Because U.S. school districts differ a great deal in size and scope, their involvement with the federal government can also vary. Districts that offer a wide variety of educational choices—such as magnet schools, vocational programs, and programs for students with limited English proficiency—may receive federal assistance from a large number of sources and be subject to additional program requirements. Other (often smaller) districts may be involved with the federal government through a smaller number of more broadly targeted programs and requirements, such as those that provide funding for teacher training. Although there has been widespread agreement on the need to improve the educational system, school districts are central to some education reform efforts and more peripheral to others. Certain education reform movements, like charter schools, have minimized the role of the school district. In contrast, in other reform efforts the district plays a central role in improving curriculum, instructional methods, student assessment, and professional development. Many proponents of all varieties of education reform—regardless of their view of school districts—regard flexibility as a key element in efforts to improve teaching and learning. However, little information is currently available about what types of flexibility are thought to be needed and how federal flexibility initiatives have been used. U.S. school districts vary greatly in size, from rural districts with only one school to citywide systems encompassing hundreds of schools and hundreds of thousands of students. In enrollment, school districts range from some with only a few students to New York City with over 1 million. As shown in figure 1.1, while only a few districts had enrollments of over 100,000 students in school year 1995-96, a much larger number of districts reported serving fewer than 150 students. These small districts, although numerous, accounted for less than one-half of 1 percent of total student enrollment. Some districts (usually smaller ones) served only younger children or only secondary students. Although about 74 percent of school districts provided instruction from the beginning of school through 12th grade, 22 percent of school districts provide instruction only through grade 8, and the remaining 4 percent have a low grade of 7 or higher and a high grade of 12. Districts with more than 100,000 students accounted for about 12 percent of student enrollment but made up less than 1 percent of all school districts. Similarly, while more school districts were located in rural areas, urban districts served a greater proportion of students. Differences in the composition of the student population are sometimes reflected in the specialized programs found in many districts and schools. In 1993-94 (the most recent school year for which data are available), 43 percent of public schools provided English as a Second Language (ESL) programs, and 18 percent of public schools provided bilingual programs, for students with limited English proficiency. Many districts offer vocational-technical programs, which provide skill training in specialized areas as well as academic instruction. Some districts offer “magnet” programs, which focus on a special subject theme. Some districts have established alternative schools; in 1993-94 there were approximately 2,600 of these schools in the country. Districts that have a wide variety of specialized programs may receive federal assistance from separate funding streams that target these specific areas. For example, in 1997, 64 districts that were implementing desegregation plans received federal funds for magnet school programs, and, in 1996, 509 school districts received federal funds to support programs for children with limited English proficiency. As a result, larger districts and districts with a wider variety of programs and populations may receive federal assistance from a larger number of sources and also be subject to a greater number of federal program requirements. One large urban district we visited received a total of 27 federal grants, from agencies as diverse as the Department of Education, the Department of Housing and Urban Development, and the Department of Agriculture. Many of these programs targeted specific areas or specific groups of students, such as students with limited English proficiency, neglected and delinquent youth, and Native Americans. Another, smaller district received only four federal grants, all from the Department of Education and all targeted fairly broadly. Many Americans see the nation’s public elementary and secondary schools as average at best. With American students’ achievement in mathematics and science lagging behind that of their peers in other industrial nations, dissatisfaction with the educational system has fueled calls for widespread systematic reform. Various education reform efforts have adopted differing approaches toward the role of the school district. Some initiatives view school district organizations as part of the problem, while others are designed to rely strongly on district leadership. Two education reform strategies—charter schools and school-based management—have attempted to expand the role of principals and other school administrators, reducing or even eliminating the role of the school district in making key decisions on educational programs. Charter schools are schools formed by parents, teachers, and/or community members who collectively determine the school’s structure, mission, and curricular focus. Charter school laws essentially allow entities other than school districts to start and operate public schools. Charter schools therefore are generally not required to follow all policies, procedures, and requirements of the local school district. In addition, although