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LAO would cut money from basic aid districts, other programs Brown would protect



The Legislative Analyst’s Office has added its endorsement of Gov. Jerry Brown’s proposal for sweeping school finance reform, praising the simplicity and clarity of Brown’s funding formula and the “reasonable” amounts of extra money he’d direct to high-needs students. At the same time, in an analysis released last week, the LAO is suggesting a half-dozen changes to the plan, including two that would stir up controversies that Brown woud just as soon avoid.

This report and other analyses by the Legislative Analyst's Office can be found at www.lao.ca.gov/

This report and other budget analyses by the Legislative Analyst’s Office can be found at www.lao.ca.gov/

Both changes would cut state money going to some politically powerful districts. One pertains to how much state money should go to property-rich communities, like Irvine, Beverly Hills and Palo Alto, that fund schools mostly on their own, without significant state aid. Comprising about 10 percent of districts, they’re known as “basic aid.” Brown would grandfather the state money that the districts do get through categorical programs; the LAO views this position as a giveaway to well-off districts. The analysis doesn’t say how much money would be saved.

The other change involves the treatment of two categorical programs, totaling $1.3 billion: home-to-school transportation and a categorical program established to fund desegregation programs that predominantly benefit Los Angeles Unified and a few urban districts. As with the basic aid districts, Brown would grandfather money districts get from these programs. The LAO argues that position contradicts Brown’s goal of creating a uniform, rational funding system.

Overall, though, the LAO likes Brown’s proposal to create what he’s calling a Local Control Funding Formula, or LCFF: “We believe the Governor’s proposed LCFF would address many problems inherent in the state’s existing K–12 funding approach, and we recommend the Legislature adopt most components of the proposal.”

The funding formula is designed to create a more uniform, straightforward system. It would replace the general funding of districts, called revenue limits, along with $6.1 billion in funding designated for one of the four-dozen plus categorical programs. In their place would be a base grant for every student in a district, and supplemental aid for low-income students, foster youth and English learners. Districts would have discretion on how to spend previously restricted categorical funds for purposes like teacher training, building maintenance and textbook purchases. No district would get less than it received this year.

Brown is proposing to give each high-needs student an extra 35 percent of the base grant – from $2,220 for those in K-3 to $2,688 for those in high school – money that would be phased in over seven years as extra funding from Proposition 30 and a rejuvenated economy becomes available. The LAO said the 35 percent supplement is “somewhat high” but still “within the range” of what other states provide for similar students as well as what California research studies recommended.

In districts where high-needs students comprise more than 50 percent of student enrollment, Brown would add a “concentration factor” with additional funding per student. By setting a threshold that is too low, the LAO says, “the governor does not prioritize funding for districts facing extraordinary levels of additional need over those facing what are essentially average levels of need.” Last week, researchers from the Public Policy Institute of California reached the same conclusion in an analysis. The LAO recommends that the Legislature consider adding a concentration factor once high-needs students comprise 70 percent of a district. “Raising the eligibility threshold in this way would narrow the beneficiaries of the concentration supplement to one–quarter of all districts, as opposed to half of all districts” thereby targeting supplemental funds “for those districts facing the greatest challenges.”

Other LAO recommendations, based on differences with Brown’s plan, include:

Add accountability: To ensure that the supplemental money is spent on high-needs students, Brown would require districts to do a detailed academic accountability plan showing how it would meet the needs of the three high-needs groups – low-income students, English learners and foster youths ­– and what the district would do to increase graduation rates, expand career technology courses and implement other measures to improve achievement. County offices of education would conduct a review to ensure that budgets aligned with the plans. However, since the counties would have no power to approve or reject the plans, the LAO says the Legislature should be more explicit in requiring that the extra money directly benefit high-needs students. Adopting the federal language for Title I and other funding, the districts should prove that the extra funds supplement, not supplant, what they would have spent on high-needs students, the LAO says.

Protect investment in buildings: One of the categorical programs that would disappear requires districts to spend 3 percent of the general budget on maintaining their facilities. Concerned that districts would let buildings run down, the LAO recommends keeping the categorical program’s 3 percent requirement – and the state’s investment from state-funded construction bonds.

Give minimum money to basic aid districts: The average basic aid district raises $3,000 more per student in property taxes than it would get in revenue limits under the current system, though a few districts, like Woodside Elementary, raise $6,000 or more per student. Basic aid districts also receive categorical funding, like other districts, and would continue to do so under Brown’s plan, though without cost-of-living increases. The LAO says the Legislature should cut that the categorical amount to the minimum or “basic aid” mandated by the state Constitution: $120 per student.

Treat desegregation and busing funds like any other categorical: As noted earlier, Brown would protect the $855 million former desegregation funding, known as Targeted Instructional Improvement Block Grant, or TIIG, from inclusion in his funding formula. Many districts that didn’t happen to apply for the funding decades ago receive no money, while Los Angeles Unified this year got $455 million, about $810 per student. San Francisco Unified got $38 million, about $775 per student, while San Jose Unified received $30 million, about $1,000 for each of its 30,000 students. No longer bound by restrictions, districts could spend the money however they want. These districts argue that the funding has been built into their budgets for decades and has been used to pay for magnet schools and other programs to benefit minority students.

Brown would freeze what districts now get in TIIG. But the LAO, saying there’s no rational reason why inequities in funding of TIIG should continue, would fold all of the money into the funding formula, for redistribution to high-needs students statewide through the supplemental funding.

