Order Code RL31583
CRS Report for Congress
Received through the CRS Web
K-12 Education: Special Forms of Flexibility in
the Administration of Federal Aid Programs
Updated October 21, 2004
Wayne Clifton Riddle
Specialist in Education Finance
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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K-12 Education: Special Forms of Flexibility in the
Administration of Federal Aid Programs
Summary
Beginning with the Improving America’s Schools Act in 1994, and continuing
through the Education Flexibility Partnership Act of 1999 and the No Child Left
Behind Act of 2001 (NCLBA), the authorization of special forms of flexibility for
grantees has been a focus of federal K-12 education legislation. These flexibility
authorities apply primarily to programs under the Elementary and Secondary
Education Act (ESEA), the largest source of federal aid to K-12 education.
In general, federal K-12 education assistance program requirements include a
broad range of activities or outcomes that state or local educational agencies (SEAs,
LEAs) are expected to provide or achieve in order to establish accountability for use
of funds consistent with the purposes of statutes that authorize the programs. These
requirements are usually intended to provide target accountability — ensuring that
funds are focused on eligible localities, pupils, and purposes; outcome accountability
— ensuring that funds are used effectively to improve student achievement and
improve the quality of K-12 instruction; and fiscal accountability — ensuring
financial integrity and providing that federal funds constitute a net increase in
resources for the eligible pupils or purposes.
In contrast, special flexibility authorities allow exceptions to these general
requirements; they include Ed-Flex, Secretarial case-by-case waivers, ESEA Title I-A
schoolwide programs, flexibility for small rural LEAs, the Innovative Programs block
grant, transferability authority, plus the State and Local Flexibility Demonstration
Program (State-Flex and Local-Flex). In general, these authorities: (a) increase the
ability of states or LEAs to use federal aid more completely in accordance with their
own priorities; (b) are significantly limited in terms of the number of states and LEAs
that may participate, the number and size of the programs affected, and/or the range
of requirements that may be waived; (c) often require some degree of accountability
based on pupil achievement outcomes in return for increased flexibility, although the
primary outcome requirements are applicable to all states and LEAs participating in
Title I-A and other ESEA programs, not just those granted special flexibility
authority; (d) often include a variety of requirements for reporting on ways in which
the authorities have been used and the impact of increased flexibility on pupil
achievement, although little information has been published on the uses or effects of
the flexibility authorities implemented thus far; and (e) have been adopted in a policy
context of substantially increased accountability requirements and authorized degrees
of flexibility in general for the ESEA and related programs.
Major issues regarding special forms of flexibility in federal K-12 education
programs include: How significant are the degrees of flexibility allowed under these
authorities? Is there significant state or local interest in the authorized forms of
flexibility? For what purposes have special flexibility authorities been used in the
past, and is there evidence that these have resulted in increased pupil performance or
had other major impacts? And, are the outcome accountability requirements
consistent with the increased flexibility provided under these authorities? This report
will be updated when major developments occur.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General Nature of Federal K-12 Program Accountability Requirements . . . . . . . 2
Sources and Forms of Accountability Requirements . . . . . . . . . . . . . . . . . . . 2
Purposes of Accountability Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Concerns About Selected Federal Program Requirements . . . . . . . . . . . . . . 6
Program-Specific Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cross-Cutting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Flexibility Authorities Initiated Previous to Enactment of the No
Child Left Behind Act of 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Ed-Flex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Secretarial Case-by-Case Waiver Authorities . . . . . . . . . . . . . . . . . . . . . . . 11
Charter Schools Waiver Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
School-Level Flexibility: ESEA Title I-A Schoolwide Programs . . . . . . . . 12
Flexibility for Small, Rural LEAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Federal K-12 Education Block Grant: ESEA Title V-A . . . . . . . . . . . . 14
State and Local Experience with the ESEA Title V-A Block Grant . . 16
Other Pre-NCLBA Flexibility Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . 17
New Flexibility Authorities Adopted in the No Child Left Behind Act of 2001 . 18
Transferability Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
State and Local Flexibility Demonstration Program . . . . . . . . . . . . . . . . . . 19
State-Flex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Local-Flex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Competition Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Comparison With Other Flexibility Authorities in the No Child
Left Behind Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Comparison With State and Local Flexibility Authorities in Earlier Senate-
and House-Passed Versions of H.R. 1 . . . . . . . . . . . . . . . . . . . . . 23
Major Cross-Cutting Issues Regarding Special Forms of Flexibility in Federal
K-12 Education Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
How Significant Are the Degrees of Flexibility Allowed under
These Authorities? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
For What Purposes Have Special Flexibility Authorities Been Used in
the Past, and Is There Evidence That These Have Resulted in
Increased Pupil Performance or Had Other Major Impacts? . . . . . . 26
Impact of Past Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Availability and Dissemination of Information on Use and
Impact of Special Flexibility Authorities . . . . . . . . . . . . . . . . . . . 29
Are the Outcome Accountability Requirements Consistent with the
Increased Flexibility Provided under These Authorities? . . . . . . . . . . 29

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K-12 Education:
Special Forms of Flexibility in the
Administration of Federal Aid Programs
Introduction
Beginning with adoption of the Improving America’s Schools Act (IASA) in
1994 (P.L. 103-382), and continuing through enactment of the Education Flexibility
Partnership Act of 1999 (P.L. 106-25) and the No Child Left Behind Act of 2001
(NCLBA, P.L. 107-110), the authorization of special forms of flexibility for grantees
has been a major focus of most federal K-12 education assistance legislation. In
particular, the recently enacted NCLBA extended some flexibility authorities that had
been established earlier, and initiated new ones, which are now beginning to be
implemented. This report provides an overview of these authorizations for state and
local flexibility in administering federal K-12 education programs. It will be updated
infrequently to incorporate major new developments in the implementation of these
authorities or new information on their use and impact.
“Flexibility” is defined for purposes of this report as authority under which
federal program requirements, particularly restrictions on the use of federal aid, may
be waived by, or on behalf of, state or local aid recipients meeting certain eligibility
criteria. In some cases, this flexibility is granted in return for meeting specified
accountability requirements related to program outcomes. Such flexibility includes
provisions for consolidation of multiple programs, or for transfer of funds among
programs, so that federal assistance may be used for a broader range of activities or
purposes than ordinarily would be allowed, as well as the authority to waive specified
types of program requirements.
In general, these flexibility authorities apply to federal aid programs authorized
by the Elementary and Secondary Education Act (ESEA), the largest source of
federal aid to K-12 education. In contrast, almost none of these authorities involve
the second largest source of federal aid, the Individuals with Disabilities Education
Act (IDEA). For this reason, as well as the existence of a number of issues regarding
requirements and flexibility that are specific to that program, the IDEA will not be
discussed further in this report, and discussions of federal involvement in K-12
education in this report should be understood to apply primarily to the ESEA and to
exclude the IDEA.
This report begins with a review of the general nature of federal K-12 education
program requirements, including their sources, purposes, and the concerns expressed
by some grantees about them. This is followed by a description of the current special
flexibility authorities under which may of these requirements may be waived or
otherwise made inapplicable, along with an analysis of issues specific to individual

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authorities. This section is divided between authorities initially adopted previous to
the NCLBA, and new authorities included in that legislation. The report concludes
with an analysis of selected cross-cutting issues regarding these special flexibility
authorities overall.
General Nature of Federal K-12 Program
Accountability Requirements
We begin this report with a brief review of the general types of program
requirements applicable to ESEA and related federal K-12 programs. Many of these
requirements may be waived, in part or in whole, for some or all states and LEAs
under the special flexibility authorities discussed later. We refer to these as
“accountability requirements” because they are intended to provide accountability by
assuring that federal funds are used in ways that are consistent with the purposes of
the federal statutes authorizing the programs. Typically, federal programs of aid to
elementary and secondary education exhibit a mix of relatively specific and explicit
requirements in such areas as eligibility of pupils to be served, allocation of funds,
or (increasingly) outcomes, along with substantial flexibility in many other important
respects, such as instructional methods or grade levels to be served.
Federal K-12 education programs generally focus upon one or more of the
following: (a) a student population with special educational needs — e.g.,
disadvantaged or limited English proficient (LEP) pupils; (b) a specific aspect of
instructional services — e.g., educational technology or recruitment and professional
development of teachers; (c) development, demonstration, and dissemination of
innovative instructional approaches — e.g., charter schools or demonstrations of
comprehensive school reform; or (d) a specific subject area, such as instruction in
drug abuse prevention. Most of the larger federal programs, such as ESEA Title I-A,
fall into category (a), while several programs of small to moderate size are in
categories (b)-(d). Almost all federal K-12 education programs, in all of categories
(a)-(d), are sometimes referred to as “categorical” programs, because their focus is
targeted or limited in one or more important respects. In contrast, one ESEA
program — the Innovative Programs authority of ESEA Title V-A — provides
support for such a broad range of activities that it is generally considered to be a
“block grant” at the other end of the intergovernmental assistance spectrum.
Sources and Forms of Accountability Requirements
There are three general sources of federal requirements or related guidance to
state and local recipients of federal aid. An important distinction (at least in theory)
can be made between “requirements” and “non-regulatory policy guidance.”
“Requirements” must be met by grantees, as a matter of law. While they are always
derived ultimately from the authorizing statute for a program, or other federal
statutes or judicial actions, they may appear in the form of regulations, in addition to
statutory text. Program regulations, which are published initially in the Federal
Register, then later integrated into annual updates of the Code of Federal
Regulations, supplement statutory language primarily with respect to a limited
number of major issues or topics which are complex, where U.S. Department of

