Title I funds are distributed to school districts according to a set of four separate formulas: the Basic Grant, Concentration Grant, Targeted Assistance Grant, and the Education Finance Incentive Grant funding formulas. School districts have some discretion in how they distribute Title I funds among schools within the district, but the law requires them to prioritize the highest-poverty schools.
Basic Grant Formula
The Basic Grant formula allocates funding to school districts based on the number of poor children they serve. Any school district with at least 10 poor children and 2 percent of its students in poverty receives funding through the Basic Grant formula, so almost all school districts, even very affluent school districts, get at least some Title I funding through this formula. In fiscal year 2014, $6.4 billion, or 45 percent of all Title I funding, was distributed through the Basic Grant formula. The Basic Grant formula is the least targeted of the four Title I formulas.
Concentration Grant Formula
The Concentration Grant formula also provides funding to schools based on the number of poor children they serve. To receive money though the Concentration formula, school districts must have at least 15 percent of children in poverty or 6,500 poor children, whichever is less. Eligibility thresholds serve as "cliffs": absent prior year eligibility, school districts with 14.9 percent poverty and 6,499 poor children receive zero Concentration Grant aid.
Under both the Basic Grant and Concentration Grant formulas, once school district pass the threshold percentage of poor children required to receive funding, they receive the same amount of money per poor child regardless of how many poor children they serve. In other words, a school district with 15 percent of children in poverty gets the same amount of money per poor child as a school district with 99 percent of children in poverty—despite considerable evidence that it costs more to educate students in schools with high poverty rates.
Concentration Grant funds are provided on top of money a school district receives through the Basic Grant formula. In fiscal year 2014, $1.4 billion, or about 9 percent of Title I funding, was distributed through the Concentration formula.
The Targeted Assistance Grant formula is different: Rather than providing the same amount of Title I funding per poor child, it provides more money per child as a district’s poverty rate increases, so that higher-poverty school districts get more money per poor child than lower ones do.
Each additional child in poverty above 38 percent brings a district 4 times as much Title I funding as each poor child up to 16 percent of children in poverty. Each additional child in poverty beyond 35,515 brings a district 3 times as much Title I funding as its first 691 children in poverty. Weighting operates on a marginal basis to avoid a "cliff" effect.
In fiscal year 2014, $3.3 billion, or 23 percent of federal Title I funding, was distributed through the Targeted Assistance Grant formula. The Targeted Assistance Grant formula is the second most targeted Title I formula to school districts nationwide.
Education Finance Incentive Grant Formula
The Education Finance Incentive Grant Formula is designed to: (1) reward "good school finance states" that spend more state resources on public education and distribute that funding equitably, and (2) doubly target funds on high poverty school districts in "bad school finance states" that inequitably distribute state and local education funding. While school finance is largely left up to states and local school districts, the federal EFIG formula encourages more equitable funding. The grants were first authorized as part of the Improving America’s Schools Act of 1994, but funding was not appropriated until the authorization was amended as part of the No Child Left Behind Act of 2001.
In fiscal year 2014, $3.3 billion, or 23 percent of federal Title I funding, will be distributed through the Education Finance Incentive Grant formula. According to the Congressional Research Service, the Education Finance Incentive Grant formula is the most targeted Title I formula to school districts nationwide. The EFIG formula provides funding to school districts based on four variables: (1) weighted low-income student population, (2) per-pupil expenditure, (3) effort, which measures the State’s effort in providing funding for education per pupil compared to its relative wealth as measured by the state’s per capita income and (4) equity, which measures the degree to which education expenditures vary among school districts within the state.
Federal Title I funding has increased by $5.6 billion, or 61 percent, since 2001. All of that new Title I funding (i.e. amounts above the fiscal year 2001 level) has been distributed through the Targeted Assistance and Education Finance Incentive Grant formulas—the two formulas that most closely focus funding on the disadvantaged students Title I is supposed to help. Funding for the Basic Grants—the least targeted of all Title I programs—declined as a percentage of total Title I funding every year from 2001 to 2009, shifting instead to the Targeted Assistance and Education Finance Incentive Grant programs. From 2009 to 2010, however, the proportion of Title I funding for Basic Grants increased from 48 percent to 52 percent, while the share of Targeted Assistance and Education Finance Incentive Grant programs decreased by three percent from 23 percent to 20 percent for both grant types. In fiscal year 2011, the distribution changed again, with less funding going to Basic Grants and more funding going to Targeted and Education Finance Incentive Grants. From fiscal year 2011 to 2014, the share per formula remained virtually unchanged.