Legislative analyst opposes Newsom’s plan for more funding to high-poverty schools

March 2, 2023

The Legislature’s nonpartisan adviser is recommending that lawmakers reject $300 million in new state funding to address low performance and racial disparities in the state’s poorest schools. Members of the Legislative Black Caucus are supporting the funding to help Black students improve learning.

Instead of relying on more money, “We find that the key issue is increasing transparency to ensure existing funding actually targets the highest needs schools and student subgroups,” the Legislative Analyst’s Office wrote in a recent report.

Gov. Gavin Newsom is calling the additional funding an “equity multiplier.” It would be a part of a larger effort to address the underachievement of racial and ethnic groups in all schools and districts. Together the pieces would make up the biggest change in the Local Control Funding Formula since the Legislature passed the equitable funding and school accountability law a decade ago.

The Legislative Analyst’s Office is also recommending holding off on a proposed additional $250 million for literacy coaches for about 300 additional high-poverty schools. The analyst says the Legislature should study how effective coaches are before doubling down on top of the $250 million in this year’s budget.

Both initiatives, totaling $550 million for high-poverty schools, would be the key element in the legislative analyst’s alternative to Newsom’s proposal to shave a third of a $3.6 billion arts and instructional materials block grant in the current budget. Some districts argue they have already committed the funding.

Budget cuts are needed for next year because state revenues for education are projected to come up several billion dollars short. The forecast would worsen in the event of a recession.

While opposing the equity multiplier money, the LAO said it does agree with other parts of Newsom’s plan and credits the governor for focusing more attention on those schools. The legislative analyst pointed to a state audit and research by the Public Policy Institute of California that revealed that much of the targeted funding either could not be tracked or was spent on districtwide purposes and didn’t reach high-needs schools.

Not mentioned in the report, however, is that eliminating the $300 million targeted to poor schools could undo a compromise that Newsom reached with Assemblymember Akilah Weber, D-La Mesa, and members of the Legislative Black Caucus. They had advocated spending at least that much in new annual funding to improve learning opportunities for Black students, who have historically tested as the lowest-performing among all ethnic and racial student groups.

Newsom disagreed with Black Caucus’ idea out of concern the funding would violate Proposition 209, the voter initiative that prohibits affirmative action programs in public education. Newsom instead is proposing to direct $300 million to address the needs of all of the lowest performing student groups in about 800 high-poverty schools; they enroll a slightly higher concentration of Black students than are enrolled statewide.

The governor’s proposed budget also would direct school districts to use state funding to close achievement gaps among all student racial and ethnic groups. Some districts have questioned whether they can use state funding to do that because funding under the Local Control Funding Formula specifically targets low-income students and English learners. However, the funding formula does require that districts track the progress of eight racial groups on a number of metrics and commit to actions in district plans for improvement, called the Local Control and Accountability Plans or LCAPs.

The legislative audit agrees with Newsom that targeting funding for low-performing racial groups is consistent with the intent of the funding formula. If needed, Newsom should ask legislators to amend state law to make that clear, the auditors said.

LCAPs already require addressing racial disparities at the district level. Newsom is proposing to extend the requirement to underperformance of racial groups at the school level. Schools would have to commit to specific actions and fund them. There would be a mid-year report using available data to document any progress. If, after three years, there was no demonstrable improvement, schools would have to change strategies.

Focus on staffing inequalities

Acknowledging that monitoring school-level spending can be burdensome and difficult to standardize across districts, the legislative auditor is suggesting focusing on staffing as a proxy for improvement.

The state should require districts to publicly report the share of teachers in every school who are fully credentialed and properly assigned, the share of teachers with less than three years of experience and the student-to-teacher ratio, according to the audit recommendations. They could be required to include other staff, like counselors.

In addition, the Legislative Auditor’s Office suggests that districts with low-performing schools be required to address staffing disparities across schools. Research by the Learning Policy Institute and others cite fixing disparities in teacher shortages, turnover and qualifications as fundamental to narrowing achievement gaps.

Mushrooming LCAPs?

The audit report implies that implementing Newsom’s plan will be challenging and suggests two fixes:

LCAP creep: Many school districts and charter schools have complained for years that reporting requirements have turned LCAPs in many districts into overwhelming documents that turn off parents and the public. Requirements to add extensive documentation on spending and goals for student groups in schools will likely add to complaints.

Recognizing that, the LAO calls on the Legislature to streamline the LCAP and to move some of the required accountability data to other platforms. It suggested, for example, that the state create an interactive portal where users could review LCAP expenditure data at various levels of detail.

Overlapping assistance: The state’s system of support for improvement relies on county offices of education to help districts and review their LCAPs. Districts with low-performing student groups receive more intensive assistance from their local counties, regional county offices with expertise in areas like chronic absenteeism or literacy, called geographic leads, and a state agency, the California Collaborative for Educational Excellence.

The governor’s plan would add a new level of county support from designated “equity leads,” whose first priority would be racial disparities in the 800 or so equity multiplier schools. The audit report questions whether another layer would be more effective. To avoid creating confusion and duplication, the auditor recommends clearer, narrower responsibilities and making clear that all addressing racial achievement should be a focus of all county offices and support agencies.

As the Legislature’s nonpartisan analyst, Legislative Analyst’s Office reports receive broad attention during the budget process.

Responding to the report, H.D. Palmer, spokesperson for the California Department of Finance, said the administration would stick with its proposal. “While the Analyst’s report reflects a different approach, the governor’s proposal reflects the administration’s continuing focus on providing equitable pre-K-12 educational opportunities through ongoing support for a Local Control Funding Formula Equity Multiplier, accompanied by further investment to support literacy coaches in high-need elementary schools.”

However, Derick Lennox, senior director of governmental relations and legal affairs with the California County Superintendents, said that his organization agrees with the LAO’s conclusion that the equity leads would duplicate current efforts within county offices of education.

“Dramatic interventions are needed to support equity and reduce racial disparities,” he said. “We hope the final budget will support the expansion of that work across all counties.”

“My overall takeaway from the LAO’s report is a sense of optimism that any technical issues in the governor’s accountability proposal are fixable,” he said, “and that there is a reasonable path forward to implementing the equity multiplier and many of the accountability changes.”

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