Backgrounder: Is Federal Education Aid Worth It?

March 9, 2015

by Craig Ladwig

Could Indiana live without 12 percent of its education budget, the $1.2 billion coming from Washington each year? The answer is yes if you trust cost-benefit analysis.

An expert in that field, Dr. Maryann O. Keating, writing in the current issue of the quarterly Indiana Policy Review, raises an even more troubling question: Does that 12 percent have anything to do with education whatsoever?

“Certainly, the $1.2 billion yields some directed benefits,” Dr. Keating wrote as she began the project. “But economists stress opportunity costs and the value of foregone options. For example, state revenue necessary for implementation of federal programs can be a cost that translates into a specified decrease in classroom teachers.”

The data soon came rolling in: 1) Projections from both the Government Accounting Office and Accountability Works greatly underestimated funds required to implement federal goals; 2) a study suggests that federal aid in one state covered as little as 8 percent of the required increase in per-student educational expenditures; and 3) after passage of No Child Left Behind (NCLB), per-student educational expenditures reportedly increased by 7.8 percent.

Any accountant trying to assign an exact dollar cost to Indiana’s federal aid would have to throw up his hands in dismay, because it cannot be measured in mere percentages. It must be measured in magnitudes or even universes. Indeed, the word aid is suspect; it’s more like when the Mafia becomes your “partner.”

There is a circular pattern to the government intrusion. The National Council of State Legislatures concludes that, at best, federal funding may come close to covering compliance costs but not the costs required to bring children up to proficiency, which, of course, was the rationale for the aid in the first place.

Nonetheless, Title I, the funnel through which all of that aid must pass, a program set to expire a half century ago, goes on forever, its purpose twisted beyond recognition. Let Dr. Keating help us count the ways:

Mission Creep — “The explicit priority of Title 1 was not education in general but to provide equitable education to children in low-income schools. The expansion of Title I (through NCLB) represented the largest single federal involvement ever in education.”

Perversity — “Federal government subsidies such as Title I ostensibly designed to target disadvantaged students instead have locked them into low-quality education.” The perverse result has been that states play the system in a “race to the bottom,” testing so as to win more federal money.

Broken Promises — Despite the fact that NCLB specifically prohibited national testing or a federally controlled curriculum, a system of such standards (Common Core) is seen as the only way Washington can combat the gamesmanship that its rules encourage.

Bureaucratic Scatter — “Even when implementation of these unfunded federal mandates are perceived to yield positive local benefits, there is often a tangential relationship between the grants and benefits. For example, the lists of grants offered in return for implementation of NCLB are not necessarily targeted to improving education in general.”

Lost Accountability — “State officials, bound by federal regulations, are not held responsible for the costs and failures of the projects they administer. Although states are free to decline to participate in these programs, it is politically costly to forfeit lucrative grants when taxpayers see their federal taxes sent elsewhere.”

The Devil Loves an Impossible Task — “The most painful lesson learned is that NCLB’s goal of having 100 percent of all students show mastery on standardized tests by 2014 was unachievable, and that some harm may have been done in trying to achieve the unattainable.”

Education Cronyism — “Throughout the United States, over 1,800 companies have their names on approved provider lists for supplemental educational services, such as tutoring. Local school districts must set aside up to 20 percent of their total Title I federal grant money for the combination of either a transfer-choice option or supplemental educational services.” Dr. Keating, citing Geyer School in Fort Wayne, adds that “closing a school and transferring these students to schools with better scores does not address the problems of students failing to make adequate progress.”

Next, let’s apply the same analytical skills to how much Indiana’s Collective Bargaining Act costs our individual school districts.

Craig Ladwig is editor of the quarterly Indiana Policy Review.



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