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This article is based on a webinar presented May 18, 2016 by Jenny House of RedRock Reports and Steven Rowley of Acumen Partners. In it they shared their insight on the likely impact of the Every Student Succeeds Act (ESSA), specifically regarding changes to federal school funding and the ramifications for education companies.

Shifting Funding

The implications of ESSA are still evolving due to the profound changes in accountability at the federal, state and local levels. Central to ESSA are massive changes in how funds will be allocated to districts. The federal government will transfer accountability and funding back to the states, essential removing themselves from funding and accountability roles.

With this shift, companies must begin to look to every state as each will be designing its own unique accountability program. Once those are established, districts will work collaboratively with states to determine spending and accountability plans.

Despite these changes, there is something that remains the same: The federal government will continue to be in charge of allocating funds that have been approved by Congress. However, now it will be up to each state to provide a plan for how that money will be spent. The state plans will be evaluated through a peer-review process, and the federal government will appropriate the money based on the quality of each plan.

Evolving Implications

It’s important to know that nothing is set in stone, and that the outlook is constantly shifting as details of the transition from No Child Left Behind (NCLB) to ESSA emerge. It is safe to describe the new federal role as “light guidance” as it helps states develop their tools.

It’s also safe to expect that the process will take time. Once the specific regulations and processes are written, Congress must review and approve them in order to appropriate funding. States can’t create their plans until they receive guidance from the federal government. That deadline is October 2016, but states are being proactive. Many have begun their meetings to determine how the state departments of education can support their districts.

Since the full implementation deadline for ESSA is August 2017, funding for the 2016-2017 school year will remain the same as last year. It’s important for education companies to understand that there is a lot of confusion within the districts about ESSA’s impact. Schools don’t want to lose any money during the transition, but they are still unclear as to what the changes will be.

Changing Research and Efficacy Requirements

Another ESSA certainty is that a greater rigor in research evidence and efficacy of effectiveness across all Title funds will be required moving forward. Companies will need to meet a higher standard for showing proof of efficacy and demonstrating their products’ impacts on learning. This standard will be evaluated by each state, meaning there could be as many as 50 frameworks. However, the law stipulates that the criteria cannot be less restrictive than the I3 (Investing in Innovation) grants, though there is no consensus yet as to what this means in practical application.

Other important things to note:

  • The call for challenging standards does not apply to the Common Core. It will be up to every state to determine what that means for their students. There will now be a hard line between the federal government and any perceived mandate of standards. Individual state accountability plans will determine which students and schools get money for intervention.
  • There will no longer be a single definition of teacher effectiveness, but 50. School interventions will now be driven by a different set of standards developed within each state’s accountability structure.
  • The framework to respond to stronger data requirements, including the ability to aggregate and disaggregate, does not exist today. Each state will need to develop this capacity before the August 2017 implementation deadline.

Since there is confusion in the districts as to what will change and when, it would be wise for education companies to hold a conservative estimate of their revenues for the upcoming 2016-2017 school year. It wouldn’t be surprising if districts decide to reserve some of their funds until the landscape clears.

Note: Part 2 of this article takes a detailed look at Title I and Title IV, Part A funding and ESSA’s impact. Read it now.

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