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LAO Recommends Modified Version of Governorís Proposal to Restructure K-12 Education Funding

February 23, 2012

On February 16, the California Legislative Analyst’s Office offered an assessment of the Governor’s proposal to restructure state funding for K-12 education. The LAO’s assessment was delivered at a meeting of the Senate Budget and Fiscal Review Committee, chaired by Sen. Mark Leno (D-San Francisco).

The LAO concluded that there is a consensus that the current system needs and overhaul, and offered a review of recent actions.

The LAO then offered the following bullet points summarizing the Governor’s proposal:

Expands Current Flexibility by Eliminating Seven Remaining Categorical Programs ($2.8 Billion).

  1. Includes about $500 million associated with restoring Home-to-School Transportation program funding for 2012-13 only.

Replaces Existing System With Weighted Student Formula.

Would combine current revenue limit and categorical funds and distribute via new formula. New formula also would apply to charter schools but not to County Offices of Education.

  1. Equal base grant for every student ($4,920 in 2012-13).
  2. Additional “weight” of 37 percent ($1,820 in 2012-13) for every English Learner (EL) and economically disadvantaged student, as measured by participation in Free and Reduced Price Meals (FRPM) program.
  3. Additional “concentration” funding for districts with large proportions of EL and FRPM students.

Phases in Formula Over Six Years.

  1. 2012-13: Districts would receive 95 percent of funding based on what they got in 2011-12 and 5 percent based on the new formula. If this results in a drop in per-pupil funding for a district, the district would receive additional funding to maintain its current-year per-pupil rate.
  2. 2013-14: 15 percent of funding distributed based on the new formula, and no hold harmless provision.
  3. 2014-15 through 2017-18: 40 percent via new formula in 2014-15, then an additional 20 percent each year until full implementation in 2017-18.

Implements New Accountability Measures Beginning in 2013-14.

Would provide fiscal bonuses to districts that meet new accountability metrics being developed by the State Board of Education.

The LAO offered the following bullet points assessing the Governor’s proposal:

Governor’s Restructuring Proposal Has Several Strong Components.

  1. Implements system that is simple, transparent, and rational.
  2. Provides additional funding for districts to serve needy students
  3. Provides immediate increase in local flexibility to focus on local priorities.
  4. Offers a reasonable phase-in period.
  5. Accomplishes restructuring within existing resources.

    Devolving Virtually All Decision-Making to Local Level Has Some Drawbacks.

    1. Important state priorities may not be accomplished.
    2. Does not ensure additional funding will translate to additional          services for disadvantaged students.
    3. Overestimates power of existing accountability system.

    The LAO also recommended adoption of a modified version of the Governor’s proposal:

    Governor’s Proposal Moves in the Right Direction.
    Recommend adopting some version of his proposed changes,
    with modifications to ensure legislative priorities are met.
    Recommend Maintaining Spending Requirements for Disadvantaged Students.
    Until state has more robust accountability system, require that districts spend supplemental “weighted” portion of allocation to provide supplemental services to disadvantaged students.

    Legislature Could Further Modify Proposal to Preserve Other Important Priorities. Options include:

    1. Different weights for disadvantaged students.
    2. Additional weighting factors.
    3. Extending timeline for phasing in new formula.
    4. Block grant approach (in lieu of weighted student formula).

    The LAO’s assessment included a list of existing categorical programs that would experience changes under the Governor’s proposal.

    The LAO also recommended that the Governor and the Legislature consider additional ways to help school districts weather fiscal uncertainty:

    Districts Grappling With Revenue Uncertainty and the Possibility of Midyear Trigger Cuts.

    Districts must have a back-up plan if November election does not result in additional state revenues.

    Recommend Legislature Provide Districts With More Flexibility.

    Regardless of whether Legislature adopts Governor’s plan to restructure K-12 funding, additional flexibility would help districts. Options include:

    1. Removing categorical and mandate requirements (beyond current law).
    2. Allowing for a shorter school year.
    3. Eliminating or suspending penalties for districts that exceed maximum statutory class sizes.
    4. Allowing for a special post-election layoff window.

    Recommend Any Additional Flexibility Provisions Take Effect on July 1.

    Providing additional tools early would give districts more options in making programmatic reductions. A fuller menu of options could reduce the magnitude of teacher layoffs this spring by allowing districts to achieve other types of operational savings.

    To read the LAO’s eight-page summary, click here.

    To view the video of the Senate Budget and Fiscal Review Committee’s meeting, click on the link below:

    Source:  California Legislative Analystís Office