Education for the Disadvantaged: Overview of ESEA Title I-A Amendments Under the No Child Left Behind Act

Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Updated January 9, 2007
Wayne C. Riddle
Specialist in Education Policy
Domestic Social Policy Division

Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Summary
Title I, Part A of the Elementary and Secondary Education Act (ESEA)
authorizes aid to local educational agencies (LEAs) for the education of
disadvantaged children. Title I-A grants are used to provide supplementary
educational and related services to low-achieving and other pupils attending schools
with relatively high concentrations of pupils from low-income families. Title I-A has
detailed provisions regarding pupil assessment, program improvement, allocation of
funds, school selection, fiscal accountability, and parental involvement, but very few
constraints on such matters as the specific resources for which funds are used.
The No Child Left Behind Act of 2001, P.L. 107-110, builds upon Title I-A
provisions adopted in 1994 that required participating states to adopt curriculum
content and pupil performance standards, and assessments linked to these, at three
grade levels in reading and mathematics; initiated steps toward identifying low-
performing schools and LEAs; attempted to increase targeting of funds on high-
poverty LEAs and schools; and increased flexibility.
Highlights of the Title I-A provisions of P.L. 107-110 include the following:
(1) participating states are required to implement standards-based assessments for
pupils in each of grades 3-8 in reading and mathematics by the end of the 2005-2006
school year, and to implement assessments at three grade levels in science by the
2007-2008 school year; (2) states receiving Title I-A funds are required to participate
in National Assessment of Educational Progress tests in 4^th and 8^th grade reading and
mathematics every two years; (3) adequate yearly progress (AYP) standards, with a
goal of all pupils reaching a proficient or advanced level of achievement on state
assessments within 12 years, must be developed by states and applied to each public
school, LEA, and state; (4) pupils at schools participating in Title I-A that fail to meet
AYP for two consecutive years must be offered public school choice options, and if
a Title I-A school fails to meet AYP for a third year, pupils from low-income
families must be offered the opportunity to receive instruction from a supplemental
services provider of their choice; (5) “corrective actions” must be taken with respect
to Title I-A schools that fail to meet AYP for a fourth year, and those that fail for a
fifth year must be “restructured”; (6) Title I-A allocation formulas are modified to
increase targeting on high-poverty states and LEAs under the Education Finance
Incentive Grant formula, move Puerto Rico gradually toward parity with the states,
and increase state minimum grants; (7) states must ensure that all of their teachers in
core subject areas are “highly qualified,” and that all paraprofessionals paid with
Title I-A funds have completed at least two years of higher education or met a
“rigorous standard of quality” by the end of the 2005-2006 school year; and (8) the
authorization level for Title I-A is specified for each year, rising to $25 billion for
FY2007. ESEA programs are authorized through FY2008, and it is generally^th
assumed that the 110 Congress will actively consider legislation to amend and
extend the ESEA. This report will not be updated.

Contents
In troduction ......................................................1
Pupil Assessment..................................................2
The Bush Administration’s High School Initiative....................5
Report Cards.................................................5
Adequate Yearly Progress Requirements................................6
Data on Schools Identified as Failing to Meet AYP...................8
Schools Failing to Meet AYP Standards
for One or More Years......................................8
Schools Failing to Meet AYP Standards
for Two or More Consecutive Years...........................9
ED Policy Developments Regarding Participation Rates
Plus Treatment of Limited English Proficient Pupils
and Certain Pupils with Disabilities in Assessments
and AYP Determinations, 2004-Present...................10
Data on LEAs Failing to Meet AYP..............................15
Selected AYP Implementation Issues.............................15
Program Improvement and Corrective Actions..........................17
School Improvement and Corrective Actions.......................17
LEA Improvement and Corrective Actions.........................20
Transition Provisions..........................................20
Issues ......................................................22
Allocation Formula Provisions......................................23
General Characteristics of the Title I-A Allocation Formulas...........23
Title I-A Allocation Formula Amendments Under the NCLBA.........26
EFIG Formula Amendments................................26
Formula Revisions for Puerto Rico...........................27
Other NCLBA Formula Amendments.........................28
Targeting on High-Poverty LEAs Under the Four Title I-A Formulas....29
FY2002-FY2007 Funding for the Title I-A Allocation Formulas........32
FY2006 Allocation Patterns.................................35
Appropriations Authorization Levels.........................36
Staff Qualifications...............................................38
Teacher Qualifications.........................................38
Qualification Requirements for Paraprofessionals...................39
Issues ......................................................42
Other Provisions Regarding Title I-A.................................42
Fl ex ibility ...................................................42
Services to Private School Pupils, Staff, and Parents.................44
Debates Over State or LEA Participation in Title I-A, or Over Whether
All Title I-A Requirements Must Be Met If Doing So Might
Arguably Require the Expenditure of Non-Federal Funds.............45

List of Tables
Table 1. Share of ESEA Title I-A Funds Allocated to LEAs,
by LEA Poverty Rate Quintile, FY2006...........................31
Table 2. FY2006-FY2007 Appropriations for ESEA Title I, Part A.........37

Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Introduction
Title I, Part A, of the Elementary and Secondary Education Act (ESEA)
authorizes federal aid to local educational agencies (LEAs) for the education of
disadvantaged children. Title I-A grants provide supplementary educational and
related services to low-achieving and other pupils attending schools with relatively
high concentrations of pupils from low-income families in pre-kindergarten through
grade 12. Title I-A is the largest federal elementary and secondary education
assistance program, with services provided to (1) over 90% of all LEAs; (2)
approximately 45,000 (48% of all) public schools; and (3) approximately 15.8
million (33% of all) pupils, including approximately 167,000 pupils attending private
schools. Four-fifths of all pupils served are in pre-kindergarten through grade 6,
while only 5% of pupils served are in grades 10-12.
On January 8, 2002, the No Child Left Behind Act of 2001 (NCLBA), an act to
extend and revise the ESEA, was signed into law as P.L. 107-110. Among other
provisions, this act builds upon Title I-A provisions adopted initially in the
Improving America’s Schools Act (IASA) of 1994, which required states¹ to adopt
curriculum content and pupil performance standards, and assessments linked to these,
at three grade levels in reading and mathematics; initiated steps toward identifying
low-performing schools and LEAs; attempted to increase targeting of funds on high-
poverty LEAs and schools; and increased flexibility. It should be noted that all of the
requirements described in this report apply only to states that participate in, and
receive grants under, ESEA Title I-A (which currently includes all states, but this
may not necessarily be the case in the future).
ESEA programs are authorized through FY2008, and it is generally assumed
that the 110^th Congress will actively consider legislation to amend and extend the
ESEA. This report provides an overview of aspects of ESEA Title I-A that were
substantially amended by the NCLBA; elements of the program that are important
but that were not substantially revised by the NCLBA (such as parental involvement
requirements) are not discussed in this report. Other current and forthcoming reports

¹ Throughout this report, unless noted otherwise, this term includes the District of Columbia
and the Commonwealth of Puerto Rico, in addition to the 50 states.

will provide more detailed discussions and analyses of selected major aspects of the
program, including pupil assessments,² accountability,³ and reauthorization issues
likely to be considered by the 110^th Congress.⁴
Major ESEA Title I-A amendments adopted in the No Child Left Behind Act
of 2001 (P.L. 107-110) were focused on pupil assessment; adequate yearly progress
(AYP) requirements; program improvement and corrective actions for schools and
LEAs; allocation formulas; staff qualifications; flexibility; and services to private
school pupils, staff, and parents. Each of these topics is discussed below. Issues
regarding implementation of these requirements and other provisions are likely to be
considered by the 109^th Congress. Such debates may particularly occur as the
Congress considers a new High School Initiative released by the Administration in
conjunction with its FY2006 and FY2007 Budgets. Relevant aspects of this Initiative
are discussed below, at the end of the report section on Pupil Assessment. This
report concludes with a brief discussion of debate in some states and LEAs over
continued participation in the Title I-A program, and the potential effects of opting-
out of participation in the program.
Pupil Assessment⁵
The IASA of 1994 required states participating in Title I-A to develop or adopt
curriculum content standards, pupil performance standards, and assessments linked
to these, at least in the subjects of mathematics and reading/language arts, and for at
least one grade in each of three grade ranges (grades 3-5, 6-9, and 10-12). In general,
these standards and assessments were to be applicable to Title I-A participants, as
well as all other pupils in the state. These requirements were adopted in part to raise
expectations that Title I-A participants would be required to meet challenging
academic standards, and to link the program to standards-based reforms taking place
in most states. Typically, such standards-based reform involves the establishment of
explicit and “challenging” goals for state school systems, and alignment of curricula,
assessment methods, pupil performance standards, teacher professional development,
instructional materials, and other school system policies in support of the goals.
The deadline for adopting content and performance standards was the 1997-

1998 program year, and for assessments was the 2000-2001 program year. States

² See CRS Report RL31407, Educational Testing: Implementation of ESEA Title I-A
Requirements Under the No Child Left Behind Act, by Wayne C. Riddle.
³ See CRS Report RL32495, Adequate Yearly Progress (AYP): Implementation of the No
Child Left Behind Act, by Wayne Riddle; and CRS Report RL31329, Supplemental
Educational Services for Children from Low-Income Families Under ESEA Title I-A, by
David P. Smole.
⁴ See CRS Report RL33731, Education for the Disadvantaged: Reauthorization Issues for
ESEA Title I-A Under the No Child Left Behind Act, by Wayne C. Riddle.
⁵ For a more detailed discussion of, and analysis of issues related to, the Title I-A assessment
requirements, see CRS Report RL31407, Educational Testing: Implementation of ESEA
Title I-A Requirements Under the No Child Left Behind Act, by Wayne Riddle.

were given several years to meet these requirements because many of them were at
an early stage of standards-based reform in 1994. The U.S. Department of Education
(ED) has been reviewing “evidence” that state standards and assessments meet the
requirements of the Title I-A statute (e.g., that assessments are linked to state content
and pupil performance standards, or that disabled and limited English proficient
(LEP) pupils are assessed with appropriate accommodations or adaptations), but is
not considering the substance of state standards and assessments. As of the date of
this report, 46 states have been approved by ED as meeting all of these “1994
requirements.” For three of the remaining states, “timeline waivers” have been
granted to allow them to complete the process of developing and implementing
necessary assessments over the next couple of years. “Compliance agreements” have
been negotiated between ED and the remaining three states that are farther from
meeting these requirements.
P.L. 107-110 substantially expanded these previous Title I-A assessment
provisions. In addition to the requirement for assessments at three grade levels in
reading and mathematics, all participating states will be required to implement
assessments, linked to state content and academic achievement standards, for all
public school pupils in each of grades 3-8 in reading and mathematics by the 2005-
2006 school year. States will also have to develop and implement assessments at
three grade levels in science by the 2007-2008 school year.⁶ P.L. 107-110 requires
assessments to be of “adequate technical quality for each purpose required under
[this] Act.”⁷
All states receiving Title I-A grants are required to participate in National
Assessment of Educational Progress (NAEP) tests in 4^th and 8^th grade reading and
mathematics administered every two years, with costs paid by the federal
government. Individual pupils may not be required to take or administer NAEP tests;
there are conflicting statutory and regulatory provisions regarding participation in
NAEP tests by LEAs and schools.⁸ Pupils who have been in U.S. schools (except

⁶ States must initially develop content and academic achievement standards in science by

2005-2006.

⁷ Under regulations published in the Federal Register on July 5, 2002 (pp. 45038-45047),
state assessments meeting the ESEA Title I-A requirements may include either criterion-
referenced tests (CRTs) — tests that measure the extent to which pupils have mastered
specified content (content standard) to a predetermined degree (achievement standard) —
or norm-referenced tests (NRTs) — tests in which pupil performance is measured against
that of other pupils, rather than against some fixed standard of performance — although any
NRTs used must be augmented to incorporate the state’s content standards and have results
expressed in terms of the state’s achievement standards. For further discussion of this and
related issues, see CRS Report RL31407, Educational Testing: Implementation of ESEA
Title I-A Requirements Under the No Child Left Behind Act, by Wayne C. Riddle.
⁸ The NCLBA explicitly provides that participation in NAEP tests is voluntary for all pupils,
but it contains conflicting provisions regarding voluntary participation by LEAs and schools.
The NAEP authorization statute (recently redesignated as Section 303 of the Education
Sciences Reform Act by P.L. 107-279) states that participation is voluntary for LEAs and
schools, as well as pupils. However, ESEA Title I-A provides that the plans of LEAs
receiving aid under that program must include an assurance that they will participate in state
(continued...)

those in Puerto Rico) for at least three years must be tested (for reading) in English,
and states are required to annually assess the English language proficiency of their
LEP pupils.
The revised ESEA authorizes (in Title VI-A-1) annual grants to the states to
help pay the costs of meeting the Title I-A standard and assessment requirements
added by the NCLBA. These grants may be used by states for development of
standards and assessments or, if these have been developed, for assessment
administration and such related activities as developing or improving assessments of
the English language proficiency of LEP pupils. The state assessment requirements
that were newly adopted under the NCLBA are contingent upon the appropriation of
minimum annual amounts for these state assessment grants; for each of FY2002-
FY2006, at least the minimum amount was appropriated for these grants. (For
FY2006, the minimum is $400 million, and the appropriation is $407,563,000.)
The NCLBA also authorizes competitive grants to states for the development
of enhanced assessment instruments. Aided activities may include efforts to improve
the quality, validity, and reliability of assessments beyond the levels required by Title
I-A, to track student progress over time, or to develop performance- or technology-
based assessments. Funds appropriated each year for state assessment grants that are
in excess of the “trigger” amounts described above for assessment development
grants are to be used for enhanced assessment grants; for FY2002, $17 million was
made available for this purpose. In February 2003, grants to nine states were
announced. The amount available for assessment enhancement grants was
$4,484,000 under the FY2003 appropriation, but no funds were available for such
grants under the FY2004 appropriation. For FY2005, $11.68 million was available
for assessment development grants, and $7.6 million is available for FY2006. In
addition, the Department is to contract with an independent organization for a study
of the assessments and accountability policies used by states to meet Title I-A
requirements.
Issues regarding the expanded ESEA Title I-A pupil assessment requirements
include the following:
^!What is the cost of developing and implementing the assessments,
and have federal grants been sufficient to pay for them?
^!What might be the impact of the requirement for annual assessment
of the English language proficiency of LEP pupils?
^!What might be the impact on NAEP, as well as the impact of NAEP
on state standards and assessments, of requiring state participation
in NAEP, while not requiring participation by individual pupils and
schools?

⁸ (...continued)
NAEP tests if selected (Section 1112(b)(1)(F)). Further, regulations (Federal Register, Dec.
2, 2002) explicitly require LEAs that receive Title I-A grants to participate in NAEP if
selected (34 C.F.R. § 200.11(b)), and ED comments accompanying these regulations state
that “an LEA cannot meet the NAEP participation requirement unless it requires all schools
selected to participate” (Federal Register, Dec. 2, 2002, p. 71740).

