The Consequences of Distrust

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The Consequences of DistrustWhy the Fiscal Requirements o Federal Education Policy Hinde

Eective School District Management and What to Do About It

Jon Fullerton and Dalia Hochman March 2012

AmericAn enterprise institute www.Aei.o

American Enterprise Institutefor Public Policy Research

Tightening Up Title I


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1 Introduction and summary

3 The challenge of intergovernmental trust

9 The consequences of intergovernmental distrust

the management imperatives of Title I fiscal regulations

16 Budgeting as Sudoku

21 Improving intergovernmental trust

25 Conclusion

26 Appendix: Sample compliance activities

29 Endnotes

30 About the authors

Contents


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Introduction and summary | American Enterprise Instit

Introduction and summary

American educaion migh be he leas locally conrolled local governmen

uncion. Te American people generally believe ha heir local school boards or

mayors are direcly responsible or school perormance, ye oher levels o gov-

ernmen exer vas amouns o inuence over schools hrough regulaions and

unding requiremens. Te ederal governmen, or example, generally accouns

or a relaively small share o he money available o primary and secondary

schools and school disricsusually less han 10 percenbu ederal regula-

ions deailing how such unds are spen signicanly impac he behavior o saeand local school leaders.

One o he mos visible ederal grans o local school disrics is ile I, Par A

(ile I) o he Elemenary and Secondary Educaion Ac o 1965, which direcs

unding o school disrics based on he number and concenraion o sudens

living in povery wihin heir borders. Allocaion ormulas o saes and disrics

conained in ile I also ake ino accoun he concenraion o povery, saewide

average per pupil expendiures, and local coss, among oher acors.1

Te original inen o ESEA was o provide compensaory educaional unding in

order o mee he addiional needs o sudens living in povery. Over ime, ile I

unding has become a criical unding sream or high-povery schools and disrics.

Much o he curren debae around he reauhorizaion o ESEA is ocused on

nonnancial policies, such as how o hold schools and school disrics accounable

or beter educaing heir sudens and how o ensure ha disrics provide all su-

dens wih high qualiy eaching. Oher provisions o he law under discussion are

public school choice, which requires disrics o provide parens wih oher school

opions when heir zoned school ails o make progress, and supplemenal educa-

ion services, which requires disrics o conrac wih exernal vendors o provideaddiional academic services or sudens in low-perorming schools.

Tis repor, however, examines a very dieren aspec o ile Iis scal

requiremens and he someimes problemaic impac such requiremens have


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2 Center or American Progress | The Consequences o Distrust

on he managemen o school disrics. In he pages ha ollow we rs describe

he key scal requiremens and guidelines governing he disribuion o roughly

$15 billion dollars in ile I appropriaions and he reasoning behind each o

hese requiremens. We ocus, in paricular, on he highes-impac requiremens

such as mainenance o eor, comparabiliy, and supplemen-no-supplan, as

well as some o he inradisric allocaion rules. Nex, we explore some o heuninended consequences he curren scal requiremens can have or he srae-

gic use o resources a boh he disric and he school level.

We hen examine he resuling budgeing and compliance regimes ha have

developed in many high-povery disrics as a resul o ile I scal requiremens

and oher caegorical program requiremens.

Our analysis leads us o a se o recommendaions or changes o boh he sau-

ory and regulaory requiremens o ile I. Overall, we sugges increased exibil-

iy in he scal requiremens coupled wih sraegic accounabiliy or resuls. Wealso recommend ha ederal regulaors inves in helping local disrics and saes

wih he inrasrucure required or houghul, sraegic managemen o unds.

Te goal o his paper is o help policymakers hink hrough how ile I scal and

reporing requiremens could be modied o improve school disric managemen

uncions and, ulimaely, o beter mee he original inen o he lawserving

he needs o high-povery sudens.


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The challenge o intergovernmental trust | American Enterprise Instit

The challenge of

intergovernmental trust

ile I unds are inended o provide addiional educaional services o he needi-

es sudens in schools and school disrics. In he rs several years aer Congress

passed he Elemenary and Secondary Educaion Ac o 1965, sae deparmens

o educaion and local school disrics had signican laiude in how o spend

ile I unds. Wihin a ew years, i became clear ha no all saes and school dis-

rics were necessarily ocused on using heir allocaed ile I dollars o help heir

needies sudens.2 As a resul, beginning in he lae 1960s, he ederal governmen

insiued regulaions ha atemp o solve hree undamenal problems:

How can he ederal governmen ensure ha ile I monies are argeed

a he sudens he program is designed o serve?3

How can he ederal governmen ensure ha ile I monies are being

spen eecively? How can he ederal governmen ensure ha ile I monies are being spen

in an appropriae ime rame and no being spen raudulenly?

Below we discuss he major scal regulaions he ederal governmen has creaed

o solve hese hree problems. Such regulaions include:

Mainenance o eora requiremen ha saes and disrics expend nonederal

unds amouning o no less han 90 percen o he previous years expendiure Comparabiliya requiremen ha disrics oer reasonably comparable

services across all schools, irrespecive o wheher hey receive ile I unds Supplemen-no-supplana requiremen ha ile I unds be used o provide

addiional services over and above wha eligible children would oherwise receive Inradisric allocaion requiremenshe rules dicaing how o divide ile I

unds among schools based on suden povery raes and grade-levels served School and program se-asidespre-deermined racions o ile I unds o be

used o suppor paricular aciviies such as parenal involvemen Spending and reporing requiremensdeailed procedures or documening

ha ile I unds heed ile I purposes


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Maintenance of effort

In he decade aer ESEA became law, ederal regulaors o ile I became under-

sandably concerned ha he inux o ederal dollars would lead o sae and local

axpayers decreasing he amoun o school unding hey provided or educaion. o

preven such decreases in local aid, he 1978 educaional amendmens o ESEA calledor more rigorous mainenance-o-eor rules o ensure ha ederal money provided

an addiional boos o educaion spending in high-povery schools and school dis-

rics.4 Secion 9521 o ESEA provides ha a local school disric will receive is ull

allocaion o ile I unds only i sae deparmens o educaion nd ha:

Either the combined scal eort per student or the aggregate expenditures o the

[local education] agency and the State with respect to the provision o ee public

education by the agency or the preceding year was not less than 90 percent o the

combined scal eort or aggregate expenditures or the second preceding scal year.5

I a school disric ails o mee is mainenance-o-eor requiremen and is pre-

ile I expendiures decrease by more han 10 percen, hen he sae deparmen o

educaion mus decrease he school disrics allocaions by he exac proporion by

which he school disric ailed o mainain ha 90-percen eor.

For many years, he mainenance-o-eor requiremen was mosly irrelevan as

sae and local spending on educaion generally only increased rom year o year.

Wih he onse o he Grea ecession in he lae 2000s, sae and local govern-

mens are now cuting heir educaion spending, sparking he renewed relevance

o he requiremen.

Comparability

Te comparabiliy provision ensures ha ile I unds are argeed a he inended

schools and sudens. Tis provision requires school disrics o prove hey are

providing comparable services and unding o schools receiving ile I unds

beore he addiion o hose ederal unds.

