Federal School Finance Reform

Policy Brief

Federal School Finance Reform

Moving Toward Title I Funding Following the Child

The Elementary and Secondary Education Act (ESEA) was signed into law in 1965 as part of President Lyndon Johnson’s “war on poverty.” The Act was designed to help disadvantaged students meet challenging state academic standards. Originally authorized in 1970, the ESEA has been reauthorized routinely through the early 2000s. The last authorization of ESEA came in the form of the No Child Left Behind Act of 2001 (NCLB), which expired in 2007.

While Congress has not reauthorized the ESEA since the expiration of NCLB, most ESEA programs still receive appropriations. As it is currently written in federal statutes, the ESEA contains eight titles each directing federal funding toward different initiatives, all of which aim to improve education for disadvantaged students. At the crux of the ESEA is the Title I program, as it is the most far-reaching and heavily funded. Where other titles under the ESEA outline grants to states for specific initiatives-like teacher training, school choice, English language instruction or state assessments-Title I grants go toward any and all students who qualify as low-income.

The Title I program has fallen under scrutiny in the last decade. A common complaint is that stipulations in the legislation do not address funding inequities between Title I and non-Title I schools. For example, schools that qualify to receive Title I funds must be comparable to non-Title I schools in terms of certified staff rather than actual per-pupil expenditures, creating a loophole that allows for vast differences in actual dollars spent per student. A second criticism is that regulations on how Title I funds are spent work against the effectiveness of the program. Further, some argue that adhering to spending restrictions creates an unnecessary administrative burden.

Current proposals for the reauthorization of the ESEA, however, have the potential to solve many of the inefficiencies inherent in the Title I program. Specifically, these proposals would allow states to make Title I funds portable, meaning that federal dollars follow each child to the public or private school of his or her choice.

This brief describes the types of grants the federal government distributes under Title I, explains how those grants are dispersed to local education agencies (LEAs) and schools, and outlines the safeguards that were introduced to protect against misuse of Title I funds. A brief review follows of the shortcomings of Title I, leading to recommendations on how to make Title I more effective. Finally, this brief provides an overview of current reform proposals and draws some conclusions about which reforms offer the best chance for successful use of Title I funds.

Attachments

Katie Furtick is a policy analyst at the Reason Foundation, where her research focuses on regulatory issues, education policy, and school choice.

Lisa Snell is the director of education and child welfare at Reason Foundation, a nonprofit think tank advancing free minds and free markets.