A Longitudinal Study of the Cost Effectiveness of Educating Students with Emotional or Behavioral Disorders in a Public School Setting





Bob MacMillan

Department of Special Education

Bridgewater State College

Bridgewater, Massachusetts


508.697.1200 x2104 (office)

























Marchus School’s 1261 Project is one of two programs funded by the State of California to establish an education program within a public school setting for elementary and middle school students with emotional or behavioral disorders (E/BD). The 1261 Project classroom serves students who traditionally have been placed out of public school settings into more restrictive nonpublic school placements. This study details the programmatic design as well as the analysis of the cost effectiveness of this successful program over a 4-year period. Descriptive statistics and case studies demonstrate that not only have costs been avoided but funds have also been saved. Recommendations and directions for further study are addressed.




Since 1991, the cost of educating students with emotional or behavioral disturbances (E/BD) in nonpublic and out of district school sites has doubled in the State of California. The lack of public-school-based programs to serve students with serious emotional disturbances (SED) has resulted in a dramatic increase in state referrals to nonpublic school sites. A report published in 1994 by a special work group convened to study escalating costs of nonpublic school programs serving students with E/BD revealed over an 8-year period (1983-84 through 1991-1992) that enrollment growth in nonpublic schools (NPSs) and nonpublic agencies (NPAs) grew by about 30% as compared to 7% in public schools. In addition, costs for NPS and NPA placements grew by over 311 %, from $31.7 million in 1983-84 to 130.2 million in 1991-92 (California Department of Education, 1994).

Currently, over 10,000 California students are being educated in restrictive, nonpublic schools at a cost to the state of over $200 million per year (California Department of Education, 1997a). As a result of these skyrocketing costs, the California legislature passed Assembly Bill 599, February 22, 1993, which was reauthorized as AB 1261, June 28, 1997. It encouraged public school districts to establish cost-effective programs for individuals with E/BD who otherwise would be, and currently are, placed in nonpublic schools.

In response to this request, the Contra Costa County Office of Education applied to the State Department of Education for financial support. With the acceptance of Contra Costa County’s application, the AB 599/1261 Project (hereafter identified as the 1261 classroom) was placed at the Floyd I. Marchus School site to provide intervention and services for elementary and middle school aged students with E/BD. The targeted students are those who are imminently at risk of being placed in a nonpublic school or other more restrictive setting. The 1261 Project was designed to provide quality programs and services at a cost to the public that is no greater than that which is incurred in identified nonpublic settings. Marchus School, located in Concord, California, a suburban area east of San Francisco, is one of two sites in the state to establish such an inclusive education program.

This study described powerful social and economic reasons to provide appropriate school district community based programs for students with E/BD. It also evaluated the costs in providing academic, behavioral and emotional treatment and appropriate living environments for those students. As a result of the analysis, investigators were able to determine the effectiveness of the 1261 classroom and formulate specific programmatic recommendations based on the project’s substantial and significant cost savings and social benefits (California Department of Education, 1997b; MacMillan et al., 1997).




The Marchus School

In Contra Costa County, the Marchus School is an integral component of a far-ranging continuum of services. This continuum includes classrooms for students from kindergarten through grade 12 as well as special education classrooms, in 21 local school districts. These school districts are served by the Contra Costa County Office of Education Special Education Local Planning Agency (SELPA), a service consortium, which, operates satellite classrooms within the school districts as well as a special site, Marchus School. In addition to these publicly operated facilities are nonpublic schools with day and residential components. Table 1 details the levels of services within Contra Costa County schools and the locations where various levels of service are provided.



