Reforming the School Finance and Funding System

California’s system for funding schools is fundamentally unfair. Not only does California inadequately fund its schools, it also fails to equitably allocate existing dollars. California ranks near the bottom when it comes to K-12 funding, with 42 states spending more per student. We have fewer teachers, guidance counselors, and librarians per student than any state in the nation.

Two separate lawsuits have been filed against the state claiming inadequate funding for schools, and advocates have introduced ballot initiatives to boost education funding. However, it will take more than just extra dollars to fix California’s education finance system.

A better system would offer districts and schools with large concentrations of high-need students the extra dollars they need to achieve. Currently, we do just the opposite. In fact, California’s highest poverty districts—those with the largest concentrations of low-income students—receive $620 less per student from state and local sources than the state’s wealthiest districts. Further, there are no assurances that the dollars districts do spend will make their way to the school level in an equitable fashion, and limited fiscal transparency and accountability make it hard to tell where districts and schools have spent their money. In 2005 we estimated that California’s high-poverty schools spent tens of thousands of dollars less on teacher salaries than low-poverty schools of similar size and in the same school districts every year.

State policymakers should resolve the inequitable aspects of the state’s school finance system to ensure that California’s highest need students get the resources they need.

Our leaders should take the following steps:

1. SHIFT TO A WEIGHTED STUDENT FORMULA THAT PROVIDES ADDITIONAL DOLLARS TO STUDENTS WITH GREATER EDUCATIONAL NEEDS.

The current system, which funnels the bulk of funding to districts through a base “revenue limit” allocation and a collection of categorical programs, is complex, irrational, and inequitable. Many of the existing formulas result from historical precedent and opaque, subjective decisions. Developing a new set of simpler, transparent rules to guide resource allocation would demystify the system and could better target dollars according to student needs. A weighted student formula would ensure that those districts whose students have greater learning needs receive more funds. At the same time, state leaders should build better reporting systems that allow the public to see the sources of a district’s revenues, the formulas used to generate these allocations, and revenue comparisons by district.

2. ENSURE THAT STUDENTS RECEIVE THE FUNDS INTENDED FOR THEM.

Under the current system and in the governor’s proposed weighted student formula model, districts are the recipients of state and local funds, even those funds targeted to specific student populations. Too often, these funds can be diverted for other uses. Instead, the bulk of per-pupil funding should follow the student to the school level and should not get spent on other schools, district-level needs, or programs. This means requiring that districts account for actual versus average teacher salaries, so that high-poverty schools, which often employ more junior, lower salaried teachers, do not end up subsidizing schools with more experienced and higher paid teachers. In addition, principals, faculty, and parents should be involved in site-level spending decisions.

3. REQUIRE DISTRICTS TO REPORT TRANSPARENTLY ON DISTRICT AND SCHOOL-LEVEL SPENDING.

Parents, community members, and taxpayers should be able to see how education dollars are being spent. This is currently almost impossible, because each district accounts for spending differently. Require school districts to adopt a common accounting system and report data on district and school-level spending, including actual teacher salaries, through a state website and standard reporting format. Such a system would allow the public to see whether the district is making equitable spending decisions across all its schools and will allow stakeholders to compare spending priorities across districts.

4. MONITOR THE RELATIONSHIP BETWEEN FINANCIAL INPUTS AND ACADEMIC RESULTS.

The state should build reports that allow the public to view school and district expenditures alongside student achievement measures derived from a strong accountability system. This would provide information about what investments seem to be paying off when it comes to student learning. Such information can foster cross-school and cross-district dialogue about strategies and investments that most positively impact students, particularly high-need learners.


Publications on School Finance

Tipping the Scale Towards Equity: Making Weighted Student Formula Work for California’s Highest-Need Students

California’s education funding system is fundamentally unfair, with large gaps in funding between the wealthiest and the lowest-income school districts, as well as between schools within districts.

In 2012, Governor Brown sought to correct the funding gaps between districts by shifting to a weighted student formula (WSF).

Publication date: 
October 25 2012
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New Education Trust—West Report Exposes Stark School Funding Gaps in California’s Largest Districts; Calls for School Funding Equity and Transparency

OAKLAND, CA (October 25, 2012) – As the debate over school funding and weighted student formula continues to heat up in California and around the nation, The Education Trust—West releases its latest report, Tipping the Scale Towards Equity: Making Weighted Student Formula Work for California’s Highest-Need Students. Using new data submitted by school districts to the Office of Civil Rights (OCR) at the U.S. Department of Education, this report reveals disturbing school funding inequities and inconsistencies in California’s twenty largest school districts.

The Cruel Divide: How California’s Education Finance System Shortchanges its Poorest School Districts

A new report released today paints a step-by-step picture of startling inequities in California’s system of education funding that harm our state’s poorest school districts. In The Cruel Divide: How California’s Education Finance System Shortchanges its Poorest School Districts, The Education Trust—West reveals that California’s highest poverty districts—those with the largest concentrations of low-income students—receive $620 less per student from state and local sources than the state’s wealthiest districts. For a mid-sized school district of 6,000 students, that amounts to over $3.7 million per year.

ETW has put together a web tool that allows you to search for a school district's per-pupil state and local revenues.  Click here to access the tool.   

Publication date: 
February 23 2012

Turning Back the Clock: The Inequitable Impact of Shortening California’s School Year

California’s education system has long failed to meet the needs of the low-income students and students of color who are now a vast majority of our state’s student population. To close persistent achievement gaps, we must dramatically improve the learning outcomes of our highest-need students by leveraging proven strategies such as increasing the amount of time students spend in school.

Yet, for the last two years, California’s policymakers have made the inequitable decision to systematically reduce the amount of instructional time that school districts are required to provide. Given that California has some of the widest achievement gaps and lowest student performance in the nation, reducing learning time in our schools should not be an option.

Publication date: 
October 31 2011

California's Hidden Teacher Spending Gap: How State and District Budgeting Practices Shortchange Poor and Minority Students and Their Schools.

This new series of Hidden Gap reports looks at the impact of the hidden teacher-spending gaps in schools throughout California.

Publication date: 
October 16 2005