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  • Districts groan as state board sets in motion Newsom’s big changes to funding formula

    Districts groan as state board sets in motion Newsom’s big changes to funding formula


    Credit: Alison Yin / EdSource

     In pursuit of narrowing cavernous gaps in student achievement, Gov. Gavin Newsom this year made changes to the Local Control Funding Formula, the state’s school funding law, that are among the most far-reaching since the law’s adoption a decade ago. School districts are bracing for the extra paperwork and demands. 

    Newsom’s directive requires that starting in 2024-25, districts and charter schools spell out how they will address poor performance and target funding for improvements in every school where one or more of the state’s 13 student groups rank red — the lowest of five performance bands on the California School Dashboard. Until now, state law required only improvement efforts for districts as a whole. 

    The revision was made in the language of the governor’s proposed state budget in January. It was discussed in legislative budget subcommittees as one of many items in the education budget but didn’t receive a separate and detailed review.

    Last week, the State Board of Education implemented the changes with regulations on what school districts must do to raise the achievement of the schools’ lowest-performing students. They include setting specific goals, committing to actions and spending to achieve them, and a new requirement — determining how to measure if those strategies are effective by the end of three years and what to do if they aren’t. 

    Before they voted, board members heard repeated warnings from dozens of superintendents and school district administrators that piling on more extensive documentation would make districts’ three-year strategic plans, called the Local Control and Accountability Plans, unbearably long and unreadable. 

    “In smaller school districts, where time and resources are already significantly limited, the current requirements of the LCAP add an undue burden,” Helio Brasil, superintendent of Keys Union School District, a two-school district in Stanislaus County, wrote to the board. 

    “In my experience, every addition of a new table or box or check box or prompt to the LCAP makes it less and less useful as the tool to promote equity-focused, locally informed strategic resource allocation,” Joshua Schultz, deputy superintendent of the Napa County Office of Education, testified. “Already, practitioners in the field will tell you that the LCAP document is not useful for informing and engaging educational partners because of its length and complexity.”

    Equity multiplier schools

    Included in the revisions is a new category of “equity multiplier” schools serving many of the state’s most vulnerable students. Among the factors for their selection are the proportions of students from low-income families and parents lacking a high school diploma, and school stability — the rate of student transience.  Many will likely be small alternative high schools serving students who have been expelled, bullied and struggled at standard high schools or are at risk of dropping out.

    The idea was initially proposed by Black educators through a bill authored by Assemblymember Akilah Weber, D-San Diego, to dedicate $300 million to improve the achievement of Black students as the lowest-scoring student group on the dashboard. Newsom agreed to the new level of funding, but, concerned about violating Proposition 209, the 1996 voter initiative that bans affirmative action in public schools, he broadened the idea. The money will require districts to address and fund the specific needs of any lowest-performing student group on any dashboard indicator — whether math scores or absenteeism and graduation rates — and create overall goals for a school. Weber and the California Association of African American School Administrators endorsed the final plan.

    The schools have yet to be designated, but the California Department of Education is projecting there could be 1,000 schools. Many will likely have student groups performing in the red and will have to address them like other schools. But equity multiplier schools additionally will be eligible for technical help from designated county offices of education and their share of the extra $300 million, based on student enrollment. 

    Intense focus on school spending

    While not providing explicit funding for each student group, districts are held accountable for their performance. Student groups are determined by race and ethnicity, family income, students learning English, students with disabilities, and foster and homeless youth. Next month, the California Department of Education will release the 2023 dashboard, with color ratings for the first time since Covid interrupted testing in March 2020.

    The statutory revisions will mark a major shift in attention and accountability for the billions of dollars in extra “supplemental” and “concentration” money that the funding formula provides to districts annually based on the enrollment numbers of English learners and low-income, homeless and foster students. 

