The Charter Blog

Title I Funding and Charter Schools: How the Dollars Follow (or Don’t Follow) Students

The Title I portability proposals in the House (H.R. 5) and Senate ESEA reauthorization bills have generated a fair amount of debate (and hand wringing) in the last few months. So much so that the President has threatened to veto H.R. 5, and the Senate responded by removing the portability language from its original proposal. For those who are not familiar with the portability concept, the portability proposals would allow states to make an average allocation per-child to public schools based on the number of eligible students choosing to attend that school, instead of using the current Title I formulas to determine allocations to school districts. In doing so, it would flatten out funding and eliminate high per-child allocations to districts and schools with higher concentrations of poverty.

In order to understand how charter schools could be impacted by portability, it is important to understand how charter schools are currently funded under Title I. In the case of a charter school that is a Local Education Agency (LEA), determining Title I allocations is complicated. In some cases funds follow the child from a district to some charter school LEAs, and in other cases charter LEAs receive statewide average per-child allocations. Given how little is generally understood of how Title I funding reaches charter schools, consider this blog your opportunity to get a crash-course in how it works.

Title I Funding Works Differently for Charter School LEAs

First, it is important to understand that all charter schools are public schools and are subject to the same Title I eligibility requirements as district-run public schools. While some charter schools receive their funding through a school district, other charter schools operate as their own school district (LEA), and the state determines their funding share. Many of these charter school LEAs have a type of Title I portability funding their school, because Title I dollars go directly to the school instead of the district. But this doesn’t necessarily lead to equitable funding, or a Title I allocation that corresponds to the actual number or percentage of students in poverty in each school.

Second, under current law, census data on children living in poverty determines the amount of Title I funds that go to the district (in accordance with four complex funding formulas). This is what is called a per “formula” child allotment. After the funds reach the district, there is an entirely different process for determining which schools get funded.

For charter schools that are their own LEAs, understanding how their allocation from their State Educational Agencies (SEA) corresponds to their number or percentage of children living in poverty is even more difficult. This is because, unlike most Title I schools receiving funds from their district, there isn’t a direct or consistent relationship between the number or percentage of eligible children attending a charter school LEA and their average Title I per-pupil allotment.

So, why is Title I charter school funding all over the map? Shouldn’t a charter school serving similar concentrations of students in poverty get the same funding as a traditional public school in the same neighborhood, serving the same students? While that seems logical, charter schools don’t fit neatly into Title I calculations. Since charter school LEAs do not have district boundaries, census data on children in poverty in a geographic area can’t be used (generally) to determine their federal formula allocations. Consequently, SEAs can’t use any of the four funding formulas as it does for traditional public school districts, and must use a different process to calculate what a charter school LEA gets.

Calculating How Much (or Whether) Money Follows the Child

There are two ways to determine how much a charter school LEA receives, and both depend on SEA estimates of census poverty children, using data such as free and reduced-price lunch (FRPL). Once the SEA has this data, the following are the methods prescribed by U.S. Department Education (ED) guidance and regulations for allocating Title I funds to charter schools:

  1. Title I traditional district “per-child” allocations follow the child to a charter school LEA: If an SEA can determine the traditional LEA where the students attending a charter school came from, the charter school LEA receives the per formula child allocation that a state allocates to the “sending” LEA (ie, the school district where the child would otherwise attend school). As a result, charter school LEAs can receive differing amounts per eligible child attending their school depending on where their students live. Due to a bias in the formula in favor of large districts, among other factors, allocations per formula child to districts can range widely—In Texas, for example, from less than $500 to more than $3,000 per student.

    As a result, a charter school LEA’s average Title I grants per child is a function of the percentage and number of formula children in the sending LEAs, not of the charter school LEA itself. In other words, a child can come to the school with their district’s Title I allocation strapped to their back, but not all funding backpacks will have the same amount of funds in them. In a large metropolitan area with multiple charter school LEAs and traditional LEAs, the average Title I grant per formula child may vary widely, depending on the proportions of students from low-income families from different sending LEAs.

  1. Statewide average “per-child” allocations follow the child to a charter school LEA: If an SEA is not able to determine the “sending” school district of charter school students, charter school LEAs are funded similar to the current Title I portability proposals: they receive the statewide formula per-child allocation. Unlike the first option, these allocations are taken from every school district in the state, not just the sending school districts. Under this policy, grants per child do not generally vary among charter school LEAs within the same state—so all those funding backpacks are pretty much the same. Notably these “average” allocations may not be the right size if the school is a high- or low-poverty school.

In either of the two methods described above, the Title I formulas are not directly used to calculate the allocation of a particular charter school LEA, which is why the poverty of the school doesn’t necessarily correspond to the funding it receives. An alternative approach to the two methods could instead allow charter schools to receive allocations based on the formulas, using an option available to states when they allocate funds to areas with fewer than 20,000 people. Under this method, a charter school LEA would receive an allocation from its SEA using the poverty data available for its school, and the per-child allocation would be determined by the four Title I formulas, not by the statewide allocation or the sending LEA. Under this option, increases in the number of students in poverty attending a charter school could increase the amount allocated per child and the amount of funds allocated to the school.

There are other issues in the formulas themselves that affect allocations to charters, including the bias in the formula towards large, urban LEAs, which can mean that some traditional school districts get a significantly higher per child allocation than smaller districts with higher poverty rates. The National Alliance explores these issues in its recently released publication by Wayne Riddle: Issues in the Allocation of ESEA Title I Funds to Charter Schools. In this paper we provide a detailed explanation of current law and how the formulas work in the allocation of funds to charter schools. Our goal is to explore what changes in the law and ED guidance might help improve the transparency of allocations to charter school LEAs, as well as ensure that higher-poverty charter schools receive funds consistent with the Title I formulas’ intent to allocate larger amounts per child to LEAs with higher levels of poverty.

Posted in Federal Government