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Introduction
How We Got Here
What is LCFF
Phasing in LCFF
The Formula
What's Included
What's Not Included
Spending Rules
Accountability Pt. 1
Accountability Pt. 2
Charter Schools
Conclusion
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A Bold New World: A Guide to the Local Control Funding Formula


Welcome to EdSource’s guide to the Local Control Funding Formula (LCFF), along with news and information about California’s new K-12 finance system.

The section includes:

The state law creating the new funding system shifts decision making on K-12 spending from the Legislature to local districts. It requires that school boards reach out and listen to parents, teachers and community members before setting priorities.

We welcome your comments and suggestions on the section. Send them to edsource@edsource@org. Prepared with support from the Stuart Foundation, the Dirk and Charlene Kabcenell Foundation, and the Charles and Helen Schwab Foundation.

California is about to embark on the most comprehensive reform to its school finance system in the past 40 years, putting local communities in the driver seat and making a historic investment in high-need students.

— Ted Lempert, president, Children Now

More Resources on LCFF

Overview of the LCFF, July 2013

Legislative Analyst's Office

LCFF School District Calculator

Fiscal Crisis and Management Assistance Team

10 Frequently Asked Questions About LCFF

Those of you on the go who want a quick primer on the new school funding system, download our guide here.

How is Your School District Affected by the Formula?

Compare your school district with others across the state.

Today, I'm signing a bill that is truly revolutionary. We are bringing government closer to the people, to the classroom where real decisions are made, and directing the money where the need and the challenge is greatest. This is a good day for California, it's a good day for school kids and it's a good day for our future.

— Gov. Jerry Brown on signing the law establishing the Local Control Funding Formula, July 1, 2013

Breaking with the Past: Reforming School Finance in California

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NOTE: Use the navigation bar to the top left to quickly move between sections. If not expanded, click on the arrow to open.

The Local Control Funding Formula replaces California's nearly half-century-old, state-controlled school finance system with one that promises more local control as well as greater transparency and fairness.

Under the old system, school districts received approximately two-thirds of their revenues as general-purpose funding based on complex historical formulas (known as "revenue limit" funds), and about one-third through nearly four dozen highly regulated "categorical programs," such as for summer school, textbooks, staff development, gifted and talented students, and counselors for middle and high schools.

Under the new system, districts will receive a uniform base grant for every district, adjusted by grade level, plus additional funds for students with greater educational needs, defined as low-income, English learner and foster youth students. Districts will get an additional 20 percent of the base grant based on the numbers of these students enrolled in a district, and even more when they make up more than 55 percent of a district's enrollment.

Districts will have broad discretion over how to use the base grants. The funding law says that districts must expand or improve services for high-needs students in proportion to the additional funding that these students bring to the district. Temporary regulations that the State Board of Education passed in January 2014 tell districts how much money they must spend each year on high-needs students and when that money can be used to fund schoolwide and districtwide programs.

The transition to the new formula began in the 2013-14 school year. Full implementation of the new funding formula is projected to take eight years. The vast majority of school districts will receive more funding under the new formula after it is fully implemented. Most districts that would get less than under the old system will receive additional payments restoring their funding to 2007-08 levels, before the Great Recession led to substantial budget cuts. In 2013-14, no district will get less than it received from the state on a per pupil basis in the 2012-13 school year.

School districts will have more authority than before to decide how to spend their money. But they will also face new obligations to show that their spending improved student performance. Districts must adopt a Local Control and Accountability Plan (LCAP), after soliciting suggestions from teachers, parents and the community, and update it annually.

The plan must spell out the district's goals for improving student outcomes according to eight priorities set by the state, and align spending to meet the goals. Districts that fail to meet their goals and improve student outcomes will receive assistance from county offices of education and through a new agency, the California Collaborative for Educational Excellence. Districts that are persistently failing could be subject to state intervention or even a state takeover.

10 Frequently Asked Questions About LCFF

For those of you on the go who want a quick primer on the top questions about the new school funding system, download our guide here.

Click here to download.

