Six Ways Congress Can Improve Education Without More Bailouts

Report Education

Six Ways Congress Can Improve Education Without More Bailouts

December 3, 2020 27 min read Download Report
schwalbachj.png
Research Associate and Project Coordinator
Jude is a research associate and project coordinator in education policy at The Heritage Foundation.

Summary

COVID-19 has provided the impetus for Congress to implement reforms, many of which are long overdue. For example, Title I, IDEA, and Head Start funding should be made portable, following students to education options and service providers of choice. The tragic effects of COVID-19 have illustrated that heavy-handed, one-size-fits-all education models, including the institution-centered district school system, often fail to deliver quality education. Student-centered funding, instead of institution-centered funding, gives families much-needed flexibility and keeps education dollars closer to the stakeholders—parents. Policymakers should take the necessary steps to restore educational autonomy to states and reduce federal regulations and compliance. These are policy reforms that would make substantial differences in the lives of children, without increasing federal spending.

Key Takeaways

Congress does not need to provide more bailouts to re-open schools. Instead, it should empower states to give more flexibility to parents and students.

Regulatory relief and more flexibility would help states to re-open schools while giving families more options for consistent learning that meet their needs.

There are six reforms lawmakers could implement right now to help school leaders to meet the education needs of families—without using extra taxpayer dollars.

The coronavirus pandemic has deeply affected K–12 education in the United States. By the end of March 2020, more than 124,000 public and private schools closed nationwide, affecting 55.1 million schoolchildren.REF As of October 2020, five states had regional, state-ordered closures, and schools in many districts across the country began the school year remotely.REF In response to the crisis, Congress appropriated $13.5 billion in federal funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act for the Elementary and Secondary School Emergency Relief (ESSER) fund, the equivalent of nearly one-quarter of what Washington spends annually on K–12 education.REF Congress justified the increase in federal spending stating that the emergency relief funds would help local schools to “prevent, prepare for, and respond to coronavirus, domestically or internationally.”REF

Yet, special interest groups claim that CARES Act funding was inadequate. They propose that Congress now spend an additional $175 billion on education. At the same time, they propose that state and local governments spend an additional $750 billion to ensure job security for school staffs.REF Instead of increasing the debt and deficit, federal policymakers should reconfigure current education funds to be more flexible and portable, while relieving states of cumbersome regulations. Such measures would allow states to use federal dollars more efficiently and effectively, without creating an additional burden on taxpayers.

Regulatory relief, combined with greater flexibility for schools, would enable states to determine how to put existing funding to the best use as they work with districts to re-open schools, while funding portability would allow families to spend their funds on education options of their choice. The pandemic made the need for student-centered and portable education funding more pressing than ever since families are unable to rely on district schools to provide regular and adequate education services. This Backgrounder outlines six reforms that federal policymakers can undertake to free school leaders to meet the needs of families more effectively, and to put more power in the hands of parents to determine where and how their children learn. These reforms are: (1) reducing burdensome federal regulations; (2) adopting the policies in the Academic Partnerships Lead Us to Success (A-PLUS) Act; (3) allowing Title I portability; (4) allowing Individuals with Disabilities Education Act (IDEA) portability; (5) making Head Start dollars student-centered and portable; and (6) expanding the DC Opportunity Scholarship Program.

Rather than spending billions in additional taxpayer dollars, saddling future generations of Americans with mounting national debt, Congress can support state efforts to re-open schools by relieving them of regulatory burdens and by making existing federal funds flexible and portable. Such measures would allow states, school districts, and families to most efficiently direct their education dollars.

Flexible Education Spending

Notwithstanding the federal creep into education beginning in the mid-20th century, education is constitutionally a state and local issue. States and localities are responsible for more than 90 percent of education spending at the K–12 level.

The Elementary and Secondary Education Act (ESEA) of 1965 was the beginning of what is now the federal government’s five-decade foray into K–12 education. In the time since its enactment, federal intervention in local school policy has grown, shifting from a “compensatory model toward attempts at systemic education reform from Washington.”REF This shift vastly changed the relationship between the federal government and schools across the country, and cost taxpayers more than $2 trillion over the past half century.REF The reforms of the 2015 Every Student Succeeds Act (ESSA) did reduce the number of federal education programs from 69 to 35, and eliminated some of the most onerous regulations of its predecessor, No Child Left Behind (NCLB); but ESSA’s $26 billion in funding for fiscal year (FY) 2020 still dwarfs its original 1965 expenditures of roughly $1 billion (approximately $8 billion in 2020 dollars).REF

