An Opportunity to Improve Transparency in the New K-12 School Funding Formula?

July 9, 2014

Tomorrow’s State Board of Education (SBE) meeting in Sacramento will focus on California’s new funding formula for K-12 schools — the Local Control Funding Formula (LCFF). The SBE will review proposed changes to the regulations they adopted this past January that govern LCFF spending and stipulate the information school districts must report in their Local Control and Accountability Plans, or LCAPs. All California school districts were required to adopt an LCAP by July 1 using a template that was developed and approved by the SBE earlier this year. Tomorrow’s meeting will review changes that the SBE is proposing to both the spending regulations and the LCAP template in response to more than 2,000 written comments the State Board received this spring. The SBE plans to adopt permanent regulations later this year and those rules, as well as the LCAP template, will determine how school districts are required to report LCFF spending for years to come.

It is critical that the SBE adopt regulations that require school districts to clearly report two pieces of information, so that stakeholders can gauge whether districts are increasing or improving services to support disadvantaged students: 1) a baseline level of spending used to support disadvantaged students in 2013-14; and 2) for each year after 2013-14, the amount spent in the prior year to support disadvantaged students. While the regulations adopted by the SBE in January do require school districts to use prior-year spending on disadvantaged students as a starting point for estimating the level of support going forward, they do not require transparent reporting of this spending level.

On Monday’s KQED Forum program, I had the chance to join SBE President Michael Kirst and others in discussing implementation of the new funding formula. President Kirst suggested during this conversation that the State Board may be willing to require school districts to transparently report how much they spent to support disadvantaged students in a prior year. By establishing a clear, easy-to-understand baseline, such a change would be a welcome step toward improving transparency and enabling stakeholders to understand whether LCFF dollars are being used to support disadvantaged students.

After tomorrow’s SBE meeting, the public will have through July 28 to submit comments on proposed changes to the regulations and the LCAP template. All Californians concerned about making LCFF spending more transparent should use that period to engage in the process and let their voices be heard.

— Jonathan Kaplan

Op-Ed: Keeping the Promise of the New School Funding Formula

June 3, 2014

Today, the Sacramento Bee featured an op-ed from CBP Senior Policy Analyst Jonathan Kaplan, which points to the need for greater transparency in California’s new system of K-12 school funding — the “Local Control Funding Formula” (LCFF). Almost one year since the new funding formula was enacted, this year’s budget negotiations could determine whether education stakeholders have access to easy-to-understand information about how school districts use LCFF dollars. As stated in the op-ed:

In the coming days, legislators and the governor will make crucial decisions about transparency. The issue at hand is whether districts will be required to report the amount they receive through the new formula to support disadvantaged students and — more importantly — how they use those dollars to benefit them. If state policymakers do not require this basic level of accounting, it will be very difficult for local stakeholders to answer some key questions about how the new funding formula is working.

The full op-ed is available on the Sacramento Bee’s website.

— Steven Bliss

Requiring Clear Baseline and Transparency Is Key in Crafting Rules for New School Funding Formula

December 19, 2013

Update: The State Board of Education initially planned to post the agenda materials for its January 2014 meeting on December 20, but has delayed that release until January 3, 2014. This blog post has been updated to reflect that change.

Last summer, when the Governor and Legislature approved California’s new education funding formula, the Local Control Funding Formula (LCFF), they deferred to the State Board of Education (SBE) key decisions regarding accountability — specifically, how to ensure that school districts spend LCFF dollars to provide additional services for disadvantaged students. The Legislature set a January 31, 2014 deadline for the SBE to adopt regulations for how schools can spend LCFF dollars. At the core of the debate regarding these regulations is how to strike a critical balance: ensuring that LCFF dollars are spent to support the disadvantaged students for whom they are intended while providing school districts more authority over how to spend those dollars.

On Friday, January 3, the SBE will post the agenda for its next meeting, scheduled for January 15 and 16, 2014, at which the SBE will need to approve regulations in order to meet the legislative deadline. As we blogged about before, the preliminary draft spending regulations released earlier this year provided far too much discretion to school districts — so much so that these regulations likely would have undermined the LCFF’s goal of addressing the inequities in the former school finance system. Other stakeholders also shared this concern. When the SBE reviewed the draft regulations at its meeting in early November, it inspired nearly five hours of public testimony by more than 180 people. Among them was Senator Holly Mitchell, who echoed the sentiments of many others when she expressed alarm that the draft regulations did not live up to the spirit of the LCFF law.

