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Blog Post · June 18, 2015

More Money, More Challenges for K-12 Schools

The 2015-16 budget agreement between the legislative leadership and governor provides substantial additional funding for the new Local Control Funding Formula (LCFF). The money allows the state to implement the formula more quickly, and some districts will experience very large funding increases. While LCFF significantly expanded district financial flexibility, it also calls for districts to use the new funding to improve local performance. Districts may find meeting various state and local expectations a complex task.

figure - California is on track to implement LCFF more quicklyThe budget includes $53.1 billion for LCFF, or $6 billion more than appropriated in the 2014-15 budget. To put this into perspective, this represents an increase of more than $1,000 per pupil on average, or 14% more than schools received this year.

When LCFF was enacted in 2013-14, the administration estimated that the transition from old to new formula would take eight years. But funding increases were larger than forecasts in 2014–15 and 2015–16. Since 2013-14, almost $11 billion has been added to LCFF, leaving a gap of only $5.5 billion to fully fund the formula. Depending on the health of the economy, this gap could disappear completely in the next few years—and far earlier than originally forecast.

The LCFF simplified school funding by consolidating several dozen funding streams into a formula that distributes funds based on the number of students in each grade and the proportion of low-income, English-learner, and foster students in each district. The formula also sets district funding targets to equalize per-pupil funding levels across districts. In addition, funding levels for kindergarten and grades 1–3 were enhanced to give districts the incentive to reduce class sizes in the early grades. Similarly, high school funding levels were increased to support vocational classes and other courses to prepare students for college and careers.

Districts must balance how new funds are spent with the various requirements of LCFF and local expectations for spending increases. They must make progress in shrinking class sizes (despite the shortage of available teachers in some areas). They also must pay for improvement plans that are required under LCFF. The law requires districts to assess student and school outcomes in eight state priority areas and develop improvement plans and budgets that address local priorities for improving student performance.

Districts must also accommodate the typical financial pressures of any large organization, such as physical plant maintenance and employee salary and benefit increases. LCFF generally requires that districts use money targeted for high-needs students only for educational services for those students. However, in a recent letter sent to school superintendents, State Superintendent of Public Instruction Tom Torlakson advised that extra funding for high-needs students may be spent on across-the-board salary increases if the expenditure will improve services for those students. This interpretation may allow districts more discretion and increase pressure for larger employee raises.

The coming fiscal year promises significant new funding for schools—and significant demands for those funds. It is important these funds are well spent, in part because districts are unlikely to see increases of this magnitude in the near future. Forecasts from both the Department of Finance and the Legislative Analyst’s Office suggest that school budgets in 2016–17 and 2017–18 are likely to grow at a rate of about 3%. This year’s 14% increase in LCFF funding may represent the largest chunk of new discretionary funding that most districts will see for several years.


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