    The state already reports in the dashboard every school’s test scores and other indicators of student performance. Some districts funnel supplemental and concentration dollars directly to high-needs schools, as Los Angeles Unified does through its Student Needs and Equity Index. But the state steers funding formula dollars only to districts, which in turn determine how the funds are spent: which schools get tutors, extra counselors, teacher training or additional aides. Districts determine whether supplemental and concentration dollars are given to schools or through the central office. Districts are not required to track supplemental and concentration funding by school.  

    Stepped up accountability

    The revisions indicate Newsom agrees that either not enough funding reached the schools where high-needs students attended or funds were spent ineffectively.

    “The experience of the past decade is that we haven’t seen districts consistently identify schools with specific needs and take actions tailored to those needs,” said Brooks Allen, an adviser to Newsom and executive director of the State Board of Education.

    There has been overall progress in raising graduation rates and cutting suspension rates statewide. But the vast differences in proficiency rates on state test scores between Black (17% in math in 2023), white (48.2% in math) and Asian students (70% in math) have not narrowed, and absenteeism rates remain disproportionately high among Black and Hispanic students.

    “Newsom is saying we should move faster and stronger to close gaps in outcomes,” said John Affeldt, managing attorney for Public Advocates, a public interest law firm, one of the advocacy groups that called for the changes that Newsom adopted.

    The latest iteration of the LCAP template is at least the sixth in the past nine years. The state board designed the LCAP both as a strategic plan for district improvement and as an accountability tool to verify that districts are directing the $13 billion in supplemental and concentration funding to students for whom it was intended.

    Over time, the goals of accessibility and transparency have worked at cross-purposes. A previous iteration, for example, eliminated a potentially huge spending loophole, which the California State Auditor and Public Advocates identified, allowing districts to dump unspent supplemental and concentration dollars into their next year’s general fund to spend for any purpose on all students. Fixing it required adding yet another section to the LCAP accounting for the unspent money from year to year.

    A challenge to follow the money

    The Legislature hasn’t dedicated funding for research or evaluations to determine whether the funding formula was working. Consistent with his view that legislators should not meddle with local control, former Gov. Jerry Brown, the funding formula’s architect, made it difficult to compare districts’ spending from the funding formula and fought proposals to standardize spending through accounting codes.

    Despite the obstacles of limited data, researchers have persisted and found evidence for optimism and skepticism. In separate research studies, both UC Berkeley labor economist Rucker Johnson and Public Policy of Institute of California research fellow Julien Lafortune concluded that the funding formula succeeded in creating a much more equitable finance system and worked as designed for those districts getting the most extra money — those in which low-income students and English learners account for at least 95% of enrollment. Johnson calculated that a $1,000 increase in per-student funding, sustained for three consecutive years in the highest-poverty districts, produced significant increases in math and reading scores.

    But Lafortune, in an analysis he co-authored this year, also found that 60% of districts do not report spending on high-need students at or above the level of supplemental and concentration funding they receive. His 2021 research found that statewide only about 55% of supplemental and concentration dollars reached school sites whose students generated the funding, although some of the remaining money could have funded districtwide activities benefiting those schools. 

    Thus, there have been increasing calls from advocates for low-income students for more fine-grained reporting on spending.

    “We don’t report in a standardized way how much we spent at a school site. Getting that would go a long way to build trust that districts are doing what the policy intended,” said Rob Manwaring, senior policy and fiscal adviser for Children Now.

    Despite efforts by California Department of Education staff to eliminate redundancies, combine goals for multiple equity multiplier schools, and convert spending listings into data tables, the latest version will undoubtedly lengthen LCAPs that already are often several hundred pages for medium and large school districts, and will take extra labor to complete.

    The LCAP instructions will increase from 45 to 57 pages. Districts will have to engage parents, students, and teachers in every equity multiplier school and document how the engagement shaped goals and actions. Districts will add dozens to hundreds of entries for schools with student groups in the red.

    “No one wants to fill out paperwork for the sake of it,” said Allen. “But if the result leads districts to conduct further needs and data analyses, and not a compliance exercise, the result could lead to positive change and better support for kids who need it most.”

