[Busmgrs] Poverty calculations in the State School Fund

[WILTFONG Michael]

DA:             April 27, 2011
TO:             District Business Managers
RE:             Poverty calculations in the State School Fund

There have been some recent questions regarding how poverty is calculated for the State School Fund.  Particularly, some districts have noted concerns because they see decreases in their poverty weighting for the ADM.  However, they are simultaneously experiencing increased poverty in their district and region.  We hope to further explain how poverty weighting is calculated to answer some of these questions.

ORS 327.013(1)(c)(v)(I) sets forth the poverty calculation, which states:  The number of children 5 to 17 years of age in poverty families in the district, as determined by the Department of Education from a report of the United States Department of Education based on the most recent federal decennial census, as adjusted by the school district's proportion of students in the county receiving free or reduced price lunches under the United States Department of Agriculture's current Income Eligibility Guidelines if the number is higher than the number determined from census data and only if the school district had an average daily membership of 2,500 or less for the 1995-1996 school year, and as further adjusted by the number of students in average daily membership in June of the year of distribution divided by number of students in average daily membership in the district, or its predecessors, in June of the year of the most recent federal decennial census;

The first step is to determine the number of children ages 5 to 17 years in poverty as calculated by the latest decennial census. The statue provides that the census numbers are further adjusted by current ADM to account for changes in population since the last census. We're currently using the 2000 Census data for the 2009-10 determination. Thus, we are ten years removed from when the last census was taken.  The adjustments made to the ADM should account for this difference.  The 2010 Census data will be used for the estimates as soon as it is available.

The second step is to determine the district's proportion of the county's students receiving Free or Reduced Lunches.  This only applies to school districts with an average daily membership of 2,500 or less for the 1995-1996 school year. The important aspect of the Free or Reduced Lunch number is that it is based on participation by district by county. If every district in the county is experiencing an increase in poverty then chances are no one district will see an increase in their ADM weighting  based on poverty because no one district is increasing their proportion of the county's students receiving free or reduced lunches.

In some instances districts will see a decrease in weighting even though their available free or reduced lunch count increases. That's because the statute requires us to calculate based on "students in county receiving free or reduced price lunches." In other words, it's based on participation and not available slots.

Once both numbers are determined, we take the larger of the two numbers for those districts that had an ADM of 2,500 or less in 1995-1996. Districts with ADM of 2,500 or more in 1995-1996 are only allowed to use the prorated census number.

A significant challenge with this calculation is the timing of data. For example, we don't have Free or Reduced Lunch data for the 2011-12 school year, so the calculation defaults to the prorated census data. We believe that this defaulting to census data resulted in swings in the poverty weighting for the smaller districts and prompted some of the recent inquiries.  To minimize these swings, we will use the most recent Free and Reduced Lunch data we have until that data can be updated.  Thus, we will be using the 2010-11 Free or Reduced Lunch data until such time that we can update with the 2011-12 Free or Reduced Lunch data.

There appears to be two answers to some of the concerns about the recent swings in poverty data.  The first answer, as explained above could be that the calculation defaults to the census data when that is the only data available.  The other answer  may well lie in the fact that all of Oregon is experiencing an increase in poverty levels and most districts are experiencing a decrease in ADM. Individual districts may see a decrease because their proportion in relation to the rest of the county is decreasing.

We hope this helps with your understanding and please let us know if we can be of further assistance.


Thank you,

Mike Wiltfong and Michael Elliott
Oregon Department of Education




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