A Parents' Guide to California School Funding

Updated: Aug 5

Education is not all about money.

It’s about the willingness of parents to be involved and pay attention, the quality and dedication of our teachers, and the care that our school administration and Board takes to ensure all our kids get an excellent education. We have all heard of the child who is born in unfortunate circumstances and has little or no resources, in a poor area of the country (or world), but through the dedication of their parents, their teachers, their community, and their own hard work ends up excelling in life.

Hard work often pays off, but not always, and not in ways that are equitable to all families.

As a society we’ve rightly decided that providing a quality free education to all kids, as equally as possible, is important to us all.

That decision has lead to a system where education funding consumes the largest share of our state’s budget - $84 billion in 2020-21, an all time high. That’s 63% of the total general fund spending for the state.

Knowing where the funding for your schools comes from is important, and something every parent should be comfortable with.

Digging into the messy details - of tax revenues, budget accounts, cash flow, etc – is something that makes even the hardened CPA’s eyes glaze over, but we don’t need to do that.

As parents, all we need to do is spend a short time getting an understanding of how the process works, and then perhaps a few hours a year paying a bit of attention to how that funding is being allocated to your school – and how they’re spending it.

We all say “our kids are the most important things in our lives”, with their education being one of the most important components of that.

Spending a few minutes now to understand how our schools get their money, and then a few hours a year paying attention to what your local district is doing with that money, is a great benefit to all.

With that, let’s go! California is a somewhat unusual state in that the majority of K-12 funding comes from the state.

In many other states, funding is determined by local tax revenues, typically property tax. But in most CA districts the bulk of funding – often 80% or more – comes from the state, which funds that through general fund tax revenues (income and sales taxes.)

California used to fund it’s schools that way as well, but that started changing in 1971. In 1971, in the landmark Serrano v. Priest case, the California Supreme Court ruled that funding method unconstitutional. Because funding by property tax resulted in huge inequities between wealthy and poorer neighborhoods, they ruled the state needed to find a way to equalize funding. "We are called upon to determine whether the California public school financing system, with its substantial dependence on local property taxes and resultant wide disparities in school revenue, violates the equal protection clause of the Fourteenth Amendment. We have determined that this funding scheme invidiously discriminates against the poor because it makes the quality of a child's education a function of the wealth of his parents and neighbors. Recognizing as we must that the right to an education in our public schools is a fundamental interest which cannot be conditioned on wealth, we can discern no compelling state purpose necessitating the present method of financing. We have concluded, therefore, that such a system cannot withstand constitutional challenge and must fall before the equal protection clause." That started the shift toward equalizing funding between districts, starting with Senate Bill 90 which, in 1972, established a “revenue limit”, above which local funds were redistributed to other districts that had less revenue for education.

Then came Proposition 13 in 1978. Prop 13 limited the amount of property tax that could be collected, which had huge impacts on local funding for schools. This made the state the primary source of funding for our schools.

More change happened in 1988, with the passage of Proposition 98, which requires the state to dedicate a minimum of about 40% of the General Fund to K-14 (including community college) education each year.

This funding came with many strings attached.

There were over 50 funding categories (called “categoricals” in edu-speak) that determined how money could be spent in local districts. Districts chafed under this. The “top down” control of funds by the state meant – at least in some people’s opinion – that money was often spent in ways that did not reflect what parents felt their kids needed in their specific district.

The CA Legislature responded to this with the Local Control Funding Formula (LCFF) law, passed in 2013.

The LCFF was a revolutionary change in the way schools were funded, wiping away the former convoluted calculations and replacing that with a somewhat simple plan that allocated money based on attendance (called “Average Daily Attendance” or ADA) and allocating more dedicated to groups that needed more support – English Learner and Low Income kids.

Equally importantly, the LCFF gave tremendous flexibility to the districts in how they spent their money. No more having the state micromanage the district’s spending.

Great news!

And the price for that? Districts were required to go through a process called the Local Control Accountability Plan (LCAP), giving stakeholders a say in how the money was spent.