    Representatives of advocacy groups who had been calling for more transparency in the LCAP expressed support for the revised template. “The governor’s proposal,  combined with other improvements, would get California closer to ensuring equitable educational opportunities and outcomes,” wrote Guillermo Mayer, president and CEO of Public Advocates, and Christopher Nellum, executive director of The Education Trust-West, a nonprofit organization, in an EdSource commentary earlier this year.

    In letters and comments to the state board, no superintendent or lobbyist for school groups commended Newsom’s decision to strengthen the funding formula law and add a new category of highest-need schools. Instead, celebrating seemingly small victories, many praised Department of Education administrators for holding the line by making only those changes to the template that were required by law. They also called for additional efforts to slim down the LCAP.

    Advocates and school administrators are hoping that software engineers from Silicon Valley and artificial intelligence will somehow resolve their differences. They’re assuming an interactive, electronic template can reduce confusion and duplication with links to both AI-generated LCAP summaries for curious parents and detailed financial data for accountability hawks. 

    “I’m sure there’s technology out there that can help to take that large document that’s now being streamlined and put it into an even more user-friendly format for those who desire (it),” said state board Vice President Cynthia Glover Woods, who, she said, had read more than her share of LCAPs as chief academic officer of the Riverside County Office of Education.

    The idea of an electronic fix has been mentioned for several years — so far to no avail. 





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  • It’s time to fix the fatal flaw in California education funding formula

    It’s time to fix the fatal flaw in California education funding formula


    Credit: Allison Shelley for American Education

    California’s way of funding schools, the Local Control Funding Formula, was not designed to be perfect. That’s because most legislation requires a series of compromises necessary to minimize opposition, maximize support and win the necessary votes for passage. 

    In LCFF’s case, one of those compromises, the creation of the Local Control Accountability Plan, or LCAP, could eventually doom the reform.

    To understand why, it’s important to revisit the initial rationale for LCFF — replacing a complex, inequitable funding model with a simpler model that targeted grants based on student need and concentrated poverty.

    The old funding model was managed from Sacramento and included popular grants for the arts and music, English learners, career and technical education and more. Large and/or politically connected districts, nonprofits and statewide groups would lobby sympathetic lawmakers for their own grants. Over time, this model grew increasingly complex, limiting local discretion over spending and stifling innovation. Despite these problems, it had remarkable political resiliency. Lawmakers were incentivized to protect existing grants and got political credit for creating new ones. Very few stakeholders were interested in changing this dynamic and risk losing their favorite grants and programs.

    So, it wasn’t enough for the Brown administration to argue that LCFF was better because it was simpler, more equitable and gave districts more control over their money. They had to prove that it would fund many of the same programs as the existing model.

    Most education advocacy groups believed that this could be achieved by requiring districts to use the grants generated by high-need students to fund services that addressed their needs. But education groups representing labor and management wanted complete financial flexibility. To avoid this requirement, the education establishment collaborated with a few legal advocacy groups to create the Local Control Accountability Plan (LCAP), arguing that it would accurately document how they were spending money on programs and services.

    The last decade has provided strong evidence that this decision was based on flawed assumptions, beginning with the presumption that school districts are the best recipients of funding for high-need students. While district bureaucracies are certainly closer to students than Sacramento policymakers, they aren’t as close as principals and teachers. Unlike schools, district leaders face powerful interest groups that lobby them for spending like higher salaries and districtwide programs. That’s why most targeted grants like federal Title I funding are sent to districts but then quickly distributed to high-poverty schools. Without similar requirements, it’s likely that billons in LCFF dollars that could have funded school-based services were spent on district-level costs such as salaries, benefits, pension obligations and more.   

    Second, policymakers assumed that districts would accurately document spending on services in the LCAP. But LCAPs were never formally connected to school district budgets, which include ongoing costs like salaries and benefits. In fact, the processes for developing LCAPs and budgets occur separately on different timelines. Almost every analysis of LCAPs has found that their financial and programmatic information cannot be verified and the documents themselves are largely incomprehensible.