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Education (ED) officials place high priority on grantees taking certain specific
actions, and where statutory text is deemed by ED to provide insufficient guidance.
One example would be ESEA Title I-A requirements regarding curriculum content
and pupil performance standards and assessments. In a few cases, authorizing
statutes explicitly provide that ED is to publish regulations addressing certain issues,
although ED may issue regulations with respect to any aid program which it
administers.
In contrast, “non-regulatory policy guidance” is also published by ED for
many programs. Such “non-regulatory policy guidance” may be published in the
form of extensive questions and answers regarding several aspects of a program, or
more specific “Dear Colleague” policy letters from the U.S. Secretary of Education
to chief state school officers or other state and local officials. As this designation
implies, grantees are not legally required to follow this “guidance,” which is
generally intended to answer relatively specific questions regarding topics such as
uses of funds or selection of pupils to be served. Nevertheless, the typical perception
and use of “non-regulatory” guidance may be more complex than this stated intent
would imply. Grantees may assume that they will face fewer effective challenges to
their use of federal aid if they follow such “non-regulatory” guidance, and may often
treat such guidance as if it were equivalent to regulations, even if they are not
explicitly “required” to do so.
A somewhat analogous form of “non-regulatory guidance” may be found in the
“competitive priorities” established by ED for competitive or discretionary (i.e., not
formula) grant programs. In these grant competitions, ED typically sets certain
priorities for applications which would receive preferential consideration in the
awarding of grants. For example, a priority might be established for applicants which
would use funds to provide services in schools with high percentages of pupils from
low-income families. While applicants are not required to meet these priorities, it is
obvious that they will have a much greater likelihood of receiving support if they do
so. These priorities are not “regulations”; they are typically published only in the
announcement of the grant competition in the Federal Register.
Over the past several years, especially since adoption of the IASA in 1994, there
has been a trend toward the publication of regulations which are less voluminous and
address fewer aspects of many federal elementary and secondary education programs
than in the past. For several programs, ED has published no regulations at all,
implying that guidance in the statute is sufficient and requires no supplementation by
regulations, although in most cases some form of “non-regulatory policy guidance”
is provided.
For ESEA programs where some regulations are still published, such as ESEA
Title I-A, the regulations are generally somewhat briefer, and often address fewer
issues, than was the case previous to the early 1990s. For example, proposed
program regulations for ESEA Title I-A after enactment of the IASA in 1994
followed a rather “minimalist” approach in that they addressed relatively few
program issues. Those regulations dealt with standards, assessments, and
accountability; schoolwide programs; participation of children who attend private
schools; and allocation of funds within states and LEAs. Several other major aspects
of the Title I-A program — e.g., selection of schools and pupils to be served, parental

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involvement, professional development, fiscal requirements, or several aspects of
state and local plans — were not addressed in the regulations.
More recently, following enactment of the NCLBA of 2001, ED has embraced
a similar strategy. With respect to ESEA Title I-A, for example, it has thus far
published regulations on a relatively limited number of topics.1 The Department has
stated:
The Secretary intends to regulate only if absolutely necessary; for example, if the
statute requires regulations or if regulations are necessary to provide flexibility
or clarification for State and local educational agencies. Rather than regulating
extensively, the Secretary intends to issue nonregulatory guidance addressing
particular legal and policy issues under the Title I programs. This guidance will
inform schools, parents, school districts, States, and other affected parties about
the flexibility that exists under the statute, including different approaches they
may take to carry out the statute’s requirements.2
Purposes of Accountability Requirements
Federal K-12 education assistance program requirements include a broad range
of activities, services, or outcomes that SEAs, LEAs, and other aid grantees are
expected to provide, perform, or achieve with, or in return for, federal grants, in order
to show evidence that program goals are being met — i.e., to establish accountability
for appropriate use of federal aid funds. Federal elementary and secondary education
program requirements are usually intended to provide one or more of three basic
types of accountability for use of funds consistent with the purposes of statutes that
authorize the programs. These intended forms of accountability include:
! Target accountability: assuring that funds are focused on eligible
localities, pupils, and purposes, usually for the ultimate purpose of
promoting more equal educational opportunities;
! Outcome accountability: assuring that funds are used effectively to
improve student achievement and enhance the quality of K-12
instruction — either in specific subject areas or for particular types
of pupils, or overall; and
! Fiscal accountability: assuring financial integrity and providing that
federal aid funds constitute a net increase in resources for the
eligible pupils or purposes, rather than potentially replacing
(supplanting) state or local funds that would otherwise be available
for the same purpose.
1 These topics include participation in the National Assessment of Educational Progress
(NAEP), state accountability systems, schoolwide programs, LEA and school improvement,
qualifications of teachers and paraprofessionals, participation of eligible pupils attending
private schools, allocations to LEAs and schools, and fiscal requirements.
2 Federal Register, May 6, 2002, p. 30452.

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Specific types of requirements intended to support one or more of these purposes
include requirements to:
! Target resources on specific “high need” pupil groups or types of
localities or schools,
! Limit the authorized uses of funds to certain high priority types of
services,
! Conduct audits or assure that federal funds supplement, and do not
supplant, state and local resources,
! Enhance parental participation or provide for equitable treatment of
pupils attending non-public schools,
! Implement minimum qualifications for school staff,
! Report to parents and the general public of information on program
activities and their impact,
! Meet certain student achievement and other outcome goals, and
! Evaluate the effectiveness of federally supported instructional
services.
Grantees that violate any of these types of regulations implicitly face the possibility
of having to repay funds to the federal government, or being prohibited from
receiving further grants, although such sanctions are rarely invoked. In some cases,
authorizing statutes explicitly provide for more limited, specific sanctions for states
or LEAs which fail to meet some requirements.3
In addition to such program-specific requirements, a number of general
requirements apply to all recipients of federal education assistance under any
program. Many of these are published in the Education Department General
Administrative Regulations (EDGAR),4 as well as the financial management
requirements contained in relevant “circulars” published by the Office of
Management and Budget (OMB).5 Other regulations that are generally applicable to
ED programs include those related to civil rights and privacy of student records.
LEAs that participate in the federal child nutrition programs administered by the
Department of Agriculture must comply with a variety of related requirements — for
example, they must provide free or reduced-price school lunches to pupils from low-
income families. Finally, federal regulations published by federal agencies other than
ED may be applicable to LEAs and schools in their role as employers (e.g.,
3 For example, the ESEA provides that the Secretary shall withhold 25% of funds otherwise
available for state administration and program improvement activities from states which fail
to meet the ESEA Title I-A requirements regarding standards and assessments which were
originally adopted in the Improving America’s Schools Act of 1994, and may withhold
additional state administration funds for failure to meet new assessment requirements
adopted under the NCLBA.
4 34 CFR 74-86.
5 The most important of the OMB Circulars for administration of federal K-12 education
programs by states and LEAs include Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations (including the “Circular A-133 Compliance Supplement”),
Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, and Circular
A-102, Grants and Cooperative Agreements with State and Local Governments.

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regulations related to workplace safety, environmental protection, access for persons
with disabilities, labor relations, etc.).
However, state and local educational agencies are given wide latitude in other
aspects of the use of federal education assistance. Such matters as grade levels,
subject areas, and instructional techniques have typically been left almost totally to
state and local discretion. If a requirement is applied to instructional methods under
the ESEA and related programs — for example, the requirement applied to selected
programs under the NCLBA that instructional methods be “scientifically based” —
it is almost always broad, leaving great scope to state and LEA discretion.
Concerns About Selected Federal Program Requirements
Program-Specific Requirements. Complaints about ESEA and related
program-specific requirements by proponents of greater flexibility are often focused
on a selected range of particular types of requirements. Program-specific
requirements that are often the focus of criticism include: (a) explicit or implicit
prohibitions against commingling (mixing) of funds under different federal programs
with each other or with revenues from state and local programs; (b) restrictions on
the use of resources purchased with federal program funds for activities other than
those conducted under that program; (c) requirements that aid be targeted on certain
types of pupils or schools; (d) eligibility thresholds for special forms of flexibility
(e.g., ESEA Title I-A schoolwide programs); and (e) ESEA Title I-A outcome
accountability requirements adopted or expanded under the NCLBA.6
In general, prohibitions against commingling of funds ((a) above) arise from
efforts to establish fiscal accountability. Restrictions on the use of instructional
resources to the pupils eligible to be served (b), as well as requirements to target aid
on pupils and schools with the greatest incidence of poverty (c), are intended to focus
limited federal funds on those with the greatest needs. The eligibility thresholds for
certain forms of flexibility, such as ESEA Title I-A schoolwide programs (d), have
rationales that are discussed later in this report. Finally, the new or expanded
outcome accountability requirements (e), which are a key element of the NCLBA, are
intended to increase the effectiveness of federally supported education services and
to help shift the focus away from other types of requirements toward improved
outcomes.
Nevertheless, from a state or local perspective, these requirements may
sometimes seem to be unnecessarily inflexible, especially in relatively low
enrollment LEAs which may receive small grants under each of a variety of federal
programs. While the categorical approach of most of the larger ED programs directs
aid at high need pupil groups — disadvantaged pupils, limited English proficient
(LEP) pupils, etc. — such an approach may have undesirable (and unintended)
effects. Some of these effects may include: fragmentation of services to children,
6 These provisions are discussed in CRS Report RL31487, Education for the
Disadvantaged: Overview of ESEA Title I-A Amendments Under the No Child Left Behind
Act, and CRS Report RL32495, Adequate Yearly Progress (AYP): Implementation of the No
Child Left Behind Act, both by Wayne Riddle.

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with challenges for coordinating special program instruction with their regular
instruction; inefficient use of resources, that may remain unused when not required
by the special needs pupils; treatment of partial needs when a more coherent focus
on the whole child and her/his entire instructional program might be more effective,
especially with respect to children with multiple special needs; or instruction of
pupils in separate settings, whether or not this is explicitly required by the legislation,
when this might not be the most effective instructional technique. The traditional
federal categorical approach has been criticized as leading to fragmented instruction,
and focusing more on targeting resources and inputs than on improving achievement
and other outcomes for pupils. Difficulties may also arise from efforts to implement
federal programs in states and LEAs with widely varying educational policies and
demographic conditions.
Some of these problems with categorical program structures and associated
requirements may be based on misunderstandings of the requirements of federal
statutes and regulations, or overly strict state or local interpretations of these. Others
may be the inevitable effects of efforts to ensure that federal aid is focused on pupils
most in need, coupled with grantee efforts to avoid problems with federal program
monitoring and audits. Whatever their basis, and regardless of whether regulatory
burdens have been reduced in recent years, state and local education officials
sometimes complain about these, and other, constraints on the use of federal funds.
Cross-Cutting Requirements. A 1998 General Accounting Office (GAO)
report,7 based on a survey of staff in a nationally representative sample of LEAs,
concluded that in addition to the program-specific varieties of requirements discussed
above, LEA staff frequently expressed concern about certain cross-cutting
requirements applicable to recipients of federal K-12 education assistance. First,
LEA staff complained that it was difficult to obtain current, accurate, and concise
information on the wide variety of federal requirements with which they must
comply, and that existing sources of technical assistance on these matters were
inadequate. The authors of the GAO report concluded that LEA staff often respond
to such information gaps in a cautious manner that unnecessarily limits their
flexibility — i.e., that they often are unaware of, or do not exercise, degrees of
flexibility which are available to them. Second, staff in most of the surveyed LEAs
expressed concern about the costs of meeting their administrative responsibilities
under federal education programs, including the preparation of required reports.
Finally, LEA staff indicated that meeting required timelines and other “logistical and
management challenges” associated with federal K-12 education programs presented
substantial difficulties.
7 General Accounting Office, Elementary and Secondary Education: Flexibility Initiatives
Do Not Address Districts’ Key Concerns About Federal Requirements, GAO/HEHS-98-232.