Te comparabiliy provision aims o ensure ha school disrics disribue ile I

money as an addiional, supplemenal unding sream on op o an allocaion ha

is, in all oher respecs, equal. Local school disrics may esablish comparabiliy in

one o he ollowing ways:


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By adoping a disricwide salary schedule and hen showing equivalence in

sang raios across schools By showing equivalen suden/insrucional sa salary raios By showing equivalen per pupil expendiures By showing a resource allocaion plan ha is based on suden characerisics

such as high-povery and limied English procien, or LEP, saus6

Such crieria or comparabiliy may appear o provide exibiliy, bu in pracice

sae deparmens o educaion can decide which o hese mehods local school

disrics are allowed o use, hereby limiing exibiliy signicanly. I is easier or

saes o monior comparabiliy i all disrics use he same measure.

Te majoriy o disrics and saes use he rs mehod, adoping a disricwide

salary schedule and hen showing equivalence in sang raios across all schools.

Tis mehod also happens o be he easies o implemen. Bu because i is all bu

impossible or all schools in a disric o have exactly he same eacher-sudenraio or suden-spending raio, saes are also responsible or deermining he

appropriae range wihin which local school disrics can claim ha ile I

schools and non-ile I schools are receiving comparable resources. Te com-

monly used range or hese resources is plus or minus 10 percen relaive o an

average or he disric.7

Te challenge o he comparabiliy regulaion lies in is lack o deail and in is

vague parameers. Ohers have writen exensively on how he many loopholes, lax

enorcemen, and weak guidelines o comparabiliy have led o he requiremen

insucienly prevening deep inequiies wihin school disrics. 8

Supplement-not-supplant

ile I also requires schools and school disrics o use he addiional ederal unds

received o supplemen, no supplan,unds rom nonederal sources ha would

have been used in he absence o ile I unds. Saes are charged wih deermin-

ing wha services a school disric would have provided in he absence o ile I

unds o sudens in ile I schools, and hen ensuring ha he school disric isno using ile I unds o buy hese services.9 I a school disric using local unds

provides schools wih a reading specialis in one year, or example, hen he dis-

ric may no use ile I unds he nex year o suppor he same posiion.


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In many ways, he supplemen-no-supplan provision is relaed o he maine-

nance-o-eor requiremen. In shor, mainenance-o-eor helps dicae sae

and disric revenue decisions while supplemen-no-supplan helps deermine

disric and school-level spending decisions on insrucional programs.

Intradistrict allocations

Inradisric ile I allocaion requiremens under ESEA add an addiional level o

complexiy o he resource-managemen decisions local school disric leaders have

o make. Federal guidelines place signican, and someimes surprising, limiaions

on how local disrics can allocae heir unds o schools. On he oher hand, he

guidelines also allow disrics grea laiude in choosing how hey dene povery

raes and how hey group schools such ha i is sill possible or lower povery

schools o receive, in aggregae, more ile I unds han heir higher-povery peers.10

One example o a prescripive inradisric allocaion guideline is wha many

sae and disric ocials colloquially call he 35 percen rule. Tis rule requires

disrics o diereniae beween schools where he percen o children in povery

is above or below 35 percen. I a disric serves any schools wih povery raes in

he school atendance area below 35 percen, hen he disric mus eiher allocae

all o is ile I disribuion o schools wih povery raes above 35 percen or rank

is schools by povery raes and allocae a leas 125 percen o he local school

disrics oal per-pupil ile I unding o schools based upon numbers o sudens

in poveryin decreasing order o school povery rankings.11

Te raionale or such a guideline is o ensure ha greaer ederal unding goes o

schools wih higher concenraions o povery. Ye his rule simulaneously guar-

anees ha schools wih low percenages o low-income sudens will no receive

anyile I dollars even hough some o heir sudens helped o generae he

ile I allocaion or he local school disric in he rs place.12

School and program set-asides

Te scal regulaions deailed above atemp o ensure ha local school disrics

do no diver ile I unds rom heir inended argeshigh-need sudens who

require addiional educaional services and suppors. Hisorically, he rules were

devised by ederal regulaors who did no always rus local governmens o arge


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ederal unds as inended, bu hese scal regulaions do litle o ensure ha once

ederal unds are allocaed o local schools and school disrics he unds are used

eectively o mee he program goals o ESEA.

o address his concern, lawmakers have enaced a number o se-aside provisions

or his purpose. For insance, local school disrics mus se aside 1 percen o heirallocaion or paren engagemen programs. Anoher 20 percen o ile I unds

mus be se aside or disrics o provide school opions and supplemenal educa-

ion services or sudens in schools ha have ailed o make sucien academic

progress. An addiional 10 percen o unds mus be se aside or proessional

developmen aciviies aimed a improving he skills o eachers and adminisraors.

Tese se-aside provisions are inended o ensure ha a leas some o he ile I

unds are used or wha he ederal governmen believes are eecive sraegies or

improving suden achievemen in high-povery schools and school disrics.13

Spending and reporting requirements

Te ederal governmen also needs o ensure ha ile I unds are spen in a imely

manner and are no subjec o wase, raud, and abuse. ile I regulaions spell ou

very specic carryover rules, requiring ha no more han 15 percen o ile I unds

allocaed o a disric or any scal year may be carried over ino he nex scal year.

In addiion, U.S. Oce o Managemen and Budge circulars require ime and

eor documenaion ha show how each ile I employee spends his or her

compensaed ime. School disric employees whose compensaion is charged

solely o ile I grans mus complee semiannual cericaion, while employees

who are unded boh by ile I and oher programs (spli-unded), mus submi

monhly repors.14

Unintended consequences

All o he regulaions described above are reasonable responses o ears a he ed-

eral level ha lower levels o governmen in charge o schools and school disricswill no carry ou he goals o he ile I program as inended. equiring disrics

o arge he money appropriaely, no o subsiue new money or he old, and

no o wase money, are all sensible precauions.


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Unorunaely, he same ederal scal regulaions inended o ensure he good

behavior o disrics, also serve o disor school disric managemen and

budgeing processes, inormaion ow abou how schools and disrics are using

ederal money, and he developmen o robus managemen inormaion sysems

ha provide imely and useable managemen daa o schools and school disric

leaders. I is o hese issues ha we now urn.


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The consequences o intergovernmental distrust | American Enterprise Instit

The consequences of intergovernmental

distrustthe management imperatives

of Title I fiscal regulations

For many school disrics and individual schools, he ask o complying wih

ile I scal requiremens discussed in he previous secion inadverenly creaes

a series o managemen imperaives ha are unrelaed or even conrary o he

original inen o he ile I program. As a resul, ile I unding guidelines oen

work a cross-purposes o he ask a handimproving he educaion o our

highes-need sudens.

Below we highligh our such managemen imperaives implici in he ile I

regulaions discussed above. Tey include:

One canno creae subsanial eciencies in he delivery o K-12 educaion. School disrics should emphasize he appearance o compliance over he

creaion o ransparen, raional budgeing and reporing processes ha consider

all sources o unding simulaneously. School disrics should use inexible per-pupil ormulas o assign sa o schools. Individual sudens should be disconneced rom he caegorical revenues

hey generae.

Disincentive for efficiency

Te rs managemen imperaive, implici in he mainenance-o-eor require-

men, is ha local school district leaders cannot create substantial eciencies in the

delivery o K-12 education. Subsanial cos-saving measures accompanied wih

reducions in local spending could jeopardize ederal ile I unding; hus here is

litle incenive o undamenally rehink how o deliver educaion services.

Te U.S. secreary o educaion may waive he mainenance-o-eor require-

men, bu he only legiimae reasons or a waiver are scal crises and naural (or

oher) disasers. Dramaic improvemens in eciency, such as disance learning


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or eliminaing posiions rendered obsolee by echnology, canno be considered.