Table 1



Continuum of Service Levels and Locations of Service Provided to Students with Disabilities in Contra Costa County


Level of Service


Service Location


1. General education classroom


local school districts


2. Special education (mild-moderate) services at local school


local school districts


3. Special education services (moderate-severe) at local school


SELPA satellite programs


4. Special education classrooms, special site


SELPA’s Marchus Center


5. 1261 classroom at special site


SELPA’s Marchus Center


6. Nonpublic day school


Private day facilities


7. Nonpublic school w/residential services


Private residential facilities


The Marchus School’s Counseling and Education Program (CEP) provides special education classes for elementary, intermediate, and middle and senior high school students who are identified as having E/BD and exhibit emotional and behavioral problems. The CEP fosters emotional development and academic achievement. The program is designed to move the student toward self-efficacy (Bandura, 1996, 1997; Schunk, 1991; Sternberg, 1989). Students learn to become more independent through a structured instructional routine. The ultimate goal is to integrate students into less restrictive environments and to help them make the transition to the community as responsible individuals. The program also strives to assist students in developing the social skills and decision-making abilities required to cope with life's difficulties.


The CEP currently serves over 150 students identified as E/BD. The program is based at the Marchus School and is extended to campuses throughout Contra Costa County through satellite classes on general education school sites. Students are recommended for transition and placement in satellite classes when their behavior is appropriate for district school campuses.



Project Design

The 1261 Project began when the State of California accepted by a funding request from the Contra Costa Office of Education. Once funding was secured, space was allocated at the Marchus School, a teacher and teacher assistants were hired, wraparound staff was employed, and the process was begun to identify students for the 1261 classroom. A critical feature of the project design was the establishment of a project advisory committee and school-based intake committee. The 13-member project advisory committee consisted of the project administrator, 1 representative from a nonpublic school, 4 representatives from local school districts, 3 representatives from county mental health agencies, 2 individuals from social service agencies, 1 representative of a psychiatrist unit at a local hospital and 1 representative of higher education who also served as the project evaluator. The two committees were influential in the development of the procedures and processes that guided the Project.

Because of the level of funding and commitment from the State (i.e., an operating budget of over $230,000 each year), the project advisory committee was empowered to make decisions that were based on the best interests of the students of Contra Costa County. Issues of cost containment rarely arose.

The 1261 classroom functions using a model based on Bandura’s (1977, 1986) social-cognitive approach, a model that integrates behavioral and cognitive theories in explaining human behavior. A person’s behavior, in this model, is viewed as the result of three coexisting factors: the environment, personal and cognitive factors, and behavior. These three factors do not necessarily contribute equally to the outcome behavior, nor are they consistent as determinates of a person’s behavior. Rather, the interaction of the factors depends on a number of varying considerations. For most situations, the social and physical environment, personal and cognitive feelings, and the individual’s behavior each play a role in human behavior. The significant element in this model is that all factors must be considered in addressing a person’s needs, especially a young person with emotional and behavioral problems (Bandura, 1977, 1986; Kauffman, 1997).

The implications here are that no one factor can be linked to the cause of behavioral disturbances; emotional and behavioral disturbances are considered globally, combining behavioral and cognitive theories into a social-cognitive theory. Therefore, the project intervention strategies do not adhere to one specific overriding theory. The classroom combines theory and practice in addressing the needs of the child through global as well as specific interventions. This is done through offering behavior modification techniques and psychoeducational approaches in the classroom. These interventions are also carried over into the home, which are referred to as wraparound services. These services are coordinated by the educational staff and the on-site school psychologist and mental health professional.

Using the social-cognitive approach, the 1261 Project teaches academic, social and conflict resolution skills that foster healthy emotional development and academic achievement. The Project's Counseling and Education Program uses a variety of behavior management techniques in order to facilitate student growth. The Project aids each student in meeting their social, emotional, and behavioral goals, as well as the academic goals and objectives that are prescribed in each student’s individual education program (IEP). Instruction in the program is highly individualized, with whole-class instruction and grouping whenever possible.

