Order Code RL31487
CRS Report for Congress
Received through the CRS Web
Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Updated October 28, 2004
Wayne Riddle
Specialist in Education Finance
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Summary
Title I, Part A of the Elementary and Secondary Education Act (ESEA)
authorizes aid to local educational agencies (LEAs) for the education of
disadvantaged children. Title I-A grants are used to provide supplementary
educational and related services to low-achieving and other pupils attending schools
with relatively high concentrations of pupils from low-income families. Title I-A has
detailed provisions regarding pupil assessment, program improvement, allocation of
funds, school selection, fiscal accountability, and parental involvement, but very few
constraints on such matters as the specific resources for which funds are used.
The No Child Left Behind Act of 2001, P.L. 107-110, builds upon Title I-A
provisions adopted in 1994 which required participating states to adopt curriculum
content and pupil performance standards, and assessments linked to these, at three
grade levels in reading and mathematics; initiated steps toward identifying low-
performing schools and LEAs; attempted to increase targeting of funds on high
poverty LEAs and schools; and increased flexibility.
Highlights of the Title I-A provisions of P.L. 107-110 include (a) participating
states are required to implement standards-based assessments for pupils in each of
grades 3-8 in reading and mathematics by the 2005-2006 school year, and to
implement assessments at three grade levels in science by the 2007-2008 school year;
(b) states receiving Title I-A funds are required to participate in National Assessment
of Educational Progress tests in 4th and 8th grade reading and mathematics every two
years; (c) adequate yearly progress (AYP) standards, with a goal of all pupils
reaching a proficient or advanced level of achievement on state assessments within
12 years, must be developed by states and applied to each public school, LEA, and
state; (d) pupils at schools participating in Title I-A that fail to meet AYP for two
consecutive years must be offered public school choice options, and if a Title I-A
school fails to meet AYP for a third consecutive year, pupils from low-income
families must be offered the opportunity to receive instruction from a supplemental
services provider of their choice; (e) “corrective actions” must be taken with respect
to Title I-A schools that fail to meet AYP for four consecutive years, and those that
fail for five years must be “restructured”; (f) Title I-A allocation formulas are
modified to increase targeting on high poverty states and LEAs under the Education
Finance Incentive Grant formula, move Puerto Rico gradually toward parity with the
states, and increase state minimum grants; (g) states must ensure that all of their
teachers in core subject areas are “highly qualified” by the end of the 2005-2006
school year; (h) within four years, all paraprofessionals paid with Title I-A funds
must have completed at least two years of higher education or met a “rigorous
standard of quality”; and (i) the authorization level for Title I-A is specified for each
year, rising from $13.5 billion for FY2002 to $25 billion for FY2007. Issues
regarding implementation of these requirements and other provisions are being
considered by the 108th Congress. This report will be updated regularly, to reflect
legislative and implementation developments.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Pupil Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Report Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Adequate Yearly Progress Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Data on Schools Identified as Failing to Meet AYP . . . . . . . . . . . . . . . . . . . 7
Recent ED Policy Developments Regarding Participation Rates
Plus Treatment of Limited English Proficient Pupils and
Certain Pupils With Disabilities in Assessments and
AYP Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Timing and Other AYP Implementation Issues . . . . . . . . . . . . . . . . . . . . . . 11
Program Improvement and Corrective Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 14
School Improvement and Corrective Actions . . . . . . . . . . . . . . . . . . . . . . . 14
LEA Improvement and Corrective Actions . . . . . . . . . . . . . . . . . . . . . . . . . 16
Transition Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Allocation Formula Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Characteristics of the Title I-A Allocation Formulas . . . . . . . . . . . 20
Title I-A Allocation Formula Amendments Under the NCLBA . . . . . . . . . 23
EFIG Formula Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Formula Revisions for Puerto Rico . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Other NCLBA Formula Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 25
Targeting on High Poverty LEAs under the Revised Title I-A Formulas . . 25
FY2002-FY2005 Funding for the Title I-A Allocation Formulas . . . . . . . . 29
FY2004 Allocation Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Appropriations Authorization Levels . . . . . . . . . . . . . . . . . . . . . . . . . 32
Staff Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Teacher Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Qualification Requirements for Paraprofessionals . . . . . . . . . . . . . . . . . . . 35
Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Other Provisions Regarding Title I-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Services to Private School Pupils, Staff, and Parents . . . . . . . . . . . . . . . . . 39
Debates Over Continued State or LEA Participation in Title I-A . . . . . . . . . . . . 40
Appendix: Regulations and Policy Guidance Published Thus Far for ESEA
Title I-A, as Amended by the No Child Left Behind Act . . . . . . . . . . . . . . 42

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List of Tables
Table 1. Share of ESEA Title I-A Funds Allocated to LEAs by LEA
Poverty Rate Quintile, FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table 2. FY2003-FY2005 Appropriations for ESEA Title I, Part A . . . . . . . . . 33

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Education for the Disadvantaged:
Overview of ESEA Title I-A Amendments
Under the No Child Left Behind Act
Introduction
Title I, Part A, of the Elementary and Secondary Education Act (ESEA)
authorizes federal aid to local educational agencies (LEAs) for the education of
disadvantaged children. Title I-A grants provide supplementary educational and
related services to low-achieving and other pupils attending schools with relatively
high concentrations of pupils from low-income families in pre-kindergarten through
grade 12. Title I-A is the largest federal elementary and secondary education
assistance program, with services provided to (a) over 90% of all LEAs; (b)
approximately 45,000 (58% of all) public schools; and (c) approximately 11 million
(22% of all) pupils, including approximately 167,000 pupils attending private
schools. Four-fifths of all pupils served are in pre-kindergarten through grade 6,
while only 5% of pupils served are in grades 10-12.
On January 8, 2002, the No Child Left Behind Act of 2001 (NCLBA), an act to
extend and revise the ESEA, was signed into law as P.L. 107-110. Among other
provisions, this act builds upon Title I-A provisions adopted initially in the
Improving America’s Schools Act (IASA) of 1994 which required states1 to adopt
curriculum content and pupil performance standards, and assessments linked to these,
at three grade levels in reading and mathematics; initiated steps toward identifying
low-performing schools and LEAs; attempted to increase targeting of funds on high
poverty LEAs and schools; and increased flexibility. It should be noted that all of the
requirements described in this report apply only to states which participate in, and
receive grants under, ESEA Title I-A (which currently includes all states, but this
may not necessarily be the case in the future).
This report provides an overview of aspects of ESEA Title I-A which were
substantially amended by the NCLBA; elements of the program which are important
but which were not substantially revised by the NCLBA (such as parental
involvement requirements) are not discussed in this report. Other current and
forthcoming reports will provide more detailed discussions and analyses of selected
1 Throughout this report, unless noted otherwise, this term includes the District of Columbia
and the Commonwealth of Puerto Rico, in addition to the 50 states.

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major aspects of the program, including pupil assessments2 and accountability.3 This
report will be updated regularly, to reflect significant actions regarding funding and
implementation of the NCLBA provisions.
Major ESEA Title I-A amendments adopted in the No Child Left Behind Act
of 2001 (P.L. 107-110) were focused on pupil assessment, adequate yearly progress
(AYP) requirements, program improvement and corrective actions for schools and
LEAs, allocation formulas, staff qualifications, flexibility, and services to private
school pupils, staff and parents. Each of these topics is discussed below. Issues
regarding implementation of these requirements and other provisions are being
considered by the 108th Congress. This report concludes with a brief discussion of
debate in some states and LEAs over continued participation in the Title I-A
program, and the potential effects of opting-out of participation in the program.
Pupil Assessment4
The IASA of 1994 required states participating in Title I-A to develop or adopt
curriculum content standards, pupil performance standards, and assessments linked
to these, at least in the subjects of mathematics and reading/language arts, and for at
least one grade in each of three grade ranges (grades 3-5, 6-9, and 10-12). In general,
these standards and assessments were to be applicable to Title I-A participants, as
well as all other pupils in the state. These requirements were adopted in part to raise
expectations that Title I-A participants would be required to meet challenging
academic standards, and to link the program to standards-based reforms taking place
in most states. Typically, such standards-based reform involves the establishment of
explicit and “challenging” goals for state school systems, and alignment of curricula,
assessment methods, pupil performance standards, teacher professional development,
instructional materials, and other school system policies in support of the goals.
The deadline for adopting content and performance standards was the 1997-
1998 program year, and for assessments was the 2000-2001 program year. States
were given several years to meet these requirements because many of them were at
an early stage of standards-based reform in 1994. The U.S. Department of Education
(ED) has been reviewing “evidence” that state standards and assessments meet the
requirements of the Title I-A statute (e.g., that assessments are linked to state content
and pupil performance standards, or that disabled and limited English proficient
(LEP) pupils are assessed with appropriate accommodations or adaptations), but is
2 See CRS Report RL31407, Educational Testing: Implementation of ESEA Title I-A
Requirements under the No Child Left Behind Act, by Wayne C. Riddle.
3 See CRS Report RL32495, Adequate Yearly Progress (AYP): Implementation of the No
Child Left Behind Act, by Wayne Riddle, and CRS Report RL31329, Supplemental
Educational Services for Children from Low-Income Families Under ESEA Title I-A, by
David P. Smole.
4 For a more detailed discussion of, and analysis of issues related to, the Title I-A assessment
requirements, see CRS Report RL31407, Educational Testing: Implementation of ESEA
Title I-A Requirements Under the No Child Left Behind Act, by Wayne Riddle.

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not considering the substance of state standards and assessments. As of the date of
this report, 21 states have been approved by ED as meeting all of these “1994
requirements.” For most of the remaining states (26), “timeline waivers” have been
granted, to allow them to complete the process of developing and implementing
necessary assessments over the next couple of years.5 “Compliance agreements”
have been negotiated between ED and the remaining five states that are farther from
meeting these requirements.6
P.L. 107-110 substantially expanded these previous Title I-A assessment
provisions. In addition to the requirement for assessments at three grade levels in
reading and mathematics, all participating states will be required to implement
assessments, linked to state content and academic achievement standards, for all
public school pupils in each of grades 3-8 in reading and mathematics by the 2005-
2006 school year. States will also have to develop and implement assessments at
three grade levels in science by the 2007-2008 school year.7 P.L. 107-110 requires
assessments to be of “adequate technical quality for each purpose required under
[this] Act.”8
All states receiving Title I-A grants are required to participate in National
Assessment of Educational Progress (NAEP) tests in 4th and 8th grade reading and
mathematics administered every two years, with costs paid by the federal
government. Individual pupils may not be required to take or administer NAEP tests;
there are conflicting statutory and regulatory provisions regarding participation in
NAEP tests by LEAs and schools.9 Pupils who have been in U.S. schools (except
5 The latest deadline for any of the current timeline waivers is Jan. 31, 2004.
6 The latest of the compliance agreements expires on Apr. 8, 2005.
7 States must initially develop content and academic achievement standards in science by
2005-2006.
8 Under regulations published in the Federal Register on July 5, 2002 (pp. 45038-45047),
state assessments meeting the ESEA Title I-A requirements may include either criterion-
referenced tests (CRTs) — tests which measure the extent to which pupils have mastered
specified content (content standard) to a predetermined degree (achievement standard) —
or norm-referenced tests (NRTs) — tests in which pupil performance is measured against
that of other pupils, rather than against some fixed standard of performance — although any
NRTs used must be augmented to incorporate the state’s content standards and have results
expressed in terms of the state’s achievement standards. For further discussion of this and
related issues, see CRS Report RL31407, Educational Testing: Implementation of ESEA
Title I-A Requirements under the No Child Left Behind Act, by Wayne C. Riddle.
9 The NCLBA explicitly provides that participation in NAEP tests is voluntary for all pupils,
but it contains conflicting provisions regarding voluntary participation by LEAs and schools.
The NAEP authorization statute (recently redesignated as Section 303 of the Education
Sciences Reform Act by P.L. 107-279) states that participation is voluntary for LEAs and
schools, as well as pupils. However, ESEA Title I-A provides that the plans of LEAs
receiving aid under that program must include an assurance that they will participate in state
NAEP tests if selected (Section 1112(b)(1)(F)). Further, regulations (Federal Register, Dec.
2, 2002) explicitly require LEAs which receive Title I-A grants to participate in NAEP if
selected (34 CFR 200.11(b)), and ED comments accompanying these regulations state that
(continued...)

