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Education Opinion

The Compliance Culture in Education

By Melissa Junge & Sheara Krvaric — October 24, 2011 5 min read
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Note: Melissa Junge and Sheara Krvaric, lawyers at the Federal Education Group, will be guest posting this week.

As education lawyers who work with states and school districts on federal education programs, part of our job is to advise clients on those programs’ fiscal and administrative compliance rules. For the most part these compliance rules are largely unknown and rarely discussed among the education policy crowd and other important stakeholders, like parents and teachers. Federal compliance requirements like supplement not supplant or time distribution (also known as time and effort) are not exactly hot topics of conversation. They should be.

These, and other, little known and little understood compliance rules have far-reaching and often unintended effects on how education services are delivered to students. Our goal this week is to explain how federal compliance rules can shape the way states and school districts think about using money for education (not just federal funds, but state and local funds as well), introduce some of the specific federal rules we see as barriers to effective programs, and offer some potential solutions along the way.

As we describe in this paper, federal compliance rules have an impact on what goes on in the classroom. This is because fear of audit or monitoring findings can lead states and school districts to do what we call “defensive spending” - i.e. spending federal money in ways that are safe in terms of audit risk, rather than effective in terms of programs that might better drive student achievement or improve a student’s experience in school. This has a cascading effect on state and local funds as well.

This defensive spending is understandable if one looks at what gets states and school districts into trouble with the U.S. Department of Education - it is largely the failure to meet technical compliance requirements. Some of the most common federal audit or monitoring findings concern non-compliance with the following rules:

• Time and effort (in short, a requirement that those paid with federal funds document how they work);
• Supplement not supplant (a requirement of many federal programs that states and districts use federal funds to add to, and not replace, state and local funds);
• Equitable services (a requirement that school districts use federal funds to provide services to students in private schools); and
• Missing elements of federally required planning documents (many federal programs require schools or districts to develop plans with a specific number of elements and if any one of these elements is missing, the plan is non-compliant).

Noncompliance with these rules can have serious financial consequences. For example, in 2010, the U.S. Department of Education’s (ED) Office of Inspector General (OIG) questioned $107 million in federal salary charges in one district due to problems with the district’s time and effort records. Other time and effort findings have come in at $52 million, $49 million, and $2.3 million. Even if ED ultimately does not require funds to be repaid, the threat of repayment, along with newspaper stories about funds being questioned, and the increased scrutiny that a state or district faces after receiving one of these findings, understandably makes states and school districts very sensitive to compliance rules. In this environment, it is easy to understand why some districts continue the same spending patterns because they are “safe” in terms of audit risk - even where that spending has not moved the needle on student achievement.

While accepting federal funds means accepting responsibility for being good stewards of public money, ironically, some of the compliance requirements originally designed to protect federal funds and better serve students can actually curtail effective spending and stifle innovation. It can take an extraordinary leader, for example, to spend federal money in an entirely new way because it is always possible change could trigger additional scrutiny and raise audit risks. (We are honored to work with many such extraordinary leaders who are laser-focused on student needs, want to figure out how to do things better within the existing rules, and are willing to push the envelope by rethinking legacy interpretations of what the rules mean.)

There is some good news. The federal government itself recognizes that many of its rules are overly burdensome and may not be linked to desired outcomes. As Rick blogged about earlier this month, ED recently announced a new pilot program that would allow states and districts relief from certain federal requirements in exchange for implementing alternative systems tied to program outcomes. The Office of Management and Budget and the General Accountability Office have announced their own burden reduction initiatives as well. These initiatives could be a great opportunity for states and districts to think about how these rules shape their daily practice, and how alternative systems and approaches could promote better outcomes. In addition, members from both parties in Congress have indicated they wish to find ways to address the unintended consequences triggered by certain compliance rules.

In light of this opportunity, over the next few days we will explore what we see as some of the most problematic rules, paying particular attention to how certain federal rules:

• Can encourage districts and schools to deliver education services in a fragmented way and make poor spending decisions;
• Likely do not protect federal money the way intended; and
• Create administrative hurdles that take away resources and attention away from the classroom.

Congress, the White House, and the U.S. Department of Education are signaling that there is an opportunity to address the unintended consequences of some of these compliance rules. Given that invitation, we are taking this opportunity to raise some of the issues we see states, school districts, and schools struggle with on a daily basis. Solving these issues could make a real difference for students.

--Melissa Junge and Sheara Krvaric

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.