The Project encourages the active support and participation of each student's family and/or caregivers. Notably, one of the determining factors for admittance into the 1261 classroom is the strong commitment by parents and/or caregivers to the success of their child and to the overall success of the classroom. The Project staff communicates frequently with families and encourages them to utilize community support services fully. Of special note is the provision of wraparound services the Contra Costa County Department of Mental Health and other agencies provide. These wraparound services provide support to the classroom staff as well as the family; they include services such as a one-to-one assistant, a mobile therapist who provides therapy in the home and school setting, and behavioral intervention specialist (Eber, 1996; VanDenBerg, 1996). Once the student is successful and stable in the 1261 classroom, the staff assists him or her in the transition to a less restrictive educational environment.

Table 2 compares the Marchus School day program, 1261 Project, and the program of a typical residential facility within Contra Costa County.


Table 2



Comparison of the Educational Services, Cost, Student-Teacher Ratio, and Level of Interaction with Counseling and Psychological Services and Contact with Parents between the Marchus School Day Program, the 1261 Project, and a Typical Residential Facility



Marchus School - Day Classroom


1261 Project


Residential Facility (NonPublic Day Program)


$18,000 per student


$23,000 per student


$44, 000 per student


2 adults per 8 to 10 students


4 adults per 8 to 10 students


4 adults per 8 to 10 students


Consultation with school psychologist on an as-needed basis, minimally weekly; parental contact approximately once or twice each week



Individual and group therapy sessions with school psychologist one or two times a week; counseling with school social worker weekly (crisis intervention counseling is available after school and on weekends as needed); parental contact approximately every day.


Group counseling sessions every day, individual counseling with mental health/social worker at least once a week, therapy sessions with psychologist one or two times per week; parental contact approximately twice a month.



The Project staff consists of one full-time credentialed special education teacher with specific training with students with E/BD, three full-time instructional assistants, one three-fourths time mental health specialist, one half-time school psychologist, and a program evaluator. In addition, students are offered art therapy services through a contract with the local Contra Costa County Mental Health Association. A maximum of 10 students were enrolled in the program at any given time.


After 4 years of operation, 35 students were served by the 1261 Project. The students ranged from age 8 to 15 years, with an average age of 12 years for students in the 1261 classroom. To give a better understanding of these students when they entered the program and their instructional and behavioral environments, Table 3 compares the Marchus general program students with those students served in the1261 classroom.


Table 3



Comparison of Marchus School General Program and 1261 Classroom Students Entering between September 1994 and March 1996

 Personal and Environmental Factors Marchus 1261 Classroom

  • students living with one parent 44% 60%
  • students living with other-than-parent 16% 40%

    students who have been involved with

    juvenile justice system 11% 100%

    students w/history of assaultive behaviors 32% 100%

    students w/drug and alcohol problems 30% 60%

    students w/history of hospitalization/

    residential treatment 26% 40%

    students w/histories of sexual/physical and

    emotional abuse 33% 40%

    student taking medication 38% 80%

    students mainstreaming/integrating 38% 0%





    Three Case Studies



    These studies are presented to illustrate the students, the environments, the program, and the progress to date.




    Steve, 14 years old, when he entered the 1261 classroom, lived with his mother. His family had a history of mental illness. There was evidence of physical abuse and neglect as well as reports of Steve’s being deprived of food. Child Protective Services had been involved with Steve and his family repeatedly over the years. Steve was tested using the Weschler Intelligence Scale for Children (WISC) and had a full scale score between 80 and 85.

    During the summer, the project advisory committee met and decided that Steve should be placed in the 1261 classroom. An IEP team meeting was held, and with the records of his previous school placement, the recommendation of the project advisory team, and the consultation and consideration of his mother, Steve was enrolled into the 1261 classroom.

    Steve displayed behaviors such as slow speech, a schizoid affect, and extremely poor hygiene. His medications included lithium, haloperidol, and imipramine. He appeared to have mentally disabilities, with slow speech and an awkward body posture.

