Flexibility Demonstration Programs: Education Needs to Better Target Program Information
Published: 2003-06-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The No Child Left Behind Act of 2001 (NCLBA) has focused national attention on increasing accountability for states and school districts to improve student achievement. While increasing accountability, NCLBA also provided states and school districts with additional flexibility. The act established two flexibility demonstration programs--State- and Local-Flex--which allow up to 7 states and 80 school districts to redirect up to 100 percent of certain NCLBA program funds. GAO was asked to determine factors that affect states' and districts' decisions whether or not to apply for the demonstration programs and to determine the extent to which the U.S. Department of Education publicized, provided guidance, and established a process to review and award flexibility demonstration programs. To address these questions, GAO conducted a study, using telephone interviews with officials in 22 states and 37 school districts, and site visits to 2 of the four applicants.
section_title: What GAO Found
paragraphs: The one applicant for State-Flex and the three applicants for Local-Flex cited two main reasons why they applied--the commitment of leadership and the ability to develop goals and strategies to improve student achievement. In contrast, states did not apply primarily due to few perceived benefits, as well as conflicting deadlines with other NCLBA requirements, while school districts did not apply primarily due to a lack of awareness about the program. In particular, state officials said they were busy completing mandatory draft plans for measuring student achievement. Additionally, these state officials indicated that they needed student achievement data based on these plans in order to apply for State-Flex. Officials in other states said that less time-consuming options to transfer funds were preferable to State-Flex due to the time and effort required to complete the State-Flex application and develop agreements with school districts. Finally, most school district officials GAO spoke with did not apply for Local-Flex because they were not aware of the program. Education publicized the flexibility demonstration programs in routine channels, such as the Federal Register, at conferences informing states and school districts about NCLBA, and in letters to nearly 200 of the largest districts. However, Education's communication strategy did not target those potential applicants in the best position to apply--states and districts that had developed goals and strategies to improve student achievement and narrow achievement gaps. Additionally, Education provided guidance on the application process and assisted interested applicants. However, the two applicants GAO visited said that more guidance was needed in some areas, such as how to demonstrate that funds would be used for allowable purposes. Finally, while Education has developed criteria and procedures for reviewing and awarding flexibility, it is too early to comment on its processes because it has not made awards under these two flexibility programs to any state or district.

section_title: Letter
paragraphs: The No Child Left Behind Act of 2001 (NCLBA) has focused national  attention on increasing accountability for states and school districts to  improve student achievement. Specifically, NCLBA requires that states  define student proficiency in mathematics, reading or language arts, and  science and establish goals for all students to achieve these proficiency  levels by 2013-14. While increasing accountability, NCLBA also provided  states and school districts with additional flexibility to use federal funds to  better meet education needs. Specifically, the act expanded options for all  states and school districts to transfer up to one-half of federal funds  among several specified NCLBA programs. Additionally, the act created  two flexibility demonstration programs—State- and Local-Flex—in which  up to 7 states and 150 districts could participate. These programs give  states and school districts additional flexibility to consolidate and redirect  up to 100 percent of certain NCLBA program funds. Of the approximately  $23.8 billion appropriated for NCLBA programs in fiscal year 2003,  approximately $3.6 billion was allocated to districts for programs covered  by Local-Flex and about $650 million is available to states under programs  covered by State-Flex. Due to concerns over design and implementation of  the demonstration programs, you asked us to determine (1) the factors  that affect states’ and districts’ decisions whether or not to apply for the  flexibility demonstration programs and (2) the extent to which the  Department of Education publicized, provided guidance to interested  applicants, and established a process to review and award flexibility  demonstration programs.
