The foundation system in California outline

California’s Educational Funding:

Tragedy or Equity?

When attempting to determine whether the method and amount of public fund distribution is equitable within any school system, several factors are always considered. In the case of California, which boasts more than 1,000 individual school districts, 8,000 schools, and over six million students, many assert than in ex-ante analysis, the state’s school finance system demonstrates sufficient levels of equitability. However, many do not agree.

The foundation system in California specifically guarantees that each individual district will receive funding known as a revenue limit based on a tax rate of one percent of its assessed value. Further, the state is charged with paying each district the difference between its determined entitlement amount and the actual amount raised through property taxes. Although this arrangement does seem good “on paper,” there remain significant questions as to whether serious examples and possibilities of inequity exist among certain districts state-wide. Further, the question over the actual levels of equity has been so nagging that even the ACLU felt moved two years ago to file a lawsuit concerning the matter.

Whatever one’s opinion on the issue, there remain significant “hard data” facts that seem to point to the possibility of there being something amiss in the system. Chief among these is the strikingly low ranking that California enjoys with regard to its spending per pupil among other national examples.

Of course, the issue that most people focus on when assessing California’s school funding issue is the effect and legacy of the infamous Proposition 13 — legislation that, in effect, according to many, virtually crippled California’s educational funding abilities. However, due to many Californians unwillingness to push for improved school funding over property tax relief, it is highly unlikely that any serious reform of the principles will occur in the near future. For this reason, it is important to bite the proverbial bullet, and attempt to assess the system as it is from within, in doing so “tweaking the system” to allow for greater equity for all California schools.

Of course, many are acutely aware of the shocking California budget gap. Of those who worry over the issue, schools definitely weigh in high on the list. This is simply due to the fact that budget gaps eventually translate into less state funds for schools. This means cuts in programs, equipment, facilities, and even teaching staff — all to the detriment of students of all ages. Of course, the issue here with equity is that those schools in wealthier or more affluent communities are necessarily able to raise the difference between what the state can offer, and what they can come up with themselves. Unfortunately, this problem brings up other problems including issues of financial and racial inequalities. Further, according to Norton Grubb, an education professor at UC Berkeley, “We’ve become a low-spending, low-resource state, with low levels of learning (Bell, 2004).” said Norton Grubb, an education professor at the University of California in Berkeley.

Although it is clear that there is a problem with the equitability of school funding in the state, it is difficult to assess just what is to be done about it. Again, however, given the fact that Proposition 13 is unlikely to be repealed in the near future, it is essential to make reforms based on what the schools have before them.

Like most aspects of any public funding system, one of the drawbacks of the California school funding system under proposition 13 is its complexity. According to Lisa Snell, the Director of Education and Child Welfare for Reason Foundation:

California’s $41 billion education finance system offers schools money through two types of funding streams: “revenue limits” and categorical funds that include 100 different programs. The funding system is complex and results in unequal funding amounts at the student level. In many cases, the amount of money a school district receives depends on how savvy the school district is and the size of its central bureaucracy rather than the needs of individual students. (RPPI, 2004)

Of course, this reality sets up the basis for a real inequality between schools and school districts based on local resources, economic, and even social realities. Although it may seem “simplistic,” removing the performance power of the bureaucratic systems as a factor for allocation of funds promises to increase the equitability of distribution to a significantly greater degree. Indeed, perhaps a dose of simplicity is exactly what the system needs.

One way that this can be accomplished is by implementing a system of allocation based on student driven data. This means coming up with a method for fund distribution based on both “standard funding needs” shared by all schools (perhaps based on student population, age of buildings and physical resources, etc. — all based on specifically designed formulae), as well as variable needs (number of special education students enrolled, average numbers of students in ESL programs, greater percentage of lower-income students, etc. (all characteristically resulting in increased funding needs). Again, according to Snell:

This process would make school finance in California simpler, more equitable, and bring significant cost savings by reducing categorical administration costs and central office costs and redirecting some of this savings to increase per-pupil funding allocations in California (RPPI).

Because the public school system in California is one of the leading areas of budget allocation in the state (to the tune of approximately 41 billion) (RPPI), it is all the more pressing to the average Californian tax payer that those funds be more equitably distributed. This is simply due to the fact that, even for those tax payers who do not have children in the system, an inadequate education means higher costs down the line — especially concerning issues of crime, welfare, and other social ills resulting from lapses in equitable, equal and fair education for all.

