A Rural Trust Guide to Title I Formulas

Last Updated: February 26, 2010

This article appeared in the February 2010 Rural Policy Matters.

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Title I is the federal program that provides funds to local school districts to improve the educational achievement of disadvantaged students. Since 2002 the formulas through which Title I funding is distributed have sent more money per eligible student on average to lower-poverty large districts than to high-poverty smaller districts. The Rural Trust has conducted extensive analysis of the mechanisms through which this inequity occurs and is leading a campaign to make the formulas fairer for all disadvantaged students regardless of where they live or attend school. Here, we explain the basics of what the Title I program is and how its formulas work.

What is Title I?

“Title I” is the federal program that provides funding to local school districts to improve the academic achievement of disadvantaged students. It is part of the Elementary and Secondary Education Act first passed in 1965. That Act is reauthorized by Congress from time to time, and often given a new name. It is currently known as the No Child Left Behind (NCLB) Act.

Section A of Title I provides grants to states to distribute directly to school districts. This is by far the largest source of federal money for local schools.

School districts do not have to apply for Title I funding as they would have to for a competitive grant. If a school district qualifies for Title I funding, it is entitled to the money. For this reason, Title I is sometimes referred to as an “entitlement” or “formula” program. Although districts do not have to submit competitive grant applications to receive Title I funding, each district must submit to the state education agency a plan for how it will use the funds to improve academic achievement among disadvantaged students.

“Disadvantaged” students are those who come from low-income families, are in foster homes, are neglected or delinquent, or who live in families receiving temporary assistance from state governments. Disadvantaged students make up more than 90% of students eligible for Title I funding. It is important to note that eligibility for Title I funding is determined by census poverty levels rather than free and reduced lunch rate. Census poverty signals a deeper level of poverty than the lunch rate.

Districts have wide discretion in determining how Title I money is to be used. About 83% of Title I money is used for programs serving pre-K through 8th grade. These programs must specifically serve students who are failing to meet academic standards or at risk of failing because they are disadvantaged. However, if more than 40% of the students in a school qualify as disadvantaged, the school is allowed to run “schoolwide” programs that serve all students, not just the disadvantaged.

What Are the Title I Formulas?

Title I is made up of four formulas that together are used to distribute funding to districts. The formulas do not determine how much Title I funding is available. That decision is made by congress as part of the budget process. Rather, the formulas determine how the total pot of Title I funding will be distributed to school districts. New formulas were implemented in 2002 when NCLB was authorized.

We explain each of the formulas here.

1. Basic Grants provide funds to LEAs (Local Education Agencies - the federal name for school districts) in which the number of children counted in the formula is at least 10 and exceeds 2 percent of a LEA's school-age population.

2. Concentration Grants flow to LEAs where the number of formula children exceeds 6,500 or 15 percent of the total school-age population.

3. Targeted Grants are based on the same data used for Basic and Concentration Grants except that the data are weighted so that LEAs with higher numbers or higher percentages of poor children receive more funds. Targeted Grants flow to LEAs where the number of schoolchildren counted in the formula (without application of the formula weights) is at least 10 and at least 5 percent of the LEA's school-age population. The weighting factors in Targeted Grants provide more money per pupil to districts with higher concentrations of disadvantaged students. Because the formulas provide money based on either the percentage or the total number of eligible students-whichever provides the most funding to the district-the targeted grant formula provides significantly more funding to large districts with high numbers of eligible students (number weighting) than to smaller districts with higher percentages of eligible students.

4. Education Finance Incentive Grants (EFIG) distribute funds to states based on factors that measure:
  • a state’s effort to provide financial support for education compared to its relative wealth as measured by its per capita income and
  • the degree to which education expenditures among LEAs within the state are equalized.

Special Issues for Rural and Small Schools

  • The number weighting provisions of the Targeted Grants formula provide more funding to large districts than to small districts, even when the smaller district has higher rates of poverty. For example, each poor child in Fairfax County, Virginia, one of the nation’s wealthiest school districts with a poverty rate of 6%, receives $1,935 per eligible student in Title I funding, while rural Richmond County, North Carolina, with a poverty rate of 32% receives just $1,209 per eligible student. On average the 900 poorest rural school districts, with a Title I eligibility rate of 37%, receive just $1,476 per disadvantaged student.
  • Many of the poorest rural districts are in poor, low-spending states. Children in these schools generally have many fewer educational resources in their schools and communities than do children in wealthier, higher-spending states. Rather than supplementing opportunity for children in poor low-spending states, the EFIG formula actually reduces the Title I allocation for these children.
  • Rural school districts are, on average, smaller than other districts and are much less likely to have grant writers on staff. High poverty rural districts generally have much less local and state money to invest in education and depend on Title I funding to improve educational opportunity for their students. Shifting away from formula grants to competitive grants, as some policymakers are advocating, will jeopardize an essential funding stream for some of the nation’s poorest children.
You can learn more about Title I and how you can get involved in helping to make the formulas fair at the Formula Fairness Campaign at www.formulafairness.com

Read more from the February 2010 Rural Policy Matters.