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CRS-4
those in Puerto Rico) for at least three years must be tested (for reading) in English,
and states are required to annually assess the English language proficiency of their
LEP pupils.
The revised ESEA authorizes (in Title VI-A-1) annual grants to the states to
help pay the costs of meeting the Title I-A standard and assessment requirements
added by the NCLBA. These grants may be used by states for development of
standards and assessments or, if these have been developed, for assessment
administration and such related activities as developing or improving assessments of
the English language proficiency of LEP pupils. The state assessment requirements
which were newly adopted under the NCLBA are contingent upon the appropriation
of minimum annual amounts for these state assessment grants; for each of FY2002
and FY2003, the minimum amount ($370 and $380 million, respectively) was
appropriated for these grants. For FY2004, the minimum ($390 million) will be
provided, assuming that the Department is able to follow through on a proposed
transfer of $710,000 from a different account (i.e., the amount initially appropriated
was $710,000 below the threshold).
The NCLBA also authorizes competitive grants to states for the development
of enhanced assessment instruments. Aided activities may include efforts to improve
the quality, validity, and reliability of assessments beyond the levels required by Title
I-A, to track student progress over time, or to develop performance or technology-
based assessments. Funds appropriated each year for state assessment grants which
are in excess of the “trigger” amounts described above for assessment development
grants are to be used for enhanced assessment grants; for FY2002, $17 million was
made available for this purpose. In February 2003, grants to nine states were
announced. The amount available for assessment enhancement grants was
$4,484,000 under the FY2003 appropriation; however, no funds will be available for
such grants under the FY2004 appropriation. In addition, the Department is to
contract with an independent organization for a study of the assessments and
accountability policies used by states to meet Title I-A requirements.
Issues regarding the expanded ESEA Title I-A pupil assessment requirements
include:
! How strict will the Department of Education be in reviewing and
approving state assessment systems, and will states meet the
expanded assessment requirements on schedule?
! What will be the cost of developing and implementing the
assessments, and to what extent will federal grants be available to
pay for them?
! What might be the impact of the requirement for annual assessment
of the English language proficiency of LEP pupils?
! What might be the impact on NAEP, as well as the impact of NAEP
on state standards and assessments, of requiring state participation
9 (...continued)
“an LEA cannot meet the NAEP participation requirement unless it requires all schools
selected to participate” (Federal Register, Dec. 2, 2002, p. 71740).

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CRS-5
in NAEP, while not requiring participation by individual pupils and
schools?
! What are the likely major benefits and costs of the expanded ESEA
Title I-A pupil assessment requirements? Will they significantly
increase the focus on assessments in public K-12 education? If so,
will this enhance educational achievement and “quality,” or will it
undesirably limit instructional curricula?
Report Cards
States and LEAs participating in the revised ESEA Title I-A must report
assessment results and certain other data to parents and the public through “report
cards.” States are to publish report cards for the state overall, and LEAs (including
charter schools which are treated under state law as individual LEAs) are to publish
report cards for the LEA and individual schools. The report cards must generally
include information on pupils’ academic performance disaggregated by race,
ethnicity, and gender, as well as disability, migrant, English proficiency, and
economic disadvantage status. The report cards must also include information on
pupil progress toward meeting any other educational indicators included in the state’s
AYP standards, plus secondary school student graduation rates, the number and
identity of any schools failing to meet AYP standards, and aggregate information on
the qualifications of teachers. The report cards may include additional information,
such as average class size or the incidence of school violence. LEA and school report
cards are to be disseminated to parents of public school pupils and to the public at
large; there are no specific provisions regarding dissemination of the state report
cards. Preexisting report cards may be modified to meet these requirements.
One issue regarding these report card requirements is the extent to which they
will lead to significant changes from previous practices. While a large majority of
states have published report cards on school system performance in recent years,
many have not provided such reports at all of the required levels: schools, LEAs, and
states overall. Further, most state report cards have not included all of the types of
information required under the NCLBA.10 Other issues include whether the
information provided will be of substantial help to parents, especially in the context
of potentially increased options to select the schools which their children attend (see
below).
10 See No State Left Behind: The Challenges and Opportunities of ESEA 2001, available at
[http://www.ecs.org/clearinghouse/32/37/3237.pdf].

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Adequate Yearly Progress Requirements
Under the NCLBA, the Title I-A requirements for state-developed standards of
AYP are substantially expanded in scope and specificity.11 These standards serve as
the basis for identifying schools and LEAs where performance is inadequate, so that
these inadequacies may be addressed first through provision of increased support and,
ultimately, a variety of “corrective actions.”
The NCLBA provisions regarding AYP were adopted largely in reaction to
perceived weaknesses with the AYP requirements of the 1994 IASA. The latter were
frequently criticized as being vague, lacking a required focus on specific
disadvantaged pupil groups, failing to require continuous improvement toward an
ultimate goal, and being applicable only to schools and LEAs participating in Title
I-A, not to states overall or to all public schools. Before the enactment of the
NCLBA, there was tremendous variation among the states in the impact of their AYP
standards — i.e., the number and percentage of Title I-A schools and LEAs identified
as failing to meet AYP standards. In some states, a very large percentage of Title I-A
schools have been identified as needing improvement, while a small number of states
had identified very few or even no such schools for at least some years preceding the
enactment of the NCLBA.12
As under the IASA, AYP is defined primarily on the basis of aggregate scores
for various groups of pupils on state assessments of academic achievement.
However, under the NCLBA, state AYP standards must also include at least one
additional academic indicator, which in the case of high schools must be the
graduation rate. AYP standards will now have to be applied separately and
specifically to economically disadvantaged pupils, LEP pupils, pupils with
disabilities, and pupils in major racial and ethnic groups, as well as all pupils. The
only exception is that pupil groups need not be considered in cases where their
number is so relatively small that achievement results would not be statistically
significant or the identity of individual pupils might be divulged.13 State AYP
standards must also be applied to all public schools, LEAs, and states overall,
although corrective actions for failing to meet AYP standards need only be applied
to schools and LEAs participating in Title I-A. The AYP state standards will also
have to incorporate a goal of all pupils reaching a proficient or advanced level of
achievement within 12 years.
According to the revised ESEA statute, a “uniform bar” approach is to be
employed: states are to set a threshold percentage (of pupils at proficient or advanced
11 For a more detailed discussion and analysis of these requirements, see CRS Report
RL32495, Adequate Yearly Progress (AYP): Implementation of the No Child Left Behind
Act, by Wayne Riddle.
12 See the U.S. Department of Education press release, Paige Releases Number of Schools
in School Improvement in Each State, July 1, 2002.
13 In addition, program regulations (Federal Register, Dec. 2, 2002) do not require
graduation rates and other additional academic indicators to be disaggregated in determining
whether schools or LEAs meet AYP standards.

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CRS-7
levels) each year that is applicable to all pupil subgroups of sufficient size (see
above).14 The “uniform bar” must generally be increased once every three years,
although in the initial period it must be increased after two years. The minimum
level for the “uniform bar” in the initial period is to be based on the greater of the
percentage (of pupils at the proficient or advanced level of achievement) for the
lowest-achieving pupil group or the threshold percentage for the lowest-performing
quintile of schools statewide in the base year. Averaging of scores over two to three
years is allowed. Under a “safe harbor” provision, a school that does not meet the
standard AYP requirements may still be deemed to meet AYP if it experiences a 10%
reduction in the gap between 100% and the base year for pupil groups that fail to
meet the “uniform bar.” Finally, in order for a school to meet AYP standards, at least
95% of all pupils, as well as at least 95% of each of the demographic groups of pupils
considered for AYP determinations for the school or LEA (see above), must
participate in the assessments that serve as the primary basis for AYP determinations
(this rule has recently been somewhat relaxed, as described later in this report).
Data on Schools Identified as Failing to Meet AYP
CRS analyses based on school-level pupil achievement data in three states —
Maryland, North Carolina, and Texas — over the period of 1998-2000, prepared
while the Congress was considering the NCLBA, indicated that between 21% and
60% of all of the public elementary and middle schools in these states would have
failed to meet the AYP requirements in P.L. 107-110 for two consecutive years —
the period after which schools would be identified as needing improvement (see
below).15 It is important to note that these estimates were based on historical data for
only a limited number of states; they were not intended to provide a basis for
predictions of what will occur in the future in these or other states.
Beginning in the summer of 2003, a substantial amount of data has become
available on the number of schools and LEAs that failed to meet the new AYP
standards as provided under the NCLBA for the 2002-2003 school year, the first year
of full implementation of the NCLBA provisions. A basic problem with all such
reported data thus far is that they have generally been incomplete (i.e., not all states
are included) and subject to change (i.e., the data for several states have been revised
one or more times after being initially published, due largely to data corrections and
appeals).16 As a result, all reports on the number of schools failing to meet AYP
standards for 2002-2003 under the NCLBA provisions remain tentative and
incomplete, and no such data have yet been published by ED.
One of the most complete compilations of state counts of schools failing to meet
AYP in 2002-2003 that has been published thus far is in a January 2004 report by the
14 Under program regulations (34 CFR 200.16(c)(2)), the starting point may vary by grade
span (e.g., elementary, middle, etc.) and subject.
15 See CRS Report RL32495, Adequate Yearly Progress (AYP): Implementation of the No
Child Left Behind Act, by Wayne Riddle.
16 See also “Data Doubts Plague States, Federal Law,” Education Week, Jan. 7, 2004.

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Center on Education Policy (CEP).17 According to this report, the overall percentage
of all public schools identified as failing to make AYP based on test scores in 2002-
2003, based on data for 47 states plus the District of Columbia, was approximately
31% of all public schools.18 The percentage for individual states varied from 5%
(Alabama and Wisconsin) to 76% (Florida).
It should be emphasized that many of the schools reported as having failed to
meet AYP standards for 2002-2003 have failed to meet AYP for one year only; the
NCLBA requires that a series of actions be taken only with respect to schools or
LEAs participating in ESEA Title I-A that fail to meet AYP for two or more
consecutive years. More recently, data reported by states to ED on the number of
schools identified as needing improvement based on data for 2002-2003 and
preceding years has been compiled and reported by a commercial publication, the
“Title I Monitor,” not ED itself. According to this publication,19 6,079 Title I-A
participating schools were in the “needs improvement” status — i.e., they had failed
to meet AYP standards for two or more consecutive years — based on AYP
determinations for 2002-2003 and the immediately preceding school years. These
constituted 11.9% of all public schools receiving Title I-A grants in 2002-2003.
Included among these schools were 2,712 schools that had failed to meet AYP
standards for two consecutive years, 1,593 that had failed to do so for three
consecutive years, 1,012 schools that had failed to meet AYP standards for four
consecutive years, and 742 schools that failed to do so for five or more consecutive
years. Again, the number of schools, and percentage of all Title I-A participating
schools, that were identified as needing improvement varied widely among the states.
For example, Wyoming reported that no schools were identified, and eight other
states, some of them large (e.g., Texas) reported fewer than 10 (and fewer than 3%
of all) schools. In contrast, seven states reported 250 or more of their Title I-A
schools had been identified as needing improvement, and the percentage of all Title
I-A schools so identified was as high as 49.3% (for Georgia).
It should be noted these AYP determinations for 2002-2003 were made before
ED announced the additional forms of flexibility discussed below (regarding
participation rates, LEP pupils and pupils with disabilities, or targeted assistance
schools). The aggregate percentage of public schools identified as failing to make
AYP might have been significantly lower for 2002-2003 if these policy options had
been implemented in every state.
For the present, it seems likely that state variations are based, at least in part, not
only on underlying differences in achievement levels but also on differences in the
degree of rigor or challenge in state pupil performance standards, and on state-
determined standards for the minimum size of pupil demographic groups in order for
17 Center on Education Policy, From the Capital to the Classroom, Year 2 of the No Child
Left Behind Act, pp. 56-57.
18 Note that the table in the report shows this as 28%, but that seems to result from dividing
the number of schools identified as failing to make AYP in 47 states plus D.C. by the total
number of public schools in 50 states plus D.C.
19 See Title I Monitor, NCLB’s First Year Saw 1 in 9 Schools In Improvement, States Reveal,
July 2004, p. 1.

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CRS-9
them to be considered in AYP determinations of schools or LEAs. (In general, larger
minimum sizes for pupil demographic groups reduce the likelihood that many
disadvantaged groups, such as LEP pupils or pupils with disabilities, will be
considered in determining whether a school or LEA meets AYP.) Also, in many
cases, it appears that schools or LEAs failed to meet AYP solely because of low
participation rates in assessments — i.e., fewer than 95% of all pupils, as well as
pupils in each relevant demographic group, took the assessments.
As a result of such estimates and reports, as well as state reports indicating that
approximately 8,600 schools have failed to meet AYP even under the pre-NCLBA
standards (see footnote 12), some have expressed concern that large percentages of
all public schools might be identified as “failing” and subjected to a variety of
corrective actions (described below), with consequent strain on financial and other
resources necessary to provide technical assistance, public school choice and
supplemental services options, and other corrective actions. In addition, some have
expressed concern that random variation in test scores from year to year, unrelated
to actual gains or losses in achievement levels, might substantially increase the
number of schools identified as failing to meet AYP standards; or that schools might
be more likely to fail to meet AYP simply because they have diverse enrollments, and
therefore more groups of pupils to be separately considered in determining whether
the school meets AYP standards.20
In response to these concerns, ED officials have emphasized the importance of
taking action to identify and move to improve underperforming schools, no matter
how numerous. They have also emphasized the possibilities for flexibility and
variation in taking corrective actions (see below) with respect to schools which fail
to meet AYP, depending on the extent to which they fail to meet those standards.
Recent ED Policy Developments Regarding Participation Rates
Plus Treatment of Limited English Proficient Pupils and Certain Pupils
With Disabilities in Assessments and AYP Determinations. ED officials
have recently published regulations and other policy guidance on participation rates
plus the treatment of limited English proficient pupils and certain pupils with
disabilities in assessments and the calculation of AYP for schools and LEAs, in an
effort to provide additional flexibility and reduce the number of schools and LEAs
identified as failing to make AYP. On March 29, 2004, ED announced that schools
could meet the requirement that 95% or more of pupils (all pupils as well as pupils
in each designated demographic group) participate in assessments (in order for the
school or LEA to make AYP) on the basis of average participation rates for the last
two or three years, rather than having to post a 95% or higher participation rate each
year. In other words, if a particular demographic group of pupils in a public school
has a 93% test participation rate in the most recent year, but had a 97% rate the
preceding year, the 95% participation rate requirement would be met. In addition,
the new guidance would allow schools to exclude pupils who fail to participate in
assessments due to a “significant medical emergency” from the participation rate
calculations. The new guidance further emphasizes the authority for states to allow
20 See Thomas J. Kane and Douglas O. Staiger, Racial Subgroup Rules in School
Accountability Systems, available at [http://www.ksg.harvard.edu/pepg/TAConfPapers.htm].