Another reform that can function within the current system is to change the way that the funds are distributed to the school districts, themselves. The fact is, because revenues that are destined (based on a non-egalitarian per capita formula) for schools must first be funneled through the bureaucracy of school district “powers that be.” Unfortunately, these individuals and groups are free to spend the funds “for the schools” in the district. Thus, those most in touch with the individual school’s needs (perhaps the principles, teachers, etc.), are not an important factor in considering fund allocation. Instead “across district” averages are the main consideration in trickling down the funds to each school — not the most efficient or equitable method by far.

Again, the very complexity of the current system often adds to shocking inequity between schools in the state. For example, Sacramento Bee writers noted, the funding allocation system “is so convoluted and obscure that not even the people who manage school budgets for a living can explain the finance system to taxpayers, who support it (SacBee, 2003).” If, instead of the complex issues that make up the funding allocation decisions today were instead based on concrete student driving data, much of this could be avoided to the benefit of all. For example, instead of allocating funds (as is the present status quo) to support programs, which can be arbitrary, questionable, and not universally of benefit to all student populations, funds should be allocated to support students based on assessed need (again, according to a devised performance and need-based formulae). Consider, for example:

The Los Angeles Unified School District spends only $84 per pupil on textbooks (or 90% of the state average) but spends $107 dollars per student on Supervisors’ salaries (which is 191% of the state average and does not include principals or other school level administrators). (RPPI, 2004)

Whereas this kind of fund allocation may have been based on a formula devised in a particular school district, there is no reason to believe that all California school districts serve children for whom supervisor salaries necessarily translates into quality education. In fact, few “ordinary people” would imagine that greater bureaucratic funding at the expense of “trench” funding would ever benefit the student body, regardless of district characteristics. In fact, several studies indicate just the opposite. For example, in William Ouchi’s 2003 work, Making Schools Work: A Revolutionary Plan to Get Your Children the Education They Need, the author cites several studies in which it was found that schools run in a more independent and decentralized manner (that is, run on an individualized, student-need driven basis) typically are more efficient financially, as well as more effective academically for their students.

So how then might such a “decentralized” and student-driven funding system be run in “real life?” Is it possible to tie fund allocation directly to student need? According to many in other states it certainly is. In fact, in such school systems as in Washington and Oregon, for example, funding is based on a “weighted student formula” devised by Michael Strembitsky, a school superintendent in Edmonton (RPPI). In simple terms, “The formula attaches school funding to the backs of children and in so doing gives budgetary control to each school principal (RPPI).” Of course, this means that the leader most in touch with the needs of the individual schools students is the one who will determine just where the state allocated funds are best spent. Additionally, the system also allows for such non-internal (school) factors that directly affect the student — even outside of the school environment. For example, In Strembitsky’s model, factors that impact the student also impact the level of funding each student brings (or attracts) to the school. These factors may include ESL needs, low income levels, and even special education needs.

Thus, as in the Seattle system, each child is “weighted” by number according to their requirements concerning identified “risk factors” or “funding factors.” For example, students who come from characteristically affluent households, are free of special education requirements, and are native English speakers may receive an average score of one, while ESL, special ed or statistically poor student populations may be assigned numbers as high as nine. Depending on the average enrollment of each number set, the school is allocated funds.

Again, this is not to say that California schools should be funded based only on student characteristics. Of course, within any school there are funding needs that are not exclusively student performance driven (although many would argue that every aspect of the student’s life is linked to school resources), but “overhead” driven — based on material requirements (buildings, utilities, insurance, supplies, extra-curricular activities, etc.). Thus, based on student population, a “base amount” of funding would be given to each school independently of student numbers and weighted scores.

A further note and perhaps advantage of student-driven funding allocation is the fact that higher district level positions would be less necessary. After all, if the funding goes directly to the school, there is little need for an expensive bureaucratic overhead at the district level.

Regardless of the discussion of just how the funds should be allocated to the schools in California, there also remains the issue of whether the current level of funding available to the schools is adequate in the first place. After all, it matters little how many “student points” each school receives if the actual funds necessary to successfully run that school are simply not available. Unfortunately, again, the current state of events is just that. After all, one of the key components of the Governor’s final “budget solution” was the decision to cut school spending in the state by a full $2 billion dollars (EdSource, 2004).” Of course, it is obvious, given the woeful state of many California schools, that cutting even more funding from their programs could hardly be beneficial.

Of course, one can understand at least in part, given the dire financial situation within the state, that school leaders would on some level accept the new cuts. Of course, this is even more true if one believes the Governor’s promise to “compensate” schools when things “get better” in the state. Unfortunately, it is highly unlikely that the schools will see increased funding any time soon. Further, when one views the promised “breakdown” of the (hopefully) forthcoming funds, it certainly gives one pause — making one wonder if a single penny will ever reach the classroom level.

