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Education Policy

Cutting Public School Relief Funds to Subsidize Private Schools – Issue Brief

An Analysis of How the Department of Education’s Equitable Services Rule Will Harm Texas Students and School Districts


By Morgan Craven, J.D., & Roy L. Johnson, M.A. • IDRA Issue Brief • July 16, 2020 • See PDF version


This analysis uses data from 185 Texas school districts to determine the impact of a new rule from the U.S. Department of Education. The rule requires many public school districts across the country to spend more of their critical COVID-19 relief funds on “equitable services” for private schools, regardless of the financial need of the private school students.

The Department of Education’s interpretation of the CARES Act could cost school districts in Texas more than $38 million. This money could have been used to fund hundreds of counselors, social workers and nurses and to purchase equipment like computers, face masks or hand sanitizer. It could have been used to support remote learning needs and other critical services for students and teachers.

The rule will harm all students in public schools, particularly students of color, students from families with limited incomes, English learners, students with disabilities, and others who most need CARES Act funds. These students and their families have been denied access to excellent and equitable educational opportunities for generations. They have been impacted by discriminatory policies and practices that keep their schools underfunded, make them more likely to be pushed into the school-to-prison pipeline, and erect barriers to college. The Department of Education’s rule funnels money away from the public schools that serve these students – even as they face additional challenges of educating and providing supports like meals and health services remotely – further entrenching the inequities exacerbated by the pandemic.

Based on its analysis, IDRA recommends the following.

  • Families, students, educators and all other advocates who care about the needs of students in public schools should submit a comment to the Department of Education urging it to rescind the interim final rule that funnels more money away from public schools and toward private schools. Comments can be submitted online here and must be submitted by July 31, 2020.
  • The Department of Education should rescind its interim final rule related to CARES Act Programs and Equitable Services to Students and Teachers in Non-Public Schools (Docket ID ED-2020-OESE-0091).
  • The U.S. Congress should reconsider the “equitable services” provision in the Every Student Succeeds Act and instead invest federal monies, and incentivize states to invest other funds, in public schools to ensure they are able to provide all students with an excellent and equitable education.
  • In subsequent COVID-19 stimulus bills, if the “equitable services” provision remains, the U.S. Congress should clarify that “equitable services” calculations should be made based on the proportion of private school students from families with limited incomes, not on total private school enrollment. This clarification would be consistent with the Department of Education’s own guidance on equitable services issued prior to the pandemic.
  • State education agencies and state legislatures should support local education agencies (LEAs), including traditional public school districts, and bolster ways to keep money in public schools instead of diverting funds from students and communities through vouchers, education savings accounts, and other schemes that provide public dollars to private entities.
  • LEAs should ensure robust and meaningful coordination with families – particularly families of color and families with limited incomes – to determine how to best respond to their needs during and after the pandemic.

Background: Federal Funding for Educating Students from Families with Limited Incomes1

The Elementary and Secondary Education Act of 1965 (ESEA) – reauthorized in 2015 by the Every Student Succeeds Act (ESSA) – allocates federal funding for LEAs that serve high concentrations of students from families with limited incomes. ESEA’s Title I, Part A (Title I) program provides supplemental funding to qualifying LEAs for supports, activities and services to ensure “fair, equitable, and high-quality education, and to close educational achievement gaps.”2 The funds are intended to address the needs of “educationally disadvantaged” students and families that schools and other institutions have historically failed to adequately serve.3 LEAs distribute these funds to schools within their districts, based on schools’ poverty levels. Within a single LEA, some schools may be designated “Title I schools” and receive program funds, and some may not.


What are “equitable services”?

Since the passage of ESEA, some private schools also have been eligible to receive services – like home tutoring, counseling programs and computer-assisted instruction – through Title I funds.4 The law’s “equitable services” provision requires LEAs that receive Title I funds to determine the proportion of students from families with low incomes who attend private schools within their Title I campus boundaries.5 The LEAs must then allocate a corresponding proportion – the “proportional share” – of their Title I funds for services for those private school students.6

According to long-standing guidance, reaffirmed by the Department of Education as recently as October 2019, LEAs must calculate the share of Title I funds for equitable services by determining “an accurate count of children from low-income families who attend public and private schools and reside in participating Title I public school attendance areas.”7 The Department of Education explains the various methods, all based on measures of poverty, that LEAs may use to determine equitable services funds and provides the chart below in its guidance.8


