delivered has no basis in § 10-66ee(d)(7). Reserve rights in writing rather than signing them away.
Build the agency record. Administrative appeals in Connecticut are confined to the record under § 4-183. Evidence a court may need should be submitted to the agency first.
VIII. Conclusion
“Reasonable cost” is not permission for a district to set its own price. In context, it means the actual cost of the IEP services the district prescribed. That reading protects students, respects the legislature’s “no advantage, no disadvantage” design, and reduces recurring disputes over special education funding. The cleanest fix is legislative: codify the actual-cost standard so districts, charter schools, and families can rely on one clear rule.
Commonlight Legal leads a charter and independent school practice with a successful record in administrative appeals and systemic advocacy for Connecticut charter schools. If your school is navigating a special education reimbursement dispute—or wants to assess its exposure before one arises—we offer a complimentary 30-minute consultation with a managing partner.
Lauren Koster is a Managing Partner of Commonlight Legal LLP, a boutique law firm serving nonprofits in New York, Connecticut, Massachusetts, and Washington, DC. She represents public charities, private foundations, and social welfare organizations as outside general counsel, and she leads the firm’s charter and independent school practice, with a proven history of successful administrative appeals and systemic advocacy on behalf of Connecticut charter schools. She submitted the consolidated appeal described above on behalf of Brass City Charter School and Booker T. Washington Academy.
This article is for general informational purposes only and does not constitute legal advice, and it concerns a matter currently pending before the Connecticut Appellate Court. Reading this article does not create an attorney-client relationship. Statements of prior results do not guarantee future outcomes. For advice specific to your organization’s situation, contact your attorney or set up a consultation with us at commonlight.legal/appointments.
