The $13 billion Title I program, now the major funding arm of President Bush's No Child Left Behind act, must close the loopholes if it is to ensure that school districts channel the money to needy schools, said lead author Marguerite Roza, a research assistant professor at the University of Washington's Evans School of Public Affairs.
The new research documents how current rules allow the federal funds intended for low-income schools to be shifted - sometimes inadvertently - to affluent schools within the same district.
"In some places," Roza said, "taxpayer money intended to help overcome the effects of poverty is actually diverted to schools in the wealthiest neighborhoods."
This stems from a practice that was scrutinized by Roza and her colleagues at the university's Center on Reinventing Public Education. In almost every school district, experienced teachers are not only far better-paid than novice teachers, but they are far more likely to work in wealthier parts of town.
However, district accounting practices typically fail to show this hidden subsidy for affluent students. Instead, most districts count costs as if salaries were the same in every school.
In the real world, the study shows, this means poor children get shortchanged. When Houston's actual teacher salaries are factored in, for example, low-income schools there get $472 less per student in non-targeted state and local funds than the district average.
Thus, the study found that despite Title I language requiring that the aid reach schools in impoverished neighborhoods, in practice the grant flows into district funding systems favoring the rich.
These findings led to two basic recommendations that the researchers say could strengthen Title I to better serve disadvantaged children and help it achieve the mission set forth during President Lyndon Johnson's War on Poverty four decades ago:
These reforms, according to the 20-page report, would not only improve the distribution of the $13 billion annually spent on Title I, but also would start to leverage a more fair and effective distribution of the rest of the nation's $455 billion in annual school spending.
"This research documents that school districts systematically discriminate against high-poverty schools in their budgeting policies," said Ross Wiener, policy director of the Education Trust, a nonpartisan, nonprofit organization in Washington, D.C., that focuses on closing achievement gaps in public education. "As a matter of simple justice, Congress should close the loopholes in federal law that allow these practices to persist."
The next major opportunity to revise the federal rules could come in 2007, when Title I is due for reauthorization by Congress. In the meantime, a House Appropriations subcommittee earlier this year drafted language asking Secretary of Education Margaret Spellings to study how Title I and district funds intermingle.
Collaborating on the report were Center on Reinventing Public Education researchers Larry Miller and Paul Hill. The study was funded in part by the Annie E. Casey Foundation and Atlantic Philanthropies.
"This study," Roza said, "is an opportunity to show how the core principles of Title I can be rescued."