Even so, ESSA’s annual expenditures fail to show the many hidden costs of federal intervention. In the past half century, federal intervention in K–12 education forced states to incur hefty administrative costs. For instance, federal regulations may explain in part what has been driving a significant expansion in schools’ non-teaching staff over the decades. For example, while public school enrollment grew 40 percent between 1960 and 2016, non-teaching staff grew 137 percent during the same time period.REF

Federal regulations also have a disproportionate effect on state education spending, especially when compared to the small percentage (8.5 percent of total education revenue) provided by federal taxpayers. According to the Office of Management and Budget (OMB), NCLB, the 2002 reauthorization of ESEA, “increased state and local governments’ annual paperwork burden by 6,680,334 hours, at an estimated cost of $141 million dollars.”REF Similarly, a 1998 federal commission estimated that “[s]tates completed 48.6 million paperwork hours to receive federal spending, which at that time resulted in just 65 cents to 70 cents of each federal dollar spent reaching the classroom.”REF

A 1994 U.S. Government Accountability Office (GAO) report found that “[a]lthough the federal government only provided about 7 percent of elementary and secondary school funding states relied on federal support for about 41 percent of the funding and 41 percent of the staff for their state education agencies.”REF The same report also indicated that “states reserved a greater share of federal than state funds for state-level operations—by a ratio of 4 to 1.”REF

These administrative expenses are especially taxing in light of the current emergency. Policymakers should consider reforms that are less cumbersome and expensive in order to more efficiently allow education funds to flow to where they are needed most. Eliminating onerous federal regulations and making education dollars flexible, portable, and student-centered offers a path forward to families in this time of crisis.

Reducing Burdensome Regulations. Through the CARES Act, Congress provided greater spending flexibility to states by temporarily waiving various regulations under ESEA. In particular, Congress loosened the following regulations:

  • The carryover limitation (15 percent) of Title I, Part A funds, which now allows schools to carry over an unlimited amount of these funds to the next school year. Low-income school districts currently receive approximately $16 billion in Title I funds annually.
  • Restrictions on the amount of time schools have to spend funds allocated for various programs under ESEA.
  • The 15 percent cap on the amount of funding that can be spent on “technology infrastructure” with Title IV, Part A of ESEA, which funds Student Support and Academic Enrichment Grants.
  • Broader spending allowances within the $1.2 billion Student Support and Academic Enrichment Grant program.
  • A broadened definition of “professional development,” so that districts can train teachers more quickly to transition to online learning.REF

Although this flexibility allows states to conserve their education funds and use them during the next academic year, they do not address reductions in overall paperwork burdens driven by federal reporting requirements. Federal policymakers should also take the opportunity to examine which reporting requirements could be eased now, and in the future. Congress should also take greater steps to restore state and local control of education by devolving all dollars and decision-making to the states, through measures found in proposals like the A-PLUS Act.

The Academic Partnerships Lead Us to Success Act. A-PLUS, most recently introduced by Mark Walker (R–NC) in the House and by Steve Daines (R–MT) in the Senate, would let states opt out of the programs authorized under the ESEA, currently reauthorized as ESSA (previously known as NCLB). A-PLUS would restore state control over $26 billion for state-approved education programs, allowing states to put funding toward any lawful education purpose under state law. A-PLUS requires states to provide a Declaration of Intent to the U.S. Secretary of Education, which is renewed every five years, pending the approval of two of three state entities (Governor, State Secretary of Education, or legislature). The declaration must:

  • Uphold federal civil rights laws,
  • Demonstrate how the state will hold schools accountable to taxpayers,
  • Show the state’s fiscal and accounting procedures,
  • Show how the state will continue to use funds to improve educational opportunities for disadvantaged students, and
  • Ensure that the state will only use these federal funds to supplement their current education funding.

In allowing states to put existing federal education spending toward state-determined education priorities, A-PLUS would free states from burdensome federal regulations that have led states to significantly expand their administrative staff, driving up costs and stifling innovation.REF

 

BG3561 Chart 1

 

A-PLUS would also streamline how states currently receive the approximately $26 billion in ESEA funds. Those dollars are currently filtered through complex formulas and discretionary grant programs, for which states must apply and which are accompanied by myriad rules and regulations. A-PLUS, on the other hand, allows states to use their education dollars for any lawful education purpose under state law, such as private school scholarships, performance bonuses for teachers, or additional supports for at-risk students.REF Sending a state’s share of federal education funding directly to the state in a single, simplified grant would reduce federal red tape and administrative overhead costs.