^!What are the likely major benefits and costs of the expanded ESEA
Title I-A pupil assessment requirements? Will they significantly
increase the focus on assessments in public K-12 education? If so,
will this enhance educational achievement and “quality,” or will it
undesirably limit instructional curricula or “drive out” assessments
in subjects other than reading, mathematics or science?
The Bush Administration’s High School Initiative
In conjunction with its FY2006 and FY2007 Budgets, the Bush Administration
has requested funding for a High School Initiative. Thus far, details of the proposal
are not available, nor have bills based on the proposal been introduced or acted upon.
Based on the available information, the HSI will be multifaceted, and some aspects
of it are directly relevant to the topic discussed immediately above — assessment
requirements for states participating in ESEA Title I-A. The other major aspect of
the HSI would be targeted initiatives to improve low-performing high schools. For
FY2007, a total of $1.475 billion has been requested for this Initiative.
Under the HSI, states receiving Title I-A grants would be required to administer
state-developed, standards-based assessments in reading and mathematics in two
additional high school grades (presumably between grades 9 and 12, since the
NCLBA already requires such assessments in each of grades 3-8) by the 2009-2010
school year, in addition to the one grade (between grades 10 and 12) already required
(as discussed above). Additional grants to states would be available to help pay the
costs of developing these assessments. The Administration has also requested an
additional $4 million in funding for NAEP for FY2007, to pay the costs of beginning
to develop a new series of 12^th grade reading and mathematics assessments at the
state level.
At this point, there are several unanswered questions regarding the HSI. These
include the following. Might the required assessments include high school exit or
graduation tests? Given the relatively high degree of curriculum differentiation at the
senior high school level (e.g., vocational and technical education programs, advanced
placement courses, and so forth) might states be allowed to meet these requirements
by adopting different types of tests for pupils in different types of academic
programs? Might Advanced Placement or International Baccalaureate tests be used
to meet the new assessment requirements for pupils participating in those programs?
Report Cards
States and LEAs participating in the revised ESEA Title I-A must report
assessment results and certain other data to parents and the public through “report
cards.” States are to publish report cards for the state overall, and LEAs (including
charter schools that are treated under state law as individual LEAs) are to publish
report cards for the LEA and individual schools. The report cards must generally
include information on pupils’ academic performance disaggregated by race,
ethnicity, and gender, as well as disability, migrant, English proficiency, and
economic disadvantage status. The report cards must also include information on
pupil progress toward meeting any other educational indicators included in the state’s

AYP standards, plus secondary school student graduation rates, the number and
identity of any schools failing to meet AYP standards, and aggregate information on
the qualifications of teachers. The report cards may include additional information,
such as average class size or the incidence of school violence. LEA and school report
cards are to be disseminated to parents of public school pupils and to the public at
large; there are no specific provisions regarding dissemination of the state report
cards. Preexisting report cards may be modified to meet these requirements.
One issue regarding these report card requirements is the extent to which they
will lead to significant changes from previous practices. While a large majority of
states have published report cards on school system performance in recent years,
many have not provided such reports at all of the required levels: schools, LEAs, and
states overall. Further, most state report cards have not included all of the types of
information required under the NCLBA.⁹ Other issues include whether the
information provided will be of substantial help to parents, especially in the context
of potentially increased options to select the schools that their children attend (see
below).
Adequate Yearly Progress Requirements
Under the NCLBA, the Title I-A requirements for state-developed standards of
AYP are substantially expanded in scope and specificity.¹⁰ These standards serve as
the basis for identifying schools and LEAs where performance is inadequate, so that
these inadequacies may be addressed first through provision of increased support and,
ultimately, a variety of “corrective actions.”
The NCLBA provisions regarding AYP were adopted largely in reaction to
perceived weaknesses with the AYP requirements of the 1994 IASA. The latter were
frequently criticized as being vague, lacking a required focus on specific
disadvantaged pupil groups, failing to require continuous improvement toward an
ultimate goal, and being applicable only to schools and LEAs participating in Title
I-A, not to states overall or to all public schools. Before the enactment of the
NCLBA, there was tremendous variation among the states in the impact of their AYP
standards — i.e., the number and percentage of Title I-A schools and LEAs identified
as failing to meet AYP standards. In some states, a very large percentage of Title I-A
schools have been identified as needing improvement, while a small number of states
had identified very few or even no such schools for at least some years preceding the
enactment of the NCLBA.¹¹

⁹ See No State Left Behind: The Challenges and Opportunities of ESEA 2001, available at
[ ht t p: / / www.ecs.or g/ cl ear i nghouse/ 32/ 37/ 3237.pdf ] .
¹⁰ For a more detailed discussion and analysis of these requirements, see CRS Report
RL32495, Adequate Yearly Progress (AYP): Implementation of the No Child Left Behind
Act, by Wayne Riddle.
¹¹ See U.S. Department of Education, “Paige Releases Number of Schools in School
Improvement in Each State,” press release, July 1, 2002.

As under the IASA, AYP is defined primarily on the basis of aggregate scores
for various groups of pupils on state assessments of academic achievement.
However, under the NCLBA, state AYP standards must also include at least one
additional academic indicator, which in the case of high schools must be the
graduation rate. AYP standards will now have to be applied separately and
specifically to economically disadvantaged pupils, LEP pupils, pupils with
disabilities, and pupils in major racial and ethnic groups, as well as all pupils. The
only exception is that pupil groups need not be considered in cases where their
number is so relatively small that achievement results would not be statistically
significant or the identity of individual pupils might be divulged.¹² State AYP
standards must also be applied to all public schools, LEAs, and states overall,
although corrective actions for failing to meet AYP standards need only be applied
to schools and LEAs participating in Title I-A. The AYP state standards will also
have to incorporate a goal of all pupils reaching a proficient or advanced level of
achievement within 12 years.
The primary basic structure for AYP under the NCLBA is specified in the
authorizing statute as a “group status model.”¹³ A “uniform bar” approach is
employed: states are to set a threshold percentage of pupils at proficient or advanced
levels of performance each year that is applicable to all pupil subgroups of sufficient
size to be considered in AYP determinations. The threshold levels of achievement
are to be set separately for reading and math, and may be set separately for each level
of K-12 education (elementary, middle, and high schools). In addition, the NCLBA
statute includes an alternative safe harbor provision, under which a school that does
not meet the standard AYP requirements may still be deemed to meet AYP if it
experiences a 10% reduction in the gap between 100% and the percentage in the
preceding year for the specific pupil groups that fail to meet the “uniform bar,” and
those pupil groups also make progress on at least one other academic indicator
included in the state’s AYP standards. This alternative provision adds “successive
group improvement” as a secondary type of AYP model under the NCLBA.
A third basic type of AYP model, not explicitly mentioned in the NCLBA
statute, is the individual/cohort growth model. The key characteristic of this model
is a focus on the rate of change over time in the level of achievement among cohorts
of the same pupils. Growth models are longitudinal, based upon the tracking of the
same pupils as they progress through their K-12 education careers. While the
progress of pupils is tracked individually, results are typically aggregated when used
for accountability purposes. In general, growth models would give credit for meeting
steps along the way to proficiency in ways that a status model typically does not. In
November 2005, the Secretary of Education announced a growth model pilot
program under which up to 10 states would be allowed to use growth models to make

¹² In addition, program regulations (Federal Register, Dec. 2, 2002) do not require
graduation rates and other additional academic indicators to be disaggregated in determining
whether schools or LEAs meet AYP standards.
¹³ For a discussion of the models of AYP, see CRS Report RL33032, Adequate Yearly
Progress (AYP): Growth Models Under the No Child Left Behind Act, by Wayne C. Riddle.

AYP determinations for the 2005-2006 school year.¹⁴ According to ED, 20 states
submitted applications to be allowed to use growth models to make AYP
determinations beginning with either the 2005-2006 or 2006-2007 school years.
Thus far, the proposals of two states (North Carolina and Tennessee) have been
approved to participate in this pilot program, beginning with AYP determinations
based on 2005-2006 assessment results.
Finally, the NCLBA AYP provisions include an assessment participation rate
requirement. In order for a school to meet AYP standards, at least 95% of all pupils,
as well as at least 95% of each of the demographic groups of pupils considered for
AYP determinations for the school or LEA, must participate in the assessments that
serve as the primary basis for AYP determinations.¹⁵
Data on Schools Identified as Failing to Meet AYP
Beginning in the summer of 2003, a substantial amount of data has become
available on the number of schools and LEAs that failed to meet the AYP standards
of the NCLBA for the 2002-2003, 2003-2004, and 2004-2005 school years. A basic
problem with almost all such reported data thus far is that they have generally been
incomplete (i.e., not all states are included) and subject to change (i.e., the data for
several states have been revised one or more times after being initially published, due
largely to data corrections and appeals).¹⁶ The currently available data reports are
discussed below in two categories: reports focusing on the number and percentage
of schools failing to meet AYP standards for one or more years versus reports on the
number and percentage of public identified for school improvement — i.e., they had
failed to meet AYP standards for two, three, four, five, or more years.
Schools Failing to Meet
AYP Standards for One or More Years
Compilations of AYP results for a majority of states for the 2002-2003 through

2004-2005 school years were published in December 2004 and 2005 by Education¹⁷

Week. While national aggregate comparisons are not possible, due to the number
of states for which data were missing for one or more years, these data continue to
reflect a pattern of wide variation among states in the percentage of public schools
failing to meet AYP standards. Among states providing results, the percentage of
public schools failing to meet AYP standards based on assessment results in the
2004-2005 school year ranged from 2% (Wisconsin) to 66% (Hawaii). For 48 states
and the District of Columbia, the average share of schools failing to meet AYP

¹⁴ U.S. Department of Education, “Secretary Spellings Announces Growth Model Pilot,
Addresses Chief State School Officers’ Annual Policy Forum in Richmond,” press release,
Nov. 18, 2005, at [http://www.ed.gov/news/pressreleases/2005/11/11182005.html], visited
Apr. 14, 2006.
¹⁵ These participation rates may be averaged over a two- or three-year period.
¹⁶ See also “Data Doubts Plague States, Federal Law,” Education Week, Jan. 7, 2004.
¹⁷ See “Taking Root,” Education Week, Dec. 8, 2004, p. 1; and “Room to Maneuver,”
Education Week, Dec. 14, 2005, p. S1.

standards was 26%. For the 46 states where such a comparison is possible, based on
these data, the percentage of public schools failing to make AYP increased between
2003-2004 and 2004-2005 in 24 states, remained the same in 2 states, and declined
in the remaining 20 states. This is largely a reversal of the pattern of change between
2002-2003 and 2003-2004, when among the 36 states where a comparison was
possible, the percentage of public schools failing to make AYP increased in only 5
states, remained the same in one state, and declined in 30 states.
More recently, in February 2006, data on the number of schools failing to meet
AYP standards based on assessment results for the 2004-2005 school year were
published in Education Daily.¹⁸ Based on data collected from all states except
Arkansas, it was reported that 22,868 schools, constituting 25.6% of all public
schools, failed to meet AYP standards for 2004-2005. Other reported results were
similar to those described in the preceding paragraph.
Schools Failing to Meet AYP Standards
for Two or More Consecutive Years
The most recent and complete published data on schools identified for
improvement appears in the February 2006 Education Daily article discussed above.
According to this survey, 11,524 schools, or 12.9% of all public schools, were
identified as needing improvement based on assessment results for the 2004-2005
and preceding school years. In several states, this group included at least some non-
Title I schools. With respect to the various stages of school improvement, a total of
3,757 schools had failed to meet AYP standards for two consecutive years, 3,696 for
three consecutive years, 1,254 for four consecutive years, and 1,847 for five or more
consecutive years.
ED, in its “National Assessment of Title I: Interim Report,” published in March
2006, reported that 13% of all public schools were identified for improvement based
on assessment results through the 2004-2005 school year. This included 9,028 Title
I-A schools, or 18% of all Title I-A schools. Schools most likely to be identified
were those large, urban LEAs, schools with high pupil poverty rates, and middle
schools.
Earlier, in December 2005, a survey of the number of schools identified for
improvement — i.e., had failed to meet AYP standards for two or more consecutive
years on the basis of assessment results for 2004-2005 and preceding school years
— was published in Education Week.¹⁹ The survey included all states except one
(Nebraska) and found that on average, 14% of public schools had been identified as
needing improvement. Again, the proportion varied widely among the states, ranging
from 1% in Kansas and Utah to 48% in Hawaii.

¹⁸ “Data analysis finds more schools subject to sanctions,” Education Daily, Feb. 16, 2006,
pp. 1-2.
¹⁹ See “Room to Maneuver,” Education Week, Dec. 14, 2005, p. S1.

For the present, it seems likely that state variations in the percentage of schools
identified as failing to meet AYP standards or as needing improvement are based, at
least in part, not only on underlying differences in achievement levels but also on
differences in the degree of rigor or challenge in state pupil performance standards,
and on state-determined standards for the minimum size of pupil demographic groups
in order for them to be considered in AYP determinations of schools or LEAs. (In
general, larger minimum sizes for pupil demographic groups reduce the likelihood
that many disadvantaged groups, such as LEP pupils or pupils with disabilities, will
be considered in determining whether a school or LEA meets AYP.) Also, in many
cases it appears that schools or LEAs failed to meet AYP solely because of low
participation rates in assessments — i.e., fewer than 95% of all pupils, as well as
pupils in each relevant demographic group, took the assessments.
As a result of such estimates and reports, as well as state reports indicating that
approximately 8,600 schools have failed to meet AYP even under the pre-NCLBA
standards, some have expressed concern that large percentages of all public schools
are being identified as “failing” and subjected to a variety of corrective actions
(described below), with consequent strain on financial and other resources necessary
to provide technical assistance, public school choice and supplemental services
options, and other corrective actions. In addition, some have expressed concern that
random variation in test scores from year to year, unrelated to actual gains or losses
in achievement levels, might substantially increase the number of schools identified
as failing to meet AYP standards; or that schools might be more likely to fail to meet
AYP simply because they have diverse enrollments and therefore more groups of
pupils to be separately considered in determining whether the school meets AYP
standards.²⁰
In response to these concerns, ED officials have emphasized the importance of
taking action to identify and move to improve underperforming schools, no matter
how numerous. They have also emphasized the possibilities for flexibility and
variation in taking corrective actions (see below) with respect to schools that fail to
meet AYP, depending on the extent to which they fail to meet those standards.
ED Policy Developments Regarding Participation Rates Plus
Treatment of Limited English Proficient Pupils and Certain Pupils with
Disabilities in Assessments and AYP Determinations, 2004-Present.
Over the last three years, ED officials have published regulations and other policy
guidance on participation rates plus the treatment of limited English proficient pupils
and certain pupils with disabilities in assessments and the calculation of AYP for
schools and LEAs, in an effort to provide additional flexibility and reduce the
number of schools and LEAs identified as failing to make AYP. On March 29, 2004,
ED announced that schools could meet the requirement that 95% or more of pupils
(all pupils as well as pupils in each designated demographic group) participate in
assessments (in order for the school or LEA to make AYP) on the basis of average
participation rates for the last two or three years, rather than having to post a 95%

²⁰ See Thomas J. Kane and Douglas O. Staiger, Racial Subgroup Rules in School
Accountability Systems, preliminary draft (Sept. 2002) available at [http://www.sppsr.ucla.
edu/faculty/kane/kanestaigerracialsubgroupsrevi sion.pdf].

or higher participation rate each year. In other words, if a particular demographic
group of pupils in a public school has a 93% test participation rate in the most recent
year, but had a 97% rate the preceding year, the 95% participation rate requirement
would be met. In addition, the new guidance would allow schools to exclude pupils
who fail to participate in assessments due to a “significant medical emergency” from
the participation rate calculations. The new guidance further emphasizes the
authority for states to allow pupils who miss a primary assessment date to take make-
up tests, and to determine the minimum size for demographic groups of pupils to be
considered in making AYP determinations (including those related to participation
rates). According to ED, in some states, as many as 20% of the schools failing to
make AYP did so on the basis of assessment participation rates alone. It is not
known how many of these schools would meet the new, somewhat more relaxed
standard.
In a letter dated February 19, and proposed regulations published on June 24,

2004, ED officials announced two new policies with respect to LEP pupils.²¹ First,

with respect to assessments, LEP pupils who have attended schools in the United
States (other than Puerto Rico) for less than 10 months must participate in English
language proficiency and mathematics tests. However, the participation of such
pupils in reading tests (in English), as well as the inclusion of any of these pupils’
test scores in AYP calculations, is to be optional (i.e., schools and LEAs need not
consider the scores of first year LEP pupils in determining whether schools or LEAs
meet AYP standards). Such pupils are still considered in determining whether the

95% test participation has been met.

