	Introduction

The Elementary and Secondary Education Act (ESEA) was last amended by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ). During the 114 th Congress, the House Education and the Workforce Committee considered and on February 20, 2015, reported the Student Success Act ( H.R. 5 ), a bill that would reauthorize the ESEA. H.R. 5 would make several changes to current law, but one issue that has attracted substantial congressional interest is a new option that would be available to states for distributing funds available under Title I-A of the ESEA to local educational agencies (LEAs) and schools. In H.R. 5 , this option is referred to as "Title I Portability" and "Title I Funds Follow the Low-Income Child State Option." Hereinafter, this option will be referred to as the "state option." Only LEAs meeting minimum numbers and/or percentages of children counted in the population factor may receive grants. The adjustments include (1) reservation of 4% of state total allocations to be used for school improvement grants; (2) reservation of 1% of state total allocations under all formulas for ESEA Title I, Part A, plus Title I, Parts C and D (discussed below), or $400,000, whichever is greater, for state administration; (3) optional reservation of up to 5% of any statewide increase in total Part A grants over the previous year for academic achievement awards to participating schools that significantly reduce achievement gaps between disadvantaged and other pupil groups and/or exceed adequate yearly progress standards for two consecutive years or more; (4) adjustment of LEA grants to provide funds to eligible charter schools or to account for recent LEA boundary changes; and (5) optional use by states of alternative methods to reallocate all of the grants as calculated by ED among the state's small LEAs (defined as those serving an area with a total population of 20,000 or fewer). State Option: Overview and Possible Issues

Under the state option, Title I-A LEA grants would be calculated by ED using the four formulas prescribed by current statute. However, once the grants were calculated, each state would have the option to reallocate the total amount of Title I-A funds that were "earned" by the LEAs in the state using a new formula. States would be permitted to redistribute all of the Title I-A funds received to LEAs based on each LEA's share of enrolled eligible children. An eligible child would be defined as a child from a family with an income below 100% of the poverty level based on the most recent data available from the Department of Commerce. LEAs would, in turn, distribute the funds received to individual public schools in the LEA based on each school's share of enrolled eligible children. That is, all of the current law requirements for providing funds to schools with relatively high concentrations of poverty would no longer apply. The amount of funding provided would be the same for every eligible child in the state under the state option. The solid line represents the estimated grant per child in poverty that an LEA would receive under the state option—all LEAs would receive the same grant amount per child in poverty. Thus, LEAs that are above the line based on current law would receive smaller grant amounts per child in poverty under the state option and vice versa. This is due to the targeting included in the formulas under current law. The bottom graph shows estimated grants per child in poverty based on the number of children in poverty in each LEA. The pattern may not be as clear as funds under the state option were allocated based on SAIPE data, so LEAs with a higher number of children living in families in poverty would get a higher grant than an LEA with a lower number of such children in the same state. Thus, under current law, Loudon County Public Schools would only meet the eligibility requirements to receive a Basic Grant.
The Elementary and Secondary Education Act (ESEA) was last amended by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110). During the 114th Congress, the House Education and the Workforce Committee considered and reported the Student Success Act (H.R. 5), a bill that would reauthorize the ESEA. H.R. 5 would make several changes to current law, but one issue that has attracted substantial congressional interest is a new option that would be available to states for distributing funds available under Title I-A of the ESEA to local educational agencies (LEAs) and schools. In H.R. 5, this option is referred to as "Title I Portability" and "Title I Funds Follow the Low-Income Child State Option." Hereinafter, this option will be referred to as the "state option."
Under current law, Title I-A grants to LEAs are calculated based on four formulas specified in statutory language. In order to receive funds under each grant, an LEA must meet certain eligibility requirements related to the number and percentage of children (primarily those living in families in poverty) in the LEA. That is, only LEAs meeting specific thresholds are eligible to receive Title I-A funds. Once the U.S. Department of Education (ED) calculates these grants, the grant information is shared with states, which subsequently make adjustments to these grant amounts based on provisions included in current law. After states make the grant adjustments, funds are provided to LEAs, which subsequently make grants primarily to schools with relatively high concentrations of poverty.
Under the state option, Title I-A LEA grants would be calculated at the LEA level by ED using the four formulas prescribed by current statute and the grant allocation information would be provided to the states. However, once the grants were calculated, each state would have the option to reallocate the total amount of Title I-A funds that were "earned" by the LEAs in the state using a new formula. States would be permitted to redistribute all of the Title I-A funds received to LEAs based on each LEA's share of enrolled eligible children. An eligible child would be defined as a child from a family with an income below 100% of the poverty level based on the most recent data available from the Department of Commerce. LEAs would, in turn, distribute the funds received to individual public schools in the LEA based on each school's share of enrolled eligible children. Under the state option, grants to LEAs and schools would not be targeted based on the number or percentage of eligible children, but rather any LEA or public school that enrolled at least one eligible child would receive a grant. The amount provided per child in poverty would be the same for every child in the state. This would result in millions of dollars moving among LEAs in a given state: LEAs with the highest numbers or percentages of eligible children would receive lower grants per child in poverty under the state option than under current law so that LEAs with lower numbers or percentages of children in poverty could receive the standard state amount per child in poverty, which would exceed their grant amount per child in poverty under current law.