Federal Aid: 45 Years of Failure

Yesterday, the Washington Post reviewed the life of Phyllis McClure, who was an advocate for federal education spending in low-income neighborhoods.

Once an aspiring journalist, Ms. McClure joined the NAACP Legal Defense and Education Fund in 1969. She immediately used her penchant for muckraking to illuminate the widespread misuse of federal funds meant to boost educational opportunities for the country’s neediest students.

The money was part of the new Title I program, created under the Elementary and Secondary Education Act of 1965. The slim volume that Ms. McClure wrote in 1969 with Ruby Martin – ‘Title I of ESEA: Is It Helping Poor Children?’ – showed how millions of dollars across the country were being used by school districts to make purchases – such as a Baptist church building in Detroit and 18 portable swimming pools in Memphis – that had little to do with helping impoverished students.

The authors charged that money meant for poor children was being used illegally by school districts as a welcome infusion of extra cash to meet overhead expenses, raise teacher pay and other such general aid. In addition, they wrote, districts were using Title I funds to continue racial segregation by offering black children free food, medical care, shoes and clothes as long as they remained in predominantly black schools.

That all sounds rather familiar–state and local governments misusing federal aid dollars. As I’ve written about at length, there was an explosion in federal aid for the states in the 1960s, with hundreds of new programs established. But huge problems developed almost immediately–excessive bureaucracy and paperwork, one-size-fits-all federal regulations stifling local innovation, and the inability of federal aid to actually solve any local problems. 

I live in Fairfax County, Virginia. The county receives about $15 million a year in federal “Title I” aid for disadvantaged schools–the program Ms. McClure was worried about. But Fairfax is the highest-income county in the nation! Why are hard-working middle-income taxpayers in, say, Ohio, paying for local schools in ultra-wealthy Fairfax?

Aside from the misallocation problem, academic evidence suggests that state and local governments mainly offset federal spending for poor schools by reducing their own spending on poor schools. Poor schools end up being no further ahead.

The federal aid system is crazy. Even if federal aid is a good idea in theory–and it isn’t–the central planners haven’t been able to make it work as they envisioned in more than four decades. The federal aid system has simply been a giant make-work project for the millions of well-paid federal/state/local administrators who handle all the paperwork and regulations.  

Even if federal aid was constitutional or it made any economic sense, it will never work efficiently. Aid will always be a more wasteful way of funding local activities than if local governments funded activities by themselves. Aid will always be politically misallocated by Congress. Aid will always involve top-down regulations from Washington that reduce local flexibility and innnovation. And aid will always undermine federalism and the American system of limited government.

It’s time to blow up the whole system.  Title 1 and all 800 other state aid programs should be repealed.