As Congress prepares this year to reauthorize the Elementary and Secondary Education Act (ESEA), lawmakers face a critical choice: refight old battles or break the mold with a "Third Way" approach that addresses the demand for a public education system that graduates students prepared for the new global economy.

ESEA is the 14-title federal law that today directs more than $13 billion in annual education assistance to states and school districts through a crazy quilt of more than 50 programs.¹ The largest and best known program is Title I, the cornerstone of the federal government's commitment to ensure educational equity for poor children. The reauthorization gives Congress the opportunity to transform Washington's role in elementary and secondary education from a focus on process to performance, and thus leverage the limited role federal spending plays in public education into a major force for change.

ESEA today is best viewed as a welter of spending dictates that prescribe how states and localities must spend federal dollars but does not hold them accountable for achieving measurable improvements. In the future, federal dollars should be tied to performance and results. With this transformation, Washington's role will shift from a passive enabler of failure to a catalyst for success. In short, what is needed is a new bargain on federal education spending: States and localities should get increased flexibility for using federal resources but must take increased responsibility for results.

Changing Times Demand Changing Measures

In his 1999 State of the Union address, President Clinton challenged Congress to tie ESEA spending--more than half of the $21 billion total federal investment in elementary and secondary education--to results on five key measures of state and local performance: ending social promotion, improving teacher quality, reconstituting failing schools, issuing school report cards, and enforcing discipline codes.² The Clinton proposal represents a historic shift toward performance-based funding and away from virtually unconditional support to states and localities. But unless it is coupled with more flexibility, the President's proposal risks adding yet another layer of federal prescription on local districts already burdened by excessive reporting requirements. At the state and local level, there is an understandable resistance to anything appearing to be additional federal regulation. State and local officials want additional resources, but describe the layering of additional programs one on top of the next as "an administrative nightmare."³

Enacted in 1965, ESEA is a Great Society landmark that signified a national interest in assuring equal access to a quality education for all Americans. In essence, the federal government took responsibility for compensating poor school districts to put them on a fiscal par with more affluent districts. The federal government must continue to play that role. However, we can no longer define equity solely in terms of fiscal parity. More than 30 years and $100 billion later, the performance gap between low-income and middle-class students remains disconcertingly wide. To narrow that gap, Washington needs to redefine equity in terms of concrete results.

We need a progressive alternative to the left's habitual demand for more spending and the right's incessant campaign to shrink Washington's role in education. Republicans, for example, propose converting ESEA programs into block grants with no accountability for results, or, in the extreme, eliminating the U.S. Department of Education. Too many Democrats refuse to acknowledge that the problems with ESEA programs go beyond their funding level.

Neither block grants nor more of the same old "top-down" categorical approach driving today's ESEA will ultimately benefit the nation's school children, especially the 20 percent who live in poverty and are most likely to be in failing schools.⁴ Since 1965, titles and programs have been added, but the underlying philosophy and methods have not been rethought. The federal role embodied in ESEA is still critical. However, ESEA has calcified into a confusing, unfocused, and largely ineffective statute, as a result of interest group pressure, constituency politics, and Washington's inability to eliminate or consolidate even the smallest or least effective government program. In 1999, ESEA is more reflective of symbolic attention to issues than substantive solutions. That is why the Progressive Policy Institute believes a dramatic new approach is essential to reshaping the ESEA.

PPI is not alone in this sentiment. Groups across the ideological spectrum are calling for substantial changes to ESEA. For example, the conservative Heritage Foundation advocates that greater control of federal programs be given to the states in exchange for greater accountability. This approach, dubbed "Super-Ed- Flex" will likely be introduced in Congress this year.⁵ PPI supports the Super-Ed-Flex goal of greater flexibility in exchange for greater accountability, but believes that this proposal fails to substantively address the basic problems of the categorical approach.

The federal role in elementary and secondary education is limited but not insignificant. While Washington contributes only about 7 percent to total education expenditures in this country, this money is concentrated--although not to the degree it should be--on impoverished areas. However, Washington must do a better job of leveraging this investment to drive better performance. Specifically, this report proposes that the current categorical approach is broken but that Washington can-- and should--play a vital role in elementary and secondary education.

States, school districts, and schools are becoming more flexible and more accountable for performance, and the federal governmentmust support this by becoming flexible and performance-based itself. To achieve a marriage of accountability and flexibility, a real link must be established between funding and results. This must be done in tandem with a commonsense consolidation of programmatic spending and an increase in flexibility. In 1965, equity could be measured in dollars; in the New Economy, equity must be measured by quality.

To update ESEA for the Information Age, PPI believes Congress must:

With this new role, Washington should be more active in benchmarking quality and measuring performance. It should do less micro-managing of how local school officials raise their students and teachers to higher performance levels. The federal government should get out of the business of accounting for programmatic inputs and instead focus more strategically on empowering citizens with information, setting broad standards and goals, measuring and comparing results, and researching effective strategies for improvement.

