DOD Dependents Schools: Cost Issues Associated With the Special Education
Program (Letter Report, 05/13/96, GAO/HEHS-96-77).

Pursuant to a congressional request, GAO reviewed the Department of
Defense's Dependents Schools (DODDS) special education program.

GAO found that: (1) from 1994 to 1995, DODDS provided special education
assistance to 7,700 students; (2) DODDS cannot determine its total
program costs because it does not track or report information regarding
its total expenditures, its accounting system only segregates special
education labor costs, and it combines other costs, such as equipment
and supply costs, into the overall budget; (3) DODDS also does not track
and report information on the additional costs it incurs to acquire
services for special education students whose needs cannot be met by
local DODDS schools, or to send special education students to non-DODDS
schools; (4) DODDS officials believe that the number of students whose
special education needs are not met is relatively small; (5) additional
annual per student costs ranged from several hundred dollars for
evaluation and monitoring to $60,000 for special transportation of
teachers to a DODDS school that lacked special education services; (6)
15 students attended non-DODDS schools because the local DODDS school
did not offer special education services or there wasn't a DODDS schools
nearby; (7) DOD lack of adherence to policies and procedures for
screening and placing dependents and ineffective DODDS management are
the two factors that most adversely affect special education program
costs; and (8) special education costs could be reduced if DOD improved
its dependent screening and if DODDS paid more attention to
administrative and instructional demands.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-96-77
     TITLE:  DOD Dependents Schools: Cost Issues Associated With the 
             Special Education Program
      DATE:  05/13/96
   SUBJECT:  Overseas dependents schools
             Education or training costs
             Teacher salaries
             Military dependents
             Special education
             Public schools
             Americans abroad
             Handicapped children
             Defense cost control
             Fringe benefits
IDENTIFIER:  DOD Dependents Schools Special Education Programs
             
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Cover
================================================================ COVER


Report to Congressional Committees

May 1996

DOD DEPENDENTS SCHOOLS - COST
ISSUES ASSOCIATED WITH THE SPECIAL
EDUCATION PROGRAM

GAO/HEHS-96-77

DODDS Special Education

(104826)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  DODDS - Department of Defense Dependents Schools
  IDEA - Individuals With Disabilities Education Act

Letter
=============================================================== LETTER


B-262031

May 13, 1996

The Honorable Strom Thurmond
Chairman, Committee on Armed Services
United States Senate

The Honorable Sam Nunn
Ranking Minority Member, Committee on
 Armed Services
United States Senate

The Honorable Floyd D.  Spence
Chairman, Committee on National Security
House of Representatives

The Honorable Ronald V.  Dellums
Ranking Minority Member, Committee on
 National Security
House of Representatives

To provide a free public education through secondary school for
dependents in overseas areas,\1 the Congress created the Department
of Defense Dependents Schools (DODDS) system in 1978.  DODDS, a
Department of Defense (DOD) support organization, is responsible for
educating every child of a sponsor\2 serving an accompanied tour,\3
regardless of the child's educational needs or the resources
available at the sponsor's overseas location. 

In addition, DODDS must provide special education assistance to all
eligible students as required by the Individuals With Disabilities
Education Act (IDEA).  To comply with IDEA, DODDS' special education
program must provide a free and appropriate education for students
with disabilities aged 3 through 21.  In most cases, special
education students attend DODDS schools with the resources to meet
their educational needs.  Sometimes, however, the sponsor of a
special education student is assigned to a location lacking a DODDS
school or where the DODDS school lacks the resources to meet the
student's needs.  In these cases, DODDS pays the cost of obtaining
such resources for students on accompanied tours, even if it means
placing students in a non-DODDS school.\4

Because of concerns that DODDS is incurring excessive costs to
educate special education students when their sponsors are assigned
to locations lacking a DODDS school that can meet the students'
needs, the House Committee on National Security asked us to review
DODDS' special education program.  This review was part of the work
we were directed to do by the Conference Report accompanying the 1994
Defense Authorization Act.\5 The Committee was particularly
interested in knowing the (1) amount of money DODDS spends on its
special education program, (2) number of special education students
whose sponsors are assigned to locations lacking a DODDS school with
the resources to meet the students' needs and the cost associated
with meeting their needs another way, and (3) number of special
education students who are sent to non-DODDS schools because no DODDS
school is located near them to meet their needs and the associated
cost. 

