Solve the Title I Set-Aside Problem by Tapping Funds for Pre-K

Ed Week’s David Hoff draws attention to a provision in the No Child Left Behind Act (NCLB) that could complicate school districts’ efforts to spend $10 billion in Title I funding provided under the American Recovery and Reinvestment Act (ARRA). Under NCLB, school districts must provide students with supplemental tutoring or give them the option of transferring to a better-performing public school if they are enrolled in schools that have failed to meet student achievement benchmarks for multiple years. Districts must set aside up to 20 percent of Title I funds for these purposes.

But in practice, many school districts with low-performing schools haven’t actually spent the full 20 percent set-aside on school choice or tutoring (also known as supplemental educational services, or SES). That’s in part because of a lack of better-performing schools for students to transfer to, and in part because many districts have done a lousy job of making parents aware of their options under the law. Districts that don’t spend the full set-aside may use that money for other purposes, but they must wait until the following year to do so. With the new infusion of Title I funding, the amount of set-aside money districts are unable to spend is likely to grow. And some observers fear that a delay in spending these funds could undermine their stimulative impact.

Complicating the picture are regulations put in place near the end of the Bush administration that would make it more difficult for school districts to roll over unused set-aside funds and use them for other purposes. Lobbyists for school districts and school administrators are citing the stimulus as a reason that the Obama Administration should undo those regulations and expand waiver authority for districts to use the set-aside funds for things other than public school choice and SES. Education reformers and advocates for low-income children fear that such changes might make it harder for children stuck in poorly performing schools to get the educational supports they need and could reward school districts for bad behavior.

We have a better idea: Maintain the requirement that districts set aside 20 percent of Title I funds for public school choice and SES, but allow them to use that funding for pre-K as well. Don’t allow districts to roll over unspent set-aside funds, but if they can’t or don’t spend the full set aside on choice and SES, require them to use the remaining funds to provide high-quality pre-K for children in neighborhoods. Services could be provided through school-based programs, Head Start, or community-based providers who meet high quality standards (such as employing teachers with bachelor’s degrees).

This approach has a number of virtues: First, it provides a way for districts that can’t or don’t spend their full Title I set-aside funds on public school choice and SES to spend that money, without giving them a blank check to use it however they see fit. Second, it eliminates the incentives that currently exist for school districts to dissuade parents from taking advantage of public school choice and SES options. Because districts now may roll over unused set-aside money and use it for other purposes, they have an incentive to keep uptake in choice and SES as low as possible, in order to maximize the amount of money they can keep. Forcing them to spend that money on pre-K would eliminate that perverse incentive. Third, it supports efforts to improve low-performing schools by providing a proven intervention—high-quality pre-K—targeted to individual children in communities with a history of poor school performance. If these children arrive in school better prepared to learn, then their schools will have an easier time making adequate yearly progress in the future.

Finally, this proposal would help compensate for the ARRA’s failure to adequately support state and local investments in pre-K programs. While the stimulus provides increased funding for Head Start and CCDBG, it doesn’t include funding specifically to help maintain funding levels for state pre-K programs. Although the ARRA provides more than $53 billion in state fiscal stabilization funds, the largest share of which is dedicated to education, the way in which the law specifies those funds be distributed actually makes it difficult for governors to use that funding to maintain state pre-K expenditures. In fact, the law’s maintenance of effort provisions for K-12 and postsecondary education may actually create a disincentive for governors to maintain pre-K funding.

The bright spot is that school districts—which are receiving most of the education funds in the ARRA—can use those funds to invest in pre-K programs, but districts are facing lots of competing pressures on their budgets right now, too. Policies that create an additional push for districts to spend Title I funds on pre-K—such as allowing them to use set aside funds for pre-K—could play an important role in helping maintain access to early education for low-income youngsters.