CARES Act Education Funding

In addition to distributing funds through ESEA, the Department of Education now distributes – and creates regulations for – the funds intended to provide emergency COVID-19 relief to LEAs through the Coronavirus Aid, Relief and Economic Security (CARES) Act.9 The Act provides education-related relief funds to state governors, institutions of higher education and state education agencies for distribution to LEAs, including school districts.10

The funds distributed to LEAs that serve elementary and secondary school students flow through the Governor’s Emergency Education Relief Fund (GEER Fund) and the Elementary and Secondary School Emergency Relief Fund (ESSER Fund).11

The GEER Fund allows governors to distribute funds to education agencies, colleges and universities, and other education-related entities that have been highly impacted by the coronavirus.12 GEER Fund monies may be used to support the needs of these entities and ensure continued functionality of schools.


In accordance with the CARES Act, the Department of Education has divided the approximately $13 billion in the ESSER Fund to state education agencies “based on the proportion that each state received under Title I, Part A” of ESEA in 2019.13 These agencies are then required to distribute at least 90% of these funds through subgrants to LEAs using formulae based on the 2019 Title I allocations.14

An LEA that did not receive Title I funds to serve students from families with limited incomes in 2019 is not eligible to receive a subgrant from the ESSER Fund.15

LEAs that receive ESSER Fund subgrants may use them for any of the allowable expenses defined in the CARES Act, including purchasing technology for distance learning and meeting the needs of students from families with low incomes, students with disabilities, English learners, migrant students, students of color, students experiencing homelessness and students in the foster care system.16 (See Appendix A for a list of allowable uses.) The remaining 10% of a state’s ESSER Funds can be used for state education agency administrative costs and to create an “ESSER Fund Reserve” for distribution to LEAs at the state’s discretion.17


New Rules for Equitable Services in the CARES Act

According to the CARES Act, LEAs that receive ESSER Fund grants or subgrants from state governors shall distribute funds to private schools in their district “in the same manner as provided under section 1117 of the ESEA of 1965.”18 The clear meaning of this provision – supported by the Department’s own 2019 equitable services guidance – is that CARES Act equitable services distributions should be provided to private schools based on the proportion of students from families with limited incomes they serve.

However, the Department of Education has interpreted this provision of the CARES Act differently. The Department issued an interim final rule on July 1, 2020, effective immediately, but open to public comment for 30 days.19 The rule, which carries the force of law, increases the funding that some LEAs would have to give to private schools, basing the calculation on the proportion of all students in the district who attend private schools, regardless of their families’ incomes.

Under the Department of Education’s interpretation of the law, LEAs – including those serving high concentrations of students from families with limited incomes and facing significant budget shortfalls – could have to give significant portions of their emergency funds to private schools to serve students with no demonstrated need.20

The rule creates two different scenarios for calculating equitable services funds.

The rule applies to COVID-19 relief monies that an LEA may receive from ESSER Fund subgrants, ESSER Fund reserve, and GEER Funds. For each of these funds, the LEA must apply the applicable scenario to calculate equitable services. Under the Department’s rule, if an LEA chooses to only use CARES Act funds for Title I schools, it may not redirect other funds from those Title I schools to non-Title I schools in the district. Doing so would violate ESSA’s “supplement, not supplant” rule, even though this rule does not otherwise apply to CARES Act funds.


What could this new calculation mean for LEAs in Texas?

Texas is set to receive $307,026,008 from GEER Fund21 and $1,285,886,064 from the ESSER Fund.22

IDRA’s analysis of 185 Texas public school districts showed that the group had 1,106 private schools within their district boundaries in fiscal year 2019.23 In those districts, approximately 95% of elementary and secondary school students attended public schools and approximately 5% attended private schools.

In the 2018-19 school year, those districts received $990,678.606 in ESSA Title I, Part A funding and were required to set aside less than 1% – approximately $6.7 million – for equitable services for participating private schools.24

The same 185 school districts are now supposed to receive $805,098,349 in emergency relief funds through ESSER Fund subgrants.25 Under the Department’s new rule, if those districts were to spend any amount of CARES Act money in non-Title I schools, including on cleaning and sanitization services or personal protective equipment, they would be required to calculate the proportional share for private schools based on total student enrollment. This would result in an equitable services reserve of more than 5% ($44,241,009) for the participating private schools and nonprofit homeschools within their district boundaries.