    In November, Steve was removed from his family and placed in a group home. During the time he was enrolled in the 1261 classroom, it was determined that he was inappropriately and overly medicated, and he was taken off all medication. He was recognized within the classroom and the larger school as an exceptional artist and musician. His hygiene improved. He was discharged from the 1261 classroom one year later. Upon discharge, and 2 years after he was initially tested, his WISC full-scale score was reported as 118.


    In June Steve left the group home to move to San Diego to live with his father. His leaving the group home saved social service agencies over $36,000. In August he enrolled in a public high school and received resource-room-level special education services only. His IEP stipulated the discontinuation of special education services once his transition to a new school was successfully completed. It is likely that:


    Finally, without 1261 services, Steve may have remained in Contra Costa County, possibly moving to a residential facility. If in fact he did move to San Diego without participating in the 1261 Project, it is very possible that Steve may have required significant and very restrictive services there.



    Matt S.

    Formerly enrolled in the Marchus School in a special education classroom, Matt moved to a less restrictive district special education special day class in October. Due to lack of academic progress and the display of inappropriate behaviors, Matt returned to Marchus School in January. In September he enrolled in the 1261 classroom located within the Marchus School. In November, as his schizophrenia became more severe, Matt was hospitalized. He was discharged from the hospital with a prescription for 250 mg. of haloperidol to be taken twice daily to control his outbursts of anger. In late January he returned to the 1261 classroom. He maintained control of his anger reasonably. Unfortunately, as Matt older and was no longer able to be served by the 1261 classroom because of his age and grade placement he exited the 1261 Program and enrolled at LaCheim Day Treatment, a nonpublic school. It is likely that:



    Dave M.

    Dave, best described as a moody, 12 year old boy, arrived at the 1261 classroom in 1995 from the Marchus general program. His records revealed that he suffered from a chronic low-grade depression and paranoid-like behaviors. He often accused people of talking about him. At times he was talkative, and he tended to embellish the truth. He was reported to have a history of stealing. His family disliked the "system" and was very defensive towards professional, institutional interventions. He did not take any medication. On the plus side, Dave enjoyed cooking.

    With interventions that the 1261 staff described as "serious", strict limits were set for Dave. As Dave's academic performance and behavior improved, the family became more supportive of him and the 1261 classroom. During this time, his mother left her abusive boyfriend. The grandfather, an alcoholic, was incarcerated. When he came home from prison, he was sober, and has remained sober. Dave’s grandmother had been in ill health, but as a result of surgery, her health and ability to function improved. Thus, the home environment became much more stable. Dave became increasingly more motivated at school through his continued success and stabilized family situation.

    Ten months after entering the 1261 classroom, Dave enrolled in a special day class for students with mild learning disabilities in a fully integrated public school at annual savings of $35,500. It is likely that:





    Evaluation Design and Intent

    Given that this Project was mandated by the legislature, the question of accountability was paramount. To validate the program, the project staff sought to determine Project effectiveness. They determined that although the aforementioned study was of value, a study of more depth was needed. This longitudinal study is the result of this effort.

    To determine the effectiveness of the 1261 Project, a study was conducted examining the first years of the project’s operation. A total of 24 students were identified by the project advisory committee as eligible for admittance into the 1261 classroom. All of the identified students were considered to be at great risk of referral to nonpublic day and residential programs. All of these students were exhibiting significant behavioral problems within their local district special education programs. Of the 24 students, 14 were randomly identified as the control group. These students were in programs throughout the County. The other 10 students were enrolled in the 1261 classroom. The students were tracked during the first 2 years of the project by an educational diagnostic specialist employed by the Contra Costa County Office of Education and who worked as a member of the Youth Interagency Contact Team (YIACT) and the project evaluator. Of those 14 students in the control group, 7 moved to more restrictive nonpublic school settings (i.e., a 50% success rate). Of the 10 students initially served by the 1261 classroom, 3 moved to more restrictive settings while the remainder were maintained in the 1261 program or went to less restrictive settings (i.e., a 70% success rate).

