Low-Income Students

When President Obama released his fiscal year 2013 budget request earlier this month, one proposal that caught our eye was $6.02 billion – an additional $825 million over 2012 levels – for the Child Care and Development Fund (CCDF).

At Ed Money Watch we talk a lot about funding formulas for various federal grant programs. We’ve written about proposed changes to the ESEA Title II funding formula in the House Students Success Act, the need for improvements to the Title I formula, and even idiosyncrasies in the Individuals with Disabilities Education Act formula. Congress has designed each of these formulas to account for factors such as population size and poverty rates or numbers when distributing federal funds to states and school districts. But another factor – something known as “small state minimums” – always seems to run roughshod over the intended target populations.

Small state minimums are intended to ensure that small states receive a basic level of funding under each federal grant. Often, the formula sets the minimum at a certain percentage of the total appropriation that Congress provides that year – like the 0.5 percent minimum in the Title II formula. The idea behind small state minimums has merit: just because some students live in small states doesn’t mean they are less deserving of equitable shares of federal funding. But do small state minimums always work as lawmakers intended? Or do they overcompensate and provide small states with disproportionate amounts of funding per student?

To answer this question, we compiled data on total student enrollment and total state Title I, IDEA, and Improving Teacher Quality State Grant allocations in 2010. We then computed the allocation per pupil for each state and ranked them. This analysis suggests that existing federal funding formulas for those programs do disproportionately benefit small states, though some formulas do so more than others.

The ten smallest states in the nation are the District of Columbia, Wyoming, Vermont, North Dakota, South Dakota, Delaware, Alaska, Montana, Rhode Island, and Hawaii, in that order. Their total enrollments range from a little over 69,000 to just over 180,000 in 2010. As expected, many of these states receive more in federal funding on a per pupil basis than their larger peers.

This is most consistently the case with Title II Improving Teacher Quality State Grants where the first nine smallest states receive nine largest allocations per pupil, in exact order of enrollment. This is because the formula ensures each state 0.5 percent of the total allocation, or just over $14 million in 2010. If the formula did not include small state minimums, each of these states would have received closer to $3 or $4 million under the program.  In fact, each of the small states receive dramatically more than the average allocation per pupil of $60. The District of Columbia received $202 per pupil, almost four times the national average.

Small states also fare well under the Title I formula, which should theoretically be driven by student poverty. DC, Wyoming, Vermont, North Dakota, South Dakota, and Rhode Island all rank in the top 10 in terms of Title I allocation per pupil. Of these states, only DC has a particularly high particularly high census poverty rate at 30.8 percent. The rest all fall in the bottom half of states in terms of poverty rates. These states received over $348 per pupil in Title I, and as much as $686, compared to the national average of $294.

IDEA Part B allocations are least influenced by the small state minimum provisions, but some effect is not all-together absent either. Wyoming, Vermont, North Dakota, Alaska, and Rhode Island each rank in the top 10 in allocations per pupil. Rhode Island has the highest rate of students participating in special education at 18.1 percent, so the high allocation it receives may be justifiable. But the rest of the states don’t fall among the top ten states with special education participants, even though they receive nearly $300 per pupil or more in IDEA funds compared to the national average of $233. Interestingly, DC, which is a small state and has a high percentage of special education students (16.3 percent) ranks only 21st in terms of IDEA Part B allocation.   

Clearly, small state minimums have a significant influence over how federal education funds are allocated to each state to the point where these small states are disproportionately benefiting from federal funds. This is not to say that Congress should eliminate the minimums entirely. But this analysis suggests that Congress should consider the implications of the minimums and perhaps readjust the formulas produce a more equitable distribution of funds. Just as students in small states deserve their fair share, so do students in large states.

Click here to view these data for all 50 states and the District of Columbia.

Editor's note: This entry was originally posted on Ed Money Watch a blog from the New America Foundation's Federal Education Budget Project.

