NORTH TEXAS (CBSDFW.COM) – The 5th U.S. Circuit of Appeals ruled Wednesday in favor of the feds’ decision to withhold $33 million from Texas for future special education funding.

The three-judge panel agreed with the U.S. Department of Education’s claim that Texas broke the law when it cut special education funding by $33 million in 2012. The federal government is withholding $33 million in funding as a penalty.

READ MORE: Tony Evans Jr., Lancaster Football Player And University Of Wyoming Recruit, Killed In Shooting At Dallas Hotel

The federal law requires states to maintain the same level of special education spending each year in order to be eligible for federal grants.

Students interact with their teacher during class. (credit: John MacDougall/AFP/Getty Images)

In 2012, Texas spent less on special education in part because the percentage of students enrolled in special education services fell to 8.6 percent – the lowest rate in the country.

Enrollment had been dropping across the state ever since the Texas Education Agency implemented a new policy in what amounted to a “cap” on special education enrollment.

READ MORE: 11-Year-Old Fatally Shot By Child Who Found Gun In Vehicle At Dallas Walmart, Police Say

In October 2016, the CBS 11 I-Team reported on how tens of thousands of Texas with disabilities were being denied special education services.

Last year, the TEA eliminated the “cap” on special education enrollment.

In January after a 15 month federal review, the U.S. Department of Education determined Texas education officials violated federal special education law and demanded the state make drastic changes.

With the elimination of the cap and demands from the feds, Texas expects to spend an additional $3 billion on special education over the next three years.

MORE NEWS: Ramsey Clark, Dallas Native And Former US Attorney General, Dies At 93

(©2018 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)