In the New Economy, knowledge-intensive jobs are increasingly the norm. As Robert Atkinson and Randolph Court wrote recently, "Since 1969, virtually all jobs lost in goods production and distribution sectors have been replaced by office jobs."⁶ In the past, students at the bottom-end of America's education system were not learning advanced skills and knowledge. This reality was papered over by--and to some degree driven by--an abundance of unskilled and low-skill jobs. The economy lent itself to schools that were, in the words of Urban League President Hugh Price, "expected to educate a small percentage of supposedly bright kids extremely well [while paying] scant attention to those who struggled academically."⁷ The Old Economy didn't demand a large number of highly educated workers. The New Economy demands all students be competent learners if they are to thrive in this new era.

ESEA: Then and Now

When ESEA was passed in 1965 it was landmark legislation, codifying the federal role and national interest in ensuring quality education for all students. Prior to 1965, impoverished students and students of color had been denied access to quality education and a chance to become upwardly mobile in the economy. Before 1965, Congress had passed smaller bills to aid education--the Smith-Hughes Act of 1917 for vocational education, Impact Aid in 1950, and the National Defense Education Act of 1958. Resistance arising from segregation, and the participation of private and religious schools, however, prevented large-scale federal assistance to elementary and secondary schools. The Civil Rights Act of 1964 helped alleviate the racial issues and ESEA was passed the following year.⁸

ESEA has evolved into a hodgepodge. As a whole, it appears to address different and complementary needs. In addition to the Title I program, there are programs for technology, migrant students, women's educational equity, teacher professional development, civics education, foreign languages, gifted and talented children, arts in education, native American and native Hawaiian children, and various demonstration projects.

Funding is distributed one of two ways: by formula or by competitive grants. Formula programs send money to states and school districts based on certain factors, for example, overall number of students or the number of poor students. Competitive grants are awarded based on an application and selection process.

Besides Title I, the larger programs include the Impact Aid program ($864 million) compensating school districts that lose property tax revenue because they host federal buildings or installations, such as military bases. The Safe and Drug-Free Schools program ($566 million) targets violence and substance abuse prevention. There is also a professional development title ($335 million), and the Title VI 'block-grant' program ($375 million), which now also includes last year's class-size reduction initiative ($1.2 billion). One title is devoted to technology ($698 million) and another to bilingual education ($380 million). School construction is even given a title, although it was only funded briefly before the funding was rescinded.⁹

In short, Washington has created a program to address every ill on the educational landscape. What this has created is a statute long on symbolism but woefully short on substance. By undertaking so many challenges through ESEA and related programs, the federal government has ended up doing nothing particularly well. And, the overwhelming emphasis on process has come at the expense of results.

While federal leadership has undoubtedly improved schools over the past 34 years--especially by drawing attention to the special needs of impoverished students- -it is difficult to attribute these gains to particular categorical programs. Moreover, as education researcher Dr. Paul Hill points out, many federal programs and regulations have "weakened schools by putting process before results, caused displacement of goals from serving students to guaranteeing administrative compliance, and weakened schools' ability to pursue effective instructional programs and solve the problems presented by their students."¹⁰

ESEA is still arranged and administered in 1999 with the same philosophy as 1965. Federal education dollars are sent to states and localities through a Byzantine patchwork of programs and formulas targeting different discrete needs and populations. This creates confusion, redundancy, and inefficiencies. It also makes systematic collection of useful data a herculean and thus far unsuccessful task.¹¹ In fact, with the exception of Title I, there is a substantial lack of data about the effectiveness of these programs. In addition, in many states it has created a dependency on federal funds to support state education departments, essentially aping the prescriptive structure of Washington.¹²

A closer look at ESEA reveals problems with the current approach.

Title I

With annual spending of more than $8 billion, Title I is the largest ESEA program. Title I is, in essence, funding sent to localities by a formula to undertake compensatory education activities for impoverished students. In this sense, Title I is essentially a block grant. Although 99 percent of Title I dollars reach the local level, the money is spread too thinly, and there is no enforced accountability for results from the funding.¹³ Between 70 and 80 percent of Title I funding is used for staff, and the remainder is used to purchase educational services and materials, increasingly from the private sector.¹⁴

Washington has spent more than $118 billion on Title I since its inception in 1965, and several recent evaluations confirm that these dollars have failed to close the achievement gap between the impoverished students served and their more affluent peers.¹⁵ While some school districts have made demonstrative gains with Title I dollars, the funding has not produced the intended compensatory effect overall.