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CRS-10
pupils who miss a primary assessment date to take make-up tests, and to determine
the minimum size for demographic groups of pupils to be considered in making AYP
determinations (including those related to participation rates). According to ED, in
some states, as many as 20% of the schools failing to make AYP did so on the basis
of assessment participation rates alone. It is not known how many of these schools
would meet the new, somewhat more relaxed standard.
In a letter dated February 19, and proposed regulations published on June 24,
2004, ED officials announced two new policies with respect to LEP pupils.21 First,
with respect to assessments, LEP pupils who have attended schools in the United
States (other than Puerto Rico) for less than 10 months must participate in English
language proficiency and mathematics tests. However, the participation of such
pupils in reading tests (in English), as well as the inclusion of any of these pupils’
test scores in AYP calculations, is to be optional (i.e., schools and LEAs need not
consider the scores of first year LEP pupils in determining whether schools or LEAs
meet AYP standards). Such pupils are still considered in determining whether the
95% test participation has been met.
Second, in AYP determinations, schools and LEAs may continue to include
pupils in the LEP demographic category for up to two years after they have attained
proficiency in English. However, these formerly LEP pupils need not be included
when determining whether a school or LEA’s count of LEP pupils meets the state’s
minimum size threshold for inclusion of the group in AYP calculations, and scores
of formerly LEP pupils may not be included in state, LEA, or school report cards.
Both these options, if exercised, should increase average test scores for pupils
categorized as being part of the LEP group, and reduce the extent to which schools
or LEAs fail to meet AYP on the basis of LEP pupil groups.22
Finally, regulations addressing the application of the Title I-A standard and
assessment requirements to certain pupils with disabilities were published in the
Federal Register on December 9, 2003 (pp. 68698-68708). The purpose of these
regulations is to clarify the application of standard, assessment, and accountability
provisions to pupils “with the most significant cognitive disabilities.” Under the
regulations, states and LEAs may adopt alternative assessments based on alternative
achievement standards — aligned with the state’s academic content standards and
reflecting “professional judgment of the highest achievement standards possible” —
for a limited percentage of pupils with disabilities.23 When making AYP
determinations, in general no more than 1.0% of all pupils (approximately 9% of all
pupils with disabilities) counted as having achievement levels of proficient or above
21 See the Federal Register, June 24, 2004, pp. 35462-35465; and [http://www.ed.gov/
policy/gen/guid/secletter/040220.html].
22 A bill introduced in the 108th Congress, H.R. 3049, would authorize the exclusion of
scores of LEP pupils who have resided in the United States for less than three years, and
would allow formerly LEP pupils to be included in that group for AYP calculation purposes
indefinitely.
23 This limitation does not apply to the administration of alternative assessments based on
the same standards applicable to all students, for other pupils with (non-cognitive or less
severe cognitive) disabilities.

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CRS-11
may consist of pupils taking such alternative assessments based on alternative
achievement standards at the state and LEA level; there is no such limitation for
individual schools. SEAs may request from the U.S. Secretary of Education an
exception allowing them to exceed the 1.0% cap statewide, and SEAs may grant such
exceptions to LEAs within their state.
Timing and Other AYP Implementation Issues
Timing is an issue mainly because of the different effective AYP standards
applicable to different school years. There are concerns regarding the application of
inconsistent AYP standards in determining whether schools should be identified as
needing improvement currently and over the next couple of years. There are two
major dimensions to this issue. First, AYP determinations for years through 2001-
2002 were made on the basis of widely varying pre-NCLBA state AYP standards.
Second, even after the NCLBA began to be implemented, the degree of flexibility
explicitly provided to states in several specific aspects of AYP determination have
changed over time, so that even the post-NCLBA AYP criteria are not consistent
from year to year. This raises at least two questions: (a) should corrective actions
be applied to schools or LEAs on the basis of two or more consecutive years of
failure to meet AYP, when those AYP standards have materially differed over the
relevant time period; and (b) should states and LEAs be allowed to apply currently
authorized forms of flexibility to revise AYP determinations for previous years?
With respect to (a), states and LEAs used pre-NCLBA standards for determining
AYP for school years through 2001-2002, and varying corrective actions are to be
taken with respect to schools that fail to meet AYP standards for up to five or more
consecutive years. The relative significance of this aspect of the timing issue was
greatest during the initial transition to the NCLBA — i.e., in the 2002-2003 and
2003-2004 school years — but it will remain somewhat significant for the next three
years at least. The fact that corrective actions taken during the 2002-2003 school
year were totally, and those taken during 2003-2004 and for the following few years
will be partially, based on pre-NCLBA AYP standards raises concerns based on the
wide variation in the structure and nature of pre-NCLBA AYP standards, as well as
the fact that the pupil assessments which form the basis for AYP determinations were
in many states “transitional” assessments which did not meet either the “1994
requirements” or those of the NCLBA. For example, those assessments may not
have been linked to state content and achievement standards.
A more immediate issue involves debates over whether recently announced
forms of flexibility in the implementation of the NCLBA AYP provisions may be
applied to AYP determinations for previous (but still post-NCLBA) years. As is
discussed above, ED has over the last several months published regulations and/or
policy guidance providing additional flexibility with respect to three aspects of AYP
calculations: pupils with disabilities, LEP pupils, and assessment participation rates.
All of these forms of flexibility take effect with respect to AYP determinations based
on assessments administered during the 2003-2004 school year. However, it is ED’s
position that these new forms of flexibility cannot be applied to revise AYP
determinations for the previous school year, 2002-2003, which was the first year of

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CRS-12
AYP determinations based on the NCLBA.24 According to ED, this is because such
regulations or policy guidance cannot be retroactively applied without explicit
statutory authority for such retroactive application.
In contrast, some Members of Congress argue that states and LEAs ought to be
allowed to recalculate AYP determinations for 2002-2003, applying all currently
allowed forms of flexibility. Bills have been introduced in the House and Senate
(H.R. 4605 and S. 2542) to allow such retroactive recalculation of AYP
determinations for the 2002-2003 school year, if requested by schools or LEAs that
have been identified as failing to meet AYP for that year. If a school previously
identified as failing to meet AYP standards in 2002-2003 was found to have met the
standards after such recalculation, then most corrective actions taken with respect to
the school as a result of such recalculation would be terminated; however, pupils
provided with supplemental services would continue to receive them for the
remainder of the school year, and pupils taking advantage of school choice options
would continue to have those options available to them until completion of the
highest grade of the school to which they have transferred.
Unfortunately, insufficient data are available to make it possible to estimate the
number of schools or LEAs whose identification as failing to meet AYP for 2002-
2003 might be reversed if AYP were recalculated using all currently available forms
of flexibility. In order to do this, one would need to know: (a) the number of schools
and LEAs that failed to meet AYP solely because of their disabled or LEP pupil
groups; and (b) how many of these AYP determinations would be reversed if current
forms of flexibility were applied. While (a) is known in a limited number of cases,
(b) is not.
ED has argued that aside from the principle of retroactivity, recalculation of
2002-2003 AYP determinations would at this point be disruptive, and the issue is of
limited significance because corrective actions are taken with respect to schools or
LEAs only after two or more consecutive years of failure to meet AYP, so one year
of determinations under less flexible policy guidance would not alone lead to
substantive consequences. However, this overlooks the fact that a number of schools
may have been determined to fail to meet AYP for 2001-2002 under pre-NCLBA
requirements, then again for 2002-2003 under NCLBA requirements more strict than
currently, but might not have failed to meet today’s more flexible requirements if
applied to determinations for 2002-2003.
In addition, some of the newly-authorized forms of flexibility reflect policies
that some states had already adopted as part of their initial NCLBA accountability
plans, and have already applied in making AYP determinations for 2002-2003. For
example, one of the key aspects of the expanded flexibility regarding LEP pupils in
AYP determinations is that schools and LEAs may continue to include pupils in the
LEP demographic category for up to two years after they have attained proficiency
24 The situation regarding pupils with disabilities differs from those of LEP pupils and
participation rates, because ED had previously published draft regulations (Mar. 20, 2003)
providing a degree of flexibility roughly comparable to that in the final regulations
(published Dec. 9, 2003).

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CRS-13
in English. Some states, such as Indiana, already had such a provision in their
original NCLBA AYP standards, and were applying it to the AYP determinations for
2002-2003. Thus, this form of flexibility was available to, and used by, some states
in 2002-2003, but not others. Of course, as was discussed above, there are significant
variations and inconsistencies in several important aspects of AYP standards (e.g.,
minimum group size or use of confidence intervals) among states, whether for 2002-
2003 or 2003-2004.
Aside from issues of timing, only limited analyses have thus far been conducted
of the extent to which state accountability plans are fully consistent with the detailed
requirements of the statute and regulations. Some analysts have concluded that ED
is allowing at least marginally increased flexibility, in comparison to the statute and
regulations, in approving state accountability plans thus far, although the approved
plans appear to closely mirror the detailed provisions of the authorizing statute and
regulations in most respects.25 Aspects of state AYP plans receiving special attention
include (a) the pace at which proficiency levels are expected to improve (e.g., equal
increments of improvement over the entire period, or much more rapid improvement
expected in later years than at the beginning); (b) whether schools or LEAs must fail
to meet AYP with respect to the same pupil group(s), grade level(s) and/or subject
areas to be identified as needing improvement, or whether two consecutive years of
failure to meet AYP with respect to any of these categories should lead to
identification26; (c) the length of time over which pupils should be identified as being
LEP; (d) the minimum size of pupil groups in a school in order for the group to be
considered in AYP determinations or for reporting of scores; (e) whether to allow
schools credit for raising pupil scores from below basic to basic (as well as from
basic or below to proficient or above) in making AYP determinations; and (f)
whether to allow use of statistical techniques such as “confidence intervals” (i.e.,
whether scores are below the required level to a statistically significant extent) in
AYP determinations.
Another developing issue is whether some states might choose to lower their
standards of “proficient” performance, in order to reduce the number of schools
identified as failing to meet AYP and make it easier to meet the ultimate NCLBA
goal of all pupils at the proficient level within 12 years. Reportedly, a few states
have redesignated lower standards (e.g., “basic” or “partially proficient”) as
constituting a “proficient” level of performance for Title I-A purposes, or established
new “proficient” levels of performance which are below levels previously understood
to constitute that level of performance, and other states are considering such
25 See “States’ Plans Likely to Test ESEA Pliancy,” Education Week, Feb. 19, 2003; “ED
Approves Five States’ Accountability Plans; Flexibility Leads to More Questions,
Confusion,” Title I Monitor, Feb. 2003; “ED Makes Progress on Accountability Plans,” Title
I Monitor, May 2003; and “ED Shows Flexibility as State Plan Approval Concludes,” Title
I Monitor, June 2003.
26 Reportedly, ED has approved state accountability plans under which schools or LEAs
would be identified as failing to meet AYP only if they failed to meet the required level of
performance in the same subject for two or more consecutive years, but has not approved
proposals under which a school would be identified only if it failed to meet AYP in the same
subject and pupil group for two or more consecutive years.

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CRS-14
actions.27 In the affected states, this would increase the percentage of pupils deemed
to be achieving at a “proficient” level, and reduce the number of schools failing to
meet AYP standards.
While states are generally free to take such actions without jeopardizing their
eligibility for Title I-A grants, since performance standards are ultimately state-
determined and have always varied widely, such actions have elicited public criticism
from ED. In a policy letter dated October 22, 2002, the Secretary of Education stated
that “Unfortunately, some states have lowered the bar of expectations to hide the low
performance of their schools. And a few others are discussing how they can ratchet
down their standards in order to remove schools from their lists of low performers.
Sadly, a small number of persons have suggested reducing standards for defining
“proficiency” in order to artificially present the facts.... Those who play semantic
games or try to tinker with state numbers to lock out parents and the public, stand in
the way of progress and reform. They are the enemies of equal justice and equal
opportunity. They are apologists for failure.”28
Program Improvement and Corrective Actions
The NCLBA requires states and LEAs to identify schools or LEAs which fail
to meet state AYP standards for two or more consecutive years as needing
improvement, and to take a variety of corrective actions with respect to schools or
LEAs which fail to meet AYP standards for four or more consecutive years.29 While
states are encouraged to establish unitary accountability systems affecting all public
schools, the Title I-A statute requires them only to take corrective actions regarding
schools and LEAs which receive Title I-A funds, not all schools and LEAs. Thus, the
corrective actions described below need be taken with respect to a large majority of
LEAs30 and approximately 58% of all public schools.
School Improvement and Corrective Actions
Title I-A schools which fail to meet AYP for two or more consecutive years
must be identified as needing improvement. At this and every subsequent stage of
the program improvement and corrective action process, the LEA and/or SEA are to
arrange for technical assistance, “based on scientifically based research” (Section
1116(b)(4)(C)), to be provided to the school. Funding for this purpose is provided
in part through the authorization for states to reserve increasing shares of their total
27 See, for example, “States Revise the Meaning of ‘Proficient’,” Education Week, Oct. 9,
2002.
28 [http://www.ed.gov/policy/elsec/guid/secletter/021022.html?exp=0].
29 An analogous, separate series of provisions applies to schools operated by the Bureau of
Indian Affairs (BIA).
30 Over 90% of all LEAs receive Title I-A grants. In general, those which do not participate
have very small enrollments and/or exceptionally low school-age child poverty rates, as a
result of which they do not meet the minimum thresholds for Basic Grants of 10 school-age
children from poor families and a 2% school-age child poverty rate.

