Fiscal Compliance Rules for Federal Funding of Elementary and Secondary Education: Transparency, Reason-Giving, and Agency Accountability

Abstract

Fiscal compliance rules — technical rules governing how districts may use their federal money and how they must document that use — are pervasive throughout federal education law. The purpose of these rules is to hold state and local educational agencies accountable for their spending choices under federal law. Yet, as this chapter demonstrates, the multi-layered bureaucratic system in which the rules are embedded actually works against the public accountability they were designed to promote. The chapter describes the institutional system of federal grants administration, and how it administers and enforces fiscal rules. After explaining the importance of these rules to state and local educational agencies, the chapter argues that the fiscal compliance rules would be more valuable in promoting accountability — and thereby would better serve students — if the system as a whole provided clearer and more accessible rules and required documented reason-giving under these rules in publicly available fora.

Keywords: fiscal compliance, education, federal grants, accountability, state and local agencies, audit