Not all impoverished schools and impoverished students are served by Title I, so blanket comparisons of Title I spending to the overall achievement of poor students are misleading. As a result of the 1994 Title I reauthorization, Title I funds are more concentrated on high-poverty areas but still not to the degree that they should be. Currently, 58 percent of schools nationwide receive at least some Title I funding.¹⁶ While 95 percent of schools with a poverty level of 75 percent to 100 percent receive Title I funding, often schools with lower but significant percentages of children in poverty do not.¹⁷ For example, one in five schools with poverty in the 50 percent to 74 percent range do not receive any Title I dollars, and only 64 percent of schools with poverty in the 35 percent to 49 percent range do.¹⁸ Research clearly demonstrates that poverty impacts learning, yet many schools with high percentages of impoverished children receive no Title I funding. At the very least, considering funding limitations, money should be focused more on schools with the highest need. Despite continuing efforts to concentrate Title I funding, the distribution is still based more on politics than policy. While there are four different Title I formulas (two are currently unfunded); 86 percent of Title I funding is allocated based on the least concentrated of the four.¹⁹

During the last ESEA reauthorization in 1994, Congress also made substantial changes to Title I, allowing local school districts much more flexibility with Title I dollars while requiring that Title I students be held to the same high standards as other students. States were required to adopt assessments to ensure poor children were making progress, and mechanisms were built into the statute to ensure accountability if these steps were not taken. Unfortunately, as one independent evaluation of Title I stated, "There is wide variance in the degree to which states have complied with the requirements of the new Title I."²⁰

Sweeping conclusions based on Title I evaluations are risky. The methodology of social science in this area is notoriously suspect because obtaining random samples often means denying services to students who could otherwise benefit from them. In essence, a random control group is rarely possible. Therefore, as the massive longitudinal evaluation of Title I, the "Prospects Report", pointed out, "[The] inability to discern a compensatory effect of [Title I] is not necessarily an indication of program failure." While the achievement gap didn't lessen as a result of Title I, it didn't grow either.²¹ Basically, because denying a specific group of children services is untenable, measuring what would have happened to these students in the absence of this funding is largely impossible.²²

However, there is evidence of improvement in math and reading scores among the most impoverished students.²³ Nonetheless, aggregate, empirical results from Title I analysis are not encouraging. Further, independent evaluations of Title I still lack academic rigor in activities that the funding supports.²⁴ The U.S. Department of Education's own analysis of Title I states, "A review of the evidence provided by states shows that [Title I] plans appear to be weak in benchmarking standards against external criteria."²⁵ Rather than raising and holding all students to high standards, Title I funds too often perpetuate a two-tiered educational system setting lower expectations for impoverished students than affluent ones. And, because a true results-based focus is not part of Title I, the federal government is therefore a silent accomplice in the continuing this bifurcated approach to schooling.

Many analysts attribute the disappointing achievement results produced by Title I to the widespread use of unqualified aides or paraprofessionals in the classroom.²⁶ The high percentage of Title I funding used for staff isn't surprising because education is naturally a labor-intensive activity. However, the type of staff this funding supports is often surprising. Half of Title I instructional staff are paraprofessionals who teach even though they lack the educational background to do so.²⁷ Congress has set the bar ridiculously low for these instructional aides requiring only that aides "have a secondary school diploma, or its recognized equivalent, or earn either within two years of employment."²⁸ Eighty-four percent of principals in high-poverty schools reported using aides compared to only 54 percent of their peers in low-poverty schools.²⁹ Moreover, in high-poverty schools, only 10 percent of aides have bachelor's degrees.³⁰ This means that the students most in need of high quality instruction are least likely to get it.

Again, it is important to note that Title I isn't a singular program at all. Rather, it is a funding source for state and local compensatory education activities in many forms. That Title I hasn't shown more encouraging results is not proof that these dollars can't be made to work. With funding based on results, all states and localities would be forced to make Title I work. Ineffective practices, such as the use of unqualified teachers especially for the most needy students, would certainly be curtailed if funding were contingent upon results. Accountability provisions are only as effective as the will to enforce them is strong. In the case of Title I, that will has been weak.

Because the U.S. Department of Education has never demanded results with Title I funding, it has created a sense among many states and program administrators that Title I is an undertaking without consequences. Although states are not required to fully implement the changes made to Title I during the 1994 reauthorization until 2001, it is unclear if this deadline will be met. The Department's own evaluation of Title I describes, "States are making significant progress in developing content standards, but progress is considerably slower with respect to developing performance standards according to the timeline set forth in the statute." ³¹

Washington has never fiscally sanctioned a state or school district for non- performance. Sanctions have been levied for fiscal noncompliance and civil rights violations but never for simply chronically failing to educate children with Title I dollars. Over 34 years this has created a sense that regulations around Title I have no real meaning. Without fiscal enforcement of the substantial changes made to the law in 1994, this trend, unfortunately, will continue. Clearly, state and local officials share some of the blame for the shortcomings, but in the words of the Citizens' Commission on Civil Rights, "The federal government's failure to take the actions needed to implement and enforce the new Title I has also retarded educational progress."³²

If simply spending money on impoverished students were the key to improving student achievement, Title I dollars would have generated more encouraging results. Equally important to resource allocation is accountability for results with those resources. Unfortunately, when it comes to Title I, this has been a forgotten part of the equation.

