Letter to the Oregon Department of Education — Reasonable Level of Tolerance (July 19, 2023)

Summary

Oregon Director Colt Gill is told in a July 19, 2023 letter from Laura Jimenez that the Department accepts the first four tolerance levels in the Oregon Department of Education's proposal for FY 2022 maintenance of equity but not the fifth. The accepted levels tolerate year-to-year per-pupil reductions of 82 percent for micro districts of 10 or fewer students, 32 percent for extremely small districts and 24 percent for small districts, plus 50 percent for LEAs shifted by virtual school enrollment. The Department does not find a five percent tolerance for LEAs of 1,000 to 4,200 students reasonable, and says Oregon must make additional payments to two LEAs and report when done.

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Full text

                      UNITED STATES DEPARTMENT OF EDUCATION
                          OFFICE OF ELEMENTARY AND SECONDARY EDUCATION




                                          July 19, 2023

The Honorable Colt Gill
Director
Oregon Department of Education
255 Capitol Street, N.E.
Salem, OR 97310-0203

Dear Director Gill:

The U.S. Department of Education (Department) received your written plan for a reasonable
level of tolerance when calculating whether the Oregon Department of Education (ODE) has met
State maintenance of equity requirements under the American Rescue Plan Act of 2021 (ARP
Act). This written plan applies only to a subset of Oregon’s local educational agencies (LEAs).

The ARP Act State maintenance of equity requirements help ensure that State funding supports
LEAs with high concentrations of poverty and the students who have been subject to
longstanding opportunity gaps in our education system and experienced the greatest impact from
the COVID-19 pandemic. These requirements are vital for ensuring that States maintain funding
to address the impact of the pandemic on students’ education, and for protecting students in high-
need and highest-poverty LEAs from disproportionate cuts if reductions in State effort do occur.

The Department determined that it is consistent with the State maintenance of equity
requirements to allow a State educational agency (SEA) to calculate whether it has maintained
funding equity with respect to its very small high-need and highest-poverty LEAs within a
reasonable “tolerance level.” The Department’s determination is based on the possibility of
significant volatility in the calculated per-pupil funding amounts for very small LEAs caused by
small changes in student enrollment, which may be unrelated to whether an SEA has achieved
the intent of the requirements. (See Frequently Asked Questions, American Rescue Plan
Elementary and Secondary School Emergency Relief Program, Maintenance of Equity
Requirements, July 26, 2022, Question 21(a).)

According to materials provided by ODE, Oregon’s State funding allocation formula, the State
School Fund, includes a base allocation for all students as well as weighted funding for students
who require additional services. Oregon also provides supplemental funding called a Small
School Correction (SSC) to LEAs that did not receive sufficient funding through the State
School Fund to operate their small schools. In the context of the funding weights and the SSC,
ODE asserts that calculated per-pupil funding amounts for its very small LEAs are significantly
affected by small changes in attendance rates. Furthermore, ODE’s proposal notes that the State
is seeing an unprecedented migration of students among LEAs in response to the pandemic,
which has also contributed to the variations in per-pupil funding. Together, these factors make
the per-pupil funding amounts in Oregon’s small LEAs an imperfect indicator of whether the
SEA has achieved the intent of maintaining equity in funding across LEAs.

Accordingly, ODE proposes five tolerance levels:
      1) For “micro districts” with a weighted average daily membership (ADMw) of 10 or
          fewer students, ODE proposes to tolerate an 82 percent reduction in per-pupil funding
          from year to year. This would impact two micro LEAs identified by the State as
          meeting the definition of high-need or highest-poverty in fiscal year (FY) 2022 that
          served 0.001 percent of Oregon’s students.
      2) For “extremely small districts” with an ADMw between 10 and 251 students, ODE
          proposes to tolerate a 32 percent reduction in per-pupil funding from year to year.
          This would impact 12 extremely small LEAs identified by the State as meeting the
          definition of high-need or highest-poverty in FY 2022 that served 0.27 percent of
          Oregon’s students.
      3) For “small districts” with an ADMw between 251 and 1,000 students, ODE proposes
          to tolerate a 24 percent reduction in per-pupil funding from year to year. This would
          impact nine small LEAs identified by the State as meeting the definition of high-need
          or highest-poverty in FY 2022 that served 1.41 percent of Oregon’s students.
      4) For LEAs that previously met ODE’s definition of “small districts” but saw extreme
          shifts in student enrollment due to increased attendance in a virtual school within the
          same LEA, ODE proposes to tolerate a 50 percent reduction in per-pupil funding from
          year to year. This would impact two LEAs identified by the State as meeting the
          definition of high-need or highest-poverty in FY 2022 that served 0.39 percent of
          Oregon’s students.
      5) For other districts with an ADMw between 1,000 and 4,200 students, ODE proposes
          to tolerate a five percent reduction in per-pupil funding from year to year. This would
          impact two districts identified by the State as meeting the definition of high-need or
          highest-poverty in FY 2022 that served 1.60 percent of Oregon’s students.

After reviewing ODE’s tolerance proposal and accompanying data, the unique circumstances in
the State, and our further State-specific analysis, we have determined that tolerance levels 1, 2, 3,
and 4 include reasonable levels of tolerance when calculating whether Oregon has maintained
equity for small LEAs in FY 2022. However, we do not find extending tolerance to Level 5
LEAs to be reasonable. For example, it is unclear how changes in enrollment in LEAs with
several thousand students would affect per-pupil funding in ways that are unrelated to
maintaining equity as compared to an LEA with many fewer students.

ODE’s proposal indicates that Oregon will need to make additional payments to two LEAs that
experienced a disproportionate reduction in per-pupil funding in FY 2022 and are not captured
by this small LEA tolerance proposal. Please advise the Department when these additional
payments have been made.
We appreciate your diligence in developing this proposal. If you have any questions, please
contact your program officer at: Oregon.OESE@ed.gov.

                                                  Sincerely,

                                                  Laura Jimenez

                                                  Laura Jimenez
                                                  Director, Office of State and Grantee Relations
                                                  Office of Elementary and Secondary Education


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