To obtain this information, we reviewed special education laws and
relevant DOD regulations.  We also analyzed data on special education
enrollments and costs in DODDS schools but did not independently
verify the accuracy of the reported data.  We supplemented our
analysis with discussions with officials at the Office of the
Secretary of Defense and DODDS headquarters and used structured
interviews to gather information from two of three DODDS regional
offices,\6 9 of 11 district offices, and 21 of 191 schools.  We did
our work on the special education program between June 1994 and
December 1995 as part of the work mandated by the Conference Report
accompanying the 1994 Defense Authorization Act.  Our work was done
in accordance with generally accepted government auditing standards. 


--------------------
\1 Public Law 95-561, the Defense Dependents' Education Act of 1978,
(20 U.S.C.  921) created DODDS. 

\2 A sponsor is an active-duty military service member stationed
overseas or a full-time DOD employee whose salary is paid from
appropriated funds and who is stationed overseas and either a U.S. 
citizen or an immigrant who is a permanent legal U.S.  resident. 

\3 An accompanied tour is an overseas tour, usually 24 to 36 months,
during which the federal government pays the transportation and
housing costs for dependents who accompany a military service or DOD
employee. 

\4 Generally, the student is placed in a school that civilian agency
dependents attend while abroad.  Various nongovernment, coeducational
independent schools are available overseas, but most American
students attend schools established cooperatively by Americans living
overseas.  Many of these schools receive assistance and support from
the U.S.  government. 

\5 Under this congressional mandate, we have issued two other
products:  Military Dependents' Education:  Current Program
Information and Potential Savings in DODDS (GAO/T-HEHS-94-155, Apr. 
26, 1994) and DOD Dependents Schools:  Enrollment Categories,
Numbers, and Locations (GAO/HEHS-95-149, Sept.  18, 1995).  This
report is our final product under this mandate. 

\6 We excluded the Panama Region from our analysis of special
education enrollments because, under the terms of the Panama Canal
Treaty, the schools in Panama will be turned over to Panama's
government for operation in 1999 and the only other school in the
region was scheduled to close in 1995. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Although DODDS provides special education assistance to about 8,000
students, it does not separately track and report information needed
to determine the total amount of money DODDS spends on its special
education program.  Specifically, DODDS' accounting system only
segregates special education labor costs, such as special education
teachers' salaries.  Other special education costs, for equipment,
supplies, and the like used for special education students, are
combined with costs incurred for the regular education program. 

Similarly, DODDS does not track and report information on the
additional costs it incurs to (1) acquire services for special
education students whose needs cannot be met by DODDS schools in
locations where their sponsors have been placed or (2) send special
education students to non-DODDS schools to meet their needs. 
According to district office special education staff, however, only a
small number of special education students fall in these categories. 
These staff estimated that DODDS had incurred additional annual per
student costs that ranged from several hundred dollars for evaluation
and monitoring to $60,000 when teachers had to be flown in to one
DODDS school throughout the school year to provide services.  DODDS
regional office staff identified 15 students in non-DODDS schools who
were receiving special education services at the time of our visits. 
A DODDS official told us that one of these students was in a
non-DODDS school because the DODDS school where the student's sponsor
had been assigned lacked special education services.  According to
the official, the other 14 students were in non-DODDS schools because
no DODDS schools were located where the students' sponsors had been
assigned. 

Two factors have influenced DODDS' special education program costs: 
(1) DOD's lack of adherence to its policies and procedures for
screening and placing dependents with special education needs, which
has sometimes resulted in the assignment of their sponsors to
overseas locations lacking DODDS schools with the services they need
and (2) DODDS' management of its special education program, which has
historically focused on legal compliance and paid scant attention to
instructional and administrative issues.  One way to possibly reduce
program costs is to improve the effectiveness of these factors. 


   BACKGROUND
------------------------------------------------------------ Letter :2

DODDS' total 1994-95 school year enrollment was approximately 89,000
students.  The enrollment in the special education program was
approximately 7,700 students--a 9-percent increase from the 1992-93
school year enrollment.\7 Some DODDS officials believe DODDS' special
education population will continue to increase as DODDS implements
new initiatives mandated by IDEA, such as the establishment of
preschools for children aged 3 to 5 with identified disabilities. 

DODDS staff in three regions--European, Pacific, and Panama--and 11
districts administer the special education program at 191 schools in
14 countries.  Although DODDS does not offer full services for all
disabilities at every school, it offers the full continuum of special
education services, except for full-time residential care, in each
region.\8 Most DODDS schools can meet the needs of most special
education students.  Some schools located near medical facilities in
both the European and Pacific regions can serve the needs of students
with severe disabilities, such as some neurological disorders, who
also require specialized medical services. 

