Title I Flexibility and Micro ESAs

In April of 1965, President Lyndon Johnson sat perched on a chair outside of a one-room schoolhouse.

ednext-aug2016-blog-burke-butcher-micro-esasIt was the school he had attended as a child and now the backdrop for his signing of the Elementary and Secondary Education Act (ESEA) – the education cornerstone of Johnson’s “War on Poverty.” The ESEA would become – and remains to this day – the most significant law impacting federal K-12 education policy.

It was a personal ceremony, as bill signings go. “In this one-room schoolhouse Miss Katie Deadrich taught eight grades at one and the same time,” the President explained of his former teacher. “Come over here, Miss Katie, and sit by me, will you? Let them see you,” Johnson beckoned. “I started school when I was four years old, and they tell me, Miss Kate, that I recited my first lessons while sitting on your lap,” he recalled.

Expectations for the impact of the new law were high. “By passing this bill,” Johnson promised, “we bridge the gap between helplessness and hope for more than five million educationally deprived children…we rekindle the revolution–the revolution of the spirit against the tyranny of ignorance.”

The foundation of the ESEA was and remains Title I of the law, which distributes federal funding via formula grants to low-income school districts. It is estimated that between half to two-thirds of public schools receive Title I funding, which currently stands at $15 billion annually.

Yet Title I has failed to achieve its stated purpose of improving educational outcomes for disadvantaged children. The Brookings Institution found that funding for Title I is used for initiatives that are largely ineffective, such as teacher professional development and nominal class size reductions. In fact, some 81 percent of principals report spending Title I dollars on professional development – a problem, as there is scant empirical evidence that professional development initiatives for teachers improves learning outcomes for students.

US News & World Report went so far as to say Title I “increases the inequality it was created to stop.” Reporters Lauren Camera and Lindsey Cook point to Fairfax County, Virginia as just one example of a wealthy district that accesses significant Title I dollars every year. Fairfax County receives some $20 million annually in Title I funding, despite being the first county in the United States to reach a median household income of over $100,000. The culprit is the convoluted system of Title I funding formulas – of which there are four – which allocate dollars with little consideration for the concentration of poverty in a district.

The recent addition of the Community Eligibility Provision (CEP), which was authorized by the Healthy, Hunger-Free Kids Act of 2010, further complicated Title I funding distributions. If an LEA chooses to participate and has at least 40 percent of its student population counted as Identified Students (students who qualify for free lunch (FRL) without an application because their families qualify for another means-tested program, such as TANF), that LEA then provides free breakfast and lunch to every student within each school in its district.

It’s common for school districts to use FRL as a proxy  for poverty to demonstrate eligibility for Title I funding (once source says 90 percent of districts engage in this practice). As a result, CEP has likely increased Title I’s complexity for districts, which must now consider that some schools within the district may be CEP schools, while others may not.

CEP is just the most recent example of the ever-more-complicated labyrinth of Title I funding formulas. As Susan Aud Pendergrass has noted, the complexity of Title I distribution formulas means “it is likely that no more than a handful of experts in the country clearly understand the process from beginning to end or could project a particular district’s allocation based on information about its low-income students.”

Instead of continuing with a complex and ineffective maze of Basic, Targeted, Concentration, and Incentive Grants, further mired in CEP regulations, Title I should be reformed to use a straightforward set per-pupil allocation. And to really move toward reforms that could make a difference – and perhaps even achieve the ESEA architect’s goal of providing “a good education for every boy and girl—no matter where he lives,” as Johnson implored, states should have the opportunity to let parents decide how to use Title I dollars.

Recent Title I portability discussions have been primarly limited to parents and students using a voucher to pay for private schools. With per student funding amounts averaging $500-$600, though, families would have few alternatives.

Students could use this money to pay for individual classes at a local college, additional public school classes, or an SAT prep course, for example. States should have the option to allow Title I funds to be deposited in an account-style option in the same way students are using education savings accounts (ESAs) in Arizona, Florida, and Mississippi (and soon Tennessee and Nevada), instead of being funneled through a convoluted maze of formulas. Parents and students would then be able to choose between public and private options in both K-12 and higher education.

Since federal law dictates that only low-income students can use the funds, these micro-ESAs should be kept separate from existing state savings account laws. Keeping the accounts separate will avoid creating a tangled mess of state and federal regulations and eligibility rules.

Still, as long as federal funding for Title I continues, allowing states to transform those dollars into micro-ESAs for families would be a welcome improvement.

Johnson said ESEA was “not the culmination but only the commencement of this journey,” suggesting room for improvement. Title I flexibility in the form of micro-ESAs could be just the ticket to a reformed – and workable – Title I.

– Lindsey M. Burke and Jonathan Butcher

Lindsey M. Burke is the Will Skillman Fellow in Education Policy at the Heritage Foundation and Jonathan Butcher is the Education Director at the Goldwater Institute.

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