In recent months, several states have asked the US Department of Education for waivers granting broad flexibility in how state policymakers can use federal education funds. State leaders argue that federal rules are overly prescriptive and administratively burdensome. Already, Secretary of Education McMahon has granted or seems inclined to grant these waivers.

My work seeks to understand the potential effects of these flexible funding waivers through comprehensive analysis of Indiana’s submission, which is the most detailed and sweeping of the waivers submitted so far. This analysis can inform Indiana and other state leaders’ approaches toward federal funding flexibility, but additional implementation opportunities and barriers will vary by state context.

Why This Matters

Federal dollars typically make up less than 10 percent of total education spending nationwide, but they are among the most targeted and equity-driven sources of support. These funds, distributed through the Elementary and Secondary Education Act, are designed to narrow achievement gaps and ensure that low-income students, English learners, students with disabilities, students experiencing homelessness, and children in rural or migratory circumstances receive additional educational support.

Introducing more flexibility into how these funds are used could decrease administrative burdens for states and allow for more local discretion in education funding usage. But loosening equity requirements on federal funds without clear accountability mechanisms could also reduce or eliminate targeted support for the students who need it most.

What I Found

Indiana’s federal funding flexibility waiver broadly focuses on three areas: Every Student Succeeds Act (ESSA) title funding, school improvement funding, and school accountability mechanisms. Given that Indiana is reworking its accountability framework, we focused our analysis on the ESSA title funding and school improvement funding portions.

For ESSA title funding, we found that Indiana’s waiver would replace the current model, which is designed to ensure targeted support for specific student groups and programs, with a model emphasizing state and local administrative discretion. This proposal would effectively create district-level block grants from federal funds, allowing school districts to reallocate dollars in accordance with their own priorities.

This flexibility, once implemented, could reduce administrative burden for districts and allow districts more freedom to tailor educational guidelines. In fact, some of what Indiana has proposed can already be accomplished under existing law. But the waiver includes few details on compliance or outcome monitoring and ignores the substantial flexibility that ESSA already provides to districts, raising concerns about transparency and accountability if the waiver were to be approved.

To ensure transparency and accountability in funding decisions regardless of whether the waiver is granted, Indiana can

• establish clear, simplified compliance guidance for tracking federal fund allocations;
• invest in local capacity, data systems, and sustained oversight of federal funding;
• pair flexible funds with transparent reporting mechanisms and robust accountability guidelines; and
• explore other existing avenues for greater funding flexibility, such as the Ed-Flex program or district-level infrastructure present in other states that consolidates federal funding reporting.

Ultimately, Indiana’s waiver faces clear policy barriers to approval and implementation, but it signals a clear desire for more state control of education funds. To ensure the best outcomes for its students, Indiana should create a robust plan that remains accountable to the students and schools with the greatest needs.