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Special Flexibility Authorities Initiated Previous to
Enactment of the No Child Left Behind Act of 2001
In recent years — particularly since 1994 — several authorities have been
adopted that allow the waiver of many types of federal K-12 program requirements
by, or on behalf of, SEAs and LEAs. Each of them is limited with respect to either
the types of requirements that can be waived, the specific ESEA and other programs
affected, or the number of states or LEAs that are currently eligible. Some require
waivers to be requested on a case-by-case basis, while others offer “blanket” waiver
authority. Further, some of these authorities require some form of additional
accountability in terms of pupil outcomes, while others do not.
In addition to two general types of waiver authorities, Ed-Flex and Secretarial
case-by-case waivers, a high degree of school-level flexibility in the use of funds
under several federal programs is provided under the schoolwide program authority
under ESEA Title I-A, an exceptional range of flexibility in the use of funds is
provided under the Innovative Programs block grant, and an authority for flexibility
in small, rural LEAs was initially adopted as part of FY2001 appropriations
legislation for ED. These five types of special flexibility, which were initiated before
adoption of the NCLBA of 2001, are described below. The succeeding section of
this report discusses new forms of flexibility included in the NCLBA. Note that in
cases where a previously initiated special flexibility authority was significantly
amended by the NCLBA, the current (amended) version is described below.
Ed-Flex
Under Ed-Flex, ED is authorized to delegate to eligible SEAs authority to waive
a range of requirements under selected ESEA programs, on behalf of LEAs or
schools in that state. Ed-Flex authority was initially authorized for up to six states
in the 1994 Goals 2000: Educate America Act. It was expanded to a maximum of
12 states in FY1996 appropriations legislation for ED (P.L. 104-134). It was
modified, and the cap on the number of participating states was removed, by the
Education Flexibility Partnership Act of 1999 (P.L. 106-25). Finally, technical
amendments were made to P.L. 106-25 by the NCLBA of 2001.
The original Ed-Flex authority was granted to 12 states, and 10 states —
Colorado, Delaware, Kansas, Maryland, Massachusetts, North Carolina, Oregon,
Pennsylvania, Texas, and Vermont — have thus far been granted Ed-Flex status
under P.L. 106-25.8 No state has been granted Ed-Flex authority since January 2002.
8 The Ed-Flex authority established under P.L. 106-25 did not automatically or immediately
replace the original authority under the Goals 2000: Educate America Act. States that had
obtained Ed-Flex authority under Goals 2000 retained that authority for the period for which
it was granted (up to five years); they simply were required to obtain any extension of their
Ed-Flex authority under the new statute, P.L. 106-25. Seven of the states with current Ed-
Flex authority under P.L. 106-25 — Colorado, Kansas, Maryland, Massachusetts, Oregon,
Texas, and Vermont — were also among the 12 Ed-Flex states under the previous authority.
As for the remaining five states that had Ed-Flex authority under the original legislation
(continued...)

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Ed-Flex authority is granted to a state for up to five years; the existing authority
expires for each of the 10 states some time during the period of 2005-2007. The
authority for ED to grant Ed-Flex authority to states expires at the end of FY2004.
States participating in Ed-Flex must commit themselves to waiving state, as well
as federal, requirements affecting LEAs and schools in the state. States must also
meet the requirements for adoption of curriculum content and pupil performance
standards, and assessments linked to these, under ESEA Title I-A.9 States are to
monitor the performance of LEAs and schools for which federal or state requirements
are waived, and submit annual reports on these outcomes to ED.
The federal programs to which Ed-Flex applies are ESEA Titles:
! I-A (Education for the Disadvantaged),
! I-B-3 (William F. Goodling Even Start Family Literacy Programs),
! I-C (Education of Migratory Children),
! I-D (Prevention and Intervention Programs for Children and Youth
Who Are Neglected, Delinquent, or At-Risk),
! I-F (Comprehensive School Reform Program),
! II-A (Teacher and Principal Training and Recruiting Fund),
! II-D-1 (State and Local Technology Grants),
! III-B-4 (Emergency Immigrant Education Act) if Title III-A is not in
effect,10
! IV-A-1 (Safe and Drug-Free Schools and Communities), and
! V-A (Innovative Programs).
plus
! The Carl D. Perkins Vocational and Applied Technology Education
Act (Perkins Act).
These include most of the ESEA programs that are administered via SEAs and that
allocate funds by formula (“state-administered programs”).11 ED has also interpreted
8 (...continued)
(Illinois, Iowa, Michigan, New Mexico, and Ohio), that authority has expired and has not
yet been replaced by new authority under the 1999 legislation.
9 For a discussion of these requirements, see CRS Report RL31407, Educational Testing:
Implementation of ESEA Title I-A Requirements Under the No Child Left Behind Act, by
Wayne Riddle.
10 Under provisions of the ESEA, as amended by the NCLBA, the Emergency Immigrant
Education Act (Title III-B-4) may be funded only if Title III-A (English Language
Acquisition and Enhancement) is not funded.
11 State-administered formula grant programs authorized by the ESEA which are not subject
to Ed-Flex authority include: Title I-B-1 (Reading First), Title I-B-4 (School Libraries), Title
I-G (Advanced Placement Programs), Title I-H (School Dropout Prevention), Title III-A
(English Language Acquisition and Enhancement), Title IV-B (21st Century Community
Learning Centers), and Title VI-B-2 (Rural and Low-Income School Program). Note that
(continued...)

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CRS-10
the Ed-Flex statutes as providing authority for participating states to waive some
cross-cutting administrative requirements of the General Education Provisions Act
(GEPA) and the Education Department General Administrative Regulations
(EDGAR) that apply to the above programs.
Several types of requirements may not be waived by Ed-Flex states, unless the
underlying purposes of the statutory requirements are otherwise met to the
satisfaction of the Secretary of Education. These include requirements related to:
! fiscal accountability (e.g., requirements for LEAs or SEAs to
maintain their level of spending for specified educational services;
to use federal aid only to supplement, and not supplant, state and
local funds for specified purposes; or to provide state and local
funding that is comparable in all schools of a LEA),
! equitable participation by private school pupils and teachers,
! parental involvement in program activities and services,
! allocation of funds to states or LEAs,
! certain ESEA Title I-A school selection requirements, and
! applicable civil rights requirements.
With the exception of statewide “blanket” waivers, LEAs or schools requesting
waivers in Ed-Flex states must apply to their SEA, providing information analogous
to that required for LEAs requesting waivers directly from ED (see the following
section of this report). SEAs may not waive requirements applicable to the SEAs
themselves. In all cases, SEAs must be satisfied that “the underlying purposes of the
statutory requirements of each program or Act for which a waiver is granted continue
to be met.” Local waivers are to be terminated if student performance has been
inadequate to justify their continuation, or performance has declined for 2
consecutive years (unless there are exceptional or uncontrollable circumstances).
States are required to submit annual reports on waivers they have granted;
beginning with the second annual report, information on the effects of waivers on
student performance must be included. Further, beginning two years after enactment
of P.L. 106-25 (i.e., April 29, 2001), and annually thereafter, ED is to make these
state reports available to Congress and the public, and to submit to Congress a report
summarizing the state reports, including information on the effects of Ed-Flex
waivers on state reform efforts and pupil performance. While such a report was
prepared in 2001, it contained no information on the use of Ed-Flex authority by
states or programmatic impacts, in part because it focused only on activities under
the new authority in P.L. 106-25, overlooking ongoing activities in the 12 states that
had received Ed-Flex authority earlier (even in cases where the same states were
involved).12 Apparently, no subsequent annual reports have been published by ED.
11 (...continued)
Title I-B-4 and Title I-H would become formula grant programs only if minimum threshold
amounts were appropriated, which has not yet occurred.
12 2001 Report to Congress on the Implementation of the Education Flexibility Partnership
Act of 1999, July 25, 2001.

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CRS-11
Secretarial Case-by-Case Waiver Authorities
A second type of federal education program flexibility authority consists of
waivers that may be granted to SEAs or LEAs on a case-by-case basis, directly by the
U.S. Secretary of Education. While there are at least three such authorities affecting
K-12 education programs, the following discussion will focus primarily on the most
broadly applicable and frequently utilized of these, which is in Title IX, Part D of the
ESEA, as amended by the NCLBA. Under this provision, the Secretary of Education
is authorized to waive most requirements associated with any program authorized by
the ESEA. The waivers must be specifically requested by SEAs, LEAs, Indian tribes
or schools (via their LEAs). Waiver requests must include “specific, measurable
educational goals, ... and the methods to be used to measure annually such progress
for meeting such goals and outcomes” for pupils eligible to be served by the relevant
programs.
With respect to types of requirements that may not be waived, the provisions
regarding case-by-case waivers are generally the same as those for the Ed-Flex
program. However, there are four types of requirements that may not be waived
under the ESEA Title IX-D case-by-case waiver authority in addition to those that
cannot be waived under Ed-Flex: (1) prohibitions against consideration of ESEA
funds in state school finance programs; (2) prohibitions against use of funds for
religious worship or instruction; (3) certain prohibitions against use of funds for sex
education (under ESEA Title IX, Section 9526); and (4) the eligibility requirements
for charter schools under the Public Charter Schools program (ESEA Title V-B-1).
ESEA Title IX-D also has no authority analogous to the Ed-Flex provision that
requirements generally not subject to waiver may be waived if the underlying
purposes of the statutory requirements continue to be met to the satisfaction of the
Secretary.
Waivers granted under the authority of ESEA Title IX-D may not exceed four
years, except that they may be extended if the Secretary determines that the waiver
has contributed to improved student achievement and is in the public interest. In
contrast, waivers are to be terminated if the Secretary determines that pupil
performance or other outcomes are inadequate to justify continuation of the waivers,
or if the waiver is no longer necessary. The Secretary of Education is required to
publish a notice of the decision to grant a waiver in the Federal Register. The most
recent such notice was published on May 2, 2000; it indicated that as of December
31, 1999, ED had approved 471 requests for waivers under the Title IX-D authority,
104 of these during 1999. LEAs and SEAs that receive waivers must submit annual
reports describing the effects of the waivers and evaluate their impact on pupil
performance, beginning the second year the waiver is in effect. The Secretary is
required to submit to Congress annual reports on the effects and effectiveness of
waivers that have been granted, beginning in FY2002.
Charter Schools Waiver Authority. A second case-by-case waiver
authority affects only schools participating in the Public Charter Schools (PCS)
program authorized by ESEA Title V, Part B. A distinctive aspect of the PCS waiver
authority (ESEA Section 5204(e)) is that none of the limitations on types of
requirements that may be waived, as listed above for Ed-Flex and the ESEA Title IX-
D waiver authority, apply to the PCS waiver authority. Under the PCS authority, any

