Dive Brief:

• Lawmakers and education officials in a few states are seeking changes to school funding formulas to avoid financial harm to districts from pandemic-related drops in student attendance rates. 
• States currently calculate funding allocations in a variety of complicated ways using attendance and enrollment counts or both, and changing student funding formulas often requires legislative approval. 
• Favoring current-school-year averages of student enrollments rather than one-day attendance counts could increase state flow-through funds to local districts and help with more accurate budget planning, school funding experts say.

Dive Insight:

Declining student attendance rates during the pandemic are raising concerns among education officials that district coffers will shrink significantly once federal emergency funding is spent and if attendance rates don't rebound.

A bill in the California legislature from state Sen. Anthony Portantino, a Democrat, would change that state’s funding formula to one favoring total enrollment that factors in how many students are enrolled in a district. The current formula uses average daily attendance, which includes how many students are present on campuses during a specific time period. 

If approved, the change would start with the 2023-24 school year. Proponents say the adjustment would benefit districts with higher absenteeism rates. 

“If a school district enrolls 100 students, but their attendance rate is 95%, the school district must prepare as if 100 students will attend class, but only receives funding for 95,” Portantino told the Sacramento Bee. “This bill will remedy that inequity.”

Research from School Innovations & Achievement, a company that provides programs to districts to reduce school absenteeism, found 17 California school districts experienced a chronic absenteeism rate of 27.4% in October 2021, up from18% in October 2020 and 11.2% in October 2019. Black and Latino students experienced higher rates of chronic absenteeism compared to White and Asian students.

Illinois lawmakers, meanwhile, last year tweaked their state’s funding formula for fiscal years 2022 through 2024 to allow districts to use average student enrollments based on pre-COVID-19 levels, if desired. In Kentucky, a task force is recommending the state legislature consider moving from its average daily attendance funding formula to one based on average daily membership, a calculation of daily enrollment.

Approaches vary nationwide

Approaches to calculating funding based on enrollment or attendance vary state-to-state, according to research from the Education Commission of the States. ECS data shows six states use attendance averages to allocate funds to districts: California, Idaho, Kentucky, Mississippi, Missouri and Texas.

Earlier in the pandemic, several states eased requirements around enrollment or attendance counts for funding purposes in light of remote learning and illnesses causing absences, allowing districts to use historical student attendance counts or projected counts.

The Texas Education Agency enacted an average daily attendance hold harmless policy last school year but has not provided the same flexibility this school year. 

This was not much of a concern in fall 2021 as in-person attendance held steady, but now several districts in the state are seeing attendance levels drop during this winter's struggle with the omicron variant, said Curtis Culwell, executive director of the Texas School Alliance, whose membership includes 44 school districts that educate 42% of the state’s total enrollment.

If the trend continues, the alliance will talk to the state education agency about the potential impact on the funding formula, Culwell said. 

Culwell predicts state lawmakers will have ongoing conversations about this because of the "deepening realization" that disruptions due to different variants "may continue to occur over the next few years."

For now, districts in Texas have "tools in their toolboxes" for short-term disruptions, Culwell said. For instance, districts have been able to adjust their calendars, such as adding days off before or after the Martin Luther King Jr. holiday weekend, in response to positive cases and staffing shortages, he said.

"This is where everybody's monitoring this situation," Culwell said. "They want to keep schools open, and they don't want another significant disruption to instruction."

Have attendance-based models run their course?

Some education finance experts have said funding schools based on attendance was outdated even before the pandemic. The forced move to virtual learning only highlighted the problems with these calculations when "student attendance" in remote settings brought different interpretations. 

The financial declines could be dramatic if a district experiences a steep enrollment drop. The Urban Institute estimates if a 1,000-student district with a $15 million budget lost 200 students between the 2019-20 and 2020-21 school years, its budget for the 2021-22 school year would decrease by $3 million, or from $15,000 per student in 2019-20 to $12,000 per student in 2021-22.

Still, others say tying funding to attendance keeps school systems accountable not only fiscally but also with student engagement and learning, because students would actually need to be in classrooms and on campuses to be counted for funding. 

Enrollment and attendance counts are just one part of the state-to-district funding calculation, as other factors influence total allocations. States are continuously looking at adjustments — both big and small — to funding formulas. They also are taking into consideration how decisions impact the many different aspects of a district's budget.

Republican South Carolina Gov. Henry McMaster is planning to propose funding formula changes based on student-teacher ratios that would increase funding for special education programs, which also receive dedicated federal funding, according to the Associated Press.

In Vermont, lawmakers are considering a change to the state's funding formula based on student enrollment that would provide higher per-student formula allocations for students from low-income households and other populations.