Study compliments and questions Brown's funding formula

February 22, 2013
This graph shows the strong relationship between results on California Standards Tests and poverty, with highest scoring API scores in the upper left going to children not in poverty. Source: CA Dept; of Education (click to enlarge).

This graph shows the strong relationship between results on California Standards Tests and poverty, with highest API scores in the upper left going to children not in poverty. Source: CA Dept. of Education. (Click to enlarge)

An analysis by the Public Policy Institute of California, released Wednesday, praises Gov. Jerry Brown’s overall plan for school finance reform, while raising questions about elements of the formula that would steer substantially more money to disadvantaged students.

“The governor’s series of reform proposals are in keeping with many of the principles of good school finance reform,” conclude Margaret Weston, a PPIC research fellow, and Heather Rose, a UC Davis associate professor of education. And his “very explicit and simple” Local Control Funding Formula funnels additional resources to students who most need them. But achieving a consensus on the formula “faces a specific and difficult challenge: agreeing on the appropriate weights for disadvantaged students,” they said.

PPIC published the study on the same day that the Department of Finance released a much anticipated district-by-district breakdown that translates the Local Control Funding Formula into per-student dollars. The 80-page chart discloses how much districts and charter schools would get during the next two years and once the formula is fully funded in seven years, if revenues meet projections. (See our explanation.)

Brown’s formula would simplify the rules for distributing state funding to school districts while channeling more dollars to low-income students and English learners to try to close gaps in their learning. Districts would receive a base level of funding, equal to their general or “revenue limit” funding in 2008, before state budget cuts slashed K-12 funding. Each disadvantaged student would get an extra 35 percent funding. And, on top of that, in schools where disadvantaged students comprise a majority, funding would be bumped up again under a “concentration factor.”

PPIC’s study suggests that the Legislature view finance reform in the context of not just state funding but all sources, since low-income students and English learners already receive significant amounts of federal aid. It also suggests that lawmakers consider raising the base level of funding and take a second look at how supplemental money for disadvantaged students would be ratcheted up under the concentration factor.

Those same students already are targeted under federal and state “categorical” programs. The study found that unified districts composed entirely of low-income students currently receive an average of $2,372 more per student than unified districts with no indigent students: $8,934 compared with $6,567. That difference of 36 percent is a net figure, after subtracting the average advantage that districts with few low-income children have in local revenues, like parcel taxes, and through “basic aid” – districts funded solely by property taxes. Federal funding contributes about 40 percent of extra revenue for low-income students and the state about 60 percent.

The problem under the current system is that state categorical aid is not uniformly distributed. Districts in which high-needs students make up 70 percent of enrollment receive an average of $1,755 per student, but averages are deceiving. Funding  among districts ranges from $991 to $3,324 per student.

If Brown’s finance formula (WPF) were implemented fully this year, total school funding, based on percentage of low-income students, would rise from a little more than $6,000 to more than $11,000 in schools where all students were low-income, state and federal funds included. Source: Public Policy Institute of California. (Click to enlarge)

With a few exceptions, what had been categorical money would be distributed uniformly under Brown’s formula. And there would be a lot more of it: 77 percent more per student in combined state and federal funding for a unified district with all low-income students under full funding of Brown’s formula in 2019-20. That’s more than twice the 36 percent in combined federal and state categorical money under the current system.

Under the Local Control Funding Formula, Brown would add bonus dollars through a concentration factor once disadvantaged students comprise a majority of students. A district with 80 percent high-needs students would get 46 percent more funding for each of those students. A district with all high-needs students would get 53 percent more funding per student, the maximum.

Concentration factor deserves scrutiny

The study doesn’t venture whether that’s the right amount, saying it’s the Legislature’s role to determine the balance between the base funding for all students and the extra money for the disadvantaged. “The literature provides some support for directing even more resources to communities with concentrated poverty,” the authors write.

However, they imply that the threshold at which the concentration factor kicks in may not be high enough, since 60 percent of students and 58 percent of districts would benefit from it. “This may argue for a higher level of base funding rather than a concentration factor,” they write.

Another problem is that concentration is measured by district, not by school, for the purpose of funding. As of two years ago, nearly 600 schools with high concentrations of disadvantaged students were located in districts where the overall number of disadvantaged students was under 50 percent; those schools would not benefit from a concentration factor.

State Board of Education President Michael Kirst, who co-wrote a brief five years ago that was the model for the Local Control Funding Formula, defended the concentration factor. He said that the study understated the compound impact in California of large numbers of English learners who are also poor. Over half of English learners attend schools where English learners are the majority. Extra money where there is such a concentration is needed, he said.

Kirst also said he was satisfied that the 35 percent basic supplement for disadvantaged students is in the general range of other research in California.

Weston and Rose also reviewed those studies, most of which were done for the 2007 Stanford-led Getting Down to Facts reports. One recommended giving districts with all high-needs students 66 percent more than districts without those students. Another, by Jon Sonstelie, a school finance expert at the University of California Santa Barbara, concluded that a 25 percent increase in base funding, plus a 30 percent supplement for high-poverty districts, would be needed to raise achievement to the state’s API target of 800. He based this on budget simulations with California educators. But since 2007, API scores have risen significantly anyway even though district budgets have been cut, casting doubt that raising test scores should be the measure for increasing spending. Kirst said more resources will be needed to meet the ambitious goals of preparing students for college and careers and for schools to succeed in teaching the more rigorous Common Core standards .

Weston and Rose concluded that research studies all pointed to the need for more money to increase student achievement, and disadvantaged students need even more. But the studies had flaws, so using their results to set spending targets is problematic.

“The reality is we don’t know how additional funding will translate into outcomes,” but a lack of certainty over how to link spending and achievement “does not relieve our state government of setting school funding goals and priorities,” they write. “A strong finance system is an essential component of a strong education system.”

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