Safe and Drug-Free Schools

While Title I is the largest and most visible program in ESEA, other parts of the law are problematic as well. The Safe and Drug-Free Schools program offers an excellent example of the focus on symbolism at the expense of results in the current categorical approach. The $566 million program is a marriage of the prescriptive requirements associated with categorical programs and the lack of accountability often associated with block grants.

The rationale behind Safe and Drug-Free Schools makes perfect sense. Drugs and violence clearly impact learning, and hence, school districts have a compelling interest in ameliorating both of these problems. Safe and Drug- Free Schools is the classic evolution of a categorical program: Identify a problem (preferably a politically attractive one with a constituency) and create a program to address it.

With the exception of money set aside for state departments of education and prevention activities led by police officers (in practice usually the popular but ineffective Drug Abuse Resistance Education or DARE program), school districts are allowed latitude in spending their Safe and Drug-Free funds. As with Title I, targeting is a problem. Because of a lack of concentration, most school districts don't receive a meaningful amount of Safe and Drug-Free money. According to Secretary of Education Richard Riley, "Three-fifths of school districts currently receive grants of less than $10,000, with the average grant providing only about $5 per student."³³

No comprehensive data on the effectiveness of Safe and Drug-Free Schools funds exists and meaningful data would be difficult to gather. Ample anecdotal evidence suggests that funds are often used ineffectively and that the program lacks a clear focus.³⁴ DARE America, the advocacy group lobbying for the DARE program, purports to have data proving the effectiveness of that particular approach. In reality, these are studies of student and teacher perceptions about the program and student perceptions about drug and alcohol abuse.³⁵ Actual empirical data about the DARE program show that it produces results that are "marginal at best."³⁶ In practice, this is probably because DARE is most often offered as an isolated activity to kids during one year of school rather than as part of a comprehensive focus on drug prevention. However, political popularity and a vocal constituency has protected DARE from being forced to sink or swim on its own merits.

This doesn't mean that the DARE program can't work, but under the current system it is not forced to work. Because funding is set aside for DARE in the Safe and Drug-Free schools program beyond the commitment of local police officers to discourage drug use among kids, there is little incentive for the program to perform. DARE, and Safe and Drug-Free Schools as a whole, are symptomatic of problems inherent in Washington's top-down approach to educational policy. Various constituencies, each protecting and advocating their slice of the pie, end up taking the flexibility, accountability, or often both out of programs. The General Accounting Office highlighted problems inherent in balancing flexibility with accountability in a program like Safe and Drug-Free Schools, stating that while local innovation is one of the goals of the program, "the lack of uniform information on program activities and effectiveness" hinders federal oversight.³⁷

Federal process-based accountability is an impossible role for Washington to play. There are more than 14,000 school districts operating in the country right now. How can the federal government possibly monitor them effectively for process compliance?³⁸ However, granting flexibility in the absence of performance measures does nothing to discourage ineffective practices.

Limited-English-Proficient Students

The $380 million bilingual education program is another example of how entrenched interests can use the inflexibility of the current system to protect categorical programs, often at the expense of children. It also typifies symbolism trumping substance in ESEA. As with Title I and Safe and Drug-Free Schools, bilingual funding is also spread too thin to make a real difference. In addition, the program has no concrete performance measures and often supports activities that research indicates are ineffective.

Educating limited-English-proficient (LEP) students is an urgent issue for many school districts, but the need is not being met. There are 3.2 million LEP students in the United States and more than 75 percent of them attend high-poverty schools.³⁹ Each year, 640,000 LEP students are not served by any sort of program targeted to their unique needs.⁴⁰ Most telling, the dropout rate for Hispanic students (the largest cohort of LEP students) is about 30 percent; 44 percent for Hispanic students born outside of the United States.⁴¹⁴² A Department of Education report on dropout rates stated that language difficulty "may be a barrier to participation in U.S. schools,"43 although it is not the sole cause of the Hispanic dropout problem.⁴³ Further, and fairly obviously, reading ability is a key predicator of graduation and academic success.⁴⁴

Bilingual education and transitional bilingual education are two different concepts. Bilingual education seeks to teach in one language while developing proficiency in a second. Transitional bilingual education simply seeks to teach English as quickly as possible so that a student can transition into mainstream classes.