It appears that the public outcry over the preliminary draft spending regulations made a difference. Last week, the consultant advising the SBE — WestEd — released a paper (PDF) outlining key issues they had identified based on public comments made at last month’s SBE meeting. They also released a draft of the Local Control and Accountability Plan (LCAP) template (PDF) that districts will use to demonstrate compliance with SBE spending regulations. As part of this release, WestEd indicated that the revised regulations and the LCAP “will reflect significant changes based on the provided input” from the November SBE meeting.

In light of the shortcomings of the preliminary regulations, this is encouraging. However, stakeholders who want to ensure that LCFF dollars allocated for disadvantaged students are actually used to support these students should focus on whether the regulations adopted by the SBE abide by two important principles: establishing a baseline and ensuring transparency.

  • Establishing a baseline: The first key issue reported in the WestEd paper states that school districts need to spend more money in order to demonstrate they are increasing or improving services for disadvantaged students. A related concern reported by WestEd highlights the need to define “a methodology for calculating” a proportional increase in funding for these students. However, their paper does not indicate that the SBE will establish a baseline to gauge whether school districts have increased spending to support disadvantaged students. If schools are not required to adhere to such a baseline, it will be difficult to determine whether additional LCFF dollars provided for disadvantaged students are actually used to support them. The proposed LCAP template would require school districts to list and describe the spending needed to meet goals identified in their LCAPs. But the SBE should go further and explicitly require school districts to annually show how schools spent base, supplemental, and concentration grants generated by disadvantaged students in a way that can be easily compared to the baseline amount spent to support these students.
  • Ensuring transparency: A key objective of the LCFF is to increase accountability so that local education stakeholders can ensure that student needs drive the allocation of resources. For stakeholders to have the information needed to make this assessment, school district spending and revenue data must be reported in a timely manner and in a format that is easily understood and that can be readily obtained by stakeholders in multiple languages. Moreover, to allow for comparisons among districts, the SBE should require a standard methodology for school district reporting of spending and revenue data. Fortunately, school districts already report expenditures and revenues based on an accounting manual that allows for transparency and comparability. But currently, these data are only reported to the state and in a format that is difficult for the public to access or understand. The SBE should adopt spending regulations that require school districts to post this accounting data online in a timely manner and in a format the public can easily obtain and comprehend.

The January SBE meeting, with the expected adoption of the spending regulations, is a critical moment for implementation of California’s new school funding formula. While the delayed release of the agenda materials leaves little time for public comment, education stakeholders should heed the upcoming meeting — and the period preceding it — as an opportunity to provide input on the proposed regulations. Ultimately, what’s at stake is to what degree LCFF dollars are spent to support the disadvantaged students who need them the most.

— Jonathan Kaplan

Full Implementation of the LCFF Could Bring California’s Per Pupil Spending Closer to the Rest of the US

August 5, 2013

Last week the Legislative Analyst’s Office (LAO) published an overview of the Local Control Funding Formula (LCFF), the fundamental restructuring of California’s K-12 education finance system. The report discusses the LCFF, details how it will provide additional dollars to disadvantaged students, and estimates how much it will cost to implement. In addition to establishing equity as a key principle for how the state funds schools, the LCFF sets a funding goal that could boost California’s per pupil spending closer — if not equal — to that of the rest of the US once the formula is fully implemented.

California should aspire to a better per student spending ranking than the bottom 10, where the state has ranked for the past several years. As we’ve blogged about, California spends $2,500 less per student than the rest of the nation. To reach the same level of per student spending as the rest of the US, California would have needed to spend $15.3 billion more in 2012-13 than it did. While such a boost in funding might seem out of reach, it is actually a smaller increase than what the LAO estimates is needed to fully implement the LCFF. Specifically, for the LCFF to be fully implemented by 2020-21 — the goal established by the Governor and the Legislature — the LAO estimates that school funding would need to reach a level that is equal to an $18 billion increase in 2013-14 (above 2012-13 funding), not accounting for required cost-of-living adjustments. So even though the LCFF is not expected to be fully implemented for several years, policymakers should be commended for establishing a goal that calls for substantially increased state support for schools and could bring state spending per student closer to the level of the rest of the nation.

Reaching this goal, however, depends on a serious long-term approach to increasing state revenue. For instance, such an approach would need to account for the fact that the tax increases from Proposition 30 will expire in 2018. And in a broader sense, a plan for significantly increasing revenues could be part of an ambitious, long-range vision for California. Whether the state will have sufficient revenues to fully implement the LCFF by 2020-21 is unclear. What is clear is that delaying LCFF implementation would perpetuate both California’s low ranking relative to other states and current funding inequities.

