A recent report by consultant APA Consulting for the Maryland State Department of Education reviewed Maryland’s method of counting low income school students and made some suggestions. APA Consulting is providing this report as part of the Study of Adequacy of Funding for Education in the State of Maryland.

The number of low-income students in schools has a bearing on federal and state school funding because formulas and grants reflect the strong correlation between students in poverty and learning challenges. The main additional state funding provided to Maryland schools for low-income students is called compensatory education funding. Under Maryland’s current system, compensatory education funding is based in part on the number of students who are eligible for free- and reduced-priced meals.

Students become eligible for free- and reduced-price meals through applications made by their parents, or because they fit into a certain category based on their status (such as children in foster care or head start). The latter method is called direct certification. In 2010, Congress passed the Healthy, Hunger-Free Kids Act (HHFKA) which allowed schools where 40% of students qualified for free- and reduced- price meals through direct certification to provide all students with free- and reduced- price meals.

Maryland’s General Assembly passed legislation allowing school districts to use a combination of the number of students eligible for free- and reduced- price meals and the number of students eligible through the federal government’s community eligibility provision as the count of low-income students used in the formula for compensatory education aid, for fiscal years 2017 and 2018. (The Hunger-Free Schools Act of 2015). However, in the long term, the community eligibility program only requires schools to collect direct certification data every four years, leading to difficulties in using this as the proxy for annual compensatory education funding.

Alternative Ways to Count Low-Income Students

The use of Free and Reduced Price Meals eligibility as the proxy for identifying economic disadvantage is one of the elements of the current system that APA is evaluating as part of the State’s review of education funding adequacy required by the Bridge to Excellence in Public Schools Act of 2002.

APA points out several issues with the current system, including potential over-reporting and under-reporting eligibility, and reviewed several other options. Ultimately, APA recommended either maintaining the current practice with some minor improvements, or adopting a “direct certification” system. A direct certification system would use eligibility statistics from other programs, such as to determine eligibility for free and reduced price meals, and compensatory education funding.

Of the four options that provide an individual indicator of economic need, the study team considers the continued use of free and reduced-price meals and the use of Direct Certification as being the best proxies for identifying economically disadvantaged students. . . While shifting to direct certification, over time, would disrupt the status quo, it would also direct greater aid to school districts that serve more economically needy students.

Funding Effects of Changing the Counting Method

A shift to direct certification statewide in Maryland would change the relative amounts of compensatory education aid provided to various Maryland counties, with Baltimore City receiving the largest increase in aid, and Prince George’s County receiving the largest decrease.

As described in the report,

Table 6, [above], presents a comparison for using free and reduced-price meals counts versus direct certification counts to identify low-income students in all schools. Because the direct certification uses a lower income threshold to identify low-income students, the direct certification count is substantially lower than the FRPM count, from 42.9% to 24.2%, or 18.7 percentage points lower. However, using this model, seventeen school districts see an increase in shares of the state’s low-income count. Baltimore City has the largest increase (6.2 percentage points), followed by Wicomico County (0.6 percentage points), and four school districts have increases of 0.4 percentage points (Allegany, Cecil, St. Mary’s and Washington counties). Prince George’s County has the largest decrease (-5.9 percentage points), followed by Montgomery County (-3.2 percentage points) and Baltimore County (-0.4 percentage points). Using direct certification as the indicator for low-income increases, the share of the state count for school districts that have a higher ratio of direct certified students to students who qualify for free and reduced-price meals – that is, school districts with a higher proportion of more severely economically disadvantaged students.

Next Steps

In discussion of the report by the Stakeholder Advisory Committee of the Study of Adequacy of Funding for Education in the State of Maryland, education stakeholders discussed the recommendations to continue using the free- and reduced-price meals proxy and for direct certification method. Some stakeholders explored other options, too, without coming to any general consensus on one recommendation at this time. Ultimately, a change in the school funding formulas would be accomplished through legislation in Maryland’s General Assembly.

This September, the Maryland State Department of Education, and the Department of Budget and Management are required to report to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the House Committee on Ways and Means before December 1, 2015, on:

(a) the research and analysis in the Adequacy of Funding for Education Study relating to using free and reduced–price meal eligibility as a proxy for representing economically disadvantaged students in the State compensatory education aid formula including: (1) the proxies used in education formulas in other states, particularly states that participate in the Community Eligibility Provision of the federal Healthy, Hunger–Free Kids Act of 2010; and (2) the identification and analysis of alternative indicators;

(b) the impact of the Community Eligibility Provision on the State compensatory aid program that uses free and reduced–price meal student count as a proxy for representing economically disadvantaged students in the State;

(c) trends in free and reduced–price meal student counts to compare the free and reduced–price meal student count used for school systems participating in the Community Eligibility Provision to the number of students who would be expected to qualify for free and reduced–price meals in the next 5 years based on past trends;

(d) preliminary recommendations on a new proxy or a revised free and reduced–price meal student count that could be used to represent economically disadvantaged students in the State compensatory education aid formula; and

(e) any proposed changes to the calculation under § 5–207(a)(3) of the Education Article, as enacted by Section 1 of this Act [The Hunger-Free Schools Act of 2015].

For more information, read the whole report, Evaluation of the Use of Free- and Reduced-Price Meal Eligibility as a Proxy for Identifying Economically Disadvantaged Students: Alternative Measures and Recommendations.