Options for Fixing Title I Inequity: Tying Allocations to Average Local Salaries Makes Matters Worse

Last Updated: June 25, 2010

This article appeared in the June 2010 Rural Policy Matters.

Some school districts get a lot more federal funding support than other districts to address the educational needs of very low-income students. Part of the reason is that the formulas used to distribute funding through Title I of the Elementary and Secondary Education Act provide more funding per eligible student in large districts than in small districts.

But another problem is that the formulas provide more funding to districts in states that spend more on education and less funding to low-spending states. You can read more about that problem in the May RPM.

One alternative to using state per pupil spending to adjust how much Title I funding each local district receives would be to estimate the cost of education for each school district by comparing the cost of teacher salaries in all districts. Teacher salaries, after all, make up the largest portion of nearly every school budget, so Title I funding could be tied to teacher costs.

Detractors of this approach, however, often note that high-poverty districts have fewer resources for offering competitive salaries and tend to be staffed by less experienced and less credentialed teachers who command less pay. In other words, lower salary costs usually suggest districts (or schools) are at a competitive disadvantage in hiring and keeping teachers. It does not mean they can provide an equitable education with less money for teachers. Therefore, using this approach would further punish many poorer districts.

Another alternative would be to estimate the cost of providing education in each district by comparing the salaries of college educated non-teachers in local labor markets and adjusting Title I funding accordingly.

The reasoning goes that if accountants, computer engineers, and nurses all get 10% more in labor market A than in labor market B, teachers should get 10% more as well. Whether or not the district has been able to compete in the market for teachers in the past does not affect this comparison.

Comparable Wage Index

The National Center for Education Statistics (NCES) actually calculates an index number for each school district showing how much above or below the national average (in percentage terms) college educated workers earn in the local labor market. They call this index the “Comparable Wage Index” (CWI).

The CWI is calculated annually and is used in several state school funding formulas to account for supposed differences in local market conditions.

The NCES calculates the CWI by using data from a federal government survey that estimates average annual earnings by occupation in about 800 local labor markets. Only survey data for non-teachers with a college education are used by NCES in calculating the CWI.

Each metropolitan area in the nation is considered a “local labor market.” Non-metropolitan counties are grouped into clusters, each with a minimum combined population of 100,000. These clusters are called “places of work,” and each is considered a local labor market.

There are many assumptions made in calculating the CWI for each labor market; most are not explained and many are dubious. The central assumption, which we examine here, is particularly flawed. It not only assumes that college educated workers in all local labor markets are alike in age, life style preferences, and education, but that the jobs held by college educated non-teachers are also alike. That assumption is so far from reality that it borders on the absurd.

This absurdity makes using the CWI as a mechanism for determining the distribution of Title I funding particularly problematic for rural school districts. In part that’s because the jobs available to college-educated non-teachers in rural areas are different from (and lower paying than) the jobs available to the same workers in metropolitan areas. But teachers have to be able to do exactly the same job in all local labor markets.

The Rural Job Market

Not all job markets create equal opportunities for college graduates, so comparing wages for jobs that are not comparable makes no sense. Take computer science jobs as an example. In rural areas, college graduates with computer skills may be able to find work as technicians, network administrators, and support specialists. But those who want jobs as software engineers, programmers, and systems analysts — jobs that are also higher paying — must usually head for the cities.

In fact, many college-educated workers are unable to find jobs in rural areas, even where there is a need for the worker’s skill. Nurses, for example, go where there are hospitals, not to rural areas where thousands of square miles may be designated as medically underserved with few if any clinics, doctors, or other options for actually practicing nursing.

The survey used to calculate the CWI shows that in most occupational categories, like computer science or health care, metropolitan labor markets offer many jobs that are scarce or non-existent in rural markets. And in every category, the higher paying jobs for college graduates are more plentiful in the metropolitan markets.

We’ll look again at the computer science example. In Broward County (Fort Lauderdale), Florida, a metropolitan labor market credited by NCES with one of the highest CWI scores in the nation, the proportion of workers who are in the computer science field is nearly four times the proportion in Northeast Florida, a multi-county rural area with one of the lowest CWI scores.

More important, the highest paying computer science job (systems software engineer) in Broward County accounts for 6% of the computer science jobs there. Not one systems software engineer is identified in the Northeast Florida survey results. Instead, 46% of the jobs in the computer science category in Northeast Florida are in the category’s three lowest paid occupations (various support specialists and analysts).

The highest paid computer science occupation in the rural Northeast Florida labor market was a catchall category called “All other computer specialists.” But that job ranked tenth in pay rate among computer science occupations in Broward County, and there were so few jobs in this category in Broward County that the government could not estimate their total number.

Overall, about 43% of the computer science workers in Broward hold the kind of computer science jobs that pay over $30 per hour. In Northeast Florida, only 3% of the computer science workers make that much.

The pay for computer science graduates is higher in Broward not because you have to pay more to get people to work those jobs in Fort Lauderdale, but because the jobs available for graduates in that field are more advanced and would be higher paying in any labor market where they exist. They just don’t exist in any significant number in places like the Northeast Florida rural labor market.

Equity for Teachers, Districts, and Students

The forces that have robbed rural communities of much of their economic opportunity have also driven out college-educated residents and driven down average rural wages.

Does this mean that rural teachers who have the same credentials and are expected to teach the same curriculum as urban teachers should earn less because other people in the place where they live and work earn less?

Unfortunately, rural teachers do earn less than teachers in other locations (see May RPM). Moreover, physics teachers, for example, will find that they not only get more money in an urban or suburban school, but they also have better equipment, more up-to-date textbooks, and fewer classes to prepare. These competitive disadvantages make it much more difficult for rural schools to find and keep the teachers they need. The challenges should not be compounded by using the CWI in the Title I formula.

CWI as a Potential Fix for Title I: A Poor Remedy for Poor Rural Districts

Title I formulas determine how funding is allocated among districts, not the size of the total Title I funding pot. Adjustments to the formulas that would tie funding amounts to the salary levels of college educated workers, such as incorporating a CWI index to determine education “costs,” would take money away from poorer districts and send it to wealthier ones. While it seems obvious, it bears saying that where there are fewer well-paying jobs there is more poverty and vice versa.

Using the CWI to adjust Title I funding would be particularly bad for rural districts. That’s because all school districts in metropolitan areas — whether inner city poor or wealthy suburban — are assigned the CWI for the entire metro area. In Massachusetts, for example, high poverty Chelsea and low-poverty Abingdon both get the same CWI because they are part of the same Boston metropolitan area.

Rural counties, on the other hand, tend to be clustered with similarly situated rural counties, many uniformly poor with few well-paying jobs for anyone, including residents with college educations.

The fact is that 99% of districts in the bottom 25% of CWI are rural or small town. The poverty rate among students in those districts is 22.4%. On the other hand, the poverty rate among school districts in the top 25% of CWI is 16.5% and most are urban and suburban.

Using the CWI to “fix” Title I funding would not be a “cost” adjustment that improves equity. Instead, it would be more like a tax on poverty. It would almost certainly shift allocations away from many poor districts, especially poor rural districts where economic opportunity and resources are most limited.

You can read the U.S. Department of Education paper on Comparable Wage Index at http://nces.ed.gov/pubs2006/2006321.pdf.

Join the Formula Fairness Campaign and check out the Campaign’s page on Facebook to learn more and to get involved.

Read more from the June 2010 Rural Policy Matters.