School Finance Reform

For decades, when California’s state leaders have wanted to see local school districts respond to shifts in policy and expectations they relied on the state-controlled school finance system to leverage local change. Through the use of categorical programs and earmarked funding, they created incentives for districts that complied and penalties for those that did not. The result: a school finance system that has been roundly criticized as irrational, inequitable, excessively complicated, overly centralized, and inefficient at allocating resources. In 2012, Governor Jerry Brown proposed to transform California’s school finance policies by introducing a new funding formula that would give local districts more control over their funding and provide additional funds to school districts based on student need. Despite broad consensus that school finance reform is needed the Legislature declined to act on the Governor’s proposal. As the 2013 legislative session begins, the governor is once again proposing K-12 finance reform. In broad strokes, his proposed Local Control Funding Formula would provide a uniform base amount for each student a school district serves, adjusted by grade span, and with extra funding based on student needs. Intended both to simplify the state’s approach to school district funding and to give more control and flexibility to local education leaders, the proposal raises a number of challenging questions:

• How can the state balance its need to create a school finance system that is more rational and transparent with its interest in better results for all students?
• Is it possible to provide funding with few or no strings attached and still have meaningful incentives and accountability systems that result in improved local educational practices and student outcomes?
• What changes in how state policymakers allocate funds to local education agencies would most effectively further their aspirational goals for schools?