Working paper

Funding California’s Schools

How Do We Assure an Adequate Education for All?
Lawrence O. Picus
University of Southern California


Today, California's schools rank 44th in the nation in education spending. Per pupil spending for education in California amounted to $6,659 in fiscal year 2001–02 when adjusted for regional cost differences across the states. This figure represented 86.1 percent of the national average of $7,734 per pupil. Worse, only six-tenths of one percent of school children went to school in districts that spent more than the national average. Looking at these figures another way, California only spent 3.5 percent of total taxable resources on education, ranking 39th out of the 51 states and the District of Columbia.

Since the 2001–02 fiscal year, things have only deteriorated for school district funding. The recession of the early part of this decade resulted in dramatic budget deficits for the state and substantial reductions to the expected level of school funding. Following his election as governor, Arnold Schwarzenegger reached an agreement with the education community to suspend the constitutional educational funding guarantees of Proposition 98 for 2004–05 in exchange for a promise to pay back those funds in 2005–06. In his budget message of January 10, 2005, Governor Schwarzenegger indicated that to balance the 2005–06 budget, repayment of those funds would not be possible. Moreover, he threatened to seek voter approval of a constitutional amendment that would weaken the Proposition 98 guarantees if the education community was not willing to go along with these further reductions.

Missing from this discussion is the question of how much money our schools need if they are to succeed in meeting the goal of having all—or almost all—of California's school children meet the state's educational proficiency standards. The purpose of this paper is to provide some background on how California's school funding system wound up in this predicament, and to offer some suggestions regarding how the problem can be resolved and what kind of effort will be required.

The answer to the question of how much we need is grounded in a new concept of school finance known as adequacy. Adequacy seeks to estimate the costs of providing an educational program that will enable all—or almost all—children to meet the state's high proficiency standards. In his budget address in January, Governor Schwarzenegger referred repeatedly to the $50 billion we spend on education. Absent from his rhetoric was any sense of how much we really need to insure that the students of California receive the education they deserve. Adequacy offers a way to estimate what that need is, and that estimate would enable our state's policy makers to develop a system to raise and distribute the funds our schools require. In addition to the need to estimate an adequate level of education spending, this paper provides some thoughts on how the state might approach funding all services for children, and it makes recommendations for finding the additional resources needed to adequately fund our schools.

Suggested citationPicus, L. O. (2005, February). Funding California's schools: How do we assure an adequate education for all? [Working paper]. Policy Analysis for California Education.