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Blaschke on Federal FundingFunding Alert: USED Announces Preliminary State Title I Formula Allocations for School Year 2008-09During the National State Title I Directors Conference in Nashville earlier this month, USED provided state Title I directors with a list of preliminary Title I formula allocations, beforeadjustments, to give them "heads up" on the general increases or decreases in Title I formula funds they would be receiving beginning in July (view Exhibit 1). As USED cautions, final allocations based on new data could result in significant changes. One of the first adjustments USED has to make stems from a "trigger," which came into effect as a result of the overall Title I appropriations reaching $14 billion for the first time. As a ressult, the amount of the SEA allocation for administration is "capped" at the current level with any excess being reallocated to districts. Another possible adjustment may relate to the use, for the first time, of a new U.S. Census Bureau "data set" on the number of students in each district eligible for Title I based on new poverty data. In the past, when updates of previously used "data sets" occurred every three years, the states were often confronted with last-minute changes, which required recalculations. The following information provided, which Education TURNKEY Systems prepared using the Federal preliminary data, is felt to be in the "ballpark." As we and the Center on Education Policy have reported over the last three years, the volatility of state -- and even more so district -- Title I allocations from year to year has increased significantly to the point that districts are often confronted with last-moment surprises regarding cuts or increases from the previous year and difficulties in Title I planning. Through the use of the new Census Bureau "data set," this is likely to happen next school year at the state level. For example, the state with the largest percentage increase in Title I funding this year was Wisconsin, which received slightly over a 30 percent increase. For this coming year, according to USED's new estimates, it will receive a $2.7 million or 1.4 percent reduction. Last year, Florida received a large cut in Title I funding such that every district in the state suffered Title I budget reductions -- the first time any state has experienced such cuts for all districts. For the coming school year, Florida will receive an increase estimated to be almost $60 million or about a ten percent increase. For companies who have products and/or services that could be used in schools identified for improvement for two years for district-operated SES, and for schools entering corrective action or restructuring, the estimates strongly suggest which specific states which should be given the highest priority. The states with the percentage increases next year (ten percent or more) are likely to be able to set aside the entire four percent set-aside for school improvement of which 95 percent are supposed to be reallocated back to specific districts, usually to schools in corrective action or restructuring, or, in some states, for providing SES. Even after the "hold harmless" provision adjustments are made for districts which receive more than a ten percent cut, there will be enough funds available from gaining districts to reserve the full four percent in the state set-aside for school improvement. These funds will be supplemented by a 300 percent increase in Section 1003 School Improvement Grants (SIGs) which will grow from $125 million this year to $490 million next year. In states confronted with overall Title I formula cuts or only slight increases, it will be very difficult for the SEA to take money away from districts receiving preliminary increases because those preliminary increases must first be reallocated to districts with a ten percent or more cut in Title I funding, which could be pretty prevalent. The states that are least likely to be able to supplement the School Improvement Grants next year by reallocating portions of the four percent state set-aside for school improvement are Arizona, California, Connecticut, District of Columbia, Illinois, Maryland, Nevada, New York, Rhode Island, Utah, Washington, Wisconsin, among others. California, like some other states, is proposing significant increases in state funds to be allocated to more than 700 schools in corrective action or restructuring which will be using prescribed interventions yet to be determined (see California State Update). In the states with large increases (i.e., ten percent or more) for next year, it is also likely that districts which will be receiving preliminary increases in allocations will be the best candidates for targeting for end-of-year spending of reallocated, unspent set-aside funds for SES for other purposes. As a result of new Non-Regulatory Guidance (NRG) on allowable carryover funding (included in another TechMIS Special Report), districts with a large amount of unspent set-aside funds have an incentive to spend the money by the end of the state';s fiscal year (June 30th or September 30th) or risk losing such funds in excess of 15 percent by attempting to carry them over to next year. We have been told by USED that preliminary district Title I formula allocations will be available in several weeks. It is very likely that there will be much greater differences between preliminary and final district allocations; the final allocations will probably not be available until mid-summer due to the use of the new Census data and other adjustments SEAs will make which affect districts, but not the SEA, allocations. We will keep you posted on developments as they occur, along with our analysis and interpretations. Questions, ideas, or in need of more information? Please contact Stacey Pusey at 856-241-7772.
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