Assessing a Shift to Enrollment-Based School Funding

analysis full 2026-27 BUDGET Assessing a Shift to Enrollment-Based School Funding GABRIEL PETEK | LEGISLATIVE ANALYST JANUARY 2026 www.lao.ca.gov 1 analysis full AN LAO REPORT 2 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Executive Summary Chapter 442 of 2024 (SB 98, Portantino) requires our office to report on the effects of changing the student count methodology of the Local Control Funding Formula (LCFF) and other K-12 education programs from average daily attendance (ADA) to student enrollment. In this report, we provide our assessment of such a shift, describe a few policy alternatives that maintain the ADA-based system, and identify key issues for the Legislature to consider if switching to enrollment-based funding. Background Most Funding to Schools Is Allocated Based on Attendance. More than 90 percent of state funding to schools is provided through three main sources—LCFF, special education, and the Expanded Learning Opportunities Program (ELOP). Funding for these programs is allocated primarily based on ADA—the average number of students attending school each day throughout the school year. LCFF provides a base amount per ADA, with additional funding based on a school district’s unduplicated pupil percentage (UPP)—the proportion of their students who are low income, English learners, or foster youth. As a result, although high UPP districts have lower attendance rates on average compared to low UPP districts, their overall LCFF allocations per student are higher. Attendance Rates Currently Below Pre-Pandemic Levels. The available research shows that attendance is a strong predictor of student achievement, including test scores, reading proficiency, and graduation rates. The statewide attendance rate for school districts and charter schools was relatively stable prior to 2019-20, averaging 95.7 percent. The statewide attendance rate decreased sharply during the pandemic, to a low of 90.6 percent in 2021-22. Since then, attendance rates have continued to rebound but remain about 2 percentage points below pre-pandemic levels. Assessment Shifting to an Enrollment Student Count Methodology Would Increase Program Costs by Over $6 Billion Annually. We estimate using enrollment for LCFF would increase annual costs by $5.7 billion, while shifting three other ongoing programs would increase costs by about $800 million. The largest increases would go to higher UPP districts, since they have lower attendance rates on average and receive more funding per student. Switching to Enrollment-Based Funding Likely Would Have Adverse Effects on Attendance. We find that shifting to an enrollment-based student count would likely result in lower attendance rates over the long run. Our assessment is informed by three factors: (1) the ADA-based funding model creates a fiscal incentive for districts to prioritize actions that support increased attendance; (2) statewide attendance rates improved after the state changed its ADA model in the late 1990s to more closely link funding to student attendance; and (3) under the current model, districts have taken recent actions to support attendance. We do not expect districts would stop conducting all activities to promote attendance or immediately reduce programs under enrollment-based funding. Over time, however, they may not prioritize these initiatives to the same degree as they did under ADA-based funding, particularly when faced with limited resources. www.lao.ca.gov 3 analysis full AN LAO REPORT Enrollment-Based Funding Would Be More Aligned With District Planning, Unlikely to Significantly Change Ongoing Administrative Workload. Enrollment-based funding would be more aligned with current budget planning because districts typically use enrollment projections—not daily attendance—to allocate base funding across their schools. Shifting to an enrollment-based student count could result in some modest one-time costs for schools and the state to update existing systems, but would not significantly change ongoing administrative workload. This is because school districts already track both daily attendance and enrollment throughout the school year for various purposes. State Could Target Additional Funding to High UPP Districts While Maintaining ADA-Based System. We identified alternative modifications to LCFF that would target funding to high UPP districts while maintaining the current ADA-based system. Compared to enrollment-based funding, two of these alternatives provide larger average increases to higher UPP districts, although a larger proportion of the increase would be provided through restricted funds rather than through base funding. Recommendation Recommend Continuing With ADA-Based Funding. Given attendance rates continue to remain below pre-pandemic levels and the available research suggesting a strong relationship between attendance and student outcomes, we recommend the Legislature maintain its ADA-based approach to help promote attendance. One concern with an ADA-based system is that high UPP districts are negatively affected because they tend to serve student groups that historically have had higher absence rates. However, as mentioned above, high UPP districts receive additional LCFF funding that more than offsets the average effect of lower attendance rates. Further, if the Legislature is interested in providing funding increases that would disproportionally benefit districts with higher UPP levels, it could do so by making changes to other aspects of the LCFF funding model while also maintaining the existing attendance-based student count. Issues to Consider if Adopting Enrollment-Based Funding Although we do not recommend shifting to enrollment-based funding, we describe several implementation issues the Legislature may want to consider if it were to shift to an enrollment-based student count. These issues include: • Using Enrollment Averaged Across the School Year. If the state switches to an enrollment-based student count, we recommend it use enrollment averaged across the school year. In particular, this approach would be helpful for local education agencies that experience significant fluctuations in enrollment throughout the school year. • Statutory Adjustment Could Avoid Any Unintended Reduction in Proposition 98 Guarantee. Proposition 98, a constitutional amendment approved by California voters in 1988, establishes a minimum annual funding requirement for schools and community colleges, commonly known as the minimum guarantee. The State Constitution requires that, in some years, changes in attendance be used to determine the minimum guarantee. Using enrollment instead of attendance to determine the guarantee would likely require voter approval. Also, switching to an enrollment student count for state program funding could indirectly reduce the guarantee in some years if the switch reduced student attendance. However, we find that significant impacts would be unlikely. If a reduction in the guarantee were a concern, one option is to adopt legislation requiring the state to offset any reduction with a supplemental appropriation. 4 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT INTRODUCTION Most Funding to Schools Is Allocated Based ADA to student enrollment. Specifically, the report on Attendance. Proposition 98 (1988) requires is required to provide: the state to annually set aside a minimum amount • A description of the legislative history on of General Fund and local property tax revenue for Chapter 855 of 1997 (SB 727, Rosenthal), public schools and community colleges. Whereas which eliminated funding to schools for Proposition 98 establishes a minimum funding excused absences, and an assessment of the level, the Legislature decides how to allocate this effects of the change on student attendance. funding among school and community college • A review of student count methodologies in programs. About 80 percent of Proposition 98 other states. funding to schools is provided through the Local • A review of the research on evidence-based Control Funding Formula (LCFF). The state approaches to improve student attendance, allocates LCFF to school districts and charter and the extent to which a state’s method of schools based on their average daily attendance funding affects attendance rates. (ADA)—the average number of students in school each day throughout school year—with additional • An assessment of the fiscal, programmatic, funding for certain student characteristics. and administrative impacts of changing the County offices of education (COEs), which primarily student count methodology of LCFF from serve nontraditional high school students, have being attendance-based to enrollment-based. a somewhat more complex LCFF formula, but • The identification and assessment of also receive a portion of their funding based alternative changes to LCFF that would on attendance and their student demographic provide similar levels of funding compared characteristics. ADA is also used to allocate funding with a switch to enrollment-based funding for many other categorical programs, including the for local education agencies (LEAs) serving two largest ongoing programs: special education a higher percentage of English learners, and a program that provides funding for before/after low-income students, and foster youth. and summer school programs. • A description of options for phasing in the State Law Requires Report on the Effects cost of implementing policy changes over a of Switching to Enrollment-Based Funding. multiyear period. Chapter 442 of 2024 (SB 98, Portantino) • An assessment of the impact of shifting requires our office to report to the Legislature, to enrollment-based funding on the on or before January 1, 2026, on the effects Proposition 98 guarantee, as well as whether of changing the student count methodology of the state should continue using ADA for the LCFF and other K-12 education programs from Proposition 98 funding calculation or other K-12 programs. CALIFORNIA EDUCATION FINANCE In this section, we provide an overview of the Proposition 98 Minimum Guarantee Proposition 98 minimum guarantee, describe the K-12 Student Attendance Can Affect the components of LCFF, and describe the state’s Calculation of the Proposition 98 Minimum recent change to attendance-based funding. Guarantee. State budgeting for schools and community colleges is governed largely by Proposition 98, a constitutional amendment www.lao.ca.gov 5 analysis full AN LAO REPORT approved by California voters in Figure 1 1988. The measure establishes a minimum annual funding Three Proposition Tests requirement, commonly known as the minimum guarantee. Each Test 1 Test 2 Test 3 year, the minimum guarantee Share of General Change in Per Change in General is determined by one of three Fund Revenue Capita Personal Fund Revenue Income (PCPI) formulas (or “tests”) set forth in the State Constitution (see Figure 1). General In recent years, the guarantee has PCPI Fund most commonly been determined About ADA ADA 40% by Test 1, which provides about 40 percent of General Fund Prior-Year Prior-Year Funding Funding revenue to schools and community colleges. When the guarantee is determined by Test 2 or Test 3, Guarantee based on share Guarantee based on prior- Guarantee based on prior- the minimum guarantee equals the of state General Fund year funding level adjusted year funding level adjusted revenue going to K-14 for year-over-year changes for year-over-year changes amount of funding provided the education in 1986-87. in K-12 attendance and in K-12 attendance and previous year, adjusted for changes California PCPI. state General Fund revenue. in ADA and a growth factor tied ADA = average daily attendance. to per capita personal income (Test 2) or per capita General Fund revenue (Test 3). For purposes of Proposition 98, Figure 2 ADA consists of the average number of students attending each day of the school year across all LCFF Represents Majority of school districts, charter schools, and COEs in the Proposition 98 Funding for state. For example, if an average of 1,000 students K-12 Education attend a given school district each day of the school Total Funding = $104.1 Billionª year, that district would contribute 1,000 ADA to the statewide total. Local Control Funding Formula Other ELOP $8.6 Most K-12 Proposition 98 Funding Is $4.6 Allocated Through LCFF. LCFF is the primary Special Education source of funding for school districts, charter $6.4 schools, and COEs—collectively referred to as LEAs. As Figure 2 shows, out of the $104.1 billion General Fund Proposition 98 funding provided to K-12 education in the 2025-26 budget, $84.5 billion (81 percent) is provided through LCFF for school districts, charter schools, and COEs. Schools LCFF $84.5 pay for most of their general operating expenses (including employee salaries and benefits, supplies, and student services) using these funds. Over half of the remaining $19.6 billion is provided through two categorical programs for special education ($6.1 billion) and the Expanding ª Includes $2 billion in programmatic funding for 2025-26 that is paid in 2026-27 or covered with prior-year funds. Learning Opportunities Program (ELOP)— LCFF = local control funding formula and ELOP = Expanded Learning Opportunities Program. which funds before/after and summer school programs ($4.6 billion). 