California lawmakers in Sacramento appear ready to stick with the state’s attendance-based school funding system, at least for now, after a key fiscal review suggested the cost of changing course could be steep. The brewing fight has put districts desperate for steadier revenue on one side and education leaders worried about worsening chronic absenteeism on the other.
In a report released Jan. 6, 2026, the Legislative Analyst’s Office found that shifting the Local Control Funding Formula from average daily attendance to an enrollment-based student count would raise annual LCFF costs by about $5.6 billion, with most of that increase going to school districts. The LAO also warned the shift "would likely result in somewhat lower attendance rates over the long run," a tradeoff it said could hurt student learning if districts scaled back their attendance work.
The analysis responds to SB 98, the bill by Sen. Anthony Portantino that Gov. Gavin Newsom signed in September 2024. That law directed the LAO to examine the fiscal and programmatic impact of moving to enrollment-based funding. Supporters, including Portantino, argue that using enrollment counts would make funding more predictable and increase money for many districts. A Policy Analysis for California Education (PACE) analysis estimated roughly 90 percent of districts would receive more funding under an enrollment-based model. When the bill was signed, Portantino told local reporters the change would "promote and create greater stability" for schools, according to local coverage.
Money And Attendance
The LAO acknowledged that enrollment-based funding would smooth out funding and cut some administrative headaches. At the same time, the office cautioned that removing the direct financial link between butts in seats and dollars in budgets could weaken the incentive for districts to run attendance-recovery programs and invest in outreach. In the end, the office said it "recommends the Legislature maintain its ADA‑based system at this time," according to the Legislative Analyst’s Office.
Districts Feel the Pressure
Districts that have been sounding the alarm on their budgets say that is easier said than done. They point to a rough combination of declining enrollment and the expiration of one-time pandemic funds, a mix that has triggered multimillion-dollar shortfalls and waves of staff cuts. State monitoring and local reports have chronicled painful choices across California, from Oakland’s roughly $100 million shortfall and hundreds of job cuts to Sacramento City Unified’s gap of more than $100 million and staffing reductions, trends documented by the Fiscal Crisis & Management Assistance Team. That financial squeeze is the central reason some lawmakers and local leaders have pushed for an enrollment-based model that might stabilize district revenue.
What Comes Next
With the LAO’s analysis now public, the debate shifts to the state budget process and whether legislators have the appetite, or the cash, for a major rewrite of the formula while juggling other priorities. As reported by the Mercury News, several lawmakers say the LAO findings make a strong case for holding the line on the current system and instead exploring targeted tweaks within the existing ADA framework.
Attendance Targets Complicate The Debate
Layered on top of the fiscal argument is a big policy promise. State education leaders have pledged to cut chronic absenteeism in half over five years, a goal the California Department of Education locked in when it issued statewide guidance in August 2025. That goal, and the department’s guidance on reengaging students, adds political and practical tension. An enrollment-based system could give districts more predictable dollars, but it could also dull the financial pressure to keep students in class, the very leverage the state is counting on to hit its attendance targets, according to the department’s materials.
For now, Sacramento is weighing a stark tradeoff: give districts steadier enrollment-based funding to help patch budget holes, or stick with an attendance-based system that keeps a direct financial reward for getting students through the door. Lawmakers and local officials are expected to keep hashing it out through the spring budget talks before deciding whether any major change happens this year.
