Policy & Funding

ESEA Loophole Costing Title I Schools $1,200 per Student

student holding a tablet in class, illustrating how lost funds could be spent if title i schools were funded equally

What could $668,900 buy? That's the amount on average not received by Title I schools owing to a "comparability loophole" in funding that some education experts would like to close in the upcoming Elementary and Secondary Education Act (ESEA) reauthorization process.

ESEA's Title I lays out what kind of financial assistance is made to states to pass onto local education agencies, which in turn provide extra funding to specific schools that need it for educating children of low-income families. Districts use various formulas for determining this percentage; but in general, a school qualifies for Title I funding when at least 35 percent of students are part of low-income families. The goal is to enable the school to provide comparable education services as other schools in the district, but how that term, "comparable," is defined is tricky.

According to a new report from the Center for American Progress, a nonpartisan research and educational institute, districts can compute comparability by using average teacher salaries or teacher-to-student ratios. What they should be using, the Center found, was actual expenditures on teacher salaries. However, a calculation approach that uses actual expenditures is prohibited by federal law.

The problem, as laid out in "Comparable but Unequal," is this: Because teacher salaries make up the largest portion of school budgets and teachers with more experience earn higher salaries and tend to teach in schools with lower rates of poverty schools, a disparity arises that the formula doesn't take into account.

ESEA "chooses to treat teachers as interchangeable widgets," the report's authors wrote. However, they pointed out, teachers are not equal. "Schools disproportionately serving low-income students also have more than their fair share of new teachers. Additionally, though individual teacher effectiveness varies, schools with more new teachers are, on average, not comparable to schools with more experienced teachers."

To understand the impact of on schools, the center analyzed 2011-2012 data from the U.S. Department of Education to understand how much districts spent on each of their schools and compared how districts funded schools eligible for Title I funds against non-Title I schools in the same "grade band." In cases where that comparison wasn't possible, the researchers did a comparison among Title I schools of high poverty and low poverty. In both scenarios, they made adjustments for differences in cost of living across districts.

What they found was that the federal loophole resulted in more than 4.5 million low-income students attending "inequitably funded" Title 1 schools. Each of those schools received about $1200 less per student than comparable schools in their districts. That tallied to $668,900 less per year per school. They also found that if the loophole were closed, high-poverty schools would benefit by the addition of $8.5 billion in new funds each year.

While $668,900 could be invested in hiring "more experienced and thus more costly teachers," the report stated, it could also be spent on other kinds of resources in the district, including technology and arts programs:

  • Purchasing new MacBook Pro computers for more than 550 students;
  • Constructing six new libraries;
  • Implementing a new music education program that serves more than 3500 students;
  • Instituting a new arts program covering more than 190 classrooms;
  • Hiring 12 new guidance counselors with an average salary of nearly $54,000; or
  • Giving $10,000 bonuses to more than 60 teachers.

"Simply put, the size of these funding gaps is appalling. But contrary to popular belief, these gaps aren't too large to be closed feasibly. Considering how much states and districts spend on education, closing the gap would only cost between 1 percent and 2 percent of their total education budgets on average," said co-author Max Marchitello, a policy analyst at the center.

The report offered three recommendations to Congress as it debates updates to ESEA:

  • First, base the comparability calculation on actual expenditures, including teacher salaries;
  • Second, require districts to achieve comparability between Title I and non-Title I schools by proving that Title I schools receive state and local funding at least equal to the average of the district's non-Title I schools; and
  • Third, require districts that serve only Title I schools to show that higher-poverty schools receive no less than the average total of state and local funds for lower-poverty schools.

"Notwithstanding the fact that comparability is the law of the land, the way districts comply with the provision undermines its true intent," the report stated. "Under the current fiscal policy, districts can spend less of their own state and local dollars on the schools with the highest needs, and most do spend millions of dollars less in these schools. Therefore, Congress should close the comparability loophole by requiring that districts fund their Title I schools at the same level as or higher than--based on actual spending--their other schools."

The full report is available on the Center for American Progress site.

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