Modernizing Formula-Funded Programs Through Portability

Congress could also make existing federal education spending work better for families by shifting from formulas that send dollars to districts based on enrolled, eligible students, to a model of student-centered and portable funding. Congress should update Title I of the ESEA, the bulk of federal support for low-income districts, as well as IDEA, to fund students directly, rather than district school systems.

Title I Portability. Title I, Part A of the ESEA provides federal funding to districts with a certain proportion of students from low-income families. As of the 2016–2017 school year, Title I-A served 24 million children in public schools nationwide through a “stream of convoluted and piecemeal formula grants that have little relationship to actual poverty.”REF

As of 2019, government officials distributed nearly $15.6 billion in Title I-A funds to local education agencies (LEAs) nationwide through four grant formulas. Historically, to be counted in the Title I formula, students had to be eligible for the free and reduced-price lunch (FRPL) program. However, recent expansions of FRPL known as “community eligibility” have complicated its use as a valid proxy of student poverty. Accordingly, states that offer greater access to FRPL are now required to provide alternative measures of student poverty, such as a combination of direct certification and household applications, to determine child eligibility for Title I-A grants.REF

An LEA’s receipt of Title I-A funds is dependent on the number of eligible students from low-income families.REF The four types of Title I-A grants are:

  1. Basic grants. Title I-A funds are available to LEAs if the number of eligible children is “at least 10 and exceeds two percent of the LEAs school-age population.”REF LEAs in each state receive the same amount of Title I funds for every eligible child.REF In FY 2019, LEAs received $6.3 billion, nearly 41 percent of Title I funding, through the basic grant formula.REF
  2. Concentration grants. Title I-A funds are available to LEAs that are already eligible for basic grants, but whose number of eligible children exceeds 6,500 or 15 percent of the LEAs total school-age population.REF LEAs in FY 2019 received $1.3 billion, more than 8 percent of Title I-A dollars, through concentration grants.REF
  3. Targeted grants. These grants are designed to provide more Title I-A funds to LEAs that have a greater percentage of students from low-income families. LEAs with at least 10 eligible children or at least 5 percent of the student body (using unweighted data), are eligible for the grant. Targeted grants, however, weight the data so that LEAs with greater rates of poverty receive more funds. Targeted grants funneled more than a quarter of Title I-A funds ($3.9 billion) to LEAs in 2019.REF
  4. Education Finance Incentive Grants (EFIGs). Since per-pupil expenditures can vary across school districts nationwide, EFIGs serve as rewards to states that have little variance in their per-pupil expenditures. Using an NCLB standardized measure called an “equity factor,” the U.S. Department of Education “derives the equity factor by calculating the average deviation in per-pupil spending from the state mean to create a weighted coefficient of variation.”REF Accordingly, states with lower variation coefficients, indicating more equal funding per pupil statewide, are more likely to receive EFIGs. In 2019, 25 percent ($3.9 billion) of Title I-A was distributed through EFIGs.REF

The complicated formulas of Title I-A, likely understood by only a handful of experts, result in ineffective spending. The National Center for Education Statistics reported that approximately 11.6 million children were counted as formula eligible for the $14.2 billion Title I-A funds in 2015.REF Accordingly, the total per-pupil allocation would be $1,227 nationwide. Yet children in New Hampshire, the state with the lowest poverty rate in 2015, received $1,958, whereas children in Mississippi, the state with highest poverty rate in 2015, received $1,099, nearly $860 less.REF This discrepancy is due to complicated formulas that reward states for equalizing district spending, even though there is no evidence that this funding model improves academic outcomes for children from low-income families.REF

 

BG3561 Chart 2

 

A better way to help children from low-income families access learning options that serve them well would be to establish a set per-pupil allocation for Title I funding that is portable to education providers of the parents’ choice. Congress should allow states to make Title I funds portable so that families can use their education dollars to support chosen schools and service providers. Portable Title I funds also allow more efficient and effective delivery of services since recipients can tailor their education dollars to their individual needs.

Congress should allow states to provide Title I funding to eligible families in the form of parent-controlled micro-education savings accounts (micro-ESAs). These ESAs are “micro” in nature because they would be populated with existing federal spending, which represents a small portion of total per-pupil spending (federal, state, and local). Through a set per-pupil allocation, each of the 11.5 million Title I–eligible children could have received approximately $1,370 to be deposited into a micro-ESA.REF Title I funds delivered through micro-ESAs would allow parents to pay for approved education expenses, such as online courses, books, and private tutoring, and to offset the cost of private school tuition, among other uses.

