How California pays for its schools affects how they function and
how they perform. If funding only flows when districts make
certain decisions, then those are the decisions that most likely
will be made -- regardless of how they relate to educational needs and
goals. If schools are held accountable for how dollars are
spent, then that will be their focus rather than how much students learn.
California's system of paying for schools has grown increasingly complex
in the past three decades -- and increasingly frustrating for those who
desire an effective financing system. The complexity seems to have
done little to help students succeed in the classroom. Educators are
often thwarted and citizens baffled by a difficult-to-understand system.
Uncounted resources are diverted to administering and tracking arcane
formulas, and providing equity for students has become a bookkeeping
exercise rather than an honest assessment of whose needs are not being
Crafting a financing system that marches in lockstep with educational goals for schools is not easy. But as the State edges closer to adopting uniform standards and assessments on the education side, it is critical that reforms occur to bring the financing side into alignment. The following findings and recommendations are designed to help the State reach that goal:
Finding 1: The present education funding system is convoluted
-- driving up administrative costs, diverting attention from
educational concerns and depriving the public of readily
accessible, comparative information.
Money reaches districts, school campuses and individual classrooms
through complex formulas that are difficult to understand and that are
constantly manipulated by state policy makers, state bureaucrats, school
administrators and outside consultants. The convoluted system is very
difficult for the public to understand -- and therefore to trust and support.
In addition, the system is expensive for the State to administer and
oversee for fiscal accountability. The same is true for districts, whose
decisions are sometimes driven by financial factors that have only a
tenuous connection with educating children.
Recommendation 1: The Governor and the Legislature should redesign the education funding system to simplify formulas, redirect the focus to educational needs rather than process and ensure meaningful equity of educational opportunity.
California's education finance system is too complicated. It often acts
as a stumbling block rather than facilitating the achievement of the goals
of educators, policy makers and taxpayers. And the complexity has
grown rather than diminished despite years of criticism and reform
proposals by a variety of experts. Inertia, fear of the consequences of a
new system and divergent political perspectives make it difficult to
change the system. Clearly, an extraordinary and well-focused effort will
be required to achieve any wholesale reform.
Establishing a venue for reform is the first hurdle policy makers should
address. To focus on overall reform rather than current resources and
individual problems, the reform effort should be kept separate from the
annual budget cycle. A special joint legislative committee, charged with
an agenda of reform issues and a time frame for negotiations, could
supply the framework for building consensus -- or at least acquiescence --
among key stakeholders. A similar process was used successfully in
1996 to address the deregulation of electricity and introducing
competition to energy markets.
Once reform discussions are under way, specific changes that policy
makers should make include:
Finding 2: The funding system for Special Education is out of
step with mandated programs, available resources, student
needs and common sense.
Many of the problems with California's education finance system are
magnified in the Special Education portion of the system -- and this is
true despite the fact that Special Education is segregated from the regular
education system structurally and is based on a completely different
approach to funding. For example:
Recommendation 2: The Governor and the Legislature should redesign the Special Education funding system to achieve simplicity, equity and flexibility and to shift accountability to outcome.
Elements of both the tri-agency recommendation and the current reform
proposal go far toward resolving problems with the current Special
Education financing system. However, policy makers should be wary of
continuing present inequitable patterns simply for the sake of obtaining
the political consensus to move forward with reform. At some point,
even if on a phased-in schedule, all Special Education children should
have the equal opportunity to receive services regardless of the district
they live in.
Recommendation 3: The Governor and the Legislature should ensure that primary responsibility for special-needs students rests in their home districts.
Money should not be routed directly to SELPAs if it is going to increase
the already-existing tendency for districts to consider Special Education
students someone else's problem. Districts should be able to purchase
regionalized services from SELPAs, but any realignment of the financing
system should not further divorce Special Education students from the
general education population and structure. Parents should be assured
of having single-point access at the home district for service, advice and
Recommendation 4: The Governor and the Legislature should petition the federal government to live up to its original funding commitment -- and if it is unwilling to do so to consider realigning the Special Education mandate with fiscal realities.
Much of the tension and acrimony within the Special Education system
comes from the irresolvable conflicts between funding shortfalls and
legitimate demands for appropriate services. The existing system is not
fair to educators, parents, students or taxpayers. Congress should be
strongly urged to increase funding levels.
Any discussion of modifying the mandate to provide services to Special
Education students needs to be handled with extreme sensitivity to the
fact that -- prior to the enactment of the broad mandate -- schools often
turned their backs on this population. They should be given no
opportunity to do so again. But clarifying the mandate and bringing it in
line with the slightly more narrow but still powerful protections of the
Americans with Disabilities Act would give both schools and parents
better guidelines for taking action.