Second, in AYP determinations, schools and LEAs may continue to include
pupils in the LEP demographic category for up to two years after they have attained
proficiency in English. However, these formerly LEP pupils need not be included
when determining whether a school or LEA’s count of LEP pupils meets the state’s
minimum size threshold for inclusion of the group in AYP calculations, and scores
of formerly LEP pupils may not be included in state, LEA, or school report cards.
Both these options, if exercised, should increase average test scores for pupils
categorized as being part of the LEP group, and reduce the extent to which schools
or LEAs fail to meet AYP on the basis of LEP pupil groups.²²
Regulations addressing the application of the Title I-A standards and assessment
requirements to certain pupils with disabilities were published in the Federal
Register on December 9, 2003 (pp. 68698-68708). The purpose of these regulations
is to clarify the application of standard, assessment, and accountability provisions to
pupils “with the most significant cognitive disabilities.” Under the regulations, states
and LEAs may adopt alternate assessments based on alternate achievement
standards — aligned with the state’s academic content standards and reflecting

²¹ See 69 Federal Register 35462-35465, June 24, 2004; and [http://www.ed.gov/
policy/ gen/guid/secletter/040220.html ].
²² A bill introduced in the 108^th Congress, H.R. 3049, would have authorized the exclusion
of scores of LEP pupils who have resided in the United States for less than three years, and
would have allowed formerly LEP pupils to be included in that group for AYP calculation
purposes indefinitely.

“professional judgment of the highest achievement standards possible” — for a
limited percentage of pupils with disabilities.²³ The number of pupils whose
proficient or higher scores on these alternate assessments may be considered as
proficient or above for AYP purposes is limited to a maximum of 1.0% of all tested
pupils (approximately 9% of all pupils with disabilities) at the state and LEA level
(there is no limit for individual schools). SEAs may request from the U.S. Secretary
of Education an exception allowing them to exceed the 1.0% cap statewide, and
SEAs may grant such exceptions to LEAs within their state. According to ED staff,
three states in 2003-2004 (Montana, Ohio, and Virginia), and four states in
2004-2005 (the preceding three states plus South Dakota), received waivers to go
marginally above the 1.0% limit statewide. In the absence of a waiver, the number
of pupils scoring at the proficient level or higher on alternate assessments, based on
alternate achievement standards, in excess of the 1.0% limit is to be added to those
scoring below proficient in LEA or state level AYP determinations.
A new ED policy affecting an additional group of pupils with disabilities was
announced initially in April 2005, with more details provided on May 10, 2005.²⁴
The new policy is divided into short-term (affecting AYP determinations for the
2005-2006 school year, based on the results of assessments administered during the
2004-2005 school year) and long-term (affecting subsequent years) phases. It is
focused on pupils with “persistent academic disabilities,” whose ability to perform
academically is assumed to be greater than that of the pupils with “the most
significant cognitive disabilities” discussed in the above paragraph, but below that
of other pupils with disabilities. In ED’s terminology, these pupils would be assessed
using assessments based on modified achievement standards.
Under the short-term policy, in eligible states that have not yet adopted modified
achievement standards, schools may add to their proficient pupil group a number of
pupils with disabilities equal to 2.0% of all pupils assessed (in effect, deeming the
scores of all of these pupils to be at the proficient level).²⁵ This policy would be
applicable only to schools and LEAs that would otherwise fail to meet AYP
standards due solely to their pupils with disabilities group. According to ED staff,
as of the date of this report, 31 states have been authorized to exercise this short-term
flexibility. Alternatively, in eligible states that have adopted modified achievement
standards, schools and LEAs may count proficient scores for pupils with disabilities
on these assessments, subject to a 2.0% (of all assessed pupils) cap at the LEA and
state levels.

²³ This limitation does not apply to the administration of alternate assessments based on the
same standards applicable to all students, for other pupils with (non-cognitive or less severe
cognitive) disabilities.
²⁴ See [http://www.ed.gov/news/pressreleases/2005/05/05102005.html].
²⁵ This would be calculated based on statewide demographic data, with the resulting
percentage applied to each affected school and LEA in the state. In making the AYP
determination using the adjusted data, no further use may be made of confidence intervals
or other statistical techniques. (The actual, not just the adjusted, percentage of pupils who
are proficient must also be reported to parents and the public.)

Both the short term and longer term flexibility policies will apply only to states
meeting a number of eligibility criteria. For example, in order to be eligible for the
short-term flexibility, states must set a minimum group size (“n”) for pupils with
disabilities in AYP determinations equal to that for other pupil groups, “provide
information on actions taken to raise achievement for students with disabilities or
narrow the achievement gap and evidence that such efforts are improving student
achievement,” and submit a variety of assurances regarding the adoption and
implementation of alternate assessments and modified and alternate achievement
standards.
On December 15, 2005, ED published proposed regulations embodying the
longer-term policy for this group of pupils with disabilities. These proposed
regulations would affect standards, assessments, and AYP for a group of pupils with
disabilities who are unlikely to achieve grade-level proficiency within the current
school year, but who are not among those pupils with the most significant cognitive
disabilities (whose situation was addressed by an earlier set of regulations, discussed
above). For this second group of pupils with disabilities, states would be authorized
to develop “modified achievement standards” and alternate assessments linked to
these. The modified achievement standards must be aligned with grade-level content
standards, but may reflect reduced breadth or depth of grade-level content in
comparison to the achievement standards applicable to the majority of pupils. The
standards must provide access to grade-level curricula, and not preclude affected
pupils from earning a regular high school diploma.
As with the previous regulations regarding pupils with the most significant
cognitive disabilities, there would be no direct limit on the number of pupils who
take alternate assessments based on modified achievement standards. However, in
AYP determinations, pupil scores of proficient or advanced on alternate assessments
based on modified achievement standards may be counted only as long as they do not
exceed a number equal to 2.0% of all pupils tested at the state or LEA level (i.e., an
estimated 20% of pupils with disabilities); such scores in excess of the limit would
be considered to be “non-proficient.” As with the 1.0% cap for pupils with the most
significant cognitive disabilities, this 2.0% cap does not apply to individual schools.
In general, LEAs or states could exceed the 2.0% cap only if they did not reach the

1.0% limit with respect to pupils with the most significant cognitive disabilities.

Thus, in general, scores of proficient or above on alternate assessments based on
alternate and modified achievement standards may not exceed a total of 3.0% of all
pupils tested at a state or LEA level.²⁶ In particular, states would no longer be
allowed to request a waiver of the 1.0% cap regarding pupils with the most
significant cognitive disabilities.
The December 15 proposed regulations also include provisions that are widely
applicable to AYP determinations. First, states would no longer be allowed to use
varying minimum group sizes (“n”) for different demographic groups of pupils. This
would prohibit the frequent practice of setting higher “n” sizes for pupils with

²⁶ The 3.0% limit might be exceeded for LEAs, but only if — and to the extent that — the
SEA waives the 1.0% cap applicable to scores on alternate assessments based on alternate
achievement standards.

disabilities or LEP pupils than for other pupil groups. Second, when pupils take state
assessments multiple times, it would no longer be required that only the first test
administration be used in AYP determinations; states and LEAs could use the highest
score for pupils who take tests more than once. Finally, as with LEP pupils, states
and LEAs could include the test scores of former pupils with disabilities in the
disability subgroup for up to two years after such pupils have exited special
education.²⁷
Thus, eligible states and LEAs will be allowed to count as “proficient or above”
in AYP determinations the proficient or higher scores of up to 1.0% of all tested
pupils on “alternate assessments based on alternate achievement standards,” and of
up to an additional 2.0% of all tested pupils on “assessments based on modified
achievement standards.” For both groups, there is no limit for individual schools on
the percentage of pupils in either of these categories, and there is no limit on the
number or percentage of pupils to whom either type of alternate assessment may be
administered.
Finally, following the damage to school systems and dispersion of pupils in the
wake of Hurricanes Katrina and Rita in August and September 2005, interest in
the possibility of waiving some of the NCLBA’s assessment, AYP, or other
accountability requirements has been expressed by officials of states and LEAs
damaged by the storms, several of which have enrolled pupils displaced by them. In
policy letters to chief state school officers (CSSOs), the Secretary of Education has
emphasized forms of flexibility already available under current law, and announced
a number of policy revisions and potential waivers that might be granted in the
future.
In a September 29, 2005 letter to all CSSOs²⁸, the Secretary of Education noted
that they could exercise existing natural disaster provisions of the NCLBA — Section
1116(b)(7)(D) and (c)(10)(F) — to postpone implementing school or LEA
improvement designations and corrective actions for schools or LEAs failing to meet
AYP standards that are located in the major disaster areas in Louisiana, Alabama,
Mississippi, Texas, or Florida, without a specific waiver being required. In addition,
waivers of these requirements will be considered for other heavily impacted LEAs
or schools via the enrollment of large numbers of evacuee pupils. Further, all
affected LEAs and schools could establish a separate subgroup for displaced students
in AYP determinations based on assessments administered during the 2005-2006
school year. Pupils would appear only in the evacuee subgroup, not in other
demographic subgroups (e.g., economically disadvantaged or LEP). Waivers could
be requested in 2006 to allow schools or LEAs to meet AYP requirements if only the
test scores of the evacuee subgroup would prevent them from making AYP. In any

²⁷ In such cases, the former pupils with disabilities would not have to be counted in
determining whether the minimum group size was met for the disability subgroup.
²⁸ See [http://www.ed.gov/policy/elsec/guid/secletter/050929.html].

case, all such students must still be assessed and the assessment results reported to
the public.²⁹
Data on LEAs Failing to Meet AYP
As mentioned above, states receiving ESEA Title I-A grants are required to
establish and implement AYP standards not only for all public schools in the state,
but also for LEAs overall, and the state as a whole. While most attention, in both the
statute and implementation activities, thus far has been focused on application of the
AYP concept to schools, a limited amount of information is becoming available
about LEAs that fail to meet AYP requirements, and the consequences for them.
According to the Education Daily survey referred to above (in the discussion of
schools failing to meet AYP standards), 3,281 LEAs, or 23.7% of all LEAs, failed
to meet AYP standards on the basis of assessment results for the 2004-2005 school
year. Of these, 1,712 LEAs (12.4% of all LEAs), were identified for improvement
as a result of failing to meet AYP standards for two or more consecutive years.
More recently, the Year 4 report of the Center on Education Policy (CEP) on No
Child Left Behind implementation³⁰ found that an estimated 20% of all LEAs were
identified failed to meet AYP standards based on assessment results for the 2004-
2005 and immediately preceding school years.³¹ According to this report, the odds
of failing to meet AYP standards were much greater for urban (50%) LEAs than for
rural (11%) or suburban (26%) LEAs.
Selected AYP Implementation Issues
Aside from issues of timing, only limited analyses have thus far been conducted
of the extent to which state accountability plans are fully consistent with the detailed
requirements of the statute and regulations. Some analysts have concluded that ED
is allowing at least marginally increased flexibility, in comparison to the statute and
regulations, in approving state accountability plans thus far, although the approved
plans appear to closely mirror the detailed provisions of the authorizing statute and
regulations in most respects.³² Aspects of state AYP plans receiving special attention
include (1) the pace at which proficiency levels are expected to improve (e.g., equal
increments of improvement over the entire period, or much more rapid improvement

²⁹ For further information on this topic, see CRS Report RL33236, Education-Related
Hurricane Relief: Legislative Action, by Rebecca Skinner, et al.
³⁰ Center on Education Policy, “From the Capital to the Classroom: Year 4 of the No Child
Left Behind Act,” Mar. 2006, pp. 56, 62.
³¹ While there were AYP requirements for LEAs under the IASA, the application of these
requirements by states was apparently quite uneven, and the provisions for consequences
for LEAs that failed to meet AYP standards for multiple years were minimal.
³² See “States’ Plans Likely to Test ESEA Pliancy,” Education Week, Feb. 19, 2003; “ED
Approves Five States’ Accountability Plans; Flexibility Leads to More Questions,
Confusion,” Title I Monitor, Feb. 2003; “ED Makes Progress on Accountability Plans,” Title
I Monitor, May 2003; and “ED Shows Flexibility as State Plan Approval Concludes,” Title
I Monitor, June 2003.

expected in later years than at the beginning); (2) whether schools or LEAs must fail
to meet AYP with respect to the same pupil group(s), grade level(s) and/or subject
areas to be identified as needing improvement, or whether two consecutive years of
failure to meet AYP with respect to any of these categories should lead to
identification;³³ (3) the length of time over which pupils should be identified as being
LEP; (4) the minimum size of pupil groups in a school in order for the group to be
considered in AYP determinations or for reporting of scores; (5) whether to allow
schools credit for raising pupil scores from below basic to basic (as well as from
basic or below to proficient or above) in making AYP determinations; and (6)
whether to allow use of statistical techniques such as “confidence intervals” (i.e.,
whether scores are below the required level to a statistically significant extent) in
AYP determinations.
Another evolving issue is whether some states might choose to lower their
standards of “proficient” performance, in order to reduce the number of schools
identified as failing to meet AYP and make it easier to meet the ultimate NCLBA
goal of all pupils at the proficient level within 12 years. Reportedly, a few states
have redesignated lower standards (e.g., “basic” or “partially proficient”) as
constituting a “proficient” level of performance for Title I-A purposes, or established
new “proficient” levels of performance that are below levels previously understood
to constitute that level of performance, and other states are considering such
actions.³⁴ In the affected states, this would increase the percentage of pupils deemed
to be achieving at a “proficient” level, and reduce the number of schools failing to
meet AYP standards.
While states are generally free to take such actions without jeopardizing their
eligibility for Title I-A grants, since performance standards are ultimately state-
determined and have always varied widely, such actions have elicited public criticism
from ED. In a policy letter dated October 22, 2002, the Secretary of Education stated
that
Unfortunately, some states have lowered the bar of expectations to hide the low
performance of their schools. And a few others are discussing how they can
ratchet down their standards in order to remove schools from their lists of low
performers. Sadly, a small number of persons have suggested reducing standards
for defining ‘proficiency’ in order to artificially present the facts.... Those who
play semantic games or try to tinker with state numbers to lock out parents and
the public, stand in the way of progress and reform. They are the enemies of³⁵

equal justice and equal opportunity. They are apologists for failure.
³³ Reportedly, ED has approved state accountability plans under which schools or LEAs
would be identified as failing to meet AYP only if they failed to meet the required level of
performance in the same subject for two or more consecutive years, but has not approved
proposals under which a school would be identified only if it failed to meet AYP in the same
subject and pupil group for two or more consecutive years.
³⁴ See, for example, “States Revise the Meaning of ‘Proficient’,” Education Week, Oct. 9,

2002.

