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Odds Seen Rising Chapter 1 Formula Will Be Altered

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WASHINGTON--The formula for distributing Chapter 1 dollars has been much discussed but altered little in the compensatory-education program's 25 years.

That may change next year, when most precollegiate-education programs are due for reauthorization. The result could be profound.

The formula determines not only the allocation of Chapter 1 grants--which totaled more than $6 billion this year--but also those for other federal programs, such as drug-free schools and mathematics and science, now funded at nearly $1 billion. Several programs being considered by the Congress would also use the formula, which is based on per-pupil expenditures and U.S. Census counts of children living in poverty at the state and county levels.

The formula was last altered significantly in 1974, "and that was a hellacious fight,'' John F. Jennings, the chief education counsel for the House Education and Labor Committee, recalled last week.

States with growing populations want child counts updated more often. States with low per-pupil-expenditure levels want less weight placed on that factor. Some advocacy groups want funding concentrated in districts with the most poor children.

Although attempts to rewrite the formula have failed in past years, some observers think 1993 will be different for the following reasons: States that want a change are already lining up support; Congressional reapportionment will work to the advantage of the Southern and Western states that would benefit the most from change; there is a consensus that Chapter 1 needs revision; and the shift to 1990 census data has drawn attention to the formula's inequities.

Supporters of change got a boost--and a roadmap--late last year when the Education Department released a Congressionally mandated report. In "The Distribution of Federal Elementary-Secondary Education Grants Among the States,'' the researcher Stephen M. Barro examined several formulas and showed which states would win and which would lose under each.

"It's going to be a year unlike any in recent memory, since the new census data will be hitting right about the time the programs are being reauthorized,'' said Tim Ransdell, the research manager for the California In
stitute, a bipartisan organization that advises members of the state's Congressional delegation. "That focuses attention.''

The importance of the Chapter 1 formula was demonstrated last month, when Secretary of Education Lamar Alexander had to decide whether to distribute 1993 grants on the basis of 1980 data or to delay payments until 1990 data became available. He decided to use the older data in order to make budgeting easier for local education agencies. (See Education Week, April 8, 1992.)

Big Losers

The Secretary's decision meant that states that had big increases in their populations of low-income students--particularly California, Texas, and Florida--lost a lot of Chapter 1 money--an estimated $134 million in California alone.

Officials in growing states want poverty counts updated annually. California officials, in particular, are trying to unite their Congressional delegation on the issue and are contacting officials from other states.

Pat McGinnis, a lobbyist for the California education department, said his agency has not yet proposed other formula changes, but acknowledged that it probably will.

"It is not too soon to begin crafting a unified strategy to address the elements of the Chapter 1 formula in anticipation of next year's formula fight,'' Benjamin A. Haddad, the head of the governor of California's Washington office, said in a March letter to the state's senators and representatives. "California obviously will have much at stake in the formula reauthorization.''

Bruce Leslie, the health and human-services policy director for the Texas office of state-federal relations, suggested that states are more interested in change than in past years because recent Chapter 1 funding increases have raised the stakes.

"With states in budget crisis, there is more of an emphasis on federal money,'' he added.

Some observers say efforts to require more timely child counts will succeed because it is hard to argue against targeting aid more accurately.

Backers of that switch, however, have not agreed on a method for updating the data. Some observers think it is impossible to compute poverty estimates that would be valid at the state and county levels short of repeating the census annually.

"God bless them if they can figure out a way to update the census,'' Mr. Jennings said. "It's a technical issue more than a policy issue.''

"We always start out with 'Why can't we have more recent data?' '' said Mr. Jennings, who has worked for the committee since 1967. "We end up with everybody agreeing that there is only one set of national data that is valid at the local level, and that's census data.''

Per-Pupil Expenditures

Updating poverty counts may be one of the least controversial proposals on the table.

When Title I, Chapter 1's forerunner, was created in 1965, a compromise was struck, basing aid on states' and counties' counts of poor children, multiplied by 50 percent of the state's average per-pupil expenditure.

Basically, the compromise won political support for the program by acknowledging that costs in Northern districts are higher, and by preventing the bulk of Chapter 1 funds from flowing to the South.

Since then, the per-pupil-expenditure multiplier has been lowered to 40 percent and upper and lower limits have been placed on it, blunting its impact. Low-spending states have repeatedly tried and failed to remove it from the formula.

In fiscal 1989, Chapter 1 aid per elementary-school pupil ranged from about $33 in Utah to $215 in the District of Columbia.

Lawmakers from Utah--which receives the least federal education aid per pupil over all, primarily due to the huge influence of the Chapter 1 formula--are leading the charge against the per-pupil-spending factor.

Senator Orrin G. Hatch, the ranking Republican on the Labor and Human Resources Committee, has tried many times to kill the factor, most recently when the Senate voted on S 2, its education-reform proposal, in January. Representative Wayne Owens, a Democrat, plans to offer a similar amendment when the House takes up its companion bill, HR 4323. The two Utah Congressmen requested Mr. Barro's report.

While 28 states would benefit from the amendment, backers think their chances will be better when they press for the change in next year's reauthorization.

"What we're trying to do now is bring attention to the situation,'' said Julie Salz, an aide to Mr. Owens.

Opponents, meanwhile, say removing the spending factor would reward states that skimp on education.

"The Hatch amendment sends states the wrong message,'' Senator Alfonse D'Amato, Republican of New York, said in a January floor debate.

Divided Coalition?

Lawmakers are likely to weigh several plans, which could divide the coalition supporting change.

In his report, Mr. Barro examines several formulas, including one that replaces per-pupil expenditure with average teacher-salary levels or private-industry wages as a proxy for educational cost. He also uses different methods for measuring states' ability to raise revenue and their education expenditures relative to that ability.

If salary figures were used in the formula instead of per-pupil spending, the "winners'' would generally be California and many Southern states; the losers would be Wyoming, Montana, and many Northeastern states.

Applying a "fiscal effort'' factor for either Chapter 1 or Chapter 2 block grants would give large percentage increases to Alaska, Montana, Utah, West Virginia, and Wyoming. California, Hawaii, Illinois, and New Hampshire would sustain large percentage losses.

The biggest gainers in terms of absolute dollars would be New York, Texas, and Michigan; the biggest losers would be California and Illinois.

But the result changes, drastically for some states, depending on which measure of fiscal capacity is used.

Lawmakers will have to create a formula that commands sufficient support to clear committees and the floors of both chambers--as well as command continuing support for funding the program.

"This is a measure that will put an end to federal aid to education,'' added the Empire State's other Senator, Daniel Patrick Moynihan, a Democrat, during the January debate on S 2.

The House Education and Labor Committee is dominated by urban representatives and members from states with declining or stable populations. Its chairman and its ranking Republican, as well as the chairman of the Senate Labor and Human Resources Committee, represent low-growth, big-spending states.

The same politics also apply to the debate over concentrating Chapter 1 funds on the poorest schools. Currently, about 90 percent of school districts receive some funds, and so-called concentration grants are distributed to 70 percent of districts.

An independent Chapter 1 study commission recently issued an interim report that backed the idea of concentrating Chapter 1 grants on the poorest schools. (See Education Week, April 15, 1992.)

"The more concentrated the poverty is, there is an exponential increase in the problems these kids face,'' said David W. Hornbeck, the commission's chairman. "The question is where you draw the line.''

"As a practical matter,'' he said, "you can't draw that line at such a concentrated level that you destroy the program's political viability.''

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