In 1983, DODDS established its special education office to ensure
compliance with IDEA.  Although the Department of Education provides
some funding for implementing IDEA in the United States, DODDS is not
eligible for such funding.  DODDS does not report to the Department
of Education on its implementation of the act because it is exempt
from IDEA's reporting provisions. 


--------------------
\7 Data on DODDS' special education population were not maintained
before school year 1992-93. 

\8 Services are available to support children with mild to severe
communication, emotional, hearing, visual, learning, and/or
orthopedic impairments as well as developmental delays.  Students
requiring full-time residential care are generally placed in
stateside residential programs. 


      DODDS DOES NOT SEPARATELY
      ACCOUNT FOR THE FULL COST OF
      ITS SPECIAL EDUCATION
      PROGRAM OR COLLECT DATA ON
      SPECIAL EDUCATION STUDENTS
      WHOSE SPONSORS ARE ASSIGNED
      TO LOCATIONS WITH SCHOOLS
      LACKING SERVICES
---------------------------------------------------------- Letter :2.1

DODDS does not record separately all costs related to its special
education program.  Generally, DODDS' knowledge about its special
education program costs is limited to teacher salaries.  DODDS
usually aggregates special education program costs such as those for
equipment, evaluation instruments, transportation, and books with
data on the costs of implementing its general education curriculum. 
Accounting codes for various special education costs were either
never established or not used consistently throughout DODDS.  Fiscal
managers in DODDS told us they did not maintain discrete data on
special education costs other than teacher salaries because they have
no need to do so. 

In addition, DODDS maintains neither records on special education
students who are placed in schools without needed services nor data
on any additional expenditures it incurs to provide the services. 
Our discussions with officials in DODDS' district offices and schools
indicate that, on the basis of their experience, the number of such
placements worldwide appears to be relatively small.  For example,
although officials in one district cited 10 students in a 2-year
period who were considered to be inappropriately placed, officials in
other districts cited only 1 or 2 students so placed per year.  They
told us, however, that disruptions can arise for staff, the student
being placed, and the other students while DODDS works to meet the
needs of the child.  For example, students with severe disabilities
may have to remain in classrooms with teachers unprepared to deal
with their needs while DODDS works to remedy the situation.  In
addition, the school may incur extra costs when a student arrives at
a school lacking the resources to serve the student.  DODDS does not,
however, routinely track and report cost data.  Data we obtained from
some locations showed approximate costs ranging from a few hundred
dollars to $60,000 for one student when teachers had been flown in
throughout the school year to provide services. 

DOD regulations authorize DODDS to obtain reimbursement from the
military services for extra costs incurred to provide special
education services for children on accompanied tours.  DODDS asked
all its regions to report these costs for the first time in August
1994.  Nevertheless, it did not obtain reliable or consistent cost
data from the responses received because districts included different
cost elements in their reports.  DODDS officials said they plan to
continue to work on getting better cost information. 

At our request, DODDS regional offices identified 15 students in
non-DODDS schools who were receiving special education services, but
they kept no record of all costs incurred to deliver special
services.  A DODDS official said only one of the special education
students in a non-DODDS school was placed there because special
education services were not available at a DODDS school.  Estimated
annual, individual costs for special education students placed in
non-DODDS schools ranged from several hundred dollars to evaluate and
monitor a child to $55,000 for non-DODDS school tuition costs. 


      SCREENING AND PLACEMENT
      POLICIES AND PROCEDURES AND
      PROGRAM MANAGEMENT CAN
      INFLUENCE THE COST OF DODDS'
      SPECIAL EDUCATION PROGRAM
---------------------------------------------------------- Letter :2.2

DODDS and DOD officials stated that DODDS costs can increase when
policies and procedures for screening and placing special education
students are not followed.  In addition, lack of management attention
to special education program issues, such as teacher workload and
training and providing the least restrictive environment for special
education students as required by IDEA, may also influence costs. 

Before authorizing an accompanied overseas tour, DOD is required to
screen school-age dependents for disabilities.  According to DODDS
officials, failure to screen students or consistently follow
established screening and placement procedures is a major reason
special education students are placed in schools without needed
services.  For example, at one DODDS school only 1 of 10 special
education students had been screened before entering the school. 