³⁵ See [http://www.ed.gov/policy/elsec/guid/secletter/021022.html?exp=0].

Program Improvement and Corrective Actions
The NCLBA requires states and LEAs to identify schools or LEAs that fail to
meet state AYP standards for two or more consecutive years as needing
improvement, and to take a variety of corrective actions with respect to schools or³⁶
LEAs that fail to meet AYP standards for four or more consecutive years. While
states are encouraged to establish unitary accountability systems affecting all public
schools, the Title I-A statute requires them only to take corrective actions regarding
schools and LEAs that receive Title I-A funds, not all schools and LEAs. Thus, the
corrective actions described below need be taken with respect to a large majority of
LEAs³⁷ and approximately 58% of all public schools.
School Improvement and Corrective Actions
Title I-A schools that fail to meet AYP for two consecutive years or more must
be identified as needing improvement. At this and every subsequent stage of the
program improvement and corrective action process, the LEA and/or SEA are to
arrange for technical assistance, “based on scientifically based research” (Section
1116(b)(4)(c)), to be provided to the school. Funding for this purpose is provided in
part through the authorization for states to reserve shares of their total Part A grants
(0.5% for FY2001, 2% for FY2002-FY2003 and 4% thereafter), as well as a separate
authorization for additional funds ($500 million for FY2002 and “such sums as may
be necessary” for subsequent years³⁸), for school improvement activities. Parents of
pupils in these schools are to be notified of the school’s identification as needing
improvement. Any school identified as needing improvement must spend at least

10% of its Title I-A grant for staff professional development activities.

In addition, pupils attending schools that have failed to meet AYP standards for
two consecutive years or more must be provided with options to attend other public
schools that meet AYP standards.³⁹ Public school choice must be offered to such
pupils by the next school year (unless prohibited by state law). LEAs are generally
required only to offer public school choice options within the same LEA; however,
if all public schools in the LEA to which a child might transfer have been identified
as needing improvement, then LEAs “shall, to the extent practicable,” establish

³⁶ An analogous, separate series of provisions applies to schools operated by the Bureau of
Indian Affairs (BIA).
³⁷ Over 90% of all LEAs receive Title I-A grants. In general, those that do not participate
have very small enrollments and/or exceptionally low school-age child poverty rates, as a
result of which they do not meet the minimum thresholds for Basic Grants of 10 school-age
children from poor families and a 2% school-age child poverty rate.
³⁸ No funds have been appropriated under this authority for FY2002-FY2006. As is
discussed later in this report, he House and Senate Appropriations Committee bills for
FY2007 would provide $200 million and $100 million, respectively, for this purpose.
³⁹ ED published a “policy letter” on these provisions on June 14, 2002; see [http://www.ed.
gov/ policy/ elsec/guid/secletter/020614.html ].

cooperative agreements with other LEAs to offer expanded public school choice
options.⁴⁰
Transportation must be provided to pupils utilizing public school choice
options. Children who transfer to other schools under this authority are to be allowed
to remain in the school to which they transfer until they complete the highest grade
in that school; however, the LEA is no longer required to provide transportation
services if the originating school meets AYP standards for two consecutive years.
If a Title I-A school fails to meet AYP standards for a third year,⁴¹ pupils from
low-income families in the school must be offered the opportunity to receive
instruction from a supplemental services provider of their choice,⁴² in addition to
continuing to offer public school choice options. States are to identify and provide
lists of approved providers of such supplemental instructional services — which
might include public or private schools, LEAs, commercial firms, or other entities
or organizations — and monitor the quality of the services they provide. The amount
spent per child for supplemental services is to be the lesser of the actual cost of the
services or the LEA’s Title I-A grant per (poor) child counted in the national
allocation formula (approximately $1,400 on average for FY2006).⁴³

⁴⁰ This is an extension and expansion of provisions contained in FY2000 and FY2001
appropriation acts for the Department of Education. Under that legislation, LEAs were
required to offer to pupils attending public schools in need of improvement the option to
enroll in different public schools within the same LEA (unless it was not possible, consistent
with state and local law, to offer such choice options to all eligible pupils). The FY2001
legislation exempted all LEAs in several small-population states (those receiving a minimum
state grant under either the Basic or Concentration Grant formulas) from this requirement.
⁴¹ Once a school has been identified for improvement — i.e., it has failed to meet AYP
standards for two consecutive years — it may be removed from this status if it meets AYP
standards for two consecutive years. If, on the other hand, it fails to meet AYP standards
for additional years after being identified for improvement, it faces a variety of additional
sanctions, as is described above. If a school that has been identified for improvement meets
AYP standards for one year after being identified, then implementation of the next stage of
sanctions may be delayed one year.
⁴² For a more detailed discussion of issues related to this provision, see CRS Report
RL31329, Supplemental Educational Services for Children From Low-Income Families, by
David Smole. Policy guidance on the supplemental services requirement was published by
ED on Aug. 22, 2002; see [http://www.ed.gov/policy/elsec/guid/suppsvcsguid.pdf].
⁴³ A limited number of states and LEAs have been allowed by ED to reverse the order for
introducing public school choice and supplemental services — i.e., to offer supplemental
services after two years of failing to meet AYP standards, and school choice after three
years.

LEAs are to use funds equal to as much as 20%⁴⁴ of their Title I-A funds for
transportation of pupils exercising public school choice options plus supplemental
services costs (combined), although the grant to any particular school identified for
improvement, corrective action, or restructuring may not be reduced by more than
15%. LEAs are also authorized to use any funds that might be available under
Innovative Programs (ESEA Title V-A) to pay additional supplemental services
costs; states are authorized to use funds they reserve for program improvement or
administration under Title I-A, or funds available to them under Title V-A, to pay
additional supplemental services costs. If insufficient funds are available to pay the
costs of supplemental services for all eligible pupils whose families wish to exercise
this option, LEAs may limit services to the lowest-achieving eligible pupils. The
requirement to provide supplemental services may be waived if none of the approved
providers offers such services in or near an LEA.
One or more of a specified series of additional “corrective actions” must be
taken with respect to Title I-A schools that fail to meet AYP for a fourth year. These
“corrective actions” include replacing relevant school staff; implementing a new
curriculum; decreasing management authority at the school level; appointing an
outside expert to advise the school; extending the school day or year; or changing the
internal organizational structure of the school. Which of these specific actions is to
be taken is left to state and/or LEA discretion.
Title I-A schools that fail to meet AYP standards for a fifth year must be
“restructured.” Up to one year of plan development may take place before the
restructuring plan must be implemented. Such restructuring must consist of one or
more of the following “alternative governance” actions: reopening as a charter
school; replacing all or most school staff; state takeover of school operations (if
permitted under state law); or other “major restructuring” of school governance. In
September 2005, the Education Commission of the States (ECS) published a report
on actions taken in the 13 states where one or more schools reached the final stage
of school improvement (year five) in 2004-2005.⁴⁵ In general, the authors of the ECS
study concluded that (1) SEAs vary widely in their involvement in the restructuring
process; (2) in most cases, the restructuring options applied to affected schools have
been relatively mild to “moderate” (e.g., changing curriculum, implementing a school
reform strategy, or altering the school’s management structure) rather than “strong”
(e.g., reconstituting or closing the school, or converting it to a charter school); and
(3) political difficulties have arisen in cases where stronger forms of restructuring
have been applied. In several states, some restructuring options could not be
implemented because they are not authorized under state law (e.g., charter schools).

⁴⁴ More specifically, LEAs are to use an amount equal to 5% of their Title I-A grant (unless
less is needed) for public school choice transportation costs, 5% (unless less is needed) for
supplemental services, and up to an additional 10% for either. These funds may be taken
from the LEA’s Title I-A grant, or from other federal, state, or local sources. These are
minimum amounts, if necessary to meet demands for public school choice and supplemental
services; LEAs may use funds above these levels if they choose to do so (and if needed).
Under program regulations, costs of administering school choice and supplemental services
programs are not to be counted in the application of these caps.
⁴⁵ See [http://www.ecs.org/clearinghouse/64/28/6428.pdf].

LEA Improvement and Corrective Actions
Procedures analogous to those for schools are to apply to LEAs that receive
Title I-A grants and fail to meet AYP requirements. As with schools, while states are
encouraged to implement unitary accountability systems applicable to all pupils and
schools, states may base decisions regarding LEA status and corrective actions only
on the Title I-A schools in each LEA (and, in the case of targeted assistance schools,
only on the individual pupils served by Title I-A). Further, as noted earlier,
identification as needing improvement and corrective actions need be taken only with
respect to LEAs that receive Title I-A grants.
LEAs that fail to meet state AYP standards for two consecutive years or more
are to be identified as needing improvement. Technical assistance, “based on
scientifically based research” (Section 1116(c)(9)(B)), is to be provided to the LEA
by the state educational agency (SEA); and parents of pupils served by the LEA are
to be notified that it has been identified as needing improvement.
SEAs are to take corrective actions with respect to LEAs that fail to meet state
AYP standards for four years. Such corrective action is to include at least one of the
following (at SEA discretion): reducing administrative funds or deferring program
funds; implementing a new curriculum; replacing relevant LEA staff; removing
specific schools from the jurisdiction of the LEA; appointing a receiver or trustee to
administer the LEA; abolishing or restructuring the LEA; authorizing pupils to
transfer to higher-performing schools in another LEA (and providing transportation)
in conjunction with at least one of the previous actions.
Finally, ED is required to establish a peer review process to evaluate whether
states overall have met their statewide AYP goals. States that fail to meet their goals
are to be listed in an annual report to Congress, and technical assistance is to be
provided to states that fail to meet their goals for two or more consecutive years.
Provisions for more extensive performance bonuses and sanctions for states, which
were contained in the original House- and Senate-passed versions of the NCLBA,
were not included in the conference version that was signed into law.
Transition Provisions
The corrective actions outlined above are to be applied not only to schools and
LEAs newly identified as having failed to meet AYP standards for two or more
consecutive years, but also to schools and LEAs that have been so identified in⁴⁶
previous years and have continued to fail to meet AYP since being identified. The

⁴⁶ Under the ESEA statute and regulations, schools or LEAs that had been identified, as of
the date of enactment of the NCLBA (Jan. 8, 2002), for school/LEA improvement or
corrective actions were to be identified for, and subjected to, school/LEA improvement and
corrective actions under the NCLBA during the 2002-2003 school year. However,
according to ED, the statutory provisions are ambiguous regarding the particular group of
schools or LEAs that failed to meet AYP requirements for a second consecutive year
specifically on the basis of assessment results for the 2001-2002 school year. While some
(continued...)

actions taken with respect to such schools or LEAs is to be based on the number of
consecutive years during which they have failed to meet AYP standards, as outlined
above.
Numerous schools, and a much smaller number of LEAs, have failed to meet
state AYP standards (based primarily on transitional assessments and pre-NCLBA
AYP provisions) consistently since initial implementation of the 1994 IASA in the
1995-1996 school year. In most cases, these schools faced no substantial corrective
actions previously, in part because the corrective action provisions of the 1994
version of the ESEA were much less specific than those of the NCLBA, and in
particular because the IASA provided that most forms of corrective action were not
to be implemented before states adopted final standards and assessments meeting all
of the requirements of the 1994 IASA, which no state had done before the 2000-2001
school year. The only exceptions to this pattern were provisions in FY2000 and
FY2001 appropriations acts that required public school choice options to be provided
to pupils attending certain Title I-A schools that failed to meet AYP standards, but
those provisions were more narrow in scope and application than those of the
NCLBA. As was discussed earlier in this report, schools and LEAs have in past
years been identified on the basis of widely varying, “transitional” AYP standards
developed by the states, raising a number of issues. Any school or LEA that has been
identified for improvement or corrective action may be removed from this status if
it meets state AYP standards for two consecutive years.
Data on the use of the school choice and supplemental services in most states
during the 2003-2004 school year were recently published by Education Week.⁴⁷
These data were reported by the states to ED, and obtained by Education Week
through a Freedom of Information Act request. Data are provided for 45 states plus
the District of Columbia with respect to public school choice, and 46 states plus the
District of Columbia with respect to supplemental services. They indicate a low rate
of utilization of the supplemental services option by eligible pupils, and a very low
rate of utilization of the school choice option by the much larger group of pupils
eligible for that. Nationwide, the data indicate that 11.3% of eligible pupils received
supplemental services in 2003-2004, with individual state rates ranging from zero for
seven states (although four of these states reported that they had no eligible pupils in
that year) to a high of 49.1% for Utah. Only 1.0% of eligible pupils were reported
as taking advantage of school choice options under the NCLBA, with this rate
ranging from zero in seven states (three of which reported that they had no pupils
eligible to transfer that year) to a maximum of 94.4% for Alabama. It is unclear
whether such low participation rates in most states, if continuing into the present,

⁴⁶ (...continued)
observers disagree with this interpretation, program regulations (34 C.F.R. § 200.32(e))
gave SEAs and LEAs the option whether or not to identify such schools or LEAs for
improvement effective in 2002-2003 (although they must be so identified if they fail to meet
AYP on the basis of assessment results for 2001-2002 and 2002-2003). The regulations
provided comparable flexibility regarding whether SEAs and LEAs may remove from
school/LEA improvement status any schools or LEAs that met AYP standards for a second
consecutive year on the basis of assessment results for 2001-2002.
⁴⁷ See [http://www.edweek.org/media/27admin.pdf].

result from delayed implementation of these provisions by states and LEAs, low
levels of parental interest, inadequate dissemination of information about the options
to parents, limited availability of alternative public schools or tutorial services, or
other factors.
Issues
A number of issues have been raised with respect to these corrective action
provisions of the NCLBA, including the following:
^!Might relatively large percentages of public schools participating in
Title I-A be identified for corrective actions, with the result that the
ability of states and LEAs to provide substantial technical assistance,
school choice and supplemental services options, and other
resources necessary for effective corrective actions for all of these
schools, would be seriously limited?
^!Is the goal of having all pupils at the proficient or advanced level of
achievement by 2013-2014 realistic? Might it result in increasing
percentages of schools and LEAs failing to meet AYP in future
years, or might it have the opposite effect of encouraging states to
weaken their performance standards? Might this goal lead states to
lower their standards for what constitutes proficient or advanced
levels of achievement, or to develop strategies to limit identification
of schools or LEAs for improvement through extensive use of high
minimum group sizes, narrow confidence intervals, and the like? Or
might such a highly ambitious goal provide the stimulus for major
improvements in the quality and equity of public education services?
^!Will a meaningful range of public school choice options be available
to pupils in LEAs that are small and/or sparsely populated, or in
highly disadvantaged LEAs where a large percentage of public
schools may fail to meet state AYP standards? Due to these and
other limiting factors, might relatively few eligible families actually
exercise the school choice and supplemental services options offered
under the NCLBA?
^!What sorts of entities, organizations, firms, or institutions will be
available to provide supplemental services to eligible pupils? Will
they be willing to provide these services for the level of funding
made available under the NCLBA provisions? How likely is it that
supplemental services provided by third parties will be more
effective than conventional public school instruction?
^!Will states and LEAs implement the NCLBA provisions for
corrective actions and restructuring for schools and LEAs in a timely
and effective manner?
^!What might be the incentive effect of the very limited sanctions, and
lack of performance bonuses, for states overall (as opposed to
individual schools or LEAs)?

