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AEP Online |
Blaschke on Federal FundingTitle I Budget Cut for FY 2006 and District Funding Allocation UncertaintiesBecause Title I funds will likely be reduced slightly during FY 2006 and the amount of funds allocated to specific districts will become even more uncertain, firms with appropriate products and services should concentrate their sales effort, even more than in the past, on districts with funds earmarked for supplemental educational services, parent choice transportation, and/or staff development. Virtually all of the remaining non-earmarked Title I funds will be used to retain Title I teachers and/or aides, with the exception of districts that reduce significantly the number of Title I schools served, which is not likely. As explained below, the problems stem largely from the Title I formula which is predicated upon the assumption that Title I funds nationally will increase each year and the use of the most recent census data on poverty enrollment. For the first time in a decade, Title I funds will have been reduced by the one percent across-the-board cut in the appropriation to make up for the $1.6 billion intended allocation to Katrina-damaged schools and displaced students (this assumes the upcoming House vote will pass). The major "fly in the ointment," according to Congressional Research Service staff, is various "hold harmless" provisions affecting the four Title I components which essentially are designed to ensure that no district receives significantly less Title I funding for the coming year than it received during the current year. Nationwide, this will be almost impossible. For certain districts in Louisiana, Alabama, Texas, and Mississippi, which have been damaged significantly, the "hold harmless" provision for 2006 would be 100 percent. For the remaining districts across the country the "hold harmless" provision would vary between 85 percent and 95 percent depending on a number of conditions the districts would have to meet. Based on the most recent census data, if the preliminary allocation to a state shows a slight increase in Title I funding, the state must ensure that no district receives less than 85-95 percent of funding it received during the previous year. This means the state must allocate funds from districts receiving slight increases to those receiving more than 5-15 percent cuts. For some districts, the reallocation from districts with increases may not be enough to make up for the shortfall; hence, the state will have to reduce the four percent state set-aside for school improvement to make up for the difference. With the Comprehensive School Reform Demonstration Act being cut from $210 million to $8 million, states will no longer have any new CSRD money to be used for school improvement to supplement the four percent set-aside. Some of the losing districts in such a state could be large urban districts whose increase will erode significantly due to "hold harmless" adjustments. An exception could be a district whose poverty rate using the new census count would go from 4.9 percent to 5 percent or more making available to it the "targeted" and "incentive" components of the Title I formula. This was the case in Fairfax County (Virginia) this year; the district’s preliminary Title I allocation increased almost 75 percent over last year’s allocation. However, in such cases, a significant portion of the increase will have been reallocated by the state to other districts receiving cuts due to "hold harmless" provisions. The best prospects to target for the remainder of this year and next year will be districts which will receive a "preliminary" increase in Title I allocations and which are located in states with at least some increases. If the one percent cut is applied proportionately to the four Title I funding components, about two-thirds of the absolute amount of cuts will be borne by 80-90 percent of the districts which receive only (or primarily) the "basic" and "concentration" component grants. Large urban districts which are the primary recipients of "targeted" and "incentive" grants will receive smaller percentage decreases and, if the poverty count under the new census data in these districts shows moderate increases, could receive an increase in preliminary allocations. These districts are also more likely to have a proportionately higher percentage of schools identified for improvement for one year or two years and, therefore, have to earmark ten percent for staff development and 20 percent for SES and parent choice transportation. Because of the lack of capacity in high-performing schools in these districts, a large portion of their 20 percent earmark for parent choice is not likely to be exercised by parents and, therefore, some of these funds may be allocated for SES. In a similar vein, there will be pressures upon many districts which will have not spent the total 20 percent earmark for SES and/or transportation this school year to carry over as much funding as they can to next year. Districts under these pressures located in Ed-Flex states (Colorado, Delaware, Kansas, Massachusetts, Maryland, North Carolina, Oregon, Pennsylvania, Texas, and Vermont) can receive automatic waivers to carry over more than 15 percent to soften the blow next year. For firms wishing to partner with districts that operate their own SES programs, priorities should be placed upon districts that have not been identified for improvement or that have received waivers to continue operating their SES programs even though they have been identified for improvement. Districts included in this "pilot program" include Chicago, Boston, New York, Memphis, Los Angeles, and other districts to be announced shortly. The Council of Great City Schools has assisted USED in negotiating waivers with its member districts. Please call Charles Blaschke directly (703/536-2310 Ext. 3) if anyone has any questions Questions, ideas, or in need of more information? Please contact Stacey Pusey at 302-295-8349.
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