Mainenance-o-eor hus helps reinorce wha unil recen years has been a one-

way rache or educaion spendingmore, bu no necessarily beter.

Te mainenance-o-eor requiremen probably made sense in he early years

o ile I when a large inusion o new ederal dollars could simply be swappedor local dollars. Bu hose imes are a disan memory. Now ile I dollars are so

ingrained in mos disric budges ha any swapping o hese dollars or local dol-

lars would enail a reducion o services unless here were oseting eciencies.

Wih sae and local ax revenues on he decline, he mainenance-o-eor

requiremen is now more cenral o local discussions abou ile I unding.

Indeed, he ederal governmen perhaps compounded he pressure mainenance-

o-eor pus on disrics hrough he American ecovery and einvesmen Ac

o 2009, which (among oher hings) creaed he $54 billion dollar Sae Fiscal

Sabilizaion Fund ha invess in sae K-12 and possecondary educaion orscal years 2009-2011.15 Money rom he und is permited o coun oward he

mainenance-o-eor requiremen. While his allowance does no pose a prob-

lem or he years hese programs are in eec, when he unds dry up in 2011,

he resul may be an even greaer mainenance-o-eor gap han would have

exised in he rs place. For example, in 2012 a given school disric will need o

show ha i mainains is sae and local scal eor a he same level as he year

beorea level ha included he ederal AR inusion o money. Tis may be a

all order or sruggling local economies.

While local school disric budge direcors may eel consrained by mainenance-

o-eor guidelines, here is litle empirical evidence ha he requiremen isel

has eeh. For mos school disrics, ile I provides under 5 percen o oal rev-

enue. Even or he highes povery disrics, where ile I unding can approximae

as much as 10 percen o oal revenue, he mainenance-o-eor requiremen

does no pose a real hrea o unding. I such a disric did compleely subsiue

ile I unding or pre-exising general unds, i would sill be wihin he 90 per-

cen allowed or by he curren guidelines.

Furhermore, i a disric somehow cu 20 percen o is per-suden operaingcoss in a single year, hen is ile I allocaion would be reduced by 11 percen in

he subsequen year. Tough his seems like an imporan slice o a disrics bud-

ge, i only amouns o one-hal o one percen o oal prior year revenue. Upon

explanaion his mah seems simple, ye many local school disric budge direc-


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The consequences o intergovernmental distrust | American Enterprise Institu

ors allow mainenance-o-eor o play a disproporionaely imporan role in key

decision-making on educaional services.16

Compliance ahead of results

Te second managemen imperaive, creaed primarily by he supplemen-no-

supplan requiremen, is ha school districts should emphasize the appearance o

compliance over the creation o transparent, rational budgeting and reporting processes

that consider all sources o unding simultaneously. Tis is because supplemen-no-

supplan requires local school budge audiors o explore a series o complex coun-

eracuals based on he key quesion: Wha would he disric have done i ile I

unds had been unavailable?

Tis is akin o asking he quesions: Would I exis i my moher had never me

my aher? or Wha i Gore insead o Bush had been declared vicor in 2000?Quesions such as hese can spark ineresing discussions, bu hey are obviously

impossible o resolve wih cerainy.

As a resul, sae deparmens o educaion end o enorce supplemen-no-sup-

plan compliance by looking or programs or posiions unded by sae and local

dollars in one year whose unding sources are swiched o ile I in he subse-

quen year. I a local school disric does swich unding sources, hen i mus have

records o show ha here was boh a lack o sucien sae-and-local unds and

he decision o eliminae ha sae-and-local spending in avor o ederal unds

was aken wihou considering he availabiliy o ederal unds.17

Needless o say, demonsraing such couneracuals is a challenge. Te disric

could always have cu a dieren iem, have no given raises, or have ound addi-

ional sources o revenue. In addiion, one should also be worried abou a disric

leadership ha only remembers i has ederal unds aer he cus have been made!

As Melissa Junge and Sheara Krvaric noe in an accompanying paper in his series

on ile I reorm, How he Supplemen-No-Supplan equiremen Can Work

Agains he Policy Goals o ile I: A Case or Using ile I, Par A, EducaionFunds More Eecively and Ecienly, he supplemen-no-supplan require-

men as currenly writen prevens disrics and schools rom doing a number o

sensible hings ha would improve he achievemen o argeed sudens. Te

managerial resul o his is wha one o he auhors (Fulleron) has in he pas


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called he dance o supplantation, a complicaed minue in which local school

disric managers and individual school principals atemp o use ile I and oher

caegorical unding sraegically o ree up less resriced sources o unding.18

Tis dance has a ew common moves. Firs, here is level-shiing, in which a

school disric may eliminae a program and posiions (reading coaches, or exam-ple), bu hen individual schools may buy hese posiions on heir own rom heir

disribuion o ile I unds. Such a move would generally be allowable (a leas i

he school disric gives schools he reedom o choose no o buy hese posiions)

because he decision makers or he cos reducions are a a dieren level o he

sysem han he decision makers or he new spending.

A second dance move is he sar-sop-sarsraegy. I a program based on sae and

local unds can no longer be aorded, eliminae he program in year wo and hen

resar a similar (bu dierenly named) program in year hree. Tis can separae he

local unding rom ederal unding decision sucienly o pass muser under hesupplemen-no-supplan requiremen and o sais y sae or ederal audiors.

Given such resricions, here are srong disincenives or disric leaders o budge

and manage ederal unds and unresriced sae-and-local unds in a unied pro-

cess. Te more siloed he budgeing process is or dieren sources o unds, he

beter, rom a compliance sandpoin.

Furhermore, i a school or disric leader is acually hoping o leverage ile I

unds o shore up a program ha has no previously been unded hrough ile I,

he leader needs o learn how no o say wha one meansa leas no in pub-

lic. As a resul, in addiion o creaing unnecessary resricions on he sraegic

argeing o resources, he supplemen-no-supplan requiremen also helps creae

disjoined and someimes dishones budge processes driven by he need or com-

pliance raher han by sraegy.

Unorunaely, he bad news does no end here. Tis ederal provision also

degrades he abiliy o local school disric managers and local voers o under-

sand how resources are acually being used in any given disric. Wih programs

consanly changing ile and level, wih he managers o hese programs hailingrom dieren oces depending on he source o unding, and wih spending being

racked primarily by ha source o unding insead o by operaional program, i is

dicul, i no impossible, o undersand how resource sreams ogeher, how

hey rack across years, and how hey are linked o suden achievemen.


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Abstract allocation divorced from needs and goals

A hird managemen imperaive driven primarily by he comparabiliy require-

men is ha school districts should use infexible per-pupil ormulas to assign sta to

schools. Such inexibiliy, in many cases, leads o grea inequaliies beween high-

povery and low-povery schools because all sa are considered equal houghhey may have very dieren skills and coss.

Te simples way or a school disric o demonsrae comparabiliy across

schools is o:

Embrace a single, disricwide salary schedule based upon experience, course

credis, and oher credenials only marginally relaed o suden achievemenAssign core sa posiions (eachers, adminisraors, counselors) o schools

based upon numbers o sudens a he school

Tis is oen called norm-based budgeing, a convenien approach ha can also

creae inequiy and undermine sraegic, oucome-oriened goals.