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CRS-12
requirement over which the Secretary of Education “exercises administrative
authority” may be waived, with the sole exception of requirements associated with
the definition of a charter school eligible to receive PCS funds (ESEA Section
5210(1)). However, this authority has been used infrequently and for relatively
limited purposes, and therefore will not be discussed further in this report.13
School-Level Flexibility:
ESEA Title I-A Schoolwide Programs
Schools participating in the ESEA Title I-A program at which 40% or more of
the pupils are from low-income families are eligible to conduct schoolwide programs
with a broad and substantial degree of flexibility in the use of funds under almost all
federal education programs. In a schoolwide program, federal aid provided under
Title I-A plus many other federal K-12 education programs may be used to improve
services to all pupils, rather than limiting services to particular pupils deemed to be
the most disadvantaged. If they meet the intent and purposes of Title I-A and the
other federal programs, and address the needs of the programs’ intended
beneficiaries, schoolwide programs are exempted from a variety of regulations under
Title I-A and most other programs, with specified exceptions, such as regulations
regarding health, safety, civil rights, parental participation, services to private school
pupils and teachers, or fiscal accountability. Title I-A and other federal program
funds must be used so that they supplement, and do not supplant, other federal and
non-federal funds that the school would otherwise receive. Further, only
commingling or flexibility in the use of funds is authorized with respect to the IDEA
in schoolwide programs; all of the IDEA’s programmatic requirements must still be
met.14
While the schoolwide program authority applies to a wide variety of federal K-
12 education programs, it is of significance primarily with respect to Title I-A. This
is because almost all of the other programs affected typically are focused on LEAs
overall, not individual schools. Further, to the extent that the non-Title I-A programs
are focused on individual schools, they are not otherwise (i.e., in schools not eligible
to conduct schoolwide programs) focused on groups of pupils with specific
educational needs (except for the IDEA, where the schoolwide program authority is
specifically limited). Nevertheless, the ability to use Title I-A funds on a schoolwide
basis, combining them with state and local funds without the need for separate
accounting, is in itself quite a significant form of flexibility in comparison to the
traditional “targeted Assistance” Title I-A program format, under which funds may
be used only to serve the lowest achieving individual pupils in a school.
13 According to John Fiegel of the U.S. Department of Education, as of August 1, 2002,
eight waivers had been granted under this authority. Five of these waivers were to allow
SEAs to use more than a statutory cap of 10% of their Public Charter Schools (PCS)
program funds for dissemination grants; one waiver was to allow a state’s Governor, rather
than the SEA, to administer the PCS program (a practice which was later discontinued); and
the final two approved requests were to waive certain Impact Aid (ESEA Title VIII)
provisions with respect to individual charter schools serving Indian pupils.
14 The latest published guidance from ED on schoolwide programs may be found in the
Federal Register of July 2, 2004, pages 40360-40365.

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CRS-13
There are few additional requirements which schoolwide programs are required
to meet in return for this increased flexibility. The number of schoolwides has grown
rapidly in recent years, and a large majority of the pupils served by Title I-A are now
in schoolwide programs; they constitute about one-half of Title I-A schools.15 The
eligibility threshold for schoolwide programs was reduced from 50% to 40% of
pupils from low-income families by the NCLBA. Previous to this, many of the Ed-
Flex and other waivers granted since 1994 had allowed schools below the 50%
threshold to operate schoolwide programs.
The rationale for providing schoolwide program authority to relatively high
poverty schools is that (a) in such schools, all pupils are disadvantaged, so most
pupils are in need of special assistance, and it seems less equitable to select only the
lowest-achieving individual 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 (relatively
large) number of low-income pupils in these schools. The NCLBA has reduced the
eligibility threshold to a level that is approximately the national average percentage
of pupils from low-income families, which may raise questions regarding the validity
of both aspects of this rationale for schools which just meet the new threshold.16 In
addition, there is little direct evidence of the achievement effects of this expansion
of schoolwide programs.
Flexibility for Small, Rural LEAs
A new form of flexibility under which small, rural LEAs may transfer funds
among selected ESEA programs was initially authorized under P.L. 106-554, the
Consolidated Appropriations Act of 2001. It was extended in essentially similar
form by the NCLBA, as follows.
The Rural Education Achievement Program (REAP), under ESEA Title VI-B,
includes both a pair of grant programs for rural and/or small and relatively high
poverty LEAs, plus a special flexibility authority for certain rural LEAs. Only the
latter is relevant to this report and is described below.
15 According to the latest available data (published in State ESEA Title I Participation
Information for 1999-2000), 48% of Title I-A schools were operating schoolwide programs
in 1999-2000, and these schools served 78% of all pupils served under Title I-A for that
year.
16 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 K-12 pupils meeting this criterion (in public schools participating in the
federal school lunch programs) is approximately 39% — 1 percentage point less than the
40% schoolwide program threshold. Further, in a school just meeting the 40% 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).

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CRS-14
LEAs with total average daily attendance below 600 pupils, or which are located
in a county with a population density of fewer than 10 persons per square mile, and
in which all schools are classified as being in rural locations,17 may combine or
transfer any funds received under ESEA Titles II-A (Teacher and Principal Training
and Recruiting Fund), II-D (Enhancing Education Through Technology), IV-A (Safe
and Drug-Free Schools and Communities), and V-A (Innovative Programs). These
funds may be used for any activity authorized under any of these programs or under
ESEA Titles I-A (Education for the Disadvantaged), III (English Language
Acquisition and Enhancement), and IV-B (21st Century Community Learning
Centers).
The primary rationale for this authority is that the smallest LEAs need special
flexibility due to the small size of grants which they receive under a number of
separate programs. These amounts, typically based in large part on LEA enrollment,
are often too small to support separate programs of sufficient size and scope to be
effective. Allowing such LEAs to combine and/or transfer funds among a limited
range of program activities may facilitate more effective use of those funds.
The degree of special flexibility provided to eligible small, rural LEAs under
this “Alternative Uses of Funds Authority” is similar to that now provided to all
LEAs under a different transferability authority in the NCLBA, which is described
below. The major differences are that the small, rural LEA authority applies to 100%
of the funds under the affected programs, while the broader authority applies to only
50% (or in some cases less) of such funds; and the small, rural LEA authority
includes additional programs into which funds may be transferred (ESEA Titles III
and IV-B). In addition, perhaps the greatest advantage of the small, rural schools
flexibility authority is that LEAs eligible for it are also eligible for supplementary
grants that may be used for any of the purposes for which combined or transferred
funds may be used under the flexibility authority.18
The Federal K-12 Education Block Grant:
ESEA Title V-A
Finally, one individual ED program is worthy of mention in the context of
special forms of flexibility for states and LEAs in the use of federal aid funds: ESEA
Title V-A, Innovative Programs. While the identification of aid programs as
“categorical” versus “block grants” is always somewhat judgmental, there seems to
be widespread agreement that ESEA Title V-A is the one major K-12 education
program currently administered by ED that may be considered to be a block grant.
In the field of education, block grants are aid programs covering an exceptionally
wide range of educational activities and types of students, and providing a great deal
of flexibility to states and LEAs in using the funds. They are often constructed
17 Under the statute, these would be schools with a locale code of 7 or 8, as determined by
ED on the basis of a Census Bureau classification system. In addition, this specific criterion
may be waived if the LEA can demonstrate, with concurrence of its SEA, that it is located
in a rural area, as defined by an agency of that state.
18 This and a related grant program are described in CRS Report RS20375, Rural Education:
Legislative Initiatives, by James B. Stedman and Richard N. Apling.

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CRS-15
through consolidation of a number of preceding categorical programs that are more
limited in the purposes or activities they support; in the case of Title V-A, the initial
consolidation took place in 1981.
After reservation of 1% of appropriations for grants to the Outlying Areas,
ESEA Title V-A funds are allocated to the 50 states, the District of Columbia and
Puerto Rico in proportion to their total population aged 5-17 years, except that no
state is to receive less than 0.5% of total grants to states. A majority of Title V-A
funds must be allocated by SEAs to LEAs on the basis of state-developed formulas.
These formulas must meet general criteria of taking into consideration each LEA’s
enrollment of pupils in public and private (non-profit) schools, and incorporating
adjustments to provide increased grants per pupil to LEAs with the greatest numbers
or percentages of “high cost” pupils, including those from economically
disadvantaged families and those living in sparsely populated areas or areas of
concentrated poverty.
The specific minimum percentage of funds which must be suballocated to LEAs
varies depending on the program’s aggregate funding level and whether the state
receives the minimum grant amount (0.5% of total grants to states). All states must
suballocate to LEAs an amount equal to at least 85% of the grant which they received
under this program for FY2002. In addition, most states are to suballocate to LEAs
100% of their Title V-A grants in excess of the FY2002 level; however, for states
receiving the minimum grant amount, the minimum share of Title V-A grants above
the FY2002 level which must be suballocated to LEAs is only 50%.
Of the funds that may be retained by states, no more than 15% may be used for
administrative costs; the remainder is to be used for one or more of seven specified
types of programs and services. The latter include the design and implementation of
pupil assessments; implementation of achievement standards; planning and
implementation of charter schools; independent analysis and reporting on LEA
achievement; (apparently) the implementation of policies to offer public school
choice options to pupils attending unsafe schools;19 school repair and renovation; and
a broad category of “statewide education reform, school improvement programs and
technical assistance and direct grants to” LEAs (Section 5121(3)).
LEAs may use their Title V-A funds for any of 27 different types of “innovative
assistance programs” listed in Section 5131. While several of these are relatively
specific — for example, planning and implementation of charter schools, “programs
to provide same gender schools and classrooms (consistent with applicable law),” or
programs to hire and support school nurses — others are broad, such as “promising
education reform projects,” “activities that encourage and expand improvements
throughout the area served by the local educational agency,” or “programs to improve
the academic achievement of educationally disadvantaged elementary and secondary
school students.” It is essentially because of the existence of these broad, “catchall”
categories of authorized use of funds by LEAs and states that Title V-A is generally
considered to be a block grant. In addition, the statute includes a prohibition against
19 The language of ESEA Title V-A on this point contains an incorrect reference to a non-
existent Section 9507. It appears that the intended reference was to Section 9532.

