Members of the Oklahoma House of Representatives voted overwhelmingly to restrict schools’ ability to receive state funding for students who no longer attend classes in the district, a practice informally referred to as “ghost student” funding.

“All it does is make the money follow the student,” said Rep. Kyle Hilbert, R-Bristow. “Where the students are, that’s where the money is. If a school has more students, they get more money. If a school has less students, they get less money.”

The legislation passed over the objection of opponents who said schools would begin mass layoffs and “white flight” would increase if schools are funded based on actual student counts.

“This bill is likely to do some of the things that we’ve seen all too often, only it’s going to do them faster,” said Rep. John Waldron, D-Tulsa. “It’s going to accelerate white flight to the suburbs. It’s going to accelerate the decline of many of our rural communities. It’s going to leave large pockets of poor students, often black and brown, in even more poorly funded schools in already stressed urban or rural neighborhoods.”

House Bill 2078, by Hilbert, would base school districts’ state funding on student enrollment from either the preceding school year or the current school year, whichever is higher. Under current law, schools can be funded for student enrollment figures from two years prior, allowing some districts to receive funding for hundreds or even thousands of students who have long since departed.

Enrollment figures for Oklahoma schools show districts may receive at least $195 million combined this year for 55,236 “ghost” students who do not attend classes in the district but are nonetheless included in enrollment counts used to determine state funding.

The legislation would also waive the current cap on school district savings, referred to as “carryover,” for the next two years. When the cap is reimposed in subsequent years, the bill boosts it by 20 percent.

Supporters said increased carryover would allow schools to better prepare for any budget impact associated with HB 2078’s funding-formula change. Oklahoma’s 500-plus public-school districts reported $982 million in combined carryover savings at the end of June 2020, an increase of 48 percent over three years, and carryover could surge even more this year. Hilbert noted $160 million went directly to Oklahoma school districts from federal bailout funding approved in March 2020, and another $650 million is going to schools from additional federal bailout funding approved in December. Much of the school funding from the first, $160 million round of bailout funding still remains unspent.

Hilbert said the current funding system ultimately hurts many schools because it reduces per-pupil funding for every school due to the impact of inflated enrollment counts.

“The issue that this is addressing is the watering down of the funding formula,” Hilbert said. “We have 700,000 actual, physical students in Oklahoma classrooms, as of October 1. The funding formula contemplates there being over 755,000 students—that’s 55,000 students double-counted, or some would say ‘ghost students,’ because those 55,000 students don’t actually exist. And so that waters down the funding.”

He said some school administrators have quietly voiced support for the legislation because of the benefit schools will reap from the higher per-pupil funding.

“The funny thing is, yes, I’ve had multiple superintendents tell me they support this bill,” Hilbert said. “They’re scared to death to admit that they support the bill because the organizations that represent them will come at them with just as many arrows as they’re shooting at me right now.”

The Oklahoma State School Boards Association has called “ghost student” funding a “budget stabilization mechanism,” and said elimination of the excess funding provided to schools via inflated enrollment counts would cause “destabilizing and shrinking budgets, staffing, programs and class sizes.”

The head of the Cooperative Council of School Administrators (CCOSA), a lobbying organization that represents roughly 3,000 school superintendents and other school employees, has also defended “ghost student” funding.

Rep. Chad Caldwell, R-Enid, said the groups opposed to HB 2078 are more worried about “the loss of the control of the money” than students.

“Public education was never intended to be a jobs program,” Caldwell said. “So again, I will ask: If a school isn’t educating the child, why are they getting the money? Should a hospital receive Medicare dollars when they’re not providing health care to a patient? What about our grocery stores? Should they receive funding when someone chooses to take their SNAP benefits elsewhere and shop at a different store? The mental gymnastics required to maintain and fight for the status quo is quite simply off the charts.”

Rep. Todd Russ, R-Cordell, noted the schools reaping the most money off inflated student counts are in urban areas, and therefore the system ultimately drains funds away from rural schools.

“If we don’t do something, I think based on the math my rural schools will actually continue to lose more money,” Russ said.

Under current state law, the Oklahoma City school district’s funding can be based an enrollment figure that includes nearly 6,800 nonexistent “ghost students,” while Tulsa may be paid for 3,291 departed students. Just 22 districts account for 30,691 “ghost students,” or more than 55 percent of the total 55,236 double-counted students statewide, based on enrollment data.

But opponents argued the funding change would cause financial chaos in Oklahoma public schools.

Waldron said the bill would “increase instability and disruption in school districts at a time when they’re already reeling from the effects of pandemic and the recent storm.” He also said districts would have to immediately “make decisions about the teachers they’re going to retain” if schools no longer receive funding for departed students.

Rep. Andy Fugate, D-Oklahoma City, made a similar prediction.

“If you vote yes today, you will make this historically low year the foundation for next year’s school budgets, and that will cause a historic, catastrophic reduction in force, a RIF, for so many of these schools in the state of Oklahoma,” Fugate said.

Hilbert noted payment is typically tied to the provision of goods or services, and those working in the private sector make budgeting decisions based on current conditions.

“My dad has run a small business for over 30 years,” Hilbert said, “and never once in that business do you know three years in advance what your revenue is going to be.”

He also noted schools in other states handle budget planning while being funded based on current enrollment, not two-year-old student counts.

“Texas does current-year count with multiple adjustments during the year,” Hilbert said. “And we have rural schools in Oklahoma. They have really rural schools in Texas. I don’t how many of you have driven through the panhandle of Texas—it’s very sparsely populated. And they’re able to make it work and be successful for their very rural schools in Texas with a current-year count.”

Caldwell also noted allegations of similar “ghost” funding have been treated far differently.

“Let me remind you, when another public school—a virtual public school—was accused of getting paid or receiving money for allegedly not educating students, it was called embezzlement,” Caldwell said. “But now a different set of public schools getting paid for children they’re not educating, that all of a sudden is the gold standard and something we should be fighting for? Apparently, what’s good for the public-school goose isn’t good for the public-school gander after all.”

House Bill 2078 passed on a 68-30 vote. The bill now proceeds to the Oklahoma Senate.