Equity in Student Success – Part 3: Legislative Post Audit Studying At-Risk Funding

Equity in Student Success – Part 3: Legislative Post Audit Studying At-Risk Funding

As noted in Part 1 of this series, students from lower income families (eligible for free or reduced-price meals) score much lower on reading and math tests and have lower graduation rates than higher income students. Part 2 showed how the state school finance formula provides additional funding for students based on the number of low-income students, but districts use that funding to help any at-risk students, regardless of income.

This part reports how Legislative auditors are studying that system of extra funding to school districts to help students at risk of poor academic performance or dropping out of school. The study, directed by the Kansas Legislature in the 2017 school finance bill, is expected to be completed in December, with results presented to the 2020 Kansas Legislature. Here is the audit proposal.

Issues in at-risk funding

Over the years, Kansas at-risk funding has received scrutiny due to several concerns. First, some Legislators charge that some number of students who should not actually quality for free meals are being counted by school districts because free lunch eligibility is not closely audited, which they say inflates the cost of the program. Second, some say free lunch status, basically being low income, is not the best indicator of actual student need. Third, some say that current spending on these programs is not used appropriately to deliver the best results.

For two years, 2016 and 2017, the state abolished the school finance formula for a “block grant” system and considered some alternative proposals for at-risk funding. However, the 2017 Legislature basically reinstated the prior law, including at-risk funding based primarily on free lunch eligibility, and actually increased the weighting factor, applied high density weighting to individual school buildings as well as districts, and required districts to spend a portion of their local option budget funding on at-risk programs based on their at-risk weighting.

Possible options for determining at-risk funding

That same 2017 law also directed the current Legislative Post Audit study, which will focus on three areas.

First, the auditors will study how the method Kansas uses to fund at-risk students in a district compares to other methods. This will include asking school district officials and other stakeholders if the free lunch count accurately reflects the number of at-risk students in their district, reviewing academic literature to determine what factors might put students at risk of academic failure and what methods might be used to identify those students, and methods used by other states. The study will then evaluate the strengths and weaknesses of the current system and alternatives.

Previous studies by KASB, the State Department of Education and Legislative agencies have consistently found that virtually all states use either free lunch counts, free and reduced lunch counts or other measures of family income as the “proxy” for at-risk student needs. One reason is noted above a strong negative correlation between the percent of students on free (or free and reduced price) meals and various achievement measures. A second reason is that number of students receiving lunch assistance can easily be determined.

There are three primary alternative methods proposed for at-risk funding. One is to use income-based factors other than free lunch, such as actual poverty rates. However, federal poverty rates at the school district level are estimates that can have large margins of error, and they are based on residents of the school district, not students actually attending public schools.

Another option would be to base funding on students actually demonstrating low academic performance by factors such as state assessments. For a number of years, Kansas had a “non-proficient” weighting based on the number of students who scored below standards on state tests but were NOT eligible for free meals. The problem with this approach is that if a district successfully uses funding to help these students improve their performance, they lose the funding that supports those programs. Without those programs, student performance could then fall again, triggering more funding to simply replace programs that had been cut.

A final option would be to use other non-income factors determined by the State Board to identify at-risk students, such as not working on academic grade level or failing to meet requirements for promotion to the next grade; failing subjects or courses of study or not meeting the requirements necessary for graduation from high school, being retained at grade level, a high rate of absenteeism, repeated suspensions or expulsions from school or having social emotional needs that cause a student to be unsuccessful in school. The challenge with this approach is the difficulty in auditing these standards for the purpose of determining state funding, as well as the same issue that if programs are successful in reducing these problems, districts would lose the funding to sustain them.

Other audit issues

The second area of the audit will look at how the funding school districts receive through at-risk and high-density at-risk student weightings compare to what districts spend to provide services to those students.

This will include an in-depth study of certain districts to determine how districts define at-risk students, what services districts provide to these students, how many students receive at-risk services, how much the districts spent for those services; and then compare the at-risk funding districts receive through the at-risk weighting to expenditures districts make for providing services, in total and on a per-student basis, and examine differences among districts.

The third focus of the audit is whether at-risk funding been calculated in accordance with state law, how districts spend that funding, and whether those expenditures align with the types of expenditures allowed by state law or regulations.

What is at stake?

Funding through at-risk weighting is the one of the largest components of the school finance formula. Last year, it amounted to over $400 million, more than 10 percent of the total general fund support from the state – higher than any other specific funding category except for special education state aid ($480 million). Changes in at-risk funding mechanisms could therefore have a major impact on school district budgets.

In addition, as noted in Part 2, at-risk funding is almost entirely based on the number of free-lunch eligible students in each district, and the percentage of such students range from less than 10 percent to over 80 percent. As a result, changes in how at-risk funds are distributed could also result in significant shifts in funding among districts, especially if no additional funds are provided.