K-12 Education: Special Forms of Flexibility in the Administration of Federal Aid Programs
Released: 2008-01-10T00:00:00

Summary:
Beginning with the Improving America's Schools Act in 1994, and continuing through the Education Flexibility Partnership Act of 1999 and the No Child Left Behind Act of 2001 (NCLB), the authorization of special forms of flexibility for grantees has been a focus of federal K-12 education legislation. These flexibility authorities apply primarily to programs under the Elementary and Secondary Education Act (ESEA), the largest source of federal aid to K-12 education.
In general, federal K-12 education assistance program requirements include activities or outcomes that state or local educational agencies (SEAs, LEAs) are expected to provide or achieve in order to establish accountability for use of funds consistent with the purposes of authorizing statutes. These requirements are usually intended to provide target accountability, ensuring that funds are focused on eligible localities, pupils, and purposes; outcome accountability, ensuring that funds are used effectively to improve student achievement and improve the quality of K-12 instruction; and fiscal accountability, ensuring financial integrity and providing that federal funds constitute a net increase in resources.
Special flexibility authorities allow exceptions to these general requirements; they include Ed-Flex, Secretarial case-by-case waivers, ESEA Title I-A schoolwide programs, flexibility for small rural LEAs, the Innovative Programs block grant, Transferability authority, plus the State and Local Flexibility Demonstration Program (State-Flex and Local-Flex). In general, these authorities: (a) increase the ability of states or LEAs to use federal aid more completely in accordance with their own priorities; (b) are significantly limited in terms of the number of states and LEAs that may participate, the number and size of the programs affected, or the range of requirements that may be waived; (c) sometimes require a degree of accountability based on pupil achievement outcomes in return for increased flexibility, although the primary outcome requirements are applicable to all states and LEAs participating in Title I-A and other ESEA programs; (d) often attempt to require reports on ways in which the authorities have been used and the impact of flexibility on pupil achievement; and (e) have been adopted in a policy context of substantially increased accountability requirements and authorized degrees of flexibility in general with respect to some aspects of the ESEA and related programs.
Major issues regarding special forms of flexibility in federal K-12 education programs include the following: How significant are the degrees of flexibility allowed under these authorities? Is there substantial state or local interest in the authorized forms of flexibility? For what purposes have special flexibility authorities been used in the past, and is there evidence that these have resulted in increased pupil performance or had other major impacts? And are the outcome accountability requirements consistent with the increased flexibility provided under these authorities? ESEA programs are authorized through FY2008, and the 110th Congress is considering whether to amend and extend the ESEA. This report will be updated regularly to reflect major legislative developments and available information.

subsections: section_title: Introduction
paragraphs: Beginning with adoption of the Improving America's Schools Act (IASA) in 1994 ( P.L. 103-382 ), and continuing through enactment of the Education Flexibility Partnership Act of 1999 ( P.L. 106-25 ) and the No Child Left Behind Act of 2001 (NCLB, P.L. 107-110 ), the authorization of special forms of flexibility for grantees has been a major focus of most federal K-12 education assistance legislation. In particular, the NCLB extended some flexibility authorities that had been established earlier, and initiated new ones. This report provides an overview of these authorizations for state and local flexibility in administering federal K-12 education programs. It will be updated infrequently to incorporate major new developments in the implementation of these authorities or new information on their use and impact.
"Flexibility" is defined for purposes of this report as authority under which federal program requirements, particularly restrictions on the use of federal aid, may be waived by, or on behalf of, state or local aid recipients meeting certain eligibility criteria. In some cases, this flexibility is granted in return for meeting specified accountability requirements related to program outcomes. Such flexibility includes provisions for consolidation of multiple programs, or for transfer of funds among programs, so that federal assistance may be used for a broader range of activities or purposes than ordinarily would be allowed, as well as the authority to waive specified types of program requirements.
In general, these flexibility authorities apply to federal aid programs authorized by the Elementary and Secondary Education Act (ESEA), the largest source of federal aid to K-12 education. In contrast, almost none of these authorities involve the second largest source of federal aid, the Individuals with Disabilities Education Act (IDEA). For this reason, as well as the existence of a number of issues regarding requirements and flexibility that are specific to that program, the IDEA will not be discussed further in this report, and discussions of federal involvement in K-12 education in this report should be understood to apply to the ESEA and to exclude the IDEA. ESEA programs are authorized through FY2008, and the 110 th Congress is considering whether to amend and extend the ESEA. This report will be updated regularly to reflect major legislative developments and available information.
This report begins with a review of the general nature of federal K-12 education program requirements, including their sources, purposes, and the concerns expressed by some grantees about them. This is followed by a description of the current special flexibility authorities under which many of these requirements may be waived or otherwise made inapplicable, along with an analysis of issues specific to individual authorities. This section is divided between authorities initially adopted before the NCLB and authorities initiated in that legislation. The report concludes with an analysis of selected cross-cutting issues regarding these special flexibility authorities overall.
section_title: General Nature of Federal K-12 Program Accountability Requirements
paragraphs: We begin this report with a brief review of the general types of program requirements applicable to ESEA and related federal K-12 programs. Many of these requirements may be waived, in part or in whole, for some or all states and LEAs under the special flexibility authorities discussed later. We refer to these as "accountability requirements" because they are intended to provide accountability by assuring that federal funds are used in ways that are consistent with the purposes of the federal statutes authorizing the programs. Typically, federal programs of aid to elementary and secondary education exhibit a mix of relatively specific and explicit requirements in such areas as eligibility of pupils to be served, allocation of funds, or (increasingly) outcomes, along with substantial flexibility in many other important respects, such as instructional methods or grade levels to be served.
Federal K-12 education programs generally focus upon one or more of the following: (a) student populations with special educational needs, such as disadvantaged or limited English proficient (LEP) pupils; (b) a specific aspect of instructional services, such as educational technology or recruitment and professional development of teachers; (c) development, demonstration, and dissemination of innovative instructional approaches, such as charter schools or demonstrations of comprehensive school reform; or (d) a specific subject area, such as instruction in math or science. Most of the larger federal programs, such as ESEA Title I-A, fall into category (a), while several programs of small to moderate size are in categories (b)-(d). Almost all federal K-12 education programs, in all of categories (a)-(d), are sometimes referred to as "categorical" programs, because their focus is targeted or limited in one or more important respects. In contrast, one ESEA program—the Innovative Programs authority of ESEA Title V-A—provides support for such a broad range of activities that it is generally considered to be a "block grant" at the other end of the intergovernmental assistance spectrum.
subsections: section_title: Sources and Forms of Accountability Requirements
paragraphs: There are three general sources of federal requirements or related guidance to state and local recipients of federal aid. An important distinction (at least in theory) can be made between "requirements" and "non-regulatory policy guidance." "Requirements" must be met by grantees, as a matter of law. While they are always derived ultimately from the authorizing statute for a program, or other federal statutes or judicial actions, they may appear in the form of regulations, in addition to statutory text. Program regulations, which are published initially in the Federal Register , then later integrated into annual updates of the Code of Federal Regulations , supplement statutory language primarily with respect to a limited number of major issues or topics which are complex, where U.S. Department of Education (ED) officials place high priority on grantees taking certain specific actions, and where statutory text is deemed by ED to provide insufficient guidance. One example would be ESEA Title I-A requirements regarding curriculum content and pupil performance standards and assessments. In a few cases, authorizing statutes explicitly provide that ED is to publish regulations addressing certain issues, although ED may issue regulations with respect to any aid program which it administers.
subsections: section_title: Non-Regulatory Policy Guidance
paragraphs: In contrast, "non-regulatory policy guidance" is also published by ED for many programs. Such "non-regulatory policy guidance" may be published in the form of extensive questions and answers regarding several aspects of a program, or more specific "Dear Colleague" policy letters from the U.S. Secretary of Education to chief state school officers or other state and local officials. As this designation implies, grantees are not legally required to follow this "guidance," which is generally intended to answer relatively specific questions regarding topics such as uses of funds or selection of pupils to be served. Nevertheless, the typical perception and use of "non-regulatory" guidance may be more complex than this stated intent would imply. Grantees may assume that they will face fewer effective challenges to their use of federal aid if they follow such "non-regulatory" guidance, and may often treat such guidance as if it were equivalent to regulations, even if they are not explicitly "required" to do so.