6 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT LCFF Is Based on ADA. The state allocates base rate for all students that is higher than the LCFF to LEAs primarily based on their ADA—the rates for school districts and charter schools.) average number of students in class each day LCFF Includes Supplemental and throughout the school year. (LCFF for COEs is Concentration Funding for Targeted Student determined partially by their ADA, as well as Groups. LCFF provides additional funds to LEAs several other factors, including the number of based on their unduplicated pupil percentage school districts and students total ADA within (UPP)—the proportion of their students who are the county in which they operate.) For funding low income (based on eligibility to receive free purposes, the state has historically credited school or reduced-price meals under a federal nutrition districts with their ADA in the current or prior year, program), English learners, or foster youth whichever was higher. As a result of concerns with ($14.8 billion for school districts and charter steep attendance declines due to the COVID-19 schools in 2025-26). The additional funding is pandemic, alongside the longer trend of statewide intended to recognize that, on average, these declining enrollment, the state added a three-year student groups typically require additional support rolling average to the LCFF calculations for school to meet grade level standards. For each English districts in 2022-23 and for COEs in 2023-24. learner, foster youth, or low-income student, School districts and COEs are credited with the school districts and charter schools receive a average of their attendance over the three prior supplemental grant equal to 20 percent of the years if it exceeds their current- and prior-year base grant. For COEs, the supplemental grant rate attendance. This policy was intended to slow is 35 percent of their base rate. A student who is funding reductions, allow districts and COEs more both an English learner and low income generates time to adjust their educational programs, and the same funding rate as a student who belongs help reduce fluctuations in funding from temporary to only one of these groups. For the purposes of changes in ADA levels. Charter schools continue calculating an LEA’s LCFF allotment, the state uses to be funded based on their current-year ADA. a three-year rolling average of its UPP. In addition to In 2024-25, half of school districts were funded the supplemental grant, school districts and charter on the rolling average of their three prior years schools can also receive a concentration grant of ADA, 33 percent were funded on current-year equal to 65 percent of the adjusted base grant for ADA, and 17 percent were funded on prior-year each English learner and low-income student above ADA. The ability to use prior-year attendance or the a UPP threshold of 55 percent. (A charter school’s three-year rolling average in 2024-25 resulted in concentration grant funding is calculated based on districts being credited with roughly 120,000 more the UPP of the school district in which it resides, if ADA (2.5 percent) than if the state funded districts the school’s UPP is higher than that of the school on current-year ADA only. district.) For COEs, the concentration grant rate is LCFF Provides Base Funding That Varies by 35 percent of the base rate for students attending Grade Span. School districts and charter schools community day schools, or 17.5 percent of the base receive the bulk of their LCFF through a base rate for students attending juvenile court schools. grant determined by their ADA in four grade spans Districts With Higher UPP Levels Receive (transitional kindergarten [TK] through grade 3, and More LCFF Per Student. Due to supplemental grades 4-6, 7-8, and 9-12). The base funding rates and concentration grant funding, LEA’s with are higher for students in higher grades—reflecting higher UPP levels receive higher levels of total generally higher costs of education at higher grade LCFF funding per ADA. Figure 3 on the next page levels. LEAs may use their base funding for any shows how variation in a district’s UPP affects educational purpose. Of the $83 billion in LCFF their total per-pupil funding. A district with a provided to school districts and charter schools, UPP of 25 percent will receive an additional $64.5 billion (77 percent) is provided through $566 per ADA from the supplemental grant base grants. (The formula for COEs includes one (a 5 percent increase from the base rate). www.lao.ca.gov 7 analysis full AN LAO REPORT services for English learners, Figure 3 low-income students, and foster youth in future years. Supplemental and Concentration Grants Increase Effective Funding Per Student One of the Largest LCFF Add-Ons Is Based on TK 2025-26 TK-3 Funding Rates Per ADA ADA. In addition to the main components of LCFF, the state $11,323 Total Funding also funds several add-ons to 0% UPP $0 S/C Funding the formula totaling $3.7 billion. About $1.5 billion of this total is 25% UPP $11,889 tied to TK staffing requirements. $566 In 2025-26, LEAs may receive an additional $5,545 per TK ADA $12,455 50% UPP $1,132 above the funding generated through the base, supplemental, and concentration grants. $14,493 75% UPP $3,170 To receive this funding, LEAs must maintain an average of $16,900 one adult for every ten students 100% UPP $5,577 enrolled in TK classrooms at each Base Funding S/C Funding school site. Most of the other Note: Reflects adjusted TK-3 rate for school districts and charter schools. add-ons are based on historical TK = transitional kindergarten; ADA = average daily attendance; UPP = unduplicated pupil percentage; factors or costs associated with and S/C = supplemental and concentration. home-to-school transportation. Several Other State Programs Comparatively, a district with a UPP of 75 percent Funded Based on ADA. In addition to LCFF, the will receive $1,698 per ADA from the supplemental state provides Proposition 98 funding through grant and $1,472 from the concentration grant— several categorical programs, many of which also for a total of $3,170 in additional funding per are based on ADA. Most notably, ADA is used in the ADA (a 28 percent increase from the base rate). allocation formulas for special education, ELOP, and This results in a district with a UPP of 75 percent the K-12 mandates block grant (funding that LEAs receiving 22 percent more funding per ADA than a receive for complying with requirements deemed district with a UPP of 25 percent. as reimbursable state mandates). Additionally, the LEAs Must Ensure “Proportionality” When state regularly allocates one-time grants to LEAs Spending Supplemental and Concentration based on ADA. Most recently, the 2025-26 budget Grant Funds. Relative to LCFF base funding, provided $1.7 billion for a new discretionary block supplemental and concentration grant funding is grant, with funds allocated to LEAs proportionally more restricted. Specifically, LEAs must use their based on their ADA. supplemental and concentration grant funding to proportionally increase or improve services for Recent Changes to their English learners, low-income students, and Attendance-Based Funding foster youth relative to the base amount of funding In recent years, the state enacted two changes they receive. LEAs are required to track and report that allowed LEAs to generate additional ADA if they the use of their supplemental and concentration comply with certain requirements. We describe grant funding as part of their annual local planning these new policies below. processes. Additionally, the state requires LEAs to State Recently Streamlined “Short-Term” use any unspent supplemental and concentration Independent Study. Students can generate grant funding from one year to increase or improve ADA for funding purposes through regular, 8 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT in-person instructional programs or through State Authorized Attendance Recovery independent study. Rather than generating Programs in 2024-25 Budget Package. ADA based on in-person attendance, independent Beginning July 1, 2025, LEAs are able to generate study programs generate ADA based on the time attendance-based funding by providing instruction students spend in synchronous or asynchronous on weekends, before and after school, and during remote instruction, as well as through coursework intersessions to students in classroom-based they complete. In cases where a student will programs who were absent from school. (The state be absent from school for a period of time and also has a longstanding Saturday school program, wants to remain enrolled in a classroom-based which is more limited in scope.) The amount program, LEAs can offer short-term independent of attendance generated by a student through study, which has a more streamlined set of attendance recovery programs cannot exceed the requirements. Beginning in 2024-25, the state total number of days the student is absent during allowed LEAs to offer short-term independent the school year, up to a maximum of ten days. In study to students who are planning to be absent addition, participating in these programs must be from their classroom-based program for any period voluntary for all students. To generate additional up to 15 days (Previously, students had to be in funding, attendance recovery programs must meet independent study for at least 3 days, and up to several requirements: 14 days.) LEAs provide students with assignments • Include content that is substantially equivalent to complete during the time that they are not to instruction the student would have received attending their in-person instructional program, as part of their regular school day. which subsequently are converted to an equivalent • Have instruction provided under the amount of attendance. In practice, this allows LEAs supervision of certificated staff. to continue to generate ADA when students are • Have a maximum student-to-teacher ratio of not attending school in person, based on the work 20 to 1 for all grades except TK, which must students complete while they are out. The ADA have a maximum ratio of 10 to 1. generated through independent study is funded the same as traditional classroom-based ADA. ATTENDANCE REQUIREMENTS In this section, we describe the state’s on three occasions in one school year. State law requirements for children to attend school and its establishes a variety of specific reasons an absence system for tracking attendance. may be considered excused, such as for illness, medical or dental appointments, attendance at the Compulsory Education and funeral of an immediate family member, jury duty, or Truancy Laws public health reasons. State Law Requires Children Age Six and State Sets Specific Requirements for Up to Attend School. State law requires children Addressing Truancy. Once a student has their between 6 and 18 years of age to attend school, third unexcused absence and is designated with a limited number of specified exceptions (for as truant, state law requires a first notification example, students who have graduated from high of truancy to the student’s parent or guardian, school or passed the California Proficiency Program as well as to the LEA’s attendance supervisor and obtained parental permission). Under state law, or superintendent. Statute requires the first students are considered truant if they are absent notification for parents or guardians to include from school without a valid excuse for three full specific information, such as the legal obligations to days in one school year, or are tardy or absent compel the attendance of their student at school, for more than 30 minutes during the school day information on alternative educational programs www.lao.ca.gov 9 analysis full AN LAO REPORT and supportive services that are available for the instruction, while COEs have minimum daily minute student, and a statement that school personnel requirements that vary based on instructional are available to discuss solutions to the student’s setting. All LEAs may face proportional reductions to truancy. After the fifth unexcused absence, the their LCFF allotment for not meeting the instructional student is considered habitually truant and may minute requirements. be referred to a Student Attendance Review Board Attendance and Instructional Time Subject to (SARB). SARBs are multiagency boards that Annual Audits. The state sets the same definition of help habitually truant students and their parents student attendance for the purposes of compulsory or guardians address issues related to school education laws and state funding. Specifically, attendance and behavior patterns to ensure that students are deemed to be in attendance if they students remain in school. are under the immediate supervision and control State Recently Repealed Criminal Penalty of a certificated employee of the school district for Parents of Truant Students. Historically, while engaged in educational activities for at least when the various interventions for habitually truant some part of the school day. LEAs record and track students failed to result in the student regularly student attendance and the number of minutes attending school, the matter could be referred to of instruction they offer each day, as well as the the courts. Specifically, parents and guardians number of days they provide instruction. LEAs are could face misdemeanor charges for failing to required to maintain readily accessible records on reasonably supervise and encourage a habitually attendance information (including whether absences truant student to attend school. Recently, the state are excused or unexcused), which is subject to an enacted Chapter 154 of 2025 (AB 461, Ahrens), annual audit by the LEA’s independent auditor. which repeals the criminal penalty for parents and State Has Waiver Process for Receiving guardians, beginning on January 1, 2026. Emergency Attendance Funding. Existing law establishes an emergency waiver process for Attendance Reporting LEAs to earn attendance-based funding when State Sets Minimum Instructional Day and they are affected by an emergency or other Time Requirements. The state sets a number of event. When LEAs must close schools due to an requirements related to the amount of instruction emergency such as a fire, flood, or epidemic, they students must receive during the school year. can receive a waiver that exempts them from the School districts and charter schools are required minimum instructional day requirements. Through to provide 180 days and 175 days of instruction, this process, LEAs can receive the same amount of respectively. School districts and charter schools funding they otherwise would have received without that are out of compliance with the minimum having to make up the days lost due to emergency. instructional day requirement will have their LEAs also can submit an emergency waiver when LCFF allotment proportionally reduced by the they remain open but certain circumstances result number of days that school was not offered. (COEs in a material decrease in attendance (at least are not subject to instructional day requirements.) 10 percent of students who would normally attend In addition to minimum day requirements, the a school do not attend on any one day). This could state sets requirements for the total amount of include circumstances such as impassable roads, instruction offered in a school year. School districts an epidemic, or a strike involving transportation and charter schools are subject to the same total services to students provided by an external number of required minutes, which vary by grade entity. LEAs must certify they have a plan for level and range from 36,000 minutes (for TK and offering online instruction or independent study kindergarten) to 64,800 minutes (for grades 9-12). to students affected by the emergency within ten Additionally, school districts are required to offer days of a closure or major decline in attendance. a minimum amount of instructional time per day. In addition, LEAs are required to reopen for This minimum requirement also varies by grade in-person instruction as soon as possible, unless span, from 180 minutes (for TK and kindergarten) prohibited under the direction of the local or state to 240 minutes (for grades 9-12). Charter schools health officer. do not have any required amount of daily 10 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT HOW OTHER STATES FUND SCHOOLS In this section, we provide a brief overview of more heavily on state funding than locally raised the different ways that states structure their primary revenue. Specifically, California ranks third in the K-12 funding formulas, including how they count nation on state funding per student ($14,726), which students for funding purposes. is 62 percent higher than the national average of $9,077. Conversely, California ranks 20th on local Public School Finance funding per student ($8,215), which is 5 percent Public Schools Primarily Funded by Local and less than the national average ($8,622). State Revenues. According to data from the U.S. Model Types Census Bureau, public schools received a total of $947 billion in 2022-23. Of that amount, 45 percent Most States Use a Student-Based Formula. came from state funding, 43 percent came from According to the Education Commission of the local funding, and the remaining 13 percent came States (ECS), state education funding formulas from federal funding. States have flexibility to can generally be categorized into three distinct determine how state and local funding will be categories. As Figure 4 shows, 35 states and the allocated, and what restrictions will apply to specific District of Columbia use a student-based funding funds. Federal funding is typically restricted for formula that typically includes a base amount of specific programs, such as to support low-income funding for each student, with additional funding students and students with disabilities. for students with additional needs. To count the California Schools Rely More Heavily on number of students, states either use counts State Funding. Census data for 2022-23 show that of enrollment or attendance. Nine states use a California’s per-student spending level ($18,798) resource-based formula, which provides funding ranked 16th among the 50 states and District of based the estimated cost of staffing, services, Columbia. This level is 14 percent higher than the or programs. (The formulas for resourced-based national average in total spending per student states also incorporate student counts in ($16,526). The data further shows that compared determining costs of programs.) Four states use a to other states, California’s education system relies hybrid approach that combines student-based and Figure 4 Most States Use a Student-Based Funding Formula Type Description States Student-Based Provides a base amount of funding per student with Alaska, Arizona, Arkansas, California, Colorado, additional funding or weights intended to provide Connecticut, District of Columbia, Florida, Hawaii, additional services and support to students with unique Indiana, Iowa, Kansas, Kentucky, Louisiana, needs. Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah. Resource-Based Allocates funding based on the cost of staffing, services, Alabama, Delaware, Idaho, North Carolina, South or programs needed to serve students. Dakota, Virginia, Washington, West Virginia, Wyoming. Hybrid Funding models that combine elements from both Georgia, Illinois, Maine, Massachusetts. student-based and resource-based models to create a unique system. Other Funding models that do not resemble from Vermont and Wisconsin. student-based, resource-based, or hybrid models. Source: Education Commission of the States. www.lao.ca.gov 11 analysis full AN LAO REPORT resource-based formulas, while two states have States With Attendance-Based Student distinct education systems. Each of the formula Counts All Use ADA. Each of the five states types incorporate student counts in some way. with attendance-based student counts use All States Provide Targeted Funding Based average attendance over a period of time. Four of on Student or District Characteristics. According the states—California, Kentucky, Missouri, and to data compiled by ECS in 2024 and our review of Texas—generally calculate ADA as the total days of recent changes made by states, all states provide student attendance, divided by the total number of targeted funding based on student characteristics instructional days in the school year. (Texas has an in addition to base funding. Currently, 49 states optional alternative methodology for LEAs with high have targeted funding for English learners, shares of migrant students.) The remaining state— 43 states have targeted funding for low-income Idaho—uses two separate ADA calculations in its students, 37 states have funding for gifted and formula. One calculation is from the first day of the talented students, and all states provide some level fall semester through the first Friday in November, of targeted funding for students with disabilities. and the other is based on the best 28 weeks of In addition, 36 states provide some funding attendance throughout the school year. Each of adjustment for small schools or districts, and some these states incorporates adjustments or exclusions states provide additional weights for districts that intended to reduce the effects of poor attendance have higher shares of students with higher needs. on school funding. For example, California, Idaho, Targeted funding may be allocated as a weight to Missouri, and Texas each have a waiver process the main funding formula, a separate categorical for LEAs whose ADA is negatively affected by program, or a reimbursement. emergencies such as natural disasters, inclement weather, or quarantines. (These waiver processes Student Count Methodology can vary on whether any lost instruction due to Vast Majority of States Use Enrollment inclement weather is required to be made up.) to Count Students. At the time of this report, In Kentucky, LEAs are able to remove the five worst 45 states and the District of Columbia use days of attendance from their ADA calculations, enrollment as their student count. The remaining and can substitute up to ten days of low attendance five states—California, Idaho, Kentucky, Missouri, due to inclement weather with attendance from the and Texas—use attendance to count students in same days in the prior school year. their K-12 funding formulas. Two States Have Recently Shifted From ADA Enrollment Student Count Methodologies Student Counts to Enrollment. Although many Vary Significantly by State. Although most states states have made significant changes to their use student enrollment for their funding model, funding formulas in the last two decades, only a there is no standard method for how student few have changed how they count students in their enrollment is counted for funding purposes. Of the funding formulas. In the last eight years, Illinois and states that fund based on enrollment, 11 states Mississippi shifted from using an attendance-based use enrollment counts from a single day in the student count to one based on enrollment. school year (typically in the early fall). In addition, For both states, this shift was not solely a shift from 11 states use multiple enrollment counts throughout attendance to enrollment, but part of significant the school year. For example, Illinois averages redesigns of their state education finance systems enrollment counts from October 1 and March 1. that effectively replaced their previous funding The remaining 24 states average enrollment counts models—akin to California’s transition from the across a period of time during the school year. For previous system of revenue limits and categorical example, Arizona averages enrollment across the programs to LCFF. These shifts were in part first 100 days of the school year, while Pennsylvania intended to address underlying inequities in averages enrollment across the entire school year. their education systems and included a variety Enrollment counts averaged across a period of time of significant policy changes such as providing are often referred to as average daily membership. additional or new targeted funding for certain 12 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT student subgroups, setting adequacy targets system, including adding a major component to to allocate more funding to districts with lower their finance system to target funding to specific property tax revenue, or significantly increasing student demographics. Furthermore, beginning in base per-student funding. 2024-25, Missouri’s student count methodology Missouri Recently Changed Their Formula factors in a combination of ADA and student to Factor Both ADA and Enrollment. Similar to enrollment. By 2029-30, Missouri’s student count Illinois and Mississippi, Missouri also recently made will be 50 percent based on ADA and 50 percent significant changes to their education funding based on enrollment. RESEARCH ON STUDENT ATTENDANCE Student Attendance and Outcomes In Later Grades, Chronic Absence a Predictor of Dropping Out. Chronic absences in higher Attendance Is a Strong Predictor of Student grades have been shown to be a predictor for Achievement. The available research consistently lower academic achievement as well as not shows a positive relationship between student completing high school. For example, a 2012 attendance and academic achievement, including study found chronic absenteeism in high schoolers test scores, reading proficiency, and graduation to be a stronger predictor of dropping out than rates. This relationship holds even after controlling suspensions or test scores, even after controlling for student demographics, such as income level for student demographics and backgrounds. and race/ethnicity. Additionally, higher chronic absenteeism is associated with a higher likelihood Drivers of Student Absenteeism of dropping out of high school and other long-term Reasons for Absences Fall Into Four negative effects in adulthood, such as poorer health Broad Categories. Researchers use a variety of outcomes, lower educational attainment, and approaches to categorize reasons why students reduced lifetime earnings. are absent from school. One such framework used In Early Grades, Attendance Is a Strong by Attendance Works groups absences into four Predictor of Reading Proficiency. Research has broad categories: shown that chronic absence in early grades is a strong indicator that a student will be behind in • Barriers to Attendance. Factors that reading. For example, one 2011 study in California prevent a student from attending school. showed that 17 percent of students who were For example: illness, lack of transportation, chronically absent in both kindergarten and first housing instability, and family responsibilities grade were reading proficiently in third grade, or home situation. compared to 64 percent for students who were • Aversion to School. Factors that may not chronically absent in the same grades. Missing cause a student to avoid attending school. significant amounts of school in early grades For example: academic challenges, negative can impede a student’s ability to build a strong school climate, and mental health issues. foundation in reading, which can have cumulative • Disengagement From School. Factors that effects in later grades. Studies also have shown result in lack of engagement or connection evidence that students can reverse academic with attending school. For example, no difficulties by improving their attendance after meaningful relationships to adults in the previously being chronically absent. school, lack of academic or behavioral support, or being behind on credits. www.lao.ca.gov 13 analysis full AN LAO REPORT • Misconceptions About the Impact of improving attendance. In particular, personalized Absences. Attitudes or beliefs students communication with parents through calls and or families may have that influence their text messages have been found to be effective attendance. For example, thinking absences approaches. Through these communications, are not an issue if they are excused, staying school staff can remind families of the student’s home for any symptom of illness, or thinking number of absences and emphasize the importance attendance only matters in the higher grades. of regular school attendance for students. These strategies also are relatively low cost, which Students With Certain Characteristics More makes them a cost-effective approach for schools. Likely to Be Absent. The available national data Home Visits and More Targeted Interventions shows that students who are low-income, English Also Can Help Improve Attendance. In addition learners, foster youth, or homeless youth are more to personalized communications, schools often likely, on average, to be chronically absent than address absenteeism by implementing more students who do not fall into any of these student targeted interventions to engage with students groups. This may be exacerbated in communities and families. For example, a 2018 study of a with greater concentrations of students with high parent teacher home visiting program in four needs. For example, one study found that students urban districts showed that students whose who live in communities with high levels of poverty families received a home visit were less likely to be are four times more likely to be chronically absent chronically absent than students whose families because they are more likely to face barriers to did not receive a home visit. More recently, initial attending school. Additionally, research suggests studies of a home visiting program funded in that higher concentrations of chronically absent Connecticut found the program to be effective students at a school can negatively affect the in reducing chronic absenteeism in the targeted outcomes for all students. school districts. The home visits allow school staff Evidence-Based Practices to to build stronger relationships with students and Improve Student Attendance families, gain an understanding of why students may be absent, and connect students with Schools in California and across the nation have supports and interventions that could address undertaken many strategies to increase attendance barriers to attending school. For example, a student and reduce chronic absenteeism. Below, we that is not academically engaged because they are discuss a few strategies that have been shown to behind on credits can be given access to tutoring improve student attendance. or opportunities for credit recovery. Staff may also Early Warning Systems Help Schools Target connect students with community partners or other Additional Support. Many education experts public agencies to help address barriers that are emphasize the importance of regular real-time outside of the school’s control. For example, they attendance tracking in being able to identify can connect homeless students with community students who are on track to becoming chronically resources, or connect students with mental health absent throughout the school year. One study challenges to counseling services. conducted by the American Institutes for Research Studies Show Other Interventions May Have found the establishment of early warning systems Positive Impact on Student Attendance. Other to be effective in reducing chronic absenteeism. programs not specifically focused on improving Identifying students who are on track to becoming attendance also can have positive impacts chronically absent gives schools the opportunity to on attendance. Several studies of community engage with students and families to understand schools implemented in New York have found the root cause of absences. improvements in student outcomes, including Research Shows Direct Communication With attendance. A preliminary study of the first cohort Students and Families Increases Attendance. of grantees from the California Community School Multiple studies have found communication Partnership Program showed higher improvements and engagement strategies to be successful in 14 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT in attendance rates and lower chronic absenteeism suggest these programs can improve student in schools implementing the community schools attendance. California significantly expanded its model, compared with similar schools that did not before/after and summer school programs through