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CRS-15
Part A grants (rising from 0.5% for FY2001 to 2% for FY2002-2003 and 4%
thereafter), as well as a separate authorization for additional funds ($500 million for
FY200231), for school improvement activities. Parents of pupils in these schools are
to be notified of the school’s identification as needing improvement. Any school
identified as needing improvement must spend at least 10% of its Title I-A grant for
professional development activities.
In addition, pupils attending schools which have failed to meet AYP standards
for two or more consecutive years must be provided with options to attend other
public schools which do meet AYP standards.32 Public school choice must be offered
to such pupils by the next school year (unless prohibited by state law). LEAs are
generally required only to offer public school choice options within the same LEA;
however, if all public schools in the LEA to which a child might transfer have been
identified as needing improvement, then LEAs “shall, to the extent practicable,”
establish cooperative agreements with other LEAs to offer expanded public school
choice options.33
Transportation must be provided to pupils utilizing public school choice
options. Children who transfer to other schools under this authority are to be allowed
to remain in the school to which they transfer until they complete the highest grade
in that school; however, the LEA is no longer required to provide transportation
services if the originating school meets AYP standards for two consecutive years.
If a Title I-A school fails to meet AYP standards for three or more consecutive
years, pupils from low-income families in the school must be offered the opportunity
to receive instruction from a supplemental services provider of their choice,34 in
addition to continuing to offer public school choice options. States are to identify
and provide lists of approved providers of such supplemental instructional services
— which might include public or private schools, commercial firms, or other entities
or organizations — and monitor the quality of the services they provide. The amount
spent per child for supplemental services is to be the lesser of the actual cost of the
services or the LEA’s Title I-A grant per (poor) child counted in the national
allocation formula (approximately $1,300 on average for FY2003).
31 No funds were appropriated under this authority for FY2002 or FY2003.
32 ED published a “policy letter” on these provisions on June 14, 2002; see
[http://www.ed.gov/policy/elsec/guid/secletter/020614.html].
33 This is an extension and expansion of provisions contained in FY2000 and 2001
appropriation acts for the Department of Education. Under that legislation, LEAs were
required to offer to pupils attending public schools in need of improvement the option to
enroll in different public schools within the same LEA (unless it was not possible, consistent
with state and local law, to offer such choice options to all eligible pupils). The FY2001
legislation exempted all LEAs in several small-population states (those receiving a minimum
state grant under either the Basic or Concentration Grant formulas) from this requirement.
34 For a more detailed discussion of provisions and issues related to this provision, see CRS
Report RL31329, Supplemental Educational Services for Children From Low-Income
Families, by David Smole. Policy guidance on the supplemental services requirement was
published by ED on Aug. 22, 2002; see [http://www.ed.gov/policy/elsec/guid/
suppsvcsguid.pdf].

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CRS-16
LEAs are to use funds equal to as much as 20%35 of their Title I-A funds for
transportation of pupils exercising public school choice options plus supplemental
services costs (combined), although the grant to any particular school identified for
improvement, corrective action, or restructuring may not be reduced by more than
15%. LEAs are also authorized to use funds under Innovative Programs (ESEA Title
V-A) to pay additional supplemental services costs; states are authorized to use funds
they reserve for program improvement or administration under Title I-A, or funds
available to them under Title V-A, to pay additional supplemental services costs. If
insufficient funds are available to pay the costs of supplemental services for all
eligible pupils whose families wish to exercise this option, LEAs may limit services
to the lowest-achieving eligible pupils. The requirement to provide supplemental
services may be waived if none of the approved providers offers such services in or
near a LEA.
One or more of a specified series of additional “corrective actions” must be
taken with respect to Title I-A schools which fail to meet AYP for four consecutive
years. These “corrective actions” include replacing relevant school staff;
implementing a new curriculum; decreasing management authority at the school
level; appointing an outside expert to advise the school; extending the school day or
year; or changing the internal organizational structure of the school. Which of these
specific actions is to be taken is left to state and/or LEA discretion.
Title I-A schools which fail to meet AYP standards for five consecutive years
must be “restructured.” Such restructuring must consist of one or more of the
following “alternative governance” actions: reopening as a charter school; replacing
all or most school staff; state takeover of school operations (if permitted under state
law); or other “major restructuring” of school governance.
LEA Improvement and Corrective Actions
Procedures analogous to those for schools are to apply to LEAs which receive
Title I-A grants and fail to meet AYP requirements. As with schools, while states are
encouraged to implement unitary accountability systems applicable to all pupils and
schools, states may base decisions regarding LEA status and corrective actions only
on the Title I-A schools in each LEA (and, in the case of targeted assistance schools,
only on the individual pupils served by Title I-A). Further, as noted earlier,
identification as needing improvement and corrective actions need be taken only with
respect to LEAs which receive Title I-A grants.
35 More specifically, LEAs are to use an amount equal to 5% of their Title I-A grant (unless
less is needed) for public school choice transportation costs, 5% (unless less is needed) for
supplemental services, and up to an additional 10% for either. These funds may be taken
from the LEA’s Title I-A grant, or from other federal, state, or local sources. These are
minimum amounts, if necessary to meet demands for public school choice and supplemental
services; LEAs may use funds above these levels if they choose to do so (and if needed).
Under program regulations, costs of administering school choice and supplemental services
programs are not to be counted in the application of these caps.

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CRS-17
LEAs which fail to meet state AYP standards for two or more consecutive years
are to be identified as needing improvement. Technical assistance, “based on
scientifically based research” (Section 1116(c)(9)(B), is to be provided to the LEA
by the state educational agency (SEA); and parents of pupils served by the LEA are
to be notified that it has been identified as needing improvement.
SEAs are to take corrective actions with respect to LEAs which fail to meet
state AYP standards for four or more consecutive years. Such corrective action is
to include at least one of the following (at SEA discretion): reducing administrative
funds or deferring program funds; implementing a new curriculum; replacing relevant
LEA staff; removing specific schools from the jurisdiction of the LEA; appointing
a receiver or trustee to administer the LEA; abolishing or restructuring the LEA;
authorizing pupils to transfer to higher-performing schools in another LEA (and
providing transportation) in conjunction with at least one of the previous actions.
Finally, ED is required to establish a peer review process to evaluate whether
states overall have met their statewide AYP goals. States that fail to meet their goals
are to be listed in an annual report to Congress, and technical assistance is to be
provided to states that fail to meet their goals for two or more consecutive years.
Provisions for more extensive performance bonuses and sanctions for states, which
were contained in the original House- and Senate-passed versions of the NCLBA,
were not included in the conference version which was signed into law.
Transition Provisions
The corrective actions outlined above are to be applied not only to schools and
LEAs newly-identified as having failed to meet AYP standards for two or more
consecutive years, but also to schools and LEAs which have been so identified in
previous years and have continued to fail to meet AYP since being identified.36 The
actions taken with respect to such schools or LEAs is to be based on the number of
consecutive years during which they have failed to meet AYP standards, as outlined
above.
Numerous schools, and a much smaller number of LEAs, have failed to meet
state AYP standards (based primarily on transitional assessments and pre-NCLBA
36 Under the ESEA statute and regulations, schools or LEAs which had been identified, as
of the date of enactment of the NCLBA (Jan. 8, 2002), for school/LEA improvement or
corrective actions were to be identified for, and subjected to, school/LEA improvement and
corrective actions under the NCLBA in the 2002-2003 school year. However, according to
ED, the statutory provisions are ambiguous regarding the particular group of schools or
LEAs which failed to meet AYP requirements for a second consecutive year specifically on
the basis of assessment results for the 2001-2002 school year. While some observers
disagree with this interpretation, program regulations (34 CFR 200.32(e)) gave SEAs and
LEAs the option whether or not to identify such schools or LEAs for improvement effective
in 2002-2003 (although they must be so identified if they fail to meet AYP on the basis of
assessment results for 2001-2002 and 2002-2003). The regulations provided comparable
flexibility regarding whether SEAs and LEAs may remove from school/LEA improvement
status any schools or LEAs which met AYP standards for a second consecutive year on the
basis of assessment results for 2001-2002.

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CRS-18
AYP provisions) consistently since initial implementation of the 1994 IASA in the
1995-1996 school year. In most cases, these schools faced no substantial corrective
actions previously, in part because the corrective action provisions of the 1994
version of the ESEA were much less specific than those of the NCLBA, and in
particular because the IASA provided that most forms of corrective action were not
to be implemented before states adopted final standards and assessments meeting all
of the requirements of the 1994 IASA, which no state had done before the 2000-2001
school year. The only exception to this pattern were provisions in FY2000 and 2001
appropriations acts which required public school choice options to be provided to
pupils attending certain Title I-A schools which failed to meet AYP standards, but
those provisions were more narrow in scope and application than those of the
NCLBA. As was discussed earlier in this report, schools and LEAs have in past
years been identified on the basis of widely-varying, “transitional” AYP standards
developed by the states, raising a number of issues. Any school or LEA which has
been identified for improvement or corrective action may be removed from this status
if it meets state AYP standards for two consecutive years.
While comprehensive, systematic data are not yet available, initial, anecdotal
reports on implementation of the requirements to provide public school choice and
supplemental services options indicate that in at least some large LEAs, relatively
few eligible families have exercised these options, even though large numbers of
schools have been identified as failing to meet AYP for two, three, or more
consecutive years.37 It is unclear whether such low participation rates, if typical,
result from delayed implementation of these provisions by states and LEAs, low
levels of parental interest, inadequate dissemination of information about the options
to parents, limited availability of alternative public schools or tutorial services, or
other factors.
Issues
A number of issues have been raised with respect to these corrective action
provisions of the NCLBA, including the following:
! As discussed earlier in this report, might relatively large percentages
of schools fail to meet state AYP standards for two or more
consecutive years, with the result that the ability of states and LEAs
to provide substantial technical assistance, school choice and
supplemental services options, and other resources necessary for
effective corrective actions for all of these schools, would be
seriously limited?
! Is the goal of having all pupils at the proficient or advanced level of
achievement within 12 years realistic? Might it result in increasing
percentages of schools and LEAs failing to meet AYP in future
years, or might it have the opposite effect of encouraging states to
weaken their performance standards? Might this goal lead states to
lower their standards for what constitutes proficient or advanced
37 “Few Choosing Public School Choice for This Fall,” Education Week, Aug. 7, 2002; “Free
Tutoring Fails to Draw Many Students,” Education Week, Nov. 15, 2002.

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CRS-19
levels of achievement, as has reportedly occurred already in some
states? Or might such a highly ambitious goal provide the stimulus
for major improvements in the quality and equity of public education
services?
! Will a meaningful range of public school choice options be available
to pupils in LEAs which are small and/or sparsely populated, or in
highly disadvantaged LEAs where a large percentage of public
schools may fail to meet state AYP standards? Due to these and
other limiting factors, might relatively few eligible families actually
exercise the school choice and supplemental services options offered
under the NCLBA?
! What sorts of entities, organizations, firms, or institutions will be
available to provide supplemental services to eligible pupils? Will
they be willing to provide these services for the level of funding
made available under the NCLBA provisions? How likely is it that
supplemental services provided by third parties will be more
effective than current public school instruction?
! Will states and LEAs implement the NCLBA provisions for
corrective actions and restructuring in a timely and effective
manner?
! What might be the incentive effect of the very limited sanctions, and
lack of performance bonuses, for states overall?
Allocation Formula Provisions
ESEA Title I-A has four separate formulas — Basic, Concentration, Targeted,
and Education Finance Incentive Grants (EFIG) — for the allocation of funds to
states and LEAs. However, once these funds reach LEAs, they are no longer treated
separately — they are combined and used for the same program purposes. The
primary rationale for using four different formulas to allocate a share of the funds for
a single program is that the formulas have distinct allocation patterns — providing
varying shares of allocated funds to different types of localities. In addition, some
of the formulas contain elements which are deemed to have important incentive
effects or to be significant symbolically — such as the equity and effort factors in the
EFIG formula — in addition to their impact on allocation patterns.
In the discussion below, we begin with a general discussion of the
characteristics of the Title I-A allocation formulas, in order to provide context for the
subsequent review of the Title I-A formula amendments in the NCLBA.