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CRS-16
SEAs exercising influence over LEA decisions on how Title V-A funds will be
used.20
State and Local Experience with the ESEA Title V-A Block Grant.
The program now authorized by ESEA Title V-A was first enacted in 1981 (P.L. 97-
35) as Chapter 2 of the Education Consolidation and Improvement Act (ECIA),
which consolidated more than 40 previous federal K-12 education programs.
Chapter 2 was the legislative response to a Reagan Administration proposal for a
much broader block grant into which almost all federal K-12 education programs
would have been consolidated. The block grant initially reduced the number of
federal education programs. However, many new categorical programs were
authorized in the years immediately following adoption of the consolidated program,
including some that were essentially direct successors to programs initially
consolidated into the block grant (e.g., aid for magnet schools).
The most recent study by ED of the program (Study of Educational Resources
and Federal Funding: Final Report, August 2000), based on a survey of a
representative sample of LEAs, found that 58% of recipient LEAs used “a great deal”
of their Title V-A funds for instructional materials, while 39% of LEAs used
substantial funds for educational technology, and 34% of LEAs for supplemental
targeted academic services. Large LEAs were found to be especially likely to use
Title V-A funds for teacher professional development services and school-based
improvement efforts. Resources or services funded by this program were found to
be infrequently targeted at particularly high-need pupils or schools. It was also
reported that the primary factors influencing decisions on the use of Title V-A funds
were long-term LEA plans and the priorities of individual schools.
Appropriations have declined significantly over the life of Title V-A, from $442
million in FY1982, the first year of funding, to $296.5 million for FY2004. With
adjustment for the considerable changes in price levels over this time period, this is
a decline of approximately 60%. One reason for this trend is that there have been
few constituencies promoting increased funding for the program. While it is
apparently popular with a broad range of state and local public education officials,
as well as many private school administrators, its support seems to be diffuse.
For FY2005, continued funding for the program has been threatened by actions
taken in the appropriations process thus far. While the Administration proposed that
the FY2004 funding level for this program ($296.5 million) be maintained for
FY2005, both the House and Senate Committees on Appropriations have reported
FY2005 Labor, Health and Human Services, Education, and Related Agencies
appropriations bills (H.R. 5006 and S. 2810, respectively) that would provide zero
funding for ESEA Title V-A. The House bill was amended in floor debate to add
funding for Title V-A, but the amount is only $20 million, less than 7% of the
previous year level. Floor consideration of the Senate bill (S. 2810) has not yet
occurred. It remains to be seen whether this program will receive funds, and at what
level, in the final FY2005 appropriations legislation.
20 This prohibition does not apply to states participating in a new State-Flex authority, which
is described later in this report.

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CRS-17
The House Committee on Appropriations provided no rationale for zero-funding
Title V-A in its report accompanying H.R. 5006. The Senate Committee on
Appropriations report on S. 2810 (S.Rept. 108-345) includes the following
discussion of the Committee’s proposal to terminate funding for this program:
The Committee recommendation does not provide an appropriation for this
source of funding due to the significantly enhanced flexibility authorized under
No Child Left Behind, the lack of evidence of effectiveness in contributing to
improved student learning and the importance of investments in other areas
where a system for measuring program performance is in place.... The
Committee notes that States and LEAs may transfer funds into this State grant
program for authorized activities described in Part A of Title V of the
Elementary and Secondary Education Act, even though no funding is provided
in this fiscal year 2005 appropriations bill. The Committee encourages States
and LEAs to transfer funds from one of the eligible State grant programs if they
believe Federal funds can be better utilized under this authority to improve the
academic achievement of all students.
As indicated in the report language above, limited information on the effects of
Title V-A services may have reduced incentives to maintain the program’s funding
level. Title V-A has tended to receive less favorable treatment in funding decisions
than programs that could demonstrate targeting of funds, or a linkage to improved
educational outcomes, particularly for high need pupil groups. In part to address this
concern, ESEA Title V-A was amended by the NCLBA to require participating states
to prepare, and submit to ED, annual summaries of “how assistance under this part
is contributing toward improving student academic achievement or improving the
quality of education for students” (Section 5122(a)(2)). As also noted by the
Committee, and discussed in later sections of this report, authorities under the
NCLBA would allow SEAs and LEAs to transfer a portion of the funds they receive
under selected other federal programs into Title V-A, if they choose to do so.
Other Pre-NCLBA Flexibility Authorities
Finally, a number of additional provisions initially adopted in the years
preceding enactment of the NCLBA are sometimes cited as providing increased
flexibility to states and LEAs. These are not discussed in detail here because their
potential impact is substantially more marginal than those of the flexibility
authorities described above, and/or their impact is primarily in the area of
administrative convenience for SEAs or LEAs. These additional forms of flexibility
include authority for consolidated SEA or LEA applications, plans, or reports for a
number of ESEA and related programs; and authority to consolidate certain funds
used for SEA or LEA administration of federal programs. These authorities are
provided currently in Parts B and C of ESEA Title IX.

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CRS-18
New Flexibility Authorities Adopted in the
No Child Left Behind Act of 2001
The No Child Left Behind Act of 2001 (NCLBA), signed into law on January
8, 2002 (P.L. 107-110), contains a number of new flexibility authorities for ESEA
programs, which are described below. The NCLBA also expanded and/or extended
certain forms of flexibility which had been initiated earlier, such as lowering the
eligibility threshold of ESEA Title I-A schoolwide programs; these NCLBA
amendments were discussed above.
Transferability Authority
Title VI, Part A, Subpart 2 of the ESEA, as amended by the NCLBA, allows
most LEAs to transfer up to 50% of their formula grants among four ESEA programs
— Teacher and Principal Training and Recruiting Fund (Title II-A), State and Local
Technology Grants (Title II-D-1), Safe and Drug Free Schools and Communities
(Title IV-A-1), and the Innovative Programs Block Grant (Title V-A). The affected
shares of funds may also be transferred into, but not from, ESEA Title I-A. LEAs
which have been identified as failing to meet state adequate yearly progress (AYP)
requirements 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. Further,
according to guidance from ED, LEAs subject to corrective actions under Title I-A
may not exercise this authority at all.21
States may transfer up to 50% of the relatively limited amount of program funds
over which they have authority, except for administrative funds, among the first four
of these programs plus the 21st Century Community Learning Centers program.
Thus, states could not transfer either any of the funds they are required to suballocate
to LEAs or funds reserved for state administration, so the significance of this
transferability authority for states is limited.
The overall scale of the programs subject to this authority is moderately
significant — the FY2004 appropriations for the four programs subject to LEA
transferability authority total approximately $4.4 billion. The transferability authority
is relatively simple and straightforward; it is available to most LEAs without the need
for specific application or approval (although state or LEA plans must be modified
to reflect the transfers, and LEAs must inform their SEA). Further, the range of
purposes for which transferred funds might be used is especially wide, given that one
of the programs into which funds could be shifted is the Innovative Programs block
grant. Nevertheless, all program requirements would continue to apply to the
21 For a discussion of ESEA Title I-A adequate yearly progress and corrective action
requirements, see CRS Report RL31487, Education for the Disadvantaged: Overview of
ESEA Title I-A Amendments Under the No Child Left Behind Act, and CRS Report
RL32495, Adequate Yearly Progress (AYP): Implementation of the No Child Left Behind
Act, both by Wayne Riddle. The ED guidance specifying that LEAs identified for corrective
action may not transfer any funds is contained in the document, Guidance on the
Transferability Authority, June 8, 2004, found at [http://www.ed.gov/programs/
transferability/legislation.html].

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CRS-19
transferred funds, including any requirements regarding shares of program funds
which must or may be used for specified purposes; funds cannot be transferred across
fiscal years; and all of the affected programs would continue to exist in places where
the authority is exercised, since no state or LEA could transfer more than 50% of its
funds out of any program. No data are yet available on the extent to which this
authority is being utilized.
State and Local Flexibility Demonstration Program
State-Flex. Under a new State and Local Flexibility Demonstration Act
(ESEA Title VI, Part A, Subpart 3), up to seven states, selected on a competitive
basis after peer review, may be authorized to consolidate all of their state
administration and state activity funds under the Education for the Disadvantaged
(Title I-A), Reading First (Title I-B-1), Even Start (Title I-B-3), Teacher and
Principal Training and Recruiting Fund (Title II-A), State and Local Technology
Grants (Title II-D-1), Safe and Drug Free Schools and Communities (Title IV-A-1),
21st Century Community Learning Centers (Title IV-B), and Innovative Programs
block grant (Title V-A) programs. Under this “State-Flex” authority, the
consolidated funds can be used for any purpose authorized under any ESEA program
(i.e., not just the activities authorized by the programs whose funds may be
consolidated). The schedule for competition for this authority is discussed below,
following a discussion of the related Local-Flex authority.
This authority will be granted to states for a period of five years; states will lose
the authority if they fail to meet state AYP requirements for two consecutive years.
ED may also terminate the authority at any time if a state fails to comply with the
terms of the flexibility authority. On the other hand, if all of the requirements
associated with this authority have been met at the end of five years, the authority is
to be renewed.
Each of the selected states is to enter into local performance agreements with
between 4 and 10 LEAs; at least one-half of these LEAs must have school-age child
poverty rates of 20% or more (slightly above the national average of approximately
18%). These LEAs may consolidate funds under the provisions of the local
flexibility authority described below. These LEAs would be required to align the use
of the funds they consolidate under this authority with the state’s uses of the funds
which it consolidates. In addition, participating states may specify the purposes for
which all LEAs in the state use the funds they receive under the ESEA Title V-A
Innovative Programs block grant. This is in contrast to the general rule, noted above,
that LEAs may use Title V-A funds for whatever purpose they choose (among the
wide range of purposes authorized in Title V-A).
Thus far, State-Flex authority has been granted to only one state, Florida.
Florida’s State-Flex plan includes local performance agreements with eight LEAs —
the Broward, Escambia, Hillsborough, Jefferson, Lake, Marion, Putnam, and Volusia
county school districts — which have received Local-Flex authority, as described
below.