Allocation Formula Provisions
ESEA Title I-A has four separate formulas — Basic, Concentration, Targeted,
and Education Finance Incentive Grants (EFIG) — for the allocation of funds to
states and LEAs. However, once these funds reach LEAs, they are no longer treated
separately — they are combined and used for the same program purposes. The
primary rationale for using four different formulas to allocate a share of the funds for
a single program is that the formulas have distinct allocation patterns — providing
varying shares of allocated funds to different types of localities. In addition, some
of the formulas contain elements that are deemed to have important incentive effects
or to be significant symbolically — such as the equity and effort factors in the EFIG
formula — in addition to their impact on allocation patterns.
In the discussion below, we begin with a general discussion of the
characteristics of the Title I-A allocation formulas, in order to provide context for the
subsequent review of the Title I-A formula amendments in the NCLBA.
General Characteristics of the Title I-A Allocation Formulas
There are several common elements of the four Title I-A allocation formulas, as
amended by the NCLBA:⁴⁸
^!Each of them has a population factor, which is the same in each of
the four formulas — children aged 5-17: (1) in poor families,
according to the latest available data that are satisfactory to the
Secretary of Education, and applying the Census Bureau’s standard
poverty income thresholds (approximately 95.5% of all formula
children for FY2004);⁴⁹ (2) in certain institutions for neglected or
delinquent children and youth or in certain foster homes (4.4% of all
formula children); and (3) in families receiving Temporary
Assistance for Needy Families (TANF) payments above the poverty
income level for a family of four (only about 0.1% of all formula
children).
^!Under each of these formulas, this population factor is multiplied by
an expenditure factor, which is based on state average expenditures
per pupil (AEPP), subject to minimum and maximum levels.⁵⁰

⁴⁸ This discussion of formulas is based on their current provisions, incorporating where
relevant amendments under the NCLBA, which are discussed in greater detail in the
succeeding section of this report.
⁴⁹ These data are from the Census Bureau’s Small Area Income and Population Estimates
(SAIPE), which provides estimates of poor and total children aged 5-17 for LEAs, counties,
and states. These intercensal estimates are updated every year. As of this writing, the latest
SAIPE data are for income year 2003; these estimates were published in Nov. 2005, and will
presumably be used for FY2006 Title I-A allocations.
⁵⁰ For all except the EFIG formula, the minimum is 80% and the maximum is 120% of the
national average. For the EFIG formula, the minimum and maximum are 85% and 115%.
(continued...)

Further, as is discussed below, special expenditure factor provisions
apply to Puerto Rico. Due to the expenditure factor, LEAs in high-
spending states receive up to 50% more per child counted in the
Title I-A formulas than LEAs in low-spending states. The rationale
for this factor is that it reflects differences in the cost of providing
public education, and provides an incentive to increase spending.
However, it is a spending, not a cost, index; it reflects ability and
willingness to spend on public education as well as cost differences;
it is crude (affecting all LEAs in a state equally); and the incentive
it provides to increase state and local spending for public education
is relatively small.
^!Each of the formulas has a hold-harmless provision — a minimum
annual grant level for LEAs that is calculated as a percentage of the
previous year’s grant under each formula.⁵¹
^!The four Title I-A formulas include a state minimum grant level as
well — in general, no state is to receive less than approximately
0.25% of allocated funds up to the FY2001 appropriation level, and
approximately 0.35% of funds above that level.⁵²
^!Finally, each formula has a minimum eligibility threshold for LEAs
— a minimum number of poor and other formula children, and/or
a minimum school-age child poverty rate,⁵³ in order to be eligible for
grants (even hold-harmless amounts) in most cases. The LEA
minimum eligibility threshold varies by formula — it is 10 formula

⁵⁰ (...continued)
These amounts are further multiplied by a “federal share” of 40% to determine maximum
authorized grants, subject to state minimum, LEA hold-harmless, and other provisions.
⁵¹ The hold-harmless rate under each formula is now 85%-95% of the previous year grant,
depending on the LEA’s school-age child poverty rate (children counted for Title I-A grants
as a percentage of total school-age population). If the LEA poverty rate is 30% or above,
the hold-harmless rate is 95%; if the poverty rate is 15%-30%, the hold-harmless rate is
90%; and if the poverty rate is less than 15%, the hold-harmless rate is 85%. Note: With
a partial exception for certain LEAs under the Concentration Grant formula, hold-harmless
rates are applicable only to LEAs meeting the eligibility thresholds for each formula.
⁵² More specifically, the minimum is up to 0.25% for Basic and Concentration Grants at
funding levels up to the FY2001 appropriation for those formulas, and up to 0.35% for Basic
and Concentration Grants above the FY2001 level plus all funds allocated under the
Targeted and EFIG formulas. In addition, these state minimums are capped in all cases;
under the Basic, Targeted, and EFIG formulas, a state may not, as a result of the state
minimum provision, receive more than the average of — (1) 0.25% of the total FY2001
amount for state grants plus 0.35% of the amount above this, and (2) 150% of the national
average grant per formula child, multiplied by the number of formula children in the state.
Under the Concentration Grant formula, a state may not, as a result of the state minimum
provision, receive more than the average of — (1) 0.25% of the total FY2001 amount for
state grants plus 0.35% of the amount above this, and (2) the greater of — (i) 150% of the
national average grant per formula child, multiplied by the number of formula children in
the state, or (ii) $340,000.
⁵³ Throughout this report, this term refers to the number of poor and other children counted
in the Title I-A allocation formulas, expressed as a percentage of the total school-age
population for the LEA.

children and a school-age child poverty rate of 2% for Basic Grants,
a 5% school-age child poverty rate for the Targeted and EFIG
formulas, and 6,500 formula children or a 15% school-age child
poverty rate for Concentration Grants.
In addition to these common elements, two of the Title I-A formulas have
unique features:
^!For the Targeted Grant formula, as well as the intra-state allocation
of funds under the EFIG formula, the poor and other children
counted in the formula are assigned weights based on each LEA’s
school-age child poverty rate and number of poor school-age
children. As a result, an LEA would receive higher grants per child
counted in the formula, the higher its poverty rate or number. Under
the Targeted Grant formula, the weighting factors are applied in the
same manner nationwide — poor and other formula children in
LEAs with the highest poverty rates have a weight of up to four, and
those in LEAs with the highest numbers of such children have a
weight of up to three, compared to a weight of one for formula in the
lowest rate and number ranges. In contrast, under the EFIG formula,
the degree of targeting (in terms of the ratio of the highest to the
lowest weight) varies depending on the value of each state’s equity
factor (three different weighting scales are used for states with equity
factors within specified ranges). Under both formulas, the higher of
its two weighted child counts (based on numbers and percentages)
is used in calculating grants for each LEA.
^!The EFIG formula has two unique factors — an equity factor and an
effort factor — in addition to the population and expenditure factors.
The equity factor is based upon a measure of the average disparity in
expenditures per pupil among the LEAs of a state called the
coefficient of variation (CV), which is expressed as a percentage of⁵⁴
the state average expenditure per pupil. In calculating grants, the
equity factor is subtracted from 1.30. As a result, the lower a state’s
expenditure disparities among its LEAs, the lower is its CV, and the
higher is its multiplier.
The effort factor is based on a comparison of state expenditures per
pupil for public elementary and secondary education with state
personal income per capita. This ratio for each state is further
compared to the national average ratio, resulting in an index number
that is greater than 1.0 for states where the ratio of expenditures per
pupil for public elementary and secondary education to personal

⁵⁴ In the CV calculations for this formula, an extra weight (1.4 vs. 1.0) is applied to
estimated counts of children from poor families. Limited purpose LEAs, such as those
providing only vocational education, are excluded from the calculations, as are small LEAs
with enrollment below 200 pupils. There are special provisions for states meeting the
expenditure disparity standard established in regulations for the Impact Aid program (ESEA
Title VIII), as well as the single-LEA areas of Hawaii, Puerto Rico, and D.C.

income per capita is greater than average for the Nation as a whole,
and below 1.0 for states where the ratio is less than average for the
Nation as a whole. Narrow bounds of 0.95 and 1.05 are placed on the
resulting multiplier, so that its effects on state grants is limited.
Under the Basic, Concentration, and Targeted Grant formulas, maximum grants
are calculated by multiplying the population factor by the expenditure factor for all
LEAs meeting the minimum eligibility thresholds. The EFIG formula differs from
the others both in terms of its use of unique formula factors and in being a two-stage
formula. First, state total grants are calculated by multiplying the population factor
by the expenditure factor, by 1.3 minus the equity factor, and by the effort factor.
Then, as is described below, these state total grants are allocated to LEAs on the basis
of a weighted population factor. Under all four formulas, maximum amounts are
reduced proportionally to the aggregate level of available funds, subject to LEA hold-
harmless and state minimum grant provisions.
Title I-A Allocation Formula Amendments Under the NCLBA
The following section of this report focuses specifically on the aspects of the
Title I-A formulas that were revised by the NCLBA. Overall, the NCLBA made a
number of relatively modest changes to the Basic, Concentration, and Targeted Grant
formulas, while substantially amending the EFIG formula. In addition,
appropriations legislation for FY2002 and subsequent fiscal years has provided funds
for each of the four formulas; in previous years only the Basic and Concentration
Grant formulas were funded. This was consistent with the NCLBA provision that,
in the allocation of Title I-A funds, an amount equal to the FY2001 appropriation is
to be allocated under the Basic and Concentration Grant formulas, and any increases
above the FY2001 level are to be allocated under the Targeted Grant or the EFIG
formula.⁵⁵
EFIG Formula Amendments. Major changes were made to the EFIG⁵⁶
formula by the NCLBA. First, while it retained its two-stage structure — one
mechanism is used to allocate funds to states, while a second is used to suballocate
state total grants to LEAs — the revised EFIG formula has its own, distinct substate
allocation formula. Previously, state total EFIG grants would have simply been
allocated to LEAs in proportion to total grants under the other three (Basic,
Concentration, and Targeted Grant) formulas. Under the NCLBA, EFIG grants are
to be allocated within states under a variation of the Targeted Grant formula, but with
the degree of targeting — the ratio of the weight applied to formula children in the
highest poverty ranges compared to the weight for such children in the lowest poverty
ranges — varying in three stages. The stage, or degree of targeting, used for substate
allocation varies depending on each state’s equity factor — the higher the equity
factor (and therefore the greater the disparities in expenditures per pupil among a

⁵⁵ In practice, appropriations for FY2003-FY2005 for Basic Grants have been slightly below
the FY2001 level, due to the application of small “across the board” funding reductions.
⁵⁶ For additional details, see CRS Report RL31256, Education Finance Incentive Grants
Under ESEA Title I-A, by David P. Smole.

state’s LEAs), the greater will be the degree of targeting on high-poverty LEAs in the
intrastate allocation of EFIG funds.
Second, in the allocation of funds to states, the population factor is changed
from total school-age children to the same count of poor and other children used to
calculate Basic, Concentration, and Targeted Grants. This change in the most
fundamental formula factor results in a pattern of allocations under this formula that
is substantially more similar to those of the other three formulas than would have
been the case in the past (when the population factor was total school-age children),
despite the other, distinctive factors in the EFIG formula.
Third, a variant of the state expenditure factor used in the other three Part A
formulas is added to the EFIG formula; previously, this was the only Title I-A
formula without an expenditure factor. For the EFIG formula, the floor and ceiling
bounds on the expenditure factor are marginally narrowed — they are 85% and 115%
of the national average, rather than 80% and 120% as under the other three formulas.
Finally, the equity and effort factors used in the allocation of EFIG grants to
states remain essentially unchanged from previous law.⁵⁷ As noted above, each
state’s equity factor will also determine which of three variations of the Targeted
Grant formula will be used for intrastate allocation of EFIG funds. The lowest
degree of targeting, which is the same as the nationwide targeting under the Targeted
Grant formula, will apply to states with an equity factor below 0.10 (14 states plus
the District of Columbia and Puerto Rico for FY2003). A middle range of intrastate
targeting, which is 50% greater than under the Targeted Grant formula (in terms of
the ratio of child weights for the highest-poverty LEAs compared to the lowest
poverty LEAs), will apply in the majority of states (35) with an equity factor equal
to or above 0.10 and below 0.20. Finally, the greatest degree of targeting, twice as
great as under the Targeted Grant formula, will apply in states with an equity factor
of 0.20 or above (one state).
Formula Revisions for Puerto Rico. The relative share of funds allocated
to Puerto Rico will increase over time as a result of two NCLBA amendments to the
Title I-A formulas. First, a provision that has reduced the expenditure factor for
Puerto Rico below the minimum applicable to the 50 states plus the District of
Columbia will be gradually eliminated. Previously, for Puerto Rico only, the
minimum expenditure factor for each of the four allocation formulas was further
multiplied by the ratio of the Puerto Rico average expenditure per pupil divided by
the lowest average for any state. For FY2001, the last pre-NCLBA year, this ratio

⁵⁷ A few minor revisions were made to the provisions for calculating state equity factors.
For example, under the 1994 IASA, for states with separate elementary or secondary (as
opposed to unified K-12) LEAs, a special rule provided for separate calculation of the CV
for each sector of LEAs, with these figures to be combined in proportion to relative
enrollment in each sector to establish a statewide CV; under the NCLBA, data from
elementary, secondary, and unified LEAs are combined at all stages of calculating CVs and
the equity factor. In addition, the 1994 version contained authority for the Secretary of
Education to revise the equity factor to adjust for regional variation in costs or the differing
costs of meeting the needs of LEP pupils or those with disabilities; this authority was
deleted from the NCLBA.

was approximately 75.0%; as a result, the grant to Puerto Rico was approximately
one-third less than the amount it would have received if it were treated fully in the
same manner as the 50 states and the District of Columbia. The NCLBA places a
floor on this ratio, which was 77.5% for FY2002, 80.0% for FY2003, 82.5% for
FY2004, etc., in steps until it reaches 100.0% — i.e., the same minimum expenditure
factor as for a state — for FY2007 and beyond. This increase is not supposed to take
effect in any year if it would result in any state or the District of Columbia receiving
total Title I-A grants below the amount it received for the preceding year.
Second, a cap on the aggregate weight applied to the population factor for
Puerto Rico (only) under the Targeted Grant formula is marginally raised (from 1.72
to 1.82). This provides that the share of Targeted Grants allocated to Puerto Rico
will be approximately equal to its share of grants under the Basic and Concentration
Grant formulas for FY2001. While it provides an increase for Puerto Rico, compared
to the previous Targeted Grant cap, the remaining cap still reduces grants below the
level that would obtain if there were no cap at all (i.e., if Puerto Rico were treated in
the same manner as the 50 states and the District of Columbia), since Puerto Rico’s
high number and percentage of poor school-age children would translate into a
significantly higher weighting factor if not capped.
Largely as a result of these provisions, the Title I-A grants to Puerto Rico have
risen substantially in recent years, from $274.4 million for FY2001, the last pre-
NCLBA year, to $333.3 million for FY2002, $402.2 million for FY2003, and $449.2
million for FY2004.
Other NCLBA Formula Amendments. The NCLBA applies a hold-
harmless rate of 85%-95% of previous year grants (the higher an LEA’s child poverty
rate, the higher is the hold-harmless percentage) to each of the four allocation
formulas. Previously, this rate applied only to Basic and Targeted Grants — there
was no hold harmless in the authorizing statute for Concentration or EFIG Grants.
For Concentration Grants (only), the hold-harmless provision applies to all LEAs that
received grants in the preceding year, not just those that currently meet the eligibility⁵⁸
criteria for this formula, except that if an LEA fails to meet such criteria for four
successive years, then the hold harmless would no longer apply.⁵⁹
State minimum grants are increased from up to 0.25% under current law to up
to 0.35%, but only with respect to funds above the FY2001 level (see footnote 42).
P.L. 107-110 also provides for the use of population data on school-age children in
poor families that is updated annually, rather than every second year previously. As
is discussed later in this report, the Census Bureau began to publish annual updates