When the federal government distributes education funding via formulas, it typically takes several things into account. Chief among the data typically used are state- and school district-level poverty rates as determined through the Small Area Income and Poverty Estimates the Census Bureau conducts annually. These poverty rate estimates show the percentage of children age 5-17 living in families with total income below the poverty rate. Recently, the Census Bureau made those estimates available for 2010, providing a unique look into how poverty rates have shifted as a result of the economic recession. Those data are now available on the Federal Education Budget Project’s website (Ed Money Watch’s parent initiative). Users can compare poverty rates over time and view them in tandem with data on federal funding, student achievement, and other demographics.

When the federal government distributes education funding via formulas, it typically takes several things into account. Chief among the data typically used are state- and school district-level poverty rates as determined through the Small Area Income and Poverty Estimates the Census Bureau conducts annually. These poverty rate estimates show the percentage of children age 5-17 living in families with total income below the poverty rate. Recently, the Census Bureau made those estimates available for 2010, providing a unique look into how poverty rates have shifted as a result of the economic recession. Those data are now available on the Federal Education Budget Project’s website (Ed Money Watch’s parent initiative), http://febp.newamerica.net. Users can compare poverty rates over time and view them in tandem with data on federal funding, student achievement, and other demographics.

At the state level, the data show that poverty rates increased from 2009 to 2010 in all but two states – New Hampshire and Missouri. In both of those states, poverty rates decreased slightly. Nevada endured the largest poverty rate increase – 3.4 percentage points – to 19.2 percent in 2010. An additional 15 states saw increases of more than 2.0 percentage points from 2009 to 2010, including several large states such as California, Florida, and Pennsylvania. Nationally, the poverty rate increased from 18.2 percent to 19.8 percent.

At the district level, the data show much greater variability in poverty rates year to year. Of the nearly 14,000 school districts with data, over 9,100 saw increased poverty rates from 2009 to 2010, with an average increase of 3.9 percentage points. But nearly 700 districts saw increases of more than 10 percent from year to year, likely creating a significant increase in the number of students in need of additional services and support. Just over 4,300 districts experienced decreases in their poverty rates and nine districts saw no change at all.

What do these increased poverty rates mean for federal funding? Because most federal funding formulas – including those for Title I, Part A Education for the Disadvantaged Grants, Individuals with Disabilities Education Act grants to states, and Title II Improving Teacher Quality State Grants – take poverty into account, these substantial increases in poverty rates should mean increased allocations for many districts. These numbers are likely to be used to distribute grants for fiscal year 2012 because they provide the most recent data available. Though Congress did appropriate more funding for all three programs for 2012 compared to 2011, it probably won’t be enough to compensate for the demographic changes.  The relatively moderate funding increases may mean that many states and districts will not get sufficient additional federal funds to support the needs of their newly-eligible students, resulting in a tough budget year for the districts that saw large increases in students living in poverty from 2009 to 2010.

Check out the Federal Education Budget Project website to view the new student poverty data as well as new or updated data on state allocations for Title I, Individuals with Disabilities Education Act, and Impact Aid Basic Support Payments for fiscal years 2011 and 2012.

Today, the Asset Building Program and the Center for Social Development at the Washington University in St. Louis released the final report in the “Creating a Financial Stake in College” series. The fourth report “Ideas for Refining Children’s Savings Account Proposals” makes a case for establishing formal mechanisms for low- and middle-income children to save. Author William Elliott argues that a systematic, national approach to children’s savings accounts is a critical part of improving access to postsecondary education, particularly for low- and middle-income students.

“Creating a Financial Stake in College” is a four-part series of reports that focuses on the relationship between children’s savings and improving college success. This series examines: (1) why policymakers should care about savings, (2) the relationship between inequality and bank account ownership, (3) the connections between savings and college attendance, and (4) recommendations to refine children’s savings account proposals.

The recently-released House ESEA draft reauthorization bill makes substantial changes to the federal role in public education. Among other changes, the proposal significantly loosens requirements on how states and local school districts can spend education dollars. While more state and local control is a popular mantra, we would like to offer a few words of caution on a few provisions in the House bill. Mainly, these changes to existing law would essentially allow states and school districts to use federal funds previously intended to benefit specific, high-need populations however they see fit without requiring consistent state and local support.

