If a business loses hundreds of customers to a competitor, are they justified in thinking they will retain the same level of profit? Of course not, that’s absurd. However, Oklahoma school district administrators appear to think so. A recent article in the Oklahoman discusses the financial impact of the mid-year funding adjustment for Oklahoma school districts. School administrators bemoan the adjustment, citing the hardships of the pandemic. This reduction should come as no surprise, however, considering how Oklahoma’s school district funding is set up.

State appropriated school district funding is allocated based on Weighted Average Daily Membership (WADM), a convoluted “per student” funding measure. WADM is then used to calculate how much funding a school district will receive from the state. In essence, the more students you have in your district, the more money the district will receive overall. It follows that if a district loses students, it will not receive as much funding, and if a school district gains students, it will receive more funding.

In 2020, school districts decided to shut-down in-person learning during the pandemic but were not adequately prepared to continue teaching students virtually; consequently, they lost some students to schools that did virtual schooling better. Specifically, in Oklahoma, over 60,000 students left their traditional public schools and enrolled in various charter schools. Therefore, the traditional districts’ enrollment fell while charter school enrollment rose. As a result, based on our discussion of formula funding above, you would think that traditional school districts would lose funding and charter schools would gain.

However, there’s a caveat—the three-year funding high. The three-year funding high was instituted to shield schools from the consequences of losing students. Here’s how it works: when the state does its funding calculation, it uses the highest WADM from any of the past three school years. As a result, districts with declining enrollment continue to receive funding for students that are no longer in their district (often called “ghost students” since they’re counted without being present). Herein lies the problem. If traditional school districts receive funding based on their previous enrollment high (before massive numbers of students left for charter schools), and charter schools receive funding based on their new enrollment, the students that left their district for charter schools get counted twice for purposes of calculating the per-student allocation used in the funding formula.

Because total funding for this year remains the same regardless of the number of students, but the total number of students has been artificially increased, the average per-student allocation of funds decreased with the mid-year adjustment. As a result, every single school district in the state bears the cost—even school districts that did not lose students.

Oklahoma lawmakers’ attempt to shield school districts from the financial result of declining enrollment has caused all the districts to suffer unnecessary financial hardship. Successful Oklahoma school districts should not be forced into financial hardship when other school districts underperform. The legislature should stop protecting underperforming school districts that are shedding students, forcing other districts to pay for it by funding “ghost students.” The legislature should immediately do away with the three-year funding high and fund every school district based on its current enrollment.

Tyler Williamson is a Research Associate at 1889 Institute and can be reached at twilliamson@1889institute.org.

The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.