How We Got Here

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For decades, California's schools — and the state's more than 6 million students have labored under a financing system that has been described as irrational, dysfunctional and inequitable by a wide range of researchers, educators and policymakers.

The History of School Finance Reform in California

Take journey through the contentious history of school finance reform in California, beginning with the famous Serrano v. Priest and moving toward Proposition 30.

Click to explore timeline.

In July 2013, Gov. Jerry Brown signed legislation that dramatically revised how California funds its schools. The new system is designed to be more equitable and transparent. It directs more funds to districts with low-income students, English learners and foster children, and shifts more authority to local districts to decide how to spend the money.

The stakes are high. The legislation (Assembly Bill 97 with revisions in Senate Bill 97 and Senate Bill 91) marks the most sweeping revision in how schools are governed and funded in four decades. Whether the new formula delivers on its promise of improved academic outcomes for students will depend, in part, on the extent to which parents, teachers and community members guide local school boards and superintendents to set ambitious goals and make wise spending decisions. Thus, it is essential that Californians interested in improving education for the state's children understand the new system and their responsibilities for contributing toward its success.

Local Control Funding Formula: The core of the new system

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The heart of this overhaul of California's school finance system is the Local Control Funding Formula. Once fully funded, the formula allocates the same base amount per pupil to all districts, with adjustments by grade level, and additional funds based on the number of low-income, English learners and foster children in attendance. In this guide, we refer to these children as "high-needs" children.

As its name implies, the Local Control Funding Formula has two central elements:

Local Control

School districts will have far more control over spending than they have had for many decades.

On paper at least, local school boards run California schools. But with the passage of Proposition 13 in 1978 limiting local school districts' ability to levy property taxes, power over school funding shifted from local communities to state government. Along with more concentrated state power came dictates in the form of an ever-expanding state Education Code, which spawned an army of consultants and lawyers to help districts interpret it.

Until now, most districts received their core revenue from the state, known as "revenue limit" funding, based on formulas several decades old. Although the landmark Serrano vs. Priest Supreme Court ruling in the 1970s required the Legislature to equalize districts' "revenue limit" funding, the differences have narrowed but have not been eliminated. In addition, disparities in funding levels among districts grew as the Legislature passed dozens of categorical programs, worth billions of dollars. From summer school and school counselors to building maintenance and school safety, each program served a perceived need but also came with its own rules — and paperwork.

In place of the old system based on "revenue limit" funding plus categorical funds, districts will receive a base grant plus additional funds determined by the number of low-income and other high-needs students enrolled. The system is intended to be simpler than the old system, and to give local school officials more flexibility over their budgets.

The new law requires school districts to seek parents' and community members' ideas on how these funds will be spent, as well as consulting with teachers, principals and other school personnel.

States in Motion: Tracking Education Over Time

Interested in seeing how California ranks compared to other states nationwide when it comes to education spending and other economic indicators? Check out this interactive tool!

Click to explore interactive tool

Funding Formula

Every district will receive the same base grant for each student, depending on his or her grade level. Districts will receive less funding for students in middle grades than for those in elementary and high school.

Proposition 30 and LCFF

The passage of Proposition 30 in November 2012 assured that there would be a temporary tax increase for funding schools over the next five years.

Click here to download.

Districts will also receive a "supplemental" grant based on the number of low-income students, English learners and foster children they serve. Districts in which these students make up at least 55 percent of enrollment will be entitled to a "concentration" grant, an additional 50 percent of the base grant for each high-needs student above the 55 percent threshold.

Most of the money distributed statewide — 84 cents of every dollar under the formula — will go to districts in the form of base grants. An additional 10 cents will be in the form of supplemental grants. The remaining 6 cents will be distributed as concentration grants to districts with large numbers of high-needs students. At full funding, those districts with all or nearly all high-needs students would receive upward of $3,000 per student above the base grant.

How the Funding Formula Will Be Phased In

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The new funding formula will be phased in gradually over the next eight years, starting in 2013-14.

