Education Department Releases Guidance Specifics on Title I Stimulus Funds

The Department of Education (ED) released long awaited guidance documents for the major programs funded in the American Recovery and Reinvestment Act on April 1st. Each document specifies how funds for each program will be distributed, how each governor must disperse the funds, and how states and local education agencies (LEAs) will be able to use them. Because each document is 40 pages or longer, we will summarize the guidance in three separate posts. Yesterday we discussed the guidance for the State Fiscal Stabilization Fund.

Today, we take you through the details of the guidance for the Title I, Part A funds provided in the stimulus.

Unfortunately, this round of guidance does not provide specifics on programs and services states and LEAs can support with the new Title I funds. But it does provide extensive details on how states must distribute the money among LEAs and what requirements LEAs must follow while using the money.

First and foremost, the guidance encourages states and LEAs to use the new Title I funds – $10 billion available over fiscal years 2009 and 2010 – toward “short term investments for long term benefits.” This means, the document posits, that state education agencies (SEAs) should focus on extending their capacity to help schools identified as in need of improvement, while LEAs should focus on expanding “evidence based practices” to improve teaching and learning. The guidance also specifically calls out investments in early and secondary education, which are often overlooked in Title I distributions, as particularly valuable. Financial incentives to attract teachers into hard-to-staff schools and subjects are also encouraged.

As we reported before, the guidance states that 50 percent of the Title I stimulus funds will be distributed to SEAs on April 1^st (yesterday), while the additional 50 percent will be distributed by September 30, 2009. This money will be combined with the regular 2009 Title I appropriations to constitute a state’s total Title I allocation for 2009. Allocations to states, minus any funds states withhold for administrative purposes, must go directly to LEAs according to the Education Finance Incentive Grant and Targeted Grant formulas. This combined LEA allocation (stimulus plus regular appropriated funds) must meet the Title I hold harmless requirement that guarantees a district a certain percentage of its previous year’s Title I allocation.

Although ED released its final state and district Title I stimulus allocations yesterday, the guidance states that many states will have to adjust the district-level allocations to account for charter school LEAs, and LEAs that came into existence after the 2007-08 school year. These adjustments are necessary because ED used Census data from 2007 to calculate distributions to LEAs. This data does not capture districts created after that year nor charter districts that are not linked to a specific geographical error. As such, SEAs are expected to adjust their allocations to provide appropriate funds for new and charter LEAs that are not accounted for in the ED tables using the best available data.

In order to qualify for Title I stimulus funds, a LEA must have at least 10 students who qualify for Title I that make up at least 5 percent of the LEAs population. Given the large increase in Title I funds due to the stimulus, however, states may provide funds to LEAs that qualify but have not received allocations in the past.

Like regularly appropriated Title I funds, the Title I stimulus funds are held to a series of restrictions and requirements. For example, SEAs are required to reserve 4 percent of their total allocation for school improvement activities. However, if a state is able to fulfill all of its improvement activities using the separate School Improvement Grant funds ($3 billion in the stimulus), then the state can redistribute the 4 percent reserve to LEAs.

Similarly, the Title I stimulus funds must be used to supplement, not supplant the use of state and local education funds. This requirement ensures that districts do not use federal funds to provide services they otherwise would have used state and local funds for. However, in cases where budget shortages and other issues would have prevented LEAs from continuing to use state and local funds for specific purposes, LEAs can use Title I funds instead.

Title I stimulus funds are also contingent on whether LEAs meet the Title I comparability standard. This standard requires LEAs to demonstrate that all schools within their jurisdiction are equitably funded to a certain degree using state and local funds before the addition of federal funds. Because State Fiscal Stabilization Funds are considered federal funds, they do not count towards comparability calculations.

The greatest precondition for receiving Title I stimulus funds is the maintenance of effort requirement. This requirement states that an SEA must provide state and local funds to an LEA in a given year that are no less than 90 percent of the funding provided in the “second preceding” year. In other words, fiscal year 2009 funding cannot be lower than 90 percent of fiscal year 2007 funding.

However, an SEA may use State Fiscal Stabilization Funds to fulfill the maintenance of effort provision as long as the state funds education at 2006 levels (the SFSF maintenance of effort requirement) and the state provides the required data. In some cases, states can request a waiver for the maintenance of effort provision.

Beyond specifying the restrictions on the funds described above, the guidance primarily confirms that Title I stimulus funds must be used for the same activities regular Title I funds go toward. These include reservations for homeless children, neglected and delinquent children, supplemental education services, services for children in private schools, and financial incentives for teachers.

Finally, the guidance provides a sneak peek into future reporting and record keeping requirements for stimulus funds. Specifically, it says that states will be required to submit quarterly reports including the amount of money expended, the projects on which it was spent, an evaluation of these activities, and the number of jobs created or saved as a result. Similarly, LEAs will have to report to SEAs school-by-school per pupil expenditures from state and local sources.

While the guidance for Title I stimulus funds illuminates many of the details surrounding the distribution and use of funds, it provides little information on how LEAs should actually spend the money. Hopefully that information will come soon, as SEAs began to receive funds yesterday.