	Introduction

The Elementary and Secondary Education Act (ESEA) is the primary source of federal aid to elementary and secondary education. The ESEA was last reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ) in 2015. The Title I-A program has always been the largest grant program authorized under the ESEA and is funded at $15.5 billion for FY2017. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. The U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). Title I-A grant amounts are primarily driven by the number of children from low-income families in an LEA, although all four formulas also include an expenditure factor based on education expenditures, minimum state grant provisions, and LEA hold harmless provisions. This report analyzes issues related to three of the major debates surrounding the Title I-A formulas: (1) the effect of different formula factors and provisions on grant amounts, (2) whether the formulas are more favorable to certain types of LEAs and states, and (3) how effectively the Title I-A formulas target funds on concentrations of poverty. The report is intended to complement CRS Report R44898, History of the ESEA Title I-A Formulas , which provides a detailed examination of the history of the Title I-A formulas and of the underlying tensions in the policy debates about the design of the formulas from enactment of the original ESEA through enactment of the ESSA. The original Basic Grant formula was based on (1) the number of children from low-income families (commonly referred to as formula children) and (2) each state's average per pupil expenditures (APPE) for public elementary and secondary education. The Concentration Grant formula was added in the 1970s in an attempt to provide additional funding for LEAs with concentrations of poverty. During the consideration of ESEA reauthorization in the early 1990s, the House and the Senate proposed formulas (Targeted Grants and EFIG, respectively) intended to target concentrations of poverty more effectively by providing more funding per child to LEAs with higher numbers or percentages of formula children. With respect to formula child counts and APPE, formula child counts are estimated to explain 95% of the variance in overall LEA grant amounts, while APPE is estimated to explain less than 1% of it. A similar pattern is found for each of the individual formulas, with formula child counts estimated to explain between 90% and 98% of the variance in grant amounts in independent examinations of each of the formulas. The minimum grant and hold harmless provisions provide a relatively large increase in overall grant amounts and grant amounts per formula child to the states and LEAs receiving them but cause a relatively small decrease in the Title I-A grant amounts of other states and LEAs. Title I-A Allocation Patterns

Since the initial enactment of Title I-A in 1965, the formulas have been criticized for being more favorable to more densely populated and typically urban areas due to how formula child counts are calculated, and for being more favorable to wealthier states due to the inclusion of factors based on education expenditures. Formula Child Counts and Rates: Densely Populated Versus Less Densely Populated Areas

There has been an ongoing debate about whether the Title I-A formulas are more favorable to densely populated or less densely populated areas. A debate over the relative emphasis that should be placed on the percentage versus the count of formula children in an LEA has also been consistently present and continues to exist regarding the current law formulas. Under current law, the debate is reflected in two formula child weighting scales used in the determination of grants under the Targeted Grant and EFIG formulas, the newer Title I-A formulas that were introduced to enhance targeting to LEAs serving concentrations of low-income students. As shown above, the top category in each weighting scale is open-ended. Because of this, LEAs with large numbers of formula children are often able to apply the highest weights to larger proportions of their formula children than smaller LEAs with relatively high percentages of formula children can. Thus, the majority of the LEAs included in the analysis have a higher weighted formula child count based on the percentage weighting scale versus the number weighting scale. However, in general, LEAs whose weighted formula child counts are calculated using the numbers scale received a higher grant per formula child than LEAs whose weighted formula child counts are calculated using the percentage scale. The expenditure factor was also intended to compensate states with a higher cost of living. Lower-spending states have generally benefitted from the changes to the expenditure factor over time. The historical changes to the expenditure factors that tied them more closely to national APPE have benefitted any state with a state APPE that is less than the national APPE and not benefitted any state with a state APPE that exceeds the national APPE. Any change to the expenditure factor that allows it to vary more closely with state APPE only (e.g., no bounds) would favor states with relatively high APPEs and disadvantage those with relatively low APPEs. Targeting Title I-A Funds on Concentrations of Poverty