In the first year, districts start with the per-student funding they received from the state in 2012-13 under the old system (not including funds they received for programs like special education that are not covered by the funding formula). Thus the initial amount differs for each district. Each year, districts will receive a pro-rated increase — a slice of the difference between their current funding and their target at full funding. This will include annual cost-of-living adjustments. In 2013-14, the first year under the formula, that slice is 11.8 percent — about an eighth of the gap between current funding and the full funding target. For 2014-15, Gov. Brown is proposing to more than double the amount of new money for the funding formula. After only two years, the Local Control Funding Formula would be more than one-third of the way toward full funding, if the budget passes as proposed.

How One District's Funding Will Change

See how San Leandro Unified School District would see its funding change under the new funding formula.

Click here to view.

Districts that in 2013-14 were receiving higher-than-average per-student funding from the state because of historical formulas and other factors and that enroll fewer-than-average high-needs students will receive a smaller increase in funding each year than districts beginning with less funding and higher percentages of high-needs students.

Take, for example, a hypothetical K-12 unified district where 60 percent of students are English learners and from low-income backgrounds. Let's say the district received $6,100 per student in funding from the state in 2012-13 and is targeted to get $10,200 per student at full funding of the Local Control Funding Formula in 2020-21. Under the formula, it would receive an additional $4,100 per student by the time it reached the last year in the estimated eight-year transition to full implementation of the formula. In 2013-14, it is receiving $484 in additional funding— a little less than an eighth of the gap. In 2014-15 under the proposed state budget, it would receive $1,013 more per student. In coming years, fluctuations in state revenue and adjustments for inflation will determine the level of annual funding.

According to projections by the Department of Finance, districts will be fully funded by 2020-21. These projections assume that Proposition 98 will see annual revenue increases averaging 6 percent, based on a sustained growth in the state and national economy. In 2014-15, Gov. Brown is projecting the increase to be nearly twice that amount, with slower growth after that. Full funding will take more or less time than eight years depending on whether the economy falters or booms.

The Department of Finance estimates that fully implementing the Local Control Funding Formula will cost an estimated additional $25 billion in K-12 funding above 2012-13 levels. This includes $18 billion in additional base, supplemental and concentration dollars and $7 billion in projected annual cost-of-living adjustments. All of the funding will be determined by Proposition 98, the 1988 voter-approved initiative that established a complex formula guaranteeing schools and community colleges a minimum annual amount from the state's General Fund. Prop. 98 funding levels are projected to grow by that amount during the next eight years. The Local Control Funding Formula by itself creates no new sources of revenue. It is a formula that prescribes how available revenues will be distributed.

In 2013-14, the first year under the formula, the Legislature has allocated $2.1 billion above last year's funding level, an average increase of 4.7 percent or $338 per student. An analysis by School Services of California of the distribution impact of the formula found that it will work as intended. Districts with between 82 percent and 100 percent high-needs students (the top quintile) will get an average of 6.4 percent more funding in 2013-14. The quintile of districts with the fewest high-needs students – up to 29 percent high-needs students – would get 3 percent more funding. That amount is still above the 1.56 percent cost-of-living increase for the year.

Gov. Brown is proposing to give districts $4.5 billion in 2014-15, raising the average per student spending under the formula by a near record-setting 10.9 percent. A small number of districts could see more than $1,000 per student in revenue.

How Funds Will Be Allocated

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Base Grants

The funding formula law lists the fully implemented base grant, which will vary by student grade level. The law also calls for annual cost-of-living adjustments.

The figures below are the projected base grants in 2013-14 dollars at full funding in the 2020-21 school year. The figures include an initial cost-of-living adjustment of 1.565 percent for 2013-14. After future cost-of-living adjustments are added, the dollars that districts will receive in 2020-21 will be higher:

  • K-3: $7,675 per student
    • This will consist of a base amount of $6,952 plus 10.4 percent of the base amount — initially $723 per student — as an incentive to keep class sizes smaller in early grades, and to cover some of the costs needed to do so.
  • Grades 4-6: $7,056 per student
  • Grades 7-8: $7,266 per student
  • Grades 9-12: $8,638 per student
    • This includes a base amount of $8,419 plus a 2.6 percent addition to the base (initially $219) to encourage — but not require — districts to fund career technical programs such as Linked Learning, which link the middle or high school curriculum with career options.

