They Keep the Formulas in Place for a Reason

The Sunday New York Times today has a front page article on the Obama administration's decision to channel its stimulus money to the states using existing formulas. Times reporter Sam Dillon writes:

In pouring rivers of cash into states and school districts, Washington is using a tangle of well-worn federal formulas, some of which benefit states that spend more per pupil, while others help states with large concentrations of poor students or simply channel money based on population. Combined, the formulas seem to take little account of who needs the money most.

As a result, some districts that are well off will find themselves swimming in cash, while some that are struggling may get too little to avoid cutbacks.

The story reports that Democratic members of Congress say they want to keep using the old formulas to save time in disbursing money. But there's more to it than that.

The best recent analysis of the Title I formulas was done by Susan Aud for the Heritage Foundation. Here's a condensed executive summary of her findings:

1. Formulas have become increasingly complex and obscure;
   
2. Distribution of funds is characterized by seemingly unintended variability;
   
3. Amounts reserved for administration significantly dilute what reaches the classroom;
   
4. Title I's Education Finance Incentive Grant encourages states to equalize spending across school districts, despite the fact that this is an unproven education reform strategy; and
   
5. Rather than delivering effectively on good intentions for helping poor children, congressional action over eight reauthorizations has led to a convoluted, bureaucratic system that is less student-centered, less transparent, and therefore less accountable to the public.
   

Here's a link to a column by Dan Lips and Evan Feinberg on Aud's study.

The truth is the members of Congress keep the formulas in place for a reason. The Democratic Leadship Council (DLC) pinpointed that reason some years ago:

The reality is that the allocation of Title I dollars is based more on politics than on need, on a formula geared to spreading these important federal dollars thin and wide.

In essence, the DLC was saying (and I would concur): Congress's not targeting Title I money narrowly on students from poor households is no accident.

CAVEAT CONSUMPTOR: It's not how much money there is for schools but rather how it is spent and what the incentives are for productivity and performance. Economist Rick Hanushek calls the issue of whether money matters “trivial,” saying that “the research neither says that resources never matter nor that resources could not matter” but only that “providing resources without changing other aspects of schools … is unlikely to boost student performance.”