The Potential Impact of H.R.1 on School Funding
By Grace Breazeale, Director of Research and K-12 Policy
On May 22, the U.S. House of Representatives passed a sweeping domestic policy bill, H.R.1 (the One Big Beautiful Bill Act). If the bill is passed by the Senate and signed into law, it could indirectly lower the amount of state funding that school districts receive and reduce the number of students eligible for free meals.
Among its many provisions, H.R.1 includes changes to the Supplemental Nutrition Assistance Program (SNAP) that are expected to reduce the number of students who are identified as low-income. This change could have critical implications for two funding streams: the Mississippi Student Funding Formula (MSFF), which is the primary avenue through which the state funds school districts; and the Community Eligibility Provision (CEP), a federal program that provides free meals for students in high-poverty schools.
H.R.1’s Impact on SNAP
H.R.1 includes a provision that would likely reduce the number of individuals eligible to receive SNAP (commonly referred to as food stamps). It would do so through tightening eligibility requirements and increasing the amount that states contribute to the program, potentially incentivizing states to impose even stricter requirements. A report from the Urban Institute predicts that over 1 million students nationwide could lose access to SNAP in the wake of the type of provisions that have been included in H.R.1. SNAP is one of the primary programs used for direct certification of low-income students.
What is Direct Certification?
The Mississippi Department of Education (MDE) uses a process called direct certification to identify students as low-income for both the MSFF and the CEP.
The MDE classifies a student as low-income if they are enrolled in a means-tested program such as SNAP, Temporary Assistance for Needy Families (TANF), or the Food Distribution Program on Indian Reservations (FDPIR). Students who are identified as homeless, migrant, runaway, or who attend Head Start are also included in a school district’s low-income population. (Note that Mississippi is one of the few states that does not use Medicaid for direct certification as it relates to the CEP.)
Students in this category are used to calculate a district’s Identified Student Percentage (ISP). The MDE uses this metric to determine poverty levels for the allocation of state funds. The US Department of Agriculture (USDA) uses the ISP to assess whether a school district qualifies for the CEP.
Significance of Direct Certification
Direct certification plays a crucial role in determining the amount of funding that schools receive through the MSFF and the CEP.
The MSFF is the primary avenue through which the Mississippi Legislature distributes state funding to school districts and charter schools. It is designed to allocate money based on student need.
The formula provides a “base amount” of funding per student, with additional funds directed for the number of students in specific categories, including low-income students, special education students, English language learners, gifted students, CTE students, students in districts with concentrated poverty, and students in sparsely populated districts. Among these categories, the low-income student population is one of the largest groups. Students are placed into this category using direct certification. Thus, the higher the number of directly certified students in a district, the more funding that district receives.
The CEP is a program that allows certain schools to offer free breakfast and lunch to all students in the school. In order to participate in the program, the school must use direct certification to verify that at least 25% of its student population is low-income.
The federal government reimburses schools for a portion of their meal costs through this program. The reimbursement amount is dependent on the percentage of students who are identified as low-income via direct certification. The higher the percentage of low-income students, the greater the amount that schools are reimbursed.
How Could a Reduction in SNAP Enrollment Affect School Funding?
If students currently included in Mississippi’s Identified Student Percentage lose SNAP eligibility, they may no longer be included in the ISP. This would decrease the funds that school districts receive for low-income students through the MSFF and CEP, and it would render some schools ineligible to participate in the CEP. As a result, the Urban Institute estimates that nearly 150,000 students in the state could lose access to free meals through the CEP.
The Bottom Line
The potential effects of H.R.1 on school funding in Mississippi deserve close attention from state legislators, school district leaders, and other stakeholders. A decrease in a district’s ISP could impact funding through the MSFF and the CEP, both of which play significant roles in supporting low-income students.
While H.R.1 still has a long way to go before it is signed into law, its implications are serious enough to warrant early planning. Many districts are already facing tight budgets due to the reversal of ESSER funding extensions, and even a small decline in ISP could lead to further strain.
We will be closely watching and sharing updates on H.R.1 as it proceeds through the legislative process. In the meantime, we encourage school and district leaders to begin preparing for potential shortfalls in funding and changes in CEP eligibility. Proactive planning could help mitigate the challenges that may lie ahead.
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