A recent internal audit by the Hawaii Department of Education finds that schools are exaggerating their enrollment counts.

That’s a serious issue because it skews how the state distributes the funding among the schools and ultimately reduces how much money schools receive for staffing and equipment.

The report, titled 鈥淒ata Integrity Review 鈥 Student Enrollment,鈥 says schools need to do a better job collecting student enrollment information and urges the department to hold administrators more accountable for accurate data.

The audit doesn’t suggest that administrators are intentionally fudging their numbers, but points out significant problems in how enrollment numbers are collected and students tracked.

The investigation was conducted last August and included a sample of 450 students from 107 public schools, most of whom had already been flagged for frequent absences. It found that in nearly half of the instances 鈥 45 percent 鈥 students were included in official enrollment counts when they shouldn鈥檛 have been. (The audit did not include charter schools.)

Enrollment numbers determine how much money schools receive for employees, equipment and other expenses calculated through a formula that determines how discretionary money is distributed across schools.

鈥淭here鈥檚 no incentive for schools to get it right,鈥 said Board of Education Chairman Don Horner at a meeting last month.

The audit concluded that a range of factors undermine the enrollment data, including a lack of accountability, school-level mismanagement and inconsistencies in data collection policies.

This past school year, the department allocated $4,000 per student to schools, amounting to roughly $730 million in so-called Weighted Student Formula funding.

But schools could be understating early enrollment projections and then overstating actual counts, first creating for a shrunken student formula budget and then distorting how that budget gets broken down by school.

鈥淭he real question is, how do you divide it up?鈥 Horner said in June. 鈥淭he money isn鈥檛 really following the child.鈥

The Weighted Student Formula funding often determines whether a school can afford a key expenditure such as another teacher, according to Campbell High School teacher Corey Rosenlee.

Data flaws, according to department officials, primarily trace back to students who leave their schools at some point during the year either because they鈥檙e transferring to a private school or moving out of the state. Inconsistent, unclear and outdated policies further compound the problem.

The constant flow of students makes tracking seemingly simple data such as enrollment particularly challenging and requires that schools have a strong system in place to ensure the counts are accurate.

鈥淎ttendance is an art more than a science,鈥 said Rosenlee, who said he鈥檚 never known of an administrator who鈥檚 intentionally fudged the numbers.

Rosenlee pointed to Hawaii鈥檚 large military population, emphasizing that scores of kids are constantly moving in and out of schools throughout the year.

Schools collect enrollment counts three times each year: once on the 10th school day, once at the end of the first quarter and once at the beginning of the second semester. The first count establishes a funding base for the school, and the other two determine whether the school has enrolled additional students and deserves more money, according to DOE Spokeswoman Donalyn Dela Cruz.

But the department doesn鈥檛 reduce a school’s funding if later counts find that fewer students are enrolled at a school than reported in the original count.

The audit highlights five problem areas, four of which it says require immediate action from officials because they鈥檙e likely to take a toll on the department鈥檚 finances. The problems, according to the audit, could distort financial statements, damage the DOE鈥檚 public image 鈥 even lead to legal trouble.

One of the most serious concerns is that the department doesn鈥檛 have a process in place to make sure the schools鈥 enrollment data is accurate.

The audit says state officials don鈥檛 hold school administrators accountable for official enrollment and withdrawal policies, including those dictating how and when registrars are to document the data. And there are no consequences for schools that don鈥檛 follow proper procedures.

Another key problem is that principals regularly understate projections for future enrollment 鈥 estimates that are due the October before the actual school year.

The projections are used to plan budgets. The department then distributes recalculated per-student funding to the schools the following August after actual enrollment figures are reported.

The audit says schools have an “incentive of convenience” to understate enrollment projections because it鈥檚 easier to add money to their budget rather than have that money taken away. That then causes a shortfall in budgeted student funds.

DOE auditing officials said department managers have agreed to change the way enrollment is tracked in accordance with the report鈥檚 recommendations.

Dela Cruz said the department is revising its enrollment policies and is planning on developing online training programs for administrators involved in enrollment data collection.

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