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CRS-20
General Characteristics of the Title I-A Allocation Formulas
There are several common elements of the four Title I-A allocation formulas, as
amended by the NCLBA:38
! Each of them has a population factor, which is the same in each of
the four formulas — children aged 5-17: (1) in poor families,
according to the latest available data that are satisfactory to the
Secretary of Education, and applying the Census Bureau’s standard
poverty income thresholds (approximately 95.8% of all formula
children for FY2003);39 (2) in certain institutions for neglected or
delinquent children and youth or in certain foster homes (4.2% of all
formula children); and (3) in families receiving Temporary
Assistance for Needy Families (TANF) payments above the poverty
income level for a family of four (only about 0.1% of all formula
children).
! Under each of these formulas, this population factor is multiplied by
an expenditure factor, which is based on state average expenditures
per pupil (AEPP), subject to minimum and maximum levels.40
Further, as is discussed below, special expenditure factor provisions
apply to Puerto Rico. Due to the expenditure factor, LEAs in high
spending states receive up to 50% more per child counted in the
Title I-A formulas than LEAs in low spending states. The rationale
for this factor is that it reflects differences in the cost of providing
public education, and provides an incentive to increase spending.
However, it is a spending, not a cost, index; it reflects ability and
willingness to spend on public education as well as cost differences;
it is crude (affecting all LEAs in a state equally); and the incentive
it provides to increase state and local spending for public education
is relatively small.
! Each of the formulas has a hold harmless provision — a minimum
annual grant level for LEAs which is calculated as a percentage of
the previous year’s grant under each formula.41
38 This discussion of formulas is based on their current provisions, incorporating where
relevant amendments under the NCLBA, which are discussed in greater detail in the
succeeding section of this report.
39 These data are from the Census Bureau’s Small Area Income and Population Estimates
(SAIPE), which provides estimates of poor and total children aged 5-17 for LEAs, counties,
and states. These intercensal estimates are updated every year. As of this writing, the latest
SAIPE data are for income year 2000; these estimates will presumably be used for FY2004
Title I-A allocations.
40 For all except the EFIG formula, the minimum is 80% and the maximum is 120% of the
national average. For the EFIG formula, the minimum and maximum are 85% and 115%.
These amounts are further multiplied by a “federal share” of 40% to determine maximum
authorized grants, subject to state minimum, LEA hold harmless, and other provisions.
41 The hold harmless rate under each formula is now 85%-95% of the previous year grant,
depending on the LEA’s school-age child poverty rate (children counted for Title I-A grants
(continued...)

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CRS-21
! The four Title I-A formulas include a state minimum grant level as
well — in general, no state is to receive less than approximately
0.25% of allocated funds up to the FY2001 appropriation level, and
approximately 0.35% of funds above that level.42
! Finally, each formula has a minimum eligibility threshold for LEAs
— a minimum number of poor and other formula children, and/or
a minimum school-age child poverty rate,43 in order to be eligible for
grants (even hold harmless amounts) in most cases. The LEA
minimum eligibility threshold varies by formula — it is 10 formula
children and a school-age child poverty rate of 2% for Basic Grants,
a 5% school-age child poverty rate for the Targeted and EFIG
formulas, and 6,500 formula children or a 15% school-age child
poverty rate for Concentration Grants.
In addition to these common elements, two of the Title I-A formulas have
unique features:
! For the Targeted Grant formula, as well as the intra-state allocation
of funds under the EFIG formula, the poor and other children
counted in the formula are assigned weights based on each LEA’s
school-age child poverty rate and number of poor school age
children. As a result, an LEA would receive higher grants per child
counted in the formula, the higher its poverty rate or number. Under
the Targeted Grant formula, the weighting factors are applied in the
same manner nationwide — poor and other formula children in
LEAs with the highest poverty rates have a weight of up to four, and
those in LEAs with the highest numbers of such children have a
41 (...continued)
as a percentage of total school-age population). If the LEA poverty rate is 30% or above,
the hold harmless rate is 95%; if the poverty rate is 15%-30%, the hold harmless rate is
90%; and if the poverty rate is less than 15%, the hold harmless rate is 85%. Note: With
a partial exception for certain LEAs under the Concentration Grant formula, hold harmless
rates are applicable only to LEAs meeting the eligibility thresholds for each formula.
42 More specifically, the minimum is up to 0.25% for Basic and Concentration Grants at
funding levels up to the FY2001 appropriation for those formulas, and up to 0.35% for Basic
and Concentration Grants above the FY2001 level plus all funds allocated under the
Targeted and EFIG formulas. In addition, these state minimums are capped in all cases;
under the Basic, Targeted, and EFIG formulas, a state may not, as a result of the state
minimum provision, receive more than the average of — (1) 0.25% of the total FY2001
amount for state grants plus 0.35% of the amount above this, and (2) 150% of the national
average grant per formula child, multiplied by the number of formula children in the state.
Under the Concentration Grant formula, a state may not, as a result of the state minimum
provision, receive more than the average of — (1) 0.25% of the total FY2001 amount for
state grants plus 0.35% of the amount above this, and (2) the greater of — (i) 150% of the
national average grant per formula child, multiplied by the number of formula children in
the state, or (ii) $340,000.
43 Throughout this report, this term refers to the number of poor and other children counted
in the Title I-A allocation formulas, expressed as a percentage of the total school-age
population for the LEA.

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CRS-22
weight of up to three, compared to a weight of one for formula in the
lowest rate and number ranges. In contrast, under the EFIG formula,
the degree of targeting (in terms of the ratio of the highest to the
lowest weight) varies depending on the value of each state’s equity
factor (three different weighting scales are used for states with equity
factors within specified ranges). Under both formulas, the higher of
its two weighted child counts (based on numbers and percentages)
is used in calculating grants for each LEA.
! The EFIG formula has two unique factors — an equity factor and an
effort factor — in addition to the population and expenditure factors.
The equity factor is based upon a measure of the average disparity in
expenditures per pupil among the LEAs of a state called the
coefficient of variation (CV), which is expressed as a percentage of
the state average expenditure per pupil.44 In calculating grants, the
equity factor is subtracted from 1.30. As a result, the lower a state’s
expenditure disparities among its LEAs, the lower is its CV, and the
higher is its multiplier.
The effort factor is based on a comparison of state expenditures per
pupil for public elementary and secondary education with state
personal income per capita. This ratio for each state is further
compared to the national average ratio, resulting in an index number
that is greater than 1.0 for states where the ratio of expenditures per
pupil for public elementary and secondary education to personal
income per capita is greater than average for the Nation as a whole,
and below 1.0 for states where the ratio is less than average for the
Nation as a whole. Narrow bounds of 0.95 and 1.05 are placed on the
resulting multiplier, so that its effects on state grants is limited.
Under the Basic, Concentration, and Targeted Grant formulas, maximum grants
are calculated by multiplying the population factor by the expenditure factor for all
LEAs meeting the minimum eligibility thresholds. The EFIG formula differs from
the others both in terms of its use of unique formula factors and in being a two-stage
formula. First, state total grants are calculated by multiplying the population factor
by the expenditure factor, by 1.3 minus the equity factor, and by the effort factor.
Then, as is described below, these state total grants are allocated to LEAs on the basis
of a weighted population factor. Under all four formulas, maximum amounts are
reduced proportionally to the aggregate level of available funds, subject to LEA hold
harmless and state minimum grant provisions.
44 In the CV calculations for this formula, an extra weight (1.4 vs. 1.0) is applied to
estimated counts of children from poor families. Limited purpose LEAs, such as those
providing only vocational education, are excluded from the calculations, as are small LEAs
with enrollment below 200 pupils. There are special provisions for states meeting the
expenditure disparity standard established in regulations for the Impact Aid program (ESEA
Title VIII), as well as the single-LEA areas of Hawaii, Puerto Rico, and D.C.

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CRS-23
Title I-A Allocation Formula Amendments Under the NCLBA
The following section of this report focuses specifically on the aspects of the
Title I-A formulas which were revised by the NCLBA. Overall, the NCLBA made
a number of relatively modest changes to the Basic, Concentration, and Targeted
Grant formulas, while substantially amending the EFIG formula. In addition,
appropriations legislation for FY2002 and subsequent fiscal years has provided funds
for each of the four formulas; in previous years only the Basic and Concentration
Grant formulas were funded. This was consistent with the NCLBA provision that,
in the allocation of Title I-A funds, an amount equal to the FY2001 appropriation is
to be allocated under the Basic and Concentration Grant formulas, and any increases
above the FY2001 level are to be allocated under the Targeted Grant or the EFIG
formula.
EFIG Formula Amendments. Major changes were made to the EFIG
formula by the NCLBA.45 First, while it retained its two-stage structure — one
mechanism is used to allocate funds to states, while a second is used to suballocate
state total grants to LEAs — the revised EFIG formula has its own, distinct substate
allocation formula. Previously, state total EFIG grants would have simply been
allocated to LEAs in proportion to total grants under the other three (Basic,
Concentration, and Targeted Grant) formulas. Under the NCLBA, EFIG grants are
to be allocated within states under a variation of the Targeted Grant formula, but with
the degree of targeting — the ratio of the weight applied to formula children in the
highest poverty ranges compared to the weight for such children in the lowest poverty
ranges — varying in three stages. The stage, or degree of targeting, used for substate
allocation varies depending on each state’s equity factor — the higher the equity
factor (and therefore the greater the disparities in expenditures per pupil among a
state’s LEAs), the greater will be the degree of targeting on high poverty LEAs in the
intrastate allocation of EFIG funds.
Second, in the allocation of funds to states, the population factor is changed
from total school-age children to the same count of poor and other children used to
calculate Basic, Concentration, and Targeted Grants. This change in the most
fundamental formula factor results in a pattern of allocations under this formula
which is substantially more similar to those of the other three formulas than would
have been the case in the past (when the population factor was total school-age
children), despite the other, distinctive factors in the EFIG formula.
Third, a variant of the state expenditure factor used in the other three Part A
formulas is added to the EFIG formula; previously, this was the only Title I-A
formula without an expenditure factor. For the EFIG formula, the floor and ceiling
bounds on the expenditure factor are marginally narrowed — they are 85% and 115%
of the national average, rather than 80% and 120% as under the other three formulas.
45 For additional details, see CRS Report RL31256, Education Finance Incentive Grants
Under ESEA Title I-A, by David P. Smole.

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CRS-24
Finally, the equity and effort factors used in the allocation of EFIG grants to
states remain essentially unchanged from previous law.46 As noted above, each
state’s equity factor will also determine which of three variations of the Targeted
Grant formula will be used for intrastate allocation of EFIG funds. The lowest
degree of targeting, which is the same as the nationwide targeting under the Targeted
Grant formula, will apply to states with an equity factor below .10 (14 states plus the
District of Columbia and Puerto Rico for FY2003). A middle range of intrastate
targeting, which is 50% greater than under the Targeted Grant formula (in terms of
the ratio of child weights for the highest poverty LEAs compared to the lowest
poverty LEAs), will apply in the majority of states (35) with an equity factor equal
to or above .10 and below .20. Finally, the greatest degree of targeting, twice as great
as under the Targeted Grant formula, will apply in states with an equity factor of .20
or above (one state).
Formula Revisions for Puerto Rico. The relative share of funds allocated
to Puerto Rico will increase over time as a result of two NCLBA amendments to the
Title I-A formulas. First, a provision which has reduced the expenditure factor for
Puerto Rico below the minimum applicable to the 50 states plus the District of
Columbia will be gradually eliminated. Previously, for Puerto Rico only, the
minimum expenditure factor for each of the four allocation formulas was further
multiplied by the ratio of the Puerto Rico average expenditure per pupil divided by
the lowest average for any state. For FY2001, the last pre-NCLBA year, this ratio
was approximately 75.0%; as a result, the grant to Puerto Rico was approximately
one-third less than the amount it would have received if it were treated fully in the
same manner as the 50 states and the District of Columbia. The NCLBA places a
floor on this ratio, which is 77.5% for FY2002, 80.0% for FY2003, 82.5% for
FY2004, etc., in steps until it reaches 100.0% — i.e., the same minimum expenditure
factor as for a state — for FY2007 and beyond. This increase will not take effect in
any year if it would result in any state or the District of Columbia receiving total Title
I-A grants below the amount it received for the preceding year.
Second, a cap on the aggregate weight applied to the population factor for
Puerto Rico (only) under the Targeted Grant formula is marginally raised (from 1.72
to 1.82). This provides that the share of Targeted Grants allocated to Puerto Rico
will be approximately equal to its share of grants under the Basic and Concentration
Grant formulas for FY2001. While it provides an increase for Puerto Rico, compared
to the previous Targeted Grant cap, the remaining cap still reduces grants below the
level that would obtain if there were no cap at all (i.e., if Puerto Rico were treated in
the same manner as the 50 states and the District of Columbia), since Puerto Rico’s
46 A few minor revisions were made to the provisions for calculating state equity factors.
For example, under the 1994 IASA, for states with separate elementary or secondary (as
opposed to unified K-12) LEAs, a special rule provided for separate calculation of the CV
for each sector of LEAs, with these figures to be combined in proportion to relative
enrollment in each sector to establish a statewide CV; under the NCLBA, data from
elementary, secondary, and unified LEAs are combined at all stages of calculating CVs and
the equity factor. In addition, the 1994 version contained authority for the Secretary of
Education to revise the equity factor to adjust for regional variation in costs or the differing
costs of meeting the needs of LEP pupils or those with disabilities; this authority was
deleted from the NCLBA.

