Report analyzes tradeoffs of funding by attendance versus enrollment

A new analysis by the research nonprofit PACE (Policy Analysis for  California Education) examines the tradeoffs and various options for one of the key decisions awaiting the Legislature this spring: how to fund TK-12 schools following two years of steep drops in student enrollment and attendance. Even before Covid, the California Department of Finance had projected that enrollment would fall statewide over the next decade.

California uses a district’s average daily attendance as the basis for determining its general funding through the Local Control Funding Formula; it encompasses more than 70% of revenue from the state.

Californian is one of only six states to base funding on attendance; most states have switched to an overall enrollment-based funding formula.

Since Covid, attendance has plummeted and chronic absenteeism has risen in most districts; the preliminary estimate is that enrollment has dropped 4.6% over two years; attendance fell by 500,000 students in 2019-20, the year of remote learning – 8.5%.

Attendance-based funding incentivizes districts to reach out to families to see that kids show up to school; it may be a reason why California ranks among the top 10 states in student attendance, with a pre-Covid 5-year average of 95.6%. But it’s also a regressive fiscal policy, as Carrie Hahnel and Christina Baumgardner, authors of the report Student Count Options for School Funding, point out: Districts with more low-income, foster and homeless students and English learners tend to have lower attendance rates for multiple reasons, and therefore they suffer greater financial penalties. “This dilutes the equitable funding goals” of the Local Control Funding Formula, they state.

Funding based on enrollment, as currently measured in October, would cost an additional $3.4 billion – but that would not result in higher overall state funding; the total would be redistributed, benefiting districts with students with the greatest needs.

Hahnel will elaborate on the findings and policy tradeoffs as a panelist on Thursday from 4 to 5 p.m. during an EdSource roundtable on the ramifications of declining enrollment. To learn more and register, go here.