California achieved two major reforms to school finance under the Local Control Funding Formula (LCFF). The LCFF introduced a weighted formula that gives additional funding to districts that serve more high-need students—students defined as low-income, English learners, and/or foster youth—and the LCFF eliminated many funding categories, giving districts more local control over how they spend. PPIC researcher Julien Lafortune tracked the effect of these changes since the state enacted LCFF in 2013–14.

“LCFF is about additional funding for high-need students and additional flexibility in how to deploy that funding,” Lafortune said. In a recent presentation, Lafortune detailed findings from a report that examines how districts targeted additional LCFF dollars and whether targeting had an impact for students.

Districts that gained more funding through the LCFF increased their spending, largely directing increases into teacher salaries and staff benefits. But how did extra spending affect student outcomes? Roughly $1,000 per year in additional concentration grant funding led to a 5-percentage-point rise in the share of students who met or exceeded standards on test scores.

These improvements happened at the overall district level. Because LCFF targets the highest-need districts, those that received the most supplemental and concentration grants saw stronger growth in test scores. However, between students who are more and less affluent, and students of differing race or ethnicity, gaps in test scores improved only slightly.

The discrepancy occurs because high-need students are dispersed across districts throughout the state. “They’re not all in these highest-need districts that have 80% or more high-need that get the majority of the funding under LCFF,” Lafortune said.

To get closer to answering the question of how much funding is reaching the schools and students targeted by the formula, Lafortune turned to federal data from the Every Student Succeeds Act, or ESSA. Under ESSA, districts must report their site-level spending to the federal government.

He found that, on average, districts spend 55 cents of each additional dollar at the school that generated those extra dollars. That is, LCFF dollars are mostly, but not completely, reaching the school sites with the most high-need students.

The ESSA data do come with caveats. “It’s only a snapshot of one year, and it’s not meant to specifically look at districts,” Lafortune said. “These aren’t meant as an accountability metric or as a true transparency metric to evaluate LCFF itself.”

While developing such transparency would be challenging and a significant cost to districts, Lafortune noted that districts already provide metrics for their own budgets and for federal ESSA reports. “If we really want to be transparent about how districts are targeting these funds to students,” Lafortune said, “we need more systematic and more intentional information to assess whether this spending is indeed consistent with LCFF’s intent.”

Lafortune stressed again that a considerable share of high-need students attend schools in districts of more moderate need. The way to target funds and attack gaps among student groups, Lafortune suggested, could involve lowering thresholds for concentration grants, increasing supplemental grants, or alternative funding mechanisms to fund school sites commensurate with the level of need and poverty.