To obtain this information, we interviewed officials in the 1 state and   3 school districts that applied for the flexibility demonstration programs.  We also interviewed officials from 12 states and 8 districts that expressed  intent to apply but did not apply and officials in 9 states and 26 districts  that neither applied for nor expressed interest in the programs. We  selected states and districts that did not apply or express interest based on  geographic location and level of student enrollment. Additionally, we  conducted a site visit to two applicants—the Florida Department of  Education and Seattle Public Schools—to gain a better understanding of  what was involved in applying for the programs and how they proposed to  use additional flexibility. Finally, we reviewed Education’s program  documentation and interviewed Education officials. We conducted our  work between January and May 2003 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: NCLBA provides for increased accountability by requiring states and  school districts to improve student achievement. Specifically, NCLBA  requires states to establish definitions of proficiency for students in math,  reading/language arts, and science. To measure student achievement,  NCLBA requires states to establish student assessment systems and to  annually test students in grades 3 through 8 and once in high school in  math and reading/language arts by 2005-06 and once in elementary,  middle, and high school in science by 2007-08. States must also establish  Adequate Yearly Progress (AYP) goals, with the ultimate goal that all  students achieve state standards for proficiency by 2013-14. Additionally,  the following subgroups must meet AYP goals: (1) students from major  racial and ethnic groups, (2) students with limited English proficiency,   (3) students with disabilities, and (4) economically disadvantaged  students. Districts and schools failing to meet AYP for 2 consecutive years  are designated as needing improvement and are required to take actions to  address student achievement problems, with additional sanctions added to  schools that continue to not meet AYP. Education required all states to  develop and submit draft accountability plans by January 31, 2003, in order  to assist them in having approved accountability plans in place prior to  submitting their consolidated applications for NCLBA program funds. All  states submitted draft accountability plans by January 31, 2003, and as of  May 1, 2003, 20 states had accountability plans approved.
To support the new accountability requirements, NCLBA established  several options that permit states and school districts to redirect specified  NCLBA program funds. First, NCLBA established two flexibility  demonstration programs—State- and Local-Flex. These programs provide  authority for up to 5 years to a maximum of 7 states and 150 school  districts to consolidate 100 percent of specified federal funds and use  those funds for any purpose under NCLBA in order to assist them in  meeting AYP. Additionally, the act established a transferability option  whereby states and school districts can transfer up to 50 percent of their  federal funds among certain programs or into Title I - Part A. Such  transfers do not require prior approval from Education. Finally, NCLBA  expanded flexibility for rural schools under the Rural Education  Achievement Program (REAP) in which rural school districts, after  notifying their states, have greater flexibility in the use of their funds from  four NCLBA programs, also without prior approval from Education.   Table 1 lists the programs that states and districts can consolidate or  transfer funds from.
Of the approximately $23.8 billion appropriated for NCLBA programs in  fiscal year 2003, roughly $18.6 billion, or about 78 percent, was  appropriated for programs covered by the four flexibility provisions. For  states, about $650 million of this $18.6 billion is available for state-level  activities and state administration under programs covered by State-Flex.  Additionally, one-half of the approximately $200 million available for state  activities was eligible for transferability. The difference in the eligible  amounts between these two programs is primarily because State-Flex  allows for the consolidation of state-level funds under a greater number of  programs and includes both administrative and nonadministrative funds,  whereas transferability only allows for transfers of nonadministrative  funds.  Approximately $3.6 billion flows to districts through the programs  covered under Local-Flex, which is very near the approximately   $3.7 billion available under transferability provisions. According to the  most recent available estimates developed by the U.S. Department of  Education, about $12 million was available for alternative uses under  REAP in fiscal year 2001. Table 2 provides information on the amounts  available under the various NCLBA flexibility provisions.
State- and Local-Flex provide various mechanisms to assist states and  school districts in their efforts to improve student achievement. First,  State-Flex allows states to consolidate NCLBA state administrative and  state-level activities funds—that are to be used for such activities as  technical assistance and professional development—and use them for any  purpose under NCLBA. Second, states that are awarded State-Flex would  also have the authority to specify how all school districts in the state use  Innovative Program funds. Finally, as part of a State-Flex agreement, a  state must enter into local performance agreements with 4 to 10 school  districts in the state, at least half of which must have 20 percent or more of  its student population living in poverty. Districts with Local-Flex or  operating under local performance agreements can consolidate  administrative and programmatic funds for four NCLBA programs and use  them for any purpose under NCLBA.