A somewhat analogous form of "non-regulatory guidance" may be found in the "competitive priorities" established by ED for competitive or discretionary (i.e., not formula) grant programs. In these grant competitions, ED typically sets certain priorities for applications which would receive preferential consideration in the awarding of grants. For example, a priority might be established for applicants which would use funds to provide services in schools with high percentages of pupils from low-income families. While applicants are not required to meet these priorities, it is obvious that they will have a much greater likelihood of receiving support if they do so. These priorities are not "regulations"; they are typically published only in the announcement of the grant competition in the Federal Register .
Over the past several years, especially since adoption of the IASA in 1994, there has been a trend toward the publication of regulations which are less voluminous and address fewer aspects of many federal elementary and secondary education programs than in the past. For several programs, ED has published no regulations at all, implying that guidance in the statute is sufficient and requires no supplementation by regulations, although in most cases some form of "non-regulatory policy guidance" is provided.
For ESEA programs where some regulations are still published, such as ESEA Title I-A, the regulations are generally somewhat briefer, and often address fewer issues, than was the case prior to the early 1990s. For example, proposed program regulations for ESEA Title I-A after enactment of the IASA in 1994 followed a rather "minimalist" approach in that they addressed relatively few program issues, primarily standards, assessments, and accountability; schoolwide programs; participation of children who attend private schools; and allocation of funds within states and LEAs. More recently, following enactment of the NCLB of 2001, ED embraced a similar strategy. With respect to ESEA Title I-A, for example, it has thus far published regulations on a relatively limited number of topics. The Department has stated:
The Secretary intends to regulate only if absolutely necessary; for example, if the statute requires regulations or if regulations are necessary to provide flexibility or clarification for State and local educational agencies. Rather than regulating extensively, the Secretary intends to issue nonregulatory guidance addressing particular legal and policy issues under the Title I programs. This guidance will inform schools, parents, school districts, States, and other affected parties about the flexibility that exists under the statute, including different approaches they may take to carry out the statute's requirements.
section_title: Purposes of Accountability Requirements
paragraphs: Federal K-12 education assistance program requirements include a broad range of activities, services, or outcomes that SEAs, LEAs, and other aid grantees are expected to provide, perform, or achieve with, or in return for, federal grants, in order to show evidence that program goals are being met—that is, to establish accountability for appropriate use of federal aid funds. Federal elementary and secondary education program requirements are usually intended to provide one or more of three basic types of accountability for use of funds consistent with the purposes of statutes that authorize the programs. These intended forms of accountability include
target accountability : assuring that funds are focused on eligible localities, pupils, and purposes, usually for the ultimate purpose of promoting more equal educational opportunities; outcome accountability : assuring that funds are used effectively to improve student achievement and enhance the quality of K-12 instruction—either in specific subject areas or for particular types of pupils, or overall; and fiscal accountability : assuring financial integrity and providing that federal aid funds constitute a net increase in resources for the eligible pupils or purposes, rather than potentially replacing (supplanting) state or local funds that would otherwise be available for the same purpose.
Specific types of requirements intended to support one or more of these purposes include requirements to
target resources on specific "high need" pupil groups or types of localities or schools, limit the authorized uses of funds to certain high priority types of services, conduct audits or assure that federal funds supplement, and do not supplant, state and local resources, enhance parental participation or provide for equitable treatment of pupils attending non-public schools, implement minimum qualifications for school staff, report to parents and the general public of information on program activities and their impact, meet certain student achievement and other outcome goals, and evaluate the effectiveness of federally supported instructional services.
Grantees that violate any of these types of regulations implicitly face the possibility of having to repay funds to the federal government, or being prohibited from receiving further grants, although such sanctions are rarely invoked. In some cases, authorizing statutes explicitly provide for more limited, specific sanctions for states or LEAs which fail to meet some requirements.
In addition to such program-specific requirements, a number of general requirements apply to all recipients of federal education assistance under any program. Many of these are published in the Education Department General Administrative Regulations (EDGAR), as well as the financial management requirements contained in relevant "circulars" published by the Office of Management and Budget (OMB). Other regulations that are generally applicable to ED programs include those related to civil rights and privacy of student records. LEAs that participate in the federal child nutrition programs administered by the Department of Agriculture must comply with a variety of related requirements—for example, they must provide free or reduced-price school lunches to pupils from low-income families. Finally, federal regulations published by federal agencies other than ED may be applicable to LEAs and schools in their role as employers (e.g., regulations related to workplace safety, environmental protection, access for persons with disabilities, labor relations, etc.).
However, state and local educational agencies are given wide latitude in other aspects of the use of federal education assistance. Such matters as grade levels, subject areas, and instructional techniques have typically been left almost totally to state and local discretion. If a requirement is applied to instructional methods under the ESEA and related programs—for example, the requirement applied to selected programs under the NCLB that instructional methods be "scientifically based"—it is almost always broad, leaving great scope to state and LEA discretion.
section_title: Concerns About Selected Federal Program Requirements
subsections: section_title: Program-Specific Requirements
paragraphs: Complaints about ESEA and related program-specific requirements by proponents of greater flexibility are often focused on a selected range of particular types of requirements. Program-specific requirements that are often the focus of criticism include (a) explicit or implicit prohibitions against commingling (mixing) of funds under different federal programs with each other or with revenues from state and local programs; (b) restrictions on the use of resources purchased with federal program funds for activities other than those conducted under that program; (c) requirements that aid be targeted on certain types of pupils or schools; (d) eligibility thresholds for special forms of flexibility (e.g., ESEA Title I-A schoolwide programs); and (e) ESEA Title I-A outcome accountability requirements under the NCLB.
In general, prohibitions against commingling of funds—(a) above—arise from efforts to establish fiscal accountability. Restrictions on the use of instructional resources to the pupils eligible to be served (b), as well as requirements to target aid on pupils and schools with the greatest incidence of poverty (c), are intended to focus limited federal funds on those with the greatest needs. The eligibility thresholds for certain forms of flexibility, such as ESEA Title I-A schoolwide programs (d), have rationales that are discussed later in this report. Finally, the new or expanded outcome accountability requirements (e), which are a key element of the NCLB, are intended to increase the effectiveness of federally supported education services and to help shift the focus away from other types of requirements toward improved outcomes.
Nevertheless, from a state or local perspective, these requirements may sometimes seem to be unnecessarily inflexible, especially in relatively low enrollment LEAs that may receive small grants under each of a variety of federal programs. While the categorical approach of most of the larger ED programs directs aid at high-need pupil groups like disadvantaged and LEP pupils, such an approach may have undesirable (and unintended) effects. Some of these effects may include fragmentation of services to children, with challenges for coordinating special program instruction with their regular instruction; inefficient use of resources, that may remain unused when not required by the special needs pupils; treatment of partial needs when a more coherent focus on the whole child and her/his entire instructional program might be more effective, especially with respect to children with multiple special needs; or instruction of pupils in separate settings, whether or not this is explicitly required by the legislation, when this might not be the most effective instructional technique. The traditional federal categorical approach has been criticized as leading to fragmented instruction, and focusing more on targeting resources and inputs than on improving achievement and other outcomes for pupils. Difficulties may also arise from efforts to implement federal programs in states and LEAs with widely varying educational policies and demographic conditions.
Some of these problems with categorical program structures and associated requirements may be based on misunderstandings of the requirements of federal statutes and regulations, or overly strict state or local interpretations of these. Others may be the inevitable effects of efforts to ensure that federal aid is focused on pupils most in need, coupled with grantee efforts to avoid problems with federal program monitoring and audits. Whatever their basis, and regardless of whether regulatory burdens have been reduced in recent years, state and local education officials sometimes complain about these, and other, constraints on the use of federal funds.
section_title: Cross-Cutting Requirements
paragraphs: A 1998 Government Accountability Office (GAO) report, based on a survey of staff in a nationally representative sample of LEAs, concluded that in addition to the program-specific varieties of requirements discussed above, LEA staff frequently expressed concern about certain cross-cutting requirements applicable to recipients of federal K-12 education assistance. First, LEA staff complained that it was difficult to obtain current, accurate, and concise information on the wide variety of federal requirements with which they must comply, and that existing sources of technical assistance on these matters were inadequate. The authors of the GAO report concluded that LEA staff often respond to such information gaps in a cautious manner that unnecessarily limits their flexibility—namely, that they often are unaware of, or do not exercise, degrees of flexibility that are available to them. Second, staff in most of the surveyed LEAs expressed concern about the costs of meeting their administrative responsibilities under federal education programs, including the preparation of required reports. Finally, LEA staff indicated that meeting required timelines and other "logistical and management challenges" associated with federal K-12 education programs presented substantial difficulties.
section_title: Special Flexibility Authorities Initiated Before Enactment of the No Child Left Behind Act of 2001
paragraphs: Prior to enactment of the NCLB, several authorities were adopted that allow the waiver of many types of federal K-12 program requirements by, or on behalf of, SEAs and LEAs. Each of them is limited with respect to either the types of requirements that can be waived, the specific ESEA and other programs affected, or the number of states or LEAs that are currently eligible. Some require waivers to be requested on a case-by-case basis, while others offer "blanket" waiver authority. Further, some of these authorities require some form of additional accountability in terms of pupil outcomes, while others do not.
