Photo by Alison Yin for EdSource (2014)
Fifth graders at Redwood Heights Elementary School in Oakland.

In its first detailed examination of former Gov. Jerry Brown’s landmark school funding law, the California State Auditor sharply criticized the Legislature and State Board of Education for failing to ensure that billions of dollars have been spent on low-income children and other students targeted for additional state money.

“In general, we determined that the State’s approach” to the Local Control Funding Formula “has not ensured that funding is benefiting students as intended,” State Auditor Elaine Howle wrote in a letter with the audit, released on Tuesday.

Howle issued her findings after examining spending by three districts since the funding formula went into effect six years ago: Oakland, San Diego and Clovis. Her report’s recommendations call for tightening rules for spending money explicitly allocated for low-income children, foster youths and English learners — the students targeted under the formula — and for making it easier for the state and the public to track spending within and across districts.

Gov. Brown had opposed some of those changes and sidetracked legislation that would have imposed what Howle wants: uniform spending codes to give lawmakers information they need to see if the law is working adequately. The audit may encourage legislators like Assemblywoman Shirley Weber, D-San Diego, who pushed for Howle’s report, to reintroduce a bill for tighter controls.

Howle’s conclusion vindicates complaints and lawsuits brought by Public Advocates and the ACLU of California and affirms longtime criticisms of student advocacy organizations like Education Trust-West and Children Now that spending for high-needs students often isn’t monitored. A recent report by the Public Policy Institute of California found that statewide, “supplemental and concentration” dollars generally were being spent on targeted groups but it took an enterprising researcher exhaustive digging to determine that.

In a statement, Bill Lucia, president of the nonprofit organization EdVoice, said Howle’s report “should be a wakeup call to all the politicians in Sacramento who say they care about closing achievement gaps. This audit uncovered serious control deficiencies lawmakers need to address immediately.”

The 2013 funding formula eliminated dozens of highly restrictive “categorical” funds and instead gave districts more flexibility and authority to decide how to spend money. The formula awards additional funding based on the proportions of “high-needs” students. Districts are to be held accountable for showing progress on multiple measures on the California School Dashboard and to lay out improvement plans in a three-year Local Control and Accountability Plan, or LCAP.

Deficiencies in law and oversight

The audit found fundamental flaws in the funding law, insufficient guidance by the State Board of Education and a lack of oversight over spending by county offices of education and the California Department of Education.

The audit cited a key administrator from the education department who said that state law allows county offices and districts to identify areas that requirement improvement but does not require the department to determine whether the funding formula is working.

“Nonetheless, we believe that as part of its responsibility to improve public education programs, it would be reasonable for CDE to have a method for doing so,” the audit said.

At a press conference Tuesday, State Superintendent of Public Instruction Tony Thurmond said that although he had not read the audit, his department would follow up “when public resources are misused,” while adding that districts are faced with difficult options. “I firmly believe they are frankly underfunded and making choices to manage their financial bottom line.”

The audit said that the three districts and three county offices interviewed agreed that base funding does not cover necessary base costs. The audit found that districts consequently were using supplemental and concentration funds to cover “what appear to be base services,” such as $5.2 million that San Diego Unified used for library services in all district schools.

Among its findings, the audit found that:

  • Districts can treat any unspent supplemental and concentration funds at the end of a year as base funding to use however they want. The audit recommends amending the law to explicitly end this practice. Only San Diego rolled over unspent supplemental and concentration funding to use for high-needs students the following year, the audit said.
  • In the first years after the adoption of the formula, the state board gave districts latitude in transitioning to the new system. As a result, the three audited districts undercalcuated how much of their budgets they were required to spend on targeted students by $320 million — dollars that instead were used for base funding for general uses. Based on that, the audit concluded that billions of dollars statewide that should have been spent on high-needs students were not.
  • Districts’ LCAPs often fail to clearly explain how districts will use funding for high-needs students. Districts have to state how much targeted funding they receive annually but don’t have to list how they spend all of the dollars. Instead, they must explain how they will serve the students by expanding or improving services proportionately — an “essentially meaningless” approach, the audit said. For example, the audit noted, supplemental and concentration funding added 8.65 percent to Clovis’ base funding. Not only is it difficult to measure the impact on any one student group, the audit said, but neither the county offices nor the state department of education is responsible for verifying that districts have achieved those spending increases.

The funding formula permits districts to use targeted funding for districtwide purposes, whether for staff training or improving library services, if high-needs students make up more than 55 percent of a district’s enrollment. But districts must justify the use by ensuring that the money would be “principally directed” to those students and shows that the money will be used effectively.

