Report: California’s School Funding Flexibility Opportunity

The Public Policy Institute of California recently released a report looking at the impact of the sweeping changes in public education financing taking effect in 2009. These laws are set to expire this year, and PPIC has prepared an analysis and recommendations based on both the good and bad aspect of the laws impact thus far.

This report, along with previously released statewide survey data, the PPIC is providing convincing evidence in the overhaul of the statewide education system. The PPIC also suggest the time is ripe now as the 2009 laws are to be reevaluated. Results from the April 2011 report include:

  • Most Californians are very concerned that the state’s budget deficit will mean significant cuts to K–12 education.
  • Six in ten adults and likely voters favor Governor Brown’s plan of spending cuts and temporary tax increases to close the deficit and avoid cuts to schools.
  • More than half of public school parents say they have noticed reduced numbers of support staff or fewer programs at their child’s school.

Spurred by a deep recession and large budget shortfalls, the California Legislature in 2009 enacted what was arguably the largest change to California’s school finance system in decades—relaxing spending restrictions on more than 40 categorical programs through 2012–13, extended later to 2014–15. Categorical funding, which gives school districts money in addition to the general funds they already receive from the state, had been limited to specific, narrow purposes: buying textbooks or providing summer school, for example. Under the 2009 changes, districts could begin spending these funds for any educational purpose.

Because the laws were part of legislative negotiations over the state budget, not education policy, the decisions made in 2009 were far from optimal for K–12 schools. A more systematic and less political reconsideration of categorical flexibility could result in a more equitable and transparent distribution of funds, while also reserving targeted aid for students who need supplemental services. In addition, under the 2009 provisions, districts could spend categorical funds on any educational purpose. Both state policymakers and local district officials have expressed concern about the impact of completely flexible funds on the collective bargaining process; specifically, that those funds would be used inappropriately to increase teacher salaries and benefits rather than to provide additional services or materials for students.

This report offers three recommendations to improve current flexibility provisions that the legislature could consider should it pursue categorical flexibility beyond the program’s sunset date:

  • Distribute these less-restricted categorical funds more equally.
  • Apply clear criteria for flexibility and consider alternative configurations.
  • Consider some restrictions on flex item funds.

These recommendations would create a more equitable and transparent source of revenue. This would provide local school districts with increased flexibility in meeting student needs, and would be consistent with several recent major school finance reform proposals, as well as Governor Brown’s campaign plan for K–12 education.

When the law expires, the legislature will be faced with a decision: whether to return to the previous, tightly restricted categorical fund system or transition to a permanent version of the flexibility now in use.

To read the entire report, click here for the PPIC publication. This post contains excerpts from the original report.

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