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

Letter

Background

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.

Commitment of Leadership and Capacity Influenced Decisions to Apply While Conflicting Deadlines, Few Perceived Benefits, and Limited Awareness Influenced Decisions Not to Apply

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.

Applicants Cite Commitment of Leadership and the Presence of Strategies to Improve Student Achievement as Key Factors Influencing Their Decisions to Apply

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.

Conflicting Deadlines, Few Perceived Benefits, and Limited Awareness of Flexibility Demonstrations Were Cited as Key Factors in Decisions Not to Apply

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.

Education’s Communications about Flexibility Demonstration Programs Not Targeted at Those Best Positioned to Apply

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.

Conclusions

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.

Recommendation for Executive Action

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.

Agency Comments

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.

Appendix I: Scope and Methodology

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.

Appendix II: Comments from the U.S. Department of Education

Appendix III: GAO Contacts and Staff Acknowledgments

GAO Contacts

Acknowledgments

In addition to those named above, Patrick DiBattista and Lynn Musser made key contributions to the report.

Related GAO Products

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.