Proposed Supplement, Not Supplant Regulations Released by ED

On Wednesday, the U.S. Department of Education (ED) published a draft Notice of Proposed Rulemaking outlining its suggested requirements surrounding the “supplement, not supplant” requirement of the Every Student Succeeds Act (ESSA).  These regulations were originally subject to negotiated rulemaking, but because negotiators did not reach consensus on what should be required of States and districts, ED was permitted to draft its own regulations.  Though the proposed regulations look very similar to the draft issued during the negotiated rulemaking process, they add a number of additional flexibilities that mean a local educational agency (LEA) has the ability to utilize different calculations and methodologies to determine whether it is in compliance.


First, the proposed regulations reiterate the language of the statute – that Title I, Part A funds may only be used to supplement, and not to take the place of, State and local dollars, and that an LEA may not be required to identify an individual cost or service as supplemental, or be required to provide services through a specific instructional method or setting.


Within this context, ED lays out a number of means for demonstrating compliance with the supplement, not supplement requirement.  Each year, an LEA must publish its methodology in a way that parents and the public can understand, and which demonstrates that each Title I school receives at least as much money as it would if it were not a Title I school.  An LEA may demonstrate that in one of three ways, and may choose to do so on either a districtwide or grade-span basis.


First, it can show that it distributes State and local funds equitably based on student characteristics “associated with educational disadvantage.”  This means that students living in poverty, English learners, students with disabilities, and others generate additional funds for the schools – essentially a weighted student funding formula (the regulations also require that a school “receives for its use” all of the funds generated under this formula, presumably to ensure that these funds are not held back at the State or LEA level for centralized servicers or are otherwise pre-allocated).


Second, an LEA can demonstrate compliance based on allocation of personnel and non-personnel resources.  This means showing that an LEA distributes State and local funds based on a formula that ensures a Title I school receives an amount of “actual State and local funds” at least equivalent to the sum of: (a) the average districtwide salary for each category of employee multiplied by the number of each employee assigned to the school and (b) the average districtwide per-pupil expenditure for non-personnel resources, multiplied by the number of students in the school.  This methodology requires that a Title I school receive average or above-average funding for both personnel and non-personnel resources (the regulatory language also assumes that an LEA has a formalized personnel distribution formula, which some smaller LEAs may not).


Next, an LEA may choose its own method of allocating funds which complies with the supplement, not supplant standard, provided that the methodology is applied consistently districtwide, and that it meets a “funds-based compliance test” established by the State.  The State test must be “at least as rigorous” as the two options laid out by ED, meaning that it results in “substantially similar” amounts of funding for Title I schools as those options, and – notably – must be approved through a federal peer review process.  The regulations note that a State is not required to establish such a test – if it does not, the LEA would have only two options for demonstrating compliance.


Finally, the regulations also establish a fourth option, which states that an LEA may distribute State and local funds using “any methodology that results in the LEA spending an amount of State and local funds per pupil in each Title I school that is equal to or greater than the amount of State and local funds spent per pupil in non-Title I schools.”  This provision seems to act as a safe harbor for LEAs so that if any of the other three methodologies prove overly complicated or rigorous, or would result in the LEA not being compliant, the LEA could still potentially meet the supplement, not supplant requirement.


Within these tests, ED provides some additional flexibility.  An LEA may be considered in compliance if the amount of State and local funds in each Title I school is no more than 5% lower than the amount in non-Title I schools – ED terms this a “de minimis annual variation.”  An LEA may also be exempt if it can demonstrate to the State that it has one or more non-Title I schools which receives disproportionate additional funding because of a large population of students with disabilities, English learners, or students from low-income families.  The regulations maintain language from earlier ED guidance, which states that an LEA may exclude from the calculation of compliance supplemental State or local funds expended for programs that “meet the intent and purposes of Title I, Part A.”


Small schools and LEAs are also provided with flexibility.  Schools with fewer than 100 students may be excluded from an LEA’s calculation – presumably an LEA would exclude them if it yielded a more favorable calculation – and an LEA which has a single school would not be require to comply.  An LEA would also be exempt from meeting the requirement in any grade span where it has a single school (e.g., if the district had only one high school), but would presumably be required to meet requirements in other grade spans, if applicable.  Funds spent on districtwide activities or staff may also be excluded from the calculation, provided that these activities proportionately benefit Title I schools.


The draft regulations offer new information on the timeline for implementation.  By December 10, 2017, an LEA must file with the State either its methodology for compliance to be implemented in the 2018-19 school year, or a plan for implementing a new compliance methodology in the 2019-20 school year.


ED has added four “rules of construction,” no doubt designed to mollify detractors in Congress who criticized earlier versions of the regulation for being overly restrictive, forcing reassignment of personnel, and requiring a specific methodology – something explicitly prohibited in legislation.  Instead, these rules of construction state that nothing in the regulation should be construed to “require the forced or involuntary transfer of school personnel,” to require equalized spending, to require a specific methodology, or to impact tenure or seniority laws, or collective bargaining or other agreements.


Still, Members of Congress expressed significant displeasure at these proposed regulations.  Representative John Kline (R-MN), Chairman of the House Committee that drafted the bill, called it a “multi-billion dollar regulatory tax” and a “punitive policy” which goes against Congress’ intent at offering States and districts more flexibility.  Senator Lamar Alexander (R-TN), Kline’s counterpart in the Senate, agreed, saying that the rule would “regulate the way States and districts spend nearly all State and local tax dollars on schools in order to receive federal Title I dollars” and would “upend State and local education funding and competitive bargaining agreements.”  Alexander also took aim at U.S. Secretary of Education John King, saying that King “must think he is the U.S. Congress as well as chairman of a national school board” and promising that if “anything resembling [this regulation] becomes final, I will do everything in my power to overturn it.”


ED defended the regulations, saying that 90% of LEAs would already meet these requirements, and in those that don’t, the regulations would result in an additional $2 billion in funds for high-poverty schools.  "No single measure will erase generations of resource inequities, and there is much more work to do across States and districts to address additional resource inequities, but this is a concrete step forward to help level the playing field and ensure compliance with the law," King said in a written statement surrounding the regulations’ release.


The proposed regulations are available here.  ED expects them to be published in the Federal Register on September 6th, with comments due 60 days after.  

About the Author

Julia Martin is an attorney with the Washington, DC law firm of Brustein & Manasevit, PLLC. Established in 1980, the Firm is nationally recognized for its federal education regulatory and legislative practice, providing legal advice regarding compliance with all major federal education programs as well as the federal grants management requirements, including the Education Department General Administrative Regulations (EDGAR). In addition, they work with agencies on federal spending flexibility, allowability, policies and procedures, audit defense and resolution and legislative updates. The Firm provides government relations services for the National Title I Association.