Funding System for California Public Education

Equitable Funding System for California Public Education

The past trend in the rate of public spending on elementary and secondary education for K-12 classes in United States depicts a lengthy evolution. Even though the Constitution of United States has not embodied any section for making provisions in federal budget for the purpose, yet the Constitutions of States emphasizes on provision of some sort of free public schooling for the citizens. Public education system in each state is administered independently by the states and it is up to the states to decide about its costs and provisions. The quality of the education depends upon the amount of budget provision and the methodology of public spending on it. It is pertinent to be aware of the amount of budget provision available, the methodology of its spending, about the decisions making authority, etc. To fully understand the funding on education. (School Finance Overview)

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The state administration in California presently started to earmark new academic standards with regard to K-12 educational system, that every student of the age group should know and striving to provide equal opportunities to every children for attaining the same. A standard for evaluation of the performance of the students are also set to make the school authorities held responsible. The deficiencies of the state administration are found in its failure to re-examine the complex school finance system of California with particular reference to the changes brought there in. (Rethinking How California Funds Its Schools) The system of financing the public schools in California is as old as 30 years and has seen many ups and downs through out the year with supplementations and variations influenced by voter and judicial interpretations as well as with tampering made by law makers. (School Finance Overview)

The California during 80s and 90s lags behind other states in the sphere of school funding. The trend during 1990s led the state authorities of California to enhance its budgetary allocations on education in comparison to other states; however the same was reduced at the beginning of 2000s amidst budgetary crisis. The resource constraint was faced by the state at the moment when the state and federal government are laying emphasis on the necessity for improving the performance of the students and to increase student and school accountability for academic performance. (A Guide to California’s School Finance System) Doubt arises as to the justification of making schools accountable at the same time not providing them with sufficient allocations to fulfill the state standards. The trend is pressurizing presently the increasing number of Californians desire to witness a definite change in the financing system of the schools.1 Increasing numbers of citizens are of the view that the system of financing of schools in California is insufficient and unjust. (School Finance Overview)

The public school system in California is considered to be a most centralized one in the United States. The funding system of K-12 education in California has been broken in all respect. The system is not considered to have any core principle, and is viewed as fully complex, considered deficient to guarantee equitable and sufficient education to all children, and perceived as ridiculous historical accumulation. (Expert: School funding is flawed) The school funding system in California is perceived to be arrived at the present process through interactions of several forces like court decisions, legislations, voter-approved initiatives and government regulations. Consequently, the system placed the school revenues at the control of the state authorities. (School Finance Overview)

The structure of the present system evolved out of its all out efforts to extend equal education in California amidst the financing of the district school educational system through varied local property tax revenues. The state Supreme Court made such difference illegitimate in 1976. The judicial injunctions were issued calling upon the states to ensure equality. The late 1970s and early 1980s in California have seen a series of legislations forcing the states to exert greater control over the method of raising and allocating provisions on education. (Budget crisis forces new thoughts on school funding) The flow of funds were ensured from increasing number of sources over the years, some of which seem to be based on local environments and decisions made in the 1970s or 1980s that are no longer concerned with the financing of education. Significantly, the system gives rise to wide disparities among the school funding and many of the institutions are compelled to be left with insufficient funding. (California School Funding System Inequitable, Inadequate and Incomprehensible) Even under the influence of tech book of early 2000s, California was considered only 32nd in the national educational funding. (Budget crisis forces new thoughts on school funding) The resource constraint compelled the schools to strive through the budgetary stringency for the third year. (Rethinking How California Funds Its Schools)

The K-12 system of education in California presently entails an expenditure of about $41 billion constituting the largest budgetary provision in the state sharing about 41%. The $41 billion educational funding of California envisages two types flow of the school money: revenue limits and categorical funds that is inclusive of 100 different programs. The existence of dual system of funding the general revenue under the head ‘revenue limits’ and the ‘categorical funds’ amounting about $12 billion flowing to 100 different programs involve a complex funding methodology depending upon historical and archaic data points resulting in inequitable funding pattern at school and student level. The system also involves diversion of huge amounts from categorical programs requiring increasing number of officials to monitor and workout the paper work and documentation. The per-student investment in each district is perceived to be irrational and dependent on several complex factors. The investment on a particular school district is dependent upon the confidence of the school district and the size of its central bureaucracy instead of taking into account the actual requirements of individual students. (Restructuring California’s School Finance System)

