Established in 2013, California’s Local Control Funding Formula (LCFF) has boosted funding for high-need students and increased district autonomy. But schools still face fiscal and academic challenges. Recently, PPIC researchers Brett Guinan and Iwunze Ugo discussed a new report exploring how tweaks to the funding system could affect state spending and district allocations.
Under the LCFF, districts receive base grants for every student, plus targeted funding in the form of supplemental grants for high-need students (defined as low-income, English Learners, or foster youth) and concentration grants for districts with large shares of high-need students.
The researchers created a model to simulate various adjustments to the LCFF, including changes to base and targeted funding levels as well as the way in which high-need students are defined. Guinan emphasized that the goal of this research “is not to make policy recommendations but to clearly illustrate the trade-offs of different formula choices.”
Some of the adjustments simulated in the report:
- Enrollment-based funding. Under the current attendance-based formula, rising rates of chronic absenteeism after the pandemic have increased cost pressures on districts. Switching to enrollment-based funding could provide relief, increasing state funding by $3.8 billion, with more going to districts struggling with high absence rates. One concern, however, is that removing districts’ financial incentive to bolster attendance could lead to even more absences.
- Regional cost adjustment. Augmenting districts’ base funding to account for differences in local labor costs could help districts attract and retain staff. An estimated $2.5 billion regional cost adjustment would be directed almost entirely to urban and suburban districts, with modest gains for individual districts. Districts in rural areas and small towns, though, would see little to no additional funding.
- Funding students with multiple needs. Districts currently receive the same supplemental funding for each high-need student, regardless of whether students have multiple needs (e.g., low-income students who are also English Learners). Providing additional funding for students in multiple targeted categories would direct the largest increases toward districts with more high-need students at a cost of $2 billion.
Guinan remarked that these adjustments could have profound effects: “Even small tweaks to the formula will have major distributional consequences, shifting billions of dollars across California’s thousand school districts.”
Historically, changes to school funding systems have been accompanied by revenue expansions, so that districts at least retain baseline funding under new allocations, said Ugo. The researchers estimate that the combination of legally required stability in state funding and the continuing trend of declining enrollment could make an additional $7.5 billion available for the state’s schools. Some or all of this revenue could go toward updating the current funding structure, increasing funding for all districts under an altered allocation across them.
More than ten years into the LCFF, the state has recently made changes to the funding formula, including expanding the concentration grant and creating the equity multiplier. “There’s been an openness to updating the school funding formula that really inspired this report,” said Ugo. He further highlighted that the researchers’ funding simulator can help put concrete numbers to potential LCFF changes as policymakers consider different funding options.
