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This is a guest blog post by Carrie Hahnel, Senior Director of Policy and Strategy with the Opportunity Institute and a senior policy and research fellow with PACE.

For more than 100 years, California has funded schools based on the average number of students who attend each day. But as attendance has plummeted during the pandemic, some policymakers and education leaders have proposed to change that. Instead, they want to fund schools based on the number of students enrolled.
The biggest risk from this change, however, is that California would remove a clear incentive for districts to focus on attendance.

A new Policy Analysis for California Education (PACE) report, Student Count Options for School Funding: Trade-offs and Policy Alternatives for California, finds that a switch from Average Daily Attendance (ADA) to enrollment could help the state meet some goals, but it would come with tradeoffs. The report recommends that any change to the student count method be paired with other policies and programs that emphasize the importance of addressing attendance.

One proposal, Senate Bill (SB) 830, would allocate state funds based on the number of students who are enrolled. A similar change has recently been proposed by lawmakers in Idaho and Kentucky. In addition to these three states, Texas, Mississippi, and Missouri still use ADA as the student count method used to allocate state funds. The remaining states use other count methods such as Average Daily Membership, which counts students over all or most of the school year.

There are benefits to using enrollment over attendance

First, an enrollment-based count method could help California distribute state education dollars more equitably. Higher poverty districts tend to have higher student absenteeism, including for reasons outside the control of schools like adverse health conditions, transportation barriers, and housing insecurity. This means that higher poverty districts suffer the largest financial penalties under the current system.

Second, an enrollment-based system may help districts gain greater fiscal stability. Budget officers hire staff and make purchases of things like devices and textbooks based on enrollment, not attendance. In addition, attendance volatility has severely shaken district budgets and planning during the pandemic; enrollments are more stable throughout the year and are easier to forecast.

Third, a change could offer districts more flexibility around how to serve students instructionally—including students who might learn better through a competency-based model or students with a history of truancy.

Fourth, a shift to enrollment-based funding could make it easier for districts to follow public health guidance without facing fiscal penalties. As it stands now, some districts and charter schools lose thousands of dollars every time they quarantine classrooms. A shift to enrollment could also make it more acceptable for families to keep sick children at home.

A switch would come with a fiscal cost
Changing the count method would not be cheap, but neither is it out of reach.

We estimate that 90 percent of districts would receive more funding under an enrollment-based formula than under the current ADA system, with the biggest boost going to high school districts and districts with more low-income, English learner, and foster youth students.

Switching to an enrollment-based count method would increase the cost of California’s Local Control Funding Formula (LCFF) — its main state aid program — by about $3.4 billion annually. While that’s a lot of money, the state can afford that level of investment. A healthy economy, combined with declining enrollment, means that California has potentially tens of billions of dollars in discretionary education funds in the coming years. It could choose to invest that money in changing the count method, or it could choose to invest in new or ongoing programs outside of LCFF.

Changing the count method introduces possible risks
Many district leaders are eyeing a switch in the count method as a short-term fix to the budget challenges that come with declining enrollment, an issue plaguing many districts, especially those in coastal areas and in Southern California. A shift from ADA to enrollment would provide modest budget relief for many, but it is not a long-term solution to enrollment declines.

The biggest risk, however, is that the state would remove a clear incentive for districts to focus on attendance. Currently, districts are rewarded financially for having higher ADA rates, even if that attendance definition is relatively weak. (In California, a student generates funding if they attend one class period or are present when attendance is taken.)

If the state dispensed with this incentive, it would need to find other ways to drive positive student attendance and engagement practices. For instance, when Illinois replaced ADA with enrollment several years ago, it also convened an attendance commission to address and prevent chronic absenteeism.

Weighing the tradeoffs
Chronic absenteeism is soaring in California, especially for Black, Native, and Pacific Islander students. Enrollment is plummeting. And with attendance and enrollment so volatile, district leaders are struggling to adjust mid-year and multi-year budget forecasts. Lawmakers will need to decide which of these challenges they want to tackle and identify the right policy tools for doing so. A change in the count method is no silver bullet. It cannot fix the many challenges facing school districts, but it could help address some of them. If the state does dispense with attendance-based funding, it should pair that move with other strategies that will help districts re-engage students and improve attendance.

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