Small: “Ghost student” reform pays off

“Ghost student” reform pays off

By Jonathan Small

In 2021, state lawmakers considered reforming school funding. Basically, they wanted to fund schools based on actual students, rather than the number of students who used to attend a district.

School officials reacted with “the sky is falling” rhetoric.

But now we’re three years down the road and the sky hasn’t fallen. Instead, a new report shows this simple reform has resulted in better allocation of roughly $180 million.

Before 2021, schools received funding based on current-year enrollment, prior-year enrollment, or enrollment from two years prior, whichever was greatest.

In practice, that meant schools with declining enrollment were paid for “ghost students” who did not exist within those districts.

In the 2020-2021 school year, districts received $195 million for 55,236 ghost students. Defenders of ghost-student funding portrayed it as a benefit to small, rural schools, but the Oklahoma City district (nearly 6,800 ghost students) and Tulsa (3,291 ghost students) were among the biggest beneficiaries. Just 22 districts accounted for 30,691 ghost students that year, or more than 55 percent.

So, in 2021, lawmakers voted to restrict the practice, requiring that schools’ per-pupil funding be based on either current-year enrollment or the final weighted average daily membership of the preceding school year.

A new report from the Reason Foundation shows an enormous reduction in ghost-student funding in Oklahoma has since occurred – a decline of nearly 93 percent.

In the 2022-23 school year, the Reason report found just 155 of 541 school districts in Oklahoma—or 28.7 percent—received declining-enrollment funding. There were an estimated 3,777 ghost students statewide, costing $14.03 million.

In 2021, the Oklahoma State School Boards Association (OSSBA) said ghost-student funding reform would result in “destabilizing and shrinking budgets, staffing, programs and class sizes” at schools.

The head of the Cooperative Council of School Administrators (CCOSA) also defended ghost-student funding.

But there has been no rash of school-district closures. In fact, overall school funding has reached historic levels. And thanks to the reform, funding is now more closely tied to actual children being served.

State Rep. Kyle Hilbert, a Bristow Republican who authored the legislation reforming the system, recalls that there were “countless falsehoods thrown at the Legislature” about the bill, but fortunately lawmakers “stood firm that the math and the truth was on our side.”

“This report by Reason verifies everything we said three years ago,” Hilbert said. “House Bill 2078 has ensured an additional $180 million is being spent on students that actually exist instead of ghost students.”

It never made sense to pay schools for educating children who didn’t exist. But common sense often draws strong opposition from special interests at the Oklahoma Capitol. The Reason Foundation study shows lawmakers were right to ignore the lobbyists.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.