In a norm-based sysem eachers, adminisraors, and oher general und resources

are assigned based on he number o sudens. For insance, he disric may assign

elemenary schools one eacher per 25 sudens and one assisan principal per every

500 sudens. Supplies are allocaed on a per suden basis as well. In such a sysem,

all eachers are reaed as equivalen, regardless o experience or salary. A posiion is

a posiion, no mater who occupies ior how much he or she coss. Tis makes he

sysem exremely simple rom boh he school and he disric poin o view.

Unorunaely, he problems wih norm-based sang models run quie deep.

Firs, here is a well-known equiy problem. Since individual schools budges are

no beneted or penalized according o he relaive coss o heir sa, school

leaders have incenives o ge he bes (and poenially higher paid) eachers ino

heir school wihou worrying abou heir salary. Since he single-salary schedule

ypically prevens principals rom oering incenives o join a school, many o he

sronges eachers migrae o low-povery schools.19

As educaion nance researcher Marguerie oza and ohers have poined ou,

he resuls o such an incenive srucure have been large dierences in acual per

pupil dollars spen a dieren schools on saeven hough he same schools are

sill deemed comparable.20


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Bu inequiy in school spending is no he only negaive consequence o norm-

based budgeing. From a managemen perspecive, norm-based disribuion

o sa serves o separae school leadership rom he majoriy o expendiures

acually incurred by he school (eacher and sa salaries). Under norm-based

budgeing, school adminisraors a he school level are no ree o decide wheher

beter sang conguraions exis o mee suden needs. A sraegic principal,or example, migh consider his or her daa and decide ha, in lieu o an assisan

principal, a beter use o he unding would be an exra mah coach or a guidance

counselor. Bu norm-based budgeing prevens principals rom exercising his

kind o discreion o mach school need wih school resources.

Furhermore, while norm-based budgeing may seem o be a simple and sable

way o disribue sa, in realiy i can acually inroduce a large amoun o sa-

ing insabiliy ino schools. Sa allocaions are ypically nalized based on he

number o sudens enrolled on a paricular dae in he all (norm day). Schools

ha nd hemselves under-enrolled relaive o heir prediced enrollmen willauomaically lose eachers, resuling in he eliminaion o classes and he redisri-

buion o sudens across eachers. Schools ha are over-enrolled relaive o pre-

diced levels will receive addiional eachers and, as a consequence, also reshufe

classrooms parway hrough he erm. None o his mid-semeser shufing is likely

helpul or eiher sudens or eachers.

Disconnects and sprawl

A ourh managemen imperaive resuls rom he inradisric allocaion rules ha

govern he disribuion o unds o schools wihin a local school disric: individual

students can and should be disconnected om the categorical revenues they generate .

ile I regulaions disconnec revenue generaorsile I unding or high-

povery sudensrom recipiens in wo ways. Firs, he guidance is quie clear

ha some o he sudens who conribue a leas indirecly o he allocaion o

ile I unds o a disric will no ulimaely be he beneciaries o hese unds.

ypically hose sudens who lose ou are a schools wih less han 35 percen

povery. Second, while sudens in povery generae allocaions o ile I (boho disrics and wihin disrics), ile I unds are o be spen on sudens a risk

o ailing o mee sae sandards or are members o several oher groupsnone

o which are dened by povery.


19/36


Te inradisric allocaion rules, or example, creae insances where ile I

equivalens are reaed dierenly depending on arbirary geographic boundaries

and governance srucures. For example, i a school wih 30 percen o is sudens

in povery is par o a larger, higher povery disric, hen ha school will likely no

receive ile I unds. Insead, he unds is atendance area generaes will be redis-

ribued o higher povery schools in he disric. Bu i he same school were acharer school (and hus is own local school disric), hen i would receive ile I

unding despie having he exacly he same sudens and eachers. Tus, here are

incenives or higher income regions o large disrics o separae o rom lower

income regions in order o capure more ile I dollars in heir relaively lower-

povery schools. Unless changing local governance srucures is a goal o ile I,

such an incenive srucure makes litle sense.

Some schools and school disrics ge around his ile I mismach o policy and

pracice by engaging in suden-based budgeing, a process in which schools are

assigned dollars based on he number o sudens enrolled and hose sudenscharacerisics.21 Schools may demonsrae comparabiliy hrough suden-based

budgeing i sae deparmens o educaion approve such a mehod. Suden-

based budgeing is a promising model, bu he analyics, ime, and money

required o ransiion rom a norm-based sysem o a suden-based budgeing

sysem are prohibiive in mos disrics.

Moreover, suden-based budgeing does no provide readily available daa

organized or complianceanoher raionale many disrics use o mainain

he saus quo approach o budgeing. Tus he scal compliance requiremens

o ile I serve o preven school disrics rom creaing a more ransparen,

raional budgeing sysem or schools. We now urn o wha schools generally

conend wih insead.


20/36

Budgeting as Sudoku

Te curren scal regulaions o he ile I program creae subopimal manage-

men processes and ime-consuming, expensive compliance rouines in many

school disrics. Te ile I program in and o isel is no he only conribuing

acor leading o he esablishmen o his compliance regime. Te ineracion o

muliple, oen overlapping, ederal and sae caegorical programs requires sig-

nican sa ime be spen on gran reporing. Te curren se-aside requiremens

in ile I unding or supplemenal educaional services and parenal involvemen

urher complicae he process, because disrics and schools need o rack se-aside unds and conend wih carryover in hese unds separaely.

A ypical example o how schools and disrics conend wih he muliude o

caegorical resricions can be seen in gure 1 below, ound in one disrics budge

preparaion documens or schools.

o budge wisely, he school leader or leadership eam mus deermine how o

disribue people, posiions, and oher expenses across unds such ha hey can

pay or he posiions hey acually need while simulaneously using all available

resources.22 While his is an excellen opporuniy or leaders who like o solve

logic puzzles, i is no, perhaps, he simples approach o creaing a sraegic plan.

Even assuming ha school leaders are able o complee his budgeing process

eecively, such a budgeing sysem can creae a nighmare or sysem leaders

rying o deermine how schools are acually spending heir money. In any given

school, a single posiion (a school nurse, or example) may be paid or parly

ou o disric general unds, parly ou o ile I unds, and parly ou o oher

caegorical unds. Indeed, one common use o ile I unds is o op o parial

FEs provided by oher programs.23

rying o make sense o how exacly ile I unds are being used wihou simula-

neously looking a all oher unds coming ino he school is largely impossible. Ye

rying o undersand how all he resources coming ino he school are being used

simulaneously is no easy eiher given he number o splis by sources o revenue.



21/36

Budgeting as Sudoku | American Enterprise Institu

Figure 1

Sudoku budgeting: Los Angeles Unified School District

Federal and State Education Programs Branch: Budget at a Glance

Listed across the top are the various unding sources or the school districts budget. Listed down the side are various items the school can

buy with its unds ( including sta, materials, and proessional services). Grayed out are items that a particular unding source will not allow. This

sample budget is not unique but rather illustrative o the complexities that ederal and state scal requirements create or districts and schools.

