Federal programs have brought billions of dollars to help states and districts achieve their education policy goals. These funds come with conditions meant to ensure that they further federal policy goals, but which necessarily limit the ability of states, districts and schools to use funds optimally to meet local needs. This panel will discuss specific ways—good and bad—in which compliance regimes restrict the use of funds, both in theory and—often due to misperceptions about what is permissible—in practice. The panel will discuss how existing compliance regimes interact with local policies such as site-based management and weighted student formulas, and how researchers’ awareness—or lack thereof—of these compliance requirements may affect their interpretations of other education policy evaluation findings. The panel will conclude by exploring alternative approaches to safeguarding federal education funds while allowing for greater local flexibility. Excerpts below from Krvaric and Junge, “Federal Compliance Works against Education Policy Goals” (AEI Outlook No. 6, July 2011), help motivate this roundtable. "Policymakers' discussions of "regulatory reform" often overlook fiscal and administrative compliance requirements that impact the day-to-day implementation of federal programs. This happens for two reasons. First, these compliance rules, by themselves, appear to be far removed from traditional education policy discussions. Second, states and districts are reluctant to raise questions or concerns about these requirements because they do not want to bring additional scrutiny to themselves. In this environment, it is critical for federal policymakers and education advocates to closely examine compliance rules and understand how they unintentionally hinder good program implementation. … the state has wide-reaching authority and responsibility over how federal education programs are implemented and is legally responsible for ensuring that school districts comply with all federal requirements. This grants states the authority to impose additional rules on districts on top of what federal law requires--including the authority to restrict how districts use federal funds, even for things otherwise permissible under federal law. … In an environment where standards vary, states may feel compelled to "lock down" federal funds to minimize exposure to noncompliance findings and may inadvertently impose more restrictive rules than federal law requires. This is because states are legally responsible for repaying money in a state-administered program if a district spends funds incorrectly. The confusion regarding the baseline federal requirements makes it challenging for state education leaders to reduce state-imposed red tape on federal funds, or to use federal funds to implement innovative programs. Districts face a different set of challenges. While districts are responsible for providing educational services to students, they often have the least authority in determining how federal funds are spent and the least access to federal and state policymakers. Therefore, state rules may make it difficult for a district leader to replicate a successful federal program from another state (since what is permitted in one state may not be permitted in another), or to access help from ED if the district believes the state is imposing rules that are inconsistent with federal law."