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CRS-20
Local-Flex. Under a companion “Local-Flex” authority, up to 80 LEAs22 (no
more than three per state initially), plus the 4-10 LEAs per state that enter into
agreements under the state flexibility demonstration above, will be allowed to
consolidate all of their funds under the Teacher and Principal Training and Recruiting
Fund (Title II-A), State and Local Technology Grants (Title II-D-1), Safe and Drug
Free Schools and Communities (Title IV-A-1), and Innovative Programs block grant
(Title V-A) programs, and to use these funds for any purpose authorized under any
ESEA program. LEAs may use no more than 4% of the consolidated funds for
administration. The authority will be granted for a period of five years; LEAs will
lose the authority if they fail to meet state AYP requirements for two consecutive
years, or if they fail to comply with the requirements of the flexibility agreement. If
LEAs meet the goals established in their agreements, their authority would be
renewed for another two-year term.
Under both the state and local flexibility demonstration programs, a limited
number of specified types of requirements — including those regarding civil rights,
fiscal accountability (particularly the requirement that funds be used only to
supplement, and not supplant, non-federal funds), and equitable participation by
private school pupils and teachers — may not be waived. Participating states and
LEAs must also prepare and widely disseminate annual reports on how consolidated
funds are used under this authority. However, program requirements other than those
specified would not apply to the consolidated funds.
Thus far, in addition to the eight LEAs (see above) receiving Local-Flex
authority in conjunction with Florida’s State-Flex authority, only one LEA has
received Local-Flex authority: Seattle, Washington.
Competition Schedule. In scheduling the initial round of competition for
these new authorities, ED attempted to avoid potential conflicts between State-Flex
and Local-Flex — - especially the provision that Local-Flex authority granted
directly by ED is limited to LEAs in states which have not been granted State-Flex
authority — - through efforts to coordinate the schedules and procedures for states
applying for State-Flex authority and LEAs applying directly to ED for Local-Flex
authority.
First, ED established a procedure whereby states could first signal their intention
to apply for State-Flex authority, and LEAs in those states would be precluded from
applying to ED for Local-Flex authority, at least in an initial round of competition.
States were given until May 8, 2002, to inform ED of their intention to apply for
State-Flex,23 and ED announced that 11 states did so.24 The purpose of this early
22 Note: Section 6133 provides that single-LEA states (and entities treated as if they were
states under the ESEA) — which would include the District of Columbia, Hawaii and Puerto
Rico — are only eligible for the state flexibility authority, not the separate LEA authority.
23 Note: States that did not notify ED by May 8, 2002, of their intention to apply for State-
Flex authority were not precluded from competing for State-Flex authority later. However,
such states (i.e., states that ultimately apply but did not inform ED of their intention by May
8, 2002) could not prevent their LEAs from applying directly to ED in the initial round of
(continued...)

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CRS-21
notification procedure was to identify states in which LEAs could apply directly to
ED for Local-Flex authority — i.e., the states other than these 11. LEAs in the 11
identified states that desired to participate in Local-Flex were required to apply to
their SEA for this authority, if the state were to successfully compete for State-Flex
authority; if the state did not receive State-Flex authority, the LEAs would be able
to apply to ED for Local-Flex authority in a second round of competition.
Second, a competition for Local-Flex authority, limited to LEAs in states that
had not notified ED of their intention to apply for State-Flex authority, was
announced through Federal Register notices on July 19 and September 17, 2002,
with applications to be submitted by December 6, 2002. Applications were to
include baseline data on pupil achievement, specific and measurable educational
goals, and strategies for meeting both those goals and the general purposes of the
programs whose funds would be consolidated under this authority. On November.
6, 2003, ED announced that the Seattle, Washington, LEA had been granted Local-
Flex authority as a result of this competition. In addition, as noted above, eight
LEAs in Florida received Local-Flex authority as part of the state’s successful State-
Flex application.
Third, on October 11, 2002, ED published in the Federal Register (page 63394)
a notice announcing an initial competition through which up to four states would be
granted State-Flex authority. Additional State-Flex states (a maximum of three to
seven, depending on the number selected in the first round of competition) could be
selected in a later competition. In this initial competition for State-Flex authority,
applications were to be submitted by January 17, 2003. States were required to
submit, in addition to their AYP definitions, baseline academic achievement data and
LEA achievement profiles, five-year plans for using this authority, and proposed
performance agreements with LEAs (including strategies for meeting measurable
goals and the general purposes of the consolidated programs). Applicant states were
to be selected on the basis of their level of need for State-Flex authority and local
performance agreements, the quality of their strategies for meeting AYP standards,
the quality of their management plans, and adequacy of resources to meet their goals.
The application notice also emphasized a requirement that students attending private
schools must be given the opportunity to participate equitably in educational services
provided with funds consolidated under the State-Flex authority and related local
performance agreements. As mentioned earlier, thus far one state, Florida, has
received State-Flex authority through this initial competition.
23 (...continued)
competition for Local-Flex authority, which was conducted between July 19 and December
6, 2002. If a state were to compete for State-Flex authority without having notified ED of
its intention by May 8, 2002, and one or more LEAs in the state had in the meantime been
granted Local-Flex authority directly by ED, then the state would have needed to secure
agreement from the LEA(s) to incorporate the LEA plan(s) into its state plan for activities
under this authority.
24 The states were Alabama, Arizona, Colorado, Delaware, Florida, Illinois, Massachusetts,
Nebraska, Pennsylvania, Tennessee, and Texas. North Carolina was originally included in
this group, but according to a September 17, 2002, Federal Register notice, that state no
longer intended to apply for State-Flex.

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CRS-22
The fourth round of this competition began on March 18, 2004, when ED
published in the Federal Register an announcement of a new, simultaneous round of
competition for both State-Flex and Local-Flex. There is no specific deadline for this
competition. The announcement indicates that, as an extra inducement to apply,
states and LEAs participating in State-Flex or Local-Flex would receive preference
in future competitions for grants under relevant discretionary grant programs
administered by the Department. The rationale offered for this preference is that
“...State-Flex and Local-Flex participants have undergone comprehensive planning
to improve teacher quality and the academic achievement of all students, especially
disadvantaged students, and are held to a higher degree of accountability....”25
Comparison With Other Flexibility Authorities in the No Child Left
Behind Act. In comparison to the transferability authority described earlier, these
state and local flexibility demonstration authorities are relatively broad, since all of
the funds under the affected programs may be involved, the funds may be used for
any purpose authorized under any ESEA program (including the exceptionally wide
range of activities authorized under Title V-A), and only a comparatively small
number of specified program requirements apply to the use of these funds. At the
same time, the scope is more narrow in the sense that only a maximum of seven
states (and 4-10 LEAs in each of these), plus up to 80 LEAs in other states, may
participate. Given the tremendous variation in the size of states and LEAs, even this
limited number of states and LEAs26 may involve a substantial proportion of the
nation’s pupils depending on which particular states and LEAs successfully compete
for this opportunity. Nevertheless, as indicated above, interest in these provisions on
the part of SEAs and LEAs appears to have been limited, with only one state and nine
LEAs receiving State-Flex or Local-Flex authority thus far, in spite of multiple
opportunities to compete over an extended period of time.
The scope of the State-Flex authority in particular is limited in at least two
respects. First, although state administration funds may be used for other purposes
under this authority, states are still responsible for meeting their administrative
responsibilities under each program. Second, for many of these programs, the overall
share of funds which may be used for state administration plus state-level activities
is relatively small, and it is smallest for the largest affected program. This relevant
share of state total grants varies from 1% for ESEA Title I-A, by far the largest
program involved, to a high of 26.5% under the Safe and Drug-Free Schools and
Communities program. However, participating states would also be given substantial
influence over the use of funds consolidated by the 4-10 LEAs with local
performance agreements, and over the use of Innovative Programs block grant funds
in all of the states’ LEAs.
In some respects, participating LEAs in the state demonstration program might
have diminished flexibility, because their use of consolidated funds must be aligned
25 Federal Register, March 18, 2004, p. 12481.
26 The maximum number of participating LEAs — 150 — would constitute only 1% of the
approximately 15,000 regular LEAs in the nation. However, if most of the LEAs
participating in Local-Flex were relatively large, they could constitute a substantial share
of total enrolled pupils in the nation.