In addition to two general types of waiver authorities, Ed-Flex and Secretarial case-by-case waivers, a high degree of school-level flexibility in the use of funds under several federal programs is provided under the schoolwide program authority under ESEA Title I-A, an exceptional range of flexibility in the use of funds is provided under the Innovative Programs block grant, and an authority for flexibility in small, rural LEAs was initially adopted as part of FY2001 appropriations legislation for ED. These five types of special flexibility, which were initiated before adoption of the NCLB of 2001, are described below. The succeeding section of this report discusses forms of flexibility initiated in the NCLB. Note that in cases where a previously initiated special flexibility authority was significantly amended by the NCLB, the current (amended) version is described below.
subsections: section_title: Ed-Flex
paragraphs: Under Ed-Flex, ED is authorized to delegate to SEAs in participating states authority to waive, on behalf of LEAs or schools in that state, a range of requirements under selected ESEA programs. Ed-Flex authority was initially authorized for up to six states in the 1994 Goals 2000: Educate America Act ( P.L. 103-227 ). It was expanded to a maximum of 12 states in FY1996 appropriations legislation for ED ( P.L. 104-134 ). It was modified, and the cap on the number of participating states was removed, by the Education Flexibility Partnership Act of 1999 ( P.L. 106-25 ). Technical amendments were made to P.L. 106-25 by the NCLB of 2001. Finally, legislation was enacted in 2006 to extend Ed-Flex authority until the next reauthorization of ESEA Title I, Part A ( P.L. 109-211 ).
The original Ed-Flex authority was granted to 12 states, and Ed-Flex status under P.L. 106-25 was obtained by 10 states: Colorado, Delaware, Kansas, Maryland, Massachusetts, North Carolina, Oregon, Pennsylvania, Texas, and Vermont. No state has been granted Ed-Flex authority since January 2002, and the authority under P.L. 106-25 for ED to grant Ed-Flex authority to additional states expired at the end of FY2004. Ed-Flex authority is granted to a state for up to five years, and the recent congressional action ( P.L. 109-211 ) addressed the prospect that authority would otherwise have expired for all of the 10 Ed-Flex states by January 2007. Under P.L. 109-211 , all states with Ed-Flex authority as of September 30, 2004 (this includes all 10 states that received Ed-Flex authority under P.L. 106-25 ) retain that authority until enactment of legislation to reauthorize ESEA Title I, Part A. However, P.L. 109-211 does not provide authority for ED to extend Ed-Flex authority beyond these 10 states.
States participating in Ed-Flex must commit themselves to waiving state, as well as federal, requirements affecting LEAs and schools in the state. States must also meet the requirements for adoption of curriculum content and pupil performance standards, and assessments linked to these, under ESEA Title I-A. States are to monitor the performance of LEAs and schools for which federal or state requirements are waived, and submit annual reports on these outcomes to ED.
The federal programs to which Ed-Flex applies are ESEA Titles:
I-A (Education for the Disadvantaged), I-B-3 (William F. Goodling Even Start Family Literacy Programs), I-C (Education of Migratory Children), I-D (Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At-Risk), I-F (Comprehensive School Reform Program), II-A (Teacher and Principal Training and Recruiting Fund), II-D-1 (State and Local Technology Grants), III-B-4 (Emergency Immigrant Education Act) if Title III-A is not in effect, IV-A-1 (Safe and Drug-Free Schools and Communities), and V-A (Innovative Programs),
plus
the Carl D. Perkins Vocational and Applied Technology Education Act (Perkins Act).
These include most of the ESEA programs that are administered via SEAs and that allocate funds by formula ("state-administered programs"). ED has also interpreted the Ed-Flex statutes as providing authority for participating states to waive some cross-cutting administrative requirements of the General Education Provisions Act (GEPA) and the Education Department General Administrative Regulations (EDGAR) that apply to the above programs.
Several types of requirements may not be waived by Ed-Flex states, unless the underlying purposes of the statutory requirements are otherwise met to the satisfaction of the Secretary of Education. These include requirements related to:
fiscal accountability (e.g., requirements for LEAs or SEAs to maintain their level of spending for specified educational services; to use federal aid only to supplement, and not supplant, state and local funds for specified purposes; or to provide state and local funding that is comparable in all schools of an LEA), equitable participation by private school pupils and teachers, parental involvement in program activities and services, allocation of funds to states or LEAs, certain ESEA Title I-A school selection requirements, and applicable civil rights requirements.
With the exception of statewide "blanket" waivers, LEAs or schools requesting waivers in Ed-Flex states must apply to their SEA, providing information analogous to that required for LEAs requesting waivers directly from ED (see the following section of this report). SEAs may not waive requirements applicable to the SEAs themselves. In all cases, SEAs must be satisfied that "the underlying purposes of the statutory requirements of each program or Act for which a waiver is granted continue to be met." Local waivers are to be terminated if student performance has been inadequate to justify their continuation, or performance has declined for two consecutive years (unless there are exceptional or uncontrollable circumstances).
States are required to submit annual reports on waivers they have granted; beginning with the second annual report, information on the effects of waivers on student performance must be included. Further, beginning two years after enactment of P.L. 106-25 (i.e., April 29, 2001), and annually thereafter, ED is to make these state reports available to Congress and the public, and to submit to Congress a report summarizing the state reports, including information on the effects of Ed-Flex waivers on state reform efforts and pupil performance. While such a report was prepared in 2001, it contained no information on the use of Ed-Flex authority by states or programmatic impacts, in part because it focused only on activities under the new authority in P.L. 106-25 , overlooking ongoing activities in the 12 states that had received Ed-Flex authority earlier (even in cases where the same states were involved). Apparently, no subsequent annual reports have been published by ED.
section_title: Secretarial Case-by-Case Waiver Authorities
paragraphs: A second type of federal education program flexibility authority consists of waivers that may be granted to SEAs or LEAs on a case-by-case basis, directly by the U.S. Secretary of Education. While there are at least three such authorities affecting K-12 education programs, the following discussion will focus primarily on the most broadly applicable and frequently utilized of these, which is in Title IX, Part D of the ESEA, as amended by the NCLB. Under this provision, the Secretary of Education is authorized to waive most requirements associated with any program authorized by the ESEA. The waivers must be specifically requested by SEAs, LEAs, Indian tribes or schools (via their LEAs). Waiver requests must include "specific, measurable educational goals ... and the methods to be used to measure annually such progress for meeting such goals and outcomes" for pupils eligible to be served by the relevant programs.
With respect to types of requirements that may not be waived, the provisions regarding case-by-case waivers are generally the same as those for the Ed-Flex program. However, there are four types of requirements that may not be waived under the ESEA Title IX-D case-by-case waiver authority in addition to those that cannot be waived under Ed-Flex: (1) prohibitions against consideration of ESEA funds in state school finance programs; (2) prohibitions against use of funds for religious worship or instruction; (3) certain prohibitions against use of funds for sex education (under ESEA Title IX, Section 9526); and (4) the eligibility requirements for charter schools under the Public Charter Schools program (ESEA Title V-B-1). ESEA Title IX-D also has no authority analogous to the Ed-Flex provision that requirements generally not subject to waiver may be waived if the underlying purposes of the statutory requirements continue to be met to the satisfaction of the Secretary.