    One understandable and powerful method of documenting success (i.e., students maintaining and/or progressing toward a less restrictive setting) is to compare costs of specific programs. This analysis was undertaken with the understanding that programs that are less restrictive tend to be less expensive than those served in more restrictive environments. The examination of specific programs for individual students led to a determination of the cost implications of programmatic decisions (MacMillan & Grimes, 1996).

    As mandated by the legislature, the 1261 Project was to evaluate individual student and class progress. Although many different evaluation processes and procedures were considered, Marchus staff decided that project success could be determined through the development of a detailed analysis of the cost savings and/or cost avoidance to school and public agencies as a result of 1261 classroom interventions.

    To determine programmatic success, the staff set out to examine specific costs of services. The analysis sought to identify the effect of Project services in the following terms:

    To begin such an analysis, the costs of specific social, behavioral, residential, and instructional services throughout the service delivery continuum were determined. For example, the Contra Costa County SELPA annual average cost for 1261 classroom placements at Marchus School is $23,000 per student for an extended school year program. Project funding is sufficient to provide basic instructional services as well as additional services and staff support to the 1261 classroom. The following analysis of the costs avoided, costs saved, and social savings is based on the cost of providing instructional service to this population. Table 4 compares the costs for all programs along the continuum of services listed earlier in Table 1.


    Table 4




    Comparison of the Costs of Services within the Delivery of Service Continuum for the Years 1994-1996 and 1996-1997





    PerPupil Program Costs


    1. General Education Classroom


    $ 4,500/4,725


    2. Special Education Services at Local School


    $ 5,500/5,775


    3. Special Education Services at Local Satellite Site


    $ 6,500/6,825


    4. Special Education Classrooms at Marchus Center




    5. 1261 Classroom at Marchus Center




    6. Non Public Day School (day treatment)




    7. Non Public School w/Residential Component






    Note: Non Public School rates, levels 6 and 7 are based on average school and mental health rates combined. Figures reflect an extended year program. Second set of figures reflects 5% increase in costs for year 1996-1997.




    As a result of 1261 intervention from September 1994 to August 1998, costs of over $767,688 has been avoided. Without this program, the 1261 Project students would have been placed in more restrictive and costly educational settings.

    Furthermore, of the 29 students who exited the project, 22 students (76%) enrolled in less restrictive academic environments. Of the 22 students, 11 have entered the Marchus program, 8 were placed in district special education programs, and 1 was totally integrated into general education. Serving these students in less restrictive and less costly programs saved local, state, and federal budgets over $610,205.

    As the students’ academic performance and behaviors improved, so did their social skills and social appropriate behaviors. Of the 29 students who exited the project, 8 moved to more normal living situations (i.e., from residential/group home settings to living with family members), resulting in an estimated social saving of $234,000. Not only has this intervention saved governmental agencies money, there have also been notable human benefits for all involved - the students as well as their families. Figure 1 details the specific cost benefits in each of the three identified categories.



    Figure 1. Costs Avoided, Costs Saved, and Social Savings, in Thousands of Dollars, Attributable to the 1261 Project Over a 4-Year Period.



    Currently, eight Project students are maintaining their improved behaviors and progressing toward less restrictive settings. The savings from avoiding placement in more costly nonpublic programs and the savings as a result of 1261 classroom interventions, taken together, have saved the taxpaying public an average of more than $48,000 per student served.


    These savings are a direct result of the effectiveness of the 1261 Project. Students have been able to improve their classroom and social behaviors to the extent that they have been able to move to less restrictive and less expensive classes. The total savings (and costs avoided) as a result of the 1261 Project for the 4 years studied amounted to $1,611,893 (see Figure 2).



    Figure 2. Total Savings, in Thousand of Dollars, Attributable to the 1261 Project Over a 4-Year Period (1994-1998).





