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Published in Print: May 6, 2015, as Efforts to Change Federal Aid Formulas Prove Tricky

Federal Aid Formulas a Sticky Issue in ESEA Debate

Winners, losers seen if cash flow revised

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When the Senate education committee marked up and approved a bipartisan rewrite of the Elementary and Secondary Education Act earlier this month, one of the few issues members sparred over was changing a formula used to distribute federal funds to states and school districts for activities such as teacher preparation.

Meanwhile, the committee didn’t touch another complex, long-standing, and politically sensitive issue: the way Title I money for low-income students flows to states and districts.

Though, in theory, everything is up for grabs in the long-overdue revision of the ESEA, altering federal funding formulas is politically problematic because it shifts money from one state or district to another. That means there will always be some entity that loses money so to speak, even if most lawmakers and advocates recognize revising the formula is the fair thing to do.

“Formula changes are difficult because senators are elected to represent a particular state, and unless there is new money on the table, formula changes tend to be zero-sum games,” said Catherine Brown, the vice president for education policy at the Washington-based Center for American Progress. She was previously an education policy aide to former Rep. George Miller, D-Calif., the longtime chairman and ranking member of the House education committee.

“Money that goes to one state is taken from another,” Ms. Brown continued. “And even though, on a theoretical level, people understand that resources need to be distributed fairly, there is a tremendous need for more money for education in every state, and so you don’t see them acquiescing to have their education funding cut.”

The federal government currently spends about $14.5 billion on Title I and $2.3 billion on Title II, the latter of which goes toward teacher training.

Dodging the Fight

So how do lawmakers fix outdated formulas that don’t take into account, for example, pockets of intense poverty or shifts in populations over time? It turns out that it rarely happens, and when it does, it’s not in a significant way.

Take, for instance, the recent Senate education committee markup of the bipartisan ESEA bill that Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., the chairman and ranking member, respectively, hammered out over the course of two months.

During a three-day executive session in mid-April, Sens. Richard Burr, R-N.C., and Robert Casey, D-Pa., offered dueling amendments involving Title II teacher aid—Sen. Burr’s in an attempt to change the formula, and Sen. Casey’s in an effort to preserve funding for his state that would be lost as a result of Mr. Burr’s proposed formula tweak and a decision by Sens. Alexander and Murray to eliminate a provision in their compromised bill that safeguards states from such formula changes.

Sen. Burr’s amendment, which was adopted by the committee via voice vote, changed the formula so that 80 percent of the aid would be based on poverty and 20 percent on population. The current formula is based 65 percent on poverty and 35 percent on population.

Sens. Alexander and Murray had worked hard to maintain the bipartisan nature of the proposed ESEA rewrite. Fearing Sen. Burr’s amendment combined with the elimination of language that protects states from a loss of formula funds might rock the boat, they asked him to provide members of the committee with a spreadsheet showing how much each of their home states stood to gain or lose because of the changes.

In this case, 12 of the 22 committee members, including the chairman and ranking member, would see their federal funding for Title II increase.

Typically, when a funding formula is changed, a “hold harmless” provision is added to ensure that no state or district loses money. Such a provision is, in fact, found in multiple titles of the ESEA. It’s generally designed to safeguard schools from substantial funding cuts by specifically stating that federal funding for a state or district cannot fall below a certain fiscal-year level.

But the Alexander-Murray compromise eliminated the hold-harmless provision in Title II, so the formula-change amendment from Sen. Burr stood to hurt states that are relatively wealthy but have dwindling populations.

Sen. Casey hails from one of those states. The elimination of the hold-harmless provision, combined with the formula change, would shift up to $25 million away from Pennsylvania schools.

Dueling Amendments

In response, Mr. Casey offered an amendment, which was also approved, that added back into the underlying bill a hold-harmless provision that would ensure states would receive no less than 25 percent of what they currently receive.

Since the Title II formula is in part based on old population data that were last calculated in 2001 when Congress was drafting the No Child Left Behind Act, the current iteration of ESEA, it assumes Pennsylvania schools still enroll nearly 300,000 more children than currently live in the state, explained Sen. Casey. The removal of the original hold-harmless provision would mean approximately 15 years of population shifts are taken into account in one year.

Several members of the committee were sympathetic to Sen. Casey’s argument.

“Maryland stands to lose 21 percent of Title II funding,” said Sen. Barbara Mikulski, D-Md. “Why punish my state?”

Sen. Burr pushed back. “It doesn’t reflect the demographic shift that happens in America,” he said of Sen. Casey’s attempt to add a hold-harmless provision back into the bill. “If we’re truly here to reauthorize programs for K-12 education, do we not have to get it right? Yes, it’s tough. Sometimes we’re losers.”

To counter Sen. Casey’s hold-harmless amendment, Sen. Burr offered an additional amendment, also adopted by the committee, that would sunset that provision entirely, mandating a 14.3 percent reduction in hold-harmless Title II funding each year over seven years.

Legislative Ping-Pong

The ping-ponging of amendments—in addition to confusing several committee members—also highlighted how divisive such revisions can be.

“Formula-funding changes are always extremely controversial because we’re talking about changing the money states are getting,” said a Senate education committee aide. “We’re talking about creating winners and losers and pitting one state against another with a finite number of dollars.”

Lawmakers have had an even tougher time changing the formula of Title I, a pillar of the federal K-12 law.

That money is distributed to school districts based on their size and concentration of poverty, among other factors. The formula places more weight on the size of a district than on the percentage of students who are poor, meaning that larger districts and big urban areas often come out ahead of poorer, rural districts and small cities.

Critics argue that the current formula often shortchanges the poorest districts in the country and, as a result, the very students the law is intended to help.

Winners and Losers

The Congressional Research Service, an independent arm of the government that acts as like an in-house think tank for members of Congress, studied the issue back in 2009. It found that high-poverty rural districts were among the hardest hit by the formula discrepancy, but so were high-poverty urban districts, like Rochester, N.Y.; Flint, Mich.; and Bakersfield, Calif.

One of the most interesting findings from the CRS report, however, was that the districts that benefited the most from the formula were low-poverty suburban districts, like Fairfax County, Va.—one of the richest counties in the nation.

Altering the formula has been a priority for a handful of members of Congress, including Rep. Glenn Thompson, R-Pa., who since 2011 has been reintroducing a bill, the All Children Are Equal Act, which would scale back the population part of the formula. In doing so, Title I dollars would be more focused on student poverty, not just population density.

Rep. Thompson eked out somewhat of a win earlier this year when Rep. John Kline, R-Minn., the chairman of the House education committee, included in his Republican-backed ESEA rewrite a minor change in the Title I formula that would amount to one one-hundredth of a percent weighted more toward poverty.

Changing the formula for how big grants like Title I and Title II are distributed is the sort of issue that doesn’t divide neatly along partisan lines. Rep. Thompson’s legislative proposal, for example, has been supported by a number of Democrats, including Reps. G.K. Butterfield of North Carolina and Ruben Hinojosa of Texas.

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Similarly, Sen. Bill Cassidy, R-La., commented frequently during the recent Senate education committee markup that his home state would “lose” under Sen. Burr’s Title II formula-change amendment to the Alexander-Murray ESEA bill.

Such conflicts are likely to remain evident as the ESEA reauthorization heads to the Senate floor, perhaps as early as the next few weeks. Although the Senate education committee didn’t debate changes to the Title I formula during the markup, an education committee aide said she expects senators to offer amendments during the floor debate that would further tweak funding formulas.

Vol. 34, Issue 29, Pages 22-23

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