Waivers granted under the authority of ESEA Title IX-D may not exceed four years, except that they may be extended if the Secretary determines that the waiver has contributed to improved student achievement and is in the public interest. In contrast, waivers are to be terminated if the Secretary determines that pupil performance or other outcomes are inadequate to justify continuation of the waivers, or if the waiver is no longer necessary. The Secretary of Education is required to publish a notice of the decision to grant a waiver in the Federal Register . According to a memorandum from ED's Office of the Inspector General dated April 5, 2007, the Department had failed for several years to publish such notices. Apparently in response to a draft version of this memorandum, ED did publish (on March 12, 2007) a list of waivers granted under ESEA Title IX-D between the enactment of the No Child Left Behind Act of 2001 ( P.L. 107-110 ) in January 2002 and December 31, 2006. A total of 197 waivers were granted during this period; however, relatively few of these were substantive. Almost two-thirds (128 or 65%) were waivers of a 5.0% administrative cost limitation on formula grants for Indian education under ESEA Title VII, Part A, and another 24 were extensions of the period during which funds under an ESEA program could be obligated. Of the remaining 45 waivers granted, 18 were related to the impact of Hurricanes Katrina and Rita in 2005, 5 were granted to allow states to participate in a pilot program using growth models of adequate yearly progress, 6 allowed LEAs to provide supplemental educational services (SES) rather than school choice in schools during their first year of improvement under the ESEA Title I-A accountability provisions, and 6 allowed LEAs identified as needing improvement to act as SES providers. The remaining 10 "general programmatic waivers" allowed exceptions to the ESEA Title I-A requirements for fiscal accountability (comparability) or school selection and allocation, or to a limitation on authority to consolidate state administrative funds under a variety of ESEA programs.
The Secretary is also required under ESEA Title IX-D to submit to Congress annual reports on the effects and effectiveness of waivers that have been granted, beginning in FY2002. It is not clear that any such reports have been submitted.
subsections: section_title: Charter Schools Waiver Authority
paragraphs: A second case-by-case waiver authority affects only schools participating in the Public Charter Schools (PCS) program authorized by ESEA Title V, Part B. A distinctive aspect of the PCS waiver authority (ESEA Section 5204(e)) is that none of the limitations on types of requirements that may be waived, as listed above for Ed-Flex and the ESEA Title IX-D waiver authority, apply to the PCS waiver authority. Under the PCS authority, any requirement over which the Secretary of Education "exercises administrative authority" may be waived, with the sole exception of requirements associated with the definition of a charter school eligible to receive PCS funds (ESEA Section 5210(1)). However, this authority has been used infrequently and for relatively limited purposes, and therefore will not be discussed further in this report.
section_title: School-Level Flexibility: ESEA Title I-A Schoolwide Programs
paragraphs: Schools participating in the ESEA Title I-A program at which 40% or more of the pupils are from low-income families are eligible to conduct schoolwide programs with a broad and substantial degree of flexibility in the use of funds under almost all federal education programs. In a schoolwide program, federal aid provided under Title I-A plus many other federal K-12 education programs may be used to improve services to all pupils, rather than limiting services to particular pupils deemed to be the most disadvantaged. If they meet the intent and purposes of Title I-A and the other federal programs, and address the needs of the programs' intended beneficiaries, schoolwide programs are exempted from a variety of regulations under Title I-A and most other programs, with specified exceptions, such as regulations regarding health, safety, civil rights, parental participation, services to private school pupils and teachers, or fiscal accountability. Title I-A and other federal program funds must be used so that they supplement, and do not supplant, other federal and non-federal funds that the school would otherwise receive. Further, only commingling or flexibility in the use of funds is authorized with respect to the IDEA in schoolwide programs; all of the IDEA's programmatic requirements must still be met.
Although the schoolwide program authority applies to a wide variety of federal K-12 education programs, it is of significance primarily with respect to Title I-A. This is because almost all of the other programs affected typically are focused on LEAs overall, not individual schools. Further, to the extent that the non-Title I-A programs are focused on individual schools, they are not otherwise (i.e., in schools not eligible to conduct schoolwide programs) focused on groups of pupils with specific educational needs (except for the IDEA, where the schoolwide program authority is specifically limited). Nevertheless, the ability to use Title I-A funds on a schoolwide basis, combining them with state and local funds without the need for separate accounting, is in itself quite a significant form of flexibility in comparison to the traditional "targeted assistance" Title I-A program format, under which funds may be used only to serve the lowest achieving individual pupils in a school.
There are few additional requirements that schoolwide programs are required to meet in return for this increased flexibility. The number of schoolwide programs has grown rapidly in recent years, and a large majority of the pupils served by Title I-A are now in schoolwide programs; they constitute more than half of Title I-A schools and a large majority of pupils participating in Title I-A programs. The eligibility threshold for schoolwide programs was reduced from 50% to 40% of pupils from low-income families by the NCLB. Before this, many of the Ed-Flex and other waivers granted between 1994 and 2001 had allowed schools below the 50% threshold to operate schoolwide programs.
The rationale for providing schoolwide program authority to relatively high poverty schools is that (a) in such schools, all pupils are disadvantaged, so most pupils are in need of special assistance, and it seems less equitable to select only the lowest-achieving individual pupils to receive Title I-A services, and (b) the level of Title I-A grants should be sufficient to meaningfully affect overall school services in high poverty schools, since these funds are allocated on the basis of the (relatively large) number of low-income pupils in these schools. The NCLB has reduced the eligibility threshold to a level that is approximately the national average percentage of pupils from low-income families, which may raise questions regarding the validity of both aspects of this rationale for schools that just meet the new threshold. In addition, there is little direct evidence of the achievement effects of this expansion of schoolwide programs.
section_title: Flexibility for Small, Rural LEAs
paragraphs: A form of flexibility under which small, rural LEAs may transfer funds among selected ESEA programs was initially authorized under P.L. 106-554 , the Consolidated Appropriations Act of 2001. It was extended in essentially similar form by the NCLB.
The Rural Education Achievement Program (REAP), under ESEA Title VI-B, includes both a pair of grant programs for rural and/or small and relatively high poverty LEAs, plus a special flexibility authority for certain rural LEAs. Only the latter is relevant to this report and is described below.
LEAs with total average daily attendance below 600 pupils, or which are located in a county with a population density of fewer than 10 persons per square mile, and in which all schools are classified as being in rural locations, may combine or transfer any funds received under ESEA Titles II-A (Teacher and Principal Training and Recruiting Fund), II-D (Enhancing Education Through Technology), IV-A (Safe and Drug-Free Schools and Communities), and V-A (Innovative Programs block grant). These funds may be used for any activity authorized under any of these programs or under ESEA Titles I-A (Education for the Disadvantaged), III (English Language Acquisition and Enhancement), and IV-B (21 st Century Community Learning Centers).
The primary rationale for this authority is that the smallest LEAs need special flexibility due to the small size of grants which they receive under a number of separate programs. These amounts, typically based in large part on LEA enrollment, are often too small to support separate programs of sufficient size and scope to be effective. Allowing such LEAs to combine and/or transfer funds among a limited range of program activities may facilitate more effective use of those funds.
The degree of special flexibility provided to eligible small, rural LEAs under this "REAP Flex" authority is similar to a different Transferability authority (described below) that is available to almost all LEAs under the NCLB. The major differences are that the small, rural LEA authority applies to 100% of the funds under the affected programs, while the broader Transferability authority applies to only 50% (or in some cases less) of such funds; and the small, rural LEA authority includes more programs into which funds may be transferred (ESEA Titles III and IV-B). In addition, perhaps the greatest advantage of the small, rural schools flexibility authority is that LEAs eligible for it are also eligible for supplementary grants that may be used for any of the purposes for which combined or transferred funds may be used under the flexibility authority.
According to a study released by ED in July 2007, participation in REAP Flex is widespread, with approximately 4,781 LEAs eligible and an estimated 51% of these participating in the rural LEA flexibility authority in 2005-2006. LEAs participating in REAP Flex most often transferred funds out of ESEA Titles II-A (Teacher and Principal Training and Recruiting Fund) and IV-A (Safe and Drug-Free Schools and Communities), and most frequently into Titles I-A (Education for the Disadvantaged) and V-A (Innovative Programs block grant). Rural LEAs reported that they found this flexibility to be particularly useful because the amount of formula allocations they received under many of the eligible programs was too small to fund substantial school improvement activities. The authors of this evaluation also found a significant amount of confusion at the LEA level between REAP Flex and the general Transferability authority, with several LEAs that are eligible for both not clear on which authority they are using.
section_title: The Federal K-12 Education Block Grant: ESEA Title V-A
paragraphs: Finally, one individual ED program is worthy of mention in the context of special forms of flexibility for states and LEAs in the use of federal aid funds: ESEA Title V-A, Innovative Programs. Although the identification of aid programs as "categorical" versus "block grants" is always somewhat judgmental, ESEA Title V-A is the one major K-12 education program currently administered by ED that is almost universally considered to be a block grant. In the field of education, block grants are aid programs covering an exceptionally wide range of educational activities and types of students, and providing a great deal of flexibility to states and LEAs in using the funds. They are often constructed through consolidation of a number of preceding categorical programs that are more limited in the purposes or activities they support; in the case of Title V-A, the initial consolidation took place in 1981.