1. First, the bill would move several existing programs to Title I, Part A of the law. These programs, which provide specific funding streams to local school districts for services for migrant students, neglected and delinquent students, English language learners, rural students, and Indian education, would be moved to the same section that funds grants for low-income students. Currently, these programs are authorized and funded under various titles and subparts of NCLB separate from Title I, Part A. This change would enable Congress to provide a single appropriation for all Title I, Part A programs, blurring the lines between funding for the programs. Under the bill these five programs would total 9.0 percent of the annual Title I Part A allocation, which would be set at $16.7 billion for 2013.
   
   At the same time, the bill includes a “flexibility” provision that would allow states and school districts to merge funds from these five programs, as well as set-asides for state administration and school improvement, and use them for any purposes covered by those programs or Title I, Part A Education for the disadvantaged. Under current law, states and districts are only allowed to transfer up to 50 percent of funds allocated under the Education Technology program (which is not funded in current law), the Safe and Drug-Free Schools program, and the school choice program into their Title I, Part A accounts. The five programs listed in the proposed flexibility provision are not included in any current flexibility provisions. Under the House proposal, states would have to notify the U.S. Department of Education and school districts would have to notify their state agencies if they intend to use any of the funding streams for alternative purposes. However, the proposal does not explicitly require states or districts to report how they repurposed the funds, what they were used for, or what programs or services were eliminated due to the flexibility.
   
   By allowing states and districts to merge funds from several funding streams targeted for specific high-need populations, the House bill would give them license to overlook the needs of some students in exchange for others. While giving state and district leaders more autonomy and control over federal funds to tailor services to their students’ needs is important, these specialized federal programs exist to serve students that are typically ignored.


2. Next, the House bill would allow any school that receives Title I, Part A funds to provide school-wide services, regardless of the percentage of students living below the poverty line, at that school. Currently, the No Child Left Behind Act only allows schools with poverty rates over 40 percent to use their Title I funds to provide school-wide services. This program is based on the assumption that all students at schools with such high poverty rates would benefit from additional services. In contrast, schools with poverty rates below 40 percent can use their Title I funds to implement interventions and services targeted just to eligible low-income students. Although the proposal would maintain the separate Targeted program, it seems unlikely that schools would opt to continue targeted programs when they could spread the funds among their whole population.
   
   By eliminating the poverty threshold for school-wide programs, the bill would allow schools with relatively small low-income populations to use their Title I, Part A funds to provide services to their entire student population, the majority of which would not otherwise be eligible for interventions or additional services. Those schools would no longer have to provide targeted services to just their high-need students, meaning these students could get lost or overlooked in the shift.


3. Finally, as we’ve written before, the House bill would eliminate the maintenance of effort provision of Title I, allowing state and local governments to cut per pupil or overall funding for education for districts but remain eligible for Title I funding. Current law allows a local school district to receive Title I Part A funds in an upcoming year only if state and local governments provided the district with at least 90 percent of the funding (per pupil or overall) that they provided in the preceding year. In other words, a district that received $8,000 per pupil in 2010 in state and local funds, must have received at least $7,200 per pupil (90 percent of $8,000) in 2011 to receive Title I funds in 2012.
   
   Assuming that states and local governments would take advantage of this change and cut their education funding, federal funds could begin to account for a much higher percentage of per pupil education funding (currently around 10 percent). It is somewhat ironic that lawmakers that typically support limiting the federal role in education would support a bill that has the potential to increase the percentage of education spending the federal government supplies while allowing state and local governments to cut their own spending.

Each of these changes would have a great impact on how states and school districts are held accountable for the use of federal Title I funds. But all together they would allow states and school districts to dramatically change how they use federal funds for education, practically turning Title I into an all-purpose block grant. These changes, in the name of local control, could make the nation's highest-need students more vulnerable than ever.

The third report in the Creating a Financial Stake in College series is being released today. In “We Save, We Go to College,” William Elliott looks at the factors contributing to a child being “on course” (enrolled in or have graduated from a two- or four-year college by age 23) or experiencing “wilt,” a phenomenon that describes children who had aspirations to attend college when in high school but are not enrolled after graduating from high school.

