In this paper, the authors explore the state of public education funding, and specifically special education funding, during COVID-19, discuss the Individuals with Disabilities Education Act (IDEA) fiscal requirements, and identify the following common challenges for state and local special education leaders: (1) compared to other federal and state education funding, special education funds often lack or are perceived to lack flexibility; (2) districts are struggling to meet the high-stakes fiscal requirements of IDEA; and (3) states and districts must define and determine who will receive, provide, and pay for compensatory services. Following a discussion of these challenges, the authors examine current guidance provided by states and present lessons learned from the similarly challenging Great Recession that can be applied now. Finally, two strategies are proposed to help states and districts leverage special education funding to mitigate the impact of COVID-19 while meeting IDEA requirements: (1) re-examine available flexibilities under IDEA fiscal requirements and institute changes to minimize penalties now and in the future; and (2) invest recovery and economic aid funds in systems that differentiate resources and supports by student need and address longstanding inequities that may have been exacerbated by the pandemic.