California's budget woes hit neediest students the hardest

August 8, 2011

(This commentary first appeared in TOP-Ed.)

Californians have been hit with so much bad budget news these past three years it’s easy to assume that we’re all suffering more or less equally. Nothing could be further from the truth when it comes to our schools. Essentially every fiscal maneuver our policymakers have undertaken to respond to the budget crisis has delivered more pain to the neediest schools and students.

Even before the traumatic $18 billion in accumulated cuts to school funding since 2009, the underlying school finance system had devolved to one that disproportionately denies low-income students and English learners an equal shot at learning the state’s academic content standards. Two constitutional challenges currently winding through the courts are confronting the fact that our districts are underfunded overall and that high-poverty districts and schools generally spend below or only at the state average even while they are trying to serve a needier student population.

Yet here come the budget cuts, heaping more shame and inequity on an already shameful and inequitable school funding system. If the state is not going to sufficiently fund our schools, it’s at least imperative to stop adopting policies that impose cuts in ways that harm the poorest and most educationally disadvantaged students.

Flexing funds away from the neediest

Let’s start with the “categorical flexibility” the Legislature granted to districts in February 2009, which allows schools to spend funds allocated to 40 categorical programs for any educational purpose. The introduction of flex categorical funding has paved the way for school districts to shift funds away from categorical programs that are often designed to assist disadvantaged students. A recent study conducted by RAND and PACE Research Network confirms that districts have been using flex categorical funds to help balance their general budget – rather than using them for the purposes for which they were originally intended.

According to the Legislative Analyst’s Office (LAO) 2011 report, the shifting of these funds has led to reductions in funding for several programs intended to assist disadvantaged students. For instance, 75 percent  of school districts polled by the LAO have shifted funds away from “Supplemental Instruction,” 72 percent have shifted funds from the “Pupil Retention Block Grant,” 68 percent have shifted funds from the “Targeted Instructional Improvement Grant,” and 63 percent have shifted funds from “supplemental instruction for students failing the high school exit exam.” The LAO also reports that some districts have completely eliminated some of these important programs. Many school administrators now express concern, as found in the RAND report, that categorical flexibility and the shift in funds away from the support of disadvantaged students is increasing inequitable educational opportunities in California.

Many organizations, including my own, have complained that rules adopted by the California Department of Education associated with flex categorical funding make it very difficult to track and analyze state K-12 funding. Following the shift to flex categorical funding, the Public Policy Institute of California observes that revenue codes for flexed programs were terminated, and the RAND report further found that some districts no longer track spending for individual programs. Therefore, a full understanding of the disproportionate effects of flex categorical funding may not be possible.

Cuts derail flexibility’s true purpose

Don’t get me wrong. I’m generally in favor of expanding district flexibility and reducing the too numerous categorical programs that have sprouted like wildflowers in California’s school finance system post-Serrano. But flexibility is supposed to help better serve student needs, not to facilitate underserving the neediest students.

The fact is the state’s education funding cuts, when combined with the new flexibility, have led to high-poverty schools reducing and eliminating critical programs and services at far greater rates than low-poverty schools. A 2010 report from UCLA/IDEA shows that high-poverty schools are nearly three times more likely than low-poverty schools (49 percent vs. 17 percent) to eliminate summer school outright and four times more likely (65.6 percent vs. 15 percent) to experience teacher layoffs.

Another report by UCLA/IDEA in 2011 shows that 25 percent of the basic-aid or high-local-revenue districts studied cut instructional days compared with more than 50 percent of other districts, and that 25 percent of the basic-aid or high-local-revenue districts reduced counseling staff compared to more than 50 percent of other districts. Furthermore, IDEA reports that in 2008-2009 middle schools serving more than 90 percent Latino, African American, and American Indian students were almost 10 times more likely than schools with a majority of white and Asian students to experience severe shortages of qualified teachers.

The Association of California School Administrators found that, since 2008-2009, overall categorical program funding has been cut 20 percent compared to a general aid or “revenue limit” cut of just 10 percent. Combine that with the Public Policy Institute of California’s (PPIC) observation that high-poverty school districts generally receive more categorical funding than low-poverty districts, and it’s clear why these budget cuts are having a far greater effect on disadvantaged California students.