Sacramento Bee in his recent studies on the structure of school funding in California viewed on its complicacy and incomprehensibility to such an extent that even the management people who has taken it as their way of life finds it difficult to convince the tax payers for their extended support. The local property taxes are combined in Sacramento and then distributed to the school districts on the basis of student strength. The flow of funds with regard to the general revenue and categorical funds are directed to the central office of the school districts rather than straight to schools. The central offices in turn allot the staffs to the schools and not funds. The school district to illustrate, demarcates the number of teaching and non-teaching staff on the basis of the student numbers in the district and quality. Considering the necessity of an additional reading instructor for improving the reading scores at the school, the principal is not at the liberty to employ or hire one due to the budgetary stipulations and earmarking of the personnel at the district one the basis of the average characteristics of schools in the district. (Restructuring California’s School Finance System)

The school districts in the whole of California presently are necessitating enhanced allocations for expansion, maintenance and modernization of their facilities. An estimate made by California Department of Education states the requirement of additional classrooms at 7000 annually up to 2008. The sources from the Office of Public School Construction reveals that the projects for new construction and modernization to the tune of $16.5 billion being approved is pending for required funding by the end of April 2004. (School Finance Overview) Legal suits have been filed against the state for its negligence in safeguarding the rights of the children to basic educational services. The comparatively low level of per-student funding in California are being challenged by several interest groups. (Rethinking How California Funds Its Schools) It is worth noting the complex school funding system of California results in diversion of more funds towards school administration and budgets rather than improving the student performance. (Restructuring California’s School Finance System)

During the period from 1970s to 1990s per-student expenditure in California was much below in comparison to the national average. The low budget provisions coupled with the higher inflation rates and cost of livings has implied that the public schools in California has less funds to manage with, in comparison to that of other industrial states. (School Finance Overview) The National Center for Education Statistics reveals that the instructional expenditure in California is estimated only to be about 54% of the total per-student expenditure. (Restructuring California’s School Finance System) The school districts with adequate local property taxes get allocation of only $120 per student. (Budget crisis forces new thoughts on school funding) This is considered as the minimum aid enshrined in the constitution.

Amidst such adversaries of the Californian students, the misdirected resources bring in further adverse consequences. The reading scores among the eligible free and reduced price lunch students at both forth and eighth grade are considered to be the lowest in California during 2002 according to the estimates made by National Assessment of Educational Progress. (Restructuring California’s School Finance System) The requirement of funds that the schools necessitate is also a matter of controversy attracting the attention of courts in California. The ACLU filed a writ petition of Williams et al. Vs. State of California et al. emphasizing that the state fails to meet the obligations in providing all students with basic educational necessities.

The local school districts appearing the law suit of ACLU were charged in the Gov. Davis and the state law suit blaming that the accountability goes to the school authorities rather than the state with regard to adequate provisions. These law suits are seen to have profound impact on the ways the schools are financed in California and the authorities and the ways by which the decisions are affected to. (School Finance Overview) It is left for consideration of the problems by a newly appointed state commission. The commission among others tried to resolve the problem of determination of the minimum requirement of resources to cater to the promising academic standards. It is a general consensus among the state educationists that California should bring a complete reformation the funding pattern or form a completely new system. (Rethinking How California Funds Its Schools)

The formulation of budgetary process for the education sector, taking into consideration the cost effectiveness at the local level, diversion of resources from non-teaching budgetary units to the class room expenditure, and ensuring equitable per-student allocation of resources on the basis of individual characteristics of the students is considered to be too complex. A simple financing system is prescribed to be adopted by California that allocates both categorical as well as revenue-limit budgetary provisions on the basis of a ‘weighted student formula’ that is expected to include equalization of the base allocation throughout the state and ensures additional weighted funds to meet the additional requirements of the students with reference to specialized education, poverty and English learners. The process is ensures the school finance system in California to become more simple, more just and entails remarkable cost reductions in the units of categorical administrative costs and central office costs and redirecting the savings to increase per student funding allocation in California. (Restructuring California’s School Finance System)

The concept of ‘weighted student formula’ in its complete form appears in the several analyses and in the book of William G. Ouchi, Professor of Management in UCLA named as, Making Schools Work: A Revolutionary Plan to Get Your Children the Education They Need. The conclusions by Ouchi and 12 other researchers on the studies of various public and Catholic schools reveal that the decentralized school financing system are considered to be more effective ensuring better student performance. The individual schools are encouraged to compete for students by the weighted student formula and the principals are also permitted to regulate their budgetary allocations in order to direct towards the needs of their specific school population. Breaking the categorical programs and enhancing the basic allocation per student in the school involves substantial savings in the state and district budgets in terms of reduction in administrative costs for operation of varied categorical programs and maintenance of a large central office. The districts presently are required to apply for separate evaluation and monitoring of the proper utilization of categorical funds. (Restructuring California’s School Finance System)