receive community school grants. Several studies the creation of ELOP, although no evaluations of the of before/after and summer school programs also program have been conducted to date. HISTORY OF FUNDING EXCUSED ABSENCES IN CALIFORNIA In this section, we provide a history of the state’s and absenteeism in schools. The audit showed decision to eliminate excused absences from actual attendance rates averaged 90.8 percent in ADA for funding purposes. selected elementary schools, 87.7 percent in junior high schools, and 81.4 percent in high schools. State Historically Funded The audit cited various factors that contributed to Excused Absences absenteeism, such as illness, behavioral issues, Prior to 1997, State Funded Excused academic problems, family or personal business, Absences. The state has funded LEAs based on or influence of friends. One of the key barriers ADA since 1911. Prior to 1997, ADA for funding to addressing absenteeism cited by members purposes was based upon actual attendance, of the Legislature and the State Auditor was plus any excused absences. Reasons for excused the state’s policy of funding excused absences, absences included illness, medical or dental which diminished the fiscal incentive for schools appointments, attendance at the funeral of an to increase actual attendance. Some members immediate family member, jury duty, or public health of the Legislature raised concerns that many reasons. To count an absence as excused, LEAs absences counted as excused may not actually were required to collect a note or other evidence have been excusable. For example, a bill analysis the student was absent for an excusable reason. cited an estimate by health officials that 6 percent LEAs were required to document and maintain of absences were due to illness, but some schools the records for excused absences for three years, reported illness rates of as high as 24 percent. In bill and were subject to the annual audit process. analyses and a 1985 Assembly Office of Research Although LEAs tracked excused and unexcused report, legislative staff raised concerns that by absences locally, ADA that was reported to the funding excused absences, schools focused on state was not disaggregated by actual attendance procedures to count an absence as excused rather and excused absences. However, one California than on increasing students’ actual attendance. Department of Education (CDE) survey of annual Furthermore, there were concerns that the system attendance data of 1,040 LEAs in 1983-84 showed discouraged schools from scrutinizing documents that the statewide attendance rate was 91 percent, supporting the excused absence. The attendance with an excused absence rate of 6 percent and an system also required schools to invest much time unexcused absence rate of 3 percent. and effort in accounting for students who were not actually attending school. In the 1970s and 1980s, Concerns Were Raised Around Funding Excused Absences. Pilot Study for Funding Based on In the 1970s, members of the Legislature and Actual Student Attendance education experts raised several concerns about truancy and dropout rates for high school students. State Commissioned a Pilot Study In 1979, at the request of the Legislature, the State to Assess No Longer Funding Excused Auditor published a general audit of attendance Absences. Chapter 1329 of 1980 (AB 3269, Hart) commissioned CDE to administer a pilot program. www.lao.ca.gov 15 analysis full AN LAO REPORT The pilot program allowed districts to receive a Pilot Study Showed Increases in Attendance higher per-student funding rate if their participating for Participating Schools. During the two school site increased their attendance above years of the pilot study, elementary schools a certain amount. Specifically, if participating averaged a 3.12 percent improvement in actual schools increased their attendance by over attendance, junior high schools had an average 2 percent relative to their 1979-80 attendance, gain of 3.42 percent, and high schools averaged a the district’s apportionment was increased by a 5.39 percent increase. The one continuation high rate equal to half of the increase. For example, if a school experienced an attendance increase of participating school increased its attendance by 11 percent. In its evaluation, CDE stated that no 3 percent relative to 1979-80, the district would one simple solution improved attendance for the receive a per-student increase of 1.5 percent to participating schools. Rather, improved attendance the district’s overall per-student rate. Half of any was linked with a comprehensive approach of funding increase was required to be directed to interrelated activities in the school and district. a specific program for staff development and Some strategies that schools and districts in the school improvement, while the remaining half pilot study used to increase attendance included could be used for any purpose. Chapter 1329 regularly monitoring actual attendance, conducting authorized CDE to select 25 unified school districts, home visits, providing counseling and tutoring, and 25 elementary school districts, and 10 high school creating incentives for students to improve their districts to participate in the pilot. To be selected attendance. Some participants also implemented as a participant, districts were required to apply more punitive measures, such as issuing in-house and identify at least one school site to be evaluated suspensions, establishing Saturday school as part of the pilot program. In total, CDE selected programs, and working with local law enforcement 32 schools from 28 school districts—10 elementary to locate truant students who were absent schools, 5 junior high schools, 16 comprehensive from school. high schools, and 1 continuation high school. CDE Disseminated Information About State Made Other Attendance-Related Improving Attendance. After the pilot study Changes. Chapter 1329 also made several other concluded, CDE issued a report in 1983 that policy changes related to attendance. Most included a comprehensive approach to improve notably, it required districts to publicly report actual attendance based on the strategies implemented attendance rates (without excused absences), by the participating schools. The report identified required districts to notify parents or guardians which interventions were used at each of immediately when their child was absent, and the participating schools, as well as tips for required parents or guardians to be present at implementing each strategy. CDE also provided SARB meetings. a checklist to help attendance personnel and Excused Absence Rates Varied at other administrators assess the adequacy of Participating Schools. In order to assess the their attendance strategies. CDE’s guidance for a impact of the pilot study, districts reported comprehensive approach to attendance included the participating school’s six components: actual attendance rates and excused absence rates for the Figure 5 1979-80 school year (prior to Higher Grade Levels at Participating Schools Had their participation in the pilot). More Absences As Figure 5 shows, schools with Attendance Rates From Year Preceding Pilot Study, 1979-80 higher grade levels had lower attendance rates and higher Actual Excused Combined excused absence rates. Attendance Rate Absence Rate Attendance Rate Elementary 91.5% 5.9% 97.4% Junior High 88.5 6.8 95.3 High 87.0 8.4 95.4 Continuation High 68.9 17.4 86.3 16 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT • Assessing Actual Attendance. Rather Optional Alternative than focusing on funded ADA that included Funding Methodology excused absences, CDE advised districts Beginning in 1992, Districts Could Opt Into to focus on improvements in actual Alternative Funding Methodology. Chapter 984 attendance rates. of 1991 (SB 407, Green) established an alternative • Developing Policies and Procedures. method of calculating funded ADA that is based CDE encouraged districts to review their on actual attendance plus a specified, fixed current attendance policies and practices to excused absence rate. Specifically, districts were see if they meet the objective of improving credited with the lesser of either the district’s student attendance. When districts establish excused absence rate for 1990-91 or the statewide an attendance policy, it brings attention to the average excused absence rate by type of district issue and sets attendance as a high-priority (elementary, high school, or unified) for 1990-91. for schools. To receive this alternative methodology for • Selecting Program Strategies. apportionment, districts had to submit a request CDE emphasized that each intervention for to the Superintendent of Public Instruction. improving attendance must include elements Districts that opted into this funding methodology such as clear expectations for students to could increase their revenue by reducing their attend school, engagement with parents rate of absences below their historic absence or guardians, a team approach from staff rate or below the statewide average. By 1997-98, across the school, and awareness from 17 school districts were using the alternative students and families of the negative impacts SB 407 ADA calculation. The use of this alternative of attendance on student progress and method was intended to be a pilot program that community well-being. would be assessed for statewide implementation. • Streamlining Attendance Reporting However, the program was not studied and was Systems. CDE encouraged districts to later repealed. computerize their attendance systems so they Elimination of Funding for could more easily monitor attendance patterns and have access to accurate, up-to-date daily Excused Absences attendance information on each student. This State Eliminated Funding for Excused information could be used when contacting Absences Beginning in 1998-99. Senate Bill 727 parents or referring students to SARBs. eliminated the use of excused absences from • Orienting Staff Members. CDE stated that the calculations used to determine funded ADA, staff involvement is a prerequisite for better beginning in 1998-99. The author’s commentary attendance. When all staff and administrators on the bill states the intent was to eliminate the at a school understand the link between incentive for districts to overlook absences as attendance and achievement, they are well as alleviate the administrative burden of more likely to promote the use of policies collecting, filing, verifying, and auditing notes for and strategies for improving attendance. excused absences. The author argued this would Additionally, ongoing staff development allow district administrators to shift their focus could help support a team approach for and redirect resources from excusing absences improving attendance. to increasing actual attendance. Additionally, the • Involving Community Members. author stated that the bill was informed by the CDE emphasized that relationships with results of the attendance pilot study and positive law enforcement, service agencies, and feedback from school districts that opted into the parents are an integral part of a school’s alternative funding methodology allowed by SB 407. efforts to improve attendance. Support from Senate Bill 727 Included Provisions to Hold the community allows school personnel to Districts Harmless. Senate Bill 727 included promote attendance and expand services to additional provisions to hold school districts students and parents. harmless from the change in no longer funding www.lao.ca.gov 17 analysis full AN LAO REPORT excused absences. Specifically, SB 727 increased Since excused absences were no longer being each districts’ per-student funding rate by their funded, if districts wanted to increase their revenue, reported excused absence rate in 1996-97. the primary avenue to do so was to increase actual Effectively, districts would receive the same attendance. Districts were required to continue amount of funding if their actual attendance was tracking excused absences for purposes of unchanged from the year prior to implementation. complying with compulsory education laws. TRENDS IN STUDENT ATTENDANCE Recent Trends in Attendance Rates a direct result of the pandemic. Schools had stricter rules around illnesses and quarantine Attendance Rates Currently Below requirements for students and families who were Pre-Pandemic Levels. As Figure 6 shows, the exposed to COVID-19. Although these specific attendance rate for school districts and charter rules are no longer in place, attendance rates schools—the ADA for the school year divided by the remain below pre-pandemic levels. School Census Day enrollment—was relatively stable prior districts and researchers have reported a shift to 2019-20, averaging 95.7 percent. The statewide in expectations among students and families attendance rate decreased sharply during the about regular school attendance that may be a pandemic, to a low of 90.6 percent in 2021-22 driving factor as to why attendance rates have not (the state did not collect attendance information returned to pre-pandemic levels. For example, in 2020-21). Since then, attendance rates have students and families may be more likely to view continued to rebound but, as of the 2024-25 school attendance as optional rather than compulsory and year, remain about 2 percentage points below students may be more likely to stay at home when pre-pandemic levels. sick. In addition, many school districts reported Districts Report Cultural Shifts Around increases in anxiety and other student mental Attendance Resulting From the Pandemic. health issues, as well as challenges with student The attendance rate declines in 2021-22 were engagement, which can also affect attendance. Figure 6 Attendance Rates and Statewide Attendance Rate Is Improving, LCFF Considerations But Still Below Pre-Pandemic Levels School Districts With Attendance Rates for School Districts and Charter Schools Higher UPP Rates Have Lower Attendance Rates 98% on Average. Consistent 96 with recent data showing 94 that students who are low-income, English learners, 92 and foster youth are more 90 likely to be absent than 88 their peers, districts with 86 higher shares of students 84 with these characteristics 82 have lower attendance 80 rates on average (Figure 7). 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21ª2021-22 2022-23 2023-24 2024-25 ª Due to the COVID-19 pandemic, the state did not collect average daily attendance in 2020-21. 