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CRS-23
with the state use of funds which they may consolidate, and because of the authority
given to participating states to specify LEA use of Title V-A funds. Finally, the
inclusion of the ESEA Title V-A Innovative Programs block grant in the Local-Flex
authority (i.e., in states which do not participate in State-Flex) is of limited
significance in the sense that those funds may already be used for an exceptionally
wide range of activities.
Comparison With State and Local Flexibility Authorities in Earlier
Senate- and House-Passed Versions of H.R. 1. It is instructive to compare
the State-Flex and Local-Flex authority with flexibility authorities that were
contained in the earlier House- and Senate-passed versions of H.R. 1, the legislation
which was enacted as the NCLBA. The final provisions are in most respects similar
to language in the House version of H.R. 1 authorizing local flexibility
demonstrations in up to 100 LEAs, but may be contrasted with a broader state and
local flexibility/performance agreement authority which was contained in the Senate
version of H.R. 1. Even though the Senate program was not included in the final
legislation, it is worthy of mention because of the amount of debate it stimulated
during Senate and conference committee consideration of this legislation.27
Overall, the flexibility/performance agreement provisions of the Senate-passed
version of H.R. 1 would have provided significantly greater flexibility than the
enacted State-Flex and Local-Flex authorities, in return for at least marginally
increased outcome accountability. At the same time, all of these authorities are
substantially more limited than optional performance agreement/grant consolidation
proposals considered, but not enacted, during the 106th Congress.28
The scope of the H.R. 1/Senate flexibility/performance agreement authority was
the same in terms of the maximum number of participating states (7), and more
narrow in number of LEAs in other states (25), which could participate. The types
of program requirements (e.g., civil rights, fiscal accountability) which continued to
apply to the use of consolidated funds was similar. However, the range of ESEA
programs subject to the flexibility authority was much more broad and involved
substantially higher levels of funding, incorporating most state-administered formula
grant programs authorized by the ESEA, including such programs as Title I-A grants
for Education of the Disadvantaged,29 and Bilingual/Immigrant Education. As with
State-Flex and Local-Flex, funds could be used for activities authorized under any
of the combined programs, including the exceptionally wide range of authorized
activities under the Innovative Programs block grant. Under the performance
agreement authority, participating states could in general have reallocated funds
27 For a discussion of the flexibility authorities in the Senate- and House-passed versions of
H.R. 1, see CRS Report RL30835, Elementary and Secondary Education: Accountability
and Flexibility in Federal Aid Proposals, by Wayne Riddle.
28 See CRS Report RL30393, “Academic Achievement for All Act (Straight A’s Act)” —
Background and Analysis, by Wayne Riddle.
29 Most requirements regarding uses of funds in Title I-A schoolwide and targeted assistance
programs would have continued to apply (with the schoolwide eligibility percentage reduced
to 35%), as would the Title I-A requirements regarding standards, assessments,
accountability, and parental involvement.

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CRS-24
under all of the affected programs among and within LEAs as long as the resulting
allocations targeted funds on concentrations of poor children at least as well as the
statutory formulas; State-Flex provides no similar authority to reallocate funds
among LEAs.
The additional element of outcome accountability required of participating states
and LEAs under the Senate version of H.R. 1 is that they would have been required
to exceed AYP goals by a statistically significant amount. This would mean that
achievement gains in excess of those required under state AYP standards must be
sufficiently large that they are unlikely to have resulted from random variations in
pupil achievement scores. While statistically significant, such an amount would not
necessarily be large, especially in a state or LEA with a large pupil population.
Major Cross-Cutting Issues Regarding
Special Forms of Flexibility in
Federal K-12 Education Programs
This report concludes with an analysis of selected cross-cutting issues that have
arisen with respect to the special forms of flexibility described above. We introduce
this topic with a brief review of the common themes of both the new forms of
flexibility included in the NCLBA, and the special flexibility authorities enacted
previously. In general, these flexibility authorities exhibit the following
characteristics:
! They increase the ability of states and/or LEAs to use federal aid
funds more thoroughly in accordance with their own priorities —
which may or may not be consistent with federal priorities — than
would otherwise be possible.
! Each of the special flexibility authorities is significantly limited in
terms of the number of states and LEAs that may participate, the
number and size of the ESEA and related programs affected, and/or
the range of program requirements that may be waived.
! With the major exceptions of the transferability authority, the
Innovative Programs block grant, and Title I-A schoolwide
programs, states and/or LEAs are allowed to waive a variety of
federal program requirements in return for some degree of
accountability based on pupil achievement outcomes. However, the
outcome accountability requirements are essentially just increased
attention to, and/or consequences related to, outcome accountability
requirements which are applicable to all states and LEAs
participating in Title I-A and other ESEA programs.
! These special flexibility authorities, particularly those enacted as
part of the NCLBA, have been adopted in a policy context of
substantially increased accountability requirements and authorized
degrees of flexibility in general for the ESEA and related federal
programs.
! The flexibility authorities often include a variety of requirements for
regular reporting on ways in which the authorities have been used,

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CRS-25
and the impact of increased flexibility on pupil achievement.
However, for flexibility authorities enacted before the NCLBA,
relatively little information has been compiled or published on the
uses of the flexibility authority, and there is very limited information
regarding the specific impact of special forms of flexibility on pupil
achievement.
Selected cross-cutting issues associated with these and other common
characteristics of special flexibility authorities are discussed below.
How Significant Are the Degrees of Flexibility
Allowed under These Authorities?
The current flexibility authorities are restricted in many important respects, and
it may be questioned whether they address the primary concerns of states and LEAs
about restrictions on the use of federal funds or administrative burdens accompanying
participation in federal programs. While broad in terms of the potential uses of funds
and federal programs covered, the ESEA Title I-A schoolwide program authority is
limited to the school level, and only schools with low-income pupil rates somewhat
above average may generally qualify. Further, as noted earlier, the significance of
this authority with respect to programs other than Title I-A is quite limited. The
Secretarial case-by-case waiver authorities are limited by the necessity of submitting
individual requests to the U.S. Secretary of Education. In most cases, LEAs must
similarly apply to their SEAs for waivers under the Ed-Flex authority. While almost
all states and LEAs may exercise the fund transferability authority, none may transfer
more than 50% of the funds received under any program, and therefore all of the
requirements associated with participating in any of the affected programs must still
be met. The rural LEA flexibility authority is available to only a select group of
exceptionally low-enrollment LEAs.
In addition, the amount of funds subject to State-Flex authority is limited, and
only seven states may participate. Local-Flex authority affects only a limited range
of programs and is available in a maximum of only 80 LEAs plus 28-70 LEAs in
State-Flex states. The limited increase in flexibility provided by these authorities is
a probable reason for the low rate of participation in these authorities thus far (one
state and nine LEAs).
Importantly, there are several types of requirements that cannot be waived under
any of these authorities, including those involving fiscal accountability, participation
by private school pupils and staff, or the increasingly important ESEA Title I-A
requirements regarding standards, assessments, and school/LEA accountability for
pupil achievement. It is noteworthy that many of the flexibility authorities do not
include the largest ESEA program, Title I-A, and none of them would allow states
to reallocate funds among LEAs.
Further, the authors of a 1999 General Accounting Office (GAO) report
(Elementary and Secondary Education: Ed-Flex States Vary in Implementation of
Waiver Process. HEHS-99-17) found that the flexibility authorities enacted as of that
time do not address the main regulatory burdens of states and LEAs, which are

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CRS-26
associated with the IDEA, the Americans with Disabilities Act, child nutrition
program administration, and environmental requirements (e.g., underground storage
tanks and asbestos removal). According to this GAO report, SEA staff in some states
think Ed-Flex is of limited value because of the relatively few programs and
requirements that may be waived. In contrast, SEA staff in other states think its
usefulness extends beyond specific use of the authority, through creating a “climate
that encourages innovation and flexibility.” These remarks would apply also to the
new authorities enacted in 2001 and 2002.
Finally, it is significant that these authorities have been adopted during a period
when “regular” federal program requirements have become more flexible in several
important respects. For programs such as ESEA Title I-A, the increased emphasis
on outcome accountability beginning in 1994 and continuing under the NCLBA has
been accompanied by generally increased flexibility for all LEAs and schools in
determining how funds may be used, especially in the schoolwide programs which
are rapidly becoming the dominant service mode for this program. The NCLBA
consolidated major groups of programs related to teachers and educational
technology, giving states and LEAs substantially greater flexibility in deciding how
to use these funds. In this context, the additional flexibility provided by the special
authorities described above seems relatively marginal in many respects.
For What Purposes Have Special Flexibility Authorities
Been Used in the Past, and Is There Evidence That
These Have Resulted in Increased Pupil Performance
or Had Other Major Impacts?
Proponents of increased flexibility in federal education programs often argue
that waivers can remove federal regulatory barriers to local educational reform and
initiative. Information is not yet available on the use of the new forms of flexibility
authorized under the NCLBA, as these are just beginning to be implemented.
However, available information on waivers granted under pre-NCLBA authorities
indicates that they have been used for relatively few purposes, at least some of which
are not clearly related to innovation or reform. In addition, several of the
requirements which were frequently waived in the past have been eliminated or made
less restrictive for all states and LEAs by the NCLBA.
Secretarial waivers, Ed-Flex and other pre-NCLBA flexibility authorities during
the mid- to late-1990s have been most often used thus far to waive the following
requirements: (1) the minimum low-income pupil percentage threshold for ESEA
Title I-A schoolwide program eligibility (especially before this was reduced under
the NCLBA); (2) within-LEA targeting of Title I-A funds on schools with the highest
number or percentage of pupils from low-income families; (3) deadlines for adoption
and implementation of standards and assessments under ESEA Title I-A; and (4) a
series of limitations on the use of funds under two pre-NCLBA programs related to
teacher recruitment and training — the Class Size Reduction (CSR) and Eisenhower

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CRS-27
Professional Development Programs.30 Each of these categories is briefly discussed
below.
While schoolwide programs offer a great deal of flexibility to use funds under
not only Title I-A but also most other federal programs in ways that might not
ordinarily be allowed, it has been questioned whether schools with relatively low
percentages of their pupils from low-income families should be granted this
authority. If schools with relatively low poverty rates receive permission to operate
schoolwide programs, the scope of these programs might be limited (since the size
of a school’s Title I-A grant is based on its number of children from low-income
families), and it would be difficult for such a modest program to have a significant
schoolwide impact. Further, no systematic evidence is available that schoolwide
programs are more effective than more traditional “targeted assistance” Title I-A
programs in improving the education of disadvantaged pupils.
The use of waivers to maintain or expand the number of schools participating
in Title I-A would tend to disperse Title I-A funds among an increased number of
relatively low-poverty schools, reducing the concentration of funds on high-poverty
schools. As noted above, Ed-Flex places restrictions on, but does not prohibit,
waivers regarding ESEA Title I-A school selection.
The use of waivers to delay meeting deadlines for implementing ESEA Title I-A
standard and assessment requirements arguably undercut the most substantial pre-
NCLBA outcome accountability requirement. This increasingly important aspect of
federal requirements is discussed further below.
With respect to the CSR and Eisenhower programs, LEAs and states frequently
requested the waiver of requirements intended to: focus teacher hiring on the early
elementary grades; require small LEAs to form consortia if their CSR grants were too
small to pay the salary of a new teacher; ensure that minimum shares of teacher
training funds would be used to support instruction in the subject areas of
mathematics and science; or to limit the share of CSR funds used for professional
development (as opposed to hiring new teachers). Such waivers appear generally to
have been requested to accommodate relatively strict and specific limitations on the
use of funds to varying local conditions.
Following enactment of the NCLBA, some of these formerly common uses of
Ed-Flex and other pre-NCLBA flexibility authorities are no longer as relevant as in
the past. As noted earlier, the NCLBA lowered the schoolwide program eligibility
threshold to 40% of pupils from low-income families nationwide (although some
may still seek Ed-Flex or Secretarial waivers for schools below 40% to conduct
schoolwide programs). The CSR and Eisenhower programs were consolidated into
a broader and more flexible ESEA Title II program supporting teacher and principal
recruitment and training.
Nevertheless, until post-NCLBA data become available, these earlier reports
provide the only available information on how states and LEAs have attempted to use
30 See, for example, the Notice of Waivers Granted, Federal Register, May 2, 2000.