The research from Reason Foundation’s Citizen’s Budget emphasizes on an overall savings rate of a minimum of 15% of the total administrative expenses at the district and state levels with adoption of these reforms. The two ideas presently hovering are enhancement of alcohol tax and extension of sales tax for supporting additional services. The alcohol tax in California is still considered to be the lower in comparison to the national average. It is urged to extend the jurisdiction of the Governor’s Quality Education Commission to study the ways of reformation of the categorical programs effected to by other states and to evaluate the methodology of implementation of the weighted student formula and devising of model legislation on the basis of the best practices from other states and localities. (Restructuring California’s School Finance System)

The insufficiency of school funding on Proposition.13 is being criticized vehemently. The constitutional amendment as old as of 1978 required the taxation of residences and commercial properties at only 1% of their assessed value at the time of purchasing the property. It was intended to make the housing costs reasonable however, confining the tax revenue going into education. (Budget crisis forces new thoughts on school funding) Consequently the measures led to curtailment of property taxes by 60%. The curtailment involved more variations in the school funding system of California in comparison to that of in earlier years. (California School Finance) It has changed the methodology employed for assessment of properties for taxation. Such assessments before 1978 were based on the full market value of the property. However, the Proposition 13 turned around the assessment on the present properties on the basis of the assessments made in 1975 and confined the assessment of values to 2% per annum in respect of the properties that are not sold. (Targeting Proposition 13 and Saving California)

With the transfer of properties along with the properties newly constituted, the assessment is made on the basis of its full market value and the assessment then increases 2% per annum. The property tax relief measures vetted by the voters of California are considered to be in response to the prevailing tax systems necessitating reformation. (Targeting Proposition 13 and Saving California) The Proposition 13 however, inherited harmful effects in respect of school districts in California as emphasized by Downes and Figlio and in respect of horizontal inequities in tax burdens as narrated by Sexton, Sheffrin and O’Sullivan. The inheritance by Proposition 13 further extended to other states in the following years those were supposedly inspired by the adoption of Californian example in respect of their property tax limitation measures. (Proposition 13 and Its Offspring:For Good or for Evil?)

Prior to promulgation of proposition 13 California was considered to have dominance in public education system having students ranking in top five among the states in terms of the performance. California was placed in top 10 states in terms of per-student expenditure during 1969. At that time about 55% of the elementary and high school funding was collected from local property taxes and was allotted by the local school board. (California’s Proposition 13 Debacle: Could this lie in Wisconsin’s future?) Proposition 13 was said to have revolutionized the very way of funding education in California. (Fort Bragg schools feel sting of Proposition 13) The school funding was transferred from local communities to the State along with shifting of control over them. The local system of finance was dependent upon the property tax, nearly half of which constitute commercial, industrial and agricultural property. Consequently, the taxes on non-residential property seem to have subsidized the local home owners and renters. The transfer of all property tax revenue to the state authorities by the Proposition 13, the subsidy so granted were stopped and in turn the cost of school services to the homeowners and renters were increased. (Fort Bragg schools feel sting of Proposition 13)

The enhancement of costs resulted in comparative decrease in per-student expenditure. In the post Proposition 13 period the state allocated revenues more justly among the school districts and efforts were made to leveling down the high spending districts and rising up the low spending ones. The local districts are constrained to raise money for adjusting the difference and restoration of the popular programs. Besides, the methodology has exerted difficulty in revamping the schools and establishes new ones by the district authorities even if the projects were demanded by majority of the voters. (Fort Bragg schools feel sting of Proposition 13) The elementary high school and community college districts are authorized to collect fees for provision of services and other facilities.

The enhancement of fees is being considered by about 50% of the school districts as revealed in the survey reports conducted by Los Angeles Times taking a sample of 70 school districts and community college systems in Southern California. The provision for community services like swimming pools, racquetball courts, play grounds and class rooms for night meetings, adult education, vocational education, public lectures and student health services etc. are effected to. The school bus fares are charged at the rate of 15 cents to $1 per day by some of the school districts in Northern California. (A report from California: Proposition 13)

Due to Proposition 13 and its progeny, assistance for schools of California has a propensity to “equalization” at a point that positions them at a condition of continuous financial emergency. Concurrently, several ambiguities and inclination towards privatization, like setting up of private educational foundations to financially support schools in affluent districts, indicates that puddles of influential investments continues in the middle of this “equalization.” (Money, Schools, & Courts) The adversaries require reevaluation of the efficacy of the Proposition 13 in California counties with increasing stringency of the fiscal measures. (Targeting Proposition 13 and Saving California) It could be seen that school boards goes on controlling districts, but the State exercises influence in the manner in which the money is distributed. With a view to improve Proposition 13, there is an urgency to execute state governance and one mode of doing it is to completely eradicate school districts. A system like this would substitute legislative creation of policies with bureaucratic command, rendering it simpler to distribute funds of the state as per the requirement. Under this system it would be simpler to assign the teachers, principals and schools answerable to the rules of the state. (Has School Finance Reform Been Good for California?)