“One of the main procedural requirements is that a district consults with its school employees, local bargaining units, parents, and students.”

Yes, the LCFF defines parents and students as having equal footing with district employees and unions in determining how the money is spent.

As an additional layer to make sure local districts were spending their money the way stakeholders want (and in the best interests of our kids), the County Offices of Education (COE’s) were involved.

And if the district had problems managing it’s funding on it’s own, a complete set of intervention and assistance programs were defined - including an escalating set of resources, starting with the COE. The California Collaborative for Educational Excellence (CCEE) was created to provide additional assistance as needed. And, ultimately, the state’s Fiscal Crises Management Team could be called in to provide expertise, if a district was in real trouble.

The LCFF defined a ramping up of funding, originally starting in 2013-14 and reaching “fully funded” in 2020-21. Thanks to better-than-expected tax revenues the state reached that fully funded point in the 2018-2019 school year, two years in advance. Many felt the pool of funds available to the LCFF was too small. The Great Recession had caused huge drops in state tax revenue, which were reflected in education funding.

To fix that in 2012 voters were asked to approve Proposition 30. This was done with a 55% majority, which was to temporarily raise the sales tax – and income taxes on “high earners” - to providing more dollars into the LCFF. Those temporary taxes were set to expire in 2016, but in that year voters approved Proposition 55, with a 63% majority, which let the sales taxes expire but extended the higher income taxes for another 12 years.

Currently – as of the 2019-20 fiscal year – the funds provided by those taxes, called “Education Protection Account” (EPA) funding, provided an additional $7.9 billion dollars for K-12 education. There are also other sources of funding – local property tax, although not the primary funding for most districts, is still a significant proportion of funds – about 22%. Some districts – usually perhaps 10% - have high enough local property taxes to allow that to fund everything, those districts are called “Basic Aid” and receive little or no funds from the state. There are also federal funds, which are typically 10% or so of total revenue.

How about lottery funding? We often hear parents say “but what about that lottery money!!!” Every penny counts, but over time, the lottery has provided slightly less than 2 cents of every dollar spent on K-12 education. In the 2019-20 budget so far that has provided about $300 million per quarter, likely around $1.2 billion for the year.

With a combination of all sources, ramping up of LCFF funding, the addition of EPA funds, and the general increase in state tax revenue, per student funding in California has soared since 2012.

According to the California Department of Education (CDE)’s “Standardized Account Code Structure” (SACS) database, in 2011-2012 (before Proposition 30) total funding (including local and federal funds) added up to $53.5 billion, or $9,656/ADA. In 2018-2019, total funding reached $79.2 billion, or $14,938/ADA.

That is an increase of almost $30 billion, or $5,327/ADA. Up 55.17%, an average rate of 6.48% per year.

During this same time, according to the California Department of Industrial Relations , inflation has averaged 2.37% per year, meaning school funding per ADA has risen at a rate almost three times greater than inflation.

In 2019, the CDE’s “Average Class Size By Subject” data, the average class size is 26.13 students. That means the total funding for a single class (remember $14,983/student) is $391,531.

That’s almost $400,000 per year per classroom.

And none of this includes additional funding put in to our K-12 education system that is not part of this revenue flow – like the state’s contribution from the general fund to the teacher retirement program, CalSTRS, or bond funds. Unknown to most, in addition to contributions from the employee and district, the state also contributes to the teacher pension plan, CalSTRS. In 2017-18 (latest data available), the state provided an extra $2.8 billion for pension funding.

Bond funding is far more well known, and over the past 20 years California voters have been generous in providing funds for construction and maintenance of facilities - 660 districts have passed local bonds worth about $113 billion dollars. Huzzzah! Pop the corks! Our kids must now have every resource they need for a quality education! Well… not so fast…

It’s not just about the money coming in, but how it’s spent.

Want to know how that breaks down?

Subscribe to our blog at sandiegoschools.net or join our Facebook group at https://www.facebook.com/groups/sandiegoschools/ to hear more about how our education dollars are spent, and how you can be a part of those spending decisions.

August 2020


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