Gov. Brown’s proposed 2014-15 budget includes a cost-of-living-adjustment of 0.86 percent, which would increase the base rates to the following:

  • K-3: $7,741 (including class-size reduction incentive)
  • Grades 4-6: $7,117
  • Grades 7-8: $7,328
  • Grades 9-12: $8,712 (including incentive for career technical ed)

The Department of Finance and the Legislative Analyst's Office have not published an average base rate for a unified school district after full funding is achieved. Our estimate for the average unified rate is $7,772 per student at full funding. It is based on the statewide K-12 enrollment by grade in 2011-12 and includes the 2013-14 cost-of-living adjustment.

How is Your School District Affected by the Changes?

Use our nifty comparison tool to easily find how your school district's state funding may be affected by the new funding system, or compare your school district with others across the state.

Click to compare school districts.

Supplemental Grants

Each district will get an additional 20 percent of the per-student base grant for every English learner, foster youth and low-income student in attendance. For K-3 grades at full funding, this will amount to an additional $1,535 per student; $1,411 for grades 4-6; $1,453 for grades 7-8; and $1,728 for high school. These amounts include the 2013-14 cost-of-living adjustment.

Some students fall into more than one high-needs category. For example, about three-quarters of English learners are from low-income families. But these students will only be counted once. Districts will receive an additional 20 percent supplement for each student, not double that for students who fall into two categories. The formula is based on an "unduplicated count" of high-needs students.

A student's "low-income" status is determined by his or her eligibility for the federally subsidized free-and-reduced-price meals program, available to children from households with incomes up to $42,643 for a family of four (185 percent of the federal poverty level) who enroll in the program. Districts identify students as "English learners" based on a home language survey and an English proficiency test. There is no limit in the law for the number of years a district can receive extra funds for each of its English learners. Eligibility ends when a district reclassifies an English learner as fluent English proficient; districts determine when that happens.

Concentration Grants

Districts in which high-needs students make up 55 percent or more of enrollment qualify for additional "concentration" grants. The grant is intended to help address research findings showing that students face extra academic challenges if their peers are also poor and struggling to learn English (see footnote 47 on page 27 in Public Policy Institute of California report on LCFF for references).

Districts will receive an extra 50 percent of the base grant ($3,838 per student for K-3, for example), in addition to the 20 percent supplemental grant ($1,535 per K-3 student), for those high-needs students above the 55 percent enrollment threshold.

At full implementation, a district in which every student is a low-income student, English learner or foster child — such as Greenfield Union Elementary in Monterey County and Compton Unified — will receive 42 percent more in per-student funding than a district with no students in these classifications.

Once full funding is achieved, the law guarantees that all districts will receive no less per pupil than they got before the Great Recession (in the 2007-08 school year, adjusted for inflation).

Because of the passage of temporary taxes under Proposition 30 and projected increases in state revenues, most districts are forecast to receive significantly more money during the next eight years. Those districts with the highest proportions of low-income students, English learners and foster children will receive the most, as the table below shows.

Targeting High-Needs Students

The Base, Supplemental and Concentration grants in the new funding formula can be difficult to wrap one's head around. This graphic provides a visual comparison of a how school district with no high-needs students would do under the new formula, compared with a school district with 100% high-needs students.

Click to expand graphic

Exceptions

After full funding is achieved, about 230 districts (about a quarter of all districts in the state) would get less under the new formula than they would have received under the old system.

Many of these districts have few high-needs students and received disproportionately more in "revenue limit" and/or "categorical" funding in past years. Some are very small schools — fewer than 200 students — in rural areas that received extra money to keep their doors open.

To make sure they will not suffer financially as a result of the new funding law, the majority will receive extra payments to make up the gap, called the Economic Recovery Target or ERT.

The majority of those districts will receive the difference between full funding under the new Local Control Funding Formula and what they would have received under the old school finance system, after cuts to revenue limits and categorical programs made during the Great Recession have been restored.

The payments will be in approximately one-eighth increments over the next eight years. At year 8, the Economic Recovery Target will become a permanent addition to what the district will receive from the state.