The audit couldn’t find the justification in nearly three-quarters of 53 expenditures of the audited districts’ LCAPs. And often the goals and the actions were so numerous that it was difficult to prove that expenditures would be effective. “For example, Clovis Unified’s first goal is ‘Maximize achievement for ALL students,’ which does not convey any information about which types of services would lead to achieving that goal,” the audit said.

Only Oakland Unified set an LCAP goal specifically aimed at English learners, the audit found.

The audit also recommended that the state require districts to align targeted funding to performance on the state dashboard and show whether it makes a difference.

In response to the audit, state board Executive Director Karen Stapf Walters said that the LCAP revision, which will go before the board for approval in January, will incorporate many of the audit’s suggestions to make supplemental and concentration expenditures more transparent. And the detailed instructions to districts about the LCAP will require more explicit explanations on expenditures. A new budget summary for parents will make it clearer whether supplemental and concentration dollars will be spent on the students they’re intended to serve, she said.

But Stapf Walters cited examples of why districts should have flexibility to use unspent supplemental and concentration dollars as they choose and disagreed with the call for accounting codes to track the dollars, as Howle urges.

She also warned against an incremental return to treating funding formula dollars as categorical funding. Decades of experience has shown the ineffectiveness of accountability “driven by year-to-year accounting procedures and compliance monitoring rather than a focus on whether spending decisions lead to improved outcomes,” Stapf Walters said.

Howle, in turn, responded that “we fundamentally disagree” with the notion that the audit’s recommendations would be a return to categorical funding. Contrary to the state board’s assertion, tracking the districts’ spending of LCFF funding is not merely “an accounting exercise.” It would “hold districts accountable for using the funding they receive to provide services to improve student achievement.”

John Affeldt, managing attorney of Public Advocates, seconded the call for more oversight. “The funding formula tried to establish a third way between overly restrictive categoricals and carte-blanche spending for improved outcomes down the road. The report is indicating that the Brown administration may have gone overboard in trying to get away from the categorical mindset.”

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  1. SD Parent 3 weeks ago3 weeks ago

    Not spending supplemental and concentration grant funding for the purpose of improving outcomes of disadvantaged students is just one example of the lack of meaningful accountability in LCFF and the LCAP. For example, Parent Engagement – including feedback on the LCAP under the auspices of "local control"– is nothing more than a check mark. Ditto for metrics purportedly used to measure success, where metrics can be so "soft" as to be useless and/or target … Read More

    Not spending supplemental and concentration grant funding for the purpose of improving outcomes of disadvantaged students is just one example of the lack of meaningful accountability in LCFF and the LCAP. For example, Parent Engagement – including feedback on the LCAP under the auspices of “local control”– is nothing more than a check mark. Ditto for metrics purportedly used to measure success, where metrics can be so “soft” as to be useless and/or target metrics that can be missed without any consequence.

    The Legislature needs to revisit LCFF and create meaningful accountability in the LCAP in all areas. This should include not just spending but also meaningful metrics for student outcomes in order to collect and share best practices. Based on recent education funding increases and the audit results, the public will want assurances that additional revenue for education (e.g. the “Schools and Communities First” ballot initiative for November 2020) will actually improve student outcomes.

    Replies

    • Todd Maddison 3 weeks ago3 weeks ago

      Hallelujah!

  2. Jennifer Bestor 4 weeks ago4 weeks ago

    Two of the three districts studied are in areas with above-average regional costs. Alameda County (Oakland USD) is 9%+ above the state average. Why is it a surprise that so-called supplemental funding is swallowed up by normal operating expenses? The shock is that the Auditor didn't realize this. Observations from Clovis (Fresno County -- well under the state average therefore, presumably more able to open up new programs with adequately compensated … Read More

    Two of the three districts studied are in areas with above-average regional costs. Alameda County (Oakland USD) is 9%+ above the state average. Why is it a surprise that so-called supplemental funding is swallowed up by normal operating expenses? The shock is that the Auditor didn’t realize this. Observations from Clovis (Fresno County — well under the state average therefore, presumably more able to open up new programs with adequately compensated staff) are far more indicative of a problem.

    To exclude regional cost effects, many similar districts would have been better choices: for example, Sac City, Long Beach, Riverside, Fresno, Lodi, Elk Grove, San Juan, Moreno Valley, Stockton or Fontana. Even San Diego’s 2% higher cost-of-living limits its flexibility in redirecting resources.

