Note: Melissa Junge and Sheara Krvaric, lawyers at the Federal Education Group, will be guest posting this week.

In our last post, we introduced the idea that federal compliance rules can have an unintended effect on what goes on in the classroom by encouraging defensive spending, discouraging comprehensive programs, and creating administrative burdens that take away resources from students. Over the next two days we will give examples of how two seemingly unrelated rules - supplement not supplant, and time and effort - interfere with comprehensive school improvement.

Policymakers have encouraged states and school districts to use federal funds to support whole school improvement initiatives for many years. From the schoolwide program model under Title I, to the shorter-lived Comprehensive School Reform program, as well as the more recent School Improvement Grants, Race to the Top, and some of the turnaround principles in the new ESEA waiver initiative, policymakers have tried to encourage comprehensive school improvement as a way to help students in high-poverty or low-performing schools.

While there are many reasons why whole school improvement may not be implemented well in a particular school or district, compliance rules are often overlooked as barriers.

Consider for example, supplement not supplant, a fiscal rule that applies to the largest federal K-12 programs, including Title I and IDEA. At its most basic, it requires that states, school districts, and schools use federal funds to provide eligible students with extra services, staff, programs or materials they would not normally receive.

This is an important policy; yet, the way supplement not supplant is enforced encourages the sort of defensive spending we talked about in our last post. This is because compliance with the requirement is tested on a cost-by-cost basis, meaning states, districts, and schools have to prove that each individual cost charged to federal funds is extra and something they would not have paid for if they did not receive federal funds. As a result, it can be easier to spend federal funds on things that clearly look “extra” - like field trips - than on educational costs that link to a school’s core curriculum - like reading or math interventions.

Even if a district or school can show it would not have provided a particular service if federal funds were not available to pay for it, the district or school can run into a supplement not supplant problem if an auditor or oversight entity thinks the service should be provided with state or local funds.

For example, we have school district colleagues throughout the country whose states (which are responsible for administering most federal education programs) and auditors have told them supplement not supplant prohibits them from spending Title I funds for things like:

• Interim assessments to determine student progress with early literacy skills;
• Outside data experts to help school staff better analyze data and use it to develop more effective interventions ;
• An additional section of 9th grade English so that more attention could be focused on improving literacy skills (for a school with very low basic literacy rates); and
• Attendance incentive programs for schools struggling with low attendance rates.

As frustrating as these denials are, consider how much more frustrating it is for a school district superintendent or school principal to be told no for these types of costs when these kinds of comprehensive interventions are actually encouraged in guidance from the U.S. Department of Education. To make matters worse, many school districts and schools throughout the country wouldn’t even try to use Title I funds for the above types of services because of confusion over how supplement not supplant works, particularly in Title I schoolwide schools. Therefore, using funds to support comprehensive interventions - which could be an important part of turning around a struggling school - are routinely denied, or not even attempted, because of supplement not supplant.

The mindset encouraged by supplement not supplant can have a substantial effect on state and local funds as well. This is because the easiest way to show that something is “extra” is to build a budget in layers; in other words, to first budget costs supported by state and local funds, and then budget federal costs. The problem with this is that it encourages a fragmented approach to spending decisions, where costs for each funding source are considered and budgeted for in separate “silos” in order to head off compliance violations with supplement not supplant. It would be more educationally effective if a state or district could comprehensively plan how to spend their funds depending on district and school needs - not the origin of the funding source. In practice, however, the supplement not supplant rule discourages that type of comprehensive planning.

These types of unintended consequences have a powerful impact in the classroom. For more examples of real-life unintended consequences, here is a paper we wrote on this topic for a joint project of the Center for American Progress and the American Enterprise Institute.

There is some good news on the supplement not supplant front. Congress is taking note of how the rule can get in the way of comprehensive interventions, particularly in Title I school programs where supplement not supplant is supposed to be tested differently (i.e. not through a cost-by-cost test). Congress is considering language that would help clear up the confusion over how the rule is tested in schoolwide programs, but given the substantial impact that supplement not supplant has outside of the schoolwide model, and even outside of Title I, it could be very powerful if Congress addressed this rule more broadly.

--Melissa Junge and Sheara Krvaric