⁵⁸ It has generally been ED’s policy to apply hold-harmless rates only to LEAs or other
grantees that meet basic program eligibility criteria.
⁵⁹ A primary rationale for this special provision limited to Concentration Grants is that
several LEAs were eligible for, and received, Concentration Grants in years preceding
FY1999, when these were calculated initially on the basis of counties, not LEAs. These
LEAs continued to receive grants for FY1999 through FY2001 due to special hold-harmless
provisions in annual appropriations legislation. For FY2002 and future grants, the NCLBA
hold-harmless provision applies to Concentration Grants for these LEAs.

in November 2003. Further, the NCLBA revised the thresholds for application of
varying weights to poor and other formula children in different poverty rate and
number ranges under the Targeted and EFIG (intrastate) formulas, to reflect the latest
available population estimates as of the time the NCLBA was enacted.⁶⁰
Targeting on High-Poverty LEAs
Under the Four Title I-A Formulas
For the last several years, the primary issue regarding the Title I-A allocation
formulas has been the extent to which funds are targeted on high-poverty LEAs.
Over 90% of the Nation’s LEAs receive grants under ESEA Title I-A, largely
because the eligibility thresholds for three of the four allocation formulas are
relatively low.⁶¹ In general, all LEAs receive Title I-A grants except those that have⁶²
extraordinarily low school-age poverty rates and/or have extremely few pupils. A
few LEAs (including certain charter schools that are treated as separate LEAs under
state law) are eligible for relatively small Title I-A grants, but do not choose to
participate in the program, at least in part because the administrative responsibilities
accompanying participation are perceived to exceed the value of the prospective
grants.
Table 1, below, presents the distribution of Title I-A grants⁶³ among LEAs
grouped by poverty rate quintile.⁶⁴ Each quintile contains LEAs with one-fifth of the
Nation’s school-age children in poor families, based on the Census Bureau
population estimates used in calculating FY2006 grants (those for income year 2003).
Table 1 lists the percentage share (of the national total) of Title I-A grants that are
allocated to LEAs in each poverty quintile. These data are provided separately for
each of the four Title I-A allocation formulas, as well as for total grants for FY2006.
As illustrated in Table 1, the share of Title I-A funds allocated to LEAs in
various poverty rate ranges varies significantly among the four allocation formulas.

⁶⁰ These ranges are structured so that one-fifth of the Nation’s formula children are in LEAs
in each quintile on both the number and poverty rate scales. The previous ranges were based
on 1990 census data, while the NCLBA ranges are based on income year 1997 SAIPE
estimates.
⁶¹ In order to be eligible for Title I-A Basic Grants, LEAs must have at least 10 children
counted in the formulas for grants to LEAs and a school-age child poverty rate of at least
2%. For Targeted and Education Finance Incentive Grants, the LEA eligibility criteria are
a 5% school-age child poverty rate and 10 formula children. For Concentration Grants,
LEAs must have a 15% school-age child poverty rate or 6,500 formula children.
⁶² According to program data for FY2001, approximately two-thirds of the LEAs receiving
no Title I-A grants have a total number of school-age children of less than 100.
⁶³ Except for analyses of FY2001 grants, which were based on only the Basic and
Concentration Grant formulas under previous law, all of the analyses in this report are based
on FY2002-FY2005 grants, using the Title I-A allocation formulas as modified by the No
Child Left Behind Act, P.L. 107-110.
⁶⁴ For the LEA-level analyses in this report, “poverty rates” are based on total children
counted in the Title I-A allocation formulas divided by total school-age population.

For Basic Grants, the share is similar for each quintile of LEAs, varying only within
the narrow range of 19.1%-21.1%.
For Concentration Grants, the share of funds allocated to LEAs in each poverty
rate range is again similar, with the exception of the lowest-poverty quintile, which
receives a much lower share (5.9% of total grants vs. 21.5%-24.5% for the other four
quintiles). This reflects the eligibility threshold for Concentration Grants (formula
child rate of at least 15% or 6,500 or more formula children). Overall, the primary
pattern for both Basic and Concentration Grants is relatively constant shares of funds
for all LEAs meeting minimum eligibility thresholds. In other words, grants per poor
and other child counted in the Title I-A allocation formulas are approximately the
same for all LEAs meeting the initial eligibility criteria for Basic and Concentration
Grants, whether those LEAs have high, average, or somewhat below average school-
age child poverty rates.
The pattern of distribution of grants under the Targeted and EFIG formulas is
somewhat different. Under each of these formulas, the share of total grants increases
steadily from the lowest to the second-highest poverty rate quintile, then declines
somewhat between the 4^th and 5^th quintile. While this partly reflects the slightly
higher eligibility threshold for these formulas in comparison to Basic Grants (5% vs.

2% formula child rate), it primarily results from the structure of these formulas.

Under both the Targeted and EFIG (within-state) formulas, the grant per formula
child continuously increases as either the school-age child poverty rate, or the total
number of children counted in the Title I-A formulas, increases. The share of funds
going to LEAs in the 4^th quintile under each of these formulas is slightly higher than
the share going to LEAs with the highest poverty rates (5^th quintile) primarily because
of the strong influence of high numbers of formula children on the allocation of
funds,⁶⁵ as well as the influence of the expenditure factor.⁶⁶

⁶⁵ With the exception of Puerto Rico, LEAs with the largest numbers of school-age children
in poor families tend to have high, but not among the highest, school-age child poverty rates.
⁶⁶ LEAs with the highest school-age child poverty rates are frequently located in states with
relatively low expenditure factors.

CRS-31
Table 1. Share of ESEA Title I-A Funds Allocated to LEAs, by LEA Poverty Rate Quintile, FY2006
Poverty rate quintile
12345
(Poverty rates of(Poverty rates of(Poverty rates of(Poverty rates of(Poverty rates
All LEAs 0 - 13.71%)13.71 - 19.25%)19.25 - 25.57%)25.57 - 32.33%)Above 32.33%)
Percentage share of total grants
-A Grants,16.9%18.7%19.8%22.7%22.0%100.0%
ⁱ^{ki/CRS-RL31487}
^g/w 21.1% 19.1% 19.5% 20.1% 20.1% 99.9%
^s^.or
^le^ak 5.9% 21.5% 24.1% 24.5% 24.0% 100.0%
^://wiki
^h^ttprgeted Grants (18% of14.1%17.2%19.1%24.9%24.7%100.0%
ncentive

13.8% 17.1% 18.6% 26.8% 23.7% 100.0%

^T^a^b^l^{e read}^{s (f}^o^r^ex^am^p^l^{e): T}^h^{e q}^uⁱⁿ^{tile o}^f^L^E^A^s^w^ith^th^{e h}ⁱ^g^h^e^{st sch}^o^o^l^-^a^g^e^ch^ild^p^o^v^erty^{rates w}^{ill receiv}^e²²^.⁰^%^o^f^to^tal^{FY2006 ESEA}^T^{itle I-}^A^g^r^an^ts^,^20.1%^of^{all f}^uⁿ^d^s
^cat^{ed as}^Basⁱ^{c G}^r^an^t^s^f^o^{r F}^Y^{2006, 24.0%}^of^C^oⁿ^cen^t^r^atⁱ^oⁿ^G^r^an^t^s^{, 24.7%}^of^T^a^rg^et^{ed G}^r^an^t^s^{, an}^{d 23.7%}^of^Edu^catⁱ^oⁿ^Fⁱⁿ^aⁿ^{ce I}ⁿ^cen^tiv^{e Gran}^ts^.

FY2002-FY2007 Funding for the Title I-A Allocation Formulas
FY2002 appropriations legislation for ED, P.L. 107-116, provided a total of
$10.35 billion for Title I-A. This legislation provided initial funding of $1.018
billion for the Targeted Grant formula and $793 million for the EFIG formula, both
of which were first authorized in 1994 but not previously implemented or funded.
In contrast to appropriations acts of several preceding years, P.L. 107-116 had no
extraordinary hold-harmless provisions (i.e., none that go beyond the hold-harmless
provisions of the authorizing statute).
For FY2003, the Bush Administration requested a total of $11.35 billion for
Title I-A grants to LEAs, an increase of $1.0 billion (9.7%). All of the increased
funds would have been allocated as Targeted Grants; the amounts allocated under the
other three formulas would have remained the same as for FY2002. Final FY2003
appropriations legislation for ED (P.L. 108-7) provided a total of $11,684,311,000
for Title I-A. The increase over FY2002 was split much more evenly between the
Targeted ($1,670,239,000) and EFIG ($1,541,759,000) formulas than requested by
the Administration. Most FY2003 appropriations under P.L. 108-7 were affected by
an “across-the-board” reduction provision; the amounts discussed herein reflect these⁶⁷
reductions.
For FY2004, the Administration requested a total of $12.35 billion for Title I-A,
an increase of $665.7 million (5.7%) over FY2003. As in its request for FY2003, the
Administration proposed that all funds above the FY2002 level be allocated as
Targeted Grants, which would have resulted in a sharp reduction for EFIG grants
from $1,541,759,000 (the FY2003 appropriation) to $793,499,000 (same as the
FY2002 level).
Different versions of stand-alone FY2004 L-HHS-ED Appropriations bills were
passed by the House and the Senate (H.R. 2660). The total FY2004 amount for
ESEA Title I-A under each version of H.R. 2660 would have been the same as under
the Administration request — $12.35 billion. The primary difference between the
bills was in the distribution of funds above the FY2002 level under the Targeted
versus the EFIG formula. As under the Administration request, the House bill would
have allocated all funds above FY2002 under the Targeted Grant formula, reducing
EFIG grants by almost one-half. In contrast, the Senate bill would have allocated the
FY2003 amount under Targeted Grants, and distributed all increases over FY2003
under the EFIG formula. The House bill would have returned Basic Grants to the
FY2002 level, while the Senate bill would have funded Basic Grants at the slightly
reduced level of FY2003.

⁶⁷ In addition to FY2003 Title I-A appropriations provided under P.L. 108-7, P.L. 108-83,
the Emergency Supplemental Appropriations Act, 2003, provided for the transfer of an
additional $4,353,368 in unobligated FY2003 funds from a variety of ED programs to Title
I-A. These funds were allocated to the three states for which the initial FY2003 allocations
under P.L. 108-7 were less than their FY2002 allocation (Iowa, Maryland, and Michigan);
the amount transferred brings the FY2003 allocation for each of these states up to its
FY2002 level.

In addition, the Senate version of H.R. 2660 would, in effect, have prohibited
ED from updating the population data to be used in allocating FY2004 grants,
requiring the Department to use the best available data as of July 1, 2003, to allocate
FY2004 grants. Beginning with income year 2000 estimates released in November
2003, the Census Bureau has shifted from its previous schedule of updating the
estimated number of school-age children in poor families in LEAs every second year,
to a new schedule of annual updates for the LEA estimates. Thus, the Senate bill’s
provision would have prevented the use of the latest (at that time, income year 2000)
population estimates to allocate FY2004 funds.
The conference version of FY2004 appropriations legislation for ED, H.R. 2673,
the Consolidated Appropriations Act, 2004 (P.L. 108-199), provided a total of
$12,342,309,000 for Title I-A (after application of a small across-the-board
reduction), marginally less than the House and Senate versions of H.R. 2660. The
amount for Basic Grants was slightly below the FY2003 level, while the
Concentration Grants total was the same as for FY2003. Under P.L. 108-199, the
remaining amounts for Title I-A were split equally between Targeted and EFIG
grants. The final legislation did not contain the Senate bill’s provision regarding use
of updated population data, allowing a transition to annually updated population
estimates to occur beginning with FY2004 grants.
For FY2005, the Administration proposed a $1 billion (8.1%) increase over the
FY2004 level for ESEA Title I-A. As in its budget requests for FY2003 and 2004,
the Administration proposed that all funds above the FY2002 level be allocated as
Targeted Grants, which would more than double the funds for this formula (from
$1,969,843,000 to $4,146,187,000), while funds for the EFIG formula would be cut
by approximately 60% (from $1,969,843,000 to $793,499,000). On July 14, 2004,
the House Committee on Appropriations reported H.R. 5006, a bill to provide
FY2005 appropriations for ED and other agencies. Under this bill, as passed by the
House on September 9, 2004, the aggregate FY2005 appropriation for Title I-A
would be the same as requested by the Administration ($13,342,309,000), but in
contrast to the Administration’s proposal, equal amounts would be allocated as
Targeted and EFIG grants ($2,469,843,000 under each formula).
The Senate Committee on Appropriations reported its FY2005 appropriations
act for ED and other agencies, S. 2810, on September 15, 2004. Under S. 2810, the
total funding for Title I-A grants to LEAs would be $13,557,607,000 —
$215,298,000 above both the Administration request and the House amount.
However, approximately one-third of this difference — $71,557,000 — consists of
funds that would be appropriated as FY2005 Basic Grants, but would be used during
the 2004-2005 school year, the year during which FY2004 appropriations would
generally be used. These funds would be allocated to the 10 states (see following
section) that currently are receiving less for FY2004 than they received for FY2003
under Title I-A overall. If this were to occur, no state would receive less for the
2004-2005 school year than it received for the previous year (although numerous
LEAs would still receive reduced grants).
An additional $100 million of the difference between the Senate and
House/Administration amounts consisted of funds provided under the Senate
Committee bill for additional school improvement funding (i.e., beyond amounts

reserved by SEAs from LEA grant appropriations for this purpose) for FY2005.
After deducting these two amounts, the difference in aggregate funding under the
Senate bill versus the House bill and Administration request for FY2005 was
$43,741,000 (0.3 %). The larger difference among these proposals is that the Senate
bill would have allocated more funds under the EFIG ($2,756,175,000) than the
Targeted Grant ($2,231,954,000) formula, in contrast to the 50-50 split under the
House bill, or the heavy emphasis on Targeted Grants under the Administration
request.
Finally, the conference version of H.R. 4818, Consolidated Appropriations Act,
2005, was passed by the House and Senate on November 20, 2004. It was signed
into law, as P.L. 108-447, on December 8, 2004. It provides a total of
$12,739,571,000 for Title I-A for FY2005. This amount is lower than the amounts
that would have been provided under the Administration request, the House-passed
bill, or the Senate Committee-reported bill. It represents an increase of $397,262,000
(3.2%) over the FY2004 appropriation. The Senate bill’s provisions for additional
FY2004 hold-harmless funds and additional school improvement grants were not
included in H.R. 4818. Under P.L. 108-447, equal amounts ($2,219,843,000 each)
were provided for Targeted and EFIG Grants, Concentration Grants are maintained
at the FY2004 level ($1,365,031,000), and Basic Grants were reduced from
$7,037,592,000 in FY2004 to $6,934,854,000 for FY2005. Note that all of these
amounts incorporate “across-the-board” spending cuts as applied by ED in a table
published on December 9, 2004; these are subject to possible (presumably minor)
future revision.
The Administration’s FY2006 budget request was announced on February 7,
2005. The total amount requested for Title I-A was $13,342,309,000, the same as the
FY2005 request, and $602,738,000 (4.7%) above the FY2005 appropriation. Under
the Administration’s FY2006 request, the amounts for Basic, Concentration, and
EFIG Grants would remain unchanged from FY2005, with all of the increase devoted
to Targeted Grants. While the emphasis on Targeted Grants is consistent with past
Administration budget proposals, it is noteworthy that they no longer requested a
reduction in funding for EFIG Grants.
On June 24, 2005, the House passed H.R. 3010, to provide FY2006
appropriations for ED and related agencies. The FY2006 appropriation for ESEA
Title I-A under H.R. 3010 would have been $12,839,571,000, an increase of $100
million, or 0.8%, over the FY2005 level. The entire increase over FY2005 would be
devoted to Targeted and EFIG Grants, with each of these rising by $50 million. Each
of these amounts remained the same in the version of H.R. 3010 that was passed by
the Senate on October 27, 2005, and the two conference versions of H.R. 3010
(H.Rept. 109-300 and 109-337), the latter of which was signed into law as P.L. 109-
149. However, separate appropriations legislation (P.L. 109-148, Department of
Defense Appropriations, 2006) provides for a 1% reduction in most FY2006
appropriations in all federal agencies, resulting in a FY2006 total for Title I-A of
$12,713,125,290, an amount slightly ($26.4 million) below the FY2005 level. As
with similar “across-the-board” reductions of recent years, all of this reduction was
applied to Basic Grants. Separately, P.L. 109-148 provides for a one-year, 100%
hold harmless for FY2006 Title I-A grants to LEAs directly affected by the 2005 Gulf
Coast hurricanes.

