In the 1960s Minnesota education was a mess. It was funded entirely by property taxes; those who had the least need got the most funding, those with the greatest need got the least.  The disparities were egregious. Then, in 1971, came the "Minnesota Miracle". Education was increasingly funded through state taxes.
This worked very well for Minnesota, until, in 2002, Minnesotans elected GOP governor Tim Pawlenty and a Republican legislature. They reduced state funding and shifted overall funding back to property taxes; this benefitted their base and harmed the state.
Now, 11 years later, education in Minnesota is struggling. Not surprisingly, the effects are being felt most strongly in the funding of special needs education. MinnPost, a digital only nonprofit , has put a series together on the topic:
- Most vulnerable students to get one-two punch under sequester | MinnPost
- Meet the cross-subsidy, an increasingly painful way to pay for special ed | MinnPost
- The safety zone: Inside a school where no student's needs are too tough | MinnPost
- Legislative wish list crafted to better help schools' most challenging students | MinnPost
- Special education cross-subsidy: Where has it grown the fastest? | MinnPost
The Star Tribune has a also published a related article: Rising special ed cases are huge cost to Minnesota schools.
There's a lot of material in the articles. A few key takeaways, with the caveat that the articles are sometimes more anecdote than science:
- Some of the cost increases may be related to the education and support of students who, as recently as 10 years ago, might have been institutionalized. As we've learned more about educating special needs students, we're also handling more difficult challenges.
- There are three regional school districts that focus on special needs education, including New Hope's North Education Center in District 287. They serve about 3,600 students, of which 2,000 were referred in from a home district which pays the bill.
- The average MN student costs $11K/year to educate, the average special ed student costs about $20K/year to educate , and the students in the North Education Center supposedly cost $70K/year. 
- A "large" percentage of St Paul's severe EBD students are African-American and only 30% are ever in a regular classroom . There is significant pressure to at least partly mainstream these students.
- St Paul's special education district spent @98 million on special education, but only received $62 million in state funding. In other words, special education services are an underfunded state mandate . The remaining $36 million came from other educational programs; the term "cross subsidy" is sometimes used to describe this funds transfer .
- Obsolete rules mandating particular adaptive technologies waste money; iPads are much less expensive and much more desirable. 
- The sequester will cut $7 million in Title I funds  and 9.2 million in federal special ed funding.
- The special-ed population has risen from 13-15% of the state's student body over the past 10 years. 
It's challenging to interpret these articles because, as my footnotes attest, there's a lot of missing data. My sense is that the overall demand is stable or slightly up, but that we are educating children who once received little education. Most of all, we are living with the damage done by Tim Pawlenty and his GOP legislature, and their reversal of the "Minnesota Miracle" educational funding system. That damage has been compounded by the Great Recession, demographic trends, and a shift from public to private/charter schools.
On the bright side, we are emerging from the Great Recession, the GOP are out of power for the moment, and the Accountable Care Act's mental health funding may allow schools to offload some of their services to the healthcare sector. From our experience, there are ways to improve the quality of special care education while also reducing the costs -- though they may require some 'no-child-left-behind' reforms. We can certainly change laws that mandate use of expensive and obsolete technologies.
There are issues here, but they aren't insurmountable.
- fn -
 American public education is often funded through taxes on property. Most nations think this is insane, and a major contributor to America's socioeconomic distress. Most nations are correct.
 We donate.
 We have two children in special ed. #1 is in a modified track, # in an adapted track. It would be interesting to see where the extra 10K goes; I suspect it's partly for speech and occupational therapy. There's also a lot of administrative overhead in managing special ed students.
 How large? No data.
 The 2007-2008 budget was 630 million. Assuming it's now about 660 million, the cross-subsidy would be very roughly a 7% "tax" on other programs but in some articles this is described as 20%. The descriptions of what is meant by "cross subsidy" are not always clear.
 I've read that elsewhere. The rules require the devices be single purpose, that rules out modern adaptive devices.
 Poverty focused funding, but that includes many special ed students.
 Unfunded mandates are a common political vice.
 We don't know how much of this arose because of shifts of students out of public schools to private schools, or if this number counts charter schools. Given "wealthy flight" in MN over the past decade this might be little true change.