The federal response to the pressing need to educate LEP kids is a competitive grant program giving priority to bilingual education programs that "provide for the development of bilingual proficiency both in English and another language for all participating students."⁴⁵ In practice, this generally means bilingual education for Spanish-speaking students only because qualified teachers in other languages are rare. More importantly, although the research on bilingual education is mixed and often methodologically suspect, there is no evidence that bilingual education is preferable to other methods of teaching LEP youngsters English. In fact, the National Research Council's Committee on the Prevention of Reading Difficulty in Young Children found the opposite. The Committee reported that that while most bilingual evaluations are too small or flawed to be useful, "the most careful met-analysis of studies comparing bilingual to English-only programs for language-minority children carried out by Willig (1985) shows better literacy outcomes in English for children who received transitional bilingual education."⁴⁶

In 1998, two types of federal bilingual grants were awarded, Enhancement Grants and Comprehensive School Grants (there are not competitions for every type of grant each year). Applications for Enhancement Grants were filed by 255 school districts and 36 grants were awarded. Applications for Comprehensive School Grants were filed by 401 school districts and 63 were awarded. Only 15 percent of the school districts that applied--that believed they needed federal assistance to educate LEP students--received funding. The average Enhancement Grant in 1998 was $130,300 while the average Comprehensive School Grant was $250,000.⁴⁷ Even a $250,000 grant can be insufficient for a school district struggling to educate a diverse population of students.

Again, the federal focus on bilingual education as a strategy to educate LEP students is surprising in the first place. It seems the only people supporting actual bilingual programs are academics and practitioners with a vested interest in their continuation. A portion of the federal bilingual funding goes to these researchers who, not surprisingly, have a proclivity for producing pro-bilingual research. As James Traub reported in a recent New York Times Magazine article, an academic and pedagogical rationale supporting bilingual education actually came about after its inception.⁴⁸ In the words of bilingual scholar Ursula Casanova, "The program was not the result of academic theory but rather "the result of political strategies designed to funnel federal poverty funds to the Southwest."⁴⁹ Boston University professor and bilingual researcher Christine Rossell and Keith Baker, who has directed bilingual studies for the U.S. Department of Education, conducted an exhaustive review of evaluations of 300 bilingual education programs and failed to find any studies showing bilingual education to be superior to other methods of teaching English to LEP students.⁵⁰ In fact, of the 300 evaluations they reviewed, Rossell and Baker only found 72 that were "methodologically sound."⁵¹ Moreover, a recent Public Agenda Foundation report found that 66 percent of Hispanic parents and 75 percent of foreign-born parents reject the idea of bilingual education, preferring English immersion.⁵² As a practical matter, bilingual education just isn't an option in many school districts. Some school districts now serve students speaking more than 100 native languages.⁵³

Voters in California recently gave their verdict on bilingual education by passing Proposition 227. That referendum shifted the focus from bilingual education to teaching children English as quickly as possible. Although, it is too soon to gauge the actual effect of 227 on school districts, changes are clearly afoot.⁵⁴ A similar initiative is on the ballot in Arizona. Meanwhile, states receiving little or no bilingual funding are coping with influxes of LEP students, and America's school-aged population continues to get more diverse.

As a result of demographic and statutory changes, school districts and states nationwide are dealing with a rapidly changing and in many cases, unaddressed situation when it comes to LEP students. However, they are supported by a static and symbolic, rather than substantive, federal role.

Teacher Quality, Class Size, and Student Achievement

Reducing class size is obviously not a bad idea. Quite the contrary, substantial research indicates it can be an effective strategy to raise student achievement. As the Progressive Policy Institute has pointed out, all things being equal, teachers are probably more effective with fewer students.⁵⁵ However, achieving smaller class sizes is often problematic. For example, as a result of a teacher shortage exacerbated by a mandate to reduce class sizes, 21,000 of California's 250,000 teachers are working with emergency permits in the states most troubled schools.⁵⁶

Now a part of Title VI of ESEA, President Clinton's $1.2 billion class-size reduction initiative, passed in 1998, illustrates Washington's obsession with means at the expense of results and also the triumph of symbolism over sound policy. The goal of raising student achievement is reasonable and essential; however, mandating localities do it by reducing class sizes precludes local decision-making and unnecessarily involves Washington in local affairs.

During the debate on the Clinton class-size proposal, it was correctly pointed out that research indicates that teacher quality is a more important variable in student achievement than class size. If fact, this crucial finding was even buried in the U.S. Department of Education's own literature on the issue.⁵⁷ The Committee on the Prevention of Reading Difficulty in Young Children stated, "[Although] the quantity and quality of teacher-student interactions are necessarily limited by large class size, best instructional practices are not guaranteed by small class size."⁵⁸ In fact, one study of 1000 school districts found that every dollar spent on more highly qualified teachers "netted greater improvements in student achievement than did any other use of school resources."⁵⁹ Yet despite this, the class- size initiative allows only 15 percent of the $1.2 billion appropriation to be spent on professional development. Instead of allowing states and localities flexibility to address their own particular circumstances, Washington created a one-size-fits all approach. Considering the crucial importance of teacher quality, the current shortage of qualified teachers, and the fact that class-size is not a universal problem throughout the country, shouldn't states and localities have the option of using more than 15 percent of this funding on professional development?

Smaller Programs

The smaller programs within ESEA are equally as prescriptive, ineffective, or irrelevant as the larger ones. They are just less expensive. Particularly in Title X--the Programs of National Significance portion of the law--there are numerous programs for such activities as reading, writing, civics, arts, gifted and talented students, and various demonstration projects. Individually these programs are small and seemingly innocuous; collectively they add up to more than $200 million in annual spending.

