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One Big Change to Education Funding Could Mean Millions for School Districts

Currently, the state sends money to districts based, in part, on how many kids show up to school each day. Some districts hope to see the formula modified to base funding on total enrollment.
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When a child needs to stay home from school, it can translate to losses in state funding for public school districts across Texas.

“When a student stays home sick, the state pays schools less, but the light bill doesn’t go down,” Dallas ISD Superintendent Stephanie Elizalde explained on Twitter. The solution, she says, is simple, yet complicated: “Fund schools on enrollment, not attendance.”

The biggest part of a district’s state funding comes from average daily attendance, which is the sum of a district’s daily attendance counts divided by the days it is open and teaching kids. The money is doled out on a per pupil basis, so if you had a student that attended regularly, a district would get $6,160. If a student missed, for instance, nine days over the school year, the district would lose about $300. That can add up.

According to Texas Education Agency records, Dallas ISD’s projected average daily attendance for 2023 is 133,983, but its projected total student count is about 136,821.406, a difference of 2,838. That would mean that the district could face losing nearly $17.5 million under the Average Daily Attendance funding formula.  

During the height of the pandemic, districts could have experienced financial hardships because of absences. But when it became clear that extended absences could mean some districts lose millions in funding, the Texas Education Agency made several adjustments that held districts harmless for those missing students. But that clearly wasn’t a long-term solution for a virus that still keeps students out for a week or longer at a time.

But tying school funding to daily attendance was already pushing some states to eschew that model. Only six states still use attendance-based funding (including Texas), the nonprofit EveryTexan.org reported. (That entity was formerly the Center for Public Policy Priorities.)

In 23 states, average enrollment is used to determine funding, which means they take enrollment from specific dates in the school year and apply the average. In 12 states, enrollment from a single day’s snapshot is used.  And in 10 states, funding is determined by either a multiple day count or an enrollment period. 

Previous bills filed in Texas aimed to use the first method, called Average Daily Membership. House Bill 31,  filed in November by state Rep. Gina Hinojosa (D-Austin), would also base funding on an average enrollment formula. State Sen. Nathan Johnson (D-Dallas) filed companion legislation, Senate Bill 263, in December.

This week, state senators indicated a possible appetite for changing the funding during the Senate Finance Committee’s first public education hearing

During the hearing, Texas Education Commissioner Mike Morath explained these funding arrangements to lawmakers. He said that while enrollment-based funding might provide districts with more stability, it also could remove the incentive to improve daily attendance. The change would cost the state an extra $6 billion per budget cycle, he said.

 “On an average daily attendance basis, literally every day that a kid shows up to school counts,” he said. “There are any number of ways that the Legislature could entertain improvements to try to both add financial stability while maintaining the incentive to go after the most at-risk kids.”

Proponents of an enrollment-based formula said that there is room to factor in daily attendance, but argued that funding isn’t the most appropriate mechanism. They say attendance goals belong in the accountability system, where it can still show up as a benchmark of a quality school, but doesn’t unnecessarily hamstring districts that have high concentrations of low-income students, or students with chronic health issues.

“Attendance and chronic absenteeism should be addressed in the Closing the Gap domain of the A-F accountability system,” EveryTexan’s report said. “This way, schools and districts would report and be held accountable for absentee rates of subgroups of students.”

A policy brief from the University of Texas at El Paso’s Center for Education Research and Policy Studies also found that school districts actually don’t have much control over whether students attend regularly. Data show that few districts have identified particularly effective strategies to improve attendance, even with the threat of losing funding hanging over them.

“Our findings suggest that holding districts accountable for attendance through school finance formulae – without including adjustments for student background – may not be an equitable mechanism for increasing student attendance,” the brief said. “The data show that districts in Texas serving greater proportions of low-income students, students of color, and lower-performing students have lower attendance rates. As a result, use of ADA in the Texas school finance system disproportionately reduces funding for high-need districts.”

Despite the early enthusiasm, it’s still too early to tell if this is the legislative session that will bring a sea change to the way schools are funded in Texas. But if this is the year, it could mean a great deal to schools that often find themselves looking for a little more cash to apply toward addressing accountability measures, increasing teacher pay, and other things that could move the needle for students.

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Bethany Erickson

Bethany Erickson

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Bethany Erickson is the senior digital editor for D Magazine. She's written about real estate, education policy, the stock market, and crime throughout her career, and sometimes all at the same time. She hates lima beans and 5 a.m. and takes SAT practice tests for fun.
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