18 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 7 To compare attendance rates between higher and lower School Districts With Higher UPP UPP school districts, we divided them Have Lower Attendance on Average into quartiles based on their UPP. Districts With More Than 2,500 Enrolled Students, 2024-25 As Figure 8 shows, districts in the quartile with the lowest UPP have average attendance rates that are 2.5 percentage points higher than districts in the quartile with the highest UPP. Lower Attendance Affects LCFF Funding. Given LCFF is funded based on ADA, lower attendance rates result in less funding per enrolled student. To estimate the effect of lower attendance rates on higher UPP districts, we estimate the average amount of funding districts in quartiles 2, 3 and 4 would receive if they had an attendance rate equal to the average of districts in the lowest UPP quartile (95.1 percent). (For this UPP = unduplicated pupil percentage. exercise, we adjusted every district’s funded ADA to reflect 95.1 percent of their enrollment and compared that Figure 8 with districts’ actual funding levels Districts in Highest Quartile of UPP Have Lowest aggregated by quartile in 2024-25.) Attendance Rates As Figure 9 shows, we estimate that Average Attendance Rate by UPP Quartile, 2024-25 districts in the highest UPP quartile would receive an average of $387 Census Day Attendance in additional funding per enrolled Quartile UPP Range ADA Enrollment Rate student if their attendance rates were 1 0% - 43.21% 932,018 980,135 95.1% 95.1 percent. (Of the districts in the 2 43.22 - 64.39 1,095,658 1,167,552 93.8 3 64.40 - 81.95 1,252,474 1,351,943 92.6 highest UPP quartile, 81 percent 4 81.96 - 100 1,454,516 1,571,041 92.6 had attendance rates less than Totals 4,734,666 5,070,671 93.4% 95.1 percent, compared to 46 percent UPP = unduplicated pupil percentage and ADA = average daily attendance. of districts in quartile 1). High UPP Districts Receive Figure 9 Higher Funding Overall Due to Supplemental and Concentration For Higher UPP Districts, Funding Would Be Funding. Although high UPP Somewhat Higher With Improved Attendance districts receive somewhat less Average LCFF Funding Per Student by UPP Quartile, 2024-25 funding per student due to lower attendance rates, their overall Average Funding Per Funding Assuming Quartile Enrolled Student Quartile 1 Attendance Rate Difference LCFF remains higher due to the targeted nature of LCFF supplemental 1 $11,304 $11,304 — 2 11,878 12,039 $161 and concentration funding. 3 13,313 13,668 355 4 14,283 14,670 387 UPP = unduplicated pupil percentage and LCFF = Local Control Funding Formula. www.lao.ca.gov 19 etaR ecnadnettA analysis full 100% 98 96 94 92 90 88 86 84 20 40 60 80 100% UPP analysis full AN LAO REPORT As Figure 10 shows, school districts in the highest UPP quartile received an Figure 10 average of $2,979 (26 percent) more per Highest UPP Districts Receive Significantly More enrolled student in 2024-25 compared to Funding Due to Supplemental and Concentration districts in the lowest UPP quartile. High School Districts Have Grants Lowest Attendance Rates. When Average LCFF Funding Per Student by UPP Quartile, 2024-25 looking at attendance rates by district type—elementary, high, and Average Funding Per Funding Compared Quartile Enrolled Student to Quartile 1 Percentage unified—high school districts have the lowest attendance rates on average 1 $11,304 — — 2 11,878 $574 5% (Figure 11). These lower rates reflect 3 13,313 2,009 18 the higher absence rates among high 4 14,283 2,979 26 school students. UPP = unduplicated pupil percentage and LCFF = Local Control Funding Formula. Chronic Absenteeism Increased Significantly Due to Pandemic. The Figure 11 state requires LEAs to annually collect and report information around chronic High School Districts Have Lowest Attendance Rates absenteeism. Students are identified as 2024-25 chronically absent if they are absent for more than 10 percent of the time they are District Type ADA Enrollment Attendance Rate enrolled at a school. (A student enrolled Elementary 955,354 1,011,859 94.4% at a school district for a full academic High 491,665 531,511 92.5 Unified 3,287,647 3,527,301 93.2 year is considered chronically absent Statewide 4,734,666 5,070,671 93.4% if they miss 18 or more days of school.) ADA = average daily attendance. As Figure 12 shows, the statewide chronic absenteeism rate increased significantly from 12.1 percent in Figure 12 2018-19 to 30 percent in 2021-22. (The state did not publish chronic Chronic Absenteeism Rates Remain absenteeism for the 2019-20 Higher Than Pre-Pandemic Levels school year due to the COVID-19 pandemic.) Since 2021-22, the 50% statewide chronic absenteeism rate 45 has steadily declined year over year, 40 but the 2024-25 rate (19.4 percent) Foster Youth 35 Homeless Youth remained substantially higher than the rate from 2018-19 (12.1 percent). 30 Students With Disabilities Figure 12 also shows the student 25 Socioeconomically Disadvantaged subgroups with the highest English Learners 20 Statewide rates of chronic absenteeism 15 are homeless students and 10 foster youth—37.3 percent and 34.9 percent in 2024-25, 5 respectively. Statewide data for 2016-17 2017-18 2018-19 2020-21 2021-22 2022-23 2023-24 2024-25 2024-25 also shows American Indian or Alaska Native students Note: Due to the COVID-19 pandemic, the state did not publish chronic absenteeism rates for 2019-20. (31.6 percent) and African 20 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT American students (31.3 percent) had the highest other states. Nationwide data show that chronic rates of chronic absenteeism among racial and absenteeism increased from 15 percent in 2018-19 ethnic subgroups. to 28 percent in 2021-22, with rates decreasing to Absenteeism Is Highest in Kindergarten 23 percent in 2023-24. Although California’s chronic and High School. As Figure 13 shows, chronic absenteeism rates were lower than the nation as absenteeism has been highest in TK and a whole prior to the pandemic, its peak rates in kindergarten since the pandemic. In 2018-19, 2021-22 were higher. California’s rates were below chronic absence for kindergarten and TK was the national average for 2023-24. 16 percent, then spiked to 40 percent in 2021-22. States Take a Variety of Approaches to Since the pandemic, these rates have declined Address Absenteeism. At least 36 states use to 23.1 percent in 2024-25. Aside from TK and chronic absenteeism in their school accountability kindergarten, absenteeism is highest in the high systems, and almost all states publish absenteeism school grades. data by school and district. However, states Reasons for Absenteeism Differ by Grade take a variety of approaches to address chronic Level. Based on our conversations with school absenteeism in schools. Several states require districts, the likely drivers of higher absenteeism school districts to develop an action plan for rates vary by grade level. For TK and kindergarten, addressing chronic absenteeism. In New Mexico, districts noted that families were more likely to all school districts must create a plan with a tiered keep their students home when they are sick system of interventions that provides more intensive compared to before the pandemic. School districts strategies as attendance worsens. In New Jersey, also mentioned that parents viewed regular a corrective action plan is required for any district attendance in TK and kindergarten as less critical, with a chronic absenteeism rate above 10 percent. since students under the age of 6 are not required Other states have provided categorical funding to attend school. School districts cited different to school districts for addressing absenteeism. reasons for higher absenteeism in high school. For high schools, school districts believed that Figure 13 greater levels of absences were Kindergarten and High School Students due to anxiety and other mental Have Highest Chronic Absenteeism Rates health issues. In addition, many report changing perceptions about 45% the value of in-person attendance given technological changes that 40 give students access to course 35 materials at home. Given high schools students can typically 30 access materials and complete and 25 Grades 9-12 submit work online, they may place TK-K less of a significance on attending 20 Statewide Grades 7-8 school regularly. 15 G G r r a a d d e e s s 1 4 - - 3 6 Chronic Absenteeism in 10 Other States 5 Other States Saw Similar Increases in Chronic 2016-17 2017-18 2018-19 2020-21 2021-22 2022-23 2023-24 2024-25 Absenteeism. California’s TK = transitional kindergarten and K = kindergarten. experience with chronic Note: Due to the COVID-19 pandemic, the state did not publish chronic absenteeism rates for 2019-20. absenteeism is similar to that in www.lao.ca.gov 21 analysis full AN LAO REPORT Many states have made more recent changes to absenteeism rates. In 2023, the state of Rhode address post-pandemic increases in absenteeism. Island enacted several policies intended to address In 2021, the state of Connecticut used federal absenteeism. Most notably, the state publishes COVID-19 relief funds to establish a home visiting chronic absenteeism data (by school and school program that targets chronically absent students district) that is updated daily during the school year. in the 15 school districts with the highest chronic LAO ASSESSMENT In this section, we describe four criteria we use Key Assumptions. In assessing the shift to an to evaluate the effects of shifting the LCFF student enrollment-based student count in LCFF, we assume count methodology from ADA to enrollment, provide no changes to any other aspect of the current our assessment of such a shift using these criteria, funding model. For example, we assume the state identify a few policy alternatives that maintain continues to credit school districts and COEs with the current ADA student count, and describe the the greater of their current-year enrollment, prior-year trade-offs to these alternatives. enrollment, or three-year rolling average of their prior-year enrollment, and funds charter schools CRITERIA FOR EVALUATING based on the current year only. We also assume the CHANGES TO THE STATE’S state maintains the three current reporting periods for LCFF funding. STUDENT COUNT METHODOLOGY Four Criteria for Assessing Impacts of Policy EFFECTS OF SHIFTING TO Change. To assess the impact of shifting to a ENROLLMENT-BASED FUNDING student count methodology based on enrollment, our assessment focuses on four key factors: Fiscal Implications • Fiscal and Distributional Effects. How Methodology. Senate Bill 98 requires our office to shifting to an enrollment-based student count analyze options for phasing in an enrollment-based methodology would affect the total amount student count methodology for LCFF that does of LCFF funding provided, as well as the not result in a reduction in funding for any LEA. distribution of LCFF funding across different To develop a fiscal estimate consistent with this types of LEAs. In particular, we focus our requirement, we generally assume the state would analysis on the effects across school districts use existing LCFF per-student rates, but apply of varying UPP levels. those rates to enrollment rather than ADA. We do • Effects on Attendance. The degree to which not assume any other changes to the formulas. a change in the student count methodology For enrollment, we use Census Day enrollment, would affect student attendance and school which provides a snapshot of enrollment based on district programs and initiatives that support the first Wednesday in October. (The state currently student attendance. only tracks this enrollment measure and cumulative • Effect on School Planning. The enrollment.) Our estimates use enrollment and degree to which a change in the student ADA from 2022-23 through 2024-25 and assume count methodology would affect LEA no changes in ADA or attendance rates. For the budget planning. LCFF rates, we use the 2025-26 rates and apply a 2.51 percent cost-of-living adjustment (COLA) to • Administrative Burden. How shifting to an reflect our estimate of the rates for 2026-27. enrollment student count for LCFF would affect the administrative burden for LEAs to Shifting to an Enrollment Student Count collect and report information used in the Methodology Would Increase LCFF Costs funding model. by About $6 Billion Annually. We estimate using enrollment for LCFF would increase annual 22 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT LCFF costs by $5.7 billion. Using 2024-25 data as a LCFF funding. In practice, however, school districts baseline, we estimate the main LCFF formulas would with lower attendance rates would see relatively increase by $5.6 billion—$5 billion for school districts larger increases as a result of the policy change, and $580 million for charter schools. Additionally, we while those with higher attendance rates would see estimate the cost of the TK staffing ratio add-on for relatively smaller increases. Since LEAs with higher school districts and charter schools would increase UPP have lower attendance rates on average and by roughly $110 million. For COEs, we estimate receive more funding per student compared to LEAs LCFF costs would increase by roughly $30 million with lower UPP levels, they would experience the statewide. Of this amount, the costs are about evenly largest increases. As Figure 14 shows, we estimate split between the two parts of the formula: one part districts in the lowest UPP quartile would receive a based on the overall student population in the county 5.2 percent LCFF increase on average, while districts and the other part based on students enrolled in in quartiles 3 and 4 would receive an 8 percent COE-run programs. For the latter portion of the increase on average. formula, rather than using Census Day enrollment, Increased LCFF Funding Primarily Comes we assume COEs would see increases similar to Through Base Grant. Of the $5 billion estimated that of the highest UPP districts. (Using COE Census increase for school districts, roughly $4 billion Day enrollment would have resulted in only minor (80 percent) would be an increase to district additional state costs, as the vast majority of COEs base grants. The remaining $1 billion would be have Census Day enrollment that is lower than provided through supplemental ($550 million) and their ADA.) concentration grants ($460 million). LCFF Increases Would Be Greater for Districts Shifting Other Programs to Enrollment-Based With Higher Proportions of Low-Income Funding Would Cost Almost $800 Million. Students. For school districts, the $5 billion increase As Figure 15 shows, we estimate shifting other in funding for switching to an enrollment-based LCFF programs to enrollment-based funding would would represent a 7.24 percent increase in statewide increase program costs by almost $800 million. Figure 14 Switching to Enrollment Would Provide Larger Increases to High UPP Districts Average LCFF Funding Per Student, by UPP Quartile Current Funding Per Enrollment-Based Funding Quartile Enrolled Student Per Enrolled Student Difference Percent 1 $11,855 $12,473 $619 5.2% 2 12,456 13,279 822 6.6 3 13,961 15,075 1,114 8.0 4 14,978 16,180 1,202 8.0 UPP = unduplicated pupil percentage and LCFF = Local Control Funding Formula. Figure 15 Shifting Other Programs to Enrollment Would Cost Almost $800 Million (In Millions) Program ADA-Based Enrollment-Based Difference Special Educationa $5,683 $6,118 $435 ELOP 4,603 4,938 335 K-12 mandates block grant 265 283 18 Totals $10,551 $11,339 $788 a Includes base special education funding and funding for educationally related mental health services. ADA = average daily attendance and ELOP = Expanded Learning Opportunities Program. www.lao.ca.gov 23 analysis full AN LAO REPORT Similar to our estimates of the main LCFF formula, State Could Use LCFF Approach to Phase we assume the state replaces ADA with enrollment in Costs. Given the costs of shifting to an but makes no other changes to the underlying enrollment-based student count and the limited formulas. (Under