Both State- and Local-Flex programs limit which states and school  districts can apply. For example, in order to be eligible to apply by the  February 28, 2003, deadline for State-Flex, a state must have submitted a  draft accountability plan to Education by January 31, 2003. To be eligible  to apply for Local-Flex, a district cannot be located in a state that  expressed its intent to apply for State-Flex by May 8, 2002, or in a state  that has been awarded State-Flex authority. Also, no more than 3 districts  in any state may be awarded authority under the Local-Flex program.  However, because Education initiated the Local-Flex application process  before the State-Flex application process, it has ruled that if any school  districts in a state have been awarded Local-Flex authority then that state  can apply for State-Flex only if those school districts agree to become part  of the State-Flex application.
As part of their application for the flexibility programs, states and school  districts had to show how consolidated funds would be used to meet AYP  goals for improving student achievement and narrowing achievement gaps  and provide several assurances on how they would use flexibility. To  demonstrate how AYP goals would be met, states and districts were  required to provide baseline student achievement data from the most  recent available school year. Also, to the extent possible, data were to be  disaggregated by (1) each major racial and ethnic group; (2) English  proficiency status; (3) disability status; and (4) status as economically  disadvantaged, in order to demonstrate the existence of achievement gaps  between these groups and the general student population. On the basis of  this information, states and districts were to develop goals and strategies  that demonstrated how they would use flexibility to meet AYP goals,  including goals for addressing achievement gaps. Additionally, states and  districts were required to provide several assurances as part of their  application, including that adequate fiscal controls were in place to ensure  the proper disbursement of and accounting for federal program funds and  that federal funds would be used to supplement the amount of funds that,  in the absence of federal funds, would be made available from nonfederal  sources.
section_title: Commitment of Leadership and Capacity Influenced Decisions to Apply While Conflicting Deadlines, Few Perceived Benefits, and Limited Awareness Influenced Decisions Not to Apply
paragraphs: Officials in the 1 state and 3 school districts that applied for the flexibility  demonstration programs did so because of the commitment of leadership  to make full use of federal flexibility provisions as soon as possible, and  the ability and willingness to develop goals and strategies demonstrating  how additional flexibility would be used to improve student achievement  even though it was possible they would have to revise these plans later.  Officials in states and districts we contacted that did not apply cited  conflicting deadlines, too few benefits, or limited awareness of the  programs as key reasons they did not apply.
subsections: section_title: Applicants Cite Commitment of Leadership and the Presence of Strategies to Improve Student Achievement as Key Factors Influencing Their Decisions to Apply
paragraphs: According to applicants we spoke with, one key factor that influenced  their decision to apply was leadership’s commitment to gaining greater  flexibility. For example, the Superintendent of the Seattle Public Schools  said he was committed to participating in the Local-Flex program for his  district because it was important to demonstrate that additional flexibility  could be used to better target federal program dollars to improve student  achievement. According to district officials, the district was willing to go  forward with its application using available data despite the possibility  that it would need to revise its application to conform to final state student  performance goals that had yet to be approved.  Similarly, officials in  Florida said that it was important to state leaders that Florida apply as  part of its effort to be “first and best in education.” Officials representing  the other district applicants—Bangor, Michigan, and Traverse City,  Michigan—also reported that district leadership took an active role in  developing the application.
State and district officials we spoke with said that a second factor  influencing their decision to apply was that the added flexibility afforded  through the demonstration programs would allow them to better  coordinate federal funds to fit with their strategies to improve student  achievement and narrow achievement gaps. These applicants were able to  disaggregate student achievement data by subgroups (such as  economically disadvantaged and limited English proficiency), which  facilitated their ability to identify achievement gaps and develop strategies  to use consolidated funds in ways they could not under original program  restrictions. For example, the Seattle school district had implemented  local initiatives to address achievement gaps between minority and  nonminority groups and was able to narrow achievement gaps for some  groups, but not sufficiently for Hispanic students. The district wanted to  use authority under Local-Flex to transfer federal Teacher and Principal  Training and Recruiting program funds to other programs specifically  targeted to improve the performance of Hispanic students.
