federal solution for education differences in America

 The two primary findings of this paper thus far are that we are systematically
(even if not intentionally) spending less on the schools that serve high concentrations of students of color, and the current discrepancies in per-pupil spending stems
from both state and district spending policies. 

This whole analysis is about problems
with state and local spending. But is there a role for federal policymakers?
Since 1936 Congress has had explicit permission from the Supreme Court
to use its spending power to influence a wide range of state and local action.29
What federal levers might Congress use to incentivize states and districts to
change the disturbing spending patterns documented above? The Elementary
and Secondary Education Act has been the primary source of federal education
funding and policy intervention since its initial passage in 1965. Congress most
recently reauthorized it in 2001 with the passage of the No Child Left Behind Act.
The money that flows through the federal programs authorized by these two laws
makes up only 8.2 percent of all education spending. Nonetheless, this is a nontrivial amount of money: $47.7 billion in 2007–08.30 By investing this much in our
nation’s schools, 

Congress has purchased a vote in how they are run. In recent history, federal lawmakers have not been shy about using their carrot-and-stick power
to force dramatic accountability and teacher-training requirements on schools
across the country. Consider, for instance, the now very well-known accountability and teacher-quality provisions added to the Elementary and Secondary
Education Act by the No Child Left Behind Act.
So what can Congress do to change state and local spending practices? Title I
of the Elementary and Secondary Education Act—

“Improving the Academic
Achievement of the Disadvantaged”—authorizes the largest pot of federal education money, and thus carries the most potential for effecting change. Because the
money is allocated to school districts directly, it is easier to use it to change district
policies than state policies.

In order to predict the effects of changing the law, I model what would happen if the
loophole were closed. There are three general ways that the loophole could be closed:
• Reallocate existing resources: School districts would be given no new money
and told they had to spend at least as much on Title I schools as non-Title I

 The result, in districts not meeting this requirement, would be to reallocate resources from the non-Title I schools to Title I schools.
• Equalize with new money: School districts would be subject to the same
requirement but would use new funds to “level up” the Title I schools to
a level of spending equal to their non-Title I counterparts.
• Combination: Districts could be required to reallocate some funds and also
be given some new money.
Of the three options, I model the so-called leveling-up version in this paper for
two reasons. First, it is the most straightforward to model. Second, it is the most
politically feasible, as I discuss below. 

This leveling-up solution would cost a total
of $6.83 billion, which is less than 4 percent of current general state and local
education funding.45
To create this modeled “closed loophole” world, I artificially increase spending
at Title I schools to the level that would be required under a closed loophole (the
average spending in non-Title I schools serving the same grade levels) if their
2009 spending registered below this bar. 

In what follows, I compare spending patterns in the closed loophole world with
today’s real world as reported to the Department of Education using 2009 data.
While this is a useful comparison, it is not entirely fair, because the closed-loophole world allocates $6.83 billion more than today’s real world. To address this,
I add a model that increases spending by the same amount but without closing
the loophole.46 This allows us to compare what our education spending patterns
will likely look like if we do nothing—do not fix the loophole and simply allow
spending to grow as the economy recovers—with what the education spending
patterns might look like if we close the loophole. 

By essentially throwing $6.83 billion at our schools in two different ways—first under
today’s rules and second under the proposed new rules—I assess what the comparability loophole is going to cost students of color in the near future if we do not close it.

How will closing this ostensibly race-neutral comparability loophole change the
national pattern of spending on students of color? Figures 3 through 6 each highlight one of the four versions of the problem described in the first section of this
paper. They compare the spending patterns in three alternative worlds:
– The real world with the comparability loophole in place
– A hypothetical scenario with 4 percent spending growth allocated under
today’s rules with no fix to the comparability loophole
– A hypothetical scenario with 4 percent spending growth allocated according
to the rules if the comparability loophole were closed

How would closing the loophole change spending patterns?
In assessing the benefits and costs of changing this policy, the first step is to define
exactly what the new “closed” comparability requirement would require. In a paper
for the Center for American Progress in 2008, Ross Weiner, then-vice president at
the Education Trust—

a nonprofit advocacy and technical assistance firm—spelled
out specific recommendations.43 In order to receive their Title I funds, districts
should have to show that they are providing comparable services by:
– Including actual teacher salaries in the calculations instead of average salaries
– Including all general education expenditures in the calculations and not just
the number of teachers
– Showing that Title I schools are each receiving at least as much as the district’s
average for non-Title I schools instead of between 90 percent and 110 percent
of the non-Title I average
– Comparing Title I schools with the non-Title I schools in the same grade level

Requiring—in districts where every school in a particular grade level is a
Title I school—schools serving the highest two quintiles of students living in
poverty to spend at least as much as the average for those schools serving the
lowest two quintiles
If these rules were adopted today, 3,836 districts across the country—where 77
percent of students attend school—would be forced to change their spending patterns or risk being out of compliance.44
This section of the paper asks two sets of questions. First, would closing the loophole change the patterns of underinvestment in students of color? And second,
what would individual districts actually do to implement it, how hard would it
be, what would it cost, and what unintended consequences might ensue? These
answers inform the final recommendation to gradually close the loophole while
also pursuing other, broader policy changes at a federal level.

