California’s public school funding should be based on students actually enrolled

As many Southern California school districts lose students, an important debate about how to fund public schools is taking place below the radar. Most states use enrollment counts to fund public schools, but California uses average daily attendance, the average number of students attending each day.

In 2024, Senate Bill 98 tasked the nonpartisan Legislative Analyst’s Office with assessing the merits of joining the other 45 states that use enrollment-based school funding. LAO’s recent report is thorough and makes important points, but its recommendation misses the mark.

LAO argues that using average daily attendance (ADA) for funding incentivizes California’s schools to get students back into classrooms, which is important at a time when attendance is down from pre-pandemic levels. Switching to enrollment-based funding, they say, could lead to lower attendance rates in the long run, potentially harming student outcomes.

“The available research shows that attendance is a strong predictor of student achievement, including test scores, reading proficiency, and graduation rates,” LAO reported.

But groups like the California School Employees Association and the California School Boards Association say that average daily attendance puts low-income school districts like Los Angeles Unified, Santa Ana Unified, and Long Beach Unified at a fiscal disadvantage since their students face more obstacles to getting to school.

“Penalizing schools with higher absentee rates unfairly diverts resources away from those who need them most,” said Adam Weinberger, president of the California School Employees Association.

The Legislative Analyst’s Office estimates that the reform would cost taxpayers about $6 billion annually, benefiting low-income school districts with poor attendance the most. But LAO rejects claims that these districts are shortchanged, pointing out that state aid allocated via the Local Control Funding Formula “more than offsets the average effect of lower attendance rates.”

LAO is right to be skeptical about spending more on public education. In 2023, California’s public schools got $25,941 per student, on average, ranking sixth in the country for K-12 funding. While there was a time when low-income school districts were shortchanged, LAO’s data show that this is no longer the case.

Under the Local Control Funding Formula, school districts with the most disadvantaged students get $2,979 more per student on average than districts with the fewest disadvantaged students. In comparison, LAO estimates that the funding gap caused by using average daily attendance is only $387 per student.

LAO recommends sticking to average daily attendance, and if legislators insist on boosting funding for low-income school districts, they should do so through the Local Control Funding Formula rather than reforming how students are counted.

But there are other good reasons for California to make the switch to enrollment-based funding, which provides clear signals about what schools gain or lose when the number of students changes. Transparency is a key feature of public and private school choice programs such as open enrollment, charter schools, and education savings accounts, which allow dollars to follow the child to the school that best fits their needs.

Using average daily attendance muddies the relationship between students and funding, paying schools for attendance rather than for attracting families. School choice programs, including public school open enrollment that allows kids to transfer to any public school with open seats, are a growing feature of K-12 education, and funding systems should reflect this.

Enrollment-based funding would also simplify the budgeting process for school districts across the state, which spend money based on the number of students enrolled rather than the number who attend each day.

“When students are absent, we do not pay school staff less, nor do the cost of utilities or building maintenance decrease,” said Alberto Carvalho, superintendent of the Los Angeles Unified School District.

Finally, there’s little evidence that using average daily attendance improves student outcomes. While ADA might drive marginal improvements in attendance, which is correlated with positive outcomes, this doesn’t mean that it produces better results. Instead, ADA fosters a compliance culture, incentivizing school districts to expand their bureaucracies and spend money on outreach and enforcement programs to get students in seats.

Enrollment-based funding, used by 45 other states, is a good policy, and doesn’t have to break the bank. Policymakers could pair the reform with eliminating the state’s hold-harmless provision, which cost taxpayers $4 billion in 2022-23, according to Reason Foundation. The state’s hold-harmless policy uses school districts’ current-year, prior-year, or three-year rolling-average student counts to calculate state aid. This wastes money, since taxpayers continue to pay for students even after they’ve left public schools.

Enrollment-based funding is a sound policy that would help open enrollment and put the focus where it belongs: students and classrooms.

A version of this column first appeared at The Orange County Register.

The post California’s public school funding should be based on students actually enrolled appeared first on Reason Foundation.

Source: https://reason.org/commentary/californias-public-school-funding-based-on-students-actually-enrolled/