section_title: Conflicting Deadlines, Few Perceived Benefits, and Limited Awareness of Flexibility Demonstrations Were Cited as Key Factors in Decisions Not to Apply
paragraphs: For the State-Flex program, officials in 8 states said they did not apply for  State-Flex because they were busy completing accountability plans and  that they needed the information in these plans in order to complete the  program application. First, state officials told us that the accountability  plans—due to Education by January 31, 2003—took a lot of time and effort  to complete and left them with only 1 month to complete the State-Flex  application, due February 28. Second, these state officials said they did not  apply because they preferred to wait until their accountability plans were  approved. The accountability plans included AYP definitions needed to  develop baseline data on student achievement required for the State-Flex  application. In order to be eligible to apply for State-Flex, Education  required states to have submitted draft accountability plans by the January  31, 2003, deadline. Education reviews these draft accountability plans and  may require states to make changes before final approval.  As a result,  states could be required to revise their State-Flex applications based on  changes Education required states to make to their accountability plans.
Of the other 13 states, 10 did not apply for the program because of  concerns that State-Flex did not provide sufficient benefits to justify the  effort involved in completing an application. In particular, these state  officials said the availability of other transferability options that allowed  states to transfer up to 50 percent of state-level activities funds provided  them with adequate flexibility (see table 1), or that the program’s  requirements for completing an application were excessive, especially  having to complete 4 to 10 local performance agreements with school  districts. The Office of Management and Budget estimated that it would  take 640 hours to complete an application. Officials we spoke with in  Florida confirmed that the process of identifying school districts for local  performance agreements and developing those performance agreements  took considerable time and effort.
The key reason why school districts did not apply for Local-Flex was a  lack of awareness about the program, while districts that were aware of  the program cited various other reasons for not applying. Specifically,   20 of 26 districts in our study that had not applied for or expressed intent  to apply for Local-Flex did not apply because they were unaware of the  program. The other 6 districts were aware of Local-Flex but did not apply  because they said they had either enough flexibility without Local-Flex or  other priorities. For the 8 districts that expressed intent to apply for Local- Flex, 3 said they did not apply because Education did not provide follow- up information, 2 cited insufficient resources to complete the application,  1 decided not to apply due to the small amount of resources that could be  consolidated, 1 did not apply because the expression of intent to apply  was done in error, and 1 did not apply because it was advised by  Education that it would be unlikely to be awarded flexibility because the  school district was under state control for poor academic performance.
Finally, some school districts were not eligible to apply for Local-Flex  because their states indicated the intent to apply for State-Flex, thereby  locking school districts out from applying for Local-Flex. Specifically,  under NCLBA, only districts in states not receiving State-Flex authority are  eligible to apply for Local-Flex. Also, districts in states that notified  Education of their intent to apply to the State-Flex program by May   8, 2002, would not be eligible to apply for Local-Flex. Eleven states— Alabama, Arizona, Colorado, Delaware, Florida, Illinois, Massachusetts,  Nebraska, Pennsylvania, Tennessee, and Texas—signaled their intent to  apply by the deadline thereby making districts in their states ineligible to  apply directly for Local-Flex. Instead, 4 to 10 districts in these states  would be eligible for flexibility under Local Performance Agreements  included in their state’s State-Flex agreement, if these states applied.
section_title: Education’s Communications about Flexibility Demonstration Programs Not Targeted at Those Best Positioned to Apply
paragraphs: Education took steps to publicize the programs, provided some guidance,  and has begun reviewing program applications. However, its  communication strategy was not targeted at those states and districts in  the best position to apply—that is, where the states had approved  accountability plans or established student assessment systems.  Additionally, according to the 1 state and 3 districts that applied, more  guidance was needed on program procedures and documentation  requirements. Finally, while Education has developed criteria and  procedures for reviewing and awarding flexibility, it is too early to  comment on its processes because it has yet to award flexibility to any  state or district.
As part of the application process for these two programs, Education  publicized and sought feedback through the Federal Register. Education  also disseminated information about the programs to state and school  district officials at Title I conferences and mailed program information  about Local-Flex to about 200 large school districts.