After reservation of 1% of appropriations for grants to the Outlying Areas, ESEA Title V-A funds are allocated to the 50 states, the District of Columbia and Puerto Rico in proportion to their total population aged 5-17 years, except that no state is to receive less than 0.5% of total grants to states. A majority of Title V-A funds must be allocated by SEAs to LEAs on the basis of state-developed formulas. These formulas must meet general criteria of taking into consideration each LEA's enrollment of pupils in public and private (non-profit) schools, and incorporating adjustments to provide increased grants per pupil to LEAs with the greatest numbers or percentages of "high cost" pupils, including those from economically disadvantaged families and those living in sparsely populated areas or areas of concentrated poverty.
The specific minimum percentage of funds that must be suballocated to LEAs varies depending on the program's aggregate funding level and whether the state receives the minimum grant amount (0.5% of total grants to states). All states must suballocate to LEAs an amount equal to at least 85% of the grant which they received under this program for FY2002. In addition, most states are to suballocate to LEAs 100% of their Title V-A grants in excess of the FY2002 level; however, for states receiving the minimum grant amount, the minimum share of Title V-A grants above the FY2002 level that must be suballocated to LEAs is only 50%.
Of the funds that may be retained by states, no more than 15% may be used for administrative costs; the remainder is to be used for one or more of seven specified types of programs and services. The latter include the design and implementation of pupil assessments; implementation of achievement standards; planning and implementation of charter schools; independent analysis and reporting on LEA achievement; (apparently) the implementation of policies to offer public school choice options to pupils attending unsafe schools; school repair and renovation; and a broad category of "statewide education reform, school improvement programs and technical assistance and direct grants to" LEAs (Section 5121(3)).
LEAs may use their Title V-A funds for any of 27 different types of "innovative assistance programs" listed in Section 5131. Several of these are relatively specific, such as planning and implementation of charter schools, "programs to provide same gender schools and classrooms (consistent with applicable law)," or programs to hire and support school nurses. Others are broad, such as "promising education reform projects," "activities that encourage and expand improvements throughout the area served by the local educational agency," or "programs to improve the academic achievement of educationally disadvantaged elementary and secondary school students." It is essentially because of the existence of these broad, "catchall" categories of authorized use of funds by LEAs and states that Title V-A is generally considered to be a block grant. In addition, the statute includes a prohibition against SEAs exercising influence over LEA decisions on how Title V-A funds will be used.
subsections: section_title: State and Local Experience with the ESEA Title V-A Block Grant
paragraphs: The program now authorized by ESEA Title V-A was first enacted in 1981 ( P.L. 97-35 ) as Chapter 2 of the Education Consolidation and Improvement Act (ECIA), which consolidated more than 40 previous federal K-12 education programs. Chapter 2 was the legislative response to a Reagan Administration proposal for a much broader block grant into which almost all federal K-12 education programs would have been consolidated. The block grant initially reduced the number of federal education programs. However, many new categorical programs were authorized in the years immediately following adoption of the consolidated program, including some that were essentially direct successors to programs initially consolidated into the block grant (e.g., aid for magnet schools).
The most recent study by ED of the program ( Study of Educational Resources and Federal Funding: Final Report , August 2000), based on a survey of a representative sample of LEAs, found that 58% of recipient LEAs used "a great deal" of their Title V-A funds for instructional materials, while 39% of LEAs used substantial funds for educational technology, and 34% of LEAs for supplemental targeted academic services. Large LEAs were found to be especially likely to use Title V-A funds for teacher professional development services and school-based improvement efforts. Resources or services funded by this program were found to be infrequently targeted at particularly high-need pupils or schools. It was also reported that the primary factors influencing decisions on the use of Title V-A funds were long-term LEA plans and the priorities of individual schools.
Appropriations have steeply declined over the life of Title V-A, from $442 million in FY1982, the first year of funding, to $99 million for FY2007. Further, P.L. 110-161 , the Consolidated Appropriations Act for FY2008, provides zero funds for Title V-A, raising the possibility that the program is being effectively terminated, at least in terms of direct appropriations. One reason for this trend is that there have been few constituencies promoting increased funding for the program. Although it is apparently popular with a broad range of state and local public education officials, as well as many private school administrators, its support seems to be diffuse. In recent years, the direct appropriation for Title V-A has been supplemented by funds transferred into the programs under the REAP Flex (see above) and Transferability (see below) authorities, and this trend seems likely to continue as possibly the only source of funding for this program.
Limited information on the effects of Title V-A services may have reduced incentives to maintain the program's funding level. Title V-A has tended to receive less favorable treatment in funding decisions than programs that could demonstrate targeting of funds, or a linkage to improved educational outcomes, particularly for high need pupil groups. In part to address this concern, ESEA Title V-A was amended by the NCLB to require participating states to prepare, and submit to ED, annual summaries of "how assistance under this part is contributing toward improving student academic achievement or improving the quality of education for students" (Section 5122(a)(2)). As discussed in later sections of this report, authorities under the NCLB would allow SEAs and LEAs to increase their Title V-A funding by transferring a portion of the funds they receive under selected other federal programs into Title V-A, if they choose to do so.
section_title: Other Pre-NCLB Flexibility Authorities
paragraphs: Finally, a number of additional provisions initially adopted in the years preceding enactment of the NCLB are sometimes cited as providing increased flexibility to states and LEAs. These are not discussed in detail here because their potential impact is substantially more marginal than those of the flexibility authorities described above, and/or their impact is primarily in the area of administrative convenience for SEAs or LEAs. These additional forms of flexibility include authority for consolidated SEA or LEA applications, plans, or reports for a number of ESEA and related programs; and authority to consolidate certain funds used for SEA or LEA administration of federal programs. These authorities are provided currently in Parts B and C of ESEA Title IX.
section_title: Flexibility Authorities Initiated in the No Child Left Behind Act of 2001
paragraphs: The No Child Left Behind Act of 2001 (NCLB), signed into law on January 8, 2002 ( P.L. 107-110 ), initiated a number of flexibility authorities for ESEA programs, which are described below. The NCLB also expanded and/or extended certain forms of flexibility which had been initiated earlier, such as lowering the eligibility threshold of ESEA Title I-A schoolwide programs; these NCLB amendments were discussed above.
subsections: section_title: Transferability Authority
paragraphs: Title VI, Part A, Subpart 2 of the ESEA, as amended by the NCLB, allows most LEAs to transfer up to 50% of their formula grants among four ESEA programs: Teacher and Principal Training and Recruiting Fund (Title II-A), State and Local Technology Grants (Title II-D-1), Safe and Drug Free Schools and Communities (Title IV-A-1), and the Innovative Programs block grant (Title V-A). The affected shares of funds may also be transferred into , but not from , ESEA Title I-A. LEAs which have been identified as failing to meet state adequate yearly progress (AYP) requirements will be able to transfer only 30% of their grants under these programs, and only to activities intended to address the failure to meet AYP standards. Further, according to guidance from ED, LEAs subject to corrective actions under Title I-A may not exercise this authority at all.
States may transfer up to 50% of the relatively limited amount of program funds over which they have authority, except for administrative funds, among the first four of these programs plus the 21 st Century Community Learning Centers program. Thus, states could not transfer either any of the funds they are required to suballocate to LEAs or funds reserved for state administration, so the significance of this Transferability authority for states is limited.
The overall scale of the programs subject to this authority is moderately significant—the FY2008 appropriations for the four programs subject to LEA Transferability authority total approximately $3.5 billion. The Transferability authority is relatively simple and straightforward; it is available to most LEAs without the need for specific application or approval (although state or LEA plans must be modified to reflect the transfers, and LEAs must inform their SEA). Further, the range of purposes for which transferred funds might be used is especially wide, given that one of the programs into which funds could be shifted is the Innovative Programs block grant. Nevertheless, all program requirements continue to apply to the transferred funds, including any requirements regarding shares of program funds which must or may be used for specified purposes; funds cannot be transferred across fiscal years; and all of the affected programs would continue to exist in places where the authority is exercised, since no state or LEA could transfer more than 50% of its funds out of any program.
According to a study released by ED in July 2007, participation in Transferability is relatively modest, with approximately 12-16% of LEAs participating in 2005-2006. Estimates of the level of participation are complicated in part by the significant confusion at the LEA level between REAP Flex and Transferability authorities, as well as many instances of conflicting reports on use of Transferability between LEAs and SEAs (i.e., cases where states identified LEAs as participating in the programs but the LEAs reported that they did not, and vice-versa). As with REAP Flex, LEAs participating in Transferability most often moved funds out of ESEA Title II-A (Teacher and Principal Training and Recruiting Fund) and, to a lesser extent, Title IV-A (Safe and Drug-Free Schools and Communities), and most frequently into Titles I-A (Education for the Disadvantaged) and V-A (Innovative Programs block grant).