  3. Dr. Bill Conrad 4 weeks ago4 weeks ago

    The Leadership in K-12 education from the District level to the County and State levels is affectionately referred to as a club. In reality, it is really an organized crime network dedicated to funneling resources within the system to the care and feeding of the adults within the system. It is first and foremost a Me First, My Family First, My Friends First System! All elements of the K-12 system are perfectly aligned to satisfy … Read More

    The Leadership in K-12 education from the District level to the County and State levels is affectionately referred to as a club. In reality, it is really an organized crime network dedicated to funneling resources within the system to the care and feeding of the adults within the system. It is first and foremost a Me First, My Family First, My Friends First System!

    All elements of the K-12 system are perfectly aligned to satisfy the voracious needs of the totally unaccountable adults within the system.

    The children and families especially those of color, economically disadvantaged, English Learners, and Students with Disabilities are way down on the leadership priorities list!

    The student academic achievement data speaks volumes about the failures of the adults! http://sipbigpucture.com!

    It’s all OK though! At least we don’t kill the children at least directly!

    The children are beginning to see that the adults are letting them down especially in the areas of gun control and climate change! We can only hope that they begin to become agitated about the inferior education they are receiving from the self-serving adults within the system!

    Time to take to the streets children as your future is at stake!

  4. Alan Pursell 1 month ago1 month ago

    A good step towards oversight and accountability would be to give Parent (and Student) Advisory Committees teeth. In Oakland, several of the audit findings mentioned have been general recommendations made by the PSAC to the board and district for several years. Unfortunately, there is no teeth behind these recommendations, or even requirements that other districts have PACs that do more than rubber stamp district-made decisions. Enhancing the role of Parent Advisory committees in the Ed … Read More

    A good step towards oversight and accountability would be to give Parent (and Student) Advisory Committees teeth. In Oakland, several of the audit findings mentioned have been general recommendations made by the PSAC to the board and district for several years. Unfortunately, there is no teeth behind these recommendations, or even requirements that other districts have PACs that do more than rubber stamp district-made decisions.

    Enhancing the role of Parent Advisory committees in the Ed Code, providing CDE assistances to advertising, recruiting and guiding them, and then providing muscle when recommendations are ignored or not met would be a strong step forward.

  5. Frances O'Neill Zimmerman 1 month ago1 month ago

    Six years and millions of dollars later is better than never to address the blatant cynicism underlying Governor Jerry Brown's Local Control Funding Formula that gave school districts and their unions carte blanche to spend tax money on themselves rather than for intended recipients -- California's legions of under-educated children who are in foster care, poor, of color and non English-speaking. Now that the coast is clear and Governor Brown is retired up in … Read More

    Six years and millions of dollars later is better than never to address the blatant cynicism underlying Governor Jerry Brown’s Local Control Funding Formula that gave school districts and their unions carte blanche to spend tax money on themselves rather than for intended recipients — California’s legions of under-educated children who are in foster care, poor, of color and non English-speaking. Now that the coast is clear and Governor Brown is retired up in Colusa, we thank State Auditor Elaine Howle for this report and send our best wishes to State Assemblymember Shirley Weber who intends to redress the abuse of LCFF in Sacramento’s next legislative session. Weber, an African-American college professor and former school board member from San Diego, deserves broad public support for her good intentions.

  6. Todd Maddison 1 month ago1 month ago

    Since we passed Prop 30 to raise taxes “to fund better education” in 2012, and then implemented the LCFF program a couple years later, funding for the K-12 system has skyrocketed. Since 2012, overall state spending per ADA has risen tremendously. According to the California Department of Education (CDE), per ADA spending has risen from $8382 in 2012 to $12,068 in 2018. That’s a 43.97% increase, for an average of 6.26% PER … Read More

    Since we passed Prop 30 to raise taxes “to fund better education” in 2012, and then implemented the LCFF program a couple years later, funding for the K-12 system has skyrocketed.

    Since 2012, overall state spending per ADA has risen tremendously. According to the California Department of Education (CDE), per ADA spending has risen from $8382 in 2012 to $12,068 in 2018.

    That’s a 43.97% increase, for an average of 6.26% PER YEAR. During a time when inflation in CA has averaged 2.45% per year (per US BLS).

    In other words, funding has risen at almost 3 times the rate of inflation.

    I don’t know how overall state spending on high needs students has done during this time (no details in the article) but in April 2019 the San Diego Union Tribune did an analysis of special ed funding in San Diego County and found that it has risen about 26% during that time.

    Note the gap? While general funding has risen 44%, special ed funding has only risen 26%.

    Where is that money going?

    Into the paychecks of our education establishment, I’m afraid.