While Education did provide information about the flexibility programs  through routine channels, it did not pursue departmental goals to  aggressively publicize the programs.  Specifically, in response to the new  flexibility provisions in NCLBA, Education, in its 2002-07 Strategic Plan,  established a strategic objective to provide increased flexibility and local  control.  To accomplish this, Education set goals to publicize flexibility  provisions by aggressively communicating flexibility opportunities,  including State- and Local-Flex, to states and school districts.  However,  by providing information primarily through routine channels, Education  did not make use of available information to identify and target potential  applicants that would have been in the best position to apply.  Specifically,  Education acknowledged that it did not focus its communications on the 5  states that had accountability plans approved prior to the State-Flex  application deadline or the 17 states that had approved statewide  assessment systems as of February 12, 2003. While these 17 states  technically did not have approved accountability plans at the time State- Flex applications were due, these states and their school districts were in  a better position to develop and use data on student achievement needed  for State- and Local-Flex applications.
While all 11 states and 2 of 3 school districts that received and reviewed  program applications reported that the guidance for completing the  application was clear, officials from the state and districts that applied  believed more guidance would have been helpful to clarify documentation  requirements once the program is implemented. For example, officials in  both Seattle and Florida said that more guidance was needed on what the  requirements were for drawing down consolidated grant funds. Typically,  a school district would draw down funds for a specific grant program,  such as Innovative Programs—and then report back to the state on how  those funds were used. However, officials in both Seattle and Florida said  that more guidance was needed on what procedures and documentation  were required to draw down combined State- and Local-Flex funds and  how districts were to report on the use of those funds. Applicants also  wanted more guidance about what information they needed to provide to  Education to demonstrate that federal funds they sought to consolidate  were not going to be used to supplant state and local funds. Education  officials acknowledged that accounting for consolidated funds was a  challenge that varied from state to state, but they would be willing to work  with states to develop a system to track federal funds.
Education has developed criteria and procedures for reviewing and  awarding the programs, but it is too early to comment on its processes  because, as of May 2003, it has not made any awards to any state or  district. Specifically, the criteria for awarding the programs under these  flexibility provisions include (1) identification of achievement gaps,   (2) quality of strategies for making AYP and narrowing achievement gaps,  (3) quality of management plans to implement and monitor the programs,  and (4) adequacy of resources. To award these programs, Education will  use a panel of external peer reviewers representative of parents, teachers,  state educational agencies, and who are familiar with educational  standards, assessments, accountability, curriculum, instruction, and staff  development.
section_title: Conclusions
paragraphs: The 1 state and 3 school districts that applied for the flexibility  demonstration programs did so because they had the leadership and  capacity to identify ways they could use additional flexibility to improve  student achievement. However, Education may have discouraged  applications from other interested states by establishing application  deadlines for the State-Flex demonstration program that conflicted with  other requirements of NCLBA. Not only were states busy completing  accountability plans, but the states needed student achievement data  developed as part of these plans in order to apply for the flexibility  programs. Consequently, by establishing the State-Flex application  deadline near the deadline for draft accountability plans, Education placed  most interested parties in the position where they could only apply using  unapproved information and might be required to spend additional time  redoing their application if Education were to require changes to their  accountability plan.
Also, states and school districts in the best position to apply (i.e., that had  met or are close to meeting accountability requirements) may not have  applied because, among other reasons, Education’s communication and  guidance was not strategically targeted. Education has acknowledged that  its communications were not targeted at those states and districts in the  best position to apply. Without increased awareness of the programs and  their benefits, states and districts that may have benefited from additional  flexibility may miss opportunities to participate.  Given that the flexibility  demonstration programs are in the early phases of design and  implementation and that they are linked critically to other new NCLBA  accountability requirements, it is clear that Education faces a challenge to  find eligible applicants with the time and information needed to  participate.  Thus, targeting information at potential applicants and  ensuring that they have the time and information needed to apply for the  flexibility programs are important.
section_title: Recommendation for Executive Action
paragraphs: We recommend that the U.S. Department of Education better target  information to states and districts in the best position to apply for  additional flexibility. This could include follow-up with states and districts  expressing interest in the programs and providing information to states  and districts that have met or are close to meeting accountability  requirements.