Screening and placement procedures were ignored for a variety of
reasons.  In some cases, military personnel concealed their
children's disabilities during the screening process because they
perceived a particular overseas transfer as necessary for career
advancement.  In other cases, after the screening identified
disabilities, the relevant military service did not contact DODDS to
coordinate the placement or disregarded the placement
recommendations.  Although the military occasionally returns
personnel to the states for not adhering to these procedures, this is
not uniformly done among the services.  Moreover, lacking adequate
expenditure data, DODDS cannot request reimbursement from the
military for the cost of providing special education to students in
schools without needed services. 

Central management of the special education program over the years
has focused on legal compliance issues and paid scant attention to
the instructional or administrative support aspects of the special
education program, according to our discussions with DODDS officials. 
For example, increasing noninstructional duties related to special
education has affected teacher workloads.  In some schools, teachers
are paid extra for handling these duties as well as a full teaching
schedule, and in other schools one teacher handles all special
education noninstructional duties as a full-time job.  No guidance
from management has indicated which arrangement is more
cost-efficient or -effective for the schools.  Also, one school
reported high special education teacher turnover rates in part due to
lack of guidance from management on implementing inclusion\9

in the school to fulfill IDEA's requirements to educate students in
the least restrictive environment.  Again, lack of management
attention to such issues leaves DODDS unable to ascertain the most
cost-efficient and educationally effective way to address these
issues.  Furthermore, because DODDS management has not implemented
procedures to ensure that valid and reliable cost data are routinely
obtained and maintained, complete cost information is not available
to determine if the program is operating efficiently or to accurately
predict its future cost. 


--------------------
\9 Inclusion is a program in which a student--no matter what
disability he or she may have--attends his or her home school with
age and grade peers and receives in-school education services, with
appropriate support in the general education classroom. 


   CONCLUDING OBSERVATIONS
------------------------------------------------------------ Letter :3

In fulfilling its educational responsibilities overseas, DODDS must
sometimes incur extra costs because the sponsors of special education
students are assigned to locations lacking DODDS schools that can
meet the students' needs.  Only a small number of cases have occurred
in which DODDS has incurred extra costs because it could not meet the
needs of special education students at a DODDS school where they
live, according to available information.  DODDS does not, however,
record information in a way that allows us to determine how much
money it actually spends on its special education program or how much
extra cost DODDS has incurred when DODDS schools could not
accommodate special education students.  As a result, opportunities
may exist for reducing the cost of DODDS' special education program. 
One possibility is better adherence to DOD's screening and placement
procedures; another is improvements in DODDS' management of its
special education program. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :4

In commenting on a draft of this report, DOD stated that cost data
can be retrieved from DOD's accounting system or from source
documentation.  DOD recognized, however, that items used in the
special education program that are not uniquely targeted or required
by an individual special education student are accounted for as
general education costs.  Although we agree that DOD segregates some
special education costs in its accounting records, not segregating
all such costs makes it impossible to determine the total amount of
money DODDS spends on its special education program or the
incremental cost DODDS incurs when its schools cannot accommodate its
special education students. 

In addition, DOD informed us of some recent actions that address
several issues raised in our report.  DODDS recently reorganized and
gave its area offices the responsibility to monitor and track all
dependent children with disabilities whose sponsors are assigned to
locations that do not have the resources to meet their special
education needs or who require placement in a non-DODDS school. 
DODDS gave area and district offices responsibility for monitoring
the compliance issues and providing technical assistance at the local
school level.  According to DOD, DODDS headquarters will continue to
provide leadership for policy development and guidance for special
education programs overseas, including technical assistance and
training in the administrative and instructional aspects of the
program.  If properly implemented, these actions may improve DODDS'
management of its special education program. 

Finally, the Department reported that the screening and placement
process for special education children is being reviewed by a
coordinating committee that is standardizing the screening process
and establishing single points of contact for each of the military
services and DODDS schools.  Like those noted already, if properly
implemented, these actions may address the concerns raised in our
report. 


---------------------------------------------------------- Letter :4.1

We are sending copies of this report to agency officials and to other
interested parties.  We will also make copies available to others on
request. 

Major contributors to this report are listed in the appendix.  If you
have any questions about this report, please call me on (202)
512-7014. 

Cornelia M.  Blanchette
Associate Director, Education and
 Employment Issues


GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
==================================================== Appendix Appendix

The following team members contributed to this report:  Mary E.  Roy,
Evaluator-in-Charge; and Joan A.  Denomme, Thomas J.  Laetz, Mary W. 
Freeman, Maria A.  Cruz, Michael D.  Rohrback, Paula J.  Haurilesko,
and Daniel J.  Tikvart, Evaluators. 


*** End of document. ***