Education for difficult-to-educate students, particularly those with disabilities, tends to be more highly regulated than regular public education. There are several reasons. These students are generally regarded as being more vulnerable and therefore deserving of greater protection. Some students may lack parents or guardians capable of advocating in the child’s best interest. Parents who are involved in their child’s education generally have limited authority to direct the placement and education of their child in the public system. In the absence of direct consumer control of education, the government relies on regulatory control.

Government regulations, however, do not guarantee a child will be well served. By their nature, government regulations fail to account for individual differences and may be unevenly enforced. They can also create unintended, adverse consequences resulting in harm to students and/or higher costs.

For example, Thomas McCool, executive director of Devereux Santa Barbara in California, says physical restraints, though benign, are considered by state authorities to be an infringement on a child’s civil liberties. Says McCool:

We had a child here who would chew his fingers. Literally chew them down. And in other programs, what they would do is put on Styrofoam restraints so that person can’t get their fingers into their mouth. That’s not permitted in California. [The child] ended up going to a program in Arizona where that is permitted.121

In another case, the school applied to the state for permission to use pneumatic splints on the arms of an autistic resident who hit himself on the side of the head, inflicting great bruises to his face. The state denied permission and the injuries continued until a medication was discovered which stopped the man’s self-abusive behavior.122

According to Ellyn Lerner, president of Kids 1, Inc., "Regulations governing class size, related services, the IEP process, and facilities requirements all contribute to higher costs without necessarily improving education for students." She estimates that the High Roads Schools, where publicly funded tuition averages $18,900 per-pupil, could successfully educate the same child for $12,000 if it were freed from some regulations.123 For example, Lerner points out that trained High Roads classroom teachers could deliver speech therapy with guidance from a speech consultant. The arrangement would save the cost of hiring full-time speech therapists and it would allow speech therapy to be delivered in a more integrated, less intrusive way. Kids 1, Inc. is piloting a program for at-risk students, who don’t fall under the same federal mandates as special-education students, using this lower-cost approach.

Says Lerner, "Costs and funding are driven by the process [not results]. And the process says the child must receive a ‘free appropriate public education.’ So we deliver the services required to satisfy the professional’s regulations, the advocate’s core beliefs, or the parent’s perceptions, rather than the services the child needs."

In another example of process overshadowing results, Ombudsman Educational Services, a private, for-profit provider of education for at-risk students, lost a contract in Minnesota after state officials decided to enforce legislation prohibiting contracts with private, for-profit education providers under the state’s Education Options program. (Contracts with private, nonprofit providers are allowed.)124 Ombudsman’s contract was terminated mid-year despite the fact that Ombudsman charged significantly less per-pupil than what the district expended to serve the same type of student and despite Ombudsman’s demonstrated success in Minnesota, where it had contracted with the public schools for nine consecutive years. (Note: The prohibition against for-profit education providers under state statute 126.22 for the Education Options program is inconsistent with other contractual arrangements with for-profit instructional providers in Minnesota including Sylvan Learning Systems, a for-profit company providing remedial education to public-school students.)

Faced with a similar situation in California, a for-profit provider of licensed-children institutions created a nonprofit division to enter into contracts. Commented an organization representative, "Our nonprofit is extremely profitable." Nonprofit or for-profit status does not appear to influence the cost or quality of services. Legislative and regulatory prohibitions against for-profit providers needlessly limit the supply of viable programs for difficult-to-educate youth or create incentives for businesses to reorganize (which entails legal and other costs) to become eligible candidates for contracts. Furthermore, for-profit companies can bring additional benefits to schools and communities. Unlike public and nonprofit organizations, for-profit organizations can generate greater tax revenues, contribute more to economic growth, and can access investment capital more readily, which can be used to enhance school programs.

Richard Milburn High School, a private program for at-risk students, faced closure of one of its locations in New England over contract semantics. Despite the fact that 80 percent of the at-risk students at Richard Milburn High School stay in school or graduate, and one third attend college, (and per-pupil costs are lower than in public schools), the state was prepared to close it down over a technicality.125 The state took issue with the contract wording that described the school district’s payment to Richard Milburn High School as tuition. The private school quickly changed the term "tuition" to read "contract fee" and the word "school" to read "program" thereby solving the problem.126