School finance reform prompts dispute over counting low-income students

September 17, 2013

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Never has school lunch meant so much for California education.

Delivering significantly more money to schools based on the number of low-income children they serve is at the heart of the sweeping new K-12 finance system approved by the state Legislature in June. The new system defines “low income” as those students eligible for the school’s free and reduced-price meals program.

But two months into the rollout of the reforms, which Gov. Jerry Brown praised as a victory for the neediest students, two of the largest districts – Los Angeles Unified and Fresno Unified – are in a dispute with the state over a last-minute change in how children who receive free meals are counted. Instead of moving into the school year confident of how much new funding they’ll receive for low-income students, the two districts, as well as scores of other districts in the state, are now being asked to submit new data from hundreds of thousands of low-income families before the funding will be released.

“We didn’t bargain for this and we were not told this,” said John Deasy, superintendent of Los Angeles Unified School District, the state’s largest district with more than 650,000 students, more than half of whom – 384,000 students – attend 466 district schools that are being asked to certify low-income students again. If the demand for new paperwork jeopardizes funding for needy children in any way, after years of work to pass Proposition 30 to fund education and to pass the new education finance system, Deasy said, there will be an outcry from educators, advocates, students, parents and legislators. “People will become unglued,” he said.

Counting heads

The dispute originated in a California Department of Education statement in August that it would no longer accept meal eligibility data used for decades by the federal government at a subset of schools that serve high percentages of low-income families. The state’s rejection of the data is being “hotly contested” in conversations between the district, the California Department of Education and the governor’s office, Deasy said. “We have been documenting poverty for years,” he said, and the federal data requirements are “an absolutely legitimate way to document poverty.”

The August announcement sent districts into a panic because they believed they had to have the new low-income student certification data by Oct. 2, the annual “census day” when schools must provide a comprehensive count of their student body to the state. But the state has clarified its information and has said that schools can correct the documentation of low-income students through Feb. 6, 2014.

At issue are two different methods used by the federal government to track low-income students eligible for free and reduced-price meals. The first method, used by the vast majority of schools, reports eligible students by their individual student identification numbers every year. The second method, used by 1,529 schools in high-poverty neighborhoods in the state, reports students individually once every four years and then uses that “base year” data to create a percentage of eligible students.

But with hundreds of millions of dollars of funding for low-income students on the line, the California Department of Education says it needs current data on low-income students.

“It’s one thing to do a rough estimate (based on numbers collected every four years), and it’s a much different thing when you have to calculate how much money to give to schools,” said Keric Ashley, director of the Analysis, Measurement and Accountability Reporting Division in the California Department of Education.

Millions at stake

Under the new formula approved by the Legislature, districts are supposed to receive additional funds for every high-needs student enrolled – as much as $3,000 per student once the formula is fully funded over the next eight years. With more than half of California’s 6 million students from low-income families, the monetary impact is huge for both the districts and the state budget.

And that demands reliable data, said Ashley, noting that some high-poverty-level schools collect “base year” data even less frequently than every four years. This is because income levels at their schools have remained consistently low and the federal government has granted extensions. There are schools, he said, “that haven’t collected that data for over a decade.”

Also at issue is whether low-income students must be identified individually, by their student identification numbers – which is data the group of high-poverty schools don’t have. But this level of detail is necessary, Ashley said, to ensure that low-income students aren’t also counted as foster youth or English learners. Each of these classifications – low income, foster youth and English learner – triggers additional funding for a student, but students are not allowed to collect additional funding for more than one classification. For instance, for the purposes of the new state funding formula, a low-income foster youth must be categorized as either low income or foster youth, but not both.

Still, Ruth F. Quinto, chief financial officer of Fresno Unified, questioned whether a new round of data collection was necessary in this first year of implementation of the new funding system, known as the Local Control Funding Formula.

“The requirements from the California Department of Education to document all of this sensitive information right now, we believe, are unnecessary, given the type of documentation that already exists,” she said.

The Fresno district has 55,000 students in 79 schools – representing three-quarters of the 106 schools in the district – that serve high-poverty neighborhoods and use the four-year data collection cycle.

‘Students are going to get left out’

While still hoping that the California Department of Education will adjust its demand for new documents, Quinto said Fresno is gearing up for a massive outreach to families. “The biggest barrier is logistically reaching families and having forms completed, returned, entered and accepted by the state,” she said. “We are putting together teams of people in a variety of languages, a game plan, and different communication strategies if we are left with no choice but to get moving on it.”

She added, “Students are going to get left out. We believe that would be in contrast to the governor’s desire to provide resources to our most at-risk population statewide.”

Even smaller districts are concerned.

“I don’t make the (federal) rules on how my kids qualify for free and reduced-price lunch,” said Frank Betry, superintendent of the Terra Bella Union School District in Tulare County. State lawmakers decided to use federal eligibility for the meal program as the qualification for extra funding for low-income students, he said, but now the California Department of Education has decided it won’t accept that count at the high-poverty schools. “If you are going to attach a qualifier to an existing program,” he said, “you can’t carve out the rules you don’t like.”

Deasy and others are still hoping to find a solution that addresses both district and state needs.

The new funding formula is “supposed to be less bureaucratic, more flexible and serve kids of greatest need,” Deasy said. “We believe in it completely and we hope the governor continues to be the unwavering governor he has been on this issue.”

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