California enacted the Local Control Funding Formula (LCFF) in 2013-14 in an effort to simplify school finance, revamp accountability, and increase funding for high-need students-those who are low income, English Learners, homeless, and/or foster youth. The LCFF represents an overhaul of the previous system of K-12 school finance that had been in place for nearly four decades. Under the LCFF, extra funding is allocated to districts with more high-need students. The LCFF also gives districts greater spending flexibility, with the consolidation of many categorical aid programs-which fund specific areas or services-into unrestricted block grants.
Given these historic increases in spending and flexibility, there are concerns that additional funding may not be reaching the highest-need students; these concerns are driven in part by arguably underwhelming progress in student achievement in recent years. And yet, our current knowledge of how LCFF funding has been spent is limited, and we have little knowledge beyond case studies of individual districts about how resources are allocated across schools in the same district.
This report provides new evidence on the effects of LCFF on the distribution of educational resources across districts and schools. Using data on district spending and school staffing, I find:
- The LCFF led to more equitable school district spending. Spending has increased substantially across all school districts. Some of this increase is due to the improved economic situation in the state and additional Proposition 98 dollars. Much of the increased funding was spent on salaries and benefits for teachers and other staff. Between 2013-14 and 2017-18, student spending in high-need districts rose by over $500 more per pupil than in low-need districts. Class sizes decreased in high-need districts more than in low-need districts.
- Allocating LCFF funding by district-level need may imperfectly target high-need students. Many high-need students reside in higher-income districts that do not receive as much LCFF funding. Unless these districts allocate additional resources to their highest-need students, the progressivity of LCFF funding is attenuated by hundreds of dollars per student: I estimate that spending on the typical high-need student in any district across the state increased by roughly $350 relative to the typical non-high-need student. Notably, the LCFF intentionally directs more money to the highest-need districts on the grounds that it costs more to educate high-need students in areas with higher concentrations of student need.
- As they did before the LCFF, districts are spending (slightly) more on teachers in their highest-poverty schools. Districts with differences in student need across schools typically spend more on instruction and have smaller class sizes in their higher-need schools. This pattern of spending has been relatively constant over time, and has not changed since the LCFF was implemented.
- High-need schools and districts rely increasingly on less-experienced (and lower-paid) teachers. While districts do spend more on teachers in their highest-need schools, these schools are staffed with teachers who have less experience and lower salaries. This staffing pattern predates the LCFF, but it has become more pronounced across districts under the new funding formula. Between 2013-14 and 2017-18, the share of novice teachers increased more in high-need than in low-need districts.
Overall, the data show that LCFF funding is, for the most part, reaching the high-need students for whom it was intended. Yet greater reliance on novice and less-qualified staff means that it may take time for gains from LCFF to accumulate in high-need schools and districts. In addition, rising pension costs, declining enrollments, and teacher shortages are placing constraints on districts’ spending options. Ensuring and improving the equitable distribution of LCFF funding may require policies that track funding within districts and hold districts accountable for the allocation of resources for high-need students.