Those districts that had per-student funding in the top 10 percent of all districts under the old financing system will not be eligible for Economic Recovery Target payments. They will continue to receive funding at their 2012-13 level — thousands of dollars more per student than average in some cases — but no more.

What's Included in the New Funding Formula

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The new funding formula will comprise between 80 percent and 90 percent of state funds allocated for K-12 schools. It will vary depending on how much is available each year as determined by Proposition 98, the complex voter-approved formula guaranteeing schools and community colleges a minimum annual amount of state revenue each year.

To protect them from a sudden loss of revenue that could result from phasing out some categorical programs, districts will still continue to receive money they previously received through two large categorical programs totaling $1.3 billion. These are:

  • Home-to-school transportation: Districts receiving these funds must continue to spend them on transportation at the level of service provided in 2012-13
  • Targeted Instructional Improvement Block Grant: These funds were originally intended to underwrite the costs of court-ordered desegregation programs in various districts. In most cases these desegregation programs are no longer in effect, yet districts are still receiving the funds. Districts will continue to get these funds, and will be free to use them as they choose

What's Not Included in the New Funding Formula

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Categorical Grants and LCFF

Of the 45 categorical grants that used to serve as the bread and butter of the old school finance model, 32 have been scraped in the new model. Find out what grants failed to make the cut here.

Click to explore graphic.

Between 10 percent and 20 percent of state education funds allocated annually through the Proposition 98 formula for K-12 schools will not go to districts under the Local Control Funding Formula. These include funds for special education, along with a dozen smaller programs, including child nutrition, foster youth services and after-school programs established under Proposition 49. Districts will continue to receive these funds in addition to the basic amounts they will receive through the new funding formula.

For the next two years, school districts are required to spend no less than they did in 2012-13 on Regional Occupational Centers and Programs (ROCPs) and Adult Education. Regional Occupational Centers are the primary providers of career technical education for high school students in the state.

"Basic aid" districts will receive no money from the state because they get more funding from local property taxes than they would from the formula. They comprise about 14 percent of the state's nearly 1,000 districts, a number that varies from year to year. Many are wealthy districts with high residential property values. However, basic aid districts must still comply with the state's new accountability requirements, including completion of an annual Local Control and Accountability Plan.

Federal regulations governing the use of federal Title I funds intended for low-income children will remain in place. Districts have used Title I money for a range of purposes, including extending the school day, training teachers and hiring specialists and instructional coaches for English learners.

Also remaining in place are requirements for districts to satisfy the terms of the Williams vs. State of California lawsuit settled in 2004. The settlement includes the requirement that all students in the state's lowest performing schools have current textbooks, access to clean and safe buildings, and fully credentialed teachers.

How Districts Can Spend Their Money

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Assembly Bill 97, the law spelling out the funding formula, gives districts wide discretion to spend their base funding as they choose. However, it says that districts must use supplemental and concentration funds to "increase or improve services for English learners, low-income students and foster children in proportion to the increase in funds" that the districts receive for those students.

In January 2014, the State Board of Education clarified the Legislature’s intent in adopting emergency regulations that will guide districts in passing their 2014-15 budgets. The regulations, which will be replaced by permanent rules in fall 2014, have two parts.

  • Provide a seven-step formula for each school district, charter school and county office of education to calculate the amount and the percentage of the annual increase in the funding formula that must be spent on increased or improved services for high-needs students. This amount would be over and above what the district provides other students and will be a significant focus of the budgeting process. (Here is an example that the State Board staff provided of the step-by-step calculations for a hypothetical district.)
  • Clarify when money intended for high-needs children under the LCFF can be used for districtwide or schoolwide purposes. Examples might be hiring a team of coaches to work with teachers of English learners in every school versus expanding tutoring not only for low-income children but other subgroups of students in a school who are under-achieving. The regulations assume that when high-needs students constitute at least 40 percent of a school’s enrollment or 55 percent of a district’s students, money can be used for a schoolwide or districtwide program, as long as it’s stated clearly how the money will benefit high-needs students. Money can still be used for schoolwide purposes when high-needs students make up less than 40 percent –and districtwide purposes where the enrollment is below 55 percent. But the burden of proof is higher. Districts must show this was the best use of the money intended for high-needs students.

