California school funding formula has a spending loophole; is a recession the time to fix it?

May 7, 2020

Assemblywomen Shirley Weber and Sharon Quirk-Silva, right, discuss two bills they are sponsoring to improve accountability for Local Control Funding Formula spending, including AB 1835, during a press conference in January 2020.

A battle is looming in California that is likely to test school districts’ commitments to serve students who are struggling most. Call it the conflict between scarcity and equity.

A hearing Wednesday of the Assembly Education Committee, on legislation that would eliminate what State Auditor Elaine Howle called a longstanding loophole in the Local Control Funding Formula, offered a preview. At issue is the timing of the reform, heading into a recession with budget cuts looming.

The funding law directs extra money to school districts to provide services and programs for English learners and low-income students, homeless and foster children — “high-needs” student groups that generally are the furthest behind academically and face the challenges of poverty.

Under a practice that advocates for these students have criticized for years, districts have moved hundreds of millions of dollars that they had committed for high-needs students but didn’t spend into the following year’s all-purpose General Fund to use however they want. Because the funding formula didn’t define the money, called supplemental and concentration funding, as “restricted,” county offices of education haven’t challenged the practice of rolling over the money for general use when they’ve approved districts’ Local Control and Accountability Plans.

At the hearing, Assemblywoman Shirley Weber, D-San Diego, said the rollover practice created a “perverse practice” among districts to hold on to funding to use for their own purposes, not for the kids it’s intended to serve. Weber, an early supporter of the funding formula who has become a sharp critic, and Assemblywoman Sharon Quirk-Silva, D- Fullerton, are co-sponsoring Assembly Bill 1835, which would carry out Howle’s recommendations. Howle would require districts to report leftover supplemental and concentration funding to the state annually and require them to spend the leftover money on high-needs students.

Even some school districts and education organizations that wrote a letter opposing the bill acknowledged that they wouldn’t have fought it until a couple of months ago. But the coronavirus and the economic recession it has precipitated has changed everything, they said.

With steep budget cuts on the horizon, it is imperative that districts be given the ability “to maximize the effectiveness of their expenditures,” they wrote, knowing they won’t be able to provide the level of services that they could have before.

Superintendents of the Natomas, Fresno and West Covina unified school districts and organizations representing school business officials, county offices of education and suburban districts signed the letter. The California School Boards Association announced its support for the bill.

In a separate letter, Long Beach Unified Superintendent Christopher Steinhauser wrote, “We can anticipate that all students” — not just those designated for additional funding — “will need services to mitigate learning loss, promote instructional continuity and address social-emotional and mental health. In the current environment of the COVID-19 pandemic and the deep economic recession that is upon us, school districts need to use funds with more flexibility, not more restrictions.”

“I understand their concern, and we know there will be challenges always with regard to economics,” Weber said in response. “But even in good times, for the last seven years, these kids have not benefited from these dollars because we have not held districts accountable for using the money as it should be spent. We cannot fail them again by simply saying, ‘Well, it’s a pandemic and we need to let the districts decide what they are going to do.’”

Samantha Tran, representing Children Now, one of the signers of a letter urging approval, testified that now is the time to double down on behalf of students who are being “disproportionately impacted” by the global pandemic, not relax the commitment. “The consequences of the profound learning loss that is occurring right now for these students may ripple through this generation, exacerbating already intolerable gaps in achievement,” she said.

Members of the Education Committee came down on the side of equity, voting 7-0 to pass the bill, which next goes to the Assembly Appropriations Committee. Gov. Gavin Newsom, who will have the final say, previously expressed support for the equity argument.

In his January budget summary (page 73), Newsom alluded to Howle’s recommendation and indicated he’d support strengthening accountability requirements for services for high-needs students, “particularly when actions described in an LCAP are not implemented as planned.”

But that was before he issued a statewide shelter-in-place order in response to the coronavirus pandemic. A spokesman for the Department of Finance declined to say whether Newsom’s revised budget, due out next week, would include language addressing the issue that Howle and Weber have raised.

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