Are Your District Finances Ready For ESSA?

By Michael Goetz  
This blog was originally posted on the Allovue Blog.
When President Obama signed the Every Student Succeeds Act (ESSA) into law, he ushered in a new era for education policy.
If No Child Left Behind (NCLB) will be remembered as the era of testing, ESSA may be marked as the era of equity. While dollars aren’t the only factor in the equity equation, how districts allocate funds to and across schools will be under intensified scrutiny.
Districts will be tasked with proving they are equitably distributing dollars before additional federal dollars can supplement state and local funds. A district needs to prove the following under the new fiscal regulations with ESSA:

Personnel resources are distributed equitably across high-achieving and low-achieving schools.image of a scale and pie charts

  1. How It Works Today: Districts are required to report student-to-staff ratios and show equity in their distribution of staff. However, they do not have to report the actual cost of these employees. It is likely that school districts who have not done more than report those ratios also do not have actual expenditures connected to locations in their chart of accounts.
  2. How It Will Work Under ESSA: Salaries, benefits and other expenditures (e.g., materials and supplies) will need to be linked to “cost centers” or “locations” of schools in order to show the distribution of federal funds across schools. ESSA regulations help ensure that, independent of staff ratios, the total expenditures in a school meet ESSA’s standard of equity.

Federal dollars are being used to supplement, not supplant local and state funds.

  1. image of a scale and pie chartsHow It Works Today: The NCLB Act intends for federal dollars to supplement state and local funds to provide greater resources to schools with high populations of low-income students. But without strict accountability, some states and municipalities have used federal dollars to supplant funds that would have come from state and local sources (e.g., using Title funds to pay for ELL services provided for by state funds). Mandated transparency of school-level source-of-funding does not exist.
  2. How It Will Work Under ESSA: The policy directive continues to be “supplement not supplant.” Federal funds are meant to provide additional money to underachieving schools, not replacement funds. With ESSA, districts will need to prove they are supplementing state and local resources by explicitly showing their local, state, and federal per-pupil funding for each school in the district.

Planned programs are “evidence-based.”

  1. How It Works Today: While NCLB advocates for the implementation of “scientifically image of a scale and pie chartsbased” strategies for struggling students, it includes no clear definition of what constitutes “scientifically based research.”
  2. How It Will Work Under ESSA: ESSA is interested in the effectiveness of every dollar. The law includes provisions to implement programs with “strong,” “moderate,” or “promising” evidence, as determined by existing scholarly research. Further, ESSA allows applications to include program proposals that have research-based rationales, if not direct research evidence. This assumes that a program includes ongoing data collection to determine the strategy’s effectiveness and to ensure that costs and effectiveness are linked.

As it currently stands, because the final regulations are still pending, ESSA dramatically increases a district’s need to build transparency and equity into their school and district finance structures. While ESSA goes into effect in the 2017-18 school year, changes to systems are recommended in the 2016-17 school year to meet requirements for ESSA Title applications.
For more, see:

Dr. Michael Goetz Director of Research at is Allovue. Follow Allovue on Twitter @AllovueBalance.

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