According to the new Department of Education rule, if the sampled Texas LEAs spend any amount of CARES Act funds to serve students, teachers or families in non-Title I schools, they could lose over $38 million of emergency relief funds to private schools and non-profit homeschools in their districts.

The Texas Education Agency (TEA) announced that it will not distribute ESSER Fund subgrants to LEAs to cover new coronavirus-related costs, though many were counting on the funds for previous and ongoing expenses related to supporting students and families during the pandemic.26 Instead, the ESSER Fund subgrants will be used to replace a portion of the state funds that eligible LEAs lost due to lower in-person daily attendance in schools.27

TEA initially issued guidance to school districts on June 25, 2020, instructing them to use the total population of private school students to calculate their equitable services reserves and that it would set aside 5% of each LEA’s ESSER Fund formula funds to cover equitable services requirements.28

TEA issued an update of that guidance on July 9, 2020, instructing school districts to follow the Department’s new rule and resubmit applications for funds that were already submitted.29 But, many LEAs in Texas may not have much of a choice under the Department’s new rule and TEA‘s ESSER fund spending requirement. Under the Department’s rule, Texas LEAs that use any ESSER Funds to replace the much-needed, lost attendance monies in their non-Title I schools will be required to provide equitable services based on the population of all students in private schools in their district.

Under the rule, LEAs will still have to allocate equitable services funding from any GEER Fund or ESSER Fund reserve they receive. Texas will use other coronavirus relief fund monies allocated through the CARES Act to reimburse up to 75% of COVID-related expenses incurred from the start of school closures in mid-March through May 20, 2020.30


How Does the Department of Education’s Rule Impact Texas Charter Schools?

Though they receive federal funds, including Title I and ESSER Funds, charter schools do not have to provide equitable services to private schools. According to TEA, because charter schools do not have geographic boundaries like traditional public school districts, they have no private schools to which they must provide services.31

Texas charter schools received more than $93 million in Title I, Part A funds in FY 2019.32 They will receive $78.03 million in ESSER Funds. They will not be required to set aside any of those funds for equitable services for private schools.


What could Texas LEAs purchase with $38 million?

LEAs could make meaningful investments with the equitable services funds that may be reserved under the Department of Education’s new rule. In Texas, LEAs will lose more than $38 million with the Department’s new rule and TEA’s guidance. There are a number of services, personnel and materials that could be purchased with this money. Schools will need masks, sanitizer, thermometers, shields, COVID-19 tests and additional custodial personnel to keep students and teachers safe and healthy. Schools will need digital devices, hotspots for connectivity, technology training and other instructional materials to support online learning. Schools will need substitute teachers while educators take time off to recover from the virus. Schools will need parent support specialists and family engagement programs to ensure schools stay connected with students and families. Schools will need social workers, counselors and nurses to address the needs of students and families. These mental and behavioral health professionals also will be critical to manage the trauma that many adults and students will feel as a result of the pandemic, distance learning and the racial equity issues that many schools are feeling increased pressures to address.


The Problems with the Department of Education’s Interpretation of the CARES Act

The Department of Education has described its new equitable services rule as an attempt to prevent “discrimination” against students who attend private schools.33 In reality, the rule could take resources away from the many public school students and families who have actually faced discrimination in their schools and other systems for generations.

IDRA and many other educational equity advocates have argued for the equitable distribution of federal, state, and local emergency relief funds, including the targeting of those funds in Title I schools.34 Students and families of color, those with limited incomes, English learners, those experiencing homelessness, and those with disabilities have long dealt with the systemic inequities in their schools that are being exacerbated by COVID-19. These communities are now being hit hardest by distance learning requirements, the economic impacts of the pandemic, and – for some – even the disease itself.

But the new rule penalizes LEAs that have spent, or plan to spend, any funds outside of Title I schools, even if those uses are permissible under the CARES Act and would provide district-wide benefits, including for those families with limited incomes but whose students do not attend Title I schools.

For example, one permissible use for ESSER funds is for LEAs to work with other local agencies to develop a coordinated response to the pandemic and the impact it is having on students and families in the district. A cross-sector coordinated response plan is certainly a good thing, particularly during a public health crisis. But LEAs will lose money to private schools if they choose this response as it would benefit all students across districts, regardless of Title I status.

