Department of Finance Releases Local Control Funding Formula

The Department of Finance released a long-awaited table today that shows how each K-12 District fares in Governor Jerry Brown’s new plan, aptly labeled Local Control Funding Formula, to direct more money to schools with low-income students and English learners. The 80-page chart calculates districts’ base per student funding for 2011-12 as a comparison and lists funding for the next two years and full per-student funding in seven years, if projected State revenues hold up.

In the Overview of the Local Control Funding Formula Proposal, the Department of Finance laid out its purpose:

Current funding for schools is inequitably distributed, not tied to student demographics, largely state-controlled, and lacking appropriate accountability measures. These inequities are primarily the result of how the current general purpose “revenue limit” funding system was created in response to court rulings and Proposition 13, freezing in funding decisions made decades ago. In addition, over time, the state created more than 60 categorical programs, each with accounting and reporting requirements, many of which are not outcome-focused. These categorical program funding allocations have also been frozen due to recent fiscal constraints and no longer are reflective of current demographics.

The Formula would increase flexibility and accountability at the local level so those closest to the students can make the decisions, reduce State bureaucracy, and ensure that student needs drive the allocation of resources.

Starting off with what districts now receive in base funding (known as “revenue limit” funding), it would create a new financing system as additional money becomes available from increased revenues generated by an improving State economy, and as past debts that the State owes to schools are paid off.

Brown’s plan would provide additional funds to districts having to meet the extra costs of educating economically disadvantaged and other high-needs students. There would be a “phase in” period, with annual funding increases, leading to full funding.

Under the plan, no district would receive less than they receive this year in State support, and “the vast majority” – 1,700 districts and charter schools – would get unspecified “moderate to significant” funding increases over the next five years, according to the overview. During this time, the average per-student funding under Proposition 98 is projected to rise $2,700 per student.

Approximately 230 school districts and charter schools are estimated to receive little or no additional funding as a result of the Formula.  Almost all of those districts and charter schools are basic aid, where local property tax revenues alone are more than sufficient to finance their funding formula entitlement.  Others receive necessary small school funding or have unique  funding issues that result in them having current funding levels well above what all other schools are receiving.

EdSource did an analysis of how the formula would work:

•    Every district would receive a base grant for every student – an average of $6,800 when fully funded, with more for high schools and less for elementary schools (to reflect the differential costs of educating pupils in different grade spans). Once the Formula is fully implemented, the significant reductions made to current general purpose “revenue limit” funding over the last five years (known as the deficit factor) will be restored, ensuring that the new base grant funding level is equivalent to the statewide average from 2007-2008.

•    It would not include money for special education and a few other categorical programs that would be funded outside of the formula. Schools would get an extra $700 per student in grades K-3 for smaller classes, though districts could spend the money otherwise.

•    Districts with disadvantaged students – low-income students, English learners and foster youth – would get additional dollars:

o    A supplement of $2,385 per student, which is equal to 35 percent of the base grant for every disadvantaged student in the district.

o    An additional grant for those districts in which high-needs students comprise 50 percent or more of students, reflecting the need for additional money to counteract the demands on districts with a high concentration of poor children. Districts with 60 percent high-needs students would get 38.5 percent more revenue per high-needs student ($2,624); a district in which every child is an English learner or low-income student would get a maximum of 52.5 percent more ($3,578) in per-student funding than a district with no high-needs children.

Accountability at the Local Level:

In addition, the Governor Brown and the Department of Finance have particular requirements for how to keep districts, charter schools, and county offices of education accountable:

•    Each school district, charter school and county office of education will produce a local control and accountability plan that will set annual goals and describe how the local agency would use available resources.

•    The proposal will provide greater transparency and allow a local agency to better craft solutions to address local needs; involve principals, teachers, parents, students, and other community members in the planning process; and require governing boards to approve the plan at a public meeting.

•    The plans will include actions the local agency will take to provide basic conditions necessary  for student achievement (such as credentialed teachers, adequate instructional materials, facilities in good repair); implement the common core standards; improve academic outcomes; and address the needs of English learners, foster children, and students from low-income backgrounds.

•    A governing board will be required to adopt a budget that aligns with the agency’s local control and accountability plan. A county office of education will review both a district’s budget and its plan to ensure that they are aligned. The Superintendent of Public Instruction will perform this review function for local plans adopted by county offices.

The Table can be found here.