The Changemaker — October 2026
A national voucher program, a Medicaid squeeze, and a deadline in December
Four developments from the field this month, and what each one means for a director.
Treasury proposed the rules for a national scholarship credit. Disability groups say the protections are missing.
On October 1, the Treasury Department and the IRS released proposed regulations implementing the Education Freedom Tax Credit, the federal scholarship tax credit created under Section 25F in H.R. 1. The rules published in the Federal Register on October 2 and cover student eligibility, how scholarship granting organizations qualify, how household income is verified, and how states elect into the program. Taxpayers can claim a nonrefundable credit of up to $1,700 for contributions to a scholarship granting organization. The program launches January 1, 2027, and roughly 30 states have opted in so far.
Five national organizations objected the following day. Their complaint is specific. The proposed rules do not require participating private schools to extend students with disabilities the rights they hold in public schools under IDEA, Section 504, and the ADA.
The Council of Administrators of Special Education was among them. Executive Director Phyllis Wolfram said the draft regulations fail to safeguard those rights and allow federal resources to support schools not held to the same standards of access and accountability as public schools. NCLD CEO Jacqueline Rodriguez raised a second concern about oversight, arguing the program lacks the transparency that would let anyone see discrimination if it occurred. The Arc, the Council for Exceptional Children, and the National Association of School Psychologists filed similar objections, with NASP and NCLD both urging states to opt out.
What this does not change
Nothing about your obligations to students enrolled in your district. A student who leaves on a scholarship is a parentally placed private school student, and the IDEA rules governing that status are unchanged. Child find still extends to children in private schools within your boundaries under 34 CFR 300.131, and the proportionate share and consultation requirements at 34 CFR 300.133 and 300.134 still apply.
Comments close December 1
Written comments on the proposed rule are due December 1, 2026, submitted through regulations.gov under REG-117199-25. A public hearing is scheduled for December 15. Requests to testify and topic outlines are also due December 1, and the hearing is cancelled if no outlines arrive. Directors have direct evidence of what happens when a student with an IEP enrolls somewhere with no obligation to serve them. The docket is open for six more weeks.
- Federal Register. (2026, October 2). Federal Scholarship Tax Credit, REG-117199-25, 91 FR 62818. Read more.
- U.S. Department of the Treasury. (2026, October 1). Treasury and IRS issue proposed regulations to implement the Education Freedom Tax Credit. Read more.
- National Center for Learning Disabilities. (2026, October 1). Disability and special education organizations condemn Treasury's proposed rules. Read more.
- K-12 Dive. (2026, October 1). IRS releases proposed school choice rule. Read more.
- EducationNC. (2026, October 1). US Treasury Department issues proposed rules on federal school choice tax credit. Read more.
- 34 C.F.R. §§ 300.130-300.144 (children with disabilities enrolled by their parents in private schools).
School-based Medicaid is tightening, and the services it funds are IDEA obligations either way
Medicaid is the fourth largest federal funding stream for public schools, providing roughly $7.5 billion a year for school-based services. Much of that money pays for the related services written into IEPs: speech-language pathology, occupational and physical therapy, school psychology, nursing, counseling, and specialized transportation.
A Healthy Schools Campaign survey of 1,440 district leaders found 80 percent expect reductions or layoffs of school health staff, 70 percent anticipate cuts to mental and behavioral health services, and 62 percent foresee reductions in assistive technology and specialized equipment for students with disabilities. Reporting from Bloomberg Government in September documented districts already reducing instructional assistants as coverage and reimbursement shift.
Rate setting is moving in the same direction in some states. New York cut its Medicaid reimbursement for direct applied behavior analysis to $9.63 per unit on October 1, down 33 percent from $14.45, the third reduction in twelve months.
The part that catches districts
If a related service is in a student's IEP, the district owes that service whether or not Medicaid pays for any of it. A reimbursement cut does not amend an IEP, and it is not a permissible reason to reduce or discontinue a service. Changes to services run through the IEP team and the procedural safeguards, not the business office.
Most districts will not formally reduce a service. The risk shows up as a vacant therapist position left open longer, a contracted provider not renewed, or minutes delivered in a larger group than the IEP describes. Each of those can be an implementation failure even though no one decided to cut anything.
A question for your business office this month
Which related services in your district are currently funded in whole or in part by Medicaid reimbursement, and what is the plan for each if that reimbursement drops.
- Healthy Schools Campaign. How Medicaid cuts will harm students and schools (survey of 1,440 district leaders). Read more.
- Bloomberg Government. (2026, September). Medicaid cuts leave schools pondering how to serve disabled kids. Read more.
- Special Needs USA. (2026, October 4). Special needs law and policy guide: 2026 changes (New York ABA reimbursement rates). Read more.
