Somewhat surprisingly, district officials had positive things to say about categorical grants. Interviewees—superintendents and school board members—noted that placing restrictions on the funding helps ensure that the money is actually spent on the targeted populations. This opinion was likely helped by the perception that categorical funding is sometimes supplementary to general aid, rather than a restriction on base funding.
On the issues of innovation, flexibility, and efficiency, district-level school officials gave more mixed responses. In general, they believed that decisions about how to spend resources are best made locally, as those closest to the grant are in the best position to understand the specific and unique needs of their students and schools. Thus, district leaders had a sense that greater or even maximum flexibility should be given to districts, even within the vein of categorical grants. As one survey respondent noted, “I think the bulk of that is best left at the local level and I don’t have a problem with being held accountable.”
California: A bright star
In the wake of the recent economic recession and the need to make significant cuts to state budgets, governors and state legislatures have been forced to rethink how they spend state resources, especially how they spend education dollars. Some states have seen this as an opportunity to significantly change the way school districts are funded in their states.
In 2009, the California State Legislature, in addition to proposing massive budget cuts to schools, eased restrictions on approximately 40 categorical-grant funding streams, allowing districts to spend this money for any educational purpose. The added flexibility was intended to help districts absorb the budget shortfall and use what funding they had in ways they thought would be most helpful.
Made possible with voter-approved tax revenue increases in 2012, California Gov. Jerry Brown (D) proposed more permanent and significant school-funding reforms, including distributing a portion of funds to districts based on the extra needs of groups of disadvantaged students, eliminating a host of categorical programs, and giving school districts more control over budgeting decisions. In June, Gov. Brown and the state legislature settled on a new funding formula known as the Local Control Funding Formula, which eliminated approximately three-quarters of the state’s categorical programs in the process.
While the new formula does not drive funds down to the school level, districts will receive a base grant that is determined by their average daily attendance across grade spans, with more dollars targeted to higher grade levels. In general, districts will see funding increases across the board—an average of $537 more per student in base funding. In addition, districts will receive an additional 20 percent for each English language learner, or ELL, low-income student, and foster youth student. Districts that have a high concentration of ELLs and low-income students—more than 55 percent of their student enrollment—will receive an additional 50 percent for each student above the 55 percent threshold.
The school-funding law requires districts to increase or improve services for ELLs and low-income students with the supplementary dollars. Furthermore, districts must develop an accountability plan that includes goals for major student subgroups, including ELLs and low-income students, across eight priority areas: student achievement, student engagement, school climate, parental involvement, implementation of the Common Core State Standards, course access, basic services, and other student outcomes.
Exactly how much discretion districts will have over the weighted, supplementary dollars they receive is still up for debate. Draft regulations from the State Board of Education currently provide school districts that receive supplementary dollars for ELLs and low-income students with broad flexibility over how to spend the additional funding. But some advocates worry that the draft regulations do not ensure that the additional dollars effectively target low-income students and ELLs.
The full implementation of California’s new funding formula will take place over the next eight years with many key decisions related to accountability and transparency occurring in the next several years. All eyes will be on the Golden State as it courageously disrupts its school finance system and transitions to a fairer, more equitable way of funding its schools.