    The pension issues are well known, with rising pension contributions absorbing an ever-increasing portion of the funds we’re giving schools to educate our kids.

    What is not so well known is the rise in pay.

    Doing a statewide longitudinal analysis is difficult – the public pay data available on Transparent California does not give enough detail to do that reliably, however I have done that analysis for individual districts. Most recently Vista Unified – who is currently facing a budget crunch and needing to cut $13M from services for kids to balance their budget.

    In their case, their average raise rate for this period has been 6.28% per year – almost mirroring the rise in funding, coincidentally enough.

    Now, if that were needed to prevent them from having to subsist on catfood I could see it, however in Vista Unified the median administrator pay is $126,070, and the median teacher made $89,467. Hardly a subsistence living.

    And, before anyone can say I’ve cherry picked a particularly egregious district, I’ve done this same analysis on at least 10 other districts with remarkably consistent results. I have not found a single district that has not served itself up raises at rates of anything less than 5% per year, median administrator pay is well into six figures, and median teacher pay always tends to be in the mid to high $80’s.

    What did we think then Tom Torlakson ruled that increased funding can be used for raises?

    Meanwhile by all measures performance is at best flat – per the CA school dashboard, CAASPP testing, NAEP testing, etc, etc.

    Is “paying everyone more” somehow going to improve education? The data says not.

    Not only do we need some of the remedies outlined in this article, but we need a fundamental exposure of this diversion of funding into paychecks so that parents can see that and demand their districts actually spend their money on things that affect education, not bigger paychecks for themselves.

    It would be a good start if “we the people” voted down the upcoming tax increase proposals “to fund better education” and sent a message to our local school boards that we want to see them actually spend their money on things that benefit kids – not adults – before we’re going to give them more money.

    Good luck….

    Replies

    • Jack 4 weeks ago4 weeks ago

      Todd, with respect to salary data for school districts, you might look at the J90 report completed annually by the CDE, and based upon data reported by individual school districts. You should be able to access this information by doing a google search "J90 report California Department of Ed". If that does not work for me, feel free to contact me privately and I will assist you with securing the data. Reports are available … Read More

      Todd, with respect to salary data for school districts, you might look at the J90 report completed annually by the CDE, and based upon data reported by individual school districts. You should be able to access this information by doing a google search “J90 report California Department of Ed”. If that does not work for me, feel free to contact me privately and I will assist you with securing the data. Reports are available dating back several years – providing a nice longitudinal view for those interested.

      • Todd Maddison 4 weeks ago4 weeks ago

        Thanks, appreciate the tip, but I'm already familiar with the J90's... As disclosure, I'm the guy who collects K-12 data for Transparent California - so I'm pretty familiar with pay data. (although nothing I say in any comments should be construed to represent TC in any way, it’s just me…) You can't really do a longitudinal study using J90 data because it does not give individual employee numbers - only averages for the district. Comparing average to average … Read More

        Thanks, appreciate the tip, but I’m already familiar with the J90’s…

        As disclosure, I’m the guy who collects K-12 data for Transparent California – so I’m pretty familiar with pay data. (although nothing I say in any comments should be construed to represent TC in any way, it’s just me…)

        You can’t really do a longitudinal study using J90 data because it does not give individual employee numbers – only averages for the district.

        Comparing average to average to get a picture of the pay increase rate is really misleading. Here’s an illustration of why….

        District A and B both have 100 employees. Last year, both had a total payroll of $5M, meaning both had an average pay rate of $50,000/year.

        This year, District A has no change. Total 100 employees, payroll $5M, average $50,000.

        District B, on the other hand, has 50 employees retire and replaces them with new employees at starting rate (call it $25,000), then gives the continuing employees all 10% raises.

        They still have 100 employees, but now their total payroll is (50 * $25,000) + (50 * $55,000) = $4,000,000 . Divided by 100 that means their average is $40,000/person.

        Wow, if you’re looking at the J90 averages, they cut everyone’s pay, right?

        No, they did not. They gave all their existing employees a whopping 10% raise…

        The only valid way to do a longitudinal study is to look at specific cohorts of employees and track their pay over time. I do this with Transparent California data by matching a prior period’s employees with the most recent period. That’s a sampling technique – it doesn’t capture “all employees”, just those that appear in both data sets, but that sample is usually more than 50% of the staff so it’s a pretty good indicator of the overall raise rate for the district, and it’s based on real pay data from real paychecks.

