Many states fund students who utilize school choice—public charter schools, private school voucher programs, interdistrict open enrollment, and the like—via “passthrough” mechanisms whereby per-pupil funding goes into a student’s home district coffers first before being transferred to the schools that students actually attend. Not only can such a funding model engender unnecessary animosity between education providers, but it can also muddy the water in vital analysis and discussion of revenue and spending. A new paper from Matthew Gardner Kelly of Penn State University and Danielle Farrie of the Education Law Center in New Jersey spells out the ways in which school funding data are complicated by passthroughs and calls for increased accuracy in funding data.
Using enrollment and fiscal stats from National Center for Education Statistics’s (NCES) Common Core of Data’s Local Education Agency Finance Survey, Kelly and Farrie find that traditional public school districts in forty-six states reported some form of passthrough payments in the 2018–19 school year. Amounts, means, and purposes varied greatly. These funds are included in the districts’ revenue and expenditure totals, but the students funded by them are excluded from enrollment totals. They term this per-pupil funding gap “artificial inflation” because the numbers make it look like districts are spending more money per pupil than they really are.
Kelly and Farrie illustrate the artificial inflation problem using their home states as examples. In Pennsylvania in 2018–19, federal data included $2.1 billion in funding designated for charter schools in district funding totals, even though the 143,259 charter students funded by those dollars were excluded from district enrollments. The “artificial inflation” average for the state was almost $1,900 per pupil, but that number masks a wide variation—from more than $25,500 per pupil in the Duquesne City School District to just $450 per pupil in Northern Tioga School District. These variations are driven by differences in the number of students attending charters, plus differences in the per-pupil amount of state dollars provided to districts via the funding formula.
Meanwhile, in New Jersey, interdistrict open enrollment was the largest passthrough category in 2018–19, totaling $1.3 billion. While there is less variation from district to district in this context, the most extreme example provided was a district that received nearly double the amount of state funding its 554 enrolled students were allotted, thereby inflating revenues and expenditures by nearly $14,000 per pupil. Again, state averages mask considerable diversity of data, and indeed, the analysts don’t tackle the issue that open enrollment typically includes both sent and received students, with money and students flowing both directions. Their bottom line, however, is well received: The more variables to be accounted for, the more accuracy can potentially be compromised.
Largely, this is “a researcher problem.” It’s not that districts are actually getting more—or less—money than they are eligible for. Considering it’s been more than thirty years since the first charter school opened its doors, this should be widely known among the research community. But Kelly and Farrie claim that the issue needs reiteration and explain how their colleagues can “avoid this inconsistency” when using federal data by subtracting passthrough dollars from total revenue, total state and local revenue, and total expenditure variables before calculating per-pupil data. They also encourage NCES to very specifically “provide more detailed enrollment data so that researchers can distinguish between membership counts that include or exclude students” associated with all of the various passthrough funding processes that exist in the vast majority of states. It is interesting to note that passthrough funding is excluded for certain school funding data (see page 42 of this Census Bureau document for details on Ohio). But until it is uniformly the case, Kelly and Farrie’s advice should be heeded by number crunchers everywhere.
SOURCE: Matthew Gardner Kelly and Danielle Farrie, “Misrepresented Funding Gaps in Data for Some States,” Educational Researcher (January 2023).