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Education funding under ESSA

How will ESSA shape funding in the new year? Former senior official at the USDOE offers insights.

7 min read


education funding


The one-year anniversary of the passage of the Every Student Succeeds Act (ESSA) is here. Like most major laws, the impact of ESSA on policy and practice, as well as on funding, is still being determined as regulations and guidance get sorted out, and Congress figures out how to provide funds for it. When finalized, the new law will impact education policy and funding through 2020 and likely beyond.

While the federal government works to fund ESSA, states and districts have not yet bounced back from the Great Recession. Research shows that many states continue to spend less on education now than they did in 2008. With ESSA’s shift to state and local control over education policy, how states and districts allocate their funds will become even more important.

The federal government’s education funding has not recovered either. Title I funding, the largest federal investment in public education and designed to provide supplemental funding for low-income students, has remained largely flat for seven years. And for most federal K-12 education programs, funding has been largely stagnant, with small increases or decreases year-over-year.

How might ESSA change this scenario? There are at least three ways:

  1. New — or modified — programs change spending priorities;
  2. States and districts have more flexibility in spending funds;
  3. Additional funding is provided.

ESSA’s Programs

Given the unpopularity of ESSA’s predecessor, the No Child Left Behind Act (NCLB), it is not surprising Congress made a number of changes to federal programs. The most significant modification to the existing federal program architecture is the creation of the Student Support and Academic Achievement block grant. This new program is a consolidation of almost 50 small, single-issue programs and provides funds to states and districts based on their relative share of Title I funds.

These new funds must be used for:

  • Well-rounded educational opportunities (20 percent);
  • Safe and healthy students (20 percent);
  • Effective use of technology (no more than 15 percent can be spent on “infrastructure”).

The U.S. Department of Education (USDE) took a narrow view of this 15 percent cap by asserting that it can only be used on devices, equipment, software, platforms, digital instructional resources and/or other one-time tech purchases.

Another big ESSA program undergoing change is Title II, Part A: High-Quality Teachers and Principals. Title II is now focused on educator development, rather than student outcomes-based evaluations and specifically included principals. In addition, ESSA changes the formula for distributing funds to states and district to be more focused on the percentages of students in poverty, which will result in a large shift in how much districts receive under Title II.

Congress also created a new, optional program for states and districts called “Direct Student Services.” Under this program, states may reserve up to three percent of Title I, Part A to competitively award grants to districts serving the highest concentrations of schools in need of improvement for various student-centered services like credit recovery, AP or college-credit bearing classes, and personalized learning.

Policy Enhancements

Beyond new or modified programs in ESSA, there are a number of changes to existing federal policies that provide increased flexibility to states and districts on how to spend federal funds. This flexibility should alleviate some compliance headaches while allowing for more innovation, creating a “flexibility dividend.”

Under Title I, a school can deliver services to only low-income students through a targeted assistance program, or it can deliver services to all students in a school (even if some are not low-income) through a “schoolwide” program that is easier to implement. For instance, a schoolwide model allows districts to consolidate their federal, state and local funds to upgrade the entire educational program for all the students in a school.

ESSA encourages more schools to utilize schoolwide programs by allowing states to waive the minimum poverty threshold normally required. ESSA also expands the strategies that can be used and incorporates the concept of a “well-rounded” education.

As with prior law, states, districts and schools must spend Title I funds to add to (supplement), but not replace (supplant) their state and local education spending: the “Supplement, not Supplant” rule. ESSA’s method for determining compliance with this fundamental rule is very different than current law. Instead of looking at individual costs to determine if they are supplemental, compliance will be determined by looking at how a district allocates state and local funding to each Title I school.

This is a more flexible approach. However, the USDE’s current proposed interpretation could be massively disruptive. The USDE’s proposed regulations are very controversial by trying to mandate equal spending between Title I and non-Title I schools.

With a new president and secretary of education, it is likely the “Supplement, not Supplant” regulation will be interpreted closer to the statute, which is long on reporting and short on specific methodologies. This continues to be the most contentious issue in the ESSA regulatory hierarchy, and how it plays out will have a significant impact on how federal funding can be used.

ESSA also requires states and districts to annually report on per-pupil expenditures of federal, state and local funds, including actual personnel expenditures and actual non-personnel expenditures, disaggregated by each school in the state and district. Greater transparency on education funding will likely create upward pressure on spending amounts, as well as lead to better allocation of resources as it becomes clearer to all stakeholders how spending is being used and what results are being achieved.

Funding levels

In an all too familiar pattern, Congress didn’t finish any of the appropriations bills that would have funded the government for Fiscal Year 2017. This past Friday, Congress approved a “continuing resolution” funding the government at current levels for current programs through April 28, 2017.  The new Congress and president will put their stamp on which programs to fund at what levels in time to impact the 2017-18 school year.

It is now more likely the Student Support and Academic Achievement block grant described earlier will get funded, but how much funding it may receive is not at all clear; the House and Senate had different amounts in their respective bills, establishing a range of $300 million to $1 billion for the program.  If the block grant is funded at the lower end of this range, not all districts may receive funding and if they do, the amounts will likely be relatively small (i.e., thousands of dollars vs. tens of thousands of dollars).

In addition, President-elect Trump and Secretary of Education nominee Betsy DeVos will have to decide how hard — and on what time frame — to push his campaign proposal to create a $20 billion school choice program.  If they decide to go hard after this behemoth choice program, all funding bets are off for ESSA programs.

The changes ESSA is bringing to federal education funding are significant. While it is unlikely there will be major new funding increases, the myriad new programs and policies ensure that states and districts will have more flexible funding that they can better use to meet their particular needs. If producing academic achievement is requires innovation and funding, then at least the “flexibility dividend” in ESSA gets states and districts half-way there.

Doug Mesecar (@dmes) is VP of Strategic Partnerships for IO Education. He has served as a senior official at the US Department of Education, as well as with leading education companies and in Congress. Doug writes frequently on education policy and technology and mentors edtech startups. 


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