How Student Disability Classifications and Learning Outcomes Respond to Special Education Funding Rules: Evidence from British Columbia

In 2002, British Columbia eliminated supplemental grants to school districts for some students with special needs. This study provides estimates of the response of special needs designations and academic performance to this funding change. Using student-level panel data, we find that students were less likely to receive a gifted, moderate behavioural disorder, or mild mental illness designation under the new funding rules. We study standardized test scores in Grade 7, finding that the reading scores of gifted students declined substantially among those exposed to the new funding rules for the longest duration.