Or, as in states like Texas, LEAs may actually have little control over how they use emergency funds. A state agency’s decisions could result in LEAs using funds for non-Title I schools and reserving more money for private schools in their district. This diversion of public funds to private entities, families and programs is consistent with other Department of Education actions and harmful to millions of students, families, teachers and schools across the country.35

Prior to the publishing of the rule, several states, including Indiana, Maine, Mississippi and Pennsylvania argued that the Department of Education’s interpretation of the equitable services provision is contrary to the text of the CARES Act and rejected the Department’s guidance.36

While the CARES Act is unique because it is responsive to a sudden and specific national crisis, it is similar to other federal education funding programs that are meant to address the long-term and national emergency of systemic inequities in our education system. The CARES Act was intended to provide support to the students who most need supplemental funding. The language of the CARES Act is clear that ESSER and other funds should be targeted at Title I schools in the same manner as ESEA funds. Any other reading is inconsistent with both the text and intent of the law.37


Appendix A

CARES Act Education Funds Allowable Uses

Elementary and Secondary Schools Emergency Relief Fund (90% to LEA subgrants)

1 Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act, the Individuals with Disabilities Education Act, the Adult Education and Family Literacy Act, the Carl D. Perkins Career and Technical Education Act of 2006, or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act

2 Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus.

3 Providing principals and others school leaders with the resources necessary to address the needs of their individual schools.

4 Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population.

5 Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies.

6 Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases.

7 Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency.

8 Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all federal, state, and local requirements.

9 Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment.

10 Providing mental health services and supports.

11 Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care.

12 Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency.

Governor’s Emergency Education Relief (GEER) Fund

1 Provide emergency support through grants to the LEAs that the state education agency deems to have been most significantly impacted by COVID-19 to support the ability of such LEAs to continue to provide educational services to public and non-public school students and to support the ongoing functionality of the LEA

2 Provide emergency support through grants to IHEs serving students within the state that the governor determines have been most significantly impacted by COVID-19 to support the ability of such institutions to continue to provide educational services and support the ongoing functionality of the institution

3 Provide support to any other IHE, LEA, or education-related entity within the state that the governor deems essential for carrying out emergency educational services to students for authorized activities described in section 18003(d)(1) of the CARES Act [Elementary and Secondary School Fund uses listed above] or the Higher Education Act of 1965, as amended (HEA), the provision of childcare and early childhood education, social and emotional support, and the protection of education-related jobs.


Appendix B

See PDF version for printing


Citations

[1] ESSA. (2020). S. 1177 – 114th Congress: Every Student Succeeds Act, sec. 1001; see also CRS (2017). “History of the ESEA Title I Formulas,” Congressional Research Service.

2 See ESSA. (2015). S. 1177 — 114th Congress: Every Student Succeeds Act.

3 See U.S. Dep’t. of Ed. (Oct. 7, 2019), Title I, Part A of the Elementary and Secondary Education Act of 1965, as Amended by the Every Student Succeeds Act: Providing Equitable Services to Eligible Private School Children, Teachers, and Families Updated, Non-Regulatory Guidance, page 34, U.S. Department of Education.

4 ESSA, supra note 3. Sec. 1117(a)(4)(a).

5 Id.; see U.S. Dep’t. of Ed., supra note 4, p. 15.

6 See U.S. Dep’t. of Ed. supra note 4, p. 7 (emphasis added).

8 Id at 14-15.

9 Id at 15, explaining “to calculate the proportional share for equitable services, the LEA would determine the overall number of children from low-income families who reside in participating Title I public school attendance areas and who attend public schools and private schools. Using the proportion of children from low-income families who attend private schools, the LEA would determine the amount of funds available for equitable services based on that proportional share of the LEA’s total Title I allocation.”

10 See CARES Act. (2020). H.R. 748 – 116th Congress, The Coronavirus Aid, Relief and Economic Security Act.

11 IDRA. (March 27, 2020). An Overview of the Coronavirus Aid, Relief and Economic Security (CARES) Act, Intercultural Development Research Association.

12 Id.

13 Id.

14 U.S. Dep‘t. of Ed. (2020). Elementary and Secondary School Emergency Relief Fund Methodology for Calculating Allocations, U.S. Department of Education.

15 See CARES Act, supra note 10; U.S. Dep’t. of Ed. (2020). Frequently Asked Questions about the Elementary and Secondary School Emergency Relief Fund (ESSER Fund), U.S. Department of Education.

