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LAO Releases Prop. 98 Education Analysis for '18-'19 Budget

February 10, 2018

(Editor’s note: on February 7, the California Legislative Analyst’s Office (LAO) released a detailed analysis of Prop. 98 funding for education. The reports executive summary is below, click on the link at the end to read the complete report.)


In this report, we analyze the Governor’s overall Proposition 98 budget package as well as his specific spending proposals for K-12 education and early education.

Overall Proposition 98 Budget
Governor’s Budget Contains $6.3 Billion in Proposition 98 Spending Proposals. Of the new spending, almost $5 billion (78 percent) is for K-12 education, $1.2 billion (19 percent) is for the California Community Colleges (CCC), and $193 million (3 percent) is for the California State Preschool Program. Across the three segments, $3.9 billion is for ongoing programs and $2.4 billion is for one-time activities. Under the Governor’s budget, overall K-12 funding per student increases from the revised 2017-18 level of $11,165 to $11,628 in 2018-19, an increase of $463 (4.1 percent).

Governor’s Overall Budget Approach Is Reasonable but Some Specific Proposals Do Not Address Root Issues. We think the Governor’s plan to allocate available Proposition 98 funding to a mix of ongoing and one-time initiatives is reasonable. Including one-time initiatives reduces the likelihood of programmatic cuts to schools if the state experiences an economic downturn after 2018-19. Additionally, many of the Governor’s specific proposals-including those relating to the Local Control Funding Formula (LCFF), district support, special education staffing shortages, and career technical education (CTE)-focus on areas of interest to the Legislature. We are concerned, however, that several of the Governor’s proposals are unlikely to address longstanding and systemic underlying problems in these areas. In response to many of these proposals, we offer the Legislature alternatives designed to address root issues. In many cases, these alternatives can be structured to cost less than the funding levels proposed by the Governor.

Key Messages

Reaching Full Implementation of LCFF Creates Opportunity to Reflect. The Governor’s plan to dedicate most new ongoing K-12 funding to LCFF implementation is consistent with the Legislature’s approach over the past five years. By continuing to prioritize LCFF implementation, the state would be fostering greater local control and flexibility while simultaneously providing more funding for disadvantaged students. Upon reaching full implementation, the Legislature will have many options to consider regarding next steps. We weigh the trade-offs of six possible options: (1) increasing base rates, (2) increasing supplemental/concentration rates, (3) changing rules for how districts generate funding for English learner and low-income (EL/LI) students, (4) raising the concentration threshold and rate to target funds to the highest-poverty districts, (5) providing clearer guidance and/or more flexibility for how high-poverty districts may use EL/LI funding, and (6) creating new categorical programs. Upon deciding its core policy objectives, the Legislature this year or in coming years might pursue one or more of these options.

Legislature Could Adopt a More Strategic Approach to Retiring the K 12 Mandate Backlog. The Governor’s budget proposes $1.8 billion in one-time discretionary grants to schools. The funds would be distributed on a per-student basis and first applied to districts’ outstanding mandate claims. With two-thirds of districts having no claims, the bulk of the $1.8 billion would have no effect on the backlog, with the backlog decreasing less than $300 million. As an alternative to the Governor’s approach, we recommend the Legislature identify an amount equal to or in excess of the remaining backlog (about $900 million) and distribute funds on a per-student basis, but require districts receiving funds to write off all remaining claims. This approach would make substantially more progress toward eliminating the backlog without rewarding districts that have unusually costly claims.

Recommend Alternative Approach to System of Support. The Governor’s budget includes four proposals totaling $76 million that are focused on supporting districts recently identified as having performance issues. We have serious concerns with the Governor’s overall approach to designing this system of support as well as each of his four specific proposals. We recommend the Legislature consider an alternative approach centered around districts rather than county offices of education (COEs). We believe the alternative approach has many advantages. Perhaps most importantly, it promotes district ownership of improvement efforts by allowing districts to choose from multiple teams of experts specializing in their performance issues. It also promotes responsiveness by allowing the California Collaborative on Educational Excellence to contract with new teams of experts each year as new district performance issues emerge. Unlike the Governor’s approach, it does not silo support for general education and special education, provide COEs with additional funding for services that already are funded through their LCFF allocations, or create new regional entities with poorly defined roles. It also costs substantially less ($30 million compared to $76 million).

Recommend LCFF Approach to CTE, but Modify Existing CTE Program if Taking Categorical Approach. The Governor’s budget provides $212 million for a high school CTE program run out of CCC. The Governor’s primary objective of running the program out of CCC is to improve coordination between schools, community colleges, and industry partners. We recommend the Legislature fund CTE from LCFF. If the Legislature has concerns that schools will not offer CTE under the LCFF structure, the Legislature could consider modifying the formula (for example, increasing the high school base rate) or modifying the accountability system (for example, establishing separate college and career readiness indicators). Though we believe funding CTE within LCFF promotes more coherent planning as well as clearer and stronger accountability, the Legislature might consider creating a CTE categorical program. If the Legislature takes this approach, we recommend it reject the Governor’s Strong Workforce approach and instead modify the existing CTE Incentive Grant program. Specifically, we recommend the Legislature (1) set a minimum threshold of CTE coursework that must be aligned with regional workforce needs, (2) require school and college districts to share data and accountability for CTE student outcomes, and (3) fold in funding from four other high school CTE programs.

Recommend Comprehensive Approach to Addressing State's Special Education Staffing Shortages. The Governor proposes two one-time grant programs totaling $100 million to support special education teacher recruitment, training, and retention. While we commend the Governor for focusing on the longstanding problem of special education staffing shortages in the state, we are concerned that his proposals fail to address the root causes of these shortages-most notably a lack of pay differentials for special education teachers, and to a lesser extent, overly restrictive education and credentialing requirements. The Governor’s proposals also do not address the longstanding shortages of special education specialists (such as speech therapists). We recommend the Legislature reject both of the Governor’s proposals and instead pursue changes that address the root causes of these shortages. Specifically, we recommend schools establish ongoing pay differentials for special education teachers. At the state level, we recommend pursuing a variety of actions, including reducing the number of special education credentials, authorizing a four-year degree pathway option for special education teachers, and providing targeted enrollment funding for the California State University to expand certain graduate specialist training programs.

To read the complete report, click on the link below:

Sources: California Legislative Analyst’s Office

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