Allocation

95% o allocation

5% o allocation

90% o allocation

10% o allocation

Pro. Development (Registration Fees)

Independent Contracts4

Contracted Instructional Services1

Sta Conerence Attendance

Sta Training Rate

Mileage

PD Teacher Regular

PD Teacher X/Z

Instructional Coach+

Problem Solving/Data Coordinator

Limited Contract Teacher (Intervention)8

Teacher X/Z (Tutoring)

Instructional Aide

Education Aide III

Teacher, Non-Register Carrying

Instructional Materials Account2

Teacher Assistant

Teacher Assistant Relie

Educational Resource Aide

Intervention Support Coordinator

Bridge Coordinator

Counselor, School9

Counselor, PSA9

Psychologist, School

Nurse

Counselor Assistant1

Dire

ctServi

cesto

Stu

dent

sRe

sour

ces

7S04

6Ti

tleI

7E04

6Ti

tleIP

arentI

nvolve

men

t

70A56

Title

IPr

ogram

Impr

ovem

ent

7M08JEI

A-EDY

70M

83E

IA-EDYSu

pple

mental

7S53

9EI

A-SCE

7N53

9EI

A-SCE

Sup

plem

ental

7S17

6Ti

tleIII

7S53

6EI

A-LEP

7N53

6EI

A-LEP

Sup

plem

ental

1431

0(c

arryov

era

llow

ed)Q

EIA

7N17

8Ti

tleII(G

rade

s4-

6)

71N78

Title

II(Grade

s9-12)

School

Organizational

SupportServices

Response-to-Intervention(RTI)

Professional

Development(PD)

1 Need prior approval or 7S1767S536 and 7N536 rom the Laguage Acquisition Branch (LA

2 Only 5% o total QEIA allocatiomay be budgeted or InstructiMaterials, and 5% may be speGeneral Supplies

3 Need approval rom FSEP andCannot be budgeted duringBudget Development

4 Need prior approval rom the

Oce o the Superintendent5 See Program and Budget Han

6 Limit o 4 Campus Aides may purchased using QEIA unds

7 Limit o 1 Oce Technician anMicrocomputer Support Assismay be purchased using QEIA

8 When unded with Title II, servmust be perormed during theregular six-hour school day

9 QEIA schools should submit aget adjustment i purchasing ateacher or high school counserom QEIA 2009-10 carryover dbudget development

10 Five days o Day to Day Sub. B

ted Absence (Item #10562) mbudgeted with this position.

Budget lines may be opened anorm day i QEIA accountabiliare met. This does not apply toalternative program schools. Lcannot be budgeted during bdevelopment. Submit budgetadjustments to Federal and StEducation Programs


22/36


As a resul o he complexiy o unding and reporing requiremens, a clear con-

necion beween he dollars spen a a given school and he resources acually on

he ground are dicul o deermine wihou acually visiing a school, aking an

invenory o adul sa a he school, and using ha daa o back ino he cos o

parial ull-ime equivalen employees and oher salary coss.

Te imelines or budgeing and spending ile I unds add an addiional chal-

lenge o he budgeing process. (see Figure 2) In one school disric we iner-

viewed or his repor, he sae requires he school disric o accoun or is

yearly ile I spending by early June so ha he sae could accoun or all disrics

by June 30, he end o is scal year. In urn, he disric requires all schools o

accoun or heir ile I spending by early May in order o prepare he required

repors or he sae. Tus, schools need o have processed all o heir spending

well beore he end o he school year.

Tis isel migh no be such a problem, excep ha schools do no receive noi-caion and clearance on heir nal ile I budges unil well aer he school year

begins. ile I unds are usually no ully available or spending unil lae Ocober

or early November. As a resul, schools may nd hemselves wih only hal o a

year (November-May) o spend heir enire year allocaiona he end o which

any surplus will be reabsorbed by he disric o be rolled over and reallocaed o

oher schools and programs or he nex year.

Such an abbreviaed imerame or ile I expendiures, driven enirely by sae and

ederal scal year and accouning requiremens, can signicanly derac rom he

ecacy o a ile I program a he very schools hese programs are designed o help.

FebJan Mar Apr May Jun Jul Aug Sep Oct Nov Dec

District fiscal year (Jul 1-Jun 30)

Spendingclosed

by district

Spendingclosed

by state

School improvementplanning and budgetin

Budget to statesbudget to districtsallocation to schools

Title I budgetdevelopment

Federal fiscal year (Oct 1-Sept 30)

Title I money accessible for school programmi

Figure 2

Title I timeline in one high poverty district


23/36

Budgeting as Sudoku | American Enterprise Institu

The compliance regime

aken ogeher, he scal requiremens and budgeing processes described above

require signican sa ime o ensure compliancesa ime ha is largely paid

or by ile I. Even in imes o budge cus here is litle moivaion or a disric

o reduce compliance personnel. Aer all, hese are he people who ensure haschools and he school disric do no lose any unds o which hey are eniled, and

who ensure ha he myserious (o praciioners) unding rules are no violaed.

Wih litle ransparency ino (and exposure o) he underlying budges o schools,

educaors come o rely on he direcives o he compliance adminisraors as crii-

cal guardians o much needed unds. Appendix I on page 26 provides one disrics

calendar o aciviies or ile I program sa in he cenral oce and illusraes

he around-he-clock naure o compliance work. Te imeline demonsraes

how ullling compliance aciviies requires he ull-ime energy o a large eam o

disric ocials.

Te key mission o compliance regime workers on boh a sae and disric level is

o ensure ha proper paperwork and reporing mechanisms are ollowed. Conics

can, and oen do, arise when oher disric employees and school employees wih

more programmaic goals nd heir eors in ension wih compliance goals. Tose

in charge o ensuring compliance may end o overinerpre ederal regulaions. As

regulaions ge passed down hrough he sysem, rom Washingon o sae depar-

mens o educaion o school disrics o schools, hey can become more and more

rigid. Over ime, perceived resricions on ile I (and oher caegorical unding

sreams) can become real resricions in he eyes o all concerned.

One disric ocial we inerviewed or his repor was dismayed o learn ha

he saes gran applicaion emplae was much hinner han he emplae ha

had been handed o her by her disric oce. In his case, he disric had added

addiional requiremens o is own on op o he ederal and sae requiremens.

No one in he compliance regime has incenives o es hese resricions; hose

responsible or compliance, however, ace real and negaive consequences or no

being in compliance wih he law and he governmenal level above hem. Te

sysem is se up o ensure ha he argeed risk-reward raio is zero.

A core uncion o he compliance rouine is he creaion o documenaion and

paperwork. For insance, one aciviy required by ile I and oher caegorical

grans is school improvemen planning. As par o oversigh and accounabiliy


24/36


mechanisms, all ile I recipiens mus submi school improvemen plans wih

accompanying goals, benchmarks, and merics. In many disrics, paperwork and

planning requiremens have become so exensive ha ull-ime ile I coordina-

ors locaed in each school spend he majoriy o heir days on creaing improve-

men plans on behal o school principals and eachers (deeaing, o course, he

purpose o he sraegic planning exercise) and paperwork compleion.

In some large schools, school principals hemselves are no even involved in he

creaion o he improvemen plan or heir own school.24 Te resul is a piecemeal

mosaic o planning documens ha oen collec dus in binders in compliance

oces raher han serve as acionable sraegic plans or schools and school

disric leaders.

A nal oucome o hese compliance rouines is ha mos school budgeing

plaorms are buil or compliance reporing raher han or managemen pur-

poses. ypical school budges divide up expendiures based on revenue sreamsand objecs (salaries, supplies, and purchased services) raher han he real unc-

ion o each expendiure. Many salaries and services, or example, are budgeed

a he disric leveleven hough services occur in schools, such as nursing or

psychological counseling. Services are simply allocaed o schools on an equal

basis (or, possibly, on a per pupil basis) regardless o he relaive amoun o

services each school consumes.