Finding 3: Because there is no way to judge schools on
academic results, the State focuses on fiscal accountability
for process and inputs -- often to the detriment of educational
When school districts violate sound fiscal policy, California has a
mechanism for taking over and bringing the operations back to financial
health. But when districts repeatedly fail to produce the outcome that
education is all about -- students with a solid base of knowledge and
skills -- there is no remedy. The State's system instead focuses on
accountability for process and inputs: Did the district provide the correct
number of instructional minutes and school days? Were categorical
funds spent on the proper services? Did the district comply with teacher-to-student ratios and administrator-to-teacher ratios? Since these are the
questions by which they are judged, districts spend substantial time,
energy and resources getting the answers right. Unfortunately, no
research has indicated that these are the factors that improve student
Recommendation 5: Once academic performance standards and assessment systems are in place, the Governor and the Legislature should ensure that the State's education accountability system shifts to outcomes.
Educators should not have to struggle to meet the demands of two
accountability systems: the existing one that focuses on processes that
are largely unrelated to academic achievement and the new one that will
surely be the natural consequence of implementing statewide standards
and tests. Instead, the State should take steps to make sure that fiscal
accountability is focused on meaningful activities. These steps could
include creating rewards -- such as incentive bonuses -- and sanctions --
including an academic bankruptcy process -- to encourage better focus
on academic performance.
Finding 4: Despite 1,000 locally elected district boards and a
professed preference for local control, California's schools
are run by the State -- directly through mandates and indirectly
through fiscal constraints.
The history of schools in California is one of local control, beginning in
the early days before statehood when settlers pooled resources to hire a
teacher for the one-room schoolhouse they had built as a community
project. But court rulings, voter initiatives and legislative mandates have
steadily pushed the State into controlling ever increasing portions of the
education system. While dominance by the State in education fiscal
matters has been seen as the best route to equity, many believe the shift
from local to state control has eroded financial resources for schools,
public support for the education system and meaningful accountability.
Recommendation 6: The Governor and the Legislature should create a local funding mechanism that provides districts with equal opportunities to raise revenues.
Communities should be able to demand responsiveness and
accountability from their local school boards. They cannot as along as
the boards can easily and legitimately point to the State as the source of
funding shortfalls and specific mandates. Districts that are able to make
a convincing case to their local voters should be allowed to raise
revenues more easily to enhance their educational programs. o ensure the equity provisions of Serrano are maintained, revenues
should be limited and balanced by state grants to low-wealth districts, as
suggested by the Legislative Analyst and others.
Recommendation 7: The Governor and the Legislature should empower school districts to operate independently as long as outcome standards are met.
Multiple top-down constraints on school districts have done little that can
be demonstrated to improve educational performance. While ratios of
teachers to students and teachers to administrators may be desirable
standards, they should be implemented locally at the behest of voters
rather than imposed by state mandates.
The pending initiative that would dictate a 95-5 percent split of funding
between schools and district offices is one more example of a reform that
focuses on inputs rather than outcomes and replaces local discretion with
state control. State officials should accelerate the move to an outcome-based, academically focused accountability system to restore confidence
in the education system -- which in turn should discourage similar
Once performance standards are in place, state officials should adopt a
model that requires the State to set broad goals and allows local districts
to use flexibility to meet the goals.
Finding 5: The allocation of education funding is driven by
resource availability and political considerations rather than
a determination of what is required to provide an adequate
When the State wants to build a highway, it plans, designs, accepts bids
from contractors and then moves ahead with construction once enough
funding is available. The cost depends on the product -- the length,
width and type of road, the conditions that must be overcome to build it,
the wages of the workers, etc.
But when it comes to education, the process is reversed. The State
starts with an allocation and then tries to determine how much and what
kind of education that will buy. Unfortunately, the product is ill-defined,
methods can vary substantially and quality is uncertain. It should not be
surprising, therefore, that there is never a sure answer to "how much is
Recommendation 8: The Governor and the Legislature should convene a process to build consensus on what elements constitute an adequate education environment in California.
Just as the Commission for the Establishment of Academic Content and Performance Standards is focused on learning content, a similar commission could consider issues such as class size, school year length, number of course offerings in high schools, building condition and ratios of types of services to students. These elements could then be used to develop standard school components, with coinciding expense estimates, to serve as a model for districts.