September 15, 2016


Cross Post: USED Regulations on Supplement/Supplant Could Change School Reporting

This blog post originally appeared in the ASBO International policy blog, School Business Network. It is reposted here, with permission.

(Note: The information below is from, “Supplement not Supplant: Latest ESSA Regulations and What It Means for Districts,” a webinar hosted by AASA—The School Superintendents Association for AASA and ASBO members. Access a recording of the webinar here and the PowerPoint slide presentation here.)

Late last month, the Department of Education (ED) proposed a rule for Title I supplement not supplant (SNS), a funding provision in the Every Student Succeeds Act (ESSA) that requires state and local education agencies (SEAs/LEAs) to ensure federal Title I dollars add to (supplement) and do not replace (supplant) state and local funding. While the overall purpose of SNS remains the same in ED’s proposal, the means for demonstrating compliance would change if the rule is implemented.

ED’s proposal is well-intentioned for trying to ensure Title I dollars support the students the law is intended to benefit, but could upend K–12 school spending and fiscal reporting practices as the rule currently stands. The rule also conflicts with Congress’ original intent for ESSA when officials passed the education law, which was to roll back the federal government’s influence in schools. Yet this proposal would allow the federal government to dictate how dollars are spent at the local level. The proposal directly affects school business officials (SBOs), who allocate resources, manage fiscal reports, and ensure Title I compliance for the school district. To be clear, ED’s SNS rule would govern how state and local dollars should be spent, not federal dollars. Complying with the rule is a condition for receiving Title I federal dollars, but the rule itself governs the allocation of state and local funds.

So what does the proposal actually say? LEAs must annually publish their methodology for allocating state and local funds in a format and language that is easy to understand, and they have four options for demonstrating compliance with SNS. Below are highlights of each methodology with potential areas of concern that the rule’s language does not address. Districts must meet one of four of these benchmarks:


  • Weighted Per-Pupil Formula
    • LEAs must distribute to schools “almost all” of the state and local funds available to the LEA through a weighted student funding formula (student-based budgeting formula), where educationally disadvantaged students generate more money for their schools.
    • This includes but isn’t limited to low-income students, English Learners (ELs), and students with disabilities. (For an example of how district calculations would work under this formula, see slide 7 of the PowerPoint presentation.)
    • What are some concerns with Method 1? 
      • The rule doesn’t define what “almost all” of the money available to the LEA means; is this 70% of funds? 90%? Also, the rule doesn’t account for weights that are not based on student disadvantage, such as preschool, gifted and talented, CTE, or magnet education programs. How should these fit into the equation?
  • Average Personnel and Non-Personnel Costs (Resource Formula)
    • LEAs must distribute to schools “almost all” of the state and local funds available to the LEA through a “consistent resource formula” where each Title I school receives at least:
      • The average districtwide salary for each category of school personnel (e.g., principals, teachers, custodians, etc.), multiplied by the number of school personnel in each category assigned to the school under the formula, and
      • The average districtwide expenditure for non-personnel resources multiplies by the number of students in school. (For an example of how district calculations would work under this formula, see slide 10 of the PowerPoint presentation.)
    • What are some concerns with Method 2? 
      • Again, the rule doesn’t define what “almost all” of the money available to the LEA means, nor does it define what a “consistent resource formula” means. There are also a lot of unanswered questions about resource allocations if they vary based on program differences, like with full-time employee (FTE) allocations. Some schools allocate more FTEs based on grade (lower grades often have more FTEs than higher grades), or FTEs may vary for low-income schools, or for special education, IB, dual-immersion programs, and magnet programs. Moreover, what if the allocated FTE position cannot be filled (for example if there is a shortage of special education teachers)?
      • The rule doesn’t clarify whether benefits, pay-for-performance, or other performance-based compensation are supposed to be included in the salary calculation. Nor does it explain whether long-term substitutes should be included in salary calculations. What about staff members who work in multiple buildings? How should custodians, groundskeepers, and other personnel who would fit into his description be calculated? What if their time in buildings is based on need and not allocable in advance? How do LEAs account for staff paid for at the central level who work in school buildings (e.g., building services, maintenance, cafeteria, safety, and grounds keeping staff)? And finally, what exactly does ED consider to be a “non-personnel resource”? The rule only creates more questions. 