Another option which remains is Charter schools. Allowed to function from 1992, charter schools function as per their individual objectives and methods, majority of the state acts are not applicable to them, and are eligible to get lump sum grants which is equivalent to the portion they would get from a usual school district. As the number of these schools increase, the state may be subjected to more and more demands to control them, once again cropping up the issue if schools can function in a really autonomous manner in the absence of regulating their own sources of incomes. In case local authority is chosen to state governance, school districts might be permitted to collect their own funds. For instance, the state can allocate its financial assistance such that same tax rates will generate the same income per student, in spite of the tax base. In order to execute such a plan, nevertheless, voters will have to revoke tax limitations forced by Proposition 13. Substantial reform in any of the spheres will not be achieved with ease. Till the time such reform is taken on, nevertheless, California might be facing problems to undo the present system of miniscule spending, bigger classes, and poor student performance in comparison to other states. (Has School Finance Reform Been Good for California?)

Split roll tax system is considered to be a revolutionary measure identified to revise the Proposition. The split-roll tax system on the other hand keeps constant the tax rate for residential property at the same time ensuring change in the commercial property tax assessments in consonance with the current market value. The ‘adequacy based’ approach is considered to be one of the most radical approaches in this respect. This necessitates identification of the educational goals of the State, and assessing the costs for attainment of the objectives and then raising of the finances. The system is necessitating complete reformation of the system necessitating earmarking of funds for spending on something rather than simply throwing money at schools and instructing to do something with it. (Budget crisis forces new thoughts on school funding)

The assessment of commercial and industrial property is considered to be the weakest point in the state tax administration. This necessitates regular assessment of the commercial and industrial property at one percent of market value in order to solve the problems of deficiency in the source revenue for schools, cities and counties. The taxes raised during the year of the initiation is estimated to be about 7-10 billion dollars and expected to grow with the advancement of the economy persistently. This implies that most of the monetary problems presently prevailing in California are expected to be solved with implementation of the Proposition 13. Such reforms have no effect on the Homeowners. Thus it indicates that most of the problems pertaining to the School funding are expected to be solved with introduction of the reforms of Proposition 13. (Proposition 13 Reform)


Guide to California’s School Finance System” (March 2004) Retrieved at on 26 September, 2004 report from California: Proposition 13″ New Tax Revolt Digest. Retrieved at Accessed on 26 September, 2004

Bell, Tom. (2004) “Fort Bragg schools feel sting of Proposition 13″ Blethen Maine Newspapers. Retrieved at Accessed on 26 September, 2004

California’s Proposition 13 Debacle: Could this lie in Wisconsin’s future?” (March 4, 1997) Retrieved at Accessed on 26 September, 2004

California School Finance” Retrieved at Accessed on 26 September, 2004

Chavez, Anselmo A. (2000) “Proposition 13 Reform” Retrieved at Accessed on 26 September, 2004

Has School Finance Reform Been Good for California?” Public Policy Institute of California. Retrieved at Accessed on 26 September, 2004

Hunter, Molly A. (December 12, 2003) “California School Funding System Inequitable, Inadequate and Incomprehensible” Retrieved at on 26 September, 2004

Karp, Stan. “Money, Schools, & Courts” Retrieved at Accessed on 26 September, 2004

McGuire, Therese J. (March 1999) “Proposition 13 and Its Offspring: For Good or for Evil?” National Tax Journal. Volume: 52; No. 1 pp. 129-38

Moore, Stephen. (July 30, 1998) “Proposition 13 Then, Now and Forever” Retrieved at Accessed on 26 September, 2004

Nobida, Martin. (May 02, 2003) “Budget crisis forces new thoughts on school funding” Palo Alto Weekly. Retrieved at Accessed on 26 September, 2004

Rethinking How California Funds Its Schools” (May 2004) Retrieved at on 26 September, 2004

Ryan, Howard. “Targeting Proposition 13 and Saving California” Retrieved at Accessed on 26 September, 2004

School Finance Overview” (2004) Retrieved at on 26 September, 2004

Snell, Lisa. “Restructuring California’s School Finance System” Retrieved at Accessed on 26 September, 2004

Vaughn, Katie. (November 28, 2003) “Expert: School funding is flawed” Mountain View Voice. Retrieved at Accessed on 26 September, 2004

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