Feds' transgender guidance: Would schools lose funds?

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(CNN)Would school districts and public universities lose federal funding if they don't heed Friday's federal guidance directing them to treat transgender students according to their gender identity?

And if noncompliant schools do lose funding, how, exactly, would the loss affect them?
Education advocates said that no clash with the U.S. Education and Justice departments would ever likely get to the fund-withholding stage, even if it is possible.
    And some elected officials are asserting that departments' interpretation of Title IX, the federal anti-discrimination law in education, is actually an expansion that can only be done by the legislative branch.
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    Enforceable or not, universities in particular "will treat this as if it's the law," an official with an advocacy group for college and university presidents said.
    "The Department of Justice and the Department of Education are two federal agencies no college or university wants to be on the wrong side of," said Terry Hartle, senior vice president of the American Council on Education.
    We'll address the likelihood of a funding shutoff later. For now, let's see what would be at stake if the federal government did decide to withhold funds.

    The money at stake

    The government says that as a condition of receiving federal funds, schools must comply with Title IX, which says schools may not discriminate based on a student's sex. Friday's guidance says that the departments of Education and Justice "treat a student's gender identity as the student's sex for purposes of Title IX."
    In part, that means the departments expect schools, if they have separate restrooms and locker rooms for males and females, to allow transgender students access to whatever facility corresponds with their gender identity.
    Here's how public schools and colleges use federal funds:
    School districts
    K-12 school districts, on average, get about 10% of their total funding from the federal government, said Joel Packer, executive director of the Washington-based Committee for Education Funding.
    A school district's actual percentage depends largely on how many of its students are poor. That's because a large portion of federal funding comes through Title I of the Elementary and Secondary Education Act, which grants money to districts according to how many children from low-income families they serve.
    The more impoverished an area is, the more Title I money comes in. Usage for Title I cash can be "pretty open-ended" -- to pay teachers and staff, after-school programs and other things, Packer said.
    Another large portion, according to Packer, comes through the Individuals with Disabilities Education Act, which helps schools educate children with disabilities.
    A federal funding stoppage would be "pretty dramatic" for a school district, and could lead to staff reductions and cutbacks in curriculum and teacher training, Packer said.
    "School districts are not rolling in cash. Some of the have been behind the eight ball since the recession" with recent cutbacks in federal and local funding, Packer said.
    Colleges
    More than 90% of federal aid for higher education consists of loans and grants to students, Hartle said.
    But a college deemed noncompliant with Title IX could be in a world of hurt, because the U.S. government could prevent students from using their federal loans and grants there, Hartle said. That would likely leave students looking elsewhere.

    Would funds really stop?

    There's no modern precedent for the feds to cut off higher-education funds, largely because "of the mere threat that they could do it," Hartle said.
    School districts, likewise, usually end up settling on a binding resolution with the federal government before funds are withheld, Packer said.
    The guidance doesn't specifically say that funds will be stopped if a district or college doesn't heed it.
    "We don't have clear guidance" from the Education Department on whether funds would be withheld, said Deborah Rigsby, the National School Boards Association's director for federal legislation.
    The paper issued Friday by the departments of Education and Justice "adds another voice to an ongoing conversation about how gender identity is addressed, and expresses an interpretation of Title IX that is unsettled law," the NSBA said in a news release.
    "A dispute about the intent of the federal law must ultimately be resolved by the courts and the Congress," the group said.
    But until then, this isn't something that colleges will want to test, Hartle said.
    "Every college or university comes into compliance before it gets to that stage," he said.