Because of political popularity and constituency politics, Congress refuses to eliminate or redirect funding from even programs that the Department of Education says ought to go. For example, each year the Department recommends eliminating funding for the Ellender Fellowships, a small program tucked into Title X of ESEA. The Ellender funding, $1.5 million last year, goes to the Alexandria, Virginia-based Close-Up Foundation. Close-Up is an excellent program that brings students from all 50 states and many U.S. territories to Washington for a week during the school year to learn about American government.

The Ellender Fellowships were established to provide scholarships for low-income students to attend Close-Up. However, a 1992 evaluation of the program found that "despite a pattern of increasing federal funding for the program and significant increases in private-sector support for the Close-Up Foundation, the number of fellowships had steadily declined."⁶⁰ Funding was clearly going to administration rather than scholarships. Close-Up and the Department of Education developed a plan to wean Close-Up from it's dependence on federal funds and as a result the Department consistently recommends against funding the Ellender program.⁶¹ Nonetheless, each year Close-Up comes through the congressional appropriations process unscathed. It is but one example of a larger problem.

Fiscal concerns about the use of the Ellender funds aside, it is also an important philosophical example. Close-Up itself is a worthy program with broad bipartisan support, valuable to many students. However, does every worthy activity deserve a federal program? As a practical matter, who is in a better position to make decisions about worthiness: Washington, or states and localities?

The Categorical Problem

In his book, Demosclerosis, Jonathan Rauch likens the current practice of layering federal programs one on top of the next without eliminating or modifying old ones to building houses, each atop its predecessor. The result might work in the short run but would ultimately become "a teetering dysfunctional mess."⁶² ESEA typifies this phenomenon. Its crucial purposes are lost in a maze of programs stifling ingenuity, flexibility, and innovation, and as a result, under-serving the children they are intended to help.

This year, in an effort to address this problem, Congress is already considering legislation to introduce more flexibility into federal education programs. This legislation, commonly referred to as Ed-Flex, would allow school districts to apply for waivers from certain state and federal regulations surrounding federal programs.⁶³ In theory, this flexibility would come in exchange for greater accountability for results. Ed-Flex is a step in the right direction, flexibility in exchange for accountability. However, it has two drawbacks. First, it vests additional power in the hands of bureaucrats rather than practitioners by establishing yet another process around federal programs, albeit a waiver process. Second, it doesn't address the core problems with categorical programs.

The fact is, categorical programs and specific grant programs, large or small, inevitably spawn constituencies and interest groups who then assume a change-averse posture around their programs. Commonsense change becomes difficult and large-scale change nearly impossible. This phenomenon isn't unique to ESEA. A look through the federal tax code or agriculture subsidies reveals parallel trends. It is also a practice that is not unique to either political party. Creating programs with nebulous purposes and no accountability has long been a bipartisan activity. A side effect of this proliferation of programs has been the accompanying thin dispersal of funds, as is the case with ESEA.

Because educational decisions are generally made at the state or local level, a federal role built around many discrete categorical purposes inherently precludes state and local decision-making. We can't expect schools and school districts to be flexible and innovative while supporting them through an outdated, static funding system.

ESEA in the New Economy: Toward a Results-Based Partnership

In the New Economy, the federal government should play the role of investor and catalyst rather than "command and control" manager. National benchmarks should be set, and Washington should empower states and localities to progress toward them. Most importantly, Washington should not use its resources to drive and support ineffective practices and should not subsidize failure.

Ideally, state and school district performance should be measured against national benchmarks. Presidents Bush and Clinton both tried to take commonsense steps toward creating a national framework of standards and assessments. In his 1997 State of the Union address, President Clinton proposed voluntary national tests in 4th grade reading and in 8th grade mathematics. The President hoped that the tests would drive national--not federal--standards embodying what students need to know in the New Economy.⁶⁴ Unfortunately, the Clinton proposal for national testing was killed on Capitol Hill in 1997 and 1998. National standards and a national assessment will ultimately create an environment of less testing for students and more flexibility for states and localities. In addition, standards and assessments create a focus on what will be taught and what should be learned.⁶⁵ This creates clarity for students and teachers and is essential for raising student achievement. PPI continues to support the President's proposal. However, in the absence of these benchmarks and a way to assess progress against them, states and school districts should be required to demonstrate progress toward established state standards. This is the crux of performance-based support: demonstrative progress toward established goals.

Further, without national standards and assessments, some national comparative measure--for example the National Assessment of Educational Progress (NAEP)--should continue to be employed to allow interstate comparisons and help the public gauge the comparability of standards. Independent groups monitoring the quality of standards and assessments in various states will also play an essential role as providers of public information and arbitrators of quality.

