...Keep it in the state.
I have been thinking about the federal funding of schools from system flow perceptive. The US constitution does not address the funding of education and who should be in charge of it, but there is a section that covers what the constitution does not address.
Article [X.] The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people
I think it is pretty clear that education was left to the states. This is not the case in NCLB, nor was it the case before NCLB. I don't know when it changed or why, but my ignorance of the matter does not prevent me from laying out the correct way education should be funded.
Federal funding of Education from process flow perspective.
Americans pay federal taxes for education. The IRS collects the money, then federal government apportions that money to the states based on laws that have been passed. Once the money gets to the states, the states then release get the money to the schools somehow. I don't know if it goes to the counties first then to the districts or directly to the districts.
As in any process, the more complex the process is the more places the process can break down. To me the greatest potential for abuse lies when the money leaves the states. The federal government essentially takes a cut of the money to pay for the federal education infrastructure. The federal salaries of the education department, travel expenses, and the buildings those employes reside in fall under that area.
The issue of effective management is the next issue which comes up in my mind. If the federal government is going to just return the money back to the state, why is it there in the first place. The amount the state gets back may be less or even more than what was paid in,but the entire lump sum should be less than what the states could have collected separately.
The potential for fraud also increases. The more complex and the more people that are involved in a process the more loop holes exist. By adding an additional layer of federal government you have opened up another chance for fraud. To decrease the potential of fraud, you have to include more people and implement a checks and audit system. While these efforts work to save money that was brought in, they also work to spend money that was brought in at the federal level.
I would also like to point out these problems, though I don't know how to classify them.
Here is an article of people getting mad at the federal government doing their job. Once you give the money away, you lose control over where it goes. If you keep it within the state, you can at least keep it going to your general area of the country. If the money, goes to the federal level, it could end up anywhere in the US.
Also, once you give the money away to the federal goverment, you may not get it back, or maybe to get your money back you will have to follow certain rules and regulations which may not fit you situation or your local needs.