REFORMING TITLE I — A STUDY IN GRANT DESIGN

Abstract

Title I of ESE A is aimed at tip grading the educationally disadvantaged. The payment formula has been severely criticized and it is our purpose to derive improved measures of the target population and the target payment rate, while examining the merits of a matching program. The principal conclusions are: (1) from families below the S5/4 povertyline should be counted instead of those below the subpoverty $2000 level or those over the arbitrary criteria of at least $2000 in welfare ; (2) payment rates should reflect the average dollar amount required to raise achievement and local cost variations; and (3) a variable matching program , with matching ratios reflecting the probability that funds will be matched and differences in local fiscal capacities, should be introduced. 'THE PURPOSE of the Title I program of the Elementary and Secondary Education Act, the largest Federal education program, is to provide for the special educational needs of educationally children. While few deny the need for Title I, several provisions of the program have come under increasing Congressional criticism. The subject of this paper is one of the key fiscal issues in the reform of Title I the design of the distribution formula. We will focus on the following areas: the target population; the target level of expenditures; and the specification of the grant. In so doing, an interesting applied analysis in the design of a grant formula is provided. *The authors are Brookings Economic Policy Fellow and Executive Director, Maryland Council of Economic Advisers. This study was financed by the Office of Education, Department of Health, Education and Welfare. The opinions expressed in the paper are only those of the authors. Present Program There are three parts to the present program: a basic grant, a special incentives grant, and a special grant for areas with high concentrations of low income children. Payments for the basic grant depend on the number of disadvantaged children and on the State's per pupil expenditure on education. For purposes of the grant, are defined as from families with an annual income of less than $2,000 or from families receiving more than $2,000 of AFDC payments.1 Neglected and institutionalized are also considered disadvantaged. The amount of money which each county receives is equal to the number of times one-half of the State's per pupil expenditure or the national average of per pupil expenditures, whichever is higher. Whenever the funds appropriated are insufficient to cover all eligible children, each county's payments are reduced proportionally. Thus far, Title I payments have always been reduced in this manner. Payments for the special incentives grant depend on each state's effort index relative to the national index. Effort here is defined as the ratio of state and local (that is, non-federal) educational expenditures in each state relative to the state's income. A special high concentration grant is also available to districts where the represent at least 20% of the school age population and to districts having at least 5,000 children, provided that the 5,000 represents at least 5% of the school age in the district. xThe income level actually was $2,000 for fiscal years 1966 and 1967. It was $3,000 for fiscal years 1968, 1969 and 1970. As of fiscal 1973 it will be $4,000. However, the limit effectively remains at $2,000 since appropriations are insufficient to cover a higher level.