The federal role in education is limited but not trivial. While federal funds only make up about 7 percent of education spending in this country, to a certain degree they are more concentrated in certain areas, increasing the ability of federal dollars to leverage reform. This is why federal aid constitutes 15.5 percent of the school budget in Birmingham, Alabama, and only 3.3 percent in wealthy Fairfax County, Virginia.⁶⁶ Generally, areas receiving higher amounts of federal funds are also areas where the schools are not delivering a high quality education to all students. Federal funds for elementary and secondary education are targeted more toward impoverished populations than state funds and play a key role in addressing fiscal inequities caused by the reliance on property taxes to fund education.⁶⁷ The General Accounting Office reports that for every dollar provided to each student nationwide, federal funds provided an average of $4.73 per poor student while state funds only provided $0.62.⁶⁸ A shift to a block grant simply allocating funds on a per-pupil basis would undermine this role.

In the future, to focus federal assistance on resources and results, federal funding should be sent to states and local school districts with minimal regulations and maximum flexibility. This should be done in tandem with an increased results-based focus. Rather than a programmatic-based approach to each problem, states and localities should be empowered to solve problems and address challenges. Federal decision-making on specific funding use inherently stifles state and local innovation and ingenuity. Federal funding should be concentrated around a small number of attainable purposes rather than spread across myriad programs with varying goals.

A shift in the federal role toward performance-based assistance will also reduce paperwork and regulatory requirements at the state level. While obviously skewed toward larger states, it does take an average of 50 full-time employees per state to administer ESEA programs.⁶⁹ Paul Hill has referred to this phenomenon as the federal "colonization" of state education agencies.⁷⁰ With consolidated, performance- based funding, states will no longer be required to administer a plethora of federal programs. Rather, they will only be required to meet basic criteria to be eligible for federal support; and continuing support will be contingent on meeting state, or ideally, national standards. Performance-based funding eases the burden on states and localities for paperwork but dramatically increases the consequences for results. Accountability should be based on results, rather than simply meeting reporting requirements.

In this sense, performance-based funding isn't deregulation as many will argue, rather it is a shift in regulation. The desired performance outcomes become the regulation, as opposed to inputs and process.⁷¹

How to Get There from Here

As much as possible, federal money should be sent to states and school districts by formula, taking into account poverty and special populations such as LEP students. Once there, these funds should supplement and not supplant state and local funding efforts. Federal dollars should not be looked upon as an alleviation of local tax effort. Targeted formulas ensure that federal dollars are going where they are needed without unnecessarily entangling Washington in the affairs of local school districts. Competitive grants, those that school districts apply and compete for, are necessary under some circumstances (for example, stimulating and supporting innovative practices), but are inherently unfair because not all school districts are able to effectively compete for these dollars. With competitive grants, often the districts needing them the most are least likely to get them. Small rural school districts are at a particular disadvantage here.

While there is variance on a state-by-state basis, localities contribute an average of 43.2 percent to public school funding with the states contributing 47.5 percent and the federal government and private sources adding the remainder.⁷² At the extreme, New Hampshire schools are almost entirely locally funded while Washington State and New Mexico rely heavily on state funding. Overall, localities rely on local property taxes, putting wealthy districts at an advantage over poor districts. Further, poorer school districts tend to have higher concentrations of students with special needs and tend to be the most in distress.

It is here that the federal government can play a vital role by providing funds to impoverished school districts to help them meet the unique challenges they face. For example, principals in high poverty schools, particularly urban ones, report more difficulty hiring teachers.⁷³ Poverty and learning problems are clearly linked, as research shows. Moreover, when a significant percentage of students at a school are impacted by poverty, the achievement of all students is impacted.⁷⁴ Students in impoverished areas are most likely to not receive the education necessary in the New Economy; increased accountability for results is most sorely needed. Consistently, when scores on national and international tests are disaggregated, it is impoverished students who are most likely to be failing in school. Or, more accurately, impoverished students are the most likely to be in failing school systems. The realities of poverty must be taken into account but are not an excuse for failing schools.

It is in these school districts where the true crisis in public education lies and here that federal dollars can most effectively leverage change. Federal funds are concentrated on these districts now, but not to the degree that they could or should be. The Washington Post recently referred to this diffusion of federal funds writing that "[education] reauthorization fights have an earthier side as well. They are partly about money--the old-fashioned issue of slicing the pie."⁷⁵

Conservatives will continue to argue that block grants and vouchers are educational panaceas. Since the GOP controls Congress, block grants are likely to dominate the Republican approach--and there are three primary reasons why this approach to ESEA is ill-conceived. First, sending funding to states or school districts solely on a per-pupil basis completely ignores the reality of school finance in the United States. Schools are heavily dependent on property taxes for revenue. Hence, wealthier districts are at a funding advantage relative to poor districts. Second, simply transferring regulatory control from one bureaucracy in Washington to 50 in state capitals around the country doesn't address the core problems with the current regulatory burden on schools. Third, the federal role in education has more defined purposes than simply revenue sharing. Block granting education programs ignores these purposes, chiefly performance goals.