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CRS-25
high number and percentage of poor school-age children would translate into a
significantly higher weighting factor if not capped.
Other NCLBA Formula Amendments. The NCLBA applies a hold
harmless rate of 85%-95% of previous year grants (the higher a LEA’s child poverty
rate, the higher is the hold harmless percentage) to each of the four allocation
formulas. Previously, this rate applied only to Basic and Targeted Grants — there
was no hold harmless in the authorizing statute for Concentration or EFIG Grants.
For Concentration Grants (only), the hold harmless provision applies to all LEAs
which received grants in the preceding year, not just those that currently meet the
eligibility criteria for this formula,47 except that if a LEA fails to meet such criteria
for four successive years, then the hold harmless would no longer apply.48
State minimum grants are increased from up to 0.25% under current law to up
to 0.35%, but only with respect to funds above the FY2001 level (see footnote 42).
P.L. 107-110 also provides for the use of population data on school-age children in
poor families that is updated annually, rather than every second year previously. As
is discussed later in this report, the Census Bureau began to publish annual updates
in November 2003. Further, the NCLBA revised the thresholds for application of
varying weights to poor and other formula children in different poverty rate and
number ranges under the Targeted and EFIG (intrastate) formulas, to reflect the latest
available population estimates as of the time the NCLBA was enacted.49
Targeting on High Poverty LEAs under the Revised Title I-A
Formulas
For the last several years, the primary issue regarding the Title I-A allocation
formulas has been the extent to which funds are targeted on high poverty LEAs.
Over 90% of the Nation’s LEAs receive grants under ESEA Title I-A, largely
because the eligibility thresholds for three of the four allocation formulas are
relatively low.50 In general, all LEAs receive Title I-A grants except those which
47 It has generally been ED’s policy to apply hold harmless rates only to LEAs or other
grantees which meet basic program eligibility criteria.
48 A primary rationale for this special provision limited to Concentration Grants is that
several LEAs were eligible for, and received, Concentration Grants in years preceding
FY1999, when these were calculated initially on the basis of counties, not LEAs. These
LEAs continued to receive grants for FY1999 through FY2001 due to special hold harmless
provisions in annual appropriations legislation. For FY2002 and future grants, the NCLBA
hold harmless provision applies to Concentration Grants for these LEAs.
49 These ranges are structured so that one-fifth of the Nation’s formula children are in LEAs
in each quintile on both the number and poverty rate scales. The previous ranges were based
on 1990 census data, while the NCLBA ranges are based on income year 1997 SAIPE
estimates.
50 In order to be eligible for Title I-A Basic Grants, LEAs must have at least 10 children
counted in the formulas for grants to LEAs and a school-age child poverty rate of at least
2%. For Targeted and Education Finance Incentive Grants, the LEA eligibility criteria are
a 5% school-age child poverty rate and 10 formula children. For Concentration Grants,
(continued...)

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CRS-26
have extraordinarily low school-age poverty rates and/or have extremely few pupils.51
A few LEAs (including certain charter schools which are treated as separate LEAs
under state law) are eligible for relatively small Title I-A grants, but do not choose
to participate in the program, at least in part because the administrative
responsibilities accompanying participation are perceived to exceed the value of the
prospective grants.
Table 1, below, presents the distribution of Title I-A grants52 among LEAs
grouped by poverty rate quintile.53 Each quintile contains LEAs with one-fifth of the
Nation’s school-age children in poor families, based on the latest Census Bureau
population estimates (income year 2000). Table 1 lists the percentage share (of the
national total) of Title I-A grants which are allocated to LEAs in each poverty
quintile. These data are provided separately for each of the four Title I-A allocation
formulas, as well as for total (all formulas) grants for FY2004.
As illustrated in Table 1, the share of Title I-A funds allocated to LEAs in
various poverty rate ranges varies significantly among the 4 allocation formulas. For
Basic Grants, the share is similar for each quintile of LEAs, varying only within the
narrow range of 19.2-21.5%, although it is noteworthy that LEAs in the lowest
poverty rate quintile (LEAs with school-age child poverty rates below 12.47%)
receive the highest share (21.5% of total grants).
For Concentration Grants, the share of funds allocated to LEAs in each poverty
rate range is again similar, with the exception of the lowest poverty quintile, which
receives a much lower share (7.6% of total grants vs. 20.9-24.2% for the other four
quintiles). This reflects the eligibility threshold for Concentration Grants (formula
child rate of at least 15% or 6,500 or more formula children). While again the share
of Concentration Grants going to LEAs in the highest poverty rate group is slightly
lower than for LEAs with lower poverty rates (23.1% for quintile 5 vs. 24.2% for
each of quintiles 3-4),54 the primary pattern for both Basic and Concentration Grants
is relatively constant shares of funds for all LEAs meeting minimum eligibility
thresholds. In other words, grants per poor and other child counted in the Title I-A
allocation formulas are approximately the same for all LEAs meeting the initial
50 (...continued)
LEAs must have a 15% school-age child poverty rate or 6,500 formula children.
51 Based on program data for FY2001, approximately two-thirds of the LEAs receiving no
Title I-A grants have a total number of school-age children of less than 100.
52 Except for analyses of FY2001 grants, which were based on only the Basic and
Concentration Grant formulas under previous law, all of the analyses in this report are based
on FY2002-FY2004 grants, using the Title I-A allocation formulas as modified by the No
Child Left Behind Act, P.L. 107-110.
53 For the LEA-level analyses in this report, “poverty rates” are based on total children
counted in the Title I-A allocation formulas divided by total school-age population.
54 This pattern is most likely due to concentration of LEAs with very high poverty rates in
states, as well as Puerto Rico, with relatively low expenditure factors, tending to offset the
impact of high poverty rates under the Targeted Grant and EFIG formulas.

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CRS-27
eligibility criteria for Basic and Concentration Grants, whether those LEAs have
high, average, or somewhat below average school-age child poverty rates.
The pattern of distribution of grants under the Targeted and EFIG formulas is
somewhat different. Under each of these formulas, the share of total grants increases
steadily from the lowest to the second highest poverty rate quintile, then declines at
least marginally between the 4th and 5th quintile. While this partly reflects the slightly
higher eligibility threshold for these formulas in comparison to Basic Grants (5% vs.
2% formula child rate), it primarily results from the structure of these formulas.
Under both the Targeted and EFIG (within-state) formulas, the grant per formula
child continuously increases as either the school-age child poverty rate, or the total
number of children counted in the Title I-A formulas, increases. The share of funds
going to LEAs in the 4th quintile under each of these formulas is somewhat higher
than the share going to LEAs with the highest poverty rates (5th quintile) primarily
because of the strong influence of high numbers of formula children on the allocation
of funds,55 as well as the influence of the expenditure factor.56
55 With the exception of Puerto Rico, LEAs with the largest numbers of school-age children
in poor families tend to have high, but not the highest, school-age child poverty rates.
56 States and other jurisdictions (e.g., Puerto Rico) with the highest school-age child poverty
rates tend to be located in states with relatively low expenditure factors.

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CRS-28
Table 1. Share of ESEA Title I-A Funds Allocated to LEAs by LEA Poverty Rate Quintile, FY2004
Poverty rate quintile
1
2
3
4
5
(Poverty rates of
(Poverty rates of
(Poverty rates of
(Poverty rates of
(Poverty rates
0 - 12.47%)
12.47 - 17.88%)
17.88 - 23.39%)
23.39 - 29.67%)
Above 29.67%)
All LEAs
Percentage share of total grants
Total Title I-A Grants,
FY2004
17.5%
18.8%
20.4%
22.2%
21.1%
100.0%
Basic Grants (57% of
FY2004 appropriations)
21.5%
19.2%
19.7%
20.2%
19.4%
100.0%
Concentration Grants (11%
of FY2004 appropriations)
7.6%
20.9%
24.2%
24.2%
23.1%
100.0%
Targeted Grants (16% of
FY2004 appropriations)
13.6%
17.2%
20.3%
24.8%
24.1%
100.0%
Education Finance Incentive
Grants (16% of FY2004
appropriations)
13.8%
17.4%
20.5%
25.7%
22.7%
100.0%
Table reads (for example): The quintile of LEAs with the highest school-age child poverty rates will receive 21.1% of total FY2004 ESEA Title I-A
grants, 19.4% of all funds allocated as Basic Grants for FY2004, 23.1% of Concentration Grants, 24.1% of Targeted Grants, and 22.7% of Education
Finance Incentive Grants.

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CRS-29
FY2002-FY2005 Funding for the Title I-A Allocation Formulas
FY2002 appropriations legislation for ED, P.L. 107-116, provided a total of
$10.35 billion for Title I-A. This legislation provided initial funding of $1.018
billion for the Targeted Grant formula and $793 million for the EFIG formula, both
of which were first authorized in 1994 but not previously implemented or funded.
In contrast to appropriations acts of several preceding years, P.L. 107-116 had no
extraordinary hold harmless provisions (i.e., none which go beyond the hold harmless
provisions of the authorizing statute).
For FY2003, the Bush Administration requested a total of $11.35 billion for
Title I-A grants to LEAs, an increase of $1.0 billion (9.7%). All of the increased
funds would have been allocated as Targeted Grants; the amounts allocated under the
other three formulas would have remained the same as for FY2002. Final FY2003
appropriations legislation for ED (P.L. 108-7) provides a total of $11,684,311,000
for Title I-A. The increase over FY2002 was split much more evenly between the
Targeted ($1,670,239,000) and EFIG ($1,541,759,000) formulas than requested by
the Administration. Most FY2003 appropriations under P.L. 108-7 were affected by
an “across-the-board” reduction provision; the amounts discussed herein reflect these
reductions.57
For FY2004, the Administration requested a total of $12.35 billion for Title I-A,
an increase of $665.7 million (5.7%) over FY2003. As in its request for FY2003, the
Administration proposed that all funds above the FY2002 level be allocated as
Targeted Grants, which would have resulted in a sharp reduction for EFIG grants
from $1,541,759,000 (the FY2003 appropriation) to $793,499,000 (same as the
FY2002 level).
Different versions of stand-alone FY2004 L-HHS-ED Appropriations bills were
passed by the House and the Senate (H.R. 2660). The total FY2004 amount for
ESEA Title I-A under each version of H.R. 2660 would have been the same as under
the Administration request — $12.35 billion. The primary difference between the
bills was in the distribution of funds above the FY2002 level under the Targeted
versus the EFIG formula. As under the Administration request, the House bill would
have allocated all funds above FY2002 under the Targeted Grant formula, reducing
EFIG grants by almost one-half. In contrast, the Senate bill would have allocated the
FY2003 amount under Targeted Grants, and distributed all increases over FY2003
under the EFIG formula. The House bill would have returned Basic Grants to the
FY2002 level, while the Senate bill would have funded Basic Grants at the slightly
reduced level of FY2003.
57 In addition to FY2003 Title I-A appropriations provided under P.L. 108-7, P.L. 108-83,
the Emergency Supplemental Appropriations Act, 2003, provided for the transfer of an
additional $4,353,368 in unobligated FY2003 funds from a variety of ED programs to Title
I-A. These funds were allocated to the three states for which the initial FY2003 allocations
under P.L. 108-7 were less than their FY2002 allocation (Iowa, Maryland, and Michigan);
the amount transferred brings the FY2003 allocation for each of these states up to its
FY2002 level.

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CRS-30
In addition, the Senate version of H.R. 2660 would, in effect, have prohibited
ED from updating the population data to be used in allocating FY2004 grants,
requiring the Department to use the best available data as of July 1, 2003, to allocate
FY2004 grants. Beginning with income year 2000 estimates released in November
2003, the Census Bureau has shifted from its previous schedule of updating the
estimated number of school-age children in poor families in LEAs every second year,
to a new schedule of annual updates for the LEA estimates. Thus, the Senate bill’s
provision would have prevented the use of the latest (income year 2000) population
estimates to allocate FY2004 funds.
The conference version of FY2004 appropriations legislation for ED, H.R. 2673,
the Consolidated Appropriations Act, 2004 (P.L. 108-199), provides a total of
$12,342,309,000 for Title I-A (after application of a small across the board
reduction), marginally less than the House and Senate versions of H.R. 2660. The
amount for Basic Grants is slightly below the FY2003 level, while the Concentration
Grants total is the same as for FY2003. Under P.L. 108-199, the remaining amounts
for Title I-A are split equally between Targeted and EFIG grants. The final
legislation does not contain the Senate bill’s provision regarding use of updated
population data, allowing a transition to annually updated population estimates to
occur beginning with FY2004 grants.
For FY2005, the Administration proposed a $1 billion (8.1%) increase over the
FY2004 level for ESEA Title I-A. As in its budget requests for FY2003 and 2004,
the Administration proposed that all funds above the FY2002 level be allocated as
Targeted Grants, which would more than double the funds for this formula (from
$1,969,843,000 to $4,146,187,000), while funds for the EFIG formula would be cut
by approximately 60% (from $1,969,843,000 to $793,499,000). On July 14, 2004,
the House Committee on Appropriations reported H.R. 5006, a bill to provide
FY2005 appropriations for ED and other agencies. Under this bill, as passed by the
House on September 9, 2004, the aggregate FY2005 appropriation for Title I-A
would be the same as requested by the Administration ($13,342,309,000), but in
contrast to the Administration’s proposal, equal amounts would be allocated as
Targeted and EFIG grants ($2,469,843,000 under each formula).
The Senate Committee on Appropriations reported its FY2005 appropriations
act for ED and other agencies, S. 2810, on September 15, 2004. Under S. 2810, the
total funding for Title I-A grants to LEAs would be $13,557,607,000 —
$215,298,000 above both the Administration request and the House amount.
However, approximately one-third of this difference — $71,557,000 — consists of
funds that would be appropriated as FY2005 Basic Grants, but would be used during
the 2004-2005 school year, the year during which FY2004 appropriations would
generally be used. These funds would be allocated to the 10 states (see following
section) that currently are receiving less for FY2004 than they received for FY2003
under Title I-A overall. If this were to occur, no state would receive less for the
2004-2005 school year than it received for the previous year (although numerous
LEAs would still receive reduced grants).
An additional $100,000,000 of the difference between the Senate and
House/Administration amounts consists of funds provided under the Senate
Committee bill for additional school improvement funding (i.e., beyond amounts

