CA and OUSD School Finance Overview
Making Sense of Your Dollars
OUSD believes well-informed stakeholders help ensure all students thrive. This brief summary of California’s complex school finance system seeks to go beyond just data reports to build understanding. Throughout this summary also find Implications for OUSD and links to learn more.
In California, individual public schools receive funds mainly through their sponsoring authority - school districts. The majority of school funding comes from state, not local or federal resources.
Districts receive these funds based on the number and needs of students attending schools. Resources received are designated in one of several funds (e.g. Cafeteria fund) and categorized based on the funding source as unrestricted or restricted (based on restrictions on use). Except for the General Fund, all other funds are classified as restricted. As of the 2016-17 Adopted Budget, OUSD expected roughly $520 million in the General Fund.
Implications for OUSD: Enrollment and student attendance are key factors in determining whether OUSD receives all the funds available to serve students from California’s Local Control Funding Formula.
CA State Funding: A Brief History
The political and legal journey to fund California public schools has been complex with a few key turning points that provide context for the current situation:
- Pre-1970s. School funding based primarily on local property taxes, largely controlled at the local level. Local communities controlled the ability to raise school funding and usage of that funding. Overall, California ranked in top 5 states in per-student spending.
- Early 1970s - Serrano decisions. In Serrano vs. Priest, the California Supreme Court found public education a “fundamental interest” of the state and that the local system violated equal protection rights of students from low socioeconomic areas because of the large difference in property values and therefore funds available to communities from property taxes. State begins efforts to equalize school funding. “Revenue limit” era is born.
- 1978 - Prop 13. Proposition 13 significantly reduced property taxes and gave the State control over distribution of funding to schools. Prop 13 also made it more difficult for local areas to pass parcel taxes. With lower local taxes and State efforts to equalize funding, a significantly larger percentage of overall school funding came from state taxes. Unfortunately, through a combination of forces, California ranked 44th in per-student spending one year after implementation of Prop 13.
- 1988 - Prop 98. After years of declining funding, Proposition 98 (and later Prop 111 in 1990) sought to provide greater stability to K-12 and community college funding. The law created a formula to calculate the minimum amount of state revenues that must be directed to education, but did not determine how those funds would be spent. Due to significant fluctuations in how Prop 98 funding is calculated and distributed, it is often perceived as more of a ceiling on funding than the floor it was intended to represent.
- 2012 - Prop 30. Continued economic uncertainty led to Proposition 30 which sought to prevent mid-year cuts to K-12 education spending that were proposed by the California legislature. Its success did not provide additional funding, but did ensure the guaranteed minimum funding under Prop 98 would in fact be provided.
- 2013 - LCFF. Beginning with the 2013-14 school year, California began a major overhaul of its school finance system with the Local Control Funding Formula (LCFF). Financially, LCFF set a target funding level projected to be reached by 2021. With LCFF, each year through 2021 the State provides schools a percentage of the remaining gap between the ultimate target and then current funding levels.
However, due to prior years of severe cuts to K-12 education after the 2007-08 recession, the 2021 LCFF target is based on the funding level that existed in 2007-08 adjusted upward for inflation. This means that by the target date of 2021, K-12 education will return to the same funding levels as 2007-08 (with adjustments for inflation). Progress toward this target varies each year depending on the strength of the state economy.
LCFF: A New Model of Local Control, Equity, Transparency and Accountability
Beyond the financial impact mentioned above, the Local Control Funding Formula created a new system seeking to provide more local control, equity, transparency and accountability on how funds are used.
More Local Control and Equity
Prior to LCFF, a significant portion of state funds were restricted in their use to “categorical” programs (e.g. Peer Assistance and Review, mathematics teacher training, adult education). With LCFF, the state eliminated specific funding for over 40 of these programs while providing the funds to districts on an unrestricted basis for use a districts deemed most effective.
To better address equity, the State has divided funds into three grants - Base, Supplemental and Concentration. The goal is to provide more funds to schools to serve students who typically have greater needs. Each student generates a Base grant. Each student that is identified as low-income, English learners or foster youth also generates a Supplemental and/or Concentration grant as indicated below.
Included in the grade span amounts is an incentive for K-3 class size reduction of 24:1 or lower and funds to support high school career technical education.
In addition to the 80-90% of state funds provided through LCFF, the state will also continue to provide separate funding for special education and about a dozen smaller programs, including child nutrition, foster youth services, and after-school programs previously established under Proposition 49.
Implications for OUSD: The new funding model allows OUSD and other districts to make local decisions on the best use of these resources. Supplemental and Concentration funds help support the additional cost of serving our students most in need.
The LCAP = LCFFs model for Transparency and Accountability
Both districts and charters are required to complete a Local Control Accountability Plan (LCAP) every three years and update it annually. The State provides a template that all districts and charters must use. The LCAP contains three elements that address Transparency and Accountability.
Section 1. Stakeholder Engagement. The LCAP must be developed with input from parents, students and district employees. The finished plan must include evidence of how stakeholders were involved and what impact that involvement had on the plan’s development. Learn More
Section 2. Goals and Progress Indicators. The LCAP must include the district’s annual goals in the eight priority areas determined by the state. Goals must be district-wide and by subgroup (e.g. racial subgroups, socioeconomically disadvantaged, English learners, foster youth).
Section 3. Actions, Services and Expenditures. The LCAP must identify what actions are be taken to achieve the goals and indicate what expenditures are tied to those actions.
Learn More: OUSD provides resources, reports and interactive tools for all stakeholders to track our revenue and expenses.
The LCAP and its annual updates intend to provide helpful information on whether actions and expenditures succeed in achieving goals. They also provide districts and stakeholders opportunities to assess and improve student success.
The LCAP for each district or charter is a public document and significant stakeholder engagement is part of its initial development and annual updates (see our LCAP). This transparency is being combined with a support system for districts led by the California Collaborative for Educational Excellence (CCEE) and an accountability system still under development by the state board of education.
Implications to OUSD: We are developing tools and resources to better help staff and external stakeholders identify connections between actions, expenditures and results. This involves fundamental changes in planning, budget and reporting processes. We value your input in this process. Please use our existing tools and complete the associated survey to help us improve.