Incentives to Keep K-3 Class Sizes Small

One program that gets special attention in the new funding formula is the state's former Class Size Reduction program, which since 1996 had attempted to reduce kindergarten through 3rd grade classrooms to 20 students. In recent years, as a result of the state's budget crisis, K-3 class sizes in most districts have increased above 20 students — and in many cases have reached 30 students per class.

Under the new system, school districts are provided with a substantial financial incentive to reduce class size in K-3 classrooms to no more than 24 students — although they will be given the full eight-year transition period to full funding to do so. By that time, all schools in a district would have to have a K-3 class size of 24 or fewer students in order for a district to receive the 10.4 percent additional base funding per-student. During the transition period, districts also must show they are moving proportionally toward reaching the 24:1 student-to-teacher target in each school.

However, if they negotiate a different class size arrangement with their teachers unions, districts can have average K-3 classes larger than 24 students and still get the additional funds for smaller class sizes.

Holding Districts Accountable for How They Spend State Money

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The funding law requires that in return for greater control over how they spend state funds, districts must involve parents and the public in setting academic goals and in linking expenditures to those goals. Districts must also subsequently share data on whether the spending achieved the desired results at the school site and district levels for all students and for student subgroups receiving additional dollars. The requirement that instructional and budget goals be tied together through a community process marks a fundamental shift in budgeting in California.

The framework for doing this will be the Local Control and Accountability Plan or LCAP, a three-year plan, which must be updated annually, that every district must create. In January 2014, after multiple revisions, the State Board approved an LCAP template that all districts must use, starting July 1 with the 2014-15 budget year.

After writing the plan, the school superintendent will present it to a District Parent Advisory Committee and — if English learners constitute 15 percent of a district's enrollment or at least 50 students — an English Learner Parent Advisory Committee. The superintendent must not only listen to the suggestions, but also respond in writing to the advisory committees’ recommendations before adopting the final plan following a second public hearing.

The school board must invite comments and recommendations at a public hearing and also reach out to parents and community members for recommendations. Beyond the minimum levels of parental involvement the State Board is requiring, parents on their own can press their school boards to be more inclusive in writing their local plans.

What's in the Local Control and Accountability Plan

The 12-page template contains three sections:

1. Community engagement: The funding law requires that a school district document how it reached out not only parents but also to guardians of foster children, parents of English learners, community organizations, teachers unions and students. While not dictating how districts should do this, the template’s guiding questions imply that the engagement should occur early in the process and be genuine and comprehensive: Did the engagement occur early in the process to allow for meaningful discussions? What information and metrics did the district provide parents and members of the district advisory committee? What changes were made to the district’s LCAP as a result of the suggestions it received? Did it listen to school site councils, which will continue to meet and make recommendations for their schools, as before?

2. Goal and progress updates: The LCAP requires that districts set annual goals covering multiple measures of school and student performance as defined by eight broad priorities set by the Legislature. Districts must update the progress annually toward meeting their objectives, using data and metrics, some of which, such as graduation and student suspension rates, were cited in the funding law.

Districts must cite how the goals will apply to each subgroup of high-needs students, as well as to all students. If individual schools have different goals, the LCAP must include those. The goals should cover all eight state priorities (see below).

3. Actions and expenditures: The LCAP spreadsheet then asks for a full listing of programs and services that a district will provide, along with the costs, to implement each of its goals. The district must include a separate breakdown for foster youth, low-income students, English learners and redesignated fluent English proficient students. The district must specify – and justify – if money earmarked for high-needs students is being used for a districtwide or schoolwide purpose. The combined expenditures should equal the amount, determined by a formula, earmarked that year for high-needs students. The LCAP should illustrate how the money spent increases or improves services for those students.

The LCAP will be a three-year plan that must be updated annually. After writing the plan, the school superintendent will present it to a District Parent Advisory Committee and — if English learners constitute 15 percent of a district's enrollment or at least 50 students — an English Learner Parent Advisory Committee. The school board must invite comments and recommendations at a public hearing and also reach out to parents and community members for recommendations.

