Federal Education Policy and the States, 1945-2009
The Reagan Years: Block Grants and Local Control
After decades of steadily expanding federal aid to schools, the Educational Consolidation and Improvement Act marked a sudden federal retreat-and its effect was dramatic. Unlike the original ESEA, which federal officials had used, in part, to promote civil rights and desegregation, the ECIA pulled back from these priorities and insisted that local officials were best suited to solve "local" problems. The centerpiece of the ECIA-the piece that most directly fostered the devolution of power away from the federal government-was Chapter 2, with its block grant to each state. Under Chapter 2, the federal Department of Education allotted a lump sum to each state, which then parceled this sum out to local schools. The amount of each state's block grant was set according to a pupil-weighting formula that allowed states with more pupils in high-cost or heavily weighted programs-programs for low-income or non-English-speaking or disabled pupils-to receive larger Chapter 2 grants. Once a state received its Chapter 2 grant, however, it was under no obligation to use this grant to serve high-cost students; instead, it could use its Chapter 2 grant in any way it wished.
On the one hand, this flexibility allowed states to meet the educational needs they considered most pressing. On the other hand, it allowed funds to bypass students from politically weaker groups. One consequence of this system was that urban schools with large enrollments of high-cost students helped their states obtain large Chapter 2 grants but did not themselves receive large grants. Indeed, most urban school districts received comparatively small grants under Chapter 2, which "consolidated" (i.e., eliminated) many of the categorical programs that previously distributed aid to high-cost students in the inner city. Whereas the original ESEA had targeted aid at educationally disadvantaged students, Chapter 2 allowed states to decide for themselves how best to use federal aid, and it was clear that most state education agencies felt intense political pressure to direct more aid to suburban areas (where voting rates and tax paying were higher) and less aid to urban schools.
It is important to note that block grants did not succeed politically at a time of federal budget surpluses (the circumstance that had given rise to the original block-grant idea in the 1960s); rather block grants succeeded politically at a time of growing budget deficits. The reason for their success was that the perceived purpose of block grants had switched from fiscal to governance concerns. Rather than merely a way to redistribute money from the federal treasury to states and localities, block grants came to be seen in the 1980s as a way to redistribute power and control over social programs. No longer were block grants simply considered a form of "revenue sharing"; rather, block grants had been repackaged as a form of "power devolution," and they gained political traction in this guise. In the wake of the Watergate scandals of the 1970s, when "trust" in the federal government was at a low ebb, block grants became a way for Congress to give responsibility back "to the people."