        With that, I typically see raise rates of 5 to 7% on average, for every district I’ve examined…

        If you’re interested, I have a template built for this I’d be happy to share. It’s a bit complex, and looking at any individual district takes some “human thought” to get correct, but if you’re a middling-to-advanced Excel user it’s not hard…

        https://drive.google.com/drive/folders/1eYvIy9_-D6bFTWXX9L07hNOIuL-rDDI5?usp=sharing

  7. Brent 1 month ago1 month ago

    The idea an academic can decide for a local district what is or is not a base service is absurd. The idea the California legislature that continually funds a train to nowhere is somehow equipped to decide how education funding is used in local districts is also absurd. The same districts who struggled mightily under the old categorical system continue to struggle under the LCFF. Maybe the state should begin to look … Read More

    The idea an academic can decide for a local district what is or is not a base service is absurd. The idea the California legislature that continually funds a train to nowhere is somehow equipped to decide how education funding is used in local districts is also absurd. The same districts who struggled mightily under the old categorical system continue to struggle under the LCFF.

    Maybe the state should begin to look at successful districts and build a model off of their practices as opposed to continually building education funding practice off of the lowest performing districts? There are plenty of high performing districts across the state; unfortunately our state too often chooses to dismiss their success as opposed to celebrating and copying it. Fund the base and fund successful districts to serve as models.

  8. el 1 month ago1 month ago

    I believe that the fundamental problem is that the base grant is too small. I am not aware of anyone who has made a credible case that it is adequate. Is someone going to argue that the library services should be restricted only to students eligible for the supplemental funding? If they examine those budgets, what other base spending did they propose to cut? Or would it be better for the district not to have … Read More

    I believe that the fundamental problem is that the base grant is too small. I am not aware of anyone who has made a credible case that it is adequate.

    Is someone going to argue that the library services should be restricted only to students eligible for the supplemental funding? If they examine those budgets, what other base spending did they propose to cut? Or would it be better for the district not to have library services?

    I encourage the critics to really get in the weeds of these budgets and honestly set forth what they think is the most ethical and beneficial budget within the rules, guidelines, and available funds. If the base grant was adequate, I don’t believe you’d see those practices that these groups find questionable, and you’d see the supplemental money used in a more truly supplemental sense. I don’t think adding more rules – so that staff is spending even more time on compliance and less time on delivering programs – is necessarily helpful.

    The state has not funded the increases in minimum wage nor the increased contributions to CalSTRS and CalPERS, and those alone are huge expenses encroaching on all the funds.

  9. Doug Carlton 1 month ago1 month ago

    One of the fundamental principles of the LCFF was that that school districts and their stakeholder groups would decide how to increase or improve services for unduplicated pupils, and that decisions about what services/expenditures are base vs. supplemental would be determined locally—the idea of subsidiarity. While Howe says she “fundamentally disagrees with the notion that the audit’s recommendations would be a return to categorical funding,” the audit also finds that districts “were using supplemental and … Read More

    One of the fundamental principles of the LCFF was that that school districts and their stakeholder groups would decide how to increase or improve services for unduplicated pupils, and that decisions about what services/expenditures are base vs. supplemental would be determined locally—the idea of subsidiarity. While Howe says she “fundamentally disagrees with the notion that the audit’s recommendations would be a return to categorical funding,” the audit also finds that districts “were using supplemental and concentration funds to cover ‘what appear to be base services,’ such as $5.2 million that San Diego Unified used for library services.” An outside auditor determining for a district what services are base vs. supplemental is the very definition of a categorical program.

  10. Jack 1 month ago1 month ago

    This report, while disturbing, is not surprising. The implementation of LCAP (LCFF funding model) decentralized and decategorized state funding, assuring much greater discretion to local school boards in California's districts. With no mandated training for local boards and limited monitoring of districts. A disaster in the making. And here we are today. The historical pattern in California has been neglect of and disregard for the needs of our most vulnerable children. The findings of the … Read More

    This report, while disturbing, is not surprising. The implementation of LCAP (LCFF funding model) decentralized and decategorized state funding, assuring much greater discretion to local school boards in California’s districts. With no mandated training for local boards and limited monitoring of districts. A disaster in the making. And here we are today.

    The historical pattern in California has been neglect of and disregard for the needs of our most vulnerable children. The findings of the state auditor’s review only reinforces this regrettable pattern of neglect .

    We should all be thankful for the work of public advocacy groups devoted to assuring the needs of children are addressed. They seem to be the only entities holding “public servants” accountable these days. Kudos to the office of the state auditor for its honest, forthright reporting. Now it’s time for the state board and legislators o step up to the plate, take action and hold local school districts accountable.