How ED’s Proposed Supplement not Supplant Regulations Could Backfire on Equity

Title I of the Elementary and Secondary Education Act (ESEA) has long had fiscal requirements to protect against the gross misuse of funds well documented in ESEA’s early years. One such requirement is the supplement not supplant (SNS) rule. SNS is designed to ensure districts do not reduce the amount of state and local money a Title I school would receive if it did not participate in Title I. This is different than Title I’s comparability requirement, which aims to promote equitable spending across schools. Congress left ESEA’s existing comparability language untouched in ESSA.

The challenge with SNS has been how to determine what state and local funds a Title I school would receive if it did not participate in Title I.

Prior to ESSA, compliance with SNS was typically determined on a cost-by-cost basis, evaluating whether each cost charged to Title I was “extra.” Because “extra” is easiest to prove when something is “different,” this approach led to Title I spending on low-impact, often unaligned “add-on” services (see my work with Sarah Reber on how SNS affects resource allocation and instructional practice).

To address this, Congress prohibited a cost-by-cost approach to SNS under ESSA. Instead, districts must show how they distribute state/local funds to each of their schools. So long as the distribution methodology does not reduce a school’s state/local funding because of the school’s participation in Title I, the methodology satisfies SNS. Congress also mandated the Department of Education to conduct negotiated rulemaking on supplement not supplant regulations. The final round of negotiations begins Monday.

My Hamilton Project proposal explains how ESSA’s new SNS language has the potential to unlock Title I funds for struggling students, allowing districts to spend Title I on broader school improvement strategies – such as improving a school’s core curriculum, or implementing common planning time for teachers – rather than working around the edges.

The U.S. Department of Education (ED), however, has proposed a regulation that goes significantly beyond ESSA’s statutory language. The draft language was prepared for negotiated rulemaking discussions on supplement not supplant (the second round concluded without consensus Friday, April 8). The proposed regulation requires districts to allocate state/local funds through a (locally-determined) methodology that:

Results in equal or greater per-pupil spending in Title I schools vs. the average per-pupil spending in non-Title I schools, and

Allocates sufficient state/local funds to provide each Title I school a basic educational program.

These are appealing principles to those who care about equity. However, faced with this as a compliance requirement, districts would face several incentives at odds with helping disadvantaged students.

The proposed rule on per-pupil spending:

• Makes weighted student formulas (WSF) less attractive to districts. Distributing state/local money to schools through a WSF can be more equitable and transparent than other distribution methods, but could run afoul of ED’s proposed regulation. This is because a school’s allocation in any given year depends on the characteristics of its students in Title I schools versus enrollments in other schools. While most WSFs weight economic disadvantage, they often give higher weights to other student categories, such as students with disabilities (SWDs), English learners (ELs), and foster care or homeless students. Negotiators understood SWDs and ELs are disproportionately poor in the aggregate population. But if a district places higher weights on SWDs and/or ELs, and has higher representation of these students in non-Title I schools, the formula could allocate more dollars to the non-Title I schools on average, causing non-compliance under the proposed SNS rule.

• Provides incentives to concentrate higher-needs students in Title I schools. For example, in a district that uses a WSF, the easiest way to comply with the proposed regulation is to concentrate higher-needs students—including poor students—in Title I schools, because these students generate more state/local revenue at the school level. Concentrating higher-needs students—whether low-income students or students with disabilities—in Title I schools goes against the Department’s goal of promoting economic integration.

• Backs districts into a corner on forced placement of teachers. For districts that use a staffing model to allocate funds, the easiest way to comply with the proposed regulation would be to place more expensive (typically more experienced) teachers in Title I schools. All negotiators agreed that forced placement is not a desired practice. But if a district finds itself in the not-uncommon position of: (1) using a staffing methodology; (2) having more senior and therefore expensive teachers in non-Title I schools; and (3) lacking major additional funds, it is difficult to see how they could comply without forced placement.

• Introduces incentives for districts to change the number of schools that receive Title I. Typically, any school with at least 35% poverty is eligible for Title I, but there is substantial local discretion and difference in practice as to how many eligible schools are served. Some districts concentrate Title I funds in their highest poverty schools, while others distribute Title I funds more broadly. Different patterns are legal, and make sense for different districts. Requiring districts to equalize their state/local spending in each Title I school with the average spending in non-Title I schools can create incentives for districts to adjust which schools they designate as Title I. For example, if a district’s lower-poverty Title I schools (which could still be high poverty schools), have new, less-expensive teachers, kicking those schools out of Title I would lower average spending in non-Title I schools. Or a district that previously chose to concentrate Title I funds in its poorest schools could instead distribute Title I to still eligible but less poor schools, if those schools have more experienced teachers which would pull up per pupil state/local spending average in its Title I schools. Either way, decisions about Title I school designation would be driven by SNS compliance concerns rather than instructional or equity goals.

The proposed rule on sufficiently funding a “basic educational program”:

• Works against customized educational approaches tailored to school or student needs. The easiest way for a district to comply with the proposed rule would be to define and require a standardized basic educational program for all of its schools. Because in practice such a program would likely use up most state and local resources, it could limit opportunities for school or student-based customization. This significantly restricts local decisions on how to use state and local funds, and potentially undermines promising school improvement practices and innovation.

• Incentivizes ineffective Title I spending practices. Prior to ESSA, the cost-by-cost SNS test prevented schools from spending Title I funds on comprehensive improvements because it was hard to show something comprehensive was “extra” or supplemental. Districts often would spend Title I funds on pull-out programs unaligned to the regular curriculum because it was easier to show a program was supplemental if it was different. Requiring districts to define their “basic educational program” would continue the regulatory focus on “basic” versus “extra” services, and discourage changes in longstanding local patterns of ineffective Title I spending, and work against the Department’s goals of supporting evidence-based practice.

For new regulations to help disadvantaged students and meet Congress’s presumed intent of changing the SNS rule to drive more effective Title I spending, the Department should strike the requirements of equalized spending and sufficient funding of the basic educational program.

The statutory language itself—forcing districts to show that they have some resource allocation method, and that it does not penalize Title I schools—is clear, and should be acknowledged as a major step forward for equity.

– Nora Gordon

Nora Gordon is Associate Professor at Georgetown University’s McCourt School of Public Policy and Research Associate of the National Bureau of Economic Research. 

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