The superintendent must not only listen to the suggestions, but also respond in writing to the recommendations of the parent and English learner advisory committees before adopting the final plan following a second public hearing.

The LCAP is a planning tool that is intended to encourage a year-long process, starting in the fall and culminating in the adoption of the plan and the district budget in May or June. If the process is working as intended, the superintendent and school board will solicit and incorporate ideas and priorities suggested by the district advisory committees, school site councils, parents and the public at large. Those districts that made the mistake of waiting for the State Board to adopt the LCAP template in January 2014 to jumpstart the process face a compressed schedule for adopting the initial LCAP in June 2014, and may have to scramble to set up the advisory committees and gather feedback called for in the plan.

Deadlines and Milestones

The next several years are crucial, requiring parents, community members, school boards and the State Board of Education to play their respective roles in shaping the outcomes for individual school districts.

Click to explore graphic.

Eight Priority Areas

The LCAP groups the eight state priorities into three categories:

Conditions of learning:

  • Access to core services as measured by the extent to which students are taught by fully credentialed teachers, have standards-aligned textbooks and materials, and attend classes in safe and clean facilities.
  • Implementation of state standards, including the Common Core and the Next Generation Science Standards, for all students, and implementation of the new Common-Core aligned English language development standards for English learners.
  • Access to a broad course of study and programs for high-needs and exceptional students: One measure will be levels of enrollment in all required courses for admittance to a 4-year state university.

Pupil outcomes:

  • Student achievement as measured by performance on standardized tests, the Academic Performance Index, the proportion of students who are "college and career ready," the percentage of English learners who are reclassified as fluent in English, the share of high school students who pass Advanced Placement course exams with a score of at least a 3 out of 5, and other measures.
  • Other student outcomes as measured by performance in other required areas of study such as physical education and the arts. Other forms of assessments, such as SAT or ACT college entrance examination scores of high school students, could also be included.

Engagement:

  • Student engagement as measured by graduation and middle and high school dropout rates, chronic absenteeism and attendance.
  • Parent involvement as measured by the extent to which parents participate in key school decisions.
  • School climate as measured by suspension and expulsion rates, and other measures as defined by local school districts.

The Role of the County Office of Education

The new funding plan includes a significant role for county offices of education, which will annually review all district accountability plans. The county office will verify that each district's Local Control and Accountability Plan complies with the requirements for the plan set by the State Board of Education, and that the district's budget reflects the plan's goals.

The law sets up a timetable for a multi-step review that could lead to several revisions:

  • The district must send the plan to the county office of education within five days of adopting it
  • The county office has until Aug. 15 to seek clarification about the plan
  • The district then has 15 days to respond to the county's request for clarification
  • The county has another 15 days to make recommended changes to the plan
  • The district must consider those recommendations at a public hearing within 15 days
  • The county can either approve the plan by Oct. 8 each year or reject it for failing to comply with state requirements and work with the district to improve it

Holding Districts Accountable for School and Student Performance

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Districts will have considerable latitude to decide how to spend money for basic services and for high-needs students. However, they must show they are getting results.

The new funding formula requires the State Board of Education to establish guidelines — called rubrics — for evaluating a school district's performance on the eight priorities areas described in the law.

The law also establishes a more collaborative and less punitive process of providing assistance for districts that do not make sufficient progress in any of the priority areas through a new agency — the California Collaborative for Education Excellence.

The Collaborative's purpose is to "advise and assist" school districts and charter schools in achieving the goals of their accountability plan as well as helping to improve the quality of teaching and leadership in a district or school.