Many LEAs reported using Transferability to partially compensate for reductions in formula grants under ESEA Title I-A and V-A, to better target resources on schools failing to meet adequate yearly progress standards under Title I-A, or to be able to use funds with the high degree of flexibility allowed under Title V-A. According to this evaluation report, the reasons most frequently cited by LEAs for not participating in Transferability included a lack of information about the authority, satisfaction with the existing level of flexibility under affected federal programs, or funding levels too low to carry out desired activities even if the Transferability authority were exercised.
section_title: State and Local Flexibility Demonstration Program
subsections: section_title: State-Flex
paragraphs: Under a new State and Local Flexibility Demonstration Act (ESEA Title VI, Part A, Subpart 3), up to seven states, selected on a competitive basis after peer review, may be authorized to consolidate all of their state administration and state activity funds under the Education for the Disadvantaged (Title I-A), Reading First (Title I-B-1), Even Start (Title I-B-3), Teacher and Principal Training and Recruiting Fund (Title II-A), State and Local Technology Grants (Title II-D-1), Safe and Drug Free Schools and Communities (Title IV-A-1), 21 st Century Community Learning Centers (Title IV-B), and Innovative Programs block grant (Title V-A) programs. Under this "State-Flex" authority, the consolidated funds can be used for any purpose authorized under any ESEA program (i.e., not just the activities authorized by the programs whose funds may be consolidated).
This authority would be granted to states for a period of five years; states would lose the authority if they fail to meet state AYP requirements for two consecutive years. ED may also terminate the authority at any time if a state fails to comply with the terms of the flexibility authority. On the other hand, if all of the requirements associated with this authority have been met at the end of five years, the authority is to be renewed.
Each of the selected states is to enter into local performance agreements with between 4 and 10 LEAs; at least one-half of these LEAs must have school-age child poverty rates of 20% or more (slightly above the national average of approximately 18%). These LEAs may consolidate funds under the provisions of the local flexibility authority described below. These LEAs would be required to align the use of the funds they consolidate under this authority with the state's uses of the funds which it consolidates. In addition, participating states may specify the purposes for which all LEAs in the state use the funds they receive under the ESEA Title V-A Innovative Programs block grant. This is in contrast to the general rule, noted above, that LEAs may use Title V-A funds for whatever purpose they choose (among the wide range of purposes authorized in Title V-A).
Thus far, State-Flex authority has been granted to only one state, Florida. However, Florida withdrew before beginning to implement its State Flex plan. Therefore, thus far, no state has ever participated in the State-Flex program .
section_title: Local-Flex
paragraphs: Under a companion "Local-Flex" authority, up to 80 LEAs (no more than three per state initially), plus the 4-10 LEAs per state that enter into agreements under the state flexibility demonstration above, would be allowed to consolidate all of their funds under the Teacher and Principal Training and Recruiting Fund (Title II-A), State and Local Technology Grants (Title II-D-1), Safe and Drug Free Schools and Communities (Title IV-A-1), and Innovative Programs block grant (Title V-A) programs, and to use these funds for any purpose authorized under any ESEA program. LEAs may use no more than 4% of the consolidated funds for administration. The authority would be granted for a period of five years; LEAs would lose the authority if they fail to meet state AYP requirements for two consecutive years, or if they fail to comply with the requirements of the flexibility agreement. If LEAs meet the goals established in their agreements, their authority would be renewed for another two-year term.
Under both the state and local flexibility demonstration programs, a limited number of specified types of requirements—including those regarding civil rights, fiscal accountability (particularly the requirement that funds be used only to supplement, and not supplant, non-federal funds), and equitable participation by private school pupils and teachers—may not be waived. Participating states and LEAs must also prepare and widely disseminate annual reports on how consolidated funds are used under this authority. However, program requirements other than those specified would not apply to the consolidated funds.
Only one LEA—Seattle, Washington—has ever participated in the Local-Flex program. Seattle's eligibility to participate has at least temporarily been suspended, because the LEA failed to make AYP for two consecutive years. Reportedly, Seattle has recently applied for a new Local-Flex agreement.
section_title: Competition for State-Flex and Local-Flex Authority
paragraphs: Beginning in Spring 2002, ED conducted a multifaceted, sometimes complex, series of competitions for State-Flex and Local-Flex authority. However, there has ultimately been very little interest by states and LEAs in obtaining these authorities. As noted above, currently only one LEA has ever participated in Local-Flex, and no states in State-Flex. One state, and eight associated LEAs, initially received approval to participate in these programs, but they subsequently withdrew. With respect to both State-Flex and Local-Flex, a recent ED study reported that major barriers to participation included additional responsibilities but few or no clear benefits, limited organizational capacity (especially during a period when many new NCLB requirements had to be met), and limited dissemination of information about the programs.
A new round of competition for these authorities began on March 18, 2004, when ED published in the Federal Register an announcement of a new, simultaneous round of competition for both State-Flex and Local-Flex. There is no deadline for this competition. The announcement indicated that, as an extra inducement to apply, states and LEAs participating in State-Flex or Local-Flex would receive preference in future competitions for grants under relevant discretionary grant programs administered by the Department. The rationale offered for this preference is that "...State-Flex and Local-Flex participants have undergone comprehensive planning to improve teacher quality and the academic achievement of all students, especially disadvantaged students, and are held to a higher degree of accountability...."
section_title: Comparison With Other Flexibility Authorities in the No Child Left Behind Act
paragraphs: In comparison to the Transferability authority described earlier, State-Flex and Local-Flex are relatively broad, since all of the funds under the affected programs may be involved, the funds may be used for any purpose authorized under any ESEA program (including the exceptionally wide range of activities authorized under Title V-A), and only a comparatively small number of specified program requirements apply to the use of these funds. At the same time, the scope of State-Flex and Local-Flex is more narrow in the sense that only a maximum of seven states (and 4-10 LEAs in each of these), plus up to 80 LEAs in other states, may participate. Nevertheless, as indicated above, interest in these provisions on the part of SEAs and LEAs has thus far been very limited, in spite of multiple invitations to compete for them over an extended period of time.
The scope of the State-Flex authority in particular is limited in at least two respects. First, although state administration funds may be used for other purposes under this authority, states are still responsible for meeting their administrative responsibilities under each program. Second, for many of these programs, the overall share of funds that may be used for state administration plus state-level activities is relatively small, and it is smallest for the largest affected program. This relevant share of state total grants varies from 1% for ESEA Title I-A, by far the largest program involved, to a high of 26.5% under the Safe and Drug-Free Schools and Communities program. However, participating states would also be given substantial influence over the use of funds consolidated by the 4-10 LEAs with local performance agreements, and over the use of Innovative Programs block grant funds in all of the states' LEAs.
In some respects, participating LEAs in the state demonstration program might have diminished flexibility, because their use of consolidated funds must be aligned with the state use of funds which they may consolidate, and because of the authority given to participating states to specify LEA use of Title V-A funds. Finally, the inclusion of the ESEA Title V-A Innovative Programs block grant in the Local-Flex authority (i.e., in states which do not participate in State-Flex) is of limited significance in the sense that those funds may already be used for an exceptionally wide range of activities.
section_title: Comparison With State and Local Flexibility Authorities in Earlier Senate- and House-Passed Versions of H.R. 1, 107th Congress
paragraphs: It is instructive to compare the State-Flex and Local-Flex authority with flexibility authorities that were contained in the earlier House- and Senate-passed versions of H.R. 1 , the legislation which was enacted as the NCLB. The final provisions are in most respects similar to language in the House version of H.R. 1 authorizing local flexibility demonstrations in up to 100 LEAs, but may be contrasted with a broader state and local flexibility/performance agreement authority that was contained in the Senate version of H.R. 1 . Even though the Senate program was not included in the final legislation, it is worthy of mention because of the amount of debate it stimulated during Senate and conference committee consideration of this legislation.
Overall, the flexibility/performance agreement provisions of the Senate-passed version of H.R. 1 would have provided significantly greater flexibility than the enacted State-Flex and Local-Flex authorities, in return for at least marginally increased outcome accountability. At the same time, all of these authorities are substantially more limited than optional performance agreement/grant consolidation proposals considered, but not enacted, during the 106 th Congress.
