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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