The picture that emerges is one of districts struggling to retain the core program – a teacher in front of a classroom – while being forced and permitted to cut all the supplemental programs around the core that are designed to give low-income students, English learners, and students with disabilities meaningful access to the general education curriculum.

Deferrals heighten pain disproportionately


The last three budgets have included payment deferrals as a way, on paper at least, to avoid programmatic cuts. For example, the 2011 LAO report shows that in 2010-2011, 17 percent of the Proposition 98 school funding guarantee was “funded” by amounts borrowed from the next fiscal year. In other words, the state promises the money now but sends it to districts next year. The report goes on to show that, in response to recent deferrals, 74 percent of districts have drawn down district reserves, 45 percent have borrowed from special funds, and 28 percent have relied on external borrowing. Furthermore, more than 20 percent of districts report they have, in fact, made programmatic cuts rather than borrow.

Therefore, school districts with the highest reserve funds and best access to special funds and external funding are in a far better position to avoid programmatic cuts caused by deferrals. Moreover, as shown by the 2010 LAO report, most of the funds deferred in the 2009-10 and 2010-2011 budgets were designated as revenue limit funds rather than categorical funds. (As a result, high revenue basic-aid districts – which no longer receive any revenue limit funds from the state but receive most of their support from local property taxes – have had far less of their funding deferred than the typically lower-revenue non-basic-aid districts.)

Private donations widening opportunity gap

Finally, things have become so dire that we are seeing a breathtaking increase in the private financing of public education in California. The RAND report observes that many districts are using donations from parents and foundations to fill the critical gaps created by the loss of funds. The use of external funding sources, however, greatly favors low-poverty schools. According to the 2010 UCLA/IDEA report, 80 percent of schools receive donations from parent organizations, but low-poverty schools on average receive eight times more ($167,797) than high-poverty schools ($21,319). The UCLA/IDEA 2011 report also shows that schools with few students from low-income families received on average $100,000 in donations compared to $5,000 for schools with a high proportion of poor students.

Of course parents should be able to support their local schools to add enrichment opportunities. What’s disturbing about the California scenario is that parents are being asked to fill the shoes of the state by funding core educational programs like music and art and, increasingly, salaries for critical teaching and student support positions. As a result, the wealth gap in our state is translating more than ever into a tangible opportunity gap.

End the unfairness


California is at the bottom nationally in terms of its level of per-pupil spending and in the percentage of personal income spent on public education. Its school finance system is built on 40-year-old anachronistic formulas that bear no relation to delivering the resources necessary for providing a standards-based education.

As the Stanford Getting Down to Facts studies demonstrated, the system now sends widely divergent amounts of funding per pupil to districts of similar size and demographics without any relationship to student needs. Finally, the system fails to sufficiently take into account the extra needs of low-income students and English learners, particularly when they are concentrated at the same schools.

Rather than addressing any of these inadequacies or inequities, the state has chosen to sink our children’s educational prospects lower and lower with unprecedented funding cuts. And rather than protecting the neediest students in these tough times, our policymakers, with their categorical flexibility, deferrals, and increased reliance on local fundraising, have served up the most severe cuts to those who can least afford it.

It’s time for our policymakers to reverse these funding cuts and address the underlying inadequacies and inequities within our school finance system. And to the extent that any such ultimate solutions remain a distant hope, Sacramento needs to stop this unfairness and take a much more nuanced approach to imposing its fiscal pain on our children. The next dollars that have to be cut should be cut as far away as possible from the neediest students.

John Affeldt is Managing Attorney at Public Advocates Inc., a nonprofit law firm and advocacy organization that challenges the systemic causes of poverty and racial discrimination by strengthening community voices in public policy. He is a leading voice on educational equity issues and has been recognized by California Lawyer Magazine as a California Attorney of the Year, by The Recorder as an Attorney of the Year, and as aLeading Plaintiff Lawyer in America by Lawdragon Magazine.

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