	Introduction

The Elementary and Secondary Education Act (ESEA) was last comprehensively reauthorized 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 reported the Student Success Act ( H.R. 5 ), which would provide for a comprehensive reauthorization of the ESEA. The bill was subsequently passed on the House floor on July 7, 2015. The Senate Health, Education, Labor, and Pensions (HELP) Committee reported the Every Child Achieves Act of 2015 (ECAA; S. 1177 ), which was subsequently passed on the Senate floor on July 16, 2015. 5 and S. 1177 would both make changes to the formulas used to allocate funds under Title I-A of the ESEA. Under S. 1177 , an Equity Grant formula would be added to the existing formulas used to distribute Title I-A funds to state educational agencies (SEAs) and local educational agencies (LEAs). S. 1177 would also modify the process by which Title I-A funds are allocated from LEAs to schools. Under H.R. 5 , a new option for distributing funds from the state level to LEAs and from LEAs to schools would be available. This option is often referred to as the "state option" or "Title I portability." 5 would also make changes to the determination of weighted child counts under two of the four Title I-A formulas included in current law. This report begins with a detailed discussion of the four Title I-A formulas used to determine grants under current law. It then discusses changes to these formulas proposed by S. 1177 and H.R. 5 . Table A-1 in Appendix A provides an overview of the key elements included in the four current formulas and the Equity Grant formula that would be added by S. 1177 . Title I-A grants provide supplementary educational and related services to low-achieving and other students attending pre-kindergarten through grade 12 schools with relatively high concentrations of students from low-income families. Title I-A has also become a vehicle to which a number of requirements affecting broad aspects of public K-12 education for all students have been attached as conditions for receiving Title I-A grants. It is the largest program authorized under the ESEA and was funded at $14.4 billion for FY2015. Under Title I-A, funds are allocated to LEAs via states using four different allocation formulas specified in statute: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). Annual appropriations bills specify that portions of each year's appropriation be allocated under each of these different formulas. Under three of the formulas—Basic Grants, Concentration Grants, and Targeted Grants—funds are initially calculated at the LEA level. State grants are the total of allocations for all LEAs in the state adjusted for state minimum grant provisions. Under EFIG, grants are first calculated for each state overall and then are subsequently suballocated to LEAs within a state using a different formula. Once funds reach LEAs, the amounts allocated under the four formulas are combined and used jointly. Conversely, arguments against an expenditure factor that varies by state include the following:
the expenditure factor may not compensate for differences in education costs as it is based on levels of state and local spending (rather than costs); as the Title I-A expenditure factor is the same for all LEAs in each state, it does not account for the potentially large differences in the education costs among LEAs within each state; the expenditure factor may provide little incentive for increased spending as (1) an increase in spending would only result in higher grant amounts if a state's APPE increased relative to that of other states, (2) an increase in spending might not result in an increase in a state's expenditure factor in a very high- or very low-spending state due to the bounds placed on APPE in determining the expenditure factor, (3) the increase in Title I-A funding would likely be small in comparison to the increase in state and local spending, and (4) an increase in spending by an individual LEA may have little impact on the aggregate spending per pupil used to determine the expenditure factor; states with relatively high concentrations of formula children (e.g., California, New Mexico, Mississippi) tend to have relatively low APPEs and thus receive less Title I-A funding as a result of the expenditure factor included in current law; and the expenditure factor might not provide the appropriate adjustment for poverty data as there is no widely accepted measure of variation in state or local costs of living and those costs may not be closely associated with variations in state APPE. H.R. Under H.R.
The Elementary and Secondary Education Act (ESEA) was last comprehensively reauthorized 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 reported the Student Success Act (H.R. 5), which would provide for a comprehensive reauthorization of the ESEA. The bill was subsequently passed on the House floor on July 7, 2015. The Senate Health, Education, Labor, and Pensions (HELP) Committee reported the Every Child Achieves Act of 2015 (ECAA; S. 1177), which was subsequently passed on the Senate floor on July 16, 2015.
Title I-A of the ESEA authorizes aid to local educational agencies (LEAs) for the education of disadvantaged children. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending pre-kindergarten through grade 12 schools with relatively high concentrations of students from low-income families. Title I-A has also become a vehicle to which a number of requirements affecting broad aspects of public K-12 education for all students have been attached as conditions for receiving Title I-A grants. It is the largest program authorized under the ESEA and was funded at $14.4 billion for FY2015.
Under Title I-A, funds are allocated to LEAs via states using four different allocation formulas specified in statute: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). Annual appropriations bills specify that portions of each year's appropriation be allocated under each of these different formulas. Under three of the formulas—Basic Grants, Concentration Grants, and Targeted Grants—funds are initially calculated at the LEA level. State grants are the total of allocations for all LEAs in the state adjusted for state minimum grant provisions. Under EFIG, grants are first calculated for each state overall and are subsequently suballocated to LEAs within a state using a different formula. Once funds reach LEAs, the amounts allocated under the four formulas are combined and used jointly.
H.R. 5 and S. 1177 would both make changes to the formulas used to allocate funds under Title I-A. Under S. 1177, an Equity Grant formula would be added to the existing formulas used to distribute Title I-A funds to state educational agencies (SEAs) and LEAs. S. 1177 would also modify the process by which Title I-A funds are allocated from LEAs to schools. Under H.R. 5, a new option for distributing funds from the state level to LEAs and from LEAs to schools would be available. This option is often referred to as the "state option" or "Title I portability." H.R. 5 would also make changes to the determination of weighted child counts under two of the four Title I-A formulas included in current law.
This report begins with a detailed discussion of how Title I-A grants are determined under current law. It then discusses the changes to these formulas that have been proposed by S. 1177 and H.R. 5. Table A-1 in Appendix A provides an overview of the key elements included in the four Title I-A formulas authorized under current law and the Equity Grant formula that would be added by S. 1177.