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CRS-31
reserved by SEAs from LEA grant appropriations for this purpose) for FY2005.
After deducting these two amounts, the difference in aggregate funding under the
Senate bill versus the House bill and Administration request for FY2005 is
$43,741,000 (0.3)%. The larger difference among these proposals is that the Senate
bill would allocate more funds under the EFIG ($2,756,175,000) than the Targeted
Grant ($2,231,954,000) formula, in contrast to the 50-50 split under the House bill,
or the heavy emphasis on Targeted Grants under the Administration request.
Title I-A funding levels for FY2003-FY2005 may be found in Table 2, below.
FY2004 Allocation Patterns. Overall, the FY2004 funding level for Title
I-A is 5.6% above the FY2003 level. While significant, this is a smaller rate of
increase over the previous year than occurred in FY2002 or FY2003, when the
increases over the previous year were 18.1% and 12.9%, respectively. At the same
time, the Census Bureau and ED have initiated annual updates of the poverty
estimates used to calculate Title I-A grants beginning with the FY2004 allocations.
In addition, the share of funds that SEAs are generally required to deduct from state
total allocations for program improvement activities increases from 2% to 4%
beginning in FY2004. As a result of these factors, several states, and a large
percentage of all LEAs, are receiving smaller Title I-A grants for FY2004 than they
received for FY2003.58
More specifically, 10 states (Kansas, Maine, Massachusetts, Michigan,
Minnesota, Missouri, New Hampshire, New Jersey, North Dakota, and Pennsylvania)
are receiving lower total grants for FY2004 than they received for FY2003. At the
LEA level, over half (approximately 56%) of all LEAs nationwide that received Title
I-A grants for both FY2003 and FY2004 are receiving smaller grants for FY2004,
even before consideration of the increased reservations from state grants for program
improvement activities. In virtually all cases, these states and LEAs are receiving
lower Title I-A grants for FY2004 than for FY2003 primarily because they are
experiencing reductions in their estimated number of school-age children in poor
families to a greater degree than the estimated nationwide reduction. In addition,
many LEAs with relatively low school-age child poverty rates are receiving lower
grants because they have fallen below the 5.0% eligibility threshold for Targeted and
EFIG grants. Under ED policy, grants under these formulas decline immediately to
zero when LEAs fall below the eligibility threshold (only Concentration Grants
provide for a continuation of hold harmless payments, for up to four years, for
ineligible LEAs).
Bills have been introduced in the 108th Congress (H.R. 4769, S. 2617) to
provide $237 million in supplemental FY2004 appropriations to increase FY2004
grants to losing LEAs up to their FY2003 grant level. No action has been taken on
these bills but, as noted above, FY2005 appropriations legislation reported by the
Senate Committee on Appropriations (S. 2810) would provide additional funds to
58 State total Title I-A grants for FY2004 may be found at [http://www.ed.gov/about/
overview/budget/statetables/index.html]. FY2004 LEA grants may be found at
[http://edworkforce.house.gov/issues/108th/education/funding/TitleIFY04.pdf].

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bring all state totals (but not all individual LEA amounts) for school year 2004-2005
up to their previous year levels ($71,557,000).
Appropriations Authorization Levels. Previous to the NCLBA, ESEA
legislation generally contained specific authorization amounts for ESEA Title I-A
only for the first year of each authorization period, authorizing only “such sums as
may be necessary” for the succeeding years. In contrast to this pattern, the NCLBA
authorizes specific amounts for each year, beginning at $13.5 billion for FY2002 and
increasing steadily to $25 billion for FY2007.59
59 This specification of authorization amounts for each year may or may not resolve long-
term debate over what constitutes the “full funding” level for Title I-A. Whether or not
specific amounts have been specified in the authorizing statute for any year, many program
advocates have argued that the “full funding” concept for Title I-A has always been based
on maximum payment calculations under the Basic Grant allocation formula. As was
described above, the Part A Basic Grant formula establishes a maximum payment based on
poor and other “formula children” multiplied by a state expenditure factor. The total of
these maximum payments is understood by many analysts to represent the “full funding”
level for Part A. For FY2004, this amount would be approximately $24.7 billion.

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Table 2. FY2003-FY2005 Appropriations for ESEA Title I, Part A
FY2004
FY2005
appropriation
appropriation under
under P.L. 108-199
FY2005
S. 2810, as reported
(after applying
FY2005
appropriation under
by the Senate
FY2003 appropriation
across the board
administration budget
H.R. 5006, as passed
Committee on
Formula
(P.L. 108-7)
reductions)
request
by the House
Appropriations
Basic Grants
$7,107,282,000
$7,037,592,000
$7,037,592,000
$7,037,592,000
$7,032,890,000
Additional funds for states
receiving less for FY2004
$0
$0
$0
$0
$71,557,000
than for FY2003
Concentration Grants
$1,365,031,000
$1,365,031,000
$1,365,031,000
$1,365,031,000
$1,365,031,000
Targeted Grants
$1,670,239,000
$1,969,843,000
$4,146,187,000
$2,469,843,000
$2,231,954,000
Education Finance
$1,541,759,000
$1,969,843,000
$793,499,000
$2,469,843,000
$2,756,175,000
Incentive Grants
Additional Assistance for
$0
$0
$0
$0
$100,000,000
School Improvement
Total ESEA Title I-A
$11,684,311,000
$12,342,309,000
$13,342,309,000
$13,342,309,000
$13,557,607,000
Grants to LEAs
Authorization level
$16,000,000,000
$18,500,000,000
$20,500,000,000
$20,500,000,000
$20,500,000,000
Notes: The amounts shown above for Basic Grants include $3,500,000 each year for census updates. Also, see footnote 57 regarding $4,353,368 transferred to Title I-A for FY2003
which is not included in the table above.

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CRS-34
Staff Qualifications
As is the case with state pupil assessment policies, the NCLBA establishes new
requirements regarding teacher qualifications for states and LEAs participating in
Title I-A which will affect public school systems overall. The revised ESEA also
contains expanded qualification requirements for teacher aides or paraprofessionals,
although these provisions are limited to certain paraprofessionals paid with Title I-A
funds. An additional major provision of the NCLBA regarding instructional staff is
the requirement that LEAs are to use between 5% and 10% of their Title I-A grants
in FY2002-2003, and at least 5% of their grants thereafter, for professional
development activities. Separately, as noted earlier, individual schools identified as
having failed to meet AYP standards for two or more consecutive years must use at
least 10% of their Title I-A grants for professional development.
Teacher Qualifications
First, the NCLBA requires LEAs participating in ESEA Title I-A to ensure that,
beginning with the 2002-2003 school year, teachers newly hired with Title I-A funds
are “highly qualified.” Second, participating states must establish plans providing
that all public school teachers statewide in core academic subjects meet the bill’s
definition of “highly qualified” by the 2005-2006 school year, and that all LEAs will
make annual progress toward meeting this deadline. Finally, according to the
authorizing statute, LEAs participating in Title I-A must have a plan to ensure that
all of their teachers are “highly qualified” by the 2005-2006 deadline.60
The criteria which teachers must meet in order to be deemed to be “highly
qualified” are found in Title IX, Part A (General Provisions) of the ESEA, as
amended by the NCLBA. This definition of a “highly qualified” teacher includes
some elements which are applicable to all public school teachers, and others which
apply only to teachers who either are or are not “new to the profession.” The criteria
applicable to all public school teachers are that they must hold at least a bachelor’s
degree, must have obtained full state certification or passed the state teacher licensing
examination, and must hold a license to teach, without any certification or licensure
requirements having been waived for them. An exception is made for teachers in
public charter schools, who must meet the requirements established in the state’s
charter school law. Program regulations also provide that individuals participating
in alternate certification programs meeting certain requirements meet the “highly
qualified” standard.
The additional criteria applicable to teachers who are new to the profession is
that they must: (a) demonstrate, by passing a “rigorous” state test, subject area
knowledge and teaching skills in basic elementary curriculum (if teaching at the
60 Regulations (Federal Register, Dec. 2, 2002) eliminate this potential conflict between
references to all teachers versus those in core subjects, providing that all of the teacher
qualification requirements apply only to teachers in core subject areas. The regulations also
define core subject areas as including English, reading or language arts, mathematics,
science, foreign languages, civics and government, economics, arts, history, and geography
(34 CFR 200.55(c)).

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CRS-35
elementary level); or (b) demonstrate “a high level of competency” by passing a
rigorous state academic test or completing an academic major (or equivalent course
work), graduate degree, or advanced certification in each subject taught (if teaching
at the middle or high school level).
Finally, a public school teacher at any elementary or secondary level who is not
new to the profession may be deemed to be “highly qualified” by either meeting the
preceding criteria for a teacher who is new to the profession, or by demonstrating
competence in all subjects taught “based on a high objective uniform State standard
of evaluation” which, among other considerations, is not based primarily on the
amount of time spent teaching each subject.61
Qualification Requirements for Paraprofessionals
Aides (or paraprofessionals) constitute approximately one-half of the staff hired
with Title I-A grants, and their salaries constitute an estimated 15% of Title I-A
funds. Use of Title I-A funds for aides appears to be especially prevalent in many
high poverty LEAs and schools. Aides whose salaries are paid with Title I-A funds
provide a variety of instructional and non-instructional services in both schoolwide
and targeted assistance programs. Some have criticized the performance of
instructional duties by aides who often lack educational credentials and may receive
little supervision from classroom teachers. Others have questioned the
appropriateness of using Title I-A funds to pay aides who perform duties that are not
directly related to instruction. The IASA in 1994 required teacher aides funded under
Title I-A to be directly supervised by teachers, and in general to have a high school
diploma or equivalent within two years of employment.
The NCLBA establishes expanded requirements for paraprofessionals paid with
Title I-A funds.62 These requirements apply currently to all paraprofessionals newly
hired with Title I-A funds after the date of enactment of P.L. 107-110 (January 8,
2002), and will apply to all such staff paid with Title I-A funds within four years of
the date of enactment (the 2005-2006 school year). According to regulations and
other policy guidance from ED, paraprofessionals paid with Title I-A funds include
all paraprofessionals employed in schools operating schoolwide programs, along with
those directly paid with Title I-A funds in targeted assistance schools.
The affected paraprofessionals must have either: (a) completed at least two
years of higher education; or (b) earned an associate’s (or higher) degree; or (c) met
a “rigorous standard of quality,” established by their LEA, and “can demonstrate,
through a formal State or local assessment ... knowledge of, and the ability to assist
61 This and related concepts and issues are discussed in CRS Report RL30834, K-12 Teacher
Quality: Issues and Legislative Action, by James B. Stedman.
62 In addition to regulations published in the Federal Register on Dec. 2, 2002, draft non-
regulatory guidance on the Title I-A paraprofessional requirements was published by ED on
Nov. 15, 2002 (see [http://www.ed.gov/policy/elsec/guid/paraguidance.pdf]).

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CRS-36
in instructing, reading, writing, and mathematics”63 or readiness to learn these
subjects, as appropriate. Under the authorizing statute, these requirements do not
apply to paraprofessionals engaged in translation or parental involvement activities;
regulations (Federal Register, December 2, 2002) also exempt from these requirements
any other paraprofessionals whose duties do not include providing instructional
support services. All paraprofessionals in Title I-A programs, regardless of duties,
must have at least a high school diploma or equivalent; this requirement was
effective upon enactment of the NCLBA.
Decisions regarding whether to allow paraprofessionals meet these requirements
via an assessment (or only by completing two years of higher education or earning
an associate’s degree), which tests to administer, what constitutes a “passing” score,
and whether these decisions should be made by LEAs or states are primarily being
left to state and LEA discretion, and a wide variety of approaches may be adopted.
State involvement in establishing, or providing guidance to LEAs on,
paraprofessional qualification standards varies widely. While some states have
established paraprofessional credentialing programs which can be used to certify that
individuals meet the Title I-A requirements, most have not yet done so. Many states
appear to be leaving decisions regarding paraprofessional qualifications largely to
LEA discretion. According to a recent study64, at least seven states have delegated
all decisions regarding paraprofessional qualifications and assessments to LEAs.
Another recent survey found nine states that are actively involved in setting
qualification standards and/or providing comprehensive guidance to LEAs to help
them set their own standards.65 In particular, some states have adopted a specific
assessment (ParaPro, developed by the Educational Testing Service), and a minimum
score thereon, to be used to establish paraprofessional qualifications throughout the
state. Most other states are allowing LEAs to use one of variety of assessments, and
are adopting a variety of approaches to setting minimum acceptable scores.
According to the authorizing statute and ED policy guidance, there are several
potential sources of funds to help pay the costs of education necessary for affected
paraprofessionals to meet the Title I-A requirements. These sources include Title I-A
funds, especially those reserved for professional development (as described above);
grants under ESEA Title II-A, Teacher and Principal Training and Recruiting Fund;
funds received under ESEA Title III-A, the English Language Acquisition, Language
Enhancement, and Academic Achievement Act; ESEA Title V-A Innovative
Programs grants; and for applicable schools, Indian Education grants under ESEA
Title VII-A. Paraprofessionals from relatively low-income families would also be
eligible for federal postsecondary grants and loans to help pay costs of taking courses
at institutions of higher education.
63 Or reading readiness, writing readiness, or mathematics readiness, where appropriate (e.g.,
for paraprofessionals serving preschool or early elementary pupils).
64 “Out of the Blue: Implementation of the Paraprofessional Assessment Requirement of
NCLB,” Title I Monitor, May 2003.
65 “States Responses to New Title I Requirements Vary Widely,” PSRP Reporter, American
Federation of Teachers, spring 2003.

