— The state Education Department will argue in court this month that its challenge to a $36 million federal punishment over recession-era budget cuts deserves to be heard, the agency spokesman said Friday.

The hearing is set for March 22 at Washington and Lee University in Lexington, Va., Jay Ragley said.

Arguments before the 4th U.S. Circuit Court of Appeals will come nearly two years after the U.S. Department of Education first said it would reduce the state’s allotment for special education because of legislators’ budget cuts.

The penalty comes over the state’s failure to meet “maintenance of effort” during the economic crisis. Federal law bars states from spending less money on special education from one year to the next. If they do spend less, their federal allotment is cut by a corresponding amount.

“This reduction serves as a deterrent to states cutting funds for special education,” the federal agency has said in a statement.

Education Superintendent Mick Zais ultimately wants the federal government to restore the money, though this hearing is primarily to discuss whether the state can appeal an administrative decision.

“South Carolina is challenging the secretary’s determination that no hearing exists” under the law, state agency attorneys wrote in a Feb. 11 response.

The $36 million penalty is what’s left of an initial threat in June 2011 of $111.5 million. Other amounts were forgiven, but the remaining cut stems from spending during the 2009-10 school year.

U.S. Education Secretary Arne Duncan dismissed South Carolina’s case last May, rejecting efforts to challenge the remaining penalty.

If Duncan’s decision stands, the reduction would always be in place.

The state’s share of money through the Individuals with Disabilities Education Act may increase, depending on congressional budget allocations, but $36 million would be taken off the top yearly for South Carolina.

Zais has called that penalty overly punitive.