  • State-Established Compliance Test
    • LEAs must distribute to schools “almost all” of the state and local funds available to the LEA in a manner chosen by the LEA that:
      • Is applied consistently district wide, and
      • Meets a funds-based compliance test as established by the SEA. This test must be as rigorous as Options/Methodologies 1 & 2, and has been approved by ED through a federal peer review process.
    • What are some concerns with Method 3?
      • The “almost all” definition continues to be a vague term here, but more importantly, this methodology would require federal approval for an SEA to carry out and would be the greatest example of federal overreach. This approach is arguably the most in conflict with Congressional intent for ESSA law. Also, the onus is on SEAs to develop the test, which must be rigorous enough to earn ED’s approval, making this method the most labor-intensive as states are reworking their ESSA accountability frameworks at the same time.

  • ED’s Special Rule (Equalized Spending)
    • LEAs must equalize per-pupil spending in Title I and non-Title I schools. LEAs automatically comply with SNS if they spend an amount of state/local funds per pupil in Title I schools that is equal to or greater than the average per-pupil amount in non-Title I schools; if LEAs meet this special rule they do not need to satisfy any of the three methodologies above.
    • This rule is essentially what ED proposed in April after its negotiated rulemaking process on SNS failed. It’s considered controversial and an example of federal overreach in local school spending, especially since the method would have potential unintended consequences like forced teacher transfers. Districts spend a lot on teacher salaries, and to remain compliant they’d have to shift teachers around to different schools to demonstrate equalized spending, which would have adverse effects on teacher union contracts and negotiations.
    • This option has some flexibilities. Spending in Title I schools can vary up to 5% of average in non-Title I schools in a given year. An LEA can exclude any Title I school that serves fewer than 100 students. An LEA can demonstrate compliance if it shows that one or more non-Title I school(s) gets extra money to serve a “high proportion” of students with disabilities, ELs, or low-income students, which disproportionally affects the average spending in non-Title I schools.
    • What are some concerns with Method 4?
      • What costs will be included/excluded in the per-pupil calculations? ED’s proposed rules for SNS versus ESSA’s accountability requirements contradict each other. The former draft rule references the per-pupil reporting requirements of Section 1111(h)(C)(x) of ESSA. “The per-pupil expenditures of Federal, State, and local funds, including actual personnel expenditures and actual non-personnel expenditures of Federal, State, and local funds, disaggregated by source of funds, for each local educational agency and each school in the State for the preceding fiscal year.” However ED’s accountability rule says the per-pupil spending report would include expenditures for administration, instruction, instructional support, student support services, transportation services, operation and maintenance of plant, fixed charges, preschool, and net expenditures to cover deficits for food services and student body activities. It excludes expenditures for community services, capital outlay, and debt service.
      • Regarding this method’s flexibility provisions, the rule doesn’t define what a “high proportion” of students with disabilities, ELs, or low-income students equals. 90%? 70%? Also, what if more high-cost special education students are in non-Title I schools, where a few students could impact the average per-pupil calculation?

The list of concerns for each methodology reflects the issue that ED’s proposal does not adequately consider the various complexities of school finance and local resource allocation. While ED’s wish to honor Title I law is noble, its approach conflicts with ESSA’s statutory language regarding the level of influence ED is supposed to have in local education. Congress passed ESSA because officials believed that schools and classrooms should be managed by local education leaders who are closer to the ground regarding local education funding and equity issues.

SBOs and other K–12 stakeholders may submit public comments to ED with their concerns about the SNS proposal at the Federal Register website until November 7. Advocates may also urge Congress to overturn ED’s regulations via the legislative process. ASBO International members can find their representatives via the Legislative Action Center and urge Congress to oppose the SNS regulation there. Stay tuned to the Legislative Affairs Community for more advocacy resources, including draft template letters to send to elected officials in opposition to the ED rule, coming soon.

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