Congress has always demanded that districts use the federal dollars to enhance
educational opportunities for low-income students. The federal funding is supposed to provide additional help for schools serving disadvantaged students,
not replace state and local funding that would otherwise go to them.31 Congress
included three specific financial requirements to keep districts from using federal
funds improperly:
– A supplement-not-supplant requirement that says federal funds must be
used to supplement nonfederally funded expenditures, not supplant them
– A maintenance-of-effort requirement that says districts must spend at least
90 percent as much each year as in the year prior 

– A provision called the comparability requirement that is designed to ensure
that all schools receiving Title I funding are providing services to their students
comparable to those in non-Title I schools before federal funds are distributed32
Collectively, says the Department of Education, these requirements are “critical
to the success of Title I, Part A because they ensure that the federal investment
has an impact on the at-risk students the program is designed to serve—something that would not occur if federal dollars replaced state and local resources that
would otherwise be made available to these at-risk students.”33
Because I suggest changing the requirement, it is important to take a moment first
to understand the details of the way the current law does and does not work. 

In order for a school district to receive its formula-based Title I grant each year,
the comparability provision says the district must show that, “Taken as a whole,
services provided in Title I schools from state-and-local funds be at least comparable to those provided in non-Title I schools.”34 The Department of Education
explains that, “The purpose of this comparability requirement is to ensure that
federal assistance is providing additional resources in high-need schools rather
than compensating for an inequitable distribution of funds that benefits more
affluent schools.”35
Districts can demonstrate compliance with this comparability requirement
in several ways. Approximately 80 percent use a method sanctioned by official
Department of Education guidance by ensuring that student-to-teacher ratios in
Title I schools are between 90 percent and 110 percent of the average in non-Title
I schools.36 The districts can do this within “school-level” bands—i.e., by comparing elementary schools to elementary schools—or in the district as a whole.37

If all schools are served by Title I, then every school must have between 90
percent and 110 percent of the district average student-to-teacher ratio.38
Districts can also choose to show comparability using expenditure data instead
of student-to-teacher ratios. In this case, they report personnel spending equal
to the number of teachers at each school multiplied by the average district teacher
salary, an accounting maneuver that effectively wipes out experience-based salary
differentials received by individual teachers.39

The loophole that undermines comparability’s effectiveness
There are two problematic assumptions in both of these widespread methods of
proving that Title I schools are getting comparable services to non-Title I schools.
First, they assume that the primary purpose of the comparability requirement
was to address the allocation of teachers—and not the allocation of other forms
of educational services. The Department of Education’s guidance, after all, allows
districts to comply by showing only student-teacher ratio comparability. Districts
are thus free to completely ignore resources such as school facilities, textbooks,
and appropriate and high-quality curricular and extracurricular offerings.
Second, these approaches treat teachers as interchangeable “widgets” that each
provide “comparable” services to their students.40 They intentionally do not
acknowledge that these teachers do not actually cost the district the same amount
of money. 

In fact, the statute explicitly forbids including any salary differentials
based on years of experience when making comparability calculations.
These problems join together to form what scholars and advocates call the “comparability loophole.”41 This loophole allows districts to claim that they are providing comparable services to Title I and non-Title I schools even if all their most
expensive (and likely most experienced) teachers may be clustered in non-Title
I schools. By intentionally turning a blind eye to this particular type of resourceallocation decision, scholars argue, Congress and the Department of Education
are undermining the intent of the billions of dollars they are spending. These
funds are intended to provide services “on top of ” those purchased using equally
distributed state and local funds. In reality, the funds are anything but equal.
Title I money is allocated primarily based on poverty levels, which means ensuring that Title I schools have “comparable services” is largely equivalent to ensuring that high-poverty schools get their fair share of state and local funding. Since race
and poverty are highly correlated,42 it is it is reasonable to predict that this loophole is depressing the amount of money spent at schools serving students of color.
Conversely, it is reasonable to predict that closing the loophole would increase
per-pupil spending on students of color

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