they receive public funds and must comply with federal requirements, charter schools are generally designed to operate with more autonomy from state and local regulations. Charter schools are responsible for meeting the terms of their charters, however, and these charters may include specific educational outcomes. Proponents of charter schools believe that this freedom from district-level and state-level requirements will lead to better academic outcomes both at charter schools and at the surrounding district schools. Another type of reform initiative—school-based management—has also focused on freeing building-level administrators from some of the restrictions imposed by district-level management. Initiatives in school-based management have become common, particularly in light of perceptions that district bureaucracies and school boards are unresponsive and impose restrictive requirements that hinder the ability of individual schools to meet their unique needs. Under school-based management, the school district typically delegates some control over decisionmaking on budgets, personnel, and/or instructional programs to school administrators, teachers, parents, or other members of the community. For example, school-based management could allow individual schools to choose to offer either half-day or full-day kindergarten, instead of following a uniform policy that was decided at the district level. Similarly, school-based management could allow individual schools to hire fewer staff and buy more computers (or vice versa), rather than have those decisions made by the district office. Proponents of school-based management believe that allowing the people most closely associated with children to make decisions about a school will make the school more responsive to children’s needs. Although charter schools and school-based management primarily focus on administration at the school level, other reform efforts involve changes in curriculum, instructional strategies, professional development, and student assessment that are implemented on a districtwide basis. For example, one school district we visited established new standards, curricula, and assessments at the district level aimed at increasing accountability for student learning. Similarly, in our 1993 report on education reform efforts, we reviewed another school district that had developed its own school improvement model, which was subsequently adopted by other districts. Another district in this study had adopted a policy of testing students frequently and evaluating teachers on the basis of student performance on certain tests that related specifically to the district’s standard curriculum. Whether reforms are initiated outside of the school district (as in charter schools) or at the school or district level, many proponents of education reform believe that efforts to improve teaching and learning will be more successful if local school districts have more flexibility to adapt federal programs to local needs. The National Governors Association, along with several major education associations, has advocated increased flexibility for school districts, including a loosening of federal and state requirements that are thought to potentially impede new or innovative reform approaches. Over the past 5 years, the Congress has enacted several provisions designed to provide schools and districts with more flexibility in how they use federal funds. In addition, for certain areas the Congress has given the Department of Education the authority to grant waivers—temporary exceptions to certain federal requirements—to states and school districts. While some experts have welcomed these provisions, other observers have urged caution. Because many federal and state restrictions were established to protect students, they fear that important social purposes—such as protecting civil rights—may be compromised if federal restrictions are loosened or lifted. Despite the importance of this debate, little information has been available about the issues school districts face in implementing various federal requirements, what flexibility they would find most useful, and how existing flexibility has been used. The Chairman of the House Committee on Education and the Workforce, the Chairman of the House Committee on the Budget, and the Chairman of the House Subcommittee on Human Resources, Committee on Government Reform and Oversight, asked us to report on how federal requirements affect local school districts. Specifically, the objectives of this study were to describe the major federal requirements that affect school districts; describe the issues that local school districts face in implementing these analyze the impact of the Department of Education’s flexibility initiatives on school districts’ ability to address these implementation issues. Our approach relied on data from a variety of sources. We interviewed officials from 87 school districts using a variety of methods—telephone interviews, group interviews, and site visits. We also interviewed representatives from 15 major education associations and federal and state program officials. We surveyed officials from all 50 states to obtain information on the use of financial flexibility mechanisms by states and local school districts. We reviewed the education finance literature and analyzed federal laws and regulations applying to school districts. In addition, we analyzed data from the Department of Education on school district characteristics and the use of federal waivers. We did not verify the data we obtained from the Department of Education. We focused our review on 36 federal programs or mandates that education experts, school district staff, state and federal officials, and the literature identified as having a major impact on school districts.