At the same time, the liberal Democratic solution of simply creating new programs without reforming or eliminating ineffective ones is equally ill-advised. By defending outmoded, ineffective, and unsuccessful practices, liberal Democrats inadvertently swell the ranks and strengthen the hand of those who believe public education is a wasteful and ineffective enterprise. The incredible response to a privately funded voucher program sponsored by Ted Forstmann and John Walton provides clear evidence that the voucher movement isn't arising from a vacuum. Many parents, particularly in inner cities, have lost faith in the status quo and for good reason. Too many schools don't perform. And throwing good money after bad won't alter the political dynamic or, more importantly, improve the schools.

The Third Way:Performance-Based Grants

There are too many federal education programs creating a confusing and top-heavy bureaucracy, but the answer isn't simply carte blanche consolidation. In the words of PPI analysts Ed Kilgore and Kathleen Sylvester, "[Simply] turning federal programs into block grants makes them easier to administer, but does not accomplish any clarification of federal and state rules, or of the national and local concerns that justify them."⁷⁶ In addition, Republican block grant proposals decrease rather than increase accountability. Performance-based funding creates greater flexibility while requiring increased accountability, by giving "flexibility in exchange for achieving defined results that embody the national purpose justifying the use of federal funds."⁷⁷

Federal performance-based ESEA funds should become more focused on underprivileged children, limited English proficient children, professional development, and innovative practices. These dollars should be contingent upon demonstrated results, and states and school districts not meeting targets should be sanctioned fiscally. Likewise, states exceeding goals and states with particularly rigorous goals should be rewarded.

PPI recommends creating five performance-based grants for compensatory education, professional development, limited-English proficient students, innovative practices, and state administration and oversight. Specifically, we recommend:

Critics will complain that school districts will squander their funds on ineffective practices without stringent federal control of means. Certainly this will occur in some places; however, Washington is in a better position to demand results for its investment than to regulate means. This complaint also ignores the reality that substantial federal and state process-based regulatory accountability has failed to curtail ineffective practices. If the past 35 years of ESEA prove anything, it is that a system comprising 50 states and more than 14,000 diverse school districts doesn't lend itself to process-based accountability.

Critics of performance-based grants will also attack them as masking cuts in education spending. They will point out that, 38 education programs were consolidated in 1981 into a block grant (now the current Title VI) and that funding for that program has dropped by more than 60 percent since then.⁸¹ The unfocused nature of that particular block grant was more the cause than any inexorable trend of consolidation equaling lower funding. As opposed to performance-based grants, the current Title VI program fails to articulate either a national interest or performance indicators.

Education, especially the education of poor children, is an expensive undertaking. Even fiscal conservatives acknowledge that additional spending is needed, and public opinion is strongly in favor of additional investment in education.⁸² However, simply spending a lot of money doesn't guarantee that impoverished students are receiving a quality education. At a minimum, the more than $13 billion currently spent on ESEA--consolidated around essential purposes and targeted where it is needed--would for the first time put substantial federal fiscal muscle behind important ESEA purposes rather than spreading funding around too thinly to make a difference.

Even with the introduction of consolidated applications for states and school districts, the process of applying for federal funds is still too arduous. In addition to the basic prerequisites described above, states should only have to submit to the Secretary of Education their goals on state assessments and should be held fiscally accountable for reaching those goals in order to receive federal funds. Until national standards and benchmarks are developed, Washington can't hold states and school districts accountable to them. By linking federal dollars to state standards and assessments and commonsense improvements, the federal government can ensure that taxpayer dollars are driving results-based education at the state and local level. Writing in the Los Angeles Times, Ronald Brownstein recently dubbed this sort of relationship "flywheel federalism".⁸³ It is an apt description and a new, more empowering, and constructive approach to education policy.

While some are far from ideal, 49 states currently have or are developing standards. Federal dollars should support states taking this commonsense step toward accountability.⁸⁴ State standards are not a substitute for national ones, but developing national standards is a process that will take time from both a policy and political standpoint. In the meantime, it is worth noting that 29 of the 41 countries participating in the Third International Mathematics and Science Study (TIMSS) set curriculum standards at the national level.⁸⁵

Conclusion

The federal government can play a tremendous role in public education; however too often federal involvement doesn't play to its strengths and instead maximizes its weakness. Effective learning happens as a result of adequate resources, high standards, and accountability for results. The federal government can play a leadership role in facilitating these conditions at the state and local level, but it cannot and should not do the job for states and localities. Recasting the federal role to focus on providing resources and demanding results supports the national interest in a strong public school system and most effectively leverages federal strengths. Everyone recognizes that schools must improve, but the federal role must change, too, in order to more effectively support and empower states and localities to achieve excellence.

Endnotes

Endnotes are available on the Adobe Acrobat version of this paper.

Andy Rotherham is director of PPI's 21st Century Schools Project.