Evidence of the effects of the Title I comparability loophole
Shining a Light on Fiscal Inequity Within Florida's Public School Districts

Evidence of the Effects of the Title I Comparabililty Loophole

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Identifying the culprit of unequal school funding in U.S. public schools used to be simple. When public schools derived nearly all of their revenues from local property taxes, the math was straightforward—schools in poor areas were poorly funded while schools in wealthy areas were well funded. Today, with federal and state governments kicking in nearly half of funding for public schools, in part to address previous inequities, understanding why schools with large concentrations of poor students are still being financially shortchanged is much more complex.

To date, legislative and judicial attention to inequity in elementary and secondary education finance has mainly focused on variation in resources available to school districts. This focus makes sense because districts have the authority to
raise revenue and distribute aid flowing from state and federal sources. Yet focusing on inequities within school districts also merits attention. Budgeting and reporting practices within districts can undermine the intent of even the most equitable state and federal funding streams. The fiscal requirements of Title I of the Elementary and Secondary Education Act seek to prevent this possibility.

The comparability requirement, one of three fiscal requirements, holds that districts that receive funds under Title I must use state and local funds to offer services in Title I schools that are comparable to those offered in schools that do not
receive Title I funds. This ensures Title I funds are used to provide supplementary services for low-income students rather than make up for inequitable distributions of state and local funds. Districts may use one of two main approaches to demonstrate compliance with the comparability provision, but both approaches fail to distill actual levels of financial resources. Instead they focus on the distribution of staff and supplies, remaining indifferent to quality issues and explicitly ignorant of the strong relationship between teacher compensation and experience. Together these shortcomings represent a “loophole” in the requirement, as highlighted in a recent Government Accountability Office report.

The extent to which the comparability loophole undermines the supplementary purpose of Title I funds is not terribly clear. There is good reason to suspect that Title I schools often receive substantially fewer resources from state and local sources, as measured in actual dollars, than non-Title I schools in the same districts. Teacher salaries, the largest single expenditure category and sometimes the majority of spending at the school level, are closely pegged to years of experience in the majority of school districts. And inexperienced teachers are overrepresented in Title I schools serving, by definition, high concentrations of low-income children. Together these patterns create “hidden salary gaps,” as documented by The Education Trust using data from California, Ohio, and Texas, and corroborated by the Center for American Progress using data from California with a more comprehensive approach.

Title I schools do not necessarily need highly experienced teachers who, despite receiving much higher salaries than teachers with a few years of experience, may prove to be no more effective in the classroom. What Title I schools need is their fair share of state and local funds. Money, not experience, is the issue, and the empirical literature that examines whether districts distribute Title I funds on a level playing field is very thin. The data necessary to reveal actual expenditures at the school level have been hard to come by historically but this is beginning to change. The American Recovery and Reinvestment Act of 2009, also known as the stimulus bill, included a one-time school-level expenditure reporting requirement, and this requirement in turn inspired the inclusion of new school-level expenditure items in the Office of Civil Rights biennial survey. These data sources should enable researchers and advocates to assess the damage done by the comparability loophole in all states and the District of Columbia.

But Florida’s rather advanced data and reporting environment allows us to get a jumpstart on this endeavor. This paper exploits a unique dataset containing information on 2,579 unique Florida public schools from the 2001-02 school year
through the 2007-08 school year. The data were drawn from web-accessible files maintained by the Florida Department of Education and the National Center for Education Statistics. Florida is ahead of its peers in reporting actual school expenditures, including measures of actual average teacher salaries and per pupil expenditures, in total and by clusters of programs (regular, exceptional, vocational education). Regular expenditures include those funded by Title I.

We use straightforward analytic techniques to address questions about the relationship between student poverty rates and expenditure measures at the school level. Specifically, we employ multilevel regression analysis that allows us
to account for the clustering of schools within districts and control statistically for district and school characteristics, providing a clearer picture of hidden salary gaps and expenditure patterns expected under the comparability loophole.

We find that, holding all else equal, a 10 percentage point increase in the student poverty rate corresponds to a $213 decrease in average teacher salary. This means teachers in a school with a 70 percent student poverty rate make, on average, $1,067 less than teachers in an otherwise identical school with a 20 percent student poverty rate. This relationship is wiped out, however, when we account for schools’ average level of teacher experience. A one-year increase in average teacher experience translates to a $523 increase in average teacher salary. This pattern conforms to expectations and corroborates prior research on hidden salary gaps.

Because teacher salary is the predominant driver of regular per pupil expenditures, one would expect any relationship between student poverty rates and average teacher salary to carry through to regular per pupil expenditures. One would also expect to find a positive relationship between student poverty rates and regular per pupil expenditures because regular per pupil expenditures include Title I funds, which districts distribute to schools based on student poverty rates. Indeed, we found that a 10 percentage point increase in the student poverty rate corresponds with a $56 increase in regular per pupil expenditures on average, controlling for a host of school and district characteristics.

Yet this overall estimate is not too reassuring. The comparability requirement pertains to districts, so we exploit the richness of the data to estimate simultaneously a separate relationship between student poverty rate and regular per pupil expenditure for each district. The distribution of these estimates suggests that at least some Florida districts cannot possibly provide truly comparable state and local resources to their Title I and non-Title I schools.

The U.S. Department of Education cited Florida in 2009 for several failures around the existing comparability requirement, so it stands to reason that expenditure patterns rendered in actual dollars are unlikely to demonstrate a comparable distribution of resources in Florida during the years studied. Policymakers should consider the following recommendations:
• Close the comparability loophole by requiring school districts to demonstrate that Title I and non-Title I schools receive reasonably similar levels of resources, in actual dollar terms, from state and local sources. In particular, this means
that salary increments related to teacher experience cannot be excluded from calculations.
• Require ongoing reporting of actual school expenditures in a manner similar to that required by the one-time American Recovery and Reinvestment Act of 2009 and the biennial Office of Civil Rights survey.

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