Understanding Economically Disadvantaged Students

The term "economically disadvantaged student" is frequently used in education, particularly in discussions about funding, resource allocation, and support programs. Understanding the definition and its implications is crucial for educators, policymakers, and anyone involved in ensuring equitable opportunities for all students.

Defining Economically Disadvantaged Students

The definition of "economically disadvantaged" can vary slightly depending on the context and the specific program or initiative. However, a common thread runs through most definitions, focusing on a student's eligibility for certain assistance programs due to their family's financial situation.

Texas Definition

In Texas, the Texas Education Code (TEC) §5.001(4) defines an educationally disadvantaged student as one "eligible to participate in the national free or reduced-price lunch program." Therefore, the terms "educationally disadvantaged" and "economically disadvantaged" are often used interchangeably in the state, both referring to a student who qualifies for the federal free or reduced-price lunch program.

National School Lunch Program (NSLP)

The National School Lunch Program (NSLP) is a federal program that provides nutritionally balanced, low-cost or free lunches to children in schools and childcare institutions. Eligibility for free or reduced-price lunch is based on household income relative to the federal poverty guidelines.

Free Lunch: Available to students from households with incomes at or below 130% of the poverty level.
Reduced-Price Lunch: Available to students from households with incomes between 130% and 185% of the poverty level.

Updated Criteria (North Carolina Example)

Beginning with the 2021-22 school year, the United States Department of Education updated the criteria for identifying Economically Disadvantaged Student (EDS) status. The North Carolina Department of Public Instruction defines Economically Disadvantaged status as any student identified by a Public School Unit (PSU) meeting the criteria of Directly Certified, Categorically Eligible, or a method consistent with state or federal guidance for financial assistance regardless of participation or eligibility in the National School Lunch Program (NSLP).

Directly Certified: Children directly certified are those eligible for free meals through data matching of Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Food Distribution Program on Indian Reservations (FDPIR) which Includes Extended Eligible students and those found in the Direct Certification system.
Categorically Eligible: Children eligible based on classification as homeless, runaway, migrant, foster, medicaid recipient, or enrolled in Head Start or comparable State-funded Head Start or Pre-kindergarten program.
Community Eligibility Provision (CEP): CEP means that an entire population at a school or PSU is deemed eligible for the NSLP. Eligibility is determined for an entire PSU, a group of schools within an PSU, or a single school within an PSU, whichever is electing Community Eligibility.

Non-Community Eligible Provision (CEP) schools and NSLP participating schools now have the ability to identify a student as Economically Disadvantage who may not be identified as part of the NSLP. PSUs may provide additional eligible students from a collection of information consistent with state or federal guidance for financial assistance. For all schools, a local process may be developed to collect information and identify students meeting the criteria for Economically Disadvantaged status.

Implications for Funding and Resource Allocation

The identification of economically disadvantaged students is often a key factor in determining the allocation of funding and resources to schools and districts. These funds are intended to provide additional support and services to help these students overcome the challenges associated with poverty and achieve academic success.

HB 3 in Texas

In Texas, House Bill 3 (HB 3) significantly impacts the funding for economically disadvantaged students. HB 3 increases the Compensatory Education allotment and targets additional resources toward those students with the most need. The new funding methodology is now a tiered multiplier for those students eligible for a free and reduced lunch, based on the tier of the student’s home address census block group.

TEA will initially fund the SCE allotment for 2019-2020 based on the census block group of each campus and the fall 2018 student estimates. This funding methodology produces an estimate, but this is NOT the actual payment methodology stipulated by law. This methodology is used because student enrollment information by census block group is not yet known.

Census Block Groups and Tiered Funding

HB 3 utilizes census block groups to determine the level of funding provided for each economically disadvantaged student. A census block group is a statistical subdivision of a census tract, and each block group is assigned a tier based on socioeconomic factors. Students residing in lower-income census block groups receive a higher funding weight.

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Sometimes, especially for new addresses, lookup tools will not produce results. In the event a census block group is not identified, the eligible student will be assumed into the lowest funded tier, receiving the 0.225 weight.

Important Considerations Regarding Census Block Groups

P.O. Boxes: The physical address where the student resides should be used for determining the census block group, not a P.O. Box.
Homeless Students: Districts do not need to report a census block group for a student who is homeless.
Residential Facilities: There are some funding and data collection issues with regard to residential facility students that require additional review by TEA.
Insufficient Data: A small number of census block groups in Texas have insufficient data to assign a census tier. In all non-standard cases, educationally disadvantaged students will be assigned into the lowest funded tier, receiving the 0.225 weight.

