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Compensatory education refers to supplementary educational programs that have been designed and developed to meet specialized academic needs of students in a variety of education subjects and settings. These programs provide supportive and individualized instruction developed to meet individual student needs by compensating for differences in readiness levels of students entering schools and student academic achievement while in school. Compensatory education programs have been developed to address cognitive disparities among children and youth; to provide educational opportunities for students with disabilities; to address academic underachievement of students as a result of family, social, and economic circumstances; and to give all students an equal educational opportunity to meet their full academic potential. Compensatory education programs are the result of educational research studies, legislation, expressed concerns of social and parental special interest groups, and local education agencies striving to provide the best educational opportunities for the students they serve. Compensatory education programs have provided the foundation and impetus for school reform efforts, particularly in the latter half of the 20th century and continuing into the 21st century. They have promoted changes in curriculum, school structures, instructional pedagogy, and attention to the needs of the individual child.

Compensatory education programs start at birth for children identified as potentially at risk of future academic failure and provide for a continuum of supplementary education services and programs from early childhood, throughout elementary and secondary curricula, and school-to-work programs. The programs provide educational reinforcement in specific academic areas with governmental funding support provided primarily under the Elementary and Secondary Education Act (ESEA). The programs covered under compensatory education include reading and mathematics programs; language instruction for limited English proficient (LEP) and immigrant students, including bilingual education and English as a second language programs; gifted and talented programs; special education; career education and vocational tech-prep/school-to-work programs; and educational support for migratory children and indigenous American student populations.

Compensatory education reform movements have often been the result of national research studies or the political climate of the era, or have been implemented following what has been perceived to be a national educational crisis. Suggestions for school improvement and reform were outlined in A Nation at Risk, the result of a study commissioned by the U.S. Department of Education and published in 1983. More recently, America 2000: Improve America's School Act, passed in 1994, and the No Child Left Behind Act of 2001 (NCLB) have once again pointed to the fact that U.S. schools have not been meeting the academic needs of all students, the changing requirements of social structures, and the needs of business and economic communities. As a result, schools and school programs are undergoing a massive restructuring effort to provide students with the knowledge and skill base they will need to be contributing members in the global economy of the 21st century; one that has quickly changed from the need for skilled employees, to a service economy, to one requiring employee technological knowledge and skills.

ESEA addresses compensatory education needs and requirements and provides the foundation for federal funding to states to supplement education budgets and ensure that all eligible students and groups receive the additional supplementary education services to ensure equity in educational opportunities for all students. ESEA was first authorized by Congress in 1965 and stressed the need for supplementary compensatory programs in math and science. Since that time, ESEA has been reauthorized in 1978, 1981, 1988, 1994, and 2001. ESEA was originally developed and passed by Congress to address the needs of individual students identified as disadvantaged and falling within an identifiable lower socioeconomic category. The compensatory programs were developed particularly to provide educational support in the areas of mathematics and science. ESEA has evolved from serving individual students to providing funding for whole schools or school districts that fall within identifiable low socioeconomic guidelines set by Congress. ESEA has also expanded from providing compensatory educational support only in mathematics and science to encompass other high-need education areas as school readiness, drop-out prevention, and low academic achievement in the core content areas of math, science, social studies, and reading/language arts. The 2001 reauthorization of ESEA also addresses adult literacy and lifelong learning; safe, disciplined, alcohol- and drug-free schools; bilingual and English as a second language programs; and parental participation in the education of their children and youth. ESEA is divided into specific categories referred to as titles. Each title addresses specific educational needs and identifies categories of compensatory education.

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