Winners and Losers of Rewriting Title I Formulas

Last week the Center for American Progress (CAP) released Bitter Pill, Better Formula, its second report on the funding formulas used under Title I, Part A, the largest federal K-12 education program. Funding for Title I, Part A ($14.5 billion in 2010) is currently distributed via four separate formulas defined in federal law. The formulas were designed by Congress mainly to distribute funding to school districts based on the number or concentration of students living in poverty, but other factors are also included in the calculations, such as hold-harmless provisions, small-state minimums, and per-pupil expenditures.

In the new report, CAP agues that Congress should reform the Title I, Part A formulas using a single, simplified calculation that would increase the relationship between the funding states and school districts receive and the concentration of students in poverty. As authors Cynthia Brown and Raegan Miller note, the new formula would require some significant political will because it would create winners and losers.

The proposed formula draws primarily from the two most targeted Title I, Part A formulas, Targeted and Education Finance Incentive, and refines some of the measures used in each formula. The formula would only allocate Title I funds to school districts that educate 10 or more children living in poverty and who make up at least 5 percent of the district’s total population. It would distribute funds based on a weighted measure of the concentration of school age children living in families below the poverty line, rather than raw counts of children living in poverty that are used under some of the current formulas. The proposed formula also would include a measure of state fiscal effort for education that takes into account total state expenditure on education (rather than per pupil expenditure) and total personal income (rather than per capita personal income). Finally, the proposed formula would include a revised hold-harmless provision that limits the size of Title I funding increases or decreases based on the concentrations of children in poverty.

Interestingly, Brown and Miller’s proposed formula would not include a measure of equity for school funding within states. Under the current Title I Educational Finance Incentive Grant (EFIG) formula, states that equitably fund their school districts receive additional funds. However, the authors claim that this current provision penalizes states that provide more funding to low income school districts than to higher income districts. Eliminating this provision, the authors argue, would encourage states to continue to provide additional funds to needy districts.

Such drastic changes to the Title I, Part A formula would come at a cost for some states and school districts. For example, the proposed formula would take away significant funding from small rural states like Wyoming. Some small states currently enjoy large per poor student allocations under Title I, Part A because they are guaranteed minimum funding amounts each year. Similarly, large school districts that educate significant numbers of poor students, but whose poor populations are not a large share of the total population, would also see drops in funding per poor student. The proposed formula would only take into account concentrations of impoverished students, not absolute numbers.

The changes, however, would free up Title I, Part A funds for states and school districts that have traditionally been overlooked by current formulas. For example, southern and western states would receive more funding per poor pupil under the proposed formula because they would no longer be penalized for lower per pupil education spending. Small and medium sized school districts with significant concentrations of poor students would also gain more funding because the formula would target funds to high concentrations of low-income students regardless of the absolute number of such students in a district.

While the details of the proposed Title I formula are controversial, the CAP report will certainly make it harder for anyone to defend unfair Title I formulas that divert funds from states and school districts most indeed of extra assistance. At a minimum, the new report shows that Congress needs to prioritiz reforming the Title I formulas when it reauthorizes the Elementary and Secondary Education Act this year. Ed Money Watch will be following the details as they unfold.