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Report Gauges Impact on Latinos, African Americans, Others

Analysis of Governor’s “Local Control” Budget Proposal Raises Several Questions

February 28, 2013

(Editor’s Note: Governor Brown’s proposed 2013-14 budget got mixed reviews in an analysis released this week by The Greenlining Institute, which was discussed at a briefing for legislators and the media on Wednesday, co-sponsored by the California Latino Legislative Caucus, the Asian and Pacific Islander Legislative Caucus and the California Legislative Black Caucus. “The governor’s proposed budget contains a number of proposals that could move us toward a fairer, more equitable state,” said Greenlining Institute Health Policy Director Carla Saporta. “But major questions remain about several provisions, which might do serious harm to the most vulnerable Californians.” Here are some highlights from the Greenlining Institute analysis:)

Gov. Brown’s proposed 2013-14 budget includes $138.6 billion in General Fund and special fund spending, up 4.5 percent from 2012-13. According to the Administration, the state’s General Fund budgetary reserve will be $1 billion by the end of 2013-14, if the governor’s plan is implemented as proposed. However, while the governor’s proposal provides increased or similar funding into California’s safety net from 2012-13, 16.6 percent of Californians still live below the poverty line (up from 16.3 percent last year) with American Indian and Alaska Native, African Americans, and Hispanic or Latino populations having the highest rates of poverty: 25.5 percent, 25 percent, and 23.4 percent respectively.

With this in mind, we analyzed the governor’s proposed 2013-14 budget with a racial equity frame. Our major findings include:

K-12 EDUCATION

Summary

Gov. Brown’s January budget proposal allocates $56.2 billion for K-12 education in 2013-14 and indicates that funding levels will increase by almost $2,700 per student through 2016-17. The increase in funding is largely due to Gov. Brown’s proposal to include revenue raised by the Clean Energy Jobs Act to meet Proposition 98’s minimum guarantee. He is using part of the revenue to pay off deferrals owed to schools and distributing the other portion on a per-student basis to school and community college districts for energy-related projects.

In addition to the increase in funding, the governor has introduced the Local Control Funding Formula (LCFF) as a new method to provide more funds to districts serving English learners and low-income students. With the increase in funding and a new funding method, Gov. Brown aims to decrease the education gap among advantaged and disadvantaged students.

Budget Proposal for K-12 Education:

The Local Control Funding Formula proposes a base grant for all districts. A supplemental grant is given to districts based on how many economically disadvantaged students are enrolled. Economically disadvantaged students are determined by whether a student is an English Language Learner and/or in the free/reduced price meal program (FRPM). A student who is both an English Learner and on Free Reduced Price Meal will not be double-counted. Districts with economically disadvantaged students above 50 percent of total enrollment will be awarded an additional concentration grant for every student above the 50 percent threshold.

Proposition 39, the California Clean Energy Jobs Act, will raise an estimated $1 billion in revenue annually.
Gov. Brown plans to allocate all of this to school and community college districts to meet the Proposition 98 minimum guarantee. The Proposition 39 revenue would increase funding to meet this minimum by $526 million, allowing him to make deferral payments and increase grants for economically disadvantaged school and community college districts.

LOCAL CONTROL FUNDING FORMULA

Gov. Brown’s January budget proposal allocates a total of $56.2 billion for K-12 education funding in 2013-14.
For K-12 schools, funding levels will increase by almost $2,700 per student through 2016-17, including an increase of more than $1,100 per student in 2013-14 over 2011-12 levels. This section specifically analyzes the Governor’s proposed change from categorical funding to the Local Control Funding Formula. Under the current categorical funding approach, the state provides districts restricted funding for specific programs.

Top funded programs include: targeted instructional improvement, school and library improvement, professional development, and middle and high school counseling. The Local Control Funding Formula proposes to consolidate these categorical grants into unrestricted lump sum grants, allowing districts to freely fund programs that fit their needs.

Current Funding Sources

K–12 school districts receive most of their money from two sources: base revenue limits and other state revenue.
Base revenue limits are calculated according to a district’s average daily attendance (ADA). Funding sources for the base revenue limit include local property and state taxes, among other miscellaneous sources. Factors that determine funding allocations for school districts are type and size of districts, historical spending patterns, and other variables.

