No Child Left Behind Act

Title I Funding and the No Child Left Behind Act

In December 2001, Congress passed with broad bipartisan support the No Child Left Behind Act, a sweeping reauthorization of the Elementary and Secondary Education Act. This legislation expands the federal role in the substance and standards of K-12 education. This issue brief describes some key aspects of federal funding related to the Act and highlights areas for further reform.

Congress needs to provide more funding to improve schools

Congress funds school reform under a variety of provisions. One of the most significant of these is Title I of the No Child Left Behind Act, which supports programs intended to help elementary and secondary schools establish and maintain a wide range of programs that will improve the educational opportunities of low-income and disadvantaged children. Title I requires that districts and schools be held accountable for improving test scores, as well as for hiring only certified qualified teachers. In 2002-03, Congress appropriated $12.3 billion for these programs. This is a significant increase over earlier spending, but it is not enough.

Congress should fully fund Title I and other key educational programs, including the Individual with Disabilities Education Act, which funds special education programs. It should also take steps to ensure that federal funding is targeted effectively to the students that need it most by increasing the amount allocated under the targeted grant and finance incentive grant formulas.

Allocation of Title I funds limit their effectiveness in reaching many schools with high concentrations of poverty

Although Title I money is intended to provide support for low-income children, many schools with high numbers of low-income children do not receive any support because they are surrounded by schools that are even poorer. This is in part because Title I money has been spread very thin. The bulk of Title I money is distributed under the "basic grant" formula. Any district with at least 2% of children below the poverty level is eligible for these grants, and nine out of ten districts receive funding. "Concentration" grants provide limited additional aid to districts with poverty rates above 15%. Nonetheless, many schools with high poverty rates, including one out of every five schools with poverty rates between 50 and 75%, did not receive any funding under previous funding formulas.

Hold harmless provisions and small state minimums also contribute to the problem. These provisions limit the extent to which the Title I funding allocations are reduced for districts and small-population states with declining numbers of poor children. As a result, states with increasing numbers of poor children do not receive their "full" formula amount. States with increasing numbers of poor children receive less per pupil than states with decreasing numbers of poor children.

GAO releases report on Title I Funding

In January 2002, GAO released a report on Title I Funding allocations. This report does not review program effectiveness, that is, student outcomes. It finds that allocations vary somewhat among states and school districts and that changes in allocations lag changes in demographics. It also finds that Title I does not encourage states to target state funds to disadvantaged students.

A promising step towards more effective targeting

In 2001, Congress appropriated funding for two formulas never previously funded. Beginning with the 2002-03 school year, each of these will provide additional targeted funding for districts and states with high concentrations of poverty:

• Targeted grants will be directed to districts with high concentrations of poverty - as the number and percentage of poor children increases, the targeted grant amount will increase. Approximately $1 billion was appropriated for the 2002-03 school year and early estimates suggest it will result in an increase of more than 30% in Title I funding to major urban areas.

• Education finance incentive grants encourage states to equalize funding across districts and to fund education generously relative to the state's per capita income. Grants distributed under this formula are targeted within states to districts with high concentrations of poverty. Approximately $800 million was appropriated for the 2002-03 school year.

Federal funding is only part of the story

Even with the recent increases in federal funding, it still represents a very small part (on average, about 7%) of over-all education funding. Schools will need additional resources from all levels - federal, state, and local - to hire qualified teachers and to give students a real opportunity to succeed at meeting state standards. The Act requires that disparities in student outcomes be widely publicized, but it does not require that disparities in resources be similarly recorded and publicized.

Congress needs to take steps to ensure that states and districts are held responsible for providing adequate resources to schools so that they can meet the standards imposed by the Act. Congress should also consider linking federal funding to state efforts to "cost out" how much it actually takes to provide an adequate education and to make funding decisions accordingly.

Do you want to know more about the No Child Left Behind Act?

No Child Left Behind is a broad-ranging federal law that has implications for many aspects of federal education policy. For more information on No Child Left Behind, visit the "federal legislation" section of our website. The site also contains additional information on advocacy and litigation efforts to address state and local resource inequities.