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With budget flexibility, Governor and Legislature may take important step in restoring CA schools

March 06, 2013 posted by Sean Gill

Could increased spending flexibility help schools serve California's students in new and innovate ways? Yes!

Perhaps Superintendent Michael Hanson of the Fresno Unified School District explained it best when he testified last Thursday before a state senate committee examining Governor Brown's K-12 education budget proposal. He spoke about a state-funded tutoring program related the California High School Exit Exam, which most students must pass to obtain a high school diploma. Before 2008, school districts could only use these funds on students who had failed their initial attempt at the exam. With funding flexibility, Fresno Unified can now use these funds to provide tutoring to students who need the help before they even take the exam, which Superintendent Hanson said made much more sense for Fresno's students in enabling them to graduate from high school. His comments touched upon a key principle that StudentsFirst advocates: we should focus on results, rather than prescribing how school districts achieve them through restricted funding streams and detailed compliance requirements.

The California Senate Budget and Fiscal Review Committee heard from several local school leaders as it learned more about the Governor's proposed "Local Control Funding Formula." The Governor proposes to direct more funds towards school districts and charter schools serving low-income students and English learners while introducing additional local control, flexibility, and accountability measures. Stanley Mantooth, the Ventura County Superintendent of Schools, testified before the committee that the proposal is perhaps the most significant funding reform proposal in California in the last 40 years.

As is clear from the recent decision by the nine "CORE" school districts to apply for a waiver from the federal No Child Left Behind Act of 2001, many local school leaders want the flexibility to innovate and spend limited federal resources in a manner they believe will best serve their students. School districts across the state have reported benefits from increased state funding flexibility on surveys conducted by the non-partisan Legislative Analyst's Office (LAO). We're encouraged that the Governor's proposal recognizes the potential of teachers, principals, parents, local Superintendents and School Board members to innovate with state funds as well.

California's existing school funding formula has been widely noted by research groups, the LAO, and educational leaders themselves as being overly complex, irrational, and inequitable. In the budgets adopted for 2012-13 and prior years, the districts received "Revenue Limit" or unrestricted funding from state income tax revenue that they used in tandem with local property tax revenue for their basic education program. In addition, the state provided restricted funding, also generally from state income tax revenue, through nearly 50 "categorical" programs. Categorical programs are often well intentioned but come with strings attached that limit school leaders from serving their students in innovative and efficient ways. California schools have enjoyed some relief from spending restrictions since 2008-09, but that flexibility will expire in 2014-15. The Governor proposes to permanently fold about 40 of these individual programs into the new funding formula, equivalent to $6.1 billion dollars and provide additional flexibility for two of these programs.

We're also encouraged that the Local Control Funding Formula would start to improve funding equity. Both the general funding formula used in prior years and the categorical funding programs resulted in inequities between districts, even ones with similar demographics. Under the proposal, school districts would receive a per-pupil base grant based on grade levels, with supplements for English language learners and students from low-income families. Additionally, schools with concentrations of English language learners and students from low-income families would receive higher supplements. The proposal would be phased in, based on growth in state revenues. The Department of Finance estimates this will take seven years.

We hope, however, the Legislature will carefully review the "hold harmless" provision that would provide even the wealthiest districts (known as the "Basic Aid" districts) with at least as much state funding as they received in 2012-13. This may make sense as part of the transition to the new formula. However, in future years, since some districts have the ability to fund their schools well above state averages using their local property tax revenues, these provisions may not be the best use of comparably limited state dollars.

As we've discussed with other states, with increased flexibility comes the need for increased accountability. The Governor proposes that school districts adopt annual accountability plans. County Superintendents would be able to review these plans. This could be a great way for school districts to engage parents, teachers, and community members. The state, however, should help facilitate these discussions by adopting and providing schools with standardized measures of educational productivity – indicators of how schools are spending wisely to benefit kids.

Both the Senate and Assembly plan to have several more hearings in the next few weeks. We'll continue to track them and share our thoughts here. For additional information on the Governor's proposal, check out coverage from EdSource or the LAO's report.

Sean Gill is a Fiscal Policy Analyst with StudentsFirst. He previously worked for the California State Auditor's Office, where he evaluated education, social service, and criminal justice programs to help policymakers spend taxpayer dollars wisely.

Topics: School Governance