Federal cuts and the Ohio House threaten special education services
Schools depend on Medicaid funding to support in-school health services for Medicaid-enrolled students with disabilities. The Ohio Medicaid School Program (MSP) helps ensure schools can provide students with services required by their Individualized Education Programs (IEPs), including speech therapy, physical therapy, and behavioral health support.[1]
Federal lawmakers are considering major cuts to Medicaid broadly that could impact the MSP, forcing school districts to compete for limited state Medicaid dollars.
How does the MSP work?
MSP allows school districts to receive Medicaid reimbursement when they provide school-based services to students who are covered by Medicaid and have an IEP.[2] The program is administered by the Ohio Department of Education and Workforce (DEW) and the Department of Medicaid. In total, the program includes 650 school districts and community schools, providing school-based health services for 125,000 students with disabilities annually.[3]
MSP is supported by two line items.[4] In the previous budget (FY24-25), both line items were funded at a combined total of $1.152 million over the biennium. The remainder of the cost of the program is reimbursed through Ohio’s general Medicaid budget.
States can use the program to draw down additional federal matching funds. To do so, school districts may use Student Wellness and Success Funds and other state or local funds to provide the state match.[5] By doing so, participating Ohio districts received an additional $48 million in federal match funding in FY22.[6]
The MSP in the House version of the budget
In the House’s budget proposal, lawmakers moved the program fully into the Department of Medicaid, and allocated $349,925 per line item for FY26 and $358,362 per line item in FY27 ($1.416 million biennium total). This 23% increase would expand the program to provide more Ohio students with more of services they need.
However, the House budget also includes “trigger language” that applies to all federally funded programs: Any federal cuts would trigger the state to consider cutting state-level Medicaid funding as well.[7]
Why does the MSP matter?
Medicaid provides important support for students with disabilities. MSP pays for physical, mental, and behavioral health services necessary for equitable access to educational opportunities.[8]
Investing in student health services improves health outcomes. MSP expands access to essential care like regular screenings, preventive services, therapy, and disease management—services many children currently go without.[9] Providing these services in schools, where students already are, reduces barriers to care.
Medicaid benefits local and state budgets, especially education budgets. Without this critical program, schools would have to find alternative ways to fund necessary school health services, relying on tight school budgets that are already being impacted by rising costs and an inadequate school funding system.
Parents are involved. Under school privacy rules, parents must consent for the school district to share information with Medicaid, which enables parents to remain fully aware of and engaged in their children’s healthcare.[10]
What do Ohioans think about this program?[11]
The Medicaid school program has allowed our students with disabilities to flourish. Our motto is they are students before they are students with disabilities. Our students can join the local workforce and contribute to the local economy due to the investments made with the Medicaid School Program.
—Assistant Treasurer, Rural District
We are woefully underfunded to start with. The reimbursements we receive are an integral part of our budget.
—Director of Student Services, Urban District
Medicaid cuts will reduce access to critical health services, such as therapy, nursing, and mental health support, that students with disabilities rely on for academic and social success. This could result in increased educational challenges, fewer resources, and a greater burden on schools to provide necessary services without adequate funding.
—School Psychologist, Rural District
[1] The state identifies seven services that are covered by Medicaid that may be provided by MSP providers: occupational therapy, physical therapy, speech-language pathology, audiology, nursing, mental health services, and evaluations to determine whether an IEP is appropriate. The list is not exhaustive. For more, see Rule 5160-35-05 Ohio Laws & Administrative Rules. Effective July 1, 2020.
[2] Ohio Medicaid School Program – The Ohio Department of Medicaid.
[3] Ohio Dept. of Medicaid – Medicaid School Program in Ohio: Program Update (2024). PowerPoint presentation.
[4] In the previous budget (FY24-25), the line items were 657601 (Schools Medicaid Administrative Claims – Federal) and 657401 (GRF). See: “House Bill 33,” Ohio Legislature 135th General Assembly. Effective July 4, 2023. For the FY26-27 budget, MSP line items were changed to GRF ALI 651425, Medicaid Program Support-State; and FED Fund 3F00 ALI 651624, Medicaid Program Support–Federal. “As passed by the House” Main Operating Budget (136th GA, HB 96).
[5] Student Wellness and Success funds in Ohio – Ohio Department of Education and Workforce (2024).
[6] See footnote 3.
[7] See Section Sec. 126.10. (A). Of House Bill 96 “As Passed.” (Page 408).
[8] Medicaid Helps School Children (2017). The Center for Budget and Policy Priorities.
[9] Perrin, J. M., Cheng, T. L., & National Academies of Sciences, Engineering, and Medicine. (2024). Opportunities for Health Promotion and Disease Prevention in Schools. In Launching Lifelong Health by Improving Health Care for Children, Youth, and Families. National Academies Press (US).
[10] Parent Consent to Share Health Information with Ohio Medicaid.
[11] These responses were provided to Policy Matters Ohio by the Healthy Schools Campaign. The Healthy Schools Campaign is not responsible for the presentation of the results beyond this purpose.