The LAO also recommends doing this for the $491 million home-to-school bus categorical program, which Brown also would preserve as is. The formula is outdated and hasn’t funded the needs of high-growth districts for decades. But rural and some urban districts have successfully lobbied until now that they’d be devastated if they lost those funds. 

Filed under: High-Needs Students, Local Control Funding Formula, School Finance, State Education Policy

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8 Responses to “LAO would cut money from basic aid districts, other programs Brown would protect”

  1. David Patterson said

    on February 26, 2013 at 7:27 am

    The LAO’s recommendations regarding Basic Aid district funding and the Targeted Instructional Improvement Block Grant bring attention to two of the largest elephants in the room. The political power that represent the districts/communities that benefit from these programs is huge. At the same time a lot of suburban districts who are not basic aid are very concerned that they will be shortchanged by new formula. Maybe the suburban districts should be talking about how a more equitable approach might be crafted that includes some of this funding, especially the funding received by basic aid districts, being shifted to support suburban districts.

    • Jennifer replied

      on September 13, 2013 at 10:12 am

      Is it your opinion, David, that the sizable basic-aid districts (Palo Alto, Menlo Park, Beverly Hills, Mountain View-Los Altos High, San Mateo High) are over-funding their students’ educations? (The many small basic-aid districts could be dissolved completely with no appreciable contribution to the $18B required to fund LCFF.) A glance at national data would suggest that these are, in fact, the only districts in California that could even be considered adequately funded. Eight entire states fund their average pupil’s education at a rate higher than California’s major basic-aid districts.

  2. el said

    on February 26, 2013 at 10:47 am

    It’s still appalling to me that more than half of school districts serve a population of more than 50% disadvantaged kids (including my own). I appreciate the LAO’s comment about a concentration for “average levels of need” but I think my reaction is quite different, that the current “average situation” for our kids is decidedly unacceptable in terms of the resources available to them.

  3. Chris Stampolis said

    on February 27, 2013 at 4:58 am

    An unaddressed issue is how disadvantaged students are especially challenged in districts that have mid-range numbers of disadvantaged students. When a district’s culture is split between the wealthy and the needy, the wealthy are likely to have better public advocates, more relationship building with School District staff and some schools that are very high percentage wealthy. Of course this means that some schools are high percentage needy – but less politically influential.

    Governor Brown must keep accountability on school districts to serve schools that are high percentage needy and to ensure that needy populations of kids receive extra attention, even and especially where a school may have mid-range percentages of poverty. A blended school is more likely to make choices for less needy families than for needy families because the advocates for less needy families have political critical mass, including the passion and time to advocate.

    After years of cutbacks, well-off parents have joined to advocate for a return of funding to their priorities. However, with limited budgets, some of those restorations may displace services for higher-needs children. I see the bitterness the wealthy (or wannabe wealthy) have towards the poor. Especially in districts with significant wealth on one end and high poverty on their other, advocates for families of wealth seem to approach the needs of English language learners and children of poverty as unfortunate obstacles they rather would purge than prioritize.

    Governor Brown should advocate for a system that rewards disaggregation of data. It’s too easy to cheer high averages that mask failure and struggle among challenged populations. Advocates for the poor need more than moral arguments to get majority votes.

    Chris Stampolis
    Trustee, Santa Clara Unified School District

  4. John Fensterwald said

    on February 27, 2013 at 10:35 am

    Chris: I see where Santa Clara, as a sizable unified district, has schools with high proportions of low-income and EL students that might not get a significant boost under a concentration formula because the district average for high-needs studets is lower. Is that an issue as well?

    • navigio replied

      on February 28, 2013 at 7:09 am

      I think its clear that the negative impacts of concentration can exist at a school-level independent of what is measured at the district level. In fact, school choice (including charters) and residence pattern defacto segregation (even within cities) tend to make that condition a given. A geographically large district is not required, though that obviously makes it more likely.

  5. navigio said

    on February 28, 2013 at 4:43 pm

    In apparent preparation for LCFF, our district proposed issuing layoffs to resource teachers who are all funded solely by schools’ categorical money (mostly EIA I expect). Somewhat of a shocker given that SSCs have not yet even made their own decisions on whether to retain those positions for next year; they always do, but it seems like a bit of a money grab to be assuming LCFF will provide enough flexibility for districts to eliminate probably the most important categorically funded position on campuses. Of course the justification was that schools no longer get the money, but the district does. Luckily the public and the board protested and they were removed from the list, but I wonder in how many districts this kind of thing actually went unnoticed. Apparently someone misunderstood the term ‘local’. Your LCFF in action, baby!

  6. Jennifer said

    on September 13, 2013 at 10:22 am

    It saddens me that the LAO does not even mention the $6.6 billion elephant in the room. It unveiled $2 billion of this elephant in its December 18, 2012 white paper on ‘Insufficient ERAF.’

    By enabling the counties and cities to backfill their Vehicle License Fee (VLF) losses from the ‘Educational Revenue Augmentation’ portion of county property tax — and then dip into schools’ direct property tax allocation if that is insufficient — a $6.6 billion shell game was created. This, per the LAO, shifts stable funding away from schools and into counties/cities. It also removes VLF backfill from any reporting mechanisms, state or county. And, finally, per the LAO, $2 billion more has been transferred than was required to cover the losses.

    This elephant has been growing steadily since it was born in 2005 and is likely is consume billions more educational funding in the next eight years, deepening the $18 billion shortfall further.

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