The scope of the H.R. 1 /Senate flexibility/performance agreement authority was the same in terms of the maximum number of participating states (7), and more narrow in number of LEAs in other states (25), which could participate. The types of program requirements (e.g., civil rights, fiscal accountability) which continued to apply to the use of consolidated funds was similar. However, the range of ESEA programs subject to the flexibility authority was much more broad and involved substantially higher levels of funding, incorporating most state-administered formula grant programs authorized by the ESEA, including such programs as Title I-A grants for Education of the Disadvantaged, and Limited English Proficient/Immigrant Education. As with State-Flex and Local-Flex, funds could be used for activities authorized under any of the combined programs, including the exceptionally wide range of authorized activities under the Innovative Programs block grant. Under the performance agreement authority, participating states could in general have reallocated funds under all of the affected programs among and within LEAs as long as the resulting allocations targeted funds on concentrations of poor children at least as well as the statutory formulas; State-Flex provides no similar authority to reallocate funds among LEAs.
The additional element of outcome accountability required of participating states and LEAs under the Senate version of H.R. 1 is that they would have been required to exceed AYP goals by a statistically significant amount. This would mean that achievement gains in excess of those required under state AYP standards must be sufficiently large that they are unlikely to have resulted from random variations in pupil achievement scores. While statistically significant, such an amount would not necessarily be large, especially in a state or LEA with a large pupil population.
section_title: Major Cross-Cutting Issues Regarding Special Forms of Flexibility in Federal K-12 Education Programs
paragraphs: This report concludes with an analysis of selected cross-cutting issues that have arisen with respect to the special forms of flexibility described above. We introduce this topic with a brief review of the common themes of both the new forms of flexibility included in the NCLB, and the special flexibility authorities enacted previously. In general, these flexibility authorities exhibit the following characteristics.
They increase the ability of states and/or LEAs to use federal aid funds more thoroughly in accordance with their own priorities (which may or may not be consistent with federal priorities) than would otherwise be possible. Each of the special flexibility authorities is significantly limited in terms of the number of states and LEAs that may participate, the number and size of the ESEA and related programs affected, and/or the range of program requirements that may be waived. With the major exceptions of the Transferability authority, the Innovative Programs block grant, and Title I-A schoolwide programs, states and/or LEAs are allowed to waive a variety of federal program requirements in return for some degree of accountability based on pupil achievement outcomes. However, the outcome accountability requirements are essentially just increased attention to, and/or consequences related to, outcome accountability requirements that are applicable to all states and LEAs participating in Title I-A and other ESEA programs. These special flexibility authorities, particularly those enacted as part of the NCLB, have been adopted in a policy context of substantially increased accountability requirements and authorized degrees of flexibility in general for the ESEA and related federal programs. At least one of the flexibility authorities adopted under the NCLB has been utilized by an estimated 12-16% of all LEAs (Transferability), while interest in others has been very limited (State-Flex, Local-Flex). However, REAP Flex is the most widely used flexibility authority among eligible small, rural LEAs. The flexibility authorities often include a variety of requirements for regular reporting on ways in which the authorities have been used, and the impact of increased flexibility on pupil achievement. However, there is very limited information regarding the specific impact of special forms of flexibility on pupil achievement.
Selected cross-cutting issues associated with these and other common characteristics of special flexibility authorities are discussed below.
subsections: section_title: How Significant Are the Degrees of Flexibility Allowed under These Authorities?
paragraphs: The current flexibility authorities are restricted in many important respects, and it may be questioned whether they address the primary concerns of states and LEAs about restrictions on the use of federal funds or administrative burdens accompanying participation in federal programs. While broad in terms of the potential uses of funds and federal programs covered, the ESEA Title I-A schoolwide program authority is limited to the school level, and only schools with low-income pupil rates somewhat above average may generally qualify. Further, as noted earlier, the significance of this authority with respect to programs other than Title I-A is quite limited. The Secretarial case-by-case waiver authorities are limited by the necessity of submitting individual requests to the U.S. Secretary of Education. In most cases, LEAs must similarly apply to their SEAs for waivers under the Ed-Flex authority. While almost all states and most LEAs may exercise the fund Transferability authority, none may transfer more than 50% of the funds received under any program, and therefore all of the requirements associated with participating in any of the affected programs must still be met. The rural LEA flexibility authority is available to only a select group of exceptionally low-enrollment LEAs.
In addition, the amount of funds subject to State-Flex authority is limited, and only seven states may participate. Local-Flex authority affects only a limited range of programs and is available in a maximum of only 80 LEAs plus 28-70 LEAs in State-Flex states. The limited increase in flexibility provided by these authorities is a probable reason for the very low rate of participation in these authorities thus far.
Importantly, there are several types of requirements that cannot be waived under any of these authorities, including those involving fiscal accountability, participation by private school pupils and staff, or the increasingly important ESEA Title I-A requirements regarding standards, assessments, and school/LEA accountability for pupil achievement. It is noteworthy that many of the flexibility authorities do not include the largest ESEA program, Title I-A, and none of them would allow states to reallocate funds among LEAs.
Further, the authors of a 1999 Government Accountability Office (GAO) report ( Elementary and Secondary Education: Ed-Flex States Vary in Implementation of Waiver Process . HEHS-99-17) found that the flexibility authorities enacted as of that time do not address the main regulatory burdens of states and LEAs, which are associated with requirements under the IDEA, the Americans with Disabilities Act, child nutrition program administration, and environmental requirements (e.g., underground storage tanks and asbestos removal). According to this GAO report, SEA staff in some states think Ed-Flex is of limited value because of the relatively few programs and requirements that may be waived. In contrast, SEA staff in other states think its usefulness extends beyond specific use of the authority, through creating a "climate that encourages innovation and flexibility." These remarks would apply also to the new authorities enacted in 2001 and 2002.
Finally, it is significant that these authorities have been adopted during a period when "regular" federal program requirements have become more flexible in some important respects. For programs such as ESEA Title I-A, the increased emphasis on outcome accountability beginning in 1994 and continuing under the NCLB has been accompanied by generally increased flexibility for all LEAs and schools in determining how funds may be used, especially in the schoolwide programs which have become the dominant service mode for this program. The NCLB consolidated major groups of programs related to teachers and educational technology, giving states and LEAs substantially greater flexibility in deciding how to use these funds. In this context, the additional flexibility provided by the special authorities described above seems relatively marginal in many respects.
section_title: For What Purposes Have Special Flexibility Authorities Been Used, and Is There Evidence That These Have Resulted in Increased Pupil Performance or Had Other Major Impacts?
paragraphs: Proponents of increased flexibility in federal education programs often argue that waivers can remove federal regulatory barriers to local educational reform and initiative. Very limited information is available on the use of the new forms of flexibility authorized under the NCLB, partly because of low participation in some of them. Available information on waivers granted under pre-NCLB authorities indicates that they have been used for relatively few purposes, at least some of which were not clearly related to innovation or reform. In addition, several of the requirements which were frequently waived in the past were subsequently eliminated or made less restrictive for all states and LEAs by the NCLB. At the same time, the ESEA Title IX-D authority has been used to allow a limited number of states to participate in a growth model pilot for determining adequate yearly progress (AYP) under the ESEA Title I-A accountability provisions, a widely supported modification of that program.
As was discussed above, a recent study prepared for ED found that under the two recently-adopted forms of flexibility authority that are widely used—REAP Flex and Transferability—this authority was most often used to move funds out of ESEA Title II-A (Teacher and Principal Training and Recruiting Fund) and, to a lesser extent, Title IV-A (Safe and Drug-Free Schools and Communities), and most frequently into Titles I-A (Education for the Disadvantaged) and V-A (Innovative Programs block grant). Many LEAs reported using these authorities to partially compensate for reductions in formula grants under ESEA Title I-A and V-A, to better target resources on schools failing to meet adequate yearly progress standards under Title I-A, or to be able to use funds with the high degree of flexibility allowed under Title V-A.
In the pre-NCLB era, Secretarial waivers, Ed-Flex and other pre-NCLB flexibility authorities during the mid- to late-1990s were most often used to waive the following requirements: (1) the minimum low-income pupil percentage threshold for ESEA Title I-A schoolwide program eligibility (before this was reduced under the NCLB); (2) within-LEA targeting of Title I-A funds on schools with the highest number or percentage of pupils from low-income families; (3) deadlines for adoption and implementation of standards and assessments under ESEA Title I-A; and (4) a series of limitations on the use of funds under two pre-NCLB programs related to teacher recruitment and training: the Class Size Reduction (CSR) and Eisenhower Professional Development Programs. Each of these categories is briefly discussed below.