Since its initial enactment, the Title I-A program has been intended to address "the impact that concentrations of low-income families have on the ability of local educational agencies to support adequate educational programs." While there are some concerns about whether having a high number or high percentage of formula children should result in larger LEA grants per formula child, as evidenced by the current debate among densely populated and less densely populated areas discussed above, there has also been a broader debate about how much to target Title I-A funds on areas with concentrations of poverty and how best to do so. Under current law, when FY2016 Title I-A funds are allocated under all four Title I-A formulas, the overall percentage of Title I-A funds provided to LEAs in a given range increases as the percentage of formula children increases. The reason that the current four formula strategy renders better targeting of Title I-A funds is because the Targeted Grant and EFIG formulas are more effective than the Basic Grant and Concentration Grant formulas at targeting funds to areas with concentrations of formula children, due in part to the use of the formula child weighting scales used in determining Targeted Grant and EFIG formula grant amounts. Examining the targeting of Title I-A funds to LEAs with relatively high numbers of formula children indicates a similar pattern: the addition of Concentration Grants, Targeted Grants, and EFIG to Basic Grants has resulted in more effective targeting of Title I-A funds on concentrations of formula children, a proxy for concentrations of poverty.
The Elementary and Secondary Education Act (ESEA) is the primary source of federal aid to elementary and secondary education. The ESEA was last reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95) in 2015. The Title I-A program has always been the largest grant program authorized under the ESEA. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families.
The U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The current four-formula strategy has evolved over time, beginning with the Basic Grant formula when the ESEA was originally enacted in 1965. The Concentration Grant formula was added in the 1970s in an attempt to provide additional funding for LEAs with concentrations of poverty. During consideration of ESEA reauthorization in the early 1990s, there was an attempt to replace the two existing formulas with a new formula that would target Title I-A funds more effectively to areas with concentrations of poverty. Both the House and the Senate developed formulas intended to accomplish this goal (Targeted Grants and EFIG, respectively). A compromise on a single new formula was not reached; nor was there agreement on eliminating the existing formulas. As a result, funds are allocated through four formulas under current law.
Title I-A grant amounts are primarily driven by the number of "formula children"—principally children from low-income families—in an LEA, although all four formulas also include an expenditure factor based on education expenditures, minimum grant provisions, and hold harmless provisions. Since the initial enactment of Title I-A in 1965, the formula(s) have been criticized for being more favorable to more densely populated and typically urban areas due to how children from low-income families are counted, and for being more favorable to wealthier states due to the inclusion of factors based on education expenditures.
This report analyzes issues related to three of the major debates surrounding the Title I-A formulas: (1) the effect of different formula factors and provisions on grant amounts, (2) whether the formulas are more favorable to certain types of LEAs and states, and (3) how effectively the Title I-A formulas target funds on concentrations of poverty. The report is intended to complement CRS Report R44898, History of the ESEA Title I-A Formulas, which provides a detailed examination of the history of the Title I-A formulas and of the underlying tensions in the policy debates about the design of the formulas from enactment of the original ESEA through enactment of the ESSA. Some of the themes highlighted in this report are as follows.
All four Title I-A formulas include both formula child counts and state average per pupil expenditures (APPE) as factors used to determine LEA grant amounts. Based on regression analysis, formula child counts are estimated to explain 95% of the variance in overall LEA grant amounts, while APPE is estimated to explain less than 1% of it. A similar pattern is found for each of the individual formulas, with formula child counts estimated to explain between 90% and 98% of the variance in grant amounts under each formula. The state minimum grant and LEA hold harmless provisions that are included in each of the four formulas provide a relatively large increase in overall grant amounts and grant amounts per formula child to the states and LEAs benefitting from these provisions, but result in a relatively small decrease in the Title I-A grant amounts of other states and LEAs. There has been an ongoing debate about whether the Title I-A formulas are more favorable to densely or less densely populated areas. This debate has centered on the relative emphasis that should be placed on the percentage of formula children versus the count of formula children in an LEA. Under current law, the debate is reflected in the two formula child weighting scales used in the determination of grants under the Targeted Grant and EFIG formulas. An LEA's grant is calculated using whichever weighting scale is more favorable. Both formulas were introduced to enhance targeting toward concentrations of low-income students and both apply weights based on the number of formula children served by LEAs or the percentage of an LEA's students that formula children comprise. The percentage weighting scale (intended to be more favorable to less densely populated areas) applies larger weights than the numbers weighting scale (intended to be more favorable to densely populated areas). This has the appearance of being advantageous to less densely populated areas. However, because the top category in each weighting scale is open-ended, LEAs with large numbers of formula children are often able to apply the highest weights in the scale to larger proportions of formula children. As a result, in general, LEAs whose weighted formula child counts are calculated using the numbers scale receive a higher grant per formula child than LEAs whose grants are calculated using the percentage scale. The expenditure factor used in the Title I-A formulas to account for differences in cost of living has changed over time. Historical changes that have placed bounds on the extent to which variation across states' APPE can influence allocations have resulted in the expenditure factor being more closely tied to national APPE. These changes have generally benefitted states with a state APPE that is less than the national APPE and not benefitted states with a state APPE that exceeds the national APPE. When changes to the expenditure factor that would loosen or remove bounds are examined, such changes typically allow it to vary more closely with state APPE and would favor states with relatively high APPEs and be disadvantageous to those with relatively low APPEs. Current expenditure factors allow for some consideration of variation across states' APPE in allocations but also limit the effect of variation on allocations. Since its initial enactment, the Title I-A program has been intended to address the effects that concentrations of low-income families have on the ability of LEAs to provide "adequate" educational programs. While there are clearly some concerns about whether having a high number or high percentage of formula children should result in larger LEA grants per formula child, there has also been a broader debate about how much to target Title I-A funds on areas with concentrations of poverty and how best to do so. While Title I-A funds currently reach LEAs with varying concentrations of formula children, a proxy measure for concentrations of poverty, the targeting of Title I-A funds on the basis of higher concentrations of formula children has increased over time (measured by either numbers or percentage of such children in LEAs) . The addition of Concentration Grants, Targeted Grants, and EFIG to Title I-A did, to some extent, improve the targeting of funds to LEAs in this manner. Among the four Title I-A formulas, the newest formulas (Targeted Grants and EFIG), which are allocating growing shares of Title I-A funds in recent years, appear to be most effective at targeting funds toward higher concentrations of poverty.