current law, a higher student funding that likely will be available over the next count for ELOP would result in lower per-student several years, transitioning to enrollment-based rates for some lower UPP LEAs to keep total costs funding likely would need to be phased in over a within existing funding levels. We assume the state multiyear period. The state could phase in funding provides additional funding to prevent reductions.) using an approach similar to what was used to The additional funding districts receive from these phase in costs of LCFF. Under this approach, the programs are likely to have similar distributional state would calculate the “gap” between current effects to LCFF funding—a comparatively funding levels and the target funding level at full greater increase funding for districts with lower implementation for each LEA and for the state as attendance rates. a whole. As part of the annual budget process, Under LAO Fiscal Outlook, Growth in the the state would determine the amount of funding Proposition 98 Guarantee Through 2029-30 it would like to set aside to close the gap and Could Cover Most of the Costs of Transitioning calculate the proportion of the gap that would to Enrollment-Based Funding. As we discuss be closed. Each LEA would then have this same in our recent brief, The 2026-27 Budget: Fiscal proportion of their gap closed. This approach has Outlook for Schools and Community Colleges, the several advantages. For example, this approach state has limited capacity to fund new school and ensures that LEAs further away from their community college commitments with the projected target receive larger annual funding increases. growth in Proposition 98 funding over the next This approach also provides the state with flexibility several years. We project the state will have less to adjust the phase-in process depending on the than $2 billion in ongoing funding available for new amount of funding that is available. school and community college commitments by Attendance Implications 2028-29. In 2029-30, the last year of our forecast, Limited Empirical Evidence on Relationship we project almost $6 billion would be available for Between State Student Count Methodology new commitments, consistent with our projections and Student Attendance. We did not identify that state revenues and the guarantee will grow any empirical studies that directly assessed more rapidly in that year. Assuming the state sets how funding based on attendance, rather than aside a portion of these funds for community enrollment, impacts student attendance. One colleges and provides a statutory COLA to K-12 exploratory study conducted in 2013 compared programs over the next several years, the increases several student outcomes in different states, such in Proposition 98 funding for schools would be as attendance rates and graduation rates, based sufficient to cover about 80 percent of the costs on student count methodologies. However, when of shifting to an enrollment-based student count. drawing comparisons, this study combined states These estimates are sensitive to changes in the that fund based on attendance with several states state’s General Fund revenues. If revenues decline that fund based on enrollment. As a result, the or grow more slowly than our forecast assumes for findings reveal nothing about whether ADA-based the next few years, the guarantee likely could not funding results in better student outcomes than even support existing programs. On the other hand, enrollment-based funding. the state could have sufficient funding by 2029-30 to cover the costs of shifting to enrollment-based Attendance Rates Improved After Enactment funding if revenues grew faster than our projections. of SB 727. Although limited research exists The Legislature could provide funding above the regarding the effects of state student count minimum guarantee if it wanted to fund the costs of methodologies, the state’s experience changing its enrollment-based funding sooner. policy around funding excused absences can serve as an instructive example. After this policy change, 24 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT districts had a greater fiscal incentive to improve initiatives they undertake to improve attendance their actual attendance since excused absences and address chronic absenteeism, many of which were no longer funded. The state enacted SB 727 have been increased in recent years. These include in part because a pilot study showed improvements the following strategies, which generally align in actual attendance when districts were not with many best practices for addressing chronic funded for excused absences. After SB 727 was absenteeism and promoting attendance. enacted and the policy was implemented, the • Regular Tracking and Monitoring statewide actual attendance rate increased. Using Attendance. Virtually all LEAs reported that available ADA and enrollment data, as well as other they regularly track student attendance during historical documents, we estimate the statewide the school year through a combination of daily, attendance rate (not including excused absences) weekly, and monthly reviews of attendance was 92.2 percent in 1996-97. In 1998-99, the first data. These reviews typically include year excused absences were no longer funded, school-level and student-level analyses. attendance rates increased 1.5 percentage points, This allows districts to determine patterns to about 93.7 percent. An analysis conducted of absenteeism, and to provide targeted during this period also noted an increase in interventions to students who are on track to attendance rates after the implementation of being chronically absent. SB 727. Due to data discrepancies, we are not able • Actions to Create a Culture That to produce statewide attendance for subsequent Supports Regular Attendance. All districts years. Over time, however, statewide attendance mentioned that part of their attendance rates for school districts and charter schools since improvement strategies included a team or the enactment of LCFF averaged 95.7 percent “all-hands-on-deck” approach from staff to through 2019-20. (Due to data limitations, we establish a culture that promotes student are not able to describe how improvement attendance. When teachers, counselors, varied by district type or student subgroup.) The social workers, administrators, and other staff increase in attendance rates immediately after the on-site are engaged with students, this helps implementation of SB 727, as well as the higher to set a culture where kids feel welcomed at attendance rates in subsequent years, suggests school and makes them more likely to attend. the policy change likely was a factor in improving Through these interactions, staff can also attendance statewide. However, given the lack of highlight the importance of regular student data available to evaluate the policy, we cannot attendance. Districts also highlighted a measure the specific impact of eliminating funding variety of other strategies, such as providing for excused absences. Some of the improvement rewards for schools or students that improve in attendance rates could have been due to attendance and adjusting the school calendar other factors, such as greater awareness of best when a significant number of students are practices for addressing absenteeism or changing regularly absent (for example, by adopting a expectations around student attendance. We longer winter break when a high proportion of are also not able to describe the programmatic families travel during this period). changes made by LEAs to increase attendance • Interacting With Students and Families. after the enactment of SB 727, as the state did not Districts also reported they engage with collect information from LEAs on their efforts to students and families to determine underlying improve attendance. causes of absences and connect students LEAs Take Various Actions to Improve and families with services to address reasons Attendance. Given the state does not collect for absences. In some cases, this may be information on actions LEAs take to address done through brief communications with attendance, we met with several LEAs and other families, such as through text messages or education experts to learn about the strategies phone calls. Some districts implemented LEAs take to support student attendance. more intensive interventions, such as home In general, LEAs reported many key actions and visits that can include multiple staff members. www.lao.ca.gov 25 analysis full AN LAO REPORT This often included connecting students to efforts to improve attendance would no longer available school and community resources. result in higher levels of funding. This may remove In circumstances when students are the current fiscal incentive that helps to prioritize chronically truant, some LEAs refer students strategies that improve attendance. We do not to their local or county SARB. expect LEAs would stop conducting all these activities or immediately reduce programs under Many LEAs Are Planning to Use Short-Term enrollment-based funding, as they understand Independent Study and Attendance Recovery to the importance of regular attendance on student Increase Funded ADA. In our conversations with outcomes. Over time, however, LEAs may not school districts, all reported that they have been prioritize these initiatives to the same degree as using the additional flexibility to provide short-term they did under ADA-based funding, particularly independent study to students when they are when faced with limited resources. During an not attending in-person. Districts highlighted economic downturn when districts have to consider that this was a way for students who planned making program reductions, they may be more to be absent for a period of time to complete likely to reduce initiatives that support attendance, schoolwork they would otherwise miss, and since these initiatives would no longer generate to generate ADA for the district. (Available additional funding. Under enrollment-based statewide data does not disaggregate short-term funding, districts also may be less likely to provide independent study ADA from other ADA.) Many additional instruction outside of the regular school districts we spoke to also indicated they planned day or provide support to students who are to implement attendance recovery programs in absent, as they would no longer receive additional 2025-26 (when they can begin to receive additional funding through short-term independent study and funding) to provide instruction to students who attendance recovery programs. were absent and generate additional ADA. Most Switching to Enrollment-Based Funding commonly, districts indicated they planned on Likely Would Have Adverse Effects on using certificated teachers as part of their ELOP Attendance. Based on our analysis of the programs to provide attendance recovery to information available, we find that shifting to an elementary school students. State law requires enrollment-based student count would likely result separate tracking and reporting of ADA generated in somewhat lower attendance rates over the long through attendance recovery, so the state will run. Our assessment is informed by the statewide have information on the additional instruction that increases to attendance after the enactment of is being provided to students who were absent. SB 727, our conversations with LEAs around Preliminary data for the first half of 2025-26 will be actions they take to support attendance, and our reported to the state by the spring of 2026. assessment of the way ADA-based funding creates Under an ADA Model, Activities That a fiscal incentive for LEAs to prioritize actions that Improve Attendance Can Help LEAs Generate support increased attendance. These changes Additional Funding. Districts currently spend are not likely to occur immediately, but as LEAs substantial resources and staff time on programs modify their programs over the long term. However, and strategies that improve attendance, as well based on the limited data available, we are unable as provide additional support and instruction to to estimate the magnitude of the policy change on students who are absent. One factor that helps overall attendance, or for different subgroups. encourage the implementation of these programs and strategies is that they generate additional Planning Implications funding for schools if they help increase ADA. Enrollment-Based Funding Would Be More In some cases, the costs of these initiatives are Aligned With District Planning and Somewhat more than offset by the additional revenue they More Predictable. In our conversations with generate through higher ADA, making these districts, all reported that they use enrollment initiatives more appealing for LEAs. If the state projections to allocate staff and base funding switches to an enrollment-based student count, 26 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT across their school sites. These enrollment school year. Data collected by CDE known as the projections are typically based on various stability rate—the share of students that spent at demographic and community information, such least 245 days continuously enrolled in one school as changes in the supply of housing within a during an academic year—shows that 91.5 percent district’s boundaries. Prior to the pandemic, when of students statewide remained enrolled in one attendance rates were more stable, districts school for the vast majority of the school year. could apply an attendance rate adjustment to In alternative schools, however, this rate was only their enrollment projections to estimate their 39 percent. The instability in alternative schools is LCFF funding (for example, by taking 95 percent most likely to affect planning for charter schools of their enrollment to project ADA). In recent years, that primarily operate alternative school programs however, as attendance rates have become more and COEs. (Most programs that COEs operate are uncertain, ADA has become somewhat more alternative school programs.) difficult to predict. School districts also reported Charter Schools Face Greater Volatility greater concern about events that could affect From Attendance-Based Funding. Since their ADA, such as student protests and federal charter schools are not credited with prior-year or deportation efforts—events for which they are three-prior-year student counts, they experience not eligible to obtain a waiver. Given districts greater uncertainty from attendance-based funding. currently plan using enrollment figures, funding Switching to enrollment-based funding may offer based on enrollment would be more aligned with greater stability to charter schools compared with current budget planning and would be somewhat school districts, although those that are alternative more predictable. schools likely would still be subject to volatility Due to Hold Harmless Provisions, Attendance in enrollment. Does Not Affect Current Year LCFF for Most Administrative Implications Districts and COEs. For the one-third of school districts whose LCFF allotments are based on Switching to Enrollment-Based Funding their current-year ADA, the uncertainty around Unlikely to Significantly Change Ongoing attendance affects their