Although schoolwide programs offer a great deal of flexibility to use funds under not only Title I-A but also most other federal programs in ways that might not ordinarily be allowed, it has been questioned whether schools with relatively low percentages of their pupils from low-income families should be granted this authority. If schools with relatively low poverty rates receive permission to operate schoolwide programs, the scope of these programs might be limited (since the size of a school's Title I-A grant is based on its number of children from low-income families), and it would be difficult for such a modest program to have a significant schoolwide impact. Further, no systematic evidence is available that schoolwide programs are more effective than more traditional "targeted assistance" Title I-A programs in improving the education of disadvantaged pupils.
The use of waivers to maintain or expand the number of schools participating in Title I-A would tend to disperse Title I-A funds among an increased number of relatively low-poverty schools, reducing the concentration of funds on high-poverty schools. As noted above, Ed-Flex places restrictions on, but does not prohibit, waivers regarding ESEA Title I-A school selection.
The use of waivers to delay meeting deadlines for implementing ESEA Title I-A standard and assessment requirements arguably undercut the most substantial pre-NCLB outcome accountability requirement. This increasingly important aspect of federal requirements is discussed further below.
With respect to the former CSR and Eisenhower programs, LEAs and states frequently requested the waiver of requirements intended to: focus teacher hiring on the early elementary grades; require small LEAs to form consortia if their CSR grants were too small to pay the salary of a new teacher; ensure that minimum shares of teacher training funds would be used to support instruction in the subject areas of mathematics and science; or to limit the share of CSR funds used for professional development (as opposed to hiring new teachers). Such waivers appear generally to have been requested to accommodate relatively strict and specific limitations on the use of funds to varying local conditions.
Following enactment of the NCLB, some of these formerly common uses of Ed-Flex and other pre-NCLB flexibility authorities are no longer as relevant as in the past. As noted earlier, the NCLB lowered the schoolwide program eligibility threshold to 40% of pupils from low-income families nationwide (although some may still seek Ed-Flex or Secretarial waivers for schools below 40% to conduct schoolwide programs). The CSR and Eisenhower programs were consolidated into a broader and more flexible ESEA Title II program supporting teacher and principal recruitment and training. As noted earlier, relatively few substantive waivers have been grated under the ESEA Title IX-D during the post-NCLB era.
subsections: section_title: Impact of Flexibility
paragraphs: Regarding the impact of special forms of flexibility on pupil achievement or other outcomes, only limited information has been available. Although states that received Ed-Flex authority have been required to submit annual reports to ED on waivers granted and their impact, the information reported by the original 12 Ed-Flex states (under the pre- P.L. 106-25 authority) was of limited value, and no reports have yet been published on the actual purposes of waivers or their effects in states under the Ed-Flex authority enacted in 1999. Anecdotal information on the achievement effects of a number of Ed-Flex and Secretarial waivers in a limited number of LEAs was included in a 1999 ED report ( Waivers: Flexibility to Achieve High Standards ). The information in this report was primarily limited to whether affected LEAs or schools met state AYP standards in effect at the time.
At the same time, supporters of special flexibility authorities often point to broader forms of evidence of their impact on state and local public education systems. These arguments are reflected in a 1998 ED report on Ed-Flex, the authors of which concluded that Ed-Flex authority has supported standards-based reform in the affected states in three major ways:
Ed-Flex "facilitates the coordination of programs and strengthens the planning process," by encouraging LEAs and schools to develop instructional programs without regard to the perceived constraints of many standard federal or state program requirements. Ed-Flex "provides the opportunity for States to streamline the administration of programs" by reducing paperwork deemed unessential to meeting basic purposes of federal programs. Ed-Flex "supports the use of resources in a way that can, together with the implementation of standards-based approaches, lead to increased student achievement and reduction in the gap in achievement between different populations" by shifting oversight focus away from inputs or procedures and toward outcomes.
section_title: Availability and Dissemination of Information on Use and Impact of Special Flexibility Authorities
paragraphs: Given the limited amount of data showing improved pupil achievement outcomes in states, LEAs, or schools to which special forms of flexibility have been granted, the conclusions by ED (immediately above) should presumably be considered to be debatable. This is related to a final aspect of this set of issues: Will sufficient information be available on the use of special flexibility authorities, and their effects on pupil achievement, to make it possible to analyze or judge their benefits and impact?
As mentioned earlier, while the statutes authorizing several forms of flexibility include significant requirements for reporting to and by ED on the use of waivers and other special authorities, and the pupil achievement and other effects of these activities, little relevant information has been disseminated by ED. Efforts by ED to compile and publish information on the use of waiver or other special flexibility authorities seem to have been a priority only infrequently. This makes it very difficult to evaluate the significance, advantages, and disadvantages of these flexibility authorities.
section_title: Are the Outcome Accountability Requirements Consistent with the Increased Flexibility Provided under These Authorities?
paragraphs: A basic question regarding all special forms of flexibility is whether the increased emphasis on outcomes that is typically associated with them—whether or not such additional outcome requirements are substantial—is an adequate substitute for other forms of accountability requirements, such as required targeting of services on priority activities or high need pupil groups, which may be diminished through the grant of flexibility.
In general, the outcome accountability requirements associated with either obtaining or maintaining the special flexibility authorities in this report are a combination of (a) goals established by the states and LEAs themselves, either in the implementation of programs such as Ed-Flex or in competing for (and ultimately implementing) State-Flex or Local-Flex authority; and (b) meeting the state-established adequate yearly progress (AYP) requirements under ESEA Title I-A. In some cases, such as the Innovative Programs block grant or Title I-A schoolwide programs, there is no direct linkage between the flexibility authority and any form of outcome accountability.
Regarding (a) above, the most substantial evidence is contained in a GAO study, which found that states granted Ed-Flex authority under the original (pre- P.L. 106-25 ) legislation differed substantially in the clarity and specificity of their outcome goals related to the granting of waivers. Five of the original 12 Ed-Flex states had set no specific objectives at all for LEAs or schools being granted waivers, and only one of the states had established outcome objectives that were specifically linked to the LEAs, schools, and pupils affected by the waivers. The GAO study further concluded that ED oversight of Ed-Flex implementation by the states was limited, involving mostly the collection of annual reports from the states with highly varying degrees of detail in the information they provided.
If such practices continue, then the most significant (and the only concrete) outcome accountability requirement associated with any of the special flexibility authorities is (b) above, meeting AYP requirements. Thus, the current flexibility authorities do not actually require substantial additional outcome accountability for participating LEAs and states—that is, accountability for pupil outcomes beyond that which is applicable to all other states and LEAs participating in Title I-A and other ESEA programs. Instead, they place increased emphasis on, attention to, and consequences for failing to meet, generally applicable outcome accountability requirements.
Although this outcome requirement is not an additional one, in comparison to states and LEAs which do not receive special flexibility authority, it may nevertheless be substantial, as states continue to implement the AYP and related requirements under the NCLB. While all schools, LEAs, and states are required to meet these requirements, and are to face a variety of consequences if they fail to do so, those with special flexibility authority would have an additional incentive to meet the requirements (i.e., to maintain their eligibility to exercise the flexibility authority), and an additional negative consequence of failing to do so.
While limited, such an enhancement of outcome accountability requirements may be consistent with the nature of the special flexibility authorities described in this report. In many respects, both the additional flexibility and the increased outcome accountability are quite limited. At the same time, these provisions take effect in the context of recent legislation, particularly the NCLB, which substantially expands both outcome accountability requirements and, at least in some major respects, flexibility in the use of federal aid funds for all states, LEAs, and schools, whether or not they have been granted one of the special flexibility authorities described in this report.
Finally, some proponents of high degrees of state and local flexibility in the use of federal K-12 education aid funds often argue that no increase in outcome or other accountability requirements is necessary to justify the granting of special forms of flexibility. To such proponents, increasing the ability of states and LEAs to use federal funds for purposes which they deem to be most appropriate and effective is sufficient justification for such policies, and is most likely to lead to improved pupil outcomes.
At the same time, critics of these authorities might argue that there is no justification for granting special forms of flexibility in return for little or nothing more than the same outcome accountability requirements which are applicable to states, LEAs, and schools which have not been granted such authority. Such critics often defend the full range of generally applicable accountability requirements as embodying important national priorities, and are concerned that special flexibility authorities not only have insufficient accountability provisions, but have been used thus far largely for purposes that have not been proven to increase program effectiveness.