    As previously mentioned the students in the 1261 classroom exhibit extremely difficult behaviors. Unfortunately, in spite of the 1261 interventions, seven students (24%), within a year of leaving the 1261 classroom, required more restrictive settings. Three students moved to nonpublic day programs, three to residential placements, and one to a hospital.



    Recommendations and Summary

    More quantitative research is needed to determine the success rates of comprehensive, individualized service models, particularly in public school settings (Jones, 1992, Kauffman, 1997; Rivera & Kutash, 1994). In a recent review of literature on the issue of program effectiveness and cost effectiveness for students with E/BD, other states reported success with similar projects which encourage wraparound, integrated, comprehensive services. Rivera and Kutash (1994) reported that comprehensive, individualized care programs in several states demonstrated success in reducing hospitalizations and returning the child involved to his or her primary care giver. The outcome clearly indicates that these interventions are more cost effective because they avoid the large costs of residential treatment and/or hospitalization.

    The following are suggested underpinnings for the successful replication of this model.


    For Parents or Primary Caregivers:



    For Local School Districts:



    For the state education agency and legislature:

    I believe that these stated underpinnings are essential to decrease the number of students referred for and served in restrictive nonpublic placements and contain the costs of providing those services.





    There is a clear need to contain the costs of providing services to students with E/BD. Not only do local and federal agencies need to be committed to serving students in local settings, they need to act on that commitment by establishing, supporting, and funding local school district alternatives to nonpublic day and residential settings. Educational and treatment programs such as the 1261 Project classroom operated by the Contra Costa County Office of Education have been successful in both human and monetary terms. We invite legislators, governmental officials, administrators and teachers to review this study.

    As others review this work, we encourage the replication of the conceptual framework, project design, and wraparound features of the 1261 Project. We also urge transporting this Project to similar programs and populations within local school districts in order to intervene with students before behaviors become so inappropriate that more restrictive placements are needed. Upon review, we are confident that legislators, educators, and parents will understand the need to establish community-based public school programs for students with E/BD.


    Finally, this longitudinal study suggests the necessity for educators, legislators, and the general public to understand not only the services to be provided to students with E/BD, but also the cost of such services. The ultimate success of students with E/BD (i.e., their ability to live as independently as possible) is a community responsibility, involving the services of local schools, mental health agencies, and child welfare agencies. Alternative placements should take into consideration the needed services of community agencies to increase cost effectiveness and ensure the success of the student. Under the federal regulations in the Individuals with Disabilities Education Act Amendments (IDEA, 1997), effective educational systems "promote service integration, and the coordination of state and local education, social health, mental health, and other services, in addressing the full range of student needs to maximize their participation and learning in school and in the community" (Sectioin 651,a). The success of students with E/BD requires the cooperation of child agencies and local schools in providing needed services to this population. State legislatures and state educational agencies need to provide a framework of support and financial incentives to districts in order to educate students with E/BD in community-based school district settings.






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    Author’s Note:

    Michael Grimes established and implemented the AB 599/1261 Project classroom at Marchus School. He currently serves as principal of Delta Vista High School, a school operated by the Contra Costa County Office of Education. The school is affiliated with the Orin Allen Youth Rehabilitation Center. The Center, located in Byron, CA, serves incarcerated youth. Mr. Bill Filler continues as the project’s classroom teacher, Christie Norton serves the project as school psychologist, and Teresa Gibson is the social worker assigned to the project. Nancy Cooper-Williamson, who also contributed to this article, was formally a graduate assistant at the Pennsylvania State University, and is currently a teacher in the Owen J. Roberts School District, Pottstown, Pennsylvania.

    I would also like to acknowledge the efforts of the program assistants, Dan Mays, Bruce Stuart, Cindy Vancil, Rosa Davis, and Ben Navarro. Their efforts have greatly contributed to the success of the 1261 Project.