ADA to ADM Funding

In Texas, the funding schools receive for the number of students enrolled and their daily attendance has dropped. After the pandemic, the state legislature is discussing a possible shift from funding by Average Daily Attendance (ADA) to Average Daily Membership (ADM). 

There are currently only a handful of ADA states left, the largest being Texas and California. Proponents of maintaining ADA funding believe that districts will not have enough incentive to focus on attendance unless it is the method of payment. In theory, this may make sense, but the unfortunate reality is that funding is reduced––and often from the districts that have the greatest need.

To make sure all districts can get better funding, we need to make sure we address absenteeism swiftly and effectively. SchoolStatus Attend is the most effective way for a school district to tackle chronic absenteeism. The data-driven attendance management platform and processes provide automatic interventions and positive reinforcement to support student success, increase daily attendance, and reduce administrative overhead. 

The reason for investing in a proactive attendance program is simple. In an ADA state, the return on the investment in schools increases ongoing revenue. The second benefit is more subtle but also shows why ADM states need to make attendance a priority. When students pass 10 days of absence each year, academic performance drops. When students miss school in ADM states, more interventions are required to support students who are academically behind. When attendance improves, so does academic achievement. This naturally reduces the number of students needing interventions. Since the intervention budget is already accounted for, this frees up resources for more intensive support to those students who need it. 

For an example of ADA funding and budget costs, think of a district with a 90% attendance rate of 100 students enrolled who would be funded for 90 students. If we use an average staff ratio––20 students to 1 teacher––districts need to hire 5 teachers and provide all the technology and instructional materials. Assuming the base funding per student was $8,000, that district would receive $720,000 total or ($7,200 per student) under ADA funding. If the state moves to Average Daily Membership (ADM) funding, the district would receive $80,000 more to provide services to all students.

California chose to remain an ADA funding model in 2022–2023. The Governor and Legislature recognized the lower ADA from the 2021–2022 school year would negatively impact school budgets and enacted two positive changes for Local Education Agencies budgets:

• The move to a 3-year averaging of ADA for funding to reduce the impact of declining enrollment and lower ADA rates
• The additional adjustment to the 2021-2022 ADA component of that 3-year average has a calculation adjustment based on the historical ADA rate of the LEA to create a proxy ADA

Both measures allowed LEAs to have a “soft” landing in the current 2022-2023 budgets using the 2019-2020 ADA (twice) and the proxy 2021-2022 ADA to produce the funded ADA. The goal was that the current year would see attendance return to previous rates.

SchoolStatus created a “first look” sampling of the actual attendance rates of over 1 million students for LEAs in 2022-2023. The results of this analysis produce some concerning trends for district leaders to consider as part of their First Interim Adjustments:

• The average ADA for the first 30 days of 2023 was 93.09%
• This is 2% above the average from the previous year, but still has the average student missing 12.4 days of school
• In this “first look,” the new range of ADA for LEAs across the State is between 90% and  93.5% 

Rates of chronic absenteeism remain in the 30%–40% range with the highest numbers in the TK–3 and 9–12 grade spans. The potential for a generational academic crisis grows as lost learning days add up.

As California LEAs finalize their First Interim, they will need to account for the fact that the current 3-year ADA averaging will result in LEAs dropping the 2019-2020 high year and replacing it with the current 2022-2023 rate. 

To illustrate the impact of this change, this chart shows funding for a 10,000-student district with a declining enrollment of 100 students each year (9,700 enrollment in 2022-2023) and using the 95.82% ADA in 2019-2020, 91.01% for the 2021-2022 rate, and 93.09% for the current 2022-2023 rate.

Viewing this LEA, the result of replacing the high year 2019-2020 (9,582.00) with the current year 2022-2023 (9,029.73) creates a reduction of 552.27 ADA with the impact spread out over 3 years. Using an average LCFF funding for an LEA of $13,527 this is a reduction of $7,470,556. To borrow a concept from the NFL, when a player is released it creates a “dead cap” number and some of these cover multiple years. For this LEA in California the impact of our “new normal” would be a “dead cap” of $2,490,185.43 for the next 3 years.

The loss of resources in this example is familiar in many LEAs. Moreover, the higher chronic absenteeism rates will require more interventions in the future, with declining resources. 

SchoolStatus Attend has shown positive results with our partner districts. The average district is up in attendance by more than 3% compared to those LEAs that do not have a comprehensive focus. With everything educators have on their plates, expecting the current staffing levels to do more is not realistic, and having a partner like SchoolStatus can make an academic difference for a generation of students.