Feds: Indiana Needs To Fix Its 2015 Title I Allocations

In response to inquiries from several members of Indiana’s educational community, the feds have spoken – and they say Indiana calculated Title I funding incorrectly.

According to correspondence between federal and state officials, the U.S. Department of Education told Indiana officials that they will likely need to take “corrective action” on the allocations they made for the 2015-16 school year.

As we reported earlier in the week, several members of Indiana’s charter school community experienced significant losses in Title I funding for the current year, and they challenged the Indiana Department of Education about their practices of distributing such funds.

Some charter leaders were upset that they lost Title I funds while their neighboring traditional public schools saw an increase.

Additionally, many claimed their funding has shrunk below levels allowed by federal statute. Much of the confusion stemmed from a specific provision called “hold harmless,” which says a local education agency may not lose more than five, 10 or 15 percent of their Title I allocation from the previous year. How much a school retains depends on what their student population looks like, based on poverty numbers and other relevant statistics.

When local charters began asking questions, the IDOE told them that hold harmless does not apply to public charter schools because they are not considered a “local education agency.” The Indiana Charter School Board contacted the USED to see if this was true.

And according to the feds, it’s not – they say charter schools do count as LEAs, a unique kind that warrant special considerations the IDOE is not currently making.

In an email obtained by StateImpact, the Office of State Support at the U.S. Department of Education explained to Indiana officials that a state may not reduce any LEA’s allocation – including a charter school’s – below its hold harmless amount, unless there are insufficient funds to pay all LEAs their due amounts. The federally-established hold harmless amounts are based on poverty percentages as follows:

Credit: U.S. Department of Education

The IDOE had told the feds charter school enrollments generally fluctuate more than public school enrollments, so they reasoned it would be “educationally disruptive” to provide a shrinking charter 85, 90, or 95 percent of its prior year’s Title I allocation. They said that’s because it would likely be more than the charter could use, and would take away from other schools with more educationally at-risk children. 

The feds say this is “inconsistent with the statute and regulations,” because a state is not allowed to reduce any LEA below its hold harmless amount except in limited circumstances – none of which include a declining enrollment.

Correspondence also provided some clarity as to how the IDOE calculated Title I allocations for 2015:

• First, the department calculated amounts for each “regular” LEA (traditional public school), taking into account applicable hold harmless rules.
• The department then determined amounts for charters based on their enrollment numbers of – read this slowly – children residing inside the boundaries of the traditional public school district in which the charter they attend is located.
• Based on those calculations, the department then adjusted the amount originally allocated to the nearby traditional public school district in step one. Essentially, this shrunk a public school’s poverty count, which meant the population of kids in poverty shrunk as a percentage of that school’s total populations – and the corresponding hold harmless amount qualified them for a smaller reduction in their Title I allocations.

The feds deem this process incorrect.

“The statute and regulations make no distinction between regular LEAs and charter school LEAs,” writes Monique Chism, director of the USED’s Office of State Support. “[The IDOE] circumvented the protection provided by the hold-harmless provisions…and its regulations for charter school LEAs.”

The feds also determined that by this process, about 47 percent of charter schools received Title I allocations that declined by more than 15 percent from the previous year. In contrast, the same thing happened to less than one percent of traditional public schools.

Based on these points, the feds told the IDOE they will likely need to fix all Title I allocations made for this school year.

The email from federal officials to the IDOE is dated at 8:45 a.m. Thursday morning. The IDOE released a statement to the public stating that they were still waiting to hear back from the feds on the issue which StateImpact received at 1:02 p.m. Friday afternoon.