State Compensatory Education (SCE)

Prior to HB 3, school districts and charter schools participating in a CEP were required to follow 19 TAC §61.1027 for an alternative reporting method. This will not change. Students that meet one of the 13 criteria are eligible for the same supplemental services they received before the passage of HB 3.TEA will continue to allocate PIC 99 to the other programs through PEIMS after the mid-year submission.

Districts and Charters may continue to use State Compensatory Education funds to pay for the second half of a pre-k program as long as the students meet the eligibility for use of the allotment. Additionally, HB 3 added the Early Education Allotment, which is another significant funding stream for districts and charters to use to fund the second half of a pre-k education program.

If a district receives $100, is required to spend $55 on the program, but only spends $45, the following year the district would be required to spend $10 plus 55% of the new allotted amount for the year.

Charter Schools

Charters receive an adjusted state average for the Small and Mid-Sized district allotment and are not eligible for the Fast Growth Allotment. The requirement for charters to offer Pre-K was not changed with HB 3, but for charters who choose and are approved to offer Pre-K, those requirements have changed. HB 3 does not change charter requirements for Gifted and Talented.

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Compliance Enforcement

Compliance enforcement with state spending requirements is no different under HB 3. The agency has historically enforced corrective action plans for LEAs if they fail to meet their spending requirements over a three-year average.

Impact on Students and Schools

The identification of economically disadvantaged students and the subsequent allocation of resources can have a significant impact on both the students themselves and the schools they attend.

Supplemental Services

Students identified as economically disadvantaged are often eligible for a range of supplemental services, including:

Tutoring: Providing individualized or small-group instruction to help students catch up or excel in specific subjects.
Counseling: Offering social and emotional support to address challenges related to poverty and its impact on mental health.
Mentoring: Connecting students with positive role models who can provide guidance and encouragement.
Enrichment Activities: Providing opportunities to participate in extracurricular activities, field trips, and other experiences that broaden their horizons.
Additional Resources: Providing access to necessary school supplies, clothing, and other essential items.

School-Wide Improvements

Schools with a high percentage of economically disadvantaged students may also benefit from school-wide improvements, such as:

Smaller Class Sizes: Allowing teachers to provide more individualized attention to students.
Professional Development: Providing teachers with training on effective strategies for teaching economically disadvantaged students.
Parent Involvement Programs: Engaging parents in their children's education and providing them with resources and support.
Improved Facilities: Upgrading school buildings and providing access to technology and other resources.

Economic Disadvantage Beyond NSLP

While the NSLP is a common criterion, economic disadvantage can extend beyond eligibility for free or reduced-price lunch. The Small Business Administration (SBA), for example, considers factors like income, net worth, and assets when determining economic disadvantage for certain programs.

SBA Considerations

According to the Small Business Administration (SBA), several factors are considered when determining economic disadvantage:

General: The SBA examines factors relating to the personal financial condition of any individual claiming disadvantaged status.
Submission of Information: When married, an individual claiming economic disadvantage must submit separate financial information for his or her spouse, unless the individual and the spouse are legally separated. SBA will consider a spouse's financial situation in determining an individual's access to credit and capital where the spouse has a role in the business or has lent money to, provided credit support to, or guaranteed a loan of the business.
Factors to be considered: In considering diminished capital and credit opportunities, SBA will examine factors relating to the personal financial condition of any individual claiming disadvantaged status, including income for the past three years (including bonuses and the value of company stock received in lieu of cash), personal net worth, and the fair market value of all assets, whether encumbered or not.
Transfers within two years: The SBA scrutinizes transfers of assets within two years of applying for disadvantaged status to ensure they were not made to circumvent eligibility requirements.
Net worth: The net worth of an individual claiming disadvantage must be less than $850,000. In determining such net worth, SBA will exclude the ownership interest in the applicant or Participant and the equity in the primary personal residence (except any portion of such equity which is attributable to excessive withdrawals from the applicant or Participant). Funds invested in an Individual Retirement Account (IRA) or other official retirement account will not be considered in determining an individual's net worth.
Personal income for the past three years: The SBA presumes that an individual is not economically disadvantaged if his or her adjusted gross income averaged over the three preceding years exceeds $400,000. Income received from an applicant or Participant that is an S corporation, LLC or partnership will be excluded from an individual's income where the applicant or Participant provides documentary evidence demonstrating that the income was reinvested in the firm or used to pay taxes arising in the normal course of operations of the firm.
Fair market value of all assets: An individual will generally not be considered economically disadvantaged if the fair market value of all his or her assets (including his or her primary residence and the value of the applicant/Participant firm) exceeds $6.5 million.

The Importance of Accurate Identification

Accurately identifying economically disadvantaged students is crucial for ensuring that they receive the support and resources they need to succeed. This requires a comprehensive approach that considers various factors and utilizes reliable data sources.

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