For FY2007, the Administration has requested a funding level of
$12,913,125,000 for Title I-A. Under this request, the same amount as for FY2006
would be provided for all aspects of Title I-A, except that $200 million would be
provided for school improvement grants, under the statute’s separate authorization
for such grants, in addition to the 4% of state grants that is generally to be reserved
for this purpose. The FY2007 amounts under bills reported by the House (H.R.
5647) and Senate (S. 3708) Committees on Appropriations would also provide the
same amounts as the Administration request, except that the Senate bill would
provide only $100 million for school improvement grants.
The Administration budget, but not the House or Senate bills, also proposes
elimination of a current prohibition against reducing an LEA’s funding level below
the previous year amount when applying the 4% reduction. As aggregate funding
levels have stopped increasing in recent years, some states have had difficulty in
reserving the full 4% while observing this requirement. As a result, some states may
be unable to reserve the full 4%, while other states may be able to reserve the full 4%
only by reducing some LEAs’ grants (compared to their initial grant) by substantially
more than 4% in order to meet this requirement.⁶⁸ Title I-A funding levels for
FY2006-FY2007 may be found in Table 2, below.
FY2006 Allocation Patterns. FY2006 (2006-2007) grants are the latest
available actual allocations. Overall, the FY2006 funding level for Title I-A was

0.2% below the FY2005 level. This is a contrast to the period of FY2002-FY2005,

when Title I-A appropriations increased over the previous year by 18.1%, 12.9%,
5.6%, and 3.2%, respectively. At the same time, the Census Bureau and ED initiated
annual updates of the poverty estimates used to calculate Title I-A grants beginning
with the FY2004 allocations. Further, the share of funds that SEAs are generally
required to deduct from state total allocations for program improvement activities
increased from 2% to 4% beginning in FY2004. As a result of these factors, several
states, and a large percentage of all LEAs, received smaller Title I-A grants for
FY2005 than they received for FY2004, and the pattern is similar for FY2006
compared to FY2005.
More specifically, 25 states, plus the District of Columbia and Puerto Rico,
received lower total grants for FY2006 than they received for FY2005; the remaining

25 states received higher grants for FY2006. At the LEA level, approximately 58%

of all LEAs nationwide that received Title I-A grants for both FY2005 and FY2006
received smaller grants for FY2006, 35% received higher grants for FY2006, and 8%
received the same amount for each year (most of the latter were LEAs eligible for the
one-year 100% hold harmless for areas affected by the Gulf Coast hurricanes). In
most cases, states and LEAs receiving lower Title I-A grants for FY2006 than in
FY2005 have been experiencing reductions in their estimated number of school-age
children in poor families; these include LEAs of all sizes and degrees of poverty
concentration, unlike the FY2002-FY2006 period when a large majority of large

⁶⁸ For a discussion of this issue, see Tom Fagan, “A Shell Game: Federal Funds to Improve
Schools,” Center on Education Policy, February 2006, available at [http://www.cep-dc.org/
titlei/T itleISchoolImpFundJ an2006.pdf].

and/or high poverty LEAs experienced grant increases, even while a majority of
LEAs were losing funds.
Appropriations Authorization Levels. Prior to the NCLBA, ESEA
legislation generally contained specific authorization amounts for ESEA Title I-A
only for the first year of each authorization period, authorizing only “such sums as
may be necessary” for the succeeding years. In contrast to this pattern, the NCLBA
authorizes specific amounts for each year, beginning at $13.5 billion for FY2002 and⁶⁹

increasing steadily to $25 billion for FY2007.
⁶⁹ This specification of authorization amounts for each year may or may not resolve long-
term debate over what constitutes the “full funding” level for Title I-A. Whether or not
specific amounts have been specified in the authorizing statute for any year, many program
advocates have argued that the “full funding” concept for Title I-A has always been based
on maximum payment calculations under the Basic Grant allocation formula. As was
described above, the Part A Basic Grant formula establishes a maximum payment based on
poor and other “formula children” multiplied by a state expenditure factor. The total of
these maximum payments is understood by a number of analysts to represent the “full
funding” level for Part A. For FY2006, this amount would be approximately $29.0 billion.

CRS-37
Table 2. FY2006-FY2007 Appropriations for ESEA Title I, Part A
FY2006 AppropriationFY2007 Appropriation
under P.L. 109-149under H.R. 5647, asFY2007 Appropriation
(incorporating 1%reported by the Houseunder S. 3708, as reported
reduction per P.L. 109-FY2007 Administration BudgetCommittee onby the Senate Committee
Formula148)RequestAppropriationson Appropriations
$6,808,408,290 $6,808,408,000 $6,808,408,000 $6,808,408,000
$1,365,031,000 $1,365,031,000 $1,365,031,000 $1,365,031,000
ⁱ^{ki/CRS-RL31487}rgeted Grants$2,269,843,000$2,269,843,000$2,269,843,000$2,269,843,000
^g/w
^s^.orncentive
^le^aka n t s $2,269,843,000 $2,269,843,000 $2,269,843,000 $2,269,843,000
^://wikimprovement Grants$0$200,000,000$200,000,000$100,000,000
^h^ttpation)
SEA Title I-A$12,713,125,290$12,913,125,000$12,913,125,000$12,813,125,000
ants to LEAs
ation level$22,750,000,000$25,000,000,000$25,000,000,000$25,000,000,000
^T^h^{e am}^ouⁿ^t^s^s^h^owⁿ^abov^{e f}^o^{r Bas}ⁱ^{c G}^r^an^t^sⁱⁿ^cl^u^d^{e $3,472,000 f}^o^{r F}^Y^{2005, $3,437,280 f}^o^{r F}^Y^{2006, an}^{d $3,472,000 f}^o^{r F}^Y^{2007 f}^o^r^c^eⁿ^{sus up}^d^a^te^s.

Staff Qualifications
As is the case with state pupil assessment policies, the NCLBA establishes new
requirements regarding teacher qualifications for states and LEAs participating in
Title I-A that will affect public school systems overall. The revised ESEA also
contains expanded qualification requirements for teacher aides or paraprofessionals,
although these provisions are limited to certain paraprofessionals paid with Title I-A
funds. An additional major provision of the NCLBA regarding instructional staff is
the requirement that LEAs are to use between 5% and 10% of their Title I-A grants
in FY2002-FY2003, and at least 5% of their grants thereafter, for professional
development activities. Separately, as noted earlier, individual schools identified as
having failed to meet AYP standards for two or more consecutive years must use at
least 10% of their Title I-A grants for professional development.
Teacher Qualifications⁷⁰
First, the NCLBA requires LEAs participating in ESEA Title I-A to ensure that,
beginning with the 2002-2003 school year, teachers newly hired with Title I-A funds
are “highly qualified.” Second, participating states must establish plans providing
that all public school teachers statewide in core academic subjects meet the bill’s
definition of “highly qualified” by the 2005-2006 school year, and that all LEAs will
make annual progress toward meeting this deadline. Finally, according to the
authorizing statute, LEAs participating in Title I-A must have a plan to ensure that
all of their teachers are “highly qualified” by the 2005-2006 deadline.⁷¹
In an October 21, 2005 letter to CSSOs,⁷² the Secretary of Education stated that
the 2005-2006 deadlines might be extended by one year (to 2006-2007) for some
states. States will qualify for the extension if they provide evidence that they are
making a “good faith effort” toward meeting the requirement, as evidenced by such
factors as whether the state’s definition of a “highly qualified teacher” is consistent
with the statute, regulations, and policy guidance; whether the state is meeting
requirements to report on teacher quality to parents and the public; the quality of data
on teacher quality reported by the state to ED; and steps taken by the state to assure
that highly qualified teachers are equitably distributed among classrooms in high
poverty versus low poverty schools.

⁷⁰ For additional information on this topic, see CRS Report RL33333, A Highly Qualified
Teacher in Every Classroom: Implementation of the No Child Left Behind Act, by Jeffrey
Kuenzi.
⁷¹ Regulations (Federal Register, Dec. 2, 2002) eliminate this potential conflict between
references to all teachers versus those in core subjects, providing that all of the teacher
qualification requirements apply only to teachers in core subject areas. The regulations also
define core subject areas as including English, reading or language arts, mathematics,
science, foreign languages, civics and government, economics, arts, history, and geography
(34 C.F.R. § 200.55(c)).
⁷² See [http://www.ed.gov/policy/elsec/guid/secletter/051021.html].

The criteria that teachers must meet in order to be deemed to be “highly
qualified” are found in Title IX, Part A (General Provisions) of the ESEA, as
amended by the NCLBA. This definition of a “highly qualified” teacher includes
some elements that are applicable to all public school teachers, and others that apply
only to teachers who either are or are not “new to the profession.” The criteria
applicable to all public school teachers are that they must hold at least a bachelor’s
degree, must have obtained full state certification or passed the state teacher licensing
examination, and must hold a license to teach, without any certification or licensure
requirements having been waived for them. An exception is made for teachers in
public charter schools, who must meet the requirements established in the state’s
charter school law. Program regulations also provide that individuals participating
in alternate certification programs meeting certain requirements would qualify as
being “highly qualified.”
The additional criteria applicable to teachers who are new to the profession are
that they must (a) demonstrate, by passing a “rigorous” state test, subject area
knowledge and teaching skills in basic elementary curricula (if teaching at the
elementary level); or (b) demonstrate “a high level of competency” by passing a
rigorous state academic test or completing an academic major (or equivalent course
work), graduate degree, or advanced certification in each subject taught (if teaching
at the middle or high school level).
Finally, a public school teacher at any elementary or secondary level who is not
new to the profession may be deemed to be “highly qualified” by either meeting the
preceding criteria for a teacher who is new to the profession, or by demonstrating
competence in all subjects taught “based on a high objective uniform State standard
of evaluation” which, among other considerations, is not based primarily on the
amount of time spent teaching each subject.⁷³
Qualification Requirements for Paraprofessionals
Paraprofessionals, also known as teacher aides, constitute approximately one-
half of the staff hired with Title I-A grants, and their salaries constitute an estimated
15% of Title I-A funds. Use of Title I-A funds for paraprofessionals appears to be
especially prevalent in many high-poverty LEAs and schools. Paraprofessionals
whose salaries are paid with Title I-A funds provide a variety of instructional and
non-instructional services in both schoolwide and targeted assistance programs.
Some have criticized the performance of instructional duties by paraprofessionals
who often lack educational credentials and may receive little supervision from
classroom teachers. Others have questioned the appropriateness of using Title I-A
funds to pay paraprofessionals who perform duties that are not directly related to
instruction. The IASA in 1994 required teacher paraprofessionals funded under Title
I-A to be directly supervised by teachers, and in general to have a high school
diploma or equivalent within two years of employment.

⁷³ This and related concepts and issues are discussed in CRS Report RL30834, K-12 Teacher
Quality: Issues and Legislative Action, by James B. Stedman.

The NCLBA established expanded requirements for paraprofessionals paid with
Title I-A funds.⁷⁴ These requirements apply currently to all paraprofessionals newly
hired with Title I-A funds after the date of enactment of P.L. 107-110 (January 8,
2002), and will apply to all such staff paid with Title I-A funds (i.e., all
paraprofessionals employed in schools operating schoolwide programs plus those
directly paid with Title I-A funds in targeted assistance schools) by the end of the

2005-2006 school year.

The affected paraprofessionals must have either: (a) completed at least two years
of higher education; or (b) earned an associate’s (or higher) degree; or (c) met a
“rigorous standard of quality,” established by their LEA, and “can demonstrate,
through a formal State or local assessment ... knowledge of, and the ability to assist
in instructing, reading, writing, and mathematics”⁷⁵ or readiness to learn these
subjects, as appropriate. Under the authorizing statute, these requirements apply to
all paraprofessionals paid with Title I-A funds except those engaged in translation or
parental involvement activities; regulations (Federal Register, December 2, 2002) also
exempt any other paraprofessionals whose duties do not include providing
instructional support services. All paraprofessionals in Title I-A programs,
regardless of duties, must have at least a high school diploma or equivalent; this
requirement was effective upon enactment of the NCLBA.
Decisions regarding whether to allow paraprofessionals to meet these
requirements via an assessment (or only by completing two years of higher education
or earning an associate’s degree), if via an assessment which test(s) would qualify
and what constitutes a “passing” score, and whether these decisions should be made
by LEAs or states, are primarily being left to state and LEA discretion, and a wide
variety of approaches are being adopted. The Education Commission of the States
(ECS) has compiled a database (covering 48 states) on state policies to meet the
NCLBA paraprofessional qualification requirements.⁷⁶ ECS reports that all states are
making progress toward meeting, or in several cases exceeding, the NCLBA
paraprofessional requirements by the end of the 2005-2006 school year. According
to ECS, 12 states have established paraprofessional qualification requirements that
exceed those under the NCLBA, and five states are applying their requirements to all
paraprofessionals, not just those providing instructional services in Title I-A
programs. Eleven states have established certification requirements for
paraprofessionals (which is not specifically required by the NCLBA). Thirty-six
states are using the ParaPro test published by the Educational Testing Service (ETS)
to assess paraprofessional qualifications, while 17 are using the WorkKeys test
published by the American College Testing Program (ACT), and 21 are allowing
LEAs to use tests of their choice (several states are following multiple approaches).

⁷⁴ In addition to regulations published in the Federal Register on Dec. 2, 2002, draft non-
regulatory guidance on the Title I-A paraprofessional requirements was published by ED on
Nov. 15, 2002 (see [http://www.ed.gov/policy/elsec/guid/paraguidance.pdf]).
⁷⁵ Or reading readiness, writing readiness, or mathematics readiness, where appropriate (e.g.,
for paraprofessionals serving preschool or early elementary pupils).
⁷⁶ The database may be accessed at [http://www.ecs.org].

