Title I Does NOT make “Rich” states “Richer!”

Posted on November 27, 2009



This is one fly I keep forgetting to swat, but one that has been repeatedly advanced by the Center for American Progress with excessively crude analyses. See: http://www.americanprogress.org/issues/2009/08/title1_map.html WOW! Just look at it. Those darn rich states like Connecticut, New York and New Jersey are running away with federal funding that should be targeted to poor states like Arkansas, Alabama and Mississippi.

Two glaring omissions in this analysis undermine entirely its conclusions. First, there is the issue of regional variation in true poverty, where – because poverty thresholds used in the CAP analysis are not regionally sensitive to income variation or costs – poverty rates tend to be overstated in lower income lower cost regions. The U.S. Census Bureau has been engaged in research on this topic and released a new report last summer:

Second, the value of the Title I dollar varies significantly by location, largely as a function of the competitive wages for staff and other resources that might be purchased with those Title I dollars.

So then, how does all of this academic, trivial griping affect the CAP analysis? First, here’s a slide of the 2006-07 title I allocations per poverty pupil – same measure as CAP – by state poverty rate.

What we see here is that the small state minimum allotment does generate distorted higher amounts of T1 funding per poor child in states like North Dakota, Wyoming and Vermont.  We would also be led to believe that states like Louisiana, Mississippi, Arkansas and Tennessee are significantly disadvantaged by the formula (receiving well less than $2,000 per poor child each) and New York, Connecticut and New Jersey (hidden in the mass of points) receive around $2,000 or more (NY much more) per poor child. An abomination I say! (or at least CAP would argue).

What happens when we correct for the mis-specification of poverty, using an average of the three alternatives from the August 2009 Census Bureau paper? Well, we get:

Hmmm… Now it would appear that states like Louisiana are actually getting much more funding than New York per corrected poverty child. And Tennessee more than New Jersey! Wait – are you telling me that Title I doesn’t make these rich states richer? Yep – and I’m not even done yet.

Let’s go the next step and correct these Title I allocations per actual poor child for the regional value (based on competitive wage variation) of the Title I allocation.  Now we get:

Now we see that state’s like New Jersey, New York and especially California are actually significantly more disadvantaged by the Title I formula than states like Mississippi or Louisiana.

Look, the Title I formula certainly doesn’t produce the most logical allocations, or most equitable ones. One might also argue that it doesn’t maximize incentives for states to clean up their own act on equity or effort.

That said, there exists little excuse for excessively crude analyses which lead to such absurdly bold – AND FLAT OUT WRONG – conclusions like the conclusion that Title I makes rich states richer. Yeah – this kind of claim sounds good – makes good political rhetoric – good stump speech stuff for the absurdities of government behavior. But in this case, the CAP critique is simply wrong!

Here is a previous presentation I made on this topic before the Census working paper was available:

Baker.AERA.Title1

Let me clarify that the same issue of mis-measurement of poverty plagues urban-rural comparisons within states. Rural poverty is, in relative terms, overstated compared to urban poverty. So too are rural costs (competitive wages) lower than urban costs. So, just as it is true that Title I does not necessarily overfund “rich” states, Title I also does not necessarily overfund urban districts at the expense of rural ones. Unfortunately, I do not yet have available a finer grained adjusted poverty measure which will allow me to easily display the urban/rural issue.

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