As a resul, i is generally dicul o deermine how much money is acually being

spen a a given school wihou signican invesigaive work.25 Exploring he

acual coss and benes o specic programs or specic sudens is exremely

dicul and ime-consuming. In he nex secion o he repor, we propose a ew

poenial modicaions o he curren ile I scal requiremens ha migh mii-

gae such counerproducive managemen and budgeing processes.


25/36

Improving intergovernmental trust

Suggestions for reform through ESEA reauthorization

No changes o he scal regulaions o he ile I program will ully address he

inheren ension beween ensuring ha ile I unds are spen in accordance wih

he inen o he program, and allowing a school leader he reedom o sraegically

manage his or her resources. Tere will always exis a need or oversigh mecha-

nisms o ensure ha money is appropriaely being spen on aciviies ocused on

high-need sudens. Some level o audiing and regulaion will always be requiredin order o preven raud and abuse. And alened school disric superinendens

and managers will nd ways o work sraegically wihin he curren ile I scal

requiremens o improve he educaion delivered by heir disric.

Ta said, we recommend some changes o he ile I regulaions ha we believe

will miigae some o he uninended consequences described above. We oer

our suggesed reorms o close ou our paper:

Drop or subsanially aler he supplemen-no-supplan requiremens o ile I Enorce he comparabiliy requiremens o ile I based on dollars spen equire saes o consolidae ile I unds in schoolwide budgeing plansAllow or more exibiliy overall in ile I spending by local schools and

school disrics

Les explore each o hese recommendaions in urn.

Reform supplement-not-supplant

Te supplemen-no-supplan requiremen as currenly insiued involves uncer-

ain couneracual judgmens ha make or uzzy rules and bad aih. I is, in prac-

ice, very hard o disinguish beween wha is a core school uncion and wha is

supplemenal, as well as beween wha is and wha would have been. Te require-

Improving intergovernmental trust | American Enterprise Institu


26/36


men resuls in oo much ime and menal eor spen on he dance o supplana-

ion raher han on sraegic, daa-based budgeing o improve suden oucomes.

We should be graning schools maximum reedom o allocae money based on

demonsraed suden need, no holding hem accounable or somehing ha is

largely impossible o prove or disprove.

As a resul, we suppor our colleagues Junge and Krvarics recommendaions o

make one o he ollowing hree changes o he supplemen-no-supplan rule:26

Eliminae supplemen-no-supplan enirely Use he supplanion es currenly required o ile I schoolwide programs and

use i or nonschoolwide programs as well Make supplemen-no-supplan waivable by ED and possibly by saes

Reform comparability

We recommend ha saes enorce comparabiliy based upon acual dollars spen,

no upon posiions, which means no ignoring salary dierenials based on each-

ers experience. A reauhorizaion o ile I could require ha saes and school

disrics develop sysems o rack spending o schools or sudens in a much more

robus way han is currenly racked. Compeiive grans o saes could help

incen disric o creae such sysems.

Beore insiuing his change in comparabiliy, hough, lawmakers should under-

sand ha mos disrics curren nance sysems are no designed o budge or

rack acual dollars spen a he school level easily. Moving rom a sysem designed

o ensure compliance wih curren caegorical regulaions o being able o atach

expendiures o schools, sudens, and programmaic uncions ha are consisen

over ime is no a rivial exercise. Tis will require subsanial ime o creae and

implemen he sysem, and subsanial coss o insall a new nancial managemen

soware inrasrucure.

Disrics are unlikely o have eiher available unding or he needed poliical capial

o implemen new inormaion echnology sysems jus because i will help hemmanage ederal ile I unding more eecively. Congress should hink o allocaing a

leas some money o incenivize appropriae sysem developmen i he comparabiliy

requiremen is expanded. Sae deparmens o educaion migh provide suppor or

regions or groups o disrics sharing a common nancial managemen sysem.


27/36

Improving intergovernmental trust | American Enterprise Institu

Comparabiliy requiremens can easily be made oo sric and become couner-

producive or school disric managemen o handle. I oo narrow a unding

band is allowed or comparabiliy purposes, hen we would expec ha saes,

disrics, and schools would begin o ocus on which dollars coun in he compa-

rabiliy calculaions as base undingand hen spend excessive amouns o eor

equalizing eacher salaries insead o eacher eeciveness. We would also expecha disrics would creae he minimal managemen inormaion sysems needed

o mee he requiremens o demonsraing comparabiliybu no more. Tis

would especially be he case i knowing more could lead o compliance lawsuis.

Congress needs o hink careully abou he relaive benes o greaer ranspar-

ency in spending versus a sricer approach o ensuring comparabiliy.

One way o address his challenge migh be o al low variances in per-suden

school spending o up o 10-15 percen per suden, bu o require ha schools

and disrics publish acual spending numbers by school or he public. Tis

would balance a base level o equiy wih managemen exibiliy while simul-aneously leveraging public ransparency o require disrics o explain why he

bounded spending dispariies exis.

Reform the local school budget process

New rules in ile I reauhorizaion should provide saes wih incenives o

encourage, and possibly even require, schools o consolidae muliple caegorical

unds ino schoolwide programs, and o encourage or require school disrics o

consolidae all improvemen planning processes ino one sreamlined single-plan

documen. Such changes would promoe more sraegic, daa-based planning

and budgeing processes on he school level and help schools move away rom a

compliance-oriened approach o wriing improvemen plans.

On he sae level, sae educaion agencies could hen provide disrics wih

common emplaes or an online planning plaorm ha link nancial sysems

wih daa warehouses. Each disric should no have o reinven he wheel or

school improvemen planning processes. Achieving such a change will mos

likely necessiae poliical, raher han echnical, eor as sae legislaors maybe relucan o see heir caegorical programs merged ino a larger, undiereni-

aed pool. For sae educaion ocials, however, lobbying or consolidaion is a

worhwhile endeavor.


28/36


Sae educaion ocials inerviewed or his paper acknowledged many o he

challenges discussed above. And hey expressed a clear willingness o be par o

he soluion o help alleviae he compliance burden disrics ace.

Since many o he scal requiremens and much o he ederal guidance guidance

speak direcly o local school disrics, we would recommend ha hose reviewingile I reauhorizaion hink careully abou which level o governmen is bes suied

or which compliance asks. Many o he echnical comparabiliy requiremens, or

example, migh be beter calculaed by an auomaed sysem a sae deparmens o

educaion raher han relying on local disric monioring. In many cases, he saes

imporan role as regulaor migh producively reduce disric ime spen on compli-

ance monioring and paperwork. We encourage a careul analysis o who does

wha among all levels o governmenrom he U.S. Deparmen o Educaion o

sae deparmens o educaion, local school disrics, and individual schools.

Embrace flexibility

Tere is a clear need o nd he righ balance beween sucien exibiliy in using

ile I unds o mee he sraegic needs o local educaors and mainaining a

modicum o accounabiliy or he resuls. Te ace o he op gran program

launched by Presiden Obama and his Secreary o Educaion Arne Duncan,

which makes ederal unding compeiive based on he meri o a saes proposal,

is chipping away a he noion ha ederal unding is a given and ha localiies are

eniled o i. I money is a carro o induce behavior, hen he ederal govern-

men needs o wield an equally srong sick o spur change.

Te ederal governmen migh consider piloing a block gran o ile I unding

wih subsanially ewer resricions (including ewer resricions on compa-

rabiliy) in exchange or greaer accounabiliy. A disric migh elec o eiher

coninue wih radiional ile I regulaions or be allowed o use ile I dollars

wih greaer exibiliy i hey agree o be held o a higher level o accounabiliy

or suden oucomes.

