Rural Schools Lose in Funding Formula

Education Secretary Arne Duncan said recently that he knew there were some inequities in federal funding of schools. Marty Strange tells how this is happening.

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Editor’s Note: Nobody knows more about how rural schools are funded than Marty Strange. Marty has written a report about federal funding for the Formula Fairness Campaign.  The report, delivered to the education committee in the House of Representatives, concerns funding under Title 1 of the Elementary and Secondary Education Act. The full report can be downloaded here, and excerpts are below.

Poor, rural schools lose out with Title 1 funding. Richer, larger districts win. Strange explains all this in the report. 

It is an entirely fixable problem. Unfortunately, neither Republican nor Democratic administrations have seen this as an important issue. If they would just read what Marty Strange has written, we think they would act.

The Issue

While there are many important issues in reauthorization (of the Elementary and Secondary Education Act) that affect (rural) communities, one that concerns us a great deal seems to be getting very little consideration.

Title I of the Act is explicitly intended to reach high-poverty schools, and formula changes first enacted in 1994 but not funded until 2002 were intended to send more Title I funds to those school districts with high concentrations of poverty.

We strongly support that goal, but those formula changes do not by any reasonable measure accomplish it. Instead, they systematically discriminate against high-poverty rural and small town districts as well as moderate-sized, high-poverty urban districts. 

The Title I formula is therefore badly in need of close (congressional) scrutiny. It should be aligned more perfectly with congressional objectives.

The Weighting System

The intent to send more money to districts with “high concentrations” of poverty was supposed to be accomplished (through grants targeted to poorer districts).

Each district’s Title I student count is calculated using two alternative weighting systems. One weighting system inflates the formula student count on the basis of the percentage of disadvantaged students in a district. Under “percentage weighting,” the higher the percentage of disadvantaged students in the district, the more each one counts in the formula. 

The other weighting system inflates the formula student count on the basis of the absolute number of Title I students in a district. Under “number weighting,” the more disadvantaged students in a district, the more each one counts in the formula. 

For a given district, the weighting system that results in the higher total weighted formula student count is the one used in the formula to determine that district’s share of the (federal) grant.

Since the amount available to be distributed under either of these weighted grants is fixed by congressional appropriation, any gain by one district causes a loss to other districts. It is important to note that a district can “gain weight” in its student count and still lose “weight share” – and therefore funding — if other districts gain proportionally more weight than it does. 

The number weighting alternative is often favorable to very large districts, especially if the district’s disadvantaged student percentage is not very high.

But because smaller districts simply do not have enough students to gain much from number weighting, they are rarely better off under the number weighting alternative.

If two districts have identical percentages of poverty but one is larger than the other, the larger one will receive more per formula student under this weighting scheme.

Moreover, a larger district with a lower percentage of poverty can, and in fact often does, receive more per formula student than a smaller district with a much higher rate of poverty. 

For example, Fairfax County (VA) Public Schools (suburban Washington, D.C.), with a 5.5% Title I eligibility rate, was allocated a Title I grant in school year 2008-09 of $1,935 per formula student. By contrast, Lee County (VA) Public Schools (far southwestern Virginia), with a 32.7% eligibility rate, was allocated $1,488 per formula student.

If all districts’ student count were weighted according to percentage weighting only (i.e., there was no number weighting alternative), this gap would be eliminated, according to data from the Congressional Research Service. 

Similar examples are legion. This is a case of a systematic bias favoring population density over population dispersion, poverty levels notwithstanding.

Top Gainers and Losers 

The biggest gainers due to number weighting are the very largest urban districts. Although these districts have high Title I eligibility rates, the advantages of number weighting for them is extraordinary because most of their students are weighted in the top bracket. Most would say that this is not surprising and that this outcome fulfills congressional intent. 

But beneath the obvious lies the complicated. The districts that lose the most money to number weighting generally have higher poverty rates than the large districts that benefit. 

The 25 rural locale code districts with the largest dollar losses due to number weighting are shown (below). Most of these have Title I eligibility rates above 30%, and eight are more than double the national rate.

[img:25ruraldistrictslosing.png]It is difficult to rationalize weighting systems that take money from high poverty districts, and send it to the low-poverty suburban districts listed below. These are the 25 suburban districts with the largest dollar gains from number weighting.

Only four are above the national average Title I eligibility rate of 18.1%. Most are well below that average and seven are in single digits.

[img:25citygainers.png]It should be noted that many of these suburban districts are actually county-wide districts with inner city cores and suburban perimeters. They are classified suburban because the students predominantly attend schools in suburban areas. Their district wide poverty rates are generally well below national average.

The Rural 900 

We track the 900 school districts with the highest Title I eligibility rate among all districts in (small towns and rural areas), about 10% of all districts in these areas. We call these high-poverty rural and small town districts the “Rural 900.”

The Rural 900 enroll over 1.2 million students, of whom an estimated 37% are Title I eligible. Fifty-nine percent are children of color (28% African-American, 23% Hispanic, and 8% Native American or Alaska Natives).

If this were one district, it would be the largest, poorest, most racially and culturally diverse district in the United States. Their (geographic) dispersion, however, makes them largely invisible, even to those committed to addressing the needs of high-poverty schools. 

But in the face of diversity and dispersion, these districts share a common fate under the Title I formula. They either lose funding to number weighting (797 of them) or they break even (103). They are unified by the systematic discrimination against small, high-poverty school districts in the formula. 

This bias is unfortunate on its face, but made worse by the fact that the Rural 900 districts are disproportionally in states with low levels of spending on public education.

Fifty-nine percent of students who attend R900 schools are in the 14 states that spend less than $8,000 per pupil. Only one percent is in the 12 states that spend over $11,000 per pupil.

The Rural 900 therefore depend more on Title I funding to meet the educational needs of their disadvantaged students. Rural 900 districts’ Title I revenue accounts of 4.9% of total current expenditure, more than double the national average and triple the average for other rural districts. For these districts, many of which have only one school or no more than one school at each grade configuration level, the Title I “comparability” issue is in the formula itself.

Remedies 

Reauthorization of ESEA should be accomplished as soon as practicable, but not sooner than these inequities in the weighted grant formulas can be addressed. The current system takes from most districts, no matter how high their poverty levels, and gives to a handful of large districts, no matter how low their poverty levels. It is difficult to believe the results documented here were intended, but whether intended or not, they amount to a perversion of the purpose of Title I and ESEA, and the damage to equity they inflict should be remedied. 

The simplest remedy is to eliminate number weighting and weight all districts on the basis of percentage of Title I eligibility. 

Some hold harmless provision could protect districts that now benefit from number weighting, or mitigate their loss. Other reforms are possible. 

But the first order of business is to recognize that these formula issues must be addressed in the current reauthorization, or they will likely be allowed to do harm to the integrity of Title I for many more years to come. 

 

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