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BILL # HB 2403 |
TITLE: S/E subject: average daily membership; course requirement |
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SPONSOR: Udall |
STATUS: As Amended by Senate ED |
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PREPARED BY: Patrick Moran |
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The bill makes modifications the calculations of Average Daily Membership (ADM) for high school students for the purposes of the K-12 Basic State Aid formula.
Estimated Impact
We estimate the bill may increase the ADE cost of part-time high school students enrolled in Arizona public schools by approximately $4.4 million annually. This estimate is based on the number of part-time high school ADM reported by ADE (5,000 in the 2020-2021 school year excluding Arizona Online Instruction) and assumes that the average Basic State Aid formula funding increase per part-time student would be $875, or approximately 0.125 ADM. This estimate is speculative, as we lack data on the current distribution of instructional hours for part-time students
ADE does not have an estimate of the impact of the bill, but notes that a 10% increase in ADM for part-time high school students would generate a fiscal impact of approximately $3 million.
A.R.S. § 15-901 establishes requirements for minimum instructional hours and courses for the purposes of ADM counts used to compute Basic State Aid formula funding entitlements for school districts and charter schools. Under current law, a high school student is considered full-time (and therefore would generate 1.0 ADM) if the student has an instructional program that totals 720 hours over the course of a 180 day school year and is enrolled in a minimum of 4 courses of at least 123 instructional hours. ADM for part-time ("fractional") high school students is reduced in 0.25 increments below 1.0 depending on the total instructional hours and courses of the student. For example, a student with an instructional program of 360 hours (but less than 540) and with at least 2 courses meeting 123 hours over the course of a 180 day school year would earn 0.5 ADM.
The bill modifies ADM requirements for part-time students by instead requiring ADE to calculate ADM by dividing the student's total instructional hours by 720 (the instructional hours for a full-time student). The modified formula would increase ADM for part-time students above current law. For example, under current law, a high school student with 700 total instructional hours (or 20 hours less than the 720 minimum requirement) would be able to qualify for a maximum of 0.75 ADM based on the current 0.25 increments. Under the bill, the same student would instead earn ADM of 0.97 (700/720 = 0.97), or an increase of 0.22 relative to current law. Given that 1.0 ADM generates average Basic State Aid funding of approximately $7,000, the 0.22 increase would represent a funding increase for that student of approximately $1,500 compared with current law.
ADE estimates that during the 2020-2021 school year, approximately 5,000 non-AOI high school students are classified as part-time. For the purposes of our analysis, we assume that the average increase in ADM is the midpoint of the current 0.25 increment (or a 0.125 increase in ADM), meaning the average cost increase per student would be $875 (0.125 X $7,000 = $875). We estimate that the resulting fiscal impact would be approximately $4.4 million. ($875 X 5,000 students = $4.4 million). Our estimate should be considered speculative, as we lack data on the actual distribution of instructional hours for part-time students currently, which we would need to compute the average funding increase under the bill. In
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addition, our estimate could change to the extent that the number of part-time high school students is lower or higher than 5,000 non-pandemic school years. We have asked ADE for historical data on part-time high school students.
ADE does not have its own estimate of the impact of the bill, but notes that a 10% increase in part-time ADM for high school students would result in a cost of approximately $3 million.
The bill also modifies ADM requirements for full-time students by eliminating the requirement that full-time students have at least 4 subjects with a minimum of 123 instructional hours. This provision would result in part-time students with at least 720 instructional hours but fewer than 4 courses with at least 123 instructional hours being re-classified to full-time students. ADE reports that districts and charters that failed to follow the 123-hour requirement paid back $274,000 in Basic State Aid in FY 2019 and $425,000 in FY 2020 as a result of ADM audits. The bill could therefore reduce these ADM audit collections, but we expect the long-run impact would be minimal, as we anticipate under current law that most audited districts and charters adjust their instructional calendars to avoid such financial penalties in the future.
The bill also modifies attendance requirements for high school students by classifying students who have attended school for at least three quarters of the instructional time scheduled for that day as having attended a full day of school. Attendance is generally only factored into ADM calculations if a student has 10 or more consecutive unexcused absences, so we also expect the impact of this provision on ADM counts would be minimal.
Local Government Impact
The bill could impact local property tax collections as a result of changes in ADM for part-time students enrolled in non-state aid districts.
4/6/21