NCPA - National Center for Policy Analysis

Ghost Students

May 29, 2012

Around the country, school finance formulas and student accounting systems are notoriously complex.  Arizona's system is no exception.  In fact, for many years, Arizona's program was considered one of the nation's most difficult to understand.  That complexity often masks disparities in spending as well as waste and overpayments, says Jonathan Butcher, education director at the Goldwater Institute.

Enter the phenomenon of "ghost students."

  • Generally speaking, schools calculate an average of student enrollment over the first 100 days in a school year and report that figure to the Arizona State Department of Education.
  • The department then uses a formula including these enrollment numbers to equalize district payments and fund maintenance, operation and transportation costs.
  • Funds are provided to districts, which then distribute the monies to schools.
  • However, Arizona does not adjust funding for traditional public schools in the same year if a student transfers out after the first 100 days.
  • Yet, for a district that sees an overall increase in enrollment during a school year, districts can apply for current-year funding increases as students enter the district.
  • The end result, therefore, is that a student who transfers from one school to another after the first 100 days of classes is funded twice.

This may seem like nitpicking, yet in-depth study of Arizona students' movement patterns and education finance shows that addressing the problem could yield substantial savings for the cash-strapped state government.

  • In 2009-2010, 40.3 percent of general fund appropriations were specifically directed to K-12 education expenditures.
  • Additionally, funding from state and local sources totaled over $8 billion in Arizona in 2010 and is estimated to have reached $8.3 billion in 2011.
  • In Arizona, over 25 percent of students experienced a non-promotional change of schools between 2004 and 2008.
  • A substantial amount of this funding is allocated for the education of an estimated 13,500 ghost students.
  • Researchers' calculations show that between the 2008-2009 and 2009-2010 school years, Arizona schools spent over $125 million on these students.

Source: Jonathan Butcher, "Ghost Busters: How to Save $125 Million a Year in Arizona's Education Budget," Goldwater Institute, May 21, 2012.

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