Individuals with Disabilities Education Act Funding. The second-largest pot of federal education funding for K–12 education is IDEA. District schools receive IDEA funds for eligible students (ages three to 21) and spend them on services that improve learning for students with disabilities. During the 2017–2018 academic year, $13.5 billion in IDEA funding supported seven million children in public schools and in private school placements.REF The purpose of IDEA funds is to ensure that:

  • Eligible children receive a free and appropriate public education (FAPE);
  • Schools work with parents to create an individual education plan (IEP) for children;
  • Children learn in the “least restrictive learning environment” possible; and
  • “[P]arents have due-process rights under the law to appeal the education accommodations made or not made for their child.”REF

The law requires public schools to provide complete educational services to children with special needs. If a public school fails to meet its FAPE requirement, it must pay for student placement in a private school. Therefore, if a parent believes that the district school has failed to adequately provide FAPE, she can enroll her child in a private school and seek tuition reimbursement from the district school.

However, district schools and parents can disagree about whether a district school meets its FAPE requirement. The disagreement becomes even more contentious if parents have already enrolled their child in a private school and the district school refuses to provide tuition reimbursement. Clashes about FAPE fulfillment can lead to expensive legal battles between parents and school districts. Families are at a marked disadvantage in such disputes since they often lack the financial and legal means to successfully make their case. “Litigating against a school district costs time and money that many parents don’t have…. [D]etermined public schools can outspend and outlast almost any family,” noted professors Marcus Winters and Jay Greene.REF

To guarantee parental satisfaction and create a level playing field, Congress should make IDEA funds portable so that families can choose the best education option for their children. Parent-controlled micro-ESAs offer a promising path forward for making IDEA funding portable.

In 2019, IDEA sent $13.5 billion to the states for children and students between the ages of three and 21 with an IEP; $12.8 billion (95 percent) of IDEA funding flows through Part B (Assistance for Education of all Children with Disabilities) of the law. Part B funding is determined by a state’s number of eligible children combined with the state’s number of children living in poverty.REF Congress should restructure IDEA funding so that all eligible children receive a micro-ESA worth 90 percent of the federal per-pupil funding. The average micro-ESA worth 90 percent of Part B of IDEA awarded to eligible children would be around $1,700.REF

Micro-ESAs would allow students to remain at their public school or their private school placement, but would permit dissatisfied families to use their micro-ESA to pay for approved education-related services of their choice. Accordingly, the micro-ESA could be used to pay for educational services, such as curricula, physical therapy, assistive technology, credentialed private tutors, and individual private courses, to name a few.

Rethinking Head Start. Launched in 1965, the largest federal early childhood education and care program, Head Start, provides access to federally funded child care centers to children from low-income families. As of 2019, Head Start enrolled more than 873,000 children with per-pupil expenditures exceeding $9,800.

 

BG3561 Chart 3

 

Despite funding per enrollee increasing by more than $8,000 since 1966, Head Start continues to show dismal results.REF In fact, randomized controlled trail evaluations conducted by the Department of Health and Human Services (HHS)—the agency that oversees Head Start—have shown that the program fails to improve learning and health outcomes for participating children. For instance, in 2005, the HHS conducted a rigorous evaluation of Head Start and found that the program had little or no effect on parenting practices or the cognitive, social-emotional, and health outcomes of participants.REF Moreover, the 2005 study found that the program did not improve outcomes among first graders in math and reading and language skills.REF

In 2012, the HHS released a follow-up study examining 5,000 former Head Start participants, who were now in the third grade. Following the cohort from the 2005 study, the new data showed that many initial gains made by Head Start participants quickly dissipated in elementary school. In some cases, some participants experienced negative outcomes in “closeness with teacher,” “teacher-child relationships,” “emotional symptoms,” and “peer relations.”REF The report’s authors noted:

In summary, there were initial positive impacts from having access to Head Start, but by the end of 3rd grade there were very few impacts found for either cohort in any of the four domains of cognitive, social-emotional, health, and parenting practices. The few impacts that were found did not show a clear pattern of favorable or unfavorable impacts on children.REF

Researchers have also identified fraud and abuse in the Head Start program.REF In 2009 and 2010, the U.S. Government Accountability Office (GAO) reported that none of 175 Head Start locations in nine states fully met federal and state requirements “to protect children from unsafe materials and equipment.”REF Moreover, the GAO noted that

21 of 24 grantees did not comply fully with Federal Head Start or State requirements to conduct criminal records checks, conduct recurring background checks, document criminal records checks, conduct checks of child care exclusion lists, or conduct checks of child abuse and neglect registries.REF