section_title: Agency Comments
paragraphs: The Department of Education provided written comments on a draft of  this report, which we have summarized below and incorporated in the  report as appropriate. (See app. II for agency comments.) Education  generally agreed with what we presented in the draft report and with the  thrust of the recommendation that it better target information to states  and districts in the best position to apply for additional flexibility.  Education noted its continued commitment to better targeting information  to states and school districts and stated that it would continue its efforts  to refine strategies for informing potential applicants about the new  flexibility authorities and their benefits.  Education also said that once  state accountability plans are approved, the timing of flexibility  competitions should no longer be an issue.
In its comments, Education pointed out that “burdens” cited by potential  applicants as a reason for not applying were created by statutory, not  administrative, requirements. In our report we did not attempt to trace the  source of the perceived burdens to either statutory or administrative  provisions. Rather, we attempted to portray state and school district  officials’ views on the reasons why they chose not to apply. Education  officials also provided technical comments that we incorporated into the  report where appropriate.
We are sending copies of this report to the Secretary of Education and  other interested parties. In addition, the report will be available at no  charge on GAO’s Web site at http://www.gao.gov.
If you or your staffs have any questions or wish to discuss this material  further, please call me on (202) 512-7215 or Harriet Ganson on (202)   512-7042. Other GAO contacts and staff acknowledgments are listed in  appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To identify factors that influenced officials’ decisions to apply or not to  apply for the programs, we contacted officials from the 1 state and   3 school districts that applied for the programs, all the states and school  districts that expressed intent to apply for the programs but did not apply,  and a selection of those that neither expressed intent to apply nor applied  for the programs. For those that did not express intent to apply we  selected 11 states and 26 districts. The 11 states were selected from the  Census geographic regions, divided into large and small states in terms of  total student enrollment. We selected the 26 districts from across the  country to include large and small districts—in terms of student  enrollment—located in urban and suburban areas and small districts  located rural areas. (See table 3.) For those that did not apply, we were  able to contact and conducted structured interviews with officials from   12 states and 8 school districts that signaled their intent to apply and  officials from 9 states and 26 school districts that did not signal their intent  to apply. For applicants, we reviewed copies of the four applications  submitted for the programs and conducted site visits to two applicants— Florida and Seattle.
To review the extent to which the Department of Education publicized,  provided guidance to interested applicants on, and established a process  to review and award flexibility demonstration programs, we conducted  structured interviews with Education officials and reviewed Education’s  documentation. We also discussed Education’s guidance with states and  school district officials. We conducted our work between January 2003  and May 2003 in accordance with generally accepted government auditing  standards.
section_title: Appendix II: Comments from the U.S. Department of Education
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those named above, Patrick DiBattista and Lynn Musser  made key contributions to the report.
section_title: Related GAO Products
paragraphs: Disadvantaged Students: Fiscal Oversight of Title I Could Be Improved.  GAO-03-377. Washington, D.C.: February 28, 2003.
Elementary and Secondary Education: Flexibility Initiatives Do Not  Address Districts’ Key Concerns About Federal Requirements. GAO/T- HEHS-00-51. Washington, D.C.: January 25, 2000.
Ed-Flex Program: Increase in Flexibility Useful but Limited by Scope of  Waiver Authority. GAO/T-HEHS-99-67. Washington, D.C.: February 25,  1999.
Elementary and Secondary Education: Ed-Flex States Vary in  Implementation of Waiver Process. GAO/HEHS-99-17. Washington, D.C.:  November 13, 1998.
Elementary and Secondary Education: Flexibility Initiatives Do Not  Address Districts’ Key Concerns About Federal Requirements.  GAO/HEHS-98-232. Washington, D.C.: September 30, 1998.
Regulatory Flexibility in Schools: What Happens When Schools Are  Allowed to Change the Rules? GAO/HEHS-94-102. Washington, D.C.: April  29, 1994.
Regulatory Flexibility Programs. GAO/HRD-94-51R. Washington, D.C.:  November 3, 1993.