Categorical funding, as mentioned above, is based on particular categories. Some examples include programs such as special education, school transportation, American Indian education centers, and Gifted and Talented Education. Categorically funded programs receive a designated amount of money that must be used for those particular programs. Importantly, it should be noted that in February 2009, legislators amended the regulations for many of the state’s categorical programs. This change gave districts more flexibility to use funds from about 40 categorical programs for other educational purposes while facing severe budget cuts. Disparities in funding exist because of the way the state com bines state and local funds to make up a district’s “revenue limit,” the amount a school district receives per student.  EdSource uses a bucket analog y to further explain how state and local funds are combined to make up a district’s revenue funding limit: Each district receives revenues through their local property taxes, and if the bucket is not filled all the way from these property taxes, the state then “tops off” the bucket with state tax revenues. However, if a district’s bucket is filled because of local property taxes, the state does not “top off” their bucket; although, if a district’s bucket “overflows” with local property taxes, they get to keep the increased revenue, which is referred to as basic aid.

Gov. Brown’s new funding formula is intended to reduce current disparities by narrowing the funding gaps between economically advantaged and economically disadvantaged students. According to Gov. Brown, the LCFF will bridge the education gap for historically economically disadvantaged K-12 students by directing new funds to students classified as either English learners or recipients of free/reduced price meals (FRPM).

In 2010-11, roughly 1 million students were English learners and almost 3.5 million were enrolled in the FRPM program.

According to 2010-11 data, over half of all K-12 students are enrolled in the FRPM program. This means one in two K-12 students are considered economically disadvantaged. At 17 percent, English learners also form a significant portion of California’s K-12 student population. Of the 50 different languages spoken by English learners, Spanish is the most spoken language at 83 percent, followed by Vietnamese at 3 percent and Cantonese at 2 percent.

Gov. Brown proposes to address the aforementioned disparities in K-12 schools with the Local Control Funding Formula, illustrated below. This proposed formula calculates multiple variables to provide all school districts a base grant, with an additional supplemental and concentration grant provided to districts based on economically disadvantaged students. Most categorical program funding will be redistributed through the LCFF. Through the supplemental and concentration grants, more funding will be allocated to school districts that have a robust enrollment of economically disadvantaged students as measured by the number of students eligible for two programs: English learners and Free/Reduced Price Meals.

• All districts will receive a base grant calculated using a district’s ADA and accounts for grade span adjustments.

• Districts with economically disadvantaged students will receive a supplemental grant for every economically disadvantaged student (35 percent of the base grant).

• Districts whose economically disadvantaged population is greater than 50 percent of the total student population will receive an additional concentrated funding grant for every student above the 50 percent threshold (35 percent of the base grant).

The levels of funding are meant to increase equity by prioritizing funding for economically disadvantaged students.

The following are areas where the LCFF can be improved to ensure it creates equity among California’s K-12 students, one of Gov. Brown’s stated goals:

• Unduplicated count – By not allotting additional funding to students who are both English learners and economically disadvantaged, the LCFF may not be meeting its intended purpose as it would if it allotted more funds to students with both of those characteristics.

• Threshold Level – In mixed-income districts the 50 percent threshold for the concentrated funding may leave out many students. Requiring districts to overcome a 50 percent threshold, for example, may reduce the number and type of services available to disadvantaged students located in districts that slightly miss the threshold.

To increase the likelihood that districts will reach the threshold, perhaps students eligible or enrolled in the compensatory education programs could also be included in the measurement for economically disadvantaged students.

• Variables – More clarification is needed to understand several of the variables.

• Grade Span – It is unclear how the new formula will address the funding allocations for the suggested grade span adjustments: K-3 and career technical education for grades 9-12.

• Economically Disadvantaged – More clarity is needed about which students will count toward the supplemental and concentrated funding. The measure used by LCFF to determine who is economically disadvantaged is students who are “eligible” for free/reduced price meals. However, it is unclear whether the term eligible refers to students who merely meet the criteria or students who meet the criteria and have enrolled in FRPM; and whether it includes students restricted from FRPM due to their age (e.g. 17+).