Consider for example that:

In addition, the agreement specified that, when additional funding becomes available, it will be used for the following in priority order: 1) growth in enrollment and cost of living adjustments; 2) fully restoring the 3% cut in districts’ general-purpose funding that the state imposed in 2003-04; 3) reimbursing districts for costs incurred in satisfying state mandates if districts’ claims withstand an audit; and 4) splitting any remaining funds 75%/25% between general-purpose increases and other state priorities (EdSource).

Indeed, even if California were to “pay back” its state schools for its temporary budget driven cuts, it is doubtful that the funding would still be sufficient for the dire needs of Californian children. After all, according to the Legislative Analysts Office, “about one in three California students attends an overcrowded school, or one in need of significant modernization (LAO, 2004).” Further, the state’s financial state, and commitment to the schools is particularly dubious at the moment. Consider for example:

According to the State Allocation Board, the cost to address these pressing school facility needs is about $30 billion, with the state’s share of cost exceeding $17 billion. Because less than $2 billion of state school construction bond funds remain uncommitted, the state will need to raise more than $15 billion to pay its share of these school facility costs (LAO).

A further problem with the literal adequacy of the California school funding system is its inconsistency due to overall state budget problems. Unfortunately, the financial funding of each school in California is dependent upon bonds and budget issues that cycle through a “good times/bad times” cycle which is not only unfair for the students who are going through a “not good” time, but unfair for the overall performance of the schools themselves which suffer under their own inconsistency.

Assuming, however, that some day in the near future, the state of California might be able to compensate schools for the budget problems, there remains the ability of those involved in the issue to “equitably” as opposed to “equalize” the education of each student. Not only is this important, but it is necessary for the continued improvement of California students. Take for example, the presiding Judge’s remarks in the 1976 Serrano v. Priest case in which he stated:

Substantial disparities in expenditures per pupil among school districts cause and perpetuate substantial disparities in the quality and extent of availability of educational opportunities. For this reason the school financing system before the court fails to provide equality of treatment to all the pupils in the state. Although an equal expenditure level per pupil in every district is not educationally sound or desirable because of differing educational needs, equality of educational opportunity requires that all school districts possess an equal ability in terms of revenue to provide students with substantially equal opportunities for learning. (18 Cal.3d 728 L.A. No. 30398)

The simple fact is that current system (within a bigger flawed system) is currently inadequate due to inadequate levels of funding as well as inadequate methods of distribution of funds. Further, the current system, which operates on a “costing-out” protocol based on “model schools” or districts prohibits the California funding system from be equitable. This is simply because to make the assumption that the same amount of funds should produce the same result in all schools across the stage is absurd. Again, throwing a million dollars at a school in middle-class suburbia is very different from throwing the same amount at a school in the heart of a big city like LA. Clearly, the school with more “issues” will use up the funds much more quickly than its more geologically bless counterpart.

Finally, it is also important to note the fact that the origin of the funds that go to the schools in California are largely based on property taxes. Of course those children who live in the poorest neighborhoods are hardly likely to come from families that spend large amounts of taxes based on their homes and land. Thus, those children will necessarily lose under the system.

In conclusion, the current method of funds allocation for K-12 schools is completely inadequate. Thus, instead of allowing the system to work according to the current criteria, a new model should be adopted. This means that, instead of the more “project” driven funding approach, a more student-focused model should be implemented. Further, funding must be based upon something other than local property taxes — or at least less tied to local property taxes. After all, a child that lives in a mansion is less likely to need the same amount of educational funding that an inner-city “project” dweller might. Unfortunately, equal does not always equal adequate. The simple fact is that some students and schools just need more money than their wealthier, more solid candidates. Sure, giving the inner city more funds is not equal, but it is, to quote the new funding buzzword, adequate…and that is what the new “educational era” must strive to be.


Bell, Tom. (2004). “Fort Bragg Schools Feel Sting of Proposition 13.” Maine Today. Retrieved on September 26, 2004, from,

Ed Source. (2004). “California School Finance News.” Retrieved on September 26, 2004, from,

RPPI. Reason Public Policy Institute. (2004). “Restructuring California’s School Finance System.” Web site. Retrieved on September 26, 2004, from,

Sacramento Bee. Staff Reporters. “Unfathomable: School Funding Mess Needs Simplifying.” Sacramento Bee Online. Retrieved on September 26, 2004, from,

LAO. Legislative Analysts Office. (2004), “A New Blueprint for California School Facility Finance.” Retrieved on September 26, 2004, from,

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