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Baseline data have recently been released by 36 states on the percentage of
affected paraprofessionals who met the NCLBA qualification requirements during
the 2002-2003 school year. According to these data, an average of approximately
40% of the paraprofessionals met the qualification requirements in 2002-2003; for
individual states, the qualification percentages ranged from 4.5% to 99.0%. A
separate survey, conducted recently by the American Federation of Teachers (AFT),
of AFT-member paraprofessionals employed in Title I-A programs concluded that
54% of the surveyed paraprofessionals currently meet the NCLBA qualification
requirements based on educational levels alone (i.e., without relying on whatever
assessments states or LEAs might use to determine competence for those not meeting
the educational requirements). However, the paraprofessionals surveyed by AFT are
concentrated in selected large urban LEAs, and may not be representative of Title I-A
paraprofessionals in general.66
In addition, the types of responsibilities to which all paraprofessionals paid with
Title I-A funds may be assigned are outlined in the NCLBA. These include tutoring
of eligible pupils, assistance with classroom management, parental involvement
activities, translation, assistance in computer laboratories or library/media centers,
and instruction under the direct supervision of a teacher.
Issues
One issue regarding these NCLBA staff qualification requirements are whether
high poverty LEAs and schools will be able to meet the teacher qualification
requirements. Schools and LEAs disadvantaged by high pupil poverty rates have
generally had particular difficulty attracting highly qualified staff.67
A second major issue is whether the requirements for paraprofessionals will be
interpreted and implemented in such a manner as to have substantial impact. The
NCLBA provisions regarding paraprofessional qualifications are ambiguous. Their
significance will depend very much on the extent and manner in which these
provisions are interpreted and implemented by states and LEAs. It is thus far unclear
what “standards of quality” or assessments states and LEAs will deem to be sufficient
to meet these new requirements. Possible effects include substantial expansion of
state or LEA procedures to certify the qualifications of paraprofessionals, or a
significant reduction in the extent to which Title I-A funds are used to hire aides.
66 See “State Data Show Majority of Paraprofessionals Still Fall Short of NCLB ‘Qualified’
Standard,” Title I Monitor, Dec. 2003, p. 8.
67 See, for example, The Education Trust, Honor in the Boxcar, Equalizing Teacher Quality,
spring 2000.

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CRS-38
Other Provisions Regarding Title I-A
Other aspects of ESEA Title I-A which were significantly modified by the
NCLBA are discussed briefly below.
Flexibility
One of the most distinctive changes in Title I-A since 1994 has been the rapid
growth of schoolwide programs, which currently account for approximately 45% of
all Title I-A schools and 60% of Title I-A funds spent at the school level. The IASA
reduced the eligibility threshold for schoolwide programs from 75% to 50% low-
income pupils in general, and the NCLBA has further reduced this threshold to
40%.68 The statute allows the use of funds under most federal aid programs, not just
Title I-A, on a schoolwide basis, if basic program objectives and fiscal accountability
requirements are met.
The rationale for providing schoolwide program authority to relatively high
poverty schools is that: (a) in such schools, all pupils are disadvantaged, so most
pupils are in need of special assistance, and it seems less equitable to select only the
lowest-achieving pupils to receive Title I-A services, and (b) the level of Title I-A
grants should be sufficient to meaningfully affect overall school services in high
poverty schools, since these funds are allocated on the basis of the number of low-
income pupils in these schools. However, the NCLBA has reduced the eligibility
threshold to a level that is approximately the national average percentage of pupils
from low-income families, and the validity of both aspects of this rationale might be
questioned for schools which just meet the new threshold.69 In addition, there is little
direct evidence of the achievement effects of this expansion of schoolwide programs.
In addition, Title VI, Part A-1 of the revised ESEA allows most LEAs to transfer
up to 50% of their grants among four programs — Teachers, Technology, Safe and
68 Under this provision, any school participating in Title I-A with 40% or more of its pupils
from low-income families may qualify to operate a schoolwide program. However, Title
I-A schools with lower percentages of pupils from low-income families may obtain waivers
directly from ED or from their SEA (if the state participates in Ed-Flex) to operate
schoolwide programs. In addition, program regulations (34 CFR 200.25(b)(2)) allow LEAs
to use measures of low-income in determining whether schools meet this threshold which
are different from (and potentially broader than) those used in the selection of participating
schools and allocation of funds among them, which may further expand the pool of eligible
schools.
69 At the level of individual schools, the most commonly used criterion for determining
whether pupils are from low-income families is eligibility for free and/or reduced-price
school lunches (not the more narrow census poverty income standard). The national average
percentage of public K-12 pupils meeting this criterion is approximately 40%. In a school
just meeting this threshold, 100% of the pupils may be served under Title I-A, although the
school would receive funds based on only 40% of its enrollment. In addition, the
free/reduced price school lunch data may overestimate the percentage of pupils from low-
income families, as there is evidence that more children and youth are counted than may be
eligible based on family income (see “Officials Seek to Refine Lunch Program Tallies,”
Education Week, Mar. 27, 2002).

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CRS-39
Drug Free Schools, and the Innovative Programs Block Grant — or into (not from)
Title I-A. LEAs which have been identified as failing to meet state AYP
requirements under Title I-A will be able to transfer only 30% of their grants under
these programs, and only to activities intended to address the failure to meet AYP
standards. According to policy guidance published by ED, LEAs identified for
corrective action may not transfer any funds under this authority.
Further, a pair of state and local flexibility demonstration authorities in the
NCLBA might have limited impact on Title I-A. Under a State and Local Flexibility
Demonstration Act (ESEA Title VI, Part A, Subpart 3), up to seven states, selected
on a competitive basis, will be authorized to consolidate all of their state
administration and state activity funds under Title I-A and several other ESEA
programs (State Flex). The consolidated funds can be used for any purpose
authorized under any ESEA program. The selected states are to enter into local
performance agreements with 4-10 LEAs (at least one-half of which must have
school-age child poverty rates of 20% or more), which may consolidate funds under
the provisions of a local flexibility authority. Up to 80 additional LEAs — i.e., in
states not participating in the state flexibility demonstration program — might be
eligible for the local flexibility authority (Local Flex). The local flexibility authority
has no direct relationship to Title I-A, although funds consolidated under this
authority could be used for any purpose authorized under any ESEA program,
including Title I-A. In addition, states and LEAs would lose their flexibility
demonstration authority if they fail to meet Title I-A AYP requirements for two
consecutive years.70 As of the date of this report, one state has qualified for State
Flex authority (Florida), with associated local performance agreements involving
eight LEAs in Florida, and one LEA has qualified on its own for the Local Flex
authority (Seattle, WA).
Services to Private School Pupils, Staff, and Parents
The NCLBA makes a number of changes to the Title I-A provisions for services
to pupils attending private schools. First, it provides that such services should be
provided not only to eligible pupils but also to their families and school staff as well
(consistent with the general Title I-A provisions for parental involvement and
professional development activities). Second, it is required that services be provided
to private school pupils “in a timely manner.” Third, requirements for consultation
between public and private school officials are significantly expanded to include such
topics as the data to be used to determine the share of pupils from low income
families who attend private schools, and who will provide the services, including
consideration of the possibility of providing services via a third-party contractor.
The revised Title I-A includes specific provisions regarding authorized methods
for LEAs to determine the share of pupils from low income families who attend
private schools, which is the basis for determining the share of Title I-A grants which
is to be devoted to serving eligible private school pupils. LEAs may: (a) use the
70 For additional information on this and other flexibility authorities adopted under the No
Child Left Behind Act, see CRS Report RL31583, K-12 Education: Special Forms of
Flexibility in the Administration of Federal Aid Programs, by Wayne Clifton Riddle.

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CRS-40
same measure of low income and source of data as used to count such children
attending public schools; (b) conduct a survey, which may be based on a
representative sample of pupils, using the same measure of low income as used to
count children attending public schools; (c) apply the percentage of children from
low income families determined for public school pupils to private school pupils
residing in the same school attendance area; or (d) use a different measure of low
income than used for counting children attending public schools, adjusting these data
by an appropriate proportion so that the measures may be equated.71 These
provisions are similar to those of policy guidance disseminated by ED under the
previous authorizing statute.
Finally, the previous authorization for grants to pay “capital expenses” of
providing Title I-A services to private school pupils was moved from Title I-A to
Subpart 19 of Title V, Part D, the Fund for Improvement of Education. The revised
authorization was extended only through FY2003.72
Debates Over Continued State or
LEA Participation in Title I-A
As implementation of the new Title I-A requirements adopted under the
NCLBA has proceeded, debate has arisen in some state legislatures and LEAs over
the federal role in K-12 education, and the costs and benefits of participating in Title
I-A and other ESEA programs. While all states continue to participate in ESEA Title
I-A, and therefore they continue to be subject to all of the requirements discussed in
this report, bills have been considered in the legislatures of some states that would
attempt to limit or terminate state participation in ESEA Title I-A, in order to avoid
being required to implement some of these requirements.73
State legislative actions have thus far taken five forms: (a) resolution expressing
opinions that are critical of some aspects of the Title I-A requirements under the
NCLBA, but which have no direct impact on state participation in the program; (b)
resolutions requesting exemptions or waivers of certain NCLBA requirements for a
state; (c) resolutions criticizing the level of funding for the NCLBA as being
inadequate; (d) bills preventing the state from spending its own funds on NCLBA
implementation costs; and (e) bills authorizing or requiring the state to terminate
71 For example, assume that data are available on the number of public school pupils in a
LEA who receive free school lunches and Medicaid, but are only available for private school
pupils who receive Medicaid, that the LEA uses the number of pupils who receive free
school lunches to allocate Title I-A funds among eligible schools, and that the ratio among
public school pupils in the LEA of free school lunch recipients to Medicaid recipients is 2
to 1. The LEA could then multiply the number of relevant private school pupils receiving
Medicaid by two to obtain an equivalent estimate of the number of such pupils who would
be eligible to receive free school lunches.
72 No funds have been appropriated for capital expenses grants since FY2001.
73 See, for example, “More States Are Fighting ‘No Child Left Behind’ Law,” Washington
Post, p. A3, Feb. 19, 2004.

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CRS-41
participation in Title I-A in order to avoid being subject to its requirements. At least
some states have adopted bills in categories (a) through (d); as of this writing, no
state has yet enacted opt-out legislation.
As discussed earlier in this report, the ESEA Title I-A requirements apply only
to states that receive funds under this program. If a state chose to terminate its
participation in Title I-A, none of the requirements discussed in this report would
apply to that state. Of course, such a state would lose a significant amount of
funding, since Title I-A is the largest federal K-12 education program. In addition,
as described in a recent letter by the acting Deputy Secretary of Education, Eugene
W. Hickok, to the Utah Superintendent of Public Instruction, such a state might also
lose some or all of its funds under several other ESEA programs, under which grants
are allocated to states using formulas that are linked to the Title I-A formulas.74
As with states, individual LEAs might choose to terminate their participation
in Title I-A, in order to attempt to avoid implementing the requirements discussed in
this report. However, even if it received no Title I-A grants, most of the
requirements discussed in this report would continue to apply to a LEA if its state
continues to participate in Title I-A. This includes the assessment, AYP, and report
card requirements, which apply to all public schools and LEAs in states receiving
Title I-A grants. A LEA that refuses Title I-A funds would be released only from the
corrective action requirements discussed in this report. In addition, as with states,
such a LEA would presumably lose funds under not only Title I-A but also several
other ESEA programs under which allocations are based on those under Title I-A.
74 The letter may be found at [http://www.nassp.org/advocacy/pdf/usde_utah.pdf].

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CRS-42
Appendix: Regulations and Policy Guidance
Published Thus Far for ESEA Title I-A,
as Amended by the No Child Left Behind Act
The regulations and policy guidance which have been published with respect to
ESEA Title I-A, as amended by the NCLBA, as of the publication date of this report,
are listed below.
Regulations
1. Final regulations regarding pupil assessments and related issues: Federal
Register, July 5, 2002 (pp. 45037-45047).
2. Final regulations regarding aspects of Title I-A other than pupil assessments:
Federal Register, Dec. 2, 2002 (pp. 71710-71771).
3. Final regulations regarding assessments and accountability for certain pupils
with disabilities: Federal Register, Dec. 9, 2003 (pp. 68698-68708).
4. Proposed regulations regarding assessments and accountability for certain
LEP pupils: Federal Register, June 24, 2004 (pp. 35462-35465).
5. Notice authorizing schoolwide programs to consolidate federal education
funds and Exempting them from complying with statutory or regulatory
provisions of those programs: Federal Register, July 2, 2004 (pp. 40360-40365).
Policy Guidance75
1. Supplemental Services
2. Paraprofessionals
3. Standards and Assessments
4. The Impact of the New Title I Requirements on Charter Schools
5. State Educational Agency Procedures for Adjusting Basic, Concentration,
Targeted, and Education Finance Incentive Grant Allocations
6. Report Cards
7. Treatment of Limited English Proficient Pupils in AYP Determinations76
8. Calculation of Participation Rates in AYP Determinations77
75 All documents available at [http://www.ed.gov/policy/elsec/guid/edpicks.jhtml?src=ln].
76 See [http://www.ed.gov/nclb/accountability/schools/factsheet-english.html].
77 See [http://www.ed.gov/news/pressreleases/2004/03/03292004.html].

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