16 Id. at 12, explaining “if an LEA did not receive an FY 2019 Title I, Part A subgrant for school year 2019-20, is it eligible to receive ESSER formula funds? No, the LEA is not eligible to receive a formula subgrant. The only exception is a new charter school LEA that did not exist in the 2019-20 school year or a charter school LEA whose significant expansion makes it eligible for Title I, Part A funds in the 2020-21 school year (see question 11 and the Technical Appendix). However, any LEA may receive ESSER funds from a SEA’s Reserve, including those LEAs that are not eligible for a formula subgrant under the ESSER Fund.”

17 See IDRA (March 27, 2020). IDRA Newsletter, supra note 11.

18 See U.S. Dep’t. Of Ed. (2020) ESSER FAQs, supra note 15.

19 CARES Act (2020), supra note 10, section 18005(a).

20 See U.S. Dep‘t of Ed. (2020). CARES Act Programs; Equitable Services to Students and Teachers in Non-Public Schools, Federal Register. Though interim final rules are effective as soon as they are posted in the federal register, they remain open for public comment for 30 days. The issuing agency may then decide to alter or rescind the rule.

21 Green, E.L. (May 15, 2020). DeVos Funnels Coronavirus Relief Funds to Favored Private and Religious Schools, New York Times.

22 U.S. Dep’t. of Ed. (2020). ESSER Fund State Allocation Table, U.S. Department of Education.

23 U.S. Dep’t. of Ed. (2020). ESSER Fund State Allocation Table, U.S. Department of Education.

24 Texas Private School Accreditation Commission (TEPSAC), private school data search available at http://www.tepsac.org/app/index.html#/search/schools.

25 See TEA. 2018-2019 ESSA Consolidated Final Amounts by LEA, Texas Education Agency; TEA, 2018-2019 ESSA LEA Private Nonprofit Equitable Services Reservations by LEA, Texas Education Agency.

26 TEA. (2020). Department of Grant Compliance and Administration CARES Act, Elementary and Secondary School Emergency Relief Fund (ESSERF) LEA Entitlement Amounts, Texas Education Agency.

27 TEA. (June 18, 2020). CARES Act Funding Support, Texas Education Agency.

28 Id. LEAs in Texas receive some state funding based on Average Daily Attendance (ADA) – an indicator of daily student attendance in the school. TEA has instructed LEAs to use the ESSER subgrant funds to make up for the ADA state funding they did receive because of COVID-19 school closures during the 2019-20 school year.

29 TEA. (July 9, 2020). Providing Equitable Services to Students and Teachers in Participating Private Non-Profit Schools Under the CARES Act, Guidance Updated July 9, 2020, Texas Education Agency.

30 Id.

32 TEA. (July 9, 2020). supra note 29; see also The CARES Act, supra note 10, Sec. 5001.

32 See TEA. (July 9, 2020). supra note 29 at Frequently Asked Question 32.

33 TEA data tables, supra note 25.

34 U.S. Dep’t of Ed. (June 25, 2020). Secretary DeVos Issues Rule to Ensure CARES Act Funding Serves All Students, U.S. Department of Education.

35 IDRA letter. (Apr. 20, 2020). Equitable Use of COVID-19 Emergency Relief Funds, Intercultural Development Research Association; TLEEC letter. (Apr. 23, 2020). The CARES Act and Emergency COVID-19 Resource Recommendations, Texas Legislative Education Equity Coalition.

36 See IDRA. (July 1, 2020). Supreme Court Ruling Widens the Door to Use Public Funds for Vouchers and Religious Schools, Intercultural Development Research Association.

37 See Ohm, R. (May 20, 2020). ”Maine Rejects Federal Guidance That Would Give Private Schools More Relief Funds,” The Portland Press Herald; Indiana Superintendent of Public Instruction Memo (May 12, 2020), Final Language for Equitable Share of CARES Act Funds; Pennsylvania Department of Education (May 21, 2020); May 21, 2020; Mississippi Department of Education, “Cares Act Equitable Services,” May 21, 2020. Guidance on Calculating and Administering Equitable Shares Reservations; Mississippi Department of Education (May 21, 2020). Cares Act Equitable Services.

38 Letter from Robert C. “Bobby” Scott, Chair, Committee on Education and Labor, U.S. House of Representatives, Rosa L. DeLauro, Chair, Committee on Appropriations, Subcommittee on Health and Human Services, Labor, and Education and Other Related Services, U.S. House of Representatives, and Patty Murray, Ranking Member, Committee on Health, Education, Labor, and Pensions, U.S. Senate, to The Honorable Betsy DeVos, Secretary of Education, May 20, 2020.

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