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CRS-28
similar authorities in the past. While it is difficult to project future activities based
on this past experience, it would seem likely that states and LEAs may attempt to use
these authorities, to the extent allowed under the numerous constraints, to increase
their ability to use Title I-A funds on a schoolwide basis and in a maximum number
of schools, and to avoid explicit constraints on the use of funds under other programs
whenever possible. It might also be projected, based on past experience, that states
and LEAs would seek when possible to obtain waivers to postpone implementing the
numerous ESEA Title I-A requirements regarding standards, assessments, and
accountability which have been expanded under the NCLBA, although the extent to
which they might be able to obtain such waivers seems likely to be limited.31
Impact of Past Waivers. Regarding the impact of waivers on pupil
achievement or other outcomes, only limited information has been made available
with respect to waivers granted under the pre-NCLBA authorities. While states that
received Ed-Flex authority have been required to submit annual reports to ED on
waivers granted and their impact, the information reported by the original 12 Ed-Flex
states (under the pre-P.L. 106-25 authority) was of limited value, and no reports have
yet been published on the actual purposes of waivers or their effects in states under
the Ed-Flex authority enacted in 1999.32 Anecdotal information on the achievement
effects of a number of Ed-Flex and Secretarial waivers in a limited number of LEAs
was included in a 1999 ED report (Waivers: Flexibility to Achieve High Standards).
The information in this report was primarily limited to whether affected LEAs or
schools met state AYP standards in effect at the time.
At the same time, supporters of special flexibility authorities often point to
broader forms of evidence of their impact on state and local public education
systems. These arguments are reflected in a 1998 ED report on Ed-Flex,33 the authors
of which concluded that Ed-Flex authority has supported standards-based reform in
the affected states in three major ways:
31 The NCLBA established a deadline (April 8, 2002), after which states could no longer
apply for waivers of the Title I-A standard and assessment requirements adopted in 1994.
This prohibition does not apply to new requirements in this area adopted under the NCLBA.
Nevertheless, a “policy letter” dated February 15, 2002, from U.S. Secretary of Education
Roderick Paige to the Chief State School Officers [http://www.ed.gov/policy/elsec/
guid/secletter/020215.html], includes the statement “Consistent with the spirit of these
provisions and with the principle that requirements should not be waived if doing so would
undermine the intent and purpose of the law, we do not intend to waive fundamental
requirements on standards, assessments, adequate yearly progress, and accountability in the
new law” (i.e., the NCLBA). For a discussion of Title I-A standard and assessment
requirements first adopted in 1994 versus those initiated under the NCLBA, see CRS Report
RL31407, Educational Testing: Implementation of ESEA Title I-A Requirements Under the
No Child Left Behind Act, by Wayne C. Riddle.
32 See 2001 Report to Congress on the Implementation of the Education Flexibility
Partnership Act of 1999, July 25, 2001.
33 Goals 2000: Reforming Education to Improve Student Achievement, Appendix B. April
30, 1998.

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CRS-29
! Ed-Flex “facilitates the coordination of programs and strengthens the
planning process,” by encouraging LEAs and schools to develop
instructional programs without regard to the perceived constraints of
many standard federal or state program requirements.
! Ed-Flex “provides the opportunity for States to streamline the
administration of programs” by reducing paperwork deemed
unessential to meeting basic purposes of federal programs.
! Ed-Flex “supports the use of resources in a way that can, together
with the implementation of standards-based approaches, lead to
increased student achievement and reduction in the gap in
achievement between different populations” by shifting oversight
focus away from inputs or procedures and toward outcomes.
Availability and Dissemination of Information on Use and Impact of
Special Flexibility Authorities. Given the limited amount of data showing
improved pupil achievement outcomes in states, LEAs, or schools to which special
forms of flexibility have been granted, the conclusions by ED (immediately above)
should presumably be considered to be tentative. This is related to a final aspect of
this set of issues: Will sufficient information be available on the use of special
flexibility authorities, and their effects on pupil achievement, to make it possible to
analyze or judge their benefits and impact?
As mentioned earlier, while the statutes authorizing several forms of flexibility
include significant requirements for reporting to and by ED on the use of waivers and
other special authorities, and the pupil achievement and other effects of these
activities, little relevant information has been disseminated by ED. Efforts by ED to
compile and publish information on the use of waiver or other special flexibility
authorities seem to have been a priority only infrequently, primarily limited to the
period just preceding congressional consideration of the Ed-Flex legislation in 1999
(P.L. 106-25). This makes it very difficult to evaluate the significance, advantages,
and disadvantages of these flexibility authorities. It remains to be seen whether this
pattern will change as the new authorities in the NCLBA continue to be
implemented.
Are the Outcome Accountability Requirements
Consistent with the Increased Flexibility
Provided under These Authorities?
A basic question regarding all special forms of flexibility is whether the
increased emphasis on outcomes which is typically associated with them — whether
or not such additional outcome requirements are substantial — is an adequate
substitute for other forms of accountability requirements, such as required targeting
of services on priority activities or high need pupil groups, which may be diminished
through the grant of flexibility.
In general, the outcome accountability requirements associated with either
obtaining or maintaining the special flexibility authorities in this report are a
combination of: (a) goals established by the states and LEAs themselves, either in
the implementation of programs such as Ed-Flex or in competing for (and ultimately

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CRS-30
implementing) State-Flex or Local-Flex authority; and (b) meeting the state-
established adequate yearly progress (AYP) requirements under ESEA Title I-A. In
some cases, such as the Innovative Programs block grant or Title I-A schoolwide
programs, there is no direct linkage between the flexibility authority and any form of
outcome accountability.34
Regarding (a) above, the most substantial evidence is contained in a recent GAO
study,35 which found that states granted Ed-Flex authority under the original (pre-P.L.
106-25) legislation differed substantially in the clarity and specificity of their
outcome goals related to the granting of waivers. Five of the original 12 Ed-Flex
states had set no specific objectives at all for LEAs or schools being granted waivers,
and only one of the states had established outcome objectives that were specifically
linked to the LEAs, schools, and pupils affected by the waivers. The GAO study
further concluded that ED oversight of Ed-Flex implementation by the states was
limited, involving mostly the collection of annual reports from the states with highly
varying degrees of detail in the information they provided.
If such practices continue, then the most significant (and the only concrete)
outcome accountability requirement associated with any of the special flexibility
authorities is (b) above — meeting AYP requirements. Thus, the current flexibility
authorities do not actually require substantial additional outcome accountability for
participating LEAs and states — i.e., accountability for pupil outcomes beyond that
which is applicable to all other states and LEAs participating in Title I-A and other
ESEA programs. Instead, they place increased emphasis on, attention to, and
consequences for failing to meet, generally applicable outcome accountability
requirements.
While this outcome requirement is not an additional one, in comparison to states
and LEAs which do not receive special flexibility authority, it may nevertheless be
substantial, as states continue to implement the AYP and related requirements under
the NCLBA.36 While all schools, LEAs, and states are required to meet these
requirements, and are to face a variety of consequences if they fail to do so, those
with special flexibility authority would have an additional incentive to meet the
requirements (i.e., to maintain their eligibility to exercise the flexibility authority),
and an additional negative consequence of failing to do so.
While limited, such an enhancement of outcome accountability requirements
may be consistent with the nature of the special flexibility authorities described in
this report. In many respects, both the additional flexibility and the increased
outcome accountability are quite limited. At the same time, these provisions take
34 Like all schools participating in Title I-A, schoolwide programs must meet AYP
standards, but their eligibility to operate as a schoolwide program is not dependent on
meeting the AYP requirements.
35 Elementary and Secondary Education: Ed-Flex States Vary in Implementation of Waiver
Process. HEHS-99-17.
36 For a discussion of the AYP and other ESEA Title I-A accountability requirements under
the NCLBA, see CRS Report RL31487, Education for the Disadvantaged: Overview of
ESEA Title I-A Amendments Under the No Child Left Behind Act, by Wayne Riddle.

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CRS-31
effect in the context of recent legislation, particularly the NCLBA, which
substantially expands both outcome accountability requirements and, at least in some
major respects, flexibility in the use of federal aid funds for all states, LEAs, and
schools, whether or not they have been granted one of the special flexibility
authorities described in this report.37
Finally, some proponents of high degrees of state and local flexibility in the use
of federal K-12 education aid funds often argue that no increase in outcome or other
accountability requirements is necessary to justify the granting of special forms of
flexibility. To such proponents, increasing the ability of states and LEAs to use
federal funds for purposes which they deem to be most appropriate and effective is
sufficient justification for such policies, and is most likely to lead to improved pupil
outcomes.
At the same time, critics of these authorities might argue that there is no
justification for granting special forms of flexibility in return for little or nothing
more than the same outcome accountability requirements which are applicable to
states, LEAs, and schools which have not been granted such authority. Such critics
often defend the full range of generally applicable accountability requirements as
embodying important national priorities, and are concerned that special flexibility
authorities not only have insufficient accountability provisions, but have been used
thus far largely for purposes that have not been proven to increase program
effectiveness.
37 For an overview of the accountability, flexibility, and other provisions of the NCLBA
overall, see CRS Report RL31284, K-12 Education: Highlights of the No Child Left Behind
Act of 2001 (P.L.107-110), coordinated by Wayne Riddle.

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