New Federal Funding Flexibility Means Sales Opportunities Now

Selling to Schools Tip: Educate Your Prospects About Changes to Federal Policies

Here’s an update to my article titled “How to Find Treasure in Education Niche Markets” you’ll find on SellingToSchools.com. When Education Secretary Duncan took office, he promised expanded sets of guidance for Title I and IDEA federal funds. These changes have provided greater flexibility for districts and new sales opportunities for firms that sell products and services to schools.

Education marketing staff and others who are selling to schools should know that district officials, including many Title I and special education directors/coordinators may be unaware of some of these changes. When approaching district decision makers and influencers (which increasingly include district superintendents), sales reps should educate them about the greater flexibility they have. The changes affecting the ways Title I (and to some extent, IDEA funds) can be used are highlighted in this article. I’ve included specific citations directly from the regulations and guidance.

Waivers May Provide Increased Title 1 Funding and Education Marketing Lift

Policy observers, including me, expected some of the Title 1 regulations enacted during the waning days of the Bush administration to be changed by Secretary Duncan. One such change, announced in a policy letter by Secretary Duncan to Chief State School Officers on April 1, 2009, allowed states and districts to apply for waivers. These waivers allow districts identified for improvement to conduct their own supplemental education service (SES) programs (under the 20 percent set aside for SES/public school choice), as long as the district is approved to provide SES by the state education agency (SEA).

Twenty-nine states’ waivers were approved. During the previous school year, the total amount set aside for SES under the 20 percent set aside was between $1.5 and $2 billion. According to the Education Industry Association, around $800 million of that was allocated to third-party SES providers. It is likely that the total set-aside amount this year will be between $2 and $2.5 billion, with a significant increase in the amount used by districts with approved waivers to operate their own SES programs. Many of the districts only recently submitted their applications to SEAs for waivers to provide their own SES and are now being considered by the SEA. SEAs are required to post on their websites the list of most recently approved SES providers, including districts. 

Extra Funds for Professional Development (PD) and Instructional Materials

Another set of flexibilities have been provided to districts identified for improvement. New guidance from the feds cited examples of how a district could rebut arguments that it used Title I funds in violation of the supplement not supplant rule. Interpretations detailed in the September 2 Title I Non-Regulatory Guidance (NRG) provide positive implications for firms providing certain types of professional development and those that have tools and instructional materials to be used in district tutoring programs, including SES. 

In one of the major new interpretations--which is the “only exception” to the rule that Title I funds cannot be used to provide professional development for non-Title I teachers--the guidance states, “An LEA in improvement status may provide professional development to instructional staff throughout the LEA with Title I, Part A ARRA funds it serves ‘off the top’ of its Title I, Part A allocation, provided the professional development activities are related to the reasons the LEA is in improvement status.” Hence, a district that includes the ARRA portion in the 10 percent, which districts in improvement must set aside for professional development, would almost double its availability of funds over the previous year and can purchase professional development products and services to provide training for both Title I teachers and all other teachers in the district in areas related to the reasons why the district was identified for improvement. Certain states, such as West Virginia, are already taking advantage of these new opportunities. 

Education Marketing Opportunities for Supplemental Curriculum Suppliers

The September 2 NRG also emphasizes an exception to the general supplement not supplant rule, which could result in district-wide opportunities for certain products. It states that if the service provided to non-Title I students meets the intent and purposes of Title I, Part A program, “the LEA may exclude those services from supplement not supplant considerations. For example, if an LEA offers after-school tutoring for students who scores below proficient on the state’s mathematics assessment, paying for Title I students with Title I funds and non-Title I students with supplemental local funds would not violate the supplement not supplant requirement. This is because the students in the non-Title I schools, by virtue of being non-proficient in mathematics, are failing to meet the State’s mathematics standards and thus would be eligible for Title I services if they attended a Title I school.” This formal clarification is welcomed by many superintendents who would like to expand the use of current materials and tutoring programs in Title I to non-Title I schools for similar students, which heretofore was “illegal.” A subsequent version of the Non-Regulatory Guidance strongly implies that the above two flexibilities can also apply to districts that have not been identified for improvement, which SEAs in their own guidance--either formal or informal--are likely to clarify.

Consolidation of Funds May Create K-12 Sales Opportunities for a Wider Range of Products and Services

In an attempt to bridge the guidance differences regarding use of federal funds to support Response to Intervention in both IDEA and Title I, the feds issued guidance in early September. They provided specific examples of allowable uses of IDEA 15 percent set-asides for Coordinated Early Intervening Services (CEIS) for non-special education students in Title I schoolwide programs. It clarified that districts that “consolidate” IDEA funds with other federal funds in Title I schoolwides have much greater flexibility in the use of these funds than other Title I schools, including less reporting on how the funds are used. Such allowable uses include:

• Purchasing curriculum-based screening and progress monitoring products, as well as formative assessment instruments and curriculum materials;
• Providing professional development to use such instruments; and
• Providing professional development to implement “evidence-based instructional and positive behavioral practices.”

The IDEA Non-Regulatory Guidance also cites numerous examples of allowable uses of funds for various technology applications. In terms of the amount of funds that could be freed up under Section 613 of IDEA, a district could use up to 50 percent of its increase in IDEA allocations, including IDEA ARRA funds to free up that amount of local resources currently being used in special education to purchase any type of product or activity allowable for purchase under ESEA. 

Be Sure to Discuss New Flexibilities with Your Prospects!

While we have reported on the uncertainty and the need for clarification in Federal guidance as to the conditions under which a district is allowed to take advantage of this local adjustment option, state policies appear to have trumped Federal “interpretations” and about three quarters of the states are now allowing districts to take advantage of this option, which could affect how upwards of $4 billion is used. Although many districts have used such freed-up funds for job retention, several reports strongly suggest that the use of these funds to retain jobs is significantly less than the use of Stabilization Funds and that many districts are using such freed-up funds to purchase products and services that do not easily fit under IDEA or even Title I allowable uses. As reps who are selling to schools approach district-level decision makers, they should refer to the citations in these reports to make them aware of the new flexibilities they have.