Study: District Budget Practices Can Siphon Title I Aid From Poor

By David J. Hoff — August 30, 2005 4 min read
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Federal money intended to help students from poor families is being spent to serve students who don’t qualify for the program, a new analysis suggests.

Teacher contracts and a loophole in the Title I compensatory education program combine to spread program dollars across districts, indirectly supplementing the well-paid teachers in schools whose students come from the wealthiest families, according to the in-depth review of how nine districts spend their money. Often, school administrators are unaware that Title I schools are being shortchanged, the researchers say.

Read “Strengthening Title I to Help High-Poverty Schools: How Title I Funds Fit Into District Allocation Patterns” from the Center on Reinventing Public Education.

“District budgeting practices systematically favor schools with the fewest educational challenges, to the detriment of those with the most,” says the report, released Aug. 18 by the Center on Reinventing Public Education at the University of Washington, located in Seattle. “In some cases, arcane district funds-allocation practices can actually funnel Title I funds to schools in the wealthiest communities.”

Although the study examines all spending in five of the districts, which are named, and just Title I spending in the other four, which are not identified, the spending patterns match those for state and local money closely enough to suggest the practice is widespread, said one of the study’s authors.

“We’re confident there’s a problem and in the way we document it,” Marguerite Roza, a senior fellow at the center, said in an interview last week.

Averaging Costs

A federal Title I rule forbids districts to use program grants to replace state and local funds. A separate rule says districts must give Title I schools state and local dollars that are comparable to those for schools not qualifying for the program. The rules are intended to ensure that the $13 billion program—the biggest source of federal aid for K-12 schools—supplements the education that poor children would receive if Title I didn’t exist. Grants under Title I are based on enrollments of low-income students.

But a clause in the federal Title I law allows districts to engage in a form of accounting—using the average of all teacher salaries districtwide in determining how a district is reimbursed from its Title I grant—that has the effect of redistributing federal aid away from the neediest schools, the report says.

Differential Pay

A gap exists between average teacher salaries in schools with the highest and lowest student-poverty rates in five urban districts with detailed financial data.

District Rating
Austin, Texas $3,837
Dallas 2,494
Fort Worth 2,222
Houston 1,880
Denver 3,633

Under the law, districts are not required to charge the federal program for the actual cost of teacher salaries in Title I schools. Instead, a district can draw down money from its Title I grant by multiplying the number of teachers in Title I schools by the district’s average salary, even if those teachers make less than the average, as is commonly the case.

The difference between the amount charged to Title I and what the teachers are actually paid doesn’t benefit the Title I schools, however. Rather, that money may indirectly subsidize the salaries of the frequently higher-paid teachers in non-Title I schools, the study suggests.

As the report points out, teachers with the most experience—and thus the highest salaries—routinely use contractual seniority rights to claim jobs in schools serving high-income students.

The study cites examples in the five named districts studied where teachers in the wealthiest schools are paid between $1,880 and $3,837 per year more than those in the poorest ones.

In a separate analysis of the four unidentified districts in the study that use salary averaging for Title I, Ms. Roza and her colleagues estimate that Title I teachers were paid as much as 3 percent less in the poorest schools in a district.

If members of Congress repealed the clause that allows the practice, Ms. Roza said, “they would eliminate that problem and drastically change the way districts account for their dollars.” In the end, districts that use salary averaging would have money to add extra teachers, pay Title I teachers more, or add other new services to Title I schools, she said.

Renewal in 2007

Congress will review the report’s recommendations in 2007 when it reauthorizes Title I and the rest of the programs in the No Child Left Behind Act, said Ryan Taylor, a spokesman for Republicans on the Senate Health, Education, Labor, and Pensions Committee. Lawmakers are unlikely to make any changes before then, he said.

But the report shows that Congress and the Department of Education need to overhaul Title I rules, some observers say.

The rules that have governed the program for decades “are not adequate to the task,” said Phyllis P. McClure, a Title I consultant who has monitored the program closely since Congress created it under the Elementary and Secondary Education Act of 1965, which was reauthorized nearly four years ago as the NCLB law. “They have to be rethought.”

Many local officials are unaware of the problem, Ms. Roza said, because the way districts set school budgets is so complex. If districts adopted a process in which schools received a per-pupil allocation—with the neediest students receiving a larger per-pupil share—they would be better able to track whether their resources were helping the neediest students, she said. (“‘Weighted’ Funding of Schools Gains Favor,” Nov. 3, 2004)

The weighted-student budgeting “makes it crystal clear where the dollars are going,” Ms. Roza said, and helps school officials ward off efforts to lobby for extra programs in schools serving the wealthiest areas.

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