From The Art of Kiki's Delivery Service, Hayao Miyazaki on Ursula's painting:

“It doesn’t matter what Ursula paints as long as it’s spirited. Given how her painting is thematically related to the film, the actual paintings had to be powerful. The paintings convey the life of a secluded female artist more than they do some message. I was looking forward to drawing them myself once I was done with the storyboards [laughs]. When I couldn’t afford to do so, I recalled the print, ‘Ship Flying Over the Rainbow.’ The print was made by a teacher at a school for the disabled, Hachinohe City Minato Special Junior High School. We obtained permission from the instructor and added a face to the original illustration. Replacing the horse’s face with Kiki’s would have been inconceivable.”

The original illustration wasn't colored, so credits in the film show:

"Ship Flying Over The Rainbow"

Painted by students of Hachinohe City Minato Special Junior High School Handicapped Children's Class

Lovely.