Supplanting or Supplementing? The Stickiness of Title I Revenues in Post-Adequacy Era

April 2026

This paper examines how school districts respond to federal Title I funding in the postadequacy era. I find that fiscal adjustment occurs through capital investment rather than operating budgets. Using a regression discontinuity design centered on the Title I Concentration Grant eligibility threshold with district-level data from 2008–2017, I show that districts at the eligibility margin have significantly lower capital spending, approximately 6–7 percent below the sample mean. These effects are mainly driven by reduced construction expenditure and lower long-term debt issuance. By contrast, operating revenues show no evidence of systematic crowd-out. These patterns are consistent with institutional constraints introduced during the adequacy era, including maintenance-of-effort requirements and weighted student funding formulas, which limit fiscal substitution in operating budgets. The results suggest that while post-adequacy institutions may have constrained traditional crowd-out, fiscal adjustment has shifted to capital investment, where regulatory oversight is weaker. Because school facility investments disproportionately benefit disadvantaged communities, these findings raise important equity concerns for federal education policy.

Keywords

Fiscal Federalism, Intergovernmental Grants, Education Finance, Title I

Education level

K-12 Education

Topics

Policy, Politics, and Governance