Photos by Credit: Alison Yin for EdSource
Sophomores attend chemistry class at Skyline High School in Oakland, California.

Why do California schools have more money than ever, yet districts across the state are considering staff layoffs?

This paradox is due, in large part, to declining student enrollment and whether California will continue to abide by and invest in the Local Control Funding Formula, or LCFF, which currently provides the lion’s share of state funding to support schools, and virtually all the funding over which the district has full discretion. What hangs in the balance are dollars and addressing long-standing inequities in our schools and outcomes for students.

When schools lose students, it creates fiscal uncertainty and the lost revenue can trigger layoff notices, shuffling of staff and lost talent.

When we look at historic patterns and recent data, we know that schools serving high numbers of students of color, students living in poverty, and those with unique learning needs such as English learners and foster youth, will be the most adversely impacted by layoffs.

These are the schools that experience the most staff turnover, higher vacancy rates, layoffs and a greater number of inexperienced teachers. In these situations, the state has a responsibility to intervene to ensure fiscal stability and equitable opportunities for students, because we know declining enrollment is not going away anytime soon.

California’s Legislative Analyst’s Office projects funding for K-12 schools and community colleges to grow by $27 billion over the next five years.

At the same time, the Department of Finance projects that K-12 schools will see a decline in enrollment of approximately 540,000 students — or about 9% — over the next decade. This is due to a decreasing birth rate and stagnated migration and immigration into the state.

Fewer students mean $7.5 billion less in annual funding generated by the state’s main attendance-based funding formula, LCFF.  At the local level, this projected decline in funding has district leaders worried. But, the irony is that at the state level, the declining enrollment will free up money for education, which must be spent because our state Constitution sets a minimum level of spending for education from transitional kindergarten through community college.

There is, however, a silver lining. Because the state must spend a minimum amount on education and we expect to have fewer students, the per-student funding level in California will go up.

The challenge is that districts currently do not know how they will receive this additional per-student funding. Will it be through additional LCFF allocations; new categorical programs, based on priorities set by the Legislature and the governor rather than school district; or one-time funds for various priorities? Categorical funds restrict how the money can be used, the type of staff the funds can support and aren’t necessarily available for all districts. In addition, districts are hesitant to use one-time funds to hire staff because they may not be able to retain the staff after the one-time dollars run out. For example, if districts hire staff with the billions in federal funds recently received, can they maintain that staffing in the future?

Consequently, school districts cannot effectively plan their spending or their staffing. When districts lack certainty and predictability, their workforce — and ultimately students — suffer. And, we know this suffering will be concentrated in schools that have the greatest needs and where students are still recovering from the disproportionate impacts of the pandemic.

Underlying all of this is California’s abysmal student-to-staff ratio, among the worst in the nation (California ranks 45th in staff ratios and 49th in teacher ratios), and districts are struggling to retain and hire qualified staff to provide the most essential supports and services. Our schools cannot afford to risk losing more adults who are working with students or scare off those that might be interested in being a teacher.

The outcome of this dilemma is not a foregone conclusion, and we believe there is a reasonable solution to predictably fund our schools and meet the needs of students. We are recommending that the state establish a “Declining Enrollment Dividend Fund” that would capture the “savings” from the reduction in district LCFF funding because of declining enrollment and commit to districts that the proceeds would be reinvested back into schools in a transparent and predictable way. Under this plan, half of the funding would go into districts’ full LCFF allocations and the other half into augmenting the LCFF supplemental and concentration grants, which are targeted at students from low-income families, English learners and foster youth.

This approach would give district leaders the confidence and ability to effectively budget and invest in their staff. And to ensure high-need students see real benefits, policymakers could apply conditions, particularly for the dollars used to augment LCFF supplemental and concentration grants by requiring districts to stabilize and improve staffing at schools with high concentrations of low-income students, English learners and foster youth, since they have historically borne the brunt of shrinking budgets and staff layoffs. This approach could build on the state’s investment of $1.1 billion LCFF concentration funds in the 2021-22 budget that districts are required to use to increase staffing ratios at high concentration schools and add greater transparency and accountability on how the funding is spent to meet this goal.

Students need and deserve stable school communities that provide meaningful opportunities, appropriate services and strong adult-child relationships. That requires consistent, qualified and sufficient staffing.

As state policymakers work to address the implications of declining enrollment in this year’s budget and beyond, we urge them to ensure equity is central to the design of any solution adopted.

•••

Robert Manwaring is senior policy and fiscal adviser for education at Children Now, a nonprofit that seeks to break down barriers that stand in the way of children’s health and education.

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  1. John H. Lorona 2 months ago2 months ago

    I am ambivalent about your article. Here’s why: For too long public school districts have lived off the automatic funding roller coaster knowing they can spend taxpayer monies overlooking EL students, special Ed., and overpaying superintendents …

  2. TIm Taylor 2 months ago2 months ago

    Well written article Robert….I am sharing this at our Superintendents Roundtable this morning!

  3. Frances O'Neill Zimmerman 2 months ago2 months ago

    Not one word about the State Auditor’s scathing report on chronic misuse of LCFF funds that were intended to improve the lot of low-achieving children of color? Local control turned into local license to fund teacher raises with impunity. Where’s the safeguard to make sure that doesn’t happen in some new “allocation?”

  4. Eric Premack 2 months ago2 months ago

    Hi Rob: Is throwing more money at this challenge, especially toward the many districts who allegedly do a poor job of focusing the LCFF supplemental and concentration grant funding really the smart solution here? You link to the Goldhaber (et. al.) study from the "Getting Down to Facts" research, but seem to ignore its key recommendations, including addressing California's needless barriers to entering the teaching profession and myriad provisions in local collective bargaining … Read More

    Hi Rob: Is throwing more money at this challenge, especially toward the many districts who allegedly do a poor job of focusing the LCFF supplemental and concentration grant funding really the smart solution here? You link to the Goldhaber (et. al.) study from the “Getting Down to Facts” research, but seem to ignore its key recommendations, including addressing California’s needless barriers to entering the teaching profession and myriad provisions in local collective bargaining agreements that hinder districts’ ability to ensure that schools serving the neediest students have great teachers.

    Some protection against declining enrollment and attendance attributable the Pandemic and other emergencies seems entirely appropriate, but throwing ongoing funding at these problems without exploring more cost effective solutions is unwise. Instead of funding “phantom” students, let’s fix the many artificial barriers that inhibit districts from making sound personnel decisions.