Unfortunately, the negative GAO reports did not produce any reforms. In the past decade, a plethora of Head Start centers have been reported for unsafe environments. For instance, the Jefferson County School District in Kentucky lost its federal Head Start funding after failing to respond to a 2017 HHS report that found 23 instances of “physical humiliation, neglect, and abuse,” “indicating a systemic failure of management.”REF

Other reports show that Head Start suffers from financial abuses as well. A 2019 GAO report indicated that Head Start suffers from regular employee malfeasance where employees enrolled ineligible children resulting in the loss of thousands of dollars. This problem is not new. A 2005 GAO report discovered that Head Start employees would direct parents to misrepresent their income on their Head Start applications to make the candidates eligible for federal aid. Similarly, multiple GAO reports in the past two decades found repeated occurrences of dubious bookkeeping, outright fraud, and theft.REF

Policymakers should stop funding a broken program that has drained taxpayer dollars for 55 years without yielding its promised positive outcomes. Ideally, states would resume complete revenue authority over pre-K programs. At the very least, federal policymakers should make Head Start funds portable. Eligible families could receive a portion of the $9,800 currently spent per pupil through Head Start, which exceeds the nation’s median cost of preschools and daycares by $1,480 annually per pupil.REF Making funding student-centered, instead of institution-centered, would let eligible parents spend their pre-K funds on the private providers of their choice.

Anchoring the DC Opportunity Scholarship Program (OSP). As a federal city, Washington, DC, falls uniquely under Congress’ jurisdiction; accordingly, Congress has a special responsibility to local children. The OSP is a private school voucher program for children from low-income families residing in the nation’s capital. In the 2019–2020 academic year, the OSP provided 1,732 scholarships (up to $9,022 for elementary and middle school students, and up to $13,534 for high school students) to children who could then attend participating private schools.REF

The OSP is often many students’ only chance to learn in a safe school, and escape bullying or dangerous environments.REF In 2019, more than 36 percent of Washington, DC, high school students reported that they had seen or heard people engage in violent or abusive behavior “where they live.”REF Unfortunately, these dangerous encounters sometimes become fatal. Already the number of homicides in 2020 among the capital’s children and teenagers exceeds 2019’s decade-high number of homicides from that age demographic.REF More than 80 percent of scholarship recipients in 2019 lived in Wards 4, 5, 7, and 8 where more than half of the homicides among children and teenagers have occurred in 2020.REF

The violence that students encounter in their surrounding neighborhoods can also spill over into the schoolyard and beyond. In 2019, approximately 10 percent of Washington, DC, high school students reported feeling unsafe traveling to and from school. At the same time, nearly 10 percent also reported that they were threatened with a weapon on campus. These dangerous on-campus encounters can escalate, as more than 14 percent of high schoolers reported being in fights on school property and more than 9 percent of high school students said that they feared being beaten at school “one or more times.”REF

Private school attendance, however, could have significant safety advantages, since students and parents generally perceive private schools as safer. A recent review of the literature found that 11 studies found safety advantages overall for students attending private schools relative to public schools. For instance, a rigorous 2019 study reviewed safety perceptions of the OSP and found that scholarship recipients were more likely to view their school as “very safe” by 34 percent.REF

Scholarship recipients perform comparably to their public school peers on academic achievement tests at one-third of the cost. They are also estimated to graduate at a rate 21 percentage points higher than their peers who applied, but did not receive, a scholarship.REF The OSP has been a resounding success for participating children. Congress should build on this success and transition Washington, DC, into an all-choice school district, making every child in the nation’s capital eligible for the OSP and formula-funding the program.REF As Table 1 shows, funds could be weighted to provide additional assistance to low-income families—and all amounts are considerably lower than the nearly $30,000 spent per pupil, per year, in DC Public Schools.

 

BG3561 Table 1

 

Conclusion

Policymakers should take the necessary steps to restore educational autonomy to states and reduce federal regulations and compliance. COVID-19 has provided the impetus for Congress to implement reforms, many of which are long overdue. For example, Title I, IDEA, and Head Start funding should be made portable, following students to education options and service providers of choice. The tragic effects of COVID-19 have illustrated that heavy-handed, one-size-fits-all education models, including the institution-centered district school system, often fail to deliver quality education to children. Student-centered funding, instead of institution-centered funding, gives families much needed flexibility and keeps education dollars closer to the stakeholders—parents. These are policy reforms that would make substantial differences in the lives of children, without increasing federal spending.

Jude Schwalbach is a Research Associate and Project Coordinator in the Center for Education Policy, of the Institute for Family, Community, and Opportunity, at The Heritage Foundation.

Authors

schwalbachj.png
Jude Schwalbach

Research Associate and Project Coordinator