    Third, they believed that districts would focus on improving student outcomes without clear state-level goals and metrics to guide their decision-making. Instead of big, important goals — like grade-level math achievement — policymakers created a mishmash of state priority areas (many of which can’t be measured) and told districts to include them in their LCAPs. Predictably, most districts paid lip service to these priorities in their LCAPs and then wrote separate strategic plans. At this point, most district leaders probably can’t remember what the state priorities are. If everything is a priority, nothing is.

    Finally, and most importantly, they assumed that all of this would improve outcomes for the most vulnerable students. Here, the evidence is limited, especially given the size of the funding increases. Given the persistently low academic performance of most high-poverty districts and the state’s sizable achievement gaps, today’s elected officials can fairly ask whether our state has seen a commensurate return on these massive education investments.

    It’s no wonder that over the last several years, elements of the previous school finance regime have roared back. Elected officials who didn’t create LCFF and are suspicious of “local control” have created a whole new set of targeted grants like the governor’s community schools grant. Districts are now subject to far more onerous legalistic requirements for their LCAPs, which are intended to show that they’re using their funding for high-need students.

    District leaders have bitterly complained about these shifts. On one level, they are right that the advocates and policymakers focused on the LCAP are just doubling down on a failed strategy. But they haven’t offered any alternative, other than “leave us alone.”

    The danger for them is threefold. Increasing levels of scrutiny and regulation; ever more targeted grants that limit their discretion; and, as the years pass, the belief that local control has failed high-need students, requiring more aggressive state and county oversight. A few years from now, they could end up with the worst aspects of the old finance model and the new one.

    There is another way.

    A decade later, we have a lot of evidence on how to make the formula better. Perhaps a substantial portion of LCFF funding, such as concentration grants (for schools with more than 55% high-needs students) should flow directly to schools based on their poverty level, like Title I funds do. State leaders could establish a few measurable academic and social-emotional priorities that districts would address in strategic plans rather than LCAPs. Instead of a potpourri of grants that limit local discretion or new LCAP compliance requirements, lawmakers could create incentives, such as additional weighted funding for districts willing to create new programs such as language immersion schools. They could even establish financial rewards for districts based on student outcomes.

    There are many possibilities, but for the Local Control Funding Formula to survive over the long term, it must always be able to answer a very basic question: What is it doing to improve the education of California’s highest-need students?    

    •••

    Arun Ramanathan is the former CEO of Pivot Learning and the Education Trust—West. 

    The opinions expressed in this commentary represent those of the author. EdSource welcomes commentaries representing diverse points of view. If you would like to submit a commentary, please review our guidelines and contact us.





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  • How to improve California’s school funding formula

    How to improve California’s school funding formula


    Credit: Alison Yin / EdSource

    Top Takeaways
    • The Local Control Funding Formula must be more responsive to enrollment trends to ensure funds serve the high-needs students for whom they are targeted, rather than filling gaps in the district budget.
    • Policymakers must create incentives for districts to improve coordination and merging of services for students with multiple needs.
    • In making adjustments to the formula, policymakers must avoid introducing too many new, disparate factors that can further burden school systems.

    California has an opportunity to ensure that its school funding formula fully delivers on its goals to improve student outcomes, especially for those who need the most support. The key to success will be accounting for shifts in enrollment and creating incentives for districts to blend student programs.

    The 2013 Local Control Funding Formula, or LCFF, represented a dramatic shift from a complicated morass of centralized funding requirements that often resulted in large variations in per-pupil funds delivered in and across districts.

    Under LCFF, higher overall student outcomes have resulted, thanks to localized decision-making and additional funding to ensure that high-needs students also have the opportunity to succeed in schools. However, progress to close achievement gaps — a central intention of the funding formula — remains slow.

    Last year, the California State Assembly held a series of LCFF panels with researchers and educators from across the state. Though divergent views were expressed, multiple experts recommended improving the distribution of supplemental grant funds to the highest-needs students and factoring in geographic cost differences — points underscored by WestEd’s evidence-based review of the funding system.    

