Around the country, school finance formulas and accounting systems are notoriously complex. Arizona’s system is no exception. For many years, Arizona’s program was considered one of the nation’s most difficult to understand.
The complexities often hide inefficiencies. A particularly vexing inefficiency is the practice of paying for “ghost” students. In theory, schools would receive funding on a per-pupil basis. The more students they have, the more funding they receive. However, because schools receive funding based on prior-year student counts, schools in districts with declining enrollments get funding for students no longer on campus. At the same time, schools with new students can get same-year funding. That means that when a student transfers between schools, the state pays for that student twice.
In 2009-10, that overpayment added up to $125 million spent on approximately 13,500 ghost students in districts with declining enrollments.
Arizona department of education officials are working to fix the student information system’s inefficiencies. However, the law is more outdated than the computer system. Lawmakers should update policies to base funding on current-year student enrollment so the money follows the child to a school or other education services. The state’s charter school funding policies serve as a model. When students enter a charter school, the school receives a current-year funding increase; if a student transfers out, when the next payment is calculated, charters do not receive money for that student.
In the past 20 years, Arizona has adopted several laws allowing parents to choose a school for their child or to customize a student’s educational experience, including education savings accounts, virtual schools, and charter schools. The state now needs to adopt a school funding structure that is as modern as the school choices students have at their fingertips.