Congress has hisorically used block grans as a mechanism o increase exibiliy.However, here has been litle success in ensuring sucien accounabiliy wih

consequences. Te pilo Edu-ex saesa group o saes esing ou more ex-

ible school budgeing processesprovides an exising policy model or Congress.


29/36

Conclusion | American Enterprise Institu

Conclusion

None o he above recommendaions will eliminae he problem o inergovern-

menal rus and he challenges enumeraed a he beginning o his paper. Ye

revisions o he scal requiremens o ile I would allow educaion leaders o

good will a all levels o governmen boh a beter ongoing undersanding o he

resources available o be used and he reedom o use hem well. Our hope is ha

he greaer ransparency ha would be required o disrics rom new and beter

nancial reporing sysems will also serve o emper he acions o hose no o

good will. Te curren alernaive is coninued misdirecion o resources, bu aworld-class Sudoku eam.


30/36


Appendix: Sample compliance activities

NCLB program coordination events and due dates

(For planning purposes only)

Month Day Event or Item Due Person/Office responsible

August

SEA required Title I perormance report and SES/Choice Reports due to SEA NCLB CO/student registration

NCLB required SES mailing with provider list, eligible schools, enrollment orm NCLB CO

NCLB required Back to School celebration (SES provider participation/advertising) NCLB CO/FACE

September

NCLB required Begin implementing SIP Schools

NCLB required Annual school level Title I parent meetings Schools (district PowerPoint template)

NCLB required Parental involvement policy/plan review, revisions, dissemination to parents,aculty and community partners

FACE oversight, school responsibility

Monthly SES provider meeting NCLB CO

Open houses/back to school nightsSES providers attend Schools/NCLB CO

Monthly NCLB meeting Director ederal programs

NCLB required Begin non-HQT mailings HR

NCLB required AMAO notications ( Title III) Special pops/ Director ELL

NCLB required ELL programming or students identied as needing services Special pops/Directopr ELL; student registratio

NCLB required Parental notications o school perormance standards (school report card) Oce o Research, Planning, & Accountability,

Cayen Contract (SES management systems) NCLB Compliance Ocer

October

NCLB required SIP review/revisions Schools

NCLB required School-parent compacts FACE oversight/collaborat ion with schools

District required SES provider training (Cayen) NCLB CO

SES student enrollment orms due NCLB CO

NCLB required Initiate SES enrollment process; second enrollment window NCLB CO

SEA required Corrective Action Plan quarterly report Director ederal programs

Monthly NCLB compliance meeting Director ederal programs

ARRA quarterly reporting Finance/ederal programs

November

School-level Title I budgetamendment due Finance/level directors

NCLB required Highly Qualied Teacher Compliance Report due HR

Monthly SES provider meeting; provider contracts NCLB CO



31/36

Appendix: Sample compliance activities | American Enterprise Institu




December

CRP amendment window CAO/nance/ed progs/T&L divisions



Survey o children in local acilities or neglected/delinquent youth due SAO

SIG applications Federal programs (Director T&L; CAO)

District required FY 11 school level Title I BudgetsCoord grant pversight/director ederal program

directors

January

SES tutoring services begin (ES & MS) NCLB CO


District required Monthly NCLB compliance meeting Director ederal programs

District required/

NCLBEarly choice mailing NCLB CO/student registration

SEA release raw NECAP perormance data RPA

Federal required. ARRA quarterly reporting Finance/ederal programs

February

Begin T&L budget process or FY11 CAO/Finance/ ederal programs


T&L preliminary budgets due CAO/ederal programs/T&L divisions

Early choice transer applications due FACE/student registration

March

SEA issues preliminary state test perormance reports

Begin updating accountability les (sanction status charts, etc.) Federal programs

Begin preparing or school improvement planning (Director T&L; ederal

programs)Dir. T&L; director ederal programs; K-8 supervi

Early choice enrollment process Registration/RPA

POP revisions Schools

3/18 Monthly NCLB compliance meeting Director ederal programs

April

NCLB requiredMailing to parents o students in INI schools (sanction status, reason or identi-

cation, measures to address the problem, how parents can be involved)FACE/ederal programs/RPA




32/36





May

Begin working on FY 11 CRP Federal programs/T&L/Coordinated grant over

Closing down o SES and nal billing NCLB CO

T&L budget revisions CAO/ederal programs/T&L divisions

NCLB required Choice mailing and enrollment windowNCLB CO/FACE/student registration/director e

programs


DNA application Fed programs/CAO/Director T&L

June

**CRP due** Finance/ederal programs/T&L divisions

SES nal invoices due

NCLB required Update choice and SES inormation on website NCLB CO

July

CRP revisions Finance/ederal programs/ T&L Divisions



33/36

Endnotes | American Enterprise Institu

Endnotes

1 For a discussion o the complex ormulas behind the allocation oTitle I unds, see Raegen T. Miller, Secret Recipes Revealed: Demysti-ying the Title I, Part A Formulas (Washington: Center or AmericanProgress, 2009) available at http://American Enterprise Institute/issues/2009/08/pd/title_one.pd.

2 For a brie discussion o early district spending misuses o Title I, seePhyllis McClure, The History o Educational Comparability in Title Io the Elementary and Secondary Education Act o 1965 (Washing-ton: Center or American Progress, 2008), available at http://Ameri-can Enterprise Institute/issues/2008/06/pd/comparability_part1.pd.

3 While Title I monies are distributed based on poverty levels,Title I is to be used to improve the academic achievement o

at-risk student s.

4 Early debates on Title I vacillated between those who supportedmore open and exible uses o the grant program and categoricaladvocates who lobbied or more stringent, targeted oversight bythe ederal government and SEAs. In 1978, with the EducationalAmendments to ESEA, the categorical camp won the day. For a ullanalysis o the impact o early MOE regulations see Aaron Gurwitzand Linda Darling-Hammond, Maintenance o Eort Provision:An Instrument o Federalism in Education (Santa Monica: RandCorporation, 1981), available at http://www.rand.org/content/dam/rand/pubs/reports/2009/R2684.pd.

5 U.S. Department o Education, Non-Regulatory Guidance: Title 1 Fis-cal IssuesMaintenance o Eort, Comparability, Supplement, NotSupplant, Carryover, Consolidating Funds in Schoolwide Programs,Grantback Requirements (Revised February 2008), available athttp://www2.ed.gov/programs/titleiparta/scalguide.pd.

6 Ibid, p.16.

7 There is considerable variability in how districts may determine theappropriate average or comparison. See ibid.

8 Saba Bireda and Raegen Miller, Walking the Talk: Closing theComparability Requirement Loophole in Title I o the Elementaryand Secondary Education Act (Center or American Progress, 2010),available at http://American Enterprise Institute/issues/2010/03/comparability_brie.html.

9 U.S. Department o Education, Non-Regulatory Guidance: Title 1Fiscal Issues,p.38.

10 U.S. Department o Education,Non-Regulatory Guidance: Local Edu-cation Agency Identication and Selection o School AttendanceAreas and Schools and Allocation o Title I Funds to those Areas andSchools (2003); Interview with state ofcial, January 2011.

11 Ibid.

12 For a concise overview o the district allocation guidelines, see thewebsite o the Massachusetts Department o Elementary andSecondary Education, available at http://www.doe.mass.edu/titlei/

scal/?section=all.

13 See U.S. Department o Education to States, Policy Letter rom theregarding use o Title I unds, October 12 , 2004, available at: http://www2.ed.gov/policy/elsec/guid/stateletters/uocssos.html.