current-year funding Administrative Workload. The LEAs we spoke levels. Most school districts and COEs, however, with indicated that their student information are funded based on their prior-year ADA, or their systems already track both daily attendance and average ADA from of the three previous years enrollment throughout the school year. Attendance and are not affected by the uncertainty of their data is collected for funding purposes, but also current-year ADA until future years. Similarly, for purposes of tracking habitually truant students ADA for purposes of special education funding is and chronic absenteeism rates. Daily enrollment based on the higher of the current year, prior year, is necessary for calculating chronic absenteeism or second prior year, which means most districts rates (although only Census Day and cumulative are not affected by current-year funding declines. enrollment are reported to the state). Given daily enrollment is already collected, shifting to an Enrollment Can Be Volatile for Alternative enrollment-based student count would not require Schools. The school districts we met with LEAs to collect new data. However, these changes generally reported that ADA was more volatile could require one-time costs for LEAs to adjust than enrollment. Although students can be absent information systems to report enrollment to CDE. throughout the year for a variety of reasons, Shifting away from an ADA-based student count leaving the school is much less common. For some would not significantly reduce workload with programs, however, enrollment can also vary tracking and reporting absences to the state given significantly throughout the year. In particular, LEAs would still be required to do so in accordance alternative schools—such as continuation high with compulsory education laws and requirements schools, juvenile court schools, and opportunity for calculating chronic absenteeism rates. schools—have significant turnover throughout the www.lao.ca.gov 27 analysis full AN LAO REPORT Likely One-Time State Costs to Shift Systems funding and whether any new requirements to Enrollment. Similar to the effect on LEAs, were put in place. For LEAs that offer short-term shifting to enrollment-based funding likely would independent study and/or attendance recovery not significantly affect ongoing costs for the state. programs, switching to an enrollment-based However, CDE would likely face one-time costs student count would mean that they would no to update the apportionment system for a new longer generate additional funding for these student count. Additionally, CDE would experience activities. This would reduce the administrative one-time administrative workload associated costs of complying with the associated tracking and with providing guidance to districts on reporting reporting guidelines, but would also likely result in enrollment counts. These one-time costs, would LEAs no longer providing these services to students depend on how the state decides to implement an to the same degree. enrollment-based student count. For example, if the state were to use Census Day enrollment, which ALTERNATIVES TO is already reported to the state, one-time costs to ENROLLMENT-BASED FUNDING the state would likely be minimal. If the state were In this section, we discuss three alternatives to to use an enrollment count that is not currently shifting to enrollment-based funding that would reported, implementation would be more costly. maintain the current ADA-based system. Consistent LEAs Could See Lower Administrative Costs with the report requirements set in statute, these Associated With State Funding. Switching alternatives would yield similar statewide increases to enrollment-based funding could ease the in LCFF costs. administrative burden of complying with a few state Alternatives Vary in Distributional Effects and requirements. For example, complying with the Share of Funding That Is Restricted. Figure 16 state’s annual financial audit requirements likely lists the three alternatives we use to compare with would be less burdensome if the state only required enrollment-based funding. These alternatives all auditing of enrollment data and eliminated auditing have roughly the same statewide LCFF costs and of attendance data. Complying with independent maintain the use of ADA, but modify components study requirements also could be less burdensome of LCFF base, supplemental, and concentration if the state no longer made funding contingent upon grants. We compare these alternatives to a completion of work products. The specific effect on switch to enrollment-based funding and focus our administrative burden would depend upon how the comparison on two factors: (1) the effects across state implemented the change to enrollment-based districts of varying UPP levels, reflecting different Figure 16 Selected Alternatives That Maintain ADA-Based LCFF Funding Option Description Effects Alternative 1 • Apply a 7.24 percent increase to LCFF rates. • Proportional increase in funding for all districts. • Proportional increase to base, supplemental, and concentration grants. Alternative 2 • Increase LCFF supplemental grant rate from • Additional funding targeted to higher UPP districts. 20 percent of the base to 30 percent of the base. • All of the increased funding would be restricted for • Increase concentration grant rate from 65 percent increasing or improving services for English learners, of the base to 80 percent of the base. low-income students, and foster youth. Alternative 3 • Increase LCFF base rate by 3.2 percent. • Majority of additional funding targeted to higher UPP • Increase supplemental grant rate from 20 percent districts, with some proportional base funding increases for of the base rate to 25 percent. all districts. • Increase concentration grant rate from 65 percent • Majority of funding restricted for increasing or improving of the base rate to 75 percent. services for certain student groups, with some funding available for any purpose. ADA = average daily attendance; LCFF = Local Control Funding Formula; and UPP = unduplicated pupil percentage. 28 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT distributional outcomes, and (2) the proportion of low-income students, and foster youth. Providing the increases that are unrestricted base funding, more of the increase through supplemental and reflecting different levels of flexibility districts would concentration grant funding would allow the state have over the funding. Due to data limitations with to target funding to high UPP districts, which have charter schools and COEs, our analysis focuses on higher chronic absenteeism rates on average, the effects on school districts. but would place more restrictions on how LEAs Alternative 1 Maintains Flexibility for could spend additional funds. Under alternative Districts, but Less Targeted to High UPP 2, the entire funding increase would be provided Districts. As Figure 17 shows, compared with through a combination of supplemental and enrollment-based funding and alternatives 2 and 3, concentration grant funding, with no increase in alternative 1—an across-the-board increase to base funding. Of the alternatives we identified, this LCFF—provides larger funding increases for approach would provide the largest increases to lower UPP districts (quartiles 1 and 2) and smaller high UPP districts, although none of the increase increases for higher UPP districts (quartiles 3 would come through base funding. Alternative 3, and 4). Conversely, compared to alternatives 2 and on the other hand, provides about one-third of 3, alternative 1 provides greater levels of flexibility. the funding increase through base funding. This As Figure 18 shows, enrollment-based funding and approach would provide some level of flexible base alternative 1 both provide roughly 80 percent of funding to all districts, while being more targeted to the increase through base funding. This is because high UPP districts than switching to an enrollment both policy changes do not alter the weights for student count methodology. Providing funding the components of LCFF that are based on UPP. increases through supplemental and concentration The main difference between enrollment-based funding may be more restrictive for districts with funding and alternative 1 is the manner in which lower UPP levels, as existing regulations more easily base funding is distributed across school districts. allow for higher UPP districts to use supplemental Enrollment-based funding would provide larger and concentration grant funds for schoolwide or increases to school districts with districtwide programs. lower attendance rates, whereas alternative 1 provides all districts Figure 17 with an equal percent increase. Alternatives 2 and 3 Provide Larger Alternatives 2 and 3 Provide Funding Increases to High UPP Districts More Targeted Funding to Increase in Average LCFF Funding Per Student, by UPP Quartile Support High-Needs Students. As Figure 18 shows, compared Enrollment- Quartile Based Funding Alternative 1 Alternative 2 Alternative 3 to enrollment-based funding and alternative 1, alternatives 1 5.2% 7.2% 2.7% 4.6% 2 6.6 7.2 5.3 6.0 2 and 3 provide more of the 3 8.0 7.2 8.0 7.7 funding increases through grants 4 8.0 7.2 9.9 8.9 targeted for English learners, UPP = unduplicated pupil percentage and LCFF = Local Control Funding Formula. Figure 18 Alternative 1 Provides Similar Level of Base Funding to Enrollment Funding Increases by Grant Type (In Billions) Enrollment Alternative 1 Alternative 2 Alternative 3 Base $4.1 $4.1 — $1.8 Supplemental and Concentration 1.0 1.0 $5.1 3.3 Totals $5.1 $5.1 $5.1 $5.1 Share of Increase Coming From Base 80% 81% — 36% www.lao.ca.gov 29 analysis full AN LAO REPORT RECOMMENDATIONS Recommend Continuing With ADA-Based high UPP districts are negatively affected because Funding. Overall, our analysis finds that shifting they tend to serve student groups that historically to enrollment-based funding would be somewhat have had higher absence rates. If the Legislature more predictable and reduce some administrative is interested in providing funding increases that burdens for LEAs, but likely would have a negative would disproportionally benefit LEAs with higher effect on student attendance over the long run. UPP levels, it could do so by making changes Given attendance rates continue to remain below under the existing ADA-based model that provides pre-pandemic levels and the available research higher rates for these LEAs. This would target suggests a strong relationship between attendance high UPP districts while maintaining the current and student outcomes, we recommend the ADA-based system that places greater attention Legislature maintain its ADA-based system at on regular student attendance. (As we discuss this time. Shifting away from ADA-based funding in the nearby box, the Legislature could consider could hinder efforts to improve attendance and changes to improve another key tool used to focus reduce chronic absenteeism levels in schools. One efforts on student attendance: the California school potential concern with an ADA-based system is that dashboard chronic absenteeism indicator.) Changes to Chronic Absenteeism Indicator Could Increase Accountability Chronic Absenteeism for Transitional Kindergarten (TK) Through Grade 8 Is an Indicator on California School Dashboard. As part of the state’s accountability system, districts report various student outcomes, referred to as statewide indicators, which are then displayed on a public website known as the school dashboard. Each statewide indicator is linked to one of eight state priority areas. Outcomes from standardized tests, for example, are part of the student achievement priority area, while chronic absenteeism is one of two indicators (along with the high school graduation rate) used to measure student engagement. Students are identified as chronically absent if they are absent for more than 10 percent of the time they are enrolled at a school. (A student enrolled at a school district for a full academic year is considered chronically absent if they miss 18 or more days of school.) As part of their annual Local Control and Accountability Plans, local education agencies (LEAs) are required to specify actions they will take to meet goals they set for several indicators, including their chronic absenteeism rates. Although the state collects and publishes chronic absenteeism data for all students, the chronic absenteeism rates reported on the dashboard only include data for students in grades TK through 8. Dashboard Assigns Performance Levels for Statewide Indicators. For each statewide indicator shown on the school dashboard, the state assigns one of five performance levels, with data available by LEA, school, and student subgroup within an LEA or school. These performance levels are based on a combination of overall status and change in performance over the past year. In 2025, 108 (out of over 900) school districts were assigned the lowest performance level in chronic absenteeism for their total student population, while another 388 school districts were assigned the lowest performance level for at least one subgroup. In the same year, 206 (out of more than 1,000) charter schools were assigned the lowest performance level in chronic absenteeism for their entire student population, with an additional 195 assigned the lowest performance level for at least one subgroup. LEAs are identified for differentiated assistance if they have at least one student subgroup that is assigned the lowest performance level in more 30 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT ...continued than one priority area. As part of differentiated assistance, LEAs must examine their root issues and access support to help them improve. To comply with federal accountability rules, the state uses a similar process to identify schools in need of support. School Dashboard Does Not Provide Accountability for High School Absenteeism. The state brings attention to student attendance in two key ways. First, it funds LEAs based on their average daily attendance. Second, it publishes chronic absenteeism data on the school dashboard and uses this data as part of the state’s approach to identify LEAs that are eligible for differentiated assistance. The latter approach, however, does not measure or track absenteeism at the high school level. The dashboard currently uses chronic absenteeism rates as an indicator of student engagement for grades TK-8, while the four-year graduation rate is used for high schools. Based on conversations with the State Board of Education, our understanding is that the state excluded high school absenteeism rates as part of its negotiations with the federal government to ensure compliance with federal Every Student Succeeds Act (ESSA) requirements. Including high school absenteeism rates on the dashboard would have resulted in a larger imbalance of high school indicators compared with elementary school indicators. Under the state’s current ESSA plan, the state has two indicators that only apply to high schools (graduation rates and the College and Career Indicator) and one that only applies to elementary schools (chronic absenteeism). An imbalance of indicators can result in an overidentification of high schools