    However, two significant dynamics, which we have frequently seen, received little airtime during the hearing. They may hold clues for further optimizing the use of taxpayer dollars.

    First, funding formula updates must meaningfully account for future enrollment declines that could cause changes in the proportions of high-needs students to be served as well as the mix of funding available to school systems.

    California’s public schools have lost a substantial number of students, and forecasts project further declines ranging from half a million to nearly 1 million students by 2032-33.

    Because many students leaving California public schools — often due to the high cost of living — are English learners, economically disadvantaged and white students, the total and mix of available revenues for school systems is changing, and changing differently by region.

    The math is clear: As each student leaves, so does a fraction of the base revenue available to the school system to cover foundational expenses, including teachers, secretaries, utilities and the like. Meanwhile, concentrations of high-needs students, like English learners and students requiring special education services, continue to rise where they are left in greater proportions than their peers, requiring more resources per student to provide equitable opportunities and access.      

    Reducing expenses for school systems proportional to revenue loss is difficult. School systems often make small, marginal changes that don’t lower expenditures to meet available revenues. This may undercut more meaningful, necessary steps — whole system re-evaluation of resource investments that match student need to the skills and expertise of educators. As a result, resources that should be dedicated to additional supports for students may instead get redirected to support basic school costs. This could leave high-needs students out in the cold instead of achieving the state’s intention to equitably allocate funds.

    To avoid this, policymakers must ensure that any future LCFF adjustments include triggers that reconcile the base, supplemental and concentration grants to ensure proper alignment with enrollment and shifts in student need. School systems will also need guidance and support to analyze, design and manage these larger shifts. The formula for special education should be re-evaluated, given that funds are tied to overall student enrollment and not students with individualized education plans (IEPs).

    Second, following any further LCFF adjustments, school systems will need policy, regulatory and funding incentives to seamlessly blend student programs like special education and English learner programs where such services are needed for the same multidimensional students.    

    Eighty-five percent of English learners are economically disadvantaged, as are 67.5% of students with disabilities. California’s high population of students with multiple needs requires additional support to successfully navigate school.

    When supports are smartly combined — such as when English learner development support is integrated into a general education classroom — the result is the simultaneous delivery of good instruction and scaffolding for English learners in all general education classrooms. Directing funding to support one identified student need or a specific program sends a message to local school systems about where to direct resources. However, it can go too far. Unchecked, the system begins to look more like what we set out to get away from in the first place: layers of “categorical” programs funded with money that could only be spent in very restricted ways.

    Policymakers must write policy that incentivizes and supports local educators to build programs that work together to address the multiple needs of students simultaneously. This includes reevaluating existing education funding to reduce its complexity, which would then allow local school systems to achieve coherent programs that seamlessly support the needs of the array of students being served on school campuses — from learning and instruction to collaborating with other agencies to provide supports such as food, health care and more.

    Panelists at the Assembly hearing also noted the need to account for missing factors like geographic cost and economies of scale. While these factors are meaningful adjustments to account for school systems’ costs, introducing too many new, disparate factors can further burden school systems when they are required to track how each of those funding streams is being used. In fact, the governor just signed a bill to conduct a comprehensive review of the overwhelming amount of district reporting already required. Accountability and transparency are important, but too much will limit school systems’ ability to wisely blend and braid funding sources to construct coherent programs that support a wide range of student needs.

    The Local Control Funding Formula has already helped California make significant headway to improve public education. By paying attention to changes in the student population and meaningfully accounting for them in funding and policy, the state will be better poised to deliver on its promise to close achievement gaps.

    •••

    Jason Willis is with the strategic resource allocation and systems planning team at WestEd, a nonprofit, nonpartisan research, development, and service agency that works to promote excellence, achieve equity, and improve learning for children, youth, and adults.

    The opinions expressed in this commentary represent those of the author. EdSource welcomes commentaries representing diverse points of view. If you would like to submit a commentary, please review our guidelines and contact us.





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