When New York City Mayor Zohran Mamdani revealed a $5.4 billion budget gap last week, he blamed it on years of underbudgeting in six major expenditure categories. Among those were “due process cases,” also known as Carter-case spending, which cost the city $1.3 billion in 2025—nearly double the budgeted amount, and accounting for nearly a quarter of the city’s shortfall.
Carter-case spending arises because the Individuals with Disabilities Education Act (IDEA), a federal law, requires school districts to provide a Free Appropriate Public Education (FAPE) to students with disabilities. When a district fails to do that, the law allows parents to place their child in a private school setting and seek reimbursement through “due process.” The Supreme Court affirmed this right in Burlington School Comm. v. Mass. Dept. of Ed. (1985) and Florence County v. Carter (1993)—the latter of which gives Carter cases their name.
Finally, a reason to check your email.
Sign up for our free newsletter today.
How did Carter cases, intended as a backstop for the public school system in a limited number of instances, come to cost New York City over a billion dollars? My new Manhattan Institute brief shows what happened: service-delivery lapses, routine settlements that locked in private placements long past need, and a private, contractor-based evaluation process that doesn’t take account of available public programs.
The initial rise of Carter-case spending was driven by failure to deliver services. Between 2014 and 2016, only 60 percent of students citywide fully received their mandated special education. Compliance has increased since then; in the 2023–2024 school year, 92 percent of students received their mandated services. But that still left 13,003 students receiving only partial or no mandated services. A 2023 New York City Comptroller report found that these service-delivery gaps were contributing to the growth in due-process claims.
The city has also recently renewed many private placements secured earlier through settlement rather than rigorously re-examining them in annual FAPE determinations, as is required by federal law. Under Mayor Michael Bloomberg, the city contested most claims. Under Mayor Bill de Blasio, the New York City Department of Education stopped re-litigating cases that parents had already won, settling a larger share each year and expediting payments. This allowed litigation-driven placements to continue long after the city had addressed the original service failures.
The effects of de Blasio’s policy change were immediate. In 2015, the first full year after the change, the Department of Education settled 4,170 tuition-reimbursement cases without a hearing, up from 2,595 the year before. The number of students whose parents received reimbursement for private school tuition increased 42 percent from 2011. Children placed in private schools under de Blasio’s policy were often allowed to remain there without anyone asking whether the district could now provide them with an appropriate education.
As a result of all this, Carter-case spending has grown sharply over the past two decades. In 2005, New York City spent $47 million on Carter cases. That figure had grown to $1.07 billion by 2023 and $1.3 billion by 2025. The average settlement per student last year was $101,757—more than three times the city’s per-pupil spending for general-education students.
No other state approaches New York’s volume of special-education due-process complaints. During the 2023–24 school year, New York recorded 517 filings per 10,000 students, compared with 56.4 in California and 7.6 in Texas. These complaints mostly come from New York City, which accounts for 98 percent of all due-process complaints filed statewide.
New York City’s dysfunction largely reflects structural choices in how the city evaluates students. Across many other large urban districts, school-based teams conduct special-education evaluations and assess children based on what the district can provide. For example, the Los Angeles Unified School District conducts nearly all its evaluations in-house.
New York City, by contrast, relies heavily on private contractors. Their reports assess need, but they are not responsible for determining how those needs can be met within existing programs. When evaluation reports describe service intensity, staffing ratios, or instructional models that the Department of Education cannot match, the likelihood of litigation increases. In many cases, the city ends up paying six-figure settlements that a different evaluation model might have avoided.
Fixing this problem will require restoring annual FAPE reviews and rebuilding the district’s own evaluation and program capacities. Indeed, the city has recognized the need for these reforms for a decade.
For too long, city government has treated Carter-case spending as a budget line rather than a warning sign. That budget line keeps growing because the policies that drove it up haven’t changed. Taxing New Yorkers more to fund a broken system isn’t a solution—fixing the system is.
Photo by Michael Loccisano/Getty Images