Sunshine Week: Records request illustrates lack of transparency of federal school funding

BY DAN BENSON | March 16, 2018

It would seem a simple question to ask of any public agency: How much money do you spend and on what?

But when the Badger Institute (formerly the Wisconsin Policy Research Institute) wanted to know about federal funding of school districts around the state, getting answers was more difficult than we imagined.

In summer 2017, the Badger Institute sent a request for information to superintendents in all 424 public school districts in Wisconsin asking for:

  • The number of federally paid full-time equivalent (FTE) workers.
  • The average salary for a federal FTE.
  • The amount of funds expended to match federal dollars.
  • The amount of funds spent as required by federal maintenance of effort (MOE) regulations.
  • How much was paid to an outside auditor to audit the school’s federal grant funds.

These questions were part of the Badger Institute’s Project for 21st Century Federalism, a multi-year effort to gauge the effect of federal grants on state and local spending and policy.

About $824 million flow through the state Department of Public Instruction annually to local school districts in the form of federal grants for programs such as Title I for disadvantaged students, IDEA for special education, school lunches, teacher training, busing and other programs. DPI skims another $54 million or so  to pay for the administration of federal school programs.

Nearly every one of the state’s school districts also employ staff and hire outside accountants and consultants to work under federal programs and ensure that federal regulations are followed.

But no data exists for that cumulative cost. Anecdotal evidence suggests it annually costs taxpayers tens of millions of dollars, if not more, that otherwise could be used to improve classroom outcomes.

The Badger Institute sought to add hard data to those anecdotes.

While many districts promptly provided answers to our queries, many refused to do so because state law does not require the custodians of the information to “create” a record, even if the data involves public spending and is readily available and provided to federal regulators.

“We would need to generate the information and that would not be in the spirit of the open records law,” one superintendent said, with no hint of irony.

Others said they would do so only if the Badger Institute agreed to pay for staff time used to compile the information, often threatening to charge more than $50 an hour, approximately the hourly wage of the schools’ business managers.

“The fact that school districts want $300 and up to find federal spending data is in itself a story,” said one former superintendent, who asked not to be identified. “Charging $350 for information on how tax dollars are spent makes it virtually impossible for school district parents and taxpayers to get information.”

One school business manager who did provide the information said employee records are coded in such a way as to indicate the source of funds that pay their salary and benefits, including federal grants. He was incredulous that a district could not provide salary information regarding school staff paid with federal dollars.

“That’s pretty basic,” he said.

Charging $50 an hour or more would seem to contravene the Wisconsin Attorney General’s open records compliance guide (page 63), which states: “Generally, the rate for an actual, necessary, and direct charge for staff time should be based on the pay rate of the lowest paid employee capable of performing the task.”

Some district officials directed the Badger Institute to forms the district had already completed as part of the federal Civil Rights Data Collection, which was completed in the spring of 2017 but not yet publicly available. Many other districts inexplicably refused to do so.

Some districts claimed the information simply did not exist and that not even staff or their own school board knew the details of how federal funding affected their districts.

“We don’t keep an inventory of (federal) grants,” a lawyer with one large northeast Wisconsin school district said. She explained that grants received by the district -- and their associated labor, matching or maintenance of effort costs -- are listed as line items in departmental budgets and are not provided in a consolidated list to school board members or anyone else. “Doing so would require a significant amount of time,” she said.

Maintenance of effort refers to the requirement that a school district maintain its level of spending on a program, such as special education, while receiving federal funds. The requirement is meant to ensure that federal dollars supplement but not supplant local and state funding. State and local officials often complain, however, that the rules restrict their ability to respond to changing budget priorities.

In the end, 259 of the 424 districts queried largely complied with the request. Of those who responded:

  • 3,826 FTEs worked under federal programs, earning $13.4 million, or an average of $52,000 annually.
  • $1.36 billion were spent in federally required matching and maintenance of effort costs.
  • Districts paid $662,565, or an average per district of $2,558, to an outside firm to audit its use of federal grant monies.

The difficulty in collecting the information points to a fundamental problem with the federal grants-in-aid system that transfers more than $700 billion to the states and accounts for nearly one-third of all states’ spending.

Critics of the system charge that it obscures spending, focuses on compliance rather than outcomes and diffuses responsibility. Among them is Chris Edwards, director of tax policy studies at the Cato Institute in Washington, D.C., and editor of www.downsizinggovernment.org.

“The (grant) system is a complicated mess, and it is getting worse all the time,” he said.

Dan Benson is editor of the Badger Institute's Project for 21st Century Federalism.

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