- K-12 Dive. Concerns mount over potential loss of Medicaid funds for schools. Read more.
- 34 C.F.R. § 300.323 (IEPs in effect).
- 34 C.F.R. § 300.103 (FAPE at no cost to parents).
North Carolina's vacancy numbers improved. The category underneath them did not move the same way.
Last issue covered the national shortage picture, where special education was a reported shortage area in 45 states. This month brought state-level numbers that complicate it.
All 115 North Carolina districts responded to the state superintendents association's annual vacancy survey as of September 21. Districts reported 2,009 K-12 teacher vacancies, down 6.8 percent from 2,155 the year before. Exceptional children teacher vacancies fell 10 percent, from 632 to 568.5. The statewide total is 44.5 percent below the 11,295 vacancies reported in 2022.
Two details complicate the headline. Total reported vacancies across all categories rose slightly, from 6,209.5 to 6,265.1, because classified and support positions grew while teaching positions shrank. And exceptional children vacancies, even after a 10 percent improvement, still account for 568.5 of the 2,009 teacher vacancies statewide. More than a quarter of the state's open teaching positions are in special education, in a state where special education is well under a quarter of the teaching force.
Why the distribution matters more than the trend
A falling vacancy count is real progress. It is also a statewide average, which is not what a district manages. What a district manages is whether the self-contained classroom has a teacher of record in October. When remaining vacancies concentrate in one category, a state can improve while the schools carrying the hardest assignments do not.
Reporting on the North Carolina numbers also noted that some of the decrease could reflect position cuts rather than successful hiring, which is a distinction to confirm locally before treating a lower number as a better one.
What to pull before your next board update
Your vacancy count is probably already in a board report. The more useful number next to it is how many of your special education positions are filled by someone not fully certified for the assignment, and how many are covered by a long-term substitute. Those two figures describe what students are actually receiving.
- North Carolina School Superintendents' Association. (2026). NC districts report 6,265 teacher and staff vacancies as new school year begins. Read more.
- WRAL. (2026, September 24). New data shows NC teacher vacancies down to start the school year. Read more.
- Proximity Learning. (2026, October). How deep the 2026 teacher shortage runs across states and subjects. Read more.
- Learning Policy Institute. (2026). State Teacher Shortages 2026 Factsheet. Read more.
OSEP is still issuing determinations. It is doing it with a fraction of the staff.
Last issue reported the September relocation of OSERS staff into the HHS building and the resignation of the office's head a day later. The October question is narrower: what is the office actually still doing.
So far, most of the statutory work is continuing. OSEP issued its annual IDEA state determinations in June, responding to each state's FFY 2024 State Performance Plan and Annual Performance Report under the Results Driven Accountability framework. It has continued collecting IDEA data, administering grants, and monitoring states. Under the June interagency agreement, HHS provides services supporting grant administration, compliance monitoring, and annual state performance determinations, while the Education Department retains OSERS leadership and the decisions assigned by statute to the Secretary.
Capacity has thinned. OSEP is carrying that work after staffing reductions that left it with a fraction of its historical workforce, and observers across the policy spectrum expect federal monitoring and discretionary investigations to move more slowly. In Congress, Senator Chris Van Hollen and ten colleagues wrote to Secretary McMahon asking her to name dedicated OSERS leadership and halt the transfer, and a House bill referred to the Education and Workforce Committee would restrict interagency transfer agreements involving Education Department offices, including OSERS.
What slower federal monitoring actually shifts
Your obligations do not change. The compliance indicators states are graded on, including evaluation timelines, secondary transition content, and timely correction of noncompliance, are the same indicators your state monitors check in your files. Those checks are run by your state education agency, and they are not slowing down because OSEP is smaller.
What does shift is the backstop. Federal oversight has historically been the mechanism that catches a state system failing at scale. With less of it, the quality of a district's own internal monitoring carries more weight than it did two years ago.
One thing to run this quarter
Pull a random sample of ten IEPs and check them against your state's compliance indicators rather than your own internal checklist. If the two instruments disagree about what a complete file looks like, fix your checklist now rather than after a monitoring visit.
- U.S. Department of Education. State monitoring and support, Results Driven Accountability. Read more.
- Special Needs USA. (2026, October 4). Special needs law and policy guide: 2026 changes (interagency agreement structure, congressional response). Read more.
- Special Needs USA. (2026, September 30). What the OSERS move to HHS means for your child's IEP. Read more.
- A Day in Our Shoes. (2026, October). OSEP in 2026: what has happened so far. Read more.
- 34 C.F.R. §§ 300.600-300.602 (state monitoring, technical assistance, and enforcement).
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