A U.S. Department of Education (USDOE) report released last week reveals that more than 40% of schools receiving Title I funds spent less state and local funds during the 2008-2009 school year on teachers and other personnel than non-Title I schools at the same grade level and in the same district. This research confirms previous assumptions that a loophole in the federal Title I statute that allows school districts to use district wide average salaries in reporting school by school data was, in fact, masking real differences in the amounts of state and local funds that are being provided to students in high poverty schools.

The current Title I statute, reauthorized in 2002 as part of the No Child Left Behind Act, states that “a local educational agency may receive Title I funds only if State and local funds will be used in Title I schools to provide services that, taken as a whole, are at least comparable to services in non-Title I schools.” The purpose of this requirement is to ensure that the federal aid is added to an equitable base of state and local resources to help high-poverty schools overcome the challenges of educating students from disadvantaged backgrounds—these resources are not intended to compensate for a lack of comparable services.

Because the “comparability of services” requirement between Title I and non-Title I schools is defined in terms of the services provided and not with specific school-level expenditures, school districts have been permitted to demonstrate comparability by using average district salary levels rather than actual personnel expenditures in each school in their compliance reports. This report is the first to document significant disparities in actual school-level expenditures. The American Recovery and Reinvestment Act of 2009 required every school district receiving Title I, Part A, ARRA funds to report school-level listings of per-pupil education expenditures from state and local funds for the 2008-2009 school year. The researchers retained by USDOE to undertake this analysis, therefore, had a huge national data base of school level expenditures to use for their analysis.

Major findings from the report reveal that:

• Depending on school grade level, 42 to 46 percent of Title I schools had lower per-pupil personnel expenditures than their district’s average expenditures for non-Title schools.

• Depending on the specific comparison approach used, between 18 and 28 percent of Title I districts would be out of compliance with Title-I expenditures-based comparability requirements if the comparability loophole were eliminated.

• Depending on the specific comparison approach used, the average estimated cost of complying with the Title-I expenditures-based comparability requirement would cost just 1 to 4% of total current school-level expenditures in affected districts but would raise per-pupil expenditures in Title I and high-poverty schools by 4 to 15 percent if the comparability loophole were eliminated.

The Dept. of Education defined school poverty rates by the percentage of students eligible for free or reduce-price lunch. Higher-poverty schools were defined as those with a rate of poverty above the district average, and lower-poverty schools were defined as those with a rate below the district average. States and districts could only report state and local fund expenditures–excluding those from federal program funds and those used for special education, adult education, school nutrition programs, summer school, preschool, and employee benefits. Nationally, this data represents 84% of the Common Core of Data schools and 96% of the districts.

Note however, as Bruce Baker points out in his school finance blog, that the school funding disparities existing between districts in many states are significantly larger than the disparities that this report has identified within many public school districts.