Background & Analysis

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The Title I program under No Child Left Behind provides funds to local school districts to improve the education of disadvantaged students from birth through the 12th grade. It is the largest federal program supporting elementary and secondary education. Funds are distributed to school districts according to a set of four separate formulas: the Basic Grant, Concentration Grant, Targeted Assistance Grant, and the Education Finance Incentive Grant funding formulas. School districts have some discretion in how they distribute Title I funds among schools within the district, but the law requires them to prioritize the highest-poverty schools.

Basic Grant Formula

The Basic Grant formula allocates funding to school districts based on the number of poor children they serve. Any school district with at least 10 poor children and 2 percent of its students in poverty receives funding through the Basic Grant formula, so almost all school districts, even very affluent school districts, get at least some Title I funding through this formula. In fiscal year 2013, $6.2 billion, or 45 percent of all Title I funding, will be distributed through the Basic Grant formula. The Basic Grant formula is the least targeted of the four Title I formulas.

Concentration Grant Formula

The Concentration Grant formula also provides funding to schools based on the number of poor children they serve. To receive money though the Concentration formula, school districts must have at least 15 percent of children in poverty or 6,500 poor children, whichever is less. Eligibility thresholds serve as "cliffs": absent prior year eligibility, school districts with 14.9 percent poverty and 6,499 poor children receive zero Concentration Grant aid.

Under both the Basic Grant and Concentration Grant formulas, once school district pass the threshold percentage of poor children required to receive funding, they receive the same amount of money per poor child regardless of how many poor children they serve. In other words, a school district with 15 percent of children in poverty gets the same amount of money per poor child as a school district with 99 percent of children in poverty—despite considerable evidence that it costs more to educate students in schools with high poverty rates.

Concentration Grant funds are provided on top of money a school district receives through the Basic Grant formula. In fiscal year 2013, $1.3 billion, or about 9 percent of Title I funding, will be distributed through the Concentration formula.

Targeted Formula

The Targeted Assistance Grant formula is different: Rather than providing the same amount of Title I funding per poor child, it provides more money per child as a district’s poverty rate increases, so that higher-poverty school districts get more money per poor child than lower ones do.

Each additional child in poverty above 38 percent brings a district 4 times as much Title I funding as each poor child up to 16 percent of children in poverty. Each additional child in poverty beyond 35,515 brings a district 3 times as much Title I funding as its first 691 children in poverty. Weighting operates on a marginal basis to avoid a "cliff" effect.

In fiscal year 2011, $3.1 billion, or 23 percent of federal Title I funding, will be distributed through the Targeted Assistance Grant formula. The Targeted Assistance Grant formula is the second most targeted Title I formula to school districts nationwide.

Targeted Title I Formula Poverty Weights
School Districts % of Children In Poverty Per Child Weight In Funding Formula
0-15.6 1
15.6-22.1 1.75
22.1-30.2 2.5
30.2-38.2 3.25
>38.2 4
School District's # Of Children In Poverty Per Child Weight In Funding Formula
0-691 1
692-2,262 1.5
2,263-7,851 2
7,852-35,514 2.5
>35,515 3
Source: Elementary and Secondary Education Act

Education Finance Incentive Grant Formula

The Education Finance Incentive Grant Formula is designed to: (1) reward "good school finance states" that spend more state resources on public education and distribute that funding equitably, and (2) doubly target funds on high poverty school districts in "bad school finance states" that inequitably distribute state and local education funding.

The formula takes into account states’ fiscal effort—the percentage of per capita income devoted to education—as well as how equitably the state school finance system distributes state and local funding for education. Within states, funding is distributed to school districts in a manner similar to the Targeted Assistance Grant formula, except that in "bad school finance states" weights are doubled.

In fiscal year 2012, $3.1 billion, or 23 percent of federal Title I funding, will be distributed through the Education Finance Incentive Grant formula. According to the Congressional Research Service, the Education Finance Incentive Grant formula is the most targeted Title I formula to school districts nationwide.

Source: U.S. Department of Education Budget Tables

Federal Title I funding has increased by $5.0/ billion, or 56 percent, since 2001. All of that new Title I funding (i.e. amounts above the fiscal year 2001 level) has been distributed through the Targeted Assistance and Education Finance Incentive Grant formulas—the two formulas that most closely focus funding on the disadvantaged students Title I is supposed to help. Funding for the Basic Grant formula, the least targeted of all Title I’s formulas, as a percentage of total Title I funding declined each year between 2001 and 2009, shifting funding to the Targeted Assistance and Education Finance Incentive Grant programs. However, from 2009 to 2010, the proportion of Title I funding for Basic Grants increased from 48 percent to 52 percent, while the share of Targeted Assistance and Education Finance Incentive Grant programs decreased by three percent, from 23 percent to 20 percent for both grant types. In fiscal year 2011, the distribution changed again, with less funding going to Basic Grants and more funding going to Targeted and Education Finance Incentive Grants. From fiscal year 2011 to 2012, the share per formula remained virtually unchanged.

Pre-K and Preschool Funding

In 2012, the U.S. Department of Education released “non-regulatory guidance” to reiterate that school districts may use Title I funds for “preschool” programs. Preschool programs are defined as programs for children who are not yet old enough to enroll in the grade level at which a school district begins to provide a free public elementary education. In some states, elementary education begins at first grade; in others it begins at kindergarten or before.

In the 2010-2011 school year, 2.5 percent of children attending Title I-funded education programs were labeled as “pre-K students,” according to the U.S. Department of Education. The Department does not require districts to report the allocation of Title I funds by age. As a result, it is difficult to track how many 3- and 4-year-olds are served with Title I funds or how many federal Title I dollars are used to support pre-K students.

Published Jul 10 2013 20:50