14 Time and eort reporting guidelines are specied in the U.S. Ofceo Management and Budget Circulars A-87 and A-133.

15 U.S. Department o Education, Guidance on State Maintenance o E-ort Requirements in the State Fiscal and Stabilization Fund Program(2010) available at: http://www2.ed.gov/policy/gen/leg/recovery/statutory/moe-guidance.pd.

16 Nora Gordon, Do Federal Grants Boost School Spending? Evidence

rom Title I,Journal of Public Economics, Volume 88 (2004):1791-1792, available at http://www.ssc.wisc.edu/~scholz/Teaching_742/Gordon.pd.

17 Title I Fiscal Issues, Part C.

18 Jon Fullerton, Mounting Debt, Education Next, Winter 2004.

19 Raegen T. Miller, Comparable, Schmomparable: Evidence o Inequityin the Allocation o Funds or Teachers Salary Within CaliorniasPublic School Districts (Washington: Center or American Progress,May, 2010), available at: http://American Enterprise Institute/is-sues/2010/05/comparable_schmomparable.html.

20 Marguerite Roza, What i We Closed the Title I ComparabilityLoophole? (Washington: Center or American Progress, June 2008)available at: http://American Enterprise Institute/issues/2008/06/comparability_part3.html.

21 For a uller discussion o Student-Based Budgeting see, MattHill, Ensuring Equal Opportunity in Public Education: How LocalSchool District Funding Practices Hurt Disadvantaged Students andWhat Federal Policy Can Do About It (Washington: The Center orAmerican Progress, 2008), available at: http://American EnterpriseInstitute/issues/2008/06/pd/comparability_part4.pd.

22 Unused resources are typically swept up by districts at the end othe year.

23 Full-Time Equivalents

24 Interview with local school district ofcial, February 2011.

25 For a vivid description o this problem, see Marguerite Roza, Educa-tional Economics, Where Do School Funds Go? (Washington: TheUrban Institute Press, 2010), Chapter 4.

26 Melissa Junge and Sheara Krvaric, How the Supplement-Not-

Supplant Requirement Can Work Against the Policy Goals o TitleI: A Case or Using Title I, Part A, Education Funds More Eectivelyand Efciently (Washington: Center or American Progress andAmerican Enterprise Institute, 2011).
http://www.americanprogress.org/issues/2009/08/pdf/title_one.pdfhttp://www.americanprogress.org/issues/2009/08/pdf/title_one.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.rand.org/content/dam/rand/pubs/reports/2009/R2684.pdfhttp://www.rand.org/content/dam/rand/pubs/reports/2009/R2684.pdfhttp://www2.ed.gov/programs/titleiparta/fiscalguide.pdfhttp://www.americanprogress.org/issues/2010/03/comparability_brief.htmlhttp://www.americanprogress.org/issues/2010/03/comparability_brief.htmlhttp://www.doe.mass.edu/titlei/fiscal/?section=allhttp://www.doe.mass.edu/titlei/fiscal/?section=allhttp://www2.ed.gov/policy/elsec/guid/stateletters/uofcssos.htmlhttp://www2.ed.gov/policy/elsec/guid/stateletters/uofcssos.htmlhttp://www2.ed.gov/policy/gen/leg/recovery/statutory/moe-guidance.pdfhttp://www2.ed.gov/policy/gen/leg/recovery/statutory/moe-guidance.pdfhttp://www.ssc.wisc.edu/~scholz/Teaching_742/Gordon.pdfhttp://www.ssc.wisc.edu/~scholz/Teaching_742/Gordon.pdfhttp://www.americanprogress.org/issues/2010/05/comparable_schmomparable.htmlhttp://www.americanprogress.org/issues/2010/05/comparable_schmomparable.htmlhttp://www.americanprogress.org/issues/2008/06/comparability_part3.htmlhttp://www.americanprogress.org/issues/2008/06/comparability_part3.htmlhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part4.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part4.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part4.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part4.pdfhttp://www.americanprogress.org/issues/2008/06/comparability_part3.htmlhttp://www.americanprogress.org/issues/2008/06/comparability_part3.htmlhttp://www.americanprogress.org/issues/2010/05/comparable_schmomparable.htmlhttp://www.americanprogress.org/issues/2010/05/comparable_schmomparable.htmlhttp://www.ssc.wisc.edu/~scholz/Teaching_742/Gordon.pdfhttp://www.ssc.wisc.edu/~scholz/Teaching_742/Gordon.pdfhttp://www2.ed.gov/policy/gen/leg/recovery/statutory/moe-guidance.pdfhttp://www2.ed.gov/policy/gen/leg/recovery/statutory/moe-guidance.pdfhttp://www2.ed.gov/policy/elsec/guid/stateletters/uofcssos.htmlhttp://www2.ed.gov/policy/elsec/guid/stateletters/uofcssos.htmlhttp://www.doe.mass.edu/titlei/fiscal/?section=allhttp://www.doe.mass.edu/titlei/fiscal/?section=allhttp://www.americanprogress.org/issues/2010/03/comparability_brief.htmlhttp://www.americanprogress.org/issues/2010/03/comparability_brief.htmlhttp://www2.ed.gov/programs/titleiparta/fiscalguide.pdfhttp://www.rand.org/content/dam/rand/pubs/reports/2009/R2684.pdfhttp://www.rand.org/content/dam/rand/pubs/reports/2009/R2684.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.americanprogress.org/issues/2008/06/pdf/comparability_part1.pdfhttp://www.americanprogress.org/issues/2009/08/pdf/title_one.pdfhttp://www.americanprogress.org/issues/2009/08/pdf/title_one.pdf


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About the authors

Jon Fullerton is he execuive direcor o he Cener or Educaional Policy

esearch a Harvard Universiy. He has exensive experience working wih policy

makers and execuives in designing and implemening organizaional change

and improvemens. Beore coming o Harvard, Fulleron served as he Board oEducaions direcor o budge and nancial policy or he Los Angeles Unied

School Disric. In his capaciy, he provided independen evaluaions o disric

reorms and helped o ensure ha he disrics budge was aligned wih board pri-

oriies. From 2002 o 2005 he was vice-presiden o sraegy, evaluaion, research,

and policy a he Urban Educaion Parnership in Los Angeles, where he worked

wih policy makers o ensure ha hey ocused on high impac educaional srae-

gies. Prior o his, Fulleron worked or ve years a McKinsey & Company as a

sraegy consulan. He holds a Ph.D. rom Harvard Universiy.

Dalia Hochman, an independen consulan, was ormerly eld direcor or he

School urnaround Group a Mass Insigh Educaion. A Mass Insigh, her work

ocuses on supporing disrics and saes engaging in school urnaround work.

Prior o joining Mass Insigh, Hochman was an adminisraor wih he Los Angeles

Unied School Disrics Oce o Innovaion. In his capaciy, she worked o creae

exernal nework parnersnonpro, civic, and universiy organizaions who

managed clusers o schools as well as developed larger reorm-oriened projecs.

Hochman spen several years eaching high school hisory in he New York Ciy

public school sysem. She has also augh a Vassar College. Hochman holds a Ph.D.

rom Columbia Universiy.


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About the Center for American Progress

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to signicant domestic and international problems and

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About the American Enterprise Institute

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ashion, we dedicate our work to a more prosperous

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Tel: 202.862.5800 Fax: 202.862.7177

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American Enterprise Institutefor Public Policy Research

The Consequences of Distrust

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