The State Board must develop and adopt three rubrics by Oct. 1, 2015:

  • A self-assessment rubric that districts will use to assess their own progress
  • A support rubric for county offices of education to determine if a district has met its performance goals or needs additional support. The county could request help from the Collaborative if a district fails to show improvement in at least one of eight state priorities for at least one subgroup of students
  • A intervention rubric for the state superintendent of public instruction to evaluate whether a district is "persistently failing" -- defined as failing to improve outcomes in more than one of the state's eight priority areas in three out of four consecutive years for at least three subgroups

Intervention by the state superintendent will be a last resort, used only after the Collaborative has determined it necessary and the State Board of Education has authorized it

The state superintendent will have the authority to change a district's accountability plan or amend a district's budget to better fund a district's priorities as spelled out in its accountability plan. The superintendent can also review and rescind actions of the local board, or appoint a trustee to run the district

Either a county office of education or the state superintendent can request the California Collaborative for Education Excellence to assist a school district. A district on its own can also request assistance from the Collaborative to focus on an area of need, to help improve instruction, or to build school or district leadership.

Charter Schools and the New Funding Law

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Charter schools are covered by the Local Control Funding Formula, which, for the first time, provides uniform funding for charter and district schools with students from similar backgrounds.

Like districts, charter schools will receive a base grant per student plus additional supplemental and concentration grants based on the number of high-needs students enrolled. There is one key exception, however. A charter school's entitlement for the concentration bonus will be capped at the percentage of high-needs students in the district where the charter school is located, not on the percentage of high-needs students it serves.

State officials explain that the intent of this provision is to eliminate any financial incentives to convert traditional public schools with high enrollments of low-income students or English learners to charter schools in order to benefit from the funds that those students would bring to the school through the new funding formula.

Some charter school leaders have expressed unhappiness that a charter school's funding will, in part, be determined by their district's student demographics, rather than the demographics of the charter schools themselves.

For example, a K-5 charter school serving 90 percent low-income and other high-needs students would receive no concentration grants in San Jose Unified, where the enrollment of high-needs students in the district overall is under the 55 percent threshold needed to qualify to receive those grants. If the same school were located just across the district's boundaries in the Franklin-McKinley School District, where 80 percent of students fall into a high-needs category, it would receive more than $900 per student in additional funding.

Charter schools will automatically receive the additional funds included in the basic grant for every student in a school with a K-3 class size of 24 students. However, unlike school districts, charter schools will not have to prove that they meet the requirement of 24 students or fewer per class, or are working toward that goal to get those additional dollars.

Charter School Accountability

Charter schools, like school districts, must complete a Local Control and Accountability Plan, updated annually by the charter school's governing board. They must also consult with parents, teachers and students in creating it. However, they do not have to follow the law's requirements for engaging the public, and they don't have to hold two public hearings required of districts for the adoption and update of the plan. They also don't need the approval of the county office of education.

Interventions and supports for charter schools are also different. Charter schools, like districts, will have their performance measured against sets of criteria or rubrics that the State Board will adopt by the fall of 2015. These rubrics will be based on the eight priority areas cited earlier.

Persistently failing charter schools must receive help either from the district that granted them their charter or, at the discretion of the state superintendent of public instruction, from the newly authorized state agency, the California Collaborative for Educational Excellence. Charter schools are subject to the same standard used to determine whether a school district requires intervention — if it fails to improve the performance of its students in three out of four years for three or more subgroups of students in more than one of the eight state priority areas.

Whichever agency granted a charter school its charter can consider revoking it upon the recommendation of the Collaborative for Educational Excellence based on one of two findings:

  • The school has not been able to carry out the Collaborative's recommendations
  • The school's performance is persistently poor

Conclusion

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California has embarked on a bold experiment to simplify its complex, opaque and inequitable system of school funding and to target additional money to students most in need. However, even at full implementation of the new formula, base funding for California's schools will continue to lag that of many states, in some cases by thousands of dollars.

The Local Control Funding Formula is a mechanism for redistributing funding, not a source of new funding. There is also no assurance that the additional supplemental and concentration dollars will result in improved student achievement. However, the new system does offer school districts more control than they have had in decades to run schools as they deem best. And requiring school boards and local education leaders to be more transparent provides parents and the community new opportunities to educate themselves and actively help shape spending decisions and academic priorities.

Many details about how the new system will work will be answered during the next two years. The challenge will be to ensure that the new funding system will result in improved outcomes for all students — and especially for high-needs students whom the new system targets for extra help.

Sources for graphics: California Department of Education, California Department of Finance, Legislative Analyst's Office, School Services of California.

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