— Jonathan Kaplan

What Does the LCFF Compromise Mean for Disadvantaged Students and School Finance?

June 14, 2013

Earlier this week, Governor Brown and legislative leaders announced a compromise plan regarding the Local Control Funding Formula (LCFF), the Governor’s proposal to fundamentally restructure how California funds its K-12 public schools. The now-imminent enactment of the LCFF is an important step forward and will make the state’s education finance system more transparent, rational, and equitable than it is today. The LCFF compromise accepts a key premise of the Governor’s proposal: that it takes additional resources to educate disadvantaged students — in particular, English learners and students from low-income families. However, compared to the Governor’s original proposal, the LCFF compromise provides fewer resources specifically for these students. The compromise boosts the base level of funding for school districts, but appears to do so primarily by reducing the total dollars allocated for disadvantaged students and also by increasing the amount of time it would take to fully implement the LCFF. Moreover, key decisions regarding accountability — specifically, how to ensure that school districts spend these allocated dollars to provide additional services for disadvantaged students — were deferred to the State Board of Education.

Released as part of the Governor’s proposed 2013-14 budget in January, the original LCFF proposal established equity in school funding as a key principle. It created three funding grants weighted to reflect the costs of educating different students: a base grant per student for all school districts, adjusted to reflect students’ grade levels; a supplemental grant per student based on a district’s unduplicated number of English learners and students from low-income families; and a concentration grant per student for districts based on the share of disadvantaged students above a specific threshold (set at 50 percent in the original proposal).

The LCFF compromise announced earlier this week maintains this basic structure, but changes the formulas used to calculate the three grants. The LCFF compromise:

  • Increases the average target base grant by more than $500 per student (this refers to the statewide average of the target LCFF base grant for each school district);
  • Reduces the supplemental grant from 35 percent of the base grant to 20 percent;
  • Increases the concentration grant from 35 percent of the base grant to 50 percent; and
  • Increases the threshold at which school districts qualify for the concentration grant, with disadvantaged students having to account for at least 55 percent of district enrollment — up from the original threshold of 50 percent.

The compromise also changes the share of total LCFF dollars allocated to each grant. Under the original LCFF plan, 80 percent of LCFF dollars would have gone toward base grants, 16 percent to supplemental grants, and 4 percent to concentration grants. Under the compromise version, 84 percent of LCFF dollars will be allocated to base grants, 10 percent to supplemental grants, and 6 percent to concentration grants. Widely circulated estimates indicate that the LCFF compromise would increase the total dollars provided to fund base grants for all school districts by approximately $3 billion, a 6 percent increase compared to the original plan.

Where do these dollars come from? It’s conceivable that they come entirely from the dollars allocated for supplemental and concentration grants in the Governor’s original proposal. But because little information exists about the total amount of funding provided for these grants, it is impossible to know. Rough calculations based on the available estimates suggest that the compromise could reduce funding specifically allocated for disadvantaged students in the neighborhood of $2.4 billion (19 percent) compared to the Governor’s original proposal. In other words, the compromise may redirect one in five dollars that the Governor had proposed to provide for students with the greatest need to fund an increase in the base grant for all students statewide.

Several questions remain as to whether the LCFF will fulfill its promise of helping both to address inequities in school finance and to ensure all students have the opportunity to achieve the state’s high academic standards. The most important is whether it will require school districts to spend supplemental and concentration grants to benefit the disadvantaged students for whom these funds will be allocated. The details of how funding accountability would work in the LCFF have been the subject of intense negotiation. But no matter the outcome, local school boards will clearly have greater authority to spend school dollars than under the current system, and education stakeholders will need to hold them accountable if equity is to be achieved.

Another key issue, which has received little attention, is the length of time it will take to fully implement the LCFF. Because the compromise boosted funding for the base grant, and increased the LCFF’s price tag, estimates indicate that full implementation of the LCFF will take eight years, rather than seven as in the original proposal. However, implementing the LCFF could take longer, as the timeframe depends on the amount of funding state policymakers provide — and each year that implementation is delayed could mean perpetuating current inequities.

Fundamentally restructuring California’s education finance system is a major undertaking, and the LCFF is an important step forward. The LCFF provides school districts with more control over how resources are allocated, which will ideally increase public awareness of, and interest in, how local officials spend dollars provided by the state. Moreover, by simplifying the way the state provides dollars to school districts, allocating those dollars based more closely on student needs, and making state education funding more rational, the LCFF has the potential to increase public confidence in the state’s stewardship of our shared investment in K-12 education. That confidence will be necessary for Californians to support providing the increased resources that all schools need.

— Jonathan Kaplan


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