• Average Daily Attendance (ADA) – ADA reporting is inconsistent throughout the K-12 system. Districts use different methods to calculate their ADA and it is currently unknown which method will be selected. The LCFF does not indicate which method for addressing ADA in districts with declining enrollment will be applied (e.g. year-to-year versus previous 2-year average). Using year-to-year ADA may adversely impact districts with migrant students whose enrollment depends on where their families are moving season-to-season, as well as districts with high rates of absence due to high rates of illnesses or for other reasons.

• Charter Schools – It is unclear whether charter schools will be factored into the formula. If they are factored in, it is unclear whether only the district charter schools’ ADA or all charter school ADA will be factored into the formula. Additionally, because of the proposed change of oversight from the California Department of Education to the California School Finance Authority, it is unclear how the charter schools will be managed.

PROPOSITION 39 FUNDING

Proposition 39, also known as the California Clean Energy Jobs Act, is a new revenue source that Gov. Brown’s proposed budget allocates toward increasing the Proposition 98174 minimum guarantee level, estimated to be $56.2 billion for 2013-14, by $526 million. Proposition 39 requires half of the annual revenue raised from the measure – up to $550 million – be transferred to a new Clean Energy Job Creation Fund from 2013-14 through 2017-18 to support the “funding of projects that create jobs in California improving energy efficiency and expanding clean energy generation.”

Gov. Brown proposes to distribute this portion of the Proposition 39 funds exclusively to school districts and community college districts on a per-student basis for energy-related projects. The governor will use the other half of the revenue to fund other areas. This section analyzes the governor’s proposed use of Proposition 39 funds to help meet the Proposition 98 minimum guarantee and specifically, how that money might be used toward paying deferrals and the impact of distributing it on a per-student basis.

Per-Student Distribution

Gov. Brown’s budget proposal allocates the funding to districts on a per average daily attendance basis, with school districts receiving $67 per student and community college districts receiving $45 per student. Overall, the governor says the increase in funding levels for K-12 schools is a reinvestment that “provides the opportunity to correct historical inequities in school district funding. By allocating new funding to districts on the basis of the number of students they serve, all California school districts can improve.”

However, if Proposition 39 funding is allocated on a per-student basis, disadvantaged districts will not be able to catch up to school districts that are already ahead. They will continue to lag behind. Thus, all districts will be treated equally but not equitably.

The following are some general areas to be considered:

• Guidelines – The budget proposal does not include guidelines explaining how districts can effectively use the funds they are allotted in an equitable manner. The budget explains, “Schools and community colleges may use Proposition 39 funds for technical assistance to help identify, evaluate, and implement appropriate projects.” Appropriate projects, however, are not defined. Additionally, it is not clear whether all programs will be coordinated with the California Energy Commission and the California Public Utilities Commission pursuant to Proposition 39 provisions, which would be helpful to avoiding duplication and maximizing leverage of existing energy efficiency and clean energy efforts.

• Project Benefits – A lack of guidelines linking projects to energy savings, job generation, and community benefits increases the risk that the Governor’s goal to achieve equity will not be achieved.

• Need – A per-student approach ignores the districts’ varying needs, in terms of energy efficiency and otherwise. The need for energy projects varies by district, with need depending on numerous factors including the size, age, and geographic location of the facilities in each district.

Impact

Examples of Potential Impacts of Proposition 39 Funding Based on a Per-Student Basis

Providing every district with funding on a per-student basis does not focus on those school and community college energy projects likely to provide the greatest energy savings and job benefits for the communities that need them the most. For example, some sites may be older than others, requiring more building repairs and improvements than newer sites, yet all facilities would receive the same amount of funding per student.

Substandard physical environments are strongly associated with student absence and other behavior problems. Schools with better building conditions have up to 14 percent lower student suspension rates. Additionally, improving a school’s health and safety standards is associated with a 36-point increase in California Academic Performance Index scores.

A per-student approach also penalizes districts with high absenteeism rates even for absence due to health reasons. In California, approximately one in seven school-aged children has asthma and misses an average of one to two days of school per year because of it. In 2009, it is estimated that California students missed about 1.1 million school days due to asthma, which translates into approximately $30.2 million in revenue lost, or an average of $31,000 for each of the 975 school districts.

This is a significant concern for students of color. Black children in California are four times more likely to be hospitalized for asthma than white children. Many students could be impacted considering that combined, blacks and Hispanics make up over 57 percent of California’s K-12 students.

To read the complete report, click on the link here.

Source:  The Greenlining Institute.