According to the authorizing statute and ED policy guidance, there are several
potential sources of funds to help pay the costs of any education that may be
necessary for affected paraprofessionals to meet the Title I-A requirements. These
sources include funds received under: Title I-A, especially those reserved for
professional development (as described above); ESEA Title II-A, Teacher and
Principal Training and Recruiting Fund; ESEA Title III-A, the English Language
Acquisition, Language Enhancement, and Academic Achievement Act; ESEA Title
V-A Innovative Programs grants; and for applicable schools, Indian Education grants
under ESEA Title VII-A. Paraprofessionals from relatively low-income families
would also be eligible for federal postsecondary grants and subsidized loans to help
pay costs of taking courses at institutions of higher education.
In December 2003, baseline data were published on the percentage of affected
paraprofessionals who met the NCLBA qualification requirements during the 2002-
2003 school year in 36 states. According to these data, an average of approximately
40% of the paraprofessionals met the qualification requirements in 2002-2003; for
individual states, the qualification percentages ranged from 4.5% to 99.0%. A
separate survey, of American Federation of Teachers (AFT)-member
paraprofessionals employed in Title I-A programs concluded that in late 2003, 54%
of the surveyed paraprofessionals met the NCLBA qualification requirements based
on educational levels alone (i.e., without relying on whatever assessments states or
LEAs might use to determine competence for those not meeting the educational
requirements). However, the paraprofessionals surveyed by AFT are concentrated
in selected large urban LEAs, and may not be representative of Title I-A
paraprofessionals in general.⁷⁷
In addition, Education Week published state data on paraprofessional
qualifications during the 2003-2004 school year.⁷⁸ These data, covering 42 states and
the District of Columbia, were reported to ED and obtained by Education Week
through a Freedom of Information request. Among these 43 jurisdictions, the
percentage of paraprofessionals in Title I programs that met the NCLBA qualification
requirements in the 2003-2004 school year ranged from 27% in Massachusetts to

99% in Iowa.

In addition, the types of responsibilities to which all paraprofessionals paid with
Title I-A funds may be assigned are outlined in the NCLBA. These include tutoring
of eligible pupils, assistance with classroom management, parental involvement
activities, translation, assistance in computer laboratories or library/media centers,
and instruction under the direct supervision of a teacher.

⁷⁷ See “State Data Show Majority of Paraprofessionals Still Fall Short of NCLB ‘Qualified’
Standard,” Title I Monitor, Dec. 2003, p. 8.
⁷⁸ See [http://www.edweek.org/media/27admin.pdf].

Issues
One issue regarding these NCLBA staff qualification requirements is whether
high-poverty LEAs and schools will be able to meet the teacher qualification
requirements. Schools and LEAs disadvantaged by high pupil-poverty rates have
generally had particular difficulty attracting highly qualified staff.⁷⁹
A second major issue is whether the requirements for paraprofessionals are
being interpreted and implemented in such a manner as to have substantial impact.
The NCLBA provisions regarding paraprofessional qualifications are ambiguous.
Their significance will depend very much on the extent and manner in which these
provisions are interpreted and implemented by states and LEAs. It is thus far unclear
what “standards of quality” or assessments states and LEAs will deem to be sufficient
to meet these new requirements. Possible effects include substantial expansion of
state or LEA procedures to certify the qualifications of paraprofessionals, or a
significant reduction in the extent to which Title I-A funds are used to hire aides.
Other Provisions Regarding Title I-A
Other aspects of ESEA Title I-A that were significantly modified by the NCLBA
are discussed briefly below.
Flexibility
One of the most distinctive changes in Title I-A since 1994 has been the rapid
growth of schoolwide programs, which currently account for approximately 45% of
all Title I-A schools and 60% of Title I-A funds spent at the school level. The IASA
reduced the eligibility threshold for schoolwide programs from 75% to 50% low-
income pupils in general, and the NCLBA has further reduced this threshold to
40%.⁸⁰ The statute allows the use of funds under most federal aid programs, not just
Title I-A, on a schoolwide basis, if basic program objectives and fiscal accountability
requirements are met.
The rationale for providing schoolwide program authority to relatively high-
poverty schools is that (a) in such schools, all pupils are disadvantaged, so most

⁷⁹ See, for example, The Education Trust, Honor in the Boxcar: Equalizing Teacher Quality,
spring 2000.
⁸⁰ Under this provision, any school participating in Title I-A with 40% or more of its pupils
from low-income families may qualify to operate a schoolwide program. However, Title
I-A schools with lower percentages of pupils from low-income families may obtain waivers
directly from ED or from their SEA (if the state participates in Ed-Flex) to operate
schoolwide programs. In addition, program regulations [34 C.F.R. § 200.25(b)(2)] allow
LEAs to use measures of low income in determining whether schools meet this threshold
that are different from (and potentially broader than) those used in the selection of
participating schools and allocation of funds among them, which may further expand the
pool of eligible schools.

pupils are in need of special assistance, and it seems less equitable to select only the
lowest-achieving pupils to receive Title I-A services; and (b) the level of Title I-A
grants should be sufficient to meaningfully affect overall school services in high-
poverty schools, since these funds are allocated on the basis of the number of low-
income pupils in these schools. However, the NCLBA has reduced the eligibility
threshold to a level that is approximately the national average percentage of pupils
from low-income families, and the validity of both aspects of this rationale might be
questioned for schools that just meet the new threshold.⁸¹ In addition, there is little
direct evidence of the achievement effects of this expansion of schoolwide programs.
In addition, Title VI, Part A-1 of the revised ESEA allows most LEAs to transfer
up to 50% of their grants among four programs — Teachers, Technology, Safe and
Drug Free Schools, and the Innovative Programs Block Grant — or into (not from)
Title I-A. LEAs that have been identified as failing to meet state AYP requirements
under Title I-A will be able to transfer only 30% of their grants under these programs,
and only to activities intended to address the failure to meet AYP standards.
According to policy guidance published by ED, LEAs identified for corrective action
may not transfer any funds under this authority.
Further, a pair of state and local flexibility demonstration authorities in the
NCLBA might have limited impact on Title I-A. Under a State and Local Flexibility
Demonstration Act (ESEA Title VI, Part A, Subpart 3), up to seven states, selected
on a competitive basis, will be authorized to consolidate all of their state
administration and state activity funds under Title I-A and several other ESEA
programs (State Flex). The consolidated funds can be used for any purpose
authorized under any ESEA program. The selected states are to enter into local
performance agreements with 4-10 LEAs (at least one-half of which must have
school-age child poverty rates of 20% or more), which may consolidate funds under
the provisions of a local flexibility authority. Up to 80 additional LEAs — i.e., in
states not participating in the state flexibility demonstration program — might be
eligible for the local flexibility authority (Local Flex). The local flexibility authority
has no direct relationship to Title I-A, although funds consolidated under this
authority could be used for any purpose authorized under any ESEA program,
including Title I-A. In addition, states and LEAs would lose their flexibility
demonstration authority if they fail to meet Title I-A AYP requirements for two
consecutive years.⁸² As of the date of this report, one state has qualified for State

⁸¹ At the level of individual schools, the most commonly used criterion for determining
whether pupils are from low-income families is eligibility for free and/or reduced-price
school lunches (not the more narrow census poverty income standard). The national average
percentage of public K-12 pupils meeting this criterion is approximately 40%. In a school
just meeting this threshold, 100% of the pupils may be served under Title I-A, although the
school would receive funds based on only 40% of its enrollment. In addition, the
free/reduced price school lunch data may overestimate the percentage of pupils from low-
income families, as there is evidence that more children and youth are counted than may be
eligible based on family income (see “Officials Seek to Refine Lunch Program Tallies,”
Education Week, Mar. 27, 2002).
⁸² For additional information on this and other flexibility authorities adopted under the No
Child Left Behind Act, see CRS Report RL31583, K-12 Education: Special Forms of
(continued...)

Flex authority (Florida), with associated local performance agreements involving
eight LEAs in Florida, and one LEA has qualified on its own for the Local Flex
authority (Seattle, WA).
Services to Private School Pupils, Staff, and Parents
The NCLBA makes a number of changes to the Title I-A provisions for services
to pupils attending private schools. First, it provides that such services should be
provided not only to eligible pupils but also to their families and school staff as well
(consistent with the general Title I-A provisions for parental involvement and
professional development activities). Second, it requires that services be provided
to private school pupils “in a timely manner.” Third, requirements for consultation
between public and private school officials are significantly expanded to include such
topics as the data to be used to determine the share of pupils from low-income
families who attend private schools, and who will provide the services, including
consideration of the possibility of providing services via a third-party contractor.
The revised Title I-A includes specific provisions regarding authorized methods
for LEAs to determine the share of pupils from low-income families who attend
private schools, which is the basis for determining the share of Title I-A grants that
is to be devoted to serving eligible private school pupils. LEAs may: (1) use the
same measure of low income and source of data as used to count such children
attending public schools; (2) conduct a survey, which may be based on a
representative sample of pupils, using the same measure of low income as used to
count children attending public schools; (3) apply the percentage of children from
low-income families determined for public school pupils to private school pupils
residing in the same school attendance area; or (4) use a different measure of low
income than used for counting children attending public schools, adjusting these data
by an appropriate proportion so that the measures may be equated.⁸³ These
provisions are similar to those of policy guidance disseminated by ED under the
previous authorizing statute.
Finally, the previous authorization for grants to pay “capital expenses” of
providing Title I-A services to private school pupils was moved from Title I-A to
Subpart 19 of Title V, Part D, the Fund for Improvement of Education. The revised
authorization was extended only through FY2003.⁸⁴

⁸² (...continued)
Flexibility in the Administration of Federal Aid Programs, by Wayne Clifton Riddle.
⁸³ For example, assume that data are available on the number of public school pupils in a
LEA who receive free school lunches and Medicaid, but are only available for private school
pupils who receive Medicaid, that the LEA uses the number of pupils who receive free
school lunches to allocate Title I-A funds among eligible schools, and that the ratio among
public school pupils in the LEA of free school lunch recipients to Medicaid recipients is 2
to 1. The LEA could then multiply the number of relevant private school pupils receiving
Medicaid by two to obtain an equivalent estimate of the number of such pupils who would
be eligible to receive free school lunches.
⁸⁴ No funds have been appropriated for capital expenses grants since FY2001.

Debates Over State or LEA Participation in
Title I-A, or Over Whether All Title I-A Requirements
Must Be Met If Doing So Might Arguably Require
the Expenditure of Non-Federal Funds
As implementation of the new Title I-A requirements adopted under the
NCLBA has proceeded, debate has arisen in some state legislatures, LEAs, and
elsewhere over the federal role in K-12 education, and the costs and benefits of
participating in Title I-A and other ESEA programs. While all states continue to
participate in ESEA Title I-A, and therefore they continue to be subject to the
requirements discussed in this report, bills have been considered in the legislatures
of some states, and recently adopted in one state (Utah), that would attempt to limit
or terminate state participation in ESEA Title I-A, in order to avoid being required⁸⁵
to implement some of these requirements. In addition, a national association has
filed a court suit, and the attorney general of at least one state has said he plans to do
so, for relief from meeting Title I-A requirements if doing so would require the
expenditure of non-federal funds.
State legislative actions have thus far taken six forms: (1) resolutions
expressing opinions that are critical of some aspects of the Title I-A requirements
under the NCLBA, but have no direct impact on state participation in the program;
(2) resolutions requesting exemptions or waivers of certain NCLBA requirements for
a state; (3) resolutions criticizing the level of funding for the NCLBA as being
inadequate; (4) bills attempting to prevent the state from spending its own funds on
NCLBA implementation costs; (5) bills requiring LEAs in a state to place higher
priority on state accountability requirements than those of Title I-A (where they may
conflict), and discouraging the spending of non-federal funds to meet Title I-A
requirements; and (6) bills authorizing or requiring the state to terminate participation
in Title I-A in order to avoid being subject to its requirements. One or more states
have adopted bills in categories (1)-(5); as of this writing, no state has yet enacted
opt-out legislation (category 6).
The legislation passed by the Utah state legislature on April 19, 2005, is in⁸⁶
category (5) above. It would require school officials to place first priority on
“meeting state goals, objectives, program needs, and accountability systems” and to
“minimize additional state resources that are diverted to implement federal programs
beyond the federal monies that are provided to fund the programs” (H.B. 1001,⁸⁷
Section 5). The practical implications of this state legislation, if signed by the
governor and implemented, as well as the response by ED, remain to be seen.

⁸⁵ See, for example, “More States Are Fighting ‘No Child Left Behind’ Law,” Washington
Post, Feb. 19, 2004, p. A3.
⁸⁶ See “Utah Lawmakers Pass Bill Flouting NCLB,” Education Week [Web ed.], Apr. 20,

2005, available at [http://www.edweek.org].

⁸⁷ See [http://www.le.state.ut.us/~2005S1/bills/hbillenr/hb1001.pdf].

In addition to actions by state legislatures, a suit has been filed by the National
Education Association,⁸⁸ and reportedly a similar suit is being considered by the
attorney general of at least one state (Connecticut).⁸⁹ These actions focus largely on
the provisions of ESEA Section 9527(a) — “Nothing in this Act shall be construed
to authorize an officer or employee of the Federal Government to mandate, direct, or
control a State local educational agency, or school’s curriculum, program of
instruction, or allocation of State or local resources, or mandate a State or any
subdivision thereof to spend any funds or incur any costs not paid for under this Act.”
Both the NEA suit, and reportedly the prospective Connecticut suit, seek relief from
meeting Title I-A requirements that, they argue would require the expenditure of state
and/or local funds to meet. More specifically, Connecticut seeks a waiver of the Title
I-A requirement for implementation of standards-based reading and mathematics
assessments in grades 3, 5, and 7 (in addition to such assessments already
administered in grades 4, 6, and 8) beginning in the 2005-2006 school year.
As discussed earlier in this report, the ESEA Title I-A requirements apply only
to states that receive funds under this program. If a state chose to terminate its
participation in Title I-A, none of the requirements discussed in this report would
apply to that state. Of course, such a state would lose a significant amount of
funding, since Title I-A is the largest federal K-12 education program. In addition,
as described in a 2004 letter by the then-acting Deputy Secretary of Education,
Eugene W. Hickok, to the Utah Superintendent of Public Instruction, such a state
might also lose some or all of its funds under several other ESEA programs, under
which grants are allocated to states using formulas that are linked to the Title I-A
formulas.⁹⁰
As with states, individual LEAs might choose to terminate their participation
in Title I-A, in order to attempt to avoid implementing the requirements discussed in
this report. However, even if it received no Title I-A grants, most of the
requirements discussed in this report would continue to apply to an LEA if its state
continues to participate in Title I-A. This includes the assessment, AYP, and report
card requirements, which apply to all public schools and LEAs in states receiving
Title I-A grants. An LEA that refuses Title I-A funds would be released only from
the corrective action requirements discussed in this report. In addition, as with states,
such an LEA would presumably lose funds under not only Title I-A but also several
other ESEA programs under which allocations are based on those under Title I-A.

⁸⁸ See [http://www.nea.org/lawsuit/index.html].
⁸⁹ See [http://www.state.ct.us/sde/BJS_NCLB_lawsuit.pdf].
⁹⁰ The letter may be found at [http://www.grantsandfunding.com/libraries/grantmanage/tims/
samplenews /tims0403a.html ].