“Creating a Financial Stake in College” is a four-part series of reports that focuses on the relationship between children’s savings and improving college success. This series examines: (1) why policymakers should care about savings, (2) the relationship between inequality and bank account ownership, (3) the connections between savings and college attendance, and (4) recommendations to refine children’s savings account proposals.

Reauthorization of the Elementary and Secondary Education Act (ESEA, currently known as No Child Left Behind) has been an on again, off again proposition in Congress. The 2002 law expired in 2007 and Congress has extended it a number of times while lawmakers debate some sort of longer term policy.  Meanwhile, the Obama Administration has given states the opportunity to waive some of the provisions of the law. In the latest development, House Education and the Workforce Committee Chairman John Kline (R-MN) announced that House Republicans would be moving forward with several pieces of legislation to address different aspects of ESEA. Earlier this week, that committee released two of these bills, the Student Success Act, which would replace the current Title I of ESEA, and the Encouraging Innovation and Effective Teachers Act, which would replace Title II of the existing law.

By many accounts, both bills contain few surprises. They generally lessen the federal role in state and local K-12 education, particularly as it pertains to accountability and standards, putting more authority in states’ hands. But as we read the bills, particularly the Title I language, we noticed a few things missing that we thought for sure would be in any proposal. The top three surprising omissions are explained below:

1. Maintenance of Effort Provision of Title I: Current law states that a local school district can only receive Title I Part A funds in an upcoming year if state and local governments provided the district with at least 90 percent of the funding (per pupil or overall) that they provided in the preceding year. In other words, if a district received $8,000 per pupil in 2010 in state and local funds, it has to have received at least $7,200 per pupil (90 percent of $8,000) in 2011 to receive Title I funds in 2012. This rule ensures that states and localities don’t dramatically reduce funding for their school districts year to year.
   
   The recently introduced House bill strikes this provision entirely. It effectively gives states and localities license to dramatically cut contributions to K-12 education without jeopardizing their federal funds. While the provision was struck no doubt to give states and districts more flexibility in crafting their own budgets, the change is problematic. If the federal government doesn’t require states and localities hold up their end of education funding, it’s far less likely that they will use Title I funds to provide additional services for low income students – the core purpose of the federal funds.
2. Updates to Teacher Comparability: Current law includes a provision that requires districts to demonstrate that they are comparably funding their low- and high-income schools. But the provision contains several flaws that undermine its goal, including a “loophole” that allows districts to exclude from the comparability calculation variations in teacher salaries that are due to years of experience. Ultimately this means that the current comparability provision has few teeth: much of the variation in spending between schools in a district is due to teacher compensation, and variation due to years of experience, at that. The current law labels spending between schools “comparable” even when schools with children from wealthier families receive much higher funding, so long as it comes in the form of salaries for more experienced teachers.
   
   The House bill makes no changes to the existing provision, effectively allowing districts to turn the intent of the comparability rule on its head and short-change low-income schools. In contrast, the Senate’s Harkin/Enzi bill includes a strengthened comparability provision that eliminates the loophole and limits comparability calculations to actual expenditures rather than student-teacher ratios.
3. High School Graduation Rates in Accountability: Current law includes an extensive accountability provision that holds states, districts, and schools accountable for student performance in math and reading and high school graduation rates. Though the House-proposed bill requires states to implement an accountability program that pertains to math and reading test outcomes, it strikes the high school graduation rate provision.  Though the bill allows states to include other student outcome measures besides math and reading test performance, high school graduation rates seem like a glaring omission, especially given the recent focus on high school completion among policymakers and other stakeholders. By comparison, the Harkin/Enzi reauthorization bill in the Senate includes high school graduation rates as a required part of a state accountability plan.

Although the House has released its bill on the core functions of ESEA – accountability and the distribution of Title I funds – it is unlikely that the reauthorization process will proceed full-speed ahead. Senator Tom Harkin (D-IA) has said that he will not move a bill forward until the House presents a bi-partisan bill and many stakeholders believe that reauthorization will not occur until 2014 when the final NCLB proficiency deadline approaches (the point at which 100 percent of students are supposed to be proficient or above on math and reading tests). But at least now we know what the House has in mind for a future federal role in K-12 education: far fewer fiscal and accountability requirements for state and local school districts masquerading as flexibility and local control.