as needing to receive additional support under federal rules. Legislature Could Consider Ways to Highlight High School Chronic Absenteeism Rates. Increasing transparency and accountability around high school chronic absenteeism rates would help bring greater focus to student attendance, particularly if the state were to shift to enrollment-based funding. One option would be for the Legislature to require high school absenteeism rates be included in the dashboard. This approach would be well-aligned with the existing accountability system, but would require the state to revise its ESSA plan and potentially make other changes to its accountability system to remain in compliance with federal government. For example, the state may need to add an indicator for elementary schools or change how indicators are weighted under the current system. Alternatively, the state could identify other ways to highlight high school absenteeism rates outside of the accountability system. For example, the Legislature could require the California Department of Education to separately publish high school absenteeism rates by LEA, school, and student subgroup, similar to how data is disaggregated on the dashboard. ISSUES TO CONSIDER IF ADOPTING ENROLLMENT-BASED FUNDING Although we do not recommend a switch to Enrollment Count Methodology enrollment-based funding, in this section we If State Switches to Enrollment, Recommend describe several implementation issues the Using Enrollment Averaged Across the School Legislature may want to consider if it were to shift to Year. If the state switches to an enrollment-based an enrollment-based student count. student count, we recommend the state use enrollment averaged across the school year, similar to how ADA is currently calculated. This approach www.lao.ca.gov 31 analysis full AN LAO REPORT would account for changes in the number of removing excused absences in 1997-98 and students served across the whole school year, excluding concurrently enrolled adults in 1993-94. and would be particularly helpful for LEAs that Using enrollment instead of ADA, however, would experience significant fluctuations in enrollment likely require voter approval, as the Constitution throughout the school year (such as COE and explicitly references attendance. (The version of charter schools that operate alternative schools). Proposition 98 approved by voters in 1988 might We do not expect this change to be administratively have allowed the Legislature to make this change, burdensome to implement, as existing school but an amendment in 1990—Proposition 111— information systems already collect this tightened the attendance requirement.) information to calculate chronic absenteeism rates. Enrollment-Based Funding Is Unlikely to The Legislature also could consider maintaining Affect the Guarantee Significantly. Whereas the the existing reporting time lines, where districts Constitution requires attendance to calculate the must submit data three times a year. Consistent Proposition 98 guarantee, it sets no requirements with current practices related to ADA, we for LCFF or other state categorical programs. recommend any new enrollment count be subject to Switching programs to enrollment-based funding annual audits. could indirectly affect the guarantee, but only under Consider Setting Specific Rules Around two specific conditions. First, it would need to affect How Enrollment Is Funded. If the Legislature year-over-year attendance growth. For example, if were to adopt enrollment-based funding, it may the change caused attendance rates to decline over want to consider setting specific rules around several years, the annual attendance adjustment how enrollment is counted for funding purposes. in those years would be lower than it would have For example, the Legislature may want to consider been otherwise. Conversely, if an enrollment-based setting a policy for how to count students who approach does not affect attendance rates, the are concurrently enrolled at two schools, such guarantee would be unaffected. Second, Test 2 as a student enrolled in a school district who is or Test 3 would have to be the applicable test. temporarily enrolled at a COE-run juvenile court Our November 2025 fiscal outlook, however, school. (Under the current funding system, the projects Test 1 will likely remain operative through home district does not generate ADA while the the end of our forecast in 2029-30. This projection student is receiving instruction at the court school.) is mainly related to declines in births and reductions The Legislature may also want to establish rules in the school-age population—trends that are regarding students who are counted as enrolled unlikely to reverse quickly or change in response to but never attend during the school year or drop out enrollment-based funding. of school. The specific solutions to these issues Statutory Adjustment Could Avoid Any would depend on the methodology the state uses Unintended Reduction in Proposition 98 to calculate enrollment. Guarantee. Although enrollment-based funding seems unlikely to have much effect on the Proposition 98 Calculations guarantee, the Legislature could adopt a special California Constitution Requires ADA for adjustment to remove any possibility of a reduction. Certain Proposition 98 Calculations. The Specifically, the state could calculate Test 2 and Constitution sets forth three main tests (formulas) Test 3 using changes in enrollment, then compare for calculating the Proposition 98 guarantee. those results with the constitutionally required Test 1—the most commonly used test over the past calculations based on changes in attendance. 15 years—is based on a share of General Fund If the enrollment-based calculation produced a revenue and is unaffected by attendance. For Test 2 higher funding amount, the law could require a and Test 3, the state applies the percentage change supplemental appropriation equal to the difference. in ADA to the prior year’s funding level, along with This adjustment would not require voter approval an inflation adjustment. The state has modified because it involves augmenting the guarantee the ADA in this calculation several times, notably in certain situations rather than altering the 32 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT underlying constitutional formulas. Moreover, using a student-count measure—ADA for the law already requires a similar supplement in schools and full-time equivalent enrollment for certain years when revenues are weak. (The state the other segments. If the state were to begin adopted this mechanism in the early 1990s to using school enrollment for these allocations, prevent disproportionate funding reductions during the total statewide student count for schools economic downturns.) The state could use this would increase and schools would receive a approach during a transition period while districts larger share of funding than other segments. adjust to enrollment-based funding, and then repeal The Legislature could consider modifying the it once attendance rates stabilize. Alternatively, the allocation so that schools do not receive a Legislature could, on an annual basis, appropriate larger share. Consistent with the requirements more than the guarantee whenever it determines of Proposition 37, any changes to state law that the constitutional formulas are insufficient to would likely require a two-thirds vote. fund its school priorities. • Necessary Small Schools (NSS). The NSS program provides an alternative LCFF base Considerations for Other Programs grant formula for districts with ADA of 2,500 Shifting to Enrollment May Require Changes or fewer that operate very small schools and to Other Programs. Several existing programs that are geographically isolated. The NSS and state policies rely on the use of attendance. allocation uses funding bands based on the If the state were considering shifting all programs combination of a school’s ADA and its staffing to enrollment, the Legislature may want to consider levels, whichever provides the lesser amount. how this would impact other programs. Below, we The Legislature may want to consider whether identify a few key programs or policies that could be the ADA thresholds should instead be based affected by a switch to enrollment-based funding. on enrollment, and consider modifying the • Independent Study. Currently, LEAs generate bands to minimize changes in funding due to ADA from independent study programs the policy change. when students participate in synchronous • Funding Determination Process for instruction and complete coursework. If LEAs Nonclassroom-Based Charter Schools. were funded based on enrollment, they would State law requires charter schools that receive funding regardless of how much provide less than 80 percent of their independent study students participate in instruction in person to be considered a instruction and complete work. LEAs are “nonclassroom-based” charter school. currently required to establish procedures This determination is currently made based for reengaging with students who are not on the proportion of a school’s ADA that is regularly attending or completing work. classroom-based. Student enrollment, by The Legislature may want to reassess these contrast, is not classified as classroom-based requirements and consider whether additional or nonclassroom-based, and students can requirements should be put in place to ensure receive part of their instruction in person students are receiving sufficient support. and partly through independent study. If the • California State Lottery Revenues. State state shifts to enrollment-based funding, the law requires a portion of revenues from Legislature may want to consider creating the State Lottery to be allocated annually a new definition that does not use ADA. For among schools, community colleges, and example, it could create a definition based on other public and higher education systems. the proportion of a school’s instruction that is These requirements were initially established provided in the classroom and the proportion by Proposition 37 (1984) and subsequently provided through independent study. amended by the Legislature. The State • ELOP. LEAs receive ELOP funding based Controller’s Office allocates available lottery on their classroom-based ADA, and funding to each public education segment nonclassroom-based charter schools are www.lao.ca.gov 33 analysis full AN LAO REPORT ineligible to receive ELOP funding. Given the actions to address absenteeism that are aligned state does not categorize student enrollment with best practices. For example, the Legislature as classroom-based or nonclassroom-based, could require that LEAs periodically review the Legislature may want to create an attendance data and talk with students and parents enrollment-based definition of in-person when a student is at risk of being chronically instruction if it wants to continue to restrict absent. These conversations could focus on funding to classroom-based programs. identifying root causes of attendance issues and • Programs That Can Generate More Than emphasize the importance of regular attendance. One Unit of ADA Per Student. In general, The Legislature could also require LEAs establish a student cannot generate more than one attendance teams and create a plan with a tiered unit of ADA from attending school for a full system of interventions, similar to other states. In academic year. However, state law provides addition, the Legislature could require LEAs to offer exceptions for some specific programs— absent students access to additional instructional such as juvenile court schools and Extended support outside of the school day, similar to what School Year services for special education they might currently receive through attendance students—that operate longer than a recovery programs. traditional 180-day school year. (For example, Consider Ways to Maintain Focus on juvenile court schools run by COEs operate Attendance. If funding is no longer based on on every weekday of the calendar year, except student attendance, schools may not monitor for holidays.) If switching to enrollment, the attendance trends as closely as they did under Legislature may want to consider allowing an ADA-based funding system. The Legislature students enrolled in these programs to could explore policies that help maintain attention generate more than one unit of enrollment. on attendance rates. For example, the state The specific adjustment would depend on could publish real-time attendance data for the specific enrollment count the Legislature every LEA and school, similar to the approach decided to implement. recently implemented in Rhode Island. Publishing this information could increase transparency Options to Support Student Attendance and draw greater public attention to changes in If the Legislature is interested in adopting an student attendance. enrollment-based student count, it may want to Provide One-Time Grants for Training and consider making other changes to mitigate potential Sharing Best Practices. The state could use negative effects on student attendance. Below, one-time Proposition 98 funding to contract with we describe a few options the state could take to one or more LEAs experienced in implementing improve attendance under an enrollment-based effective attendance improvement initiatives to funding model. provide training across the state. This approach Require Schools Take Specific Actions to could help LEAs reflect on their current practices Support Students Who Are at Risk of Being and identify ways to make them more effective. Chronically Absent. To address concerns that The state could prioritize grant funding for LEAs LEAs would place less emphasis on attendance, with the highest rates of chronic absenteeism. the Legislature could require schools take specific 34 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT CONCLUSION Through its school funding formula, the state additional school funding moving forward, it will establishes important priorities and sets specific want to consider how the benefits and drawbacks requirements for LEAs. We find that shifting to of shifting to enrollment-based funding compare enrollment-based funding would be somewhat more with other approaches, such as increasing funding predictable and less administratively burdensome through the existing attendance-based funding for schools, but likely would reduce student model. If the Legislature is interested in transitioning attendance over the long run. Given attendance to an enrollment-based model, it will also want rates continue to remain below pre-pandemic to consider changes to other existing programs levels and the available research suggests a and policies to ensure they are aligned with the strong relationship between attendance and new funding approach, as well as additional student outcomes, we recommend the Legislature actions to mitigate potential negative effects on maintain its attendance-based system at this student attendance. time. As the Legislature considers how to spend www.lao.ca.gov 35 analysis full AN LAO REPORT LAO PUBLICATIONS This report was prepared by Michael Alferes, and reviewed by Edgar Cabral and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 36 LEGISLATIVE ANALYST’S OFFICE