Spurred by a deep recession and large budget shortfalls, the California Legislature in 2009 enacted what was arguably the largest change to California's school finance system in decades--relaxing spending restrictions on more than 40 categorical programs through 2012-13, extended later to 2014-15. Categorical funding, which gives school districts money in addition to the general funds they already receive from the state, had been limited to specific, narrow purposes: buying textbooks or providing summer school, for example. Under the 2009 changes, districts could begin spending these funds for any educational purpose. When the law expires, the legislature will be faced with a decision: whether to return to the previous, tightly restricted categorical fund system or transition to a permanent version of the flexibility now in use. Because they were part of legislative negotiations over the state budget, not education policy, the decisions made in 2009 were far from optimal for k-12 schools. A more systematic and less political reconsideration of categorical flexibility could result in a more equitable and transparent distribution of funds, while also reserving targeted aid for students who need supplemental services. In addition, under the 2009 provisions, districts could spend categorical funds on any educational purpose. Both state policymakers and local district officials have expressed concern about the impact of completely flexible funds on the collective bargaining process; specifically, that those funds would be used inappropriately to increase teacher salaries and benefits rather than to provide additional services or materials for students. This report offers three recommendations to improve current flexibility provisions that the legislature could consider should it pursue categorical flexibility beyond the program's sunset date: (1) Distribute these less-restricted categorical funds more equally; (2) Apply clear criteria for flexibility and consider alternative configurations; and (3) Consider some restrictions on flex item funds. These recommendations would create a more equitable and transparent source of revenue. This would provide local school districts with increased flexibility in meeting student needs, and would be consistent with several recent major school finance reform proposals, as well as Governor Brown's campaign plan for k-12 education. (Contains 6 figures, 5 tables and 36 footnotes.) [For "California's New School Funding Flexibility. Technical Appendices," see ed519504.].

Governor Jerry Brown's January 2011 budget proposal suggests shifting responsibility and funding for many state programs from the state to the local level. Under this "realignment" of government authority, local governments--usually counties--would be given responsibility for providing the services in realigned programs, and the state would provide local governments with a source of funding for the new responsibilities. In addition, local governments would be granted the authority to reshape realigned programs to better accommodate local conditions and priorities. Although k-12 education is not included in the governor's realignment proposal, similar themes apply to the current discussions and legislation pertaining to California's school finance system. This report examines California's school finance system through the lens of realignment, offering a framework for thinking about how k-12 realignment might work and the difficulties it might face. Certainly there are arguments on both sides of the equation. Proponents of greater local control argue that local school authorities have a better knowledge than state officials of the unique needs in their districts and that greater local control would reduce the administrative burden on schools and enable them to redirect their resources toward improving student outcomes. Those in favor of maintaining state control argue that central control allows the state to ensure its priorities are met across individual districts and that students in all districts, regardless of their size or location, are provided with similar educational opportunities. This study examines the trade-offs of each approach, concluding that thoughtful revisions in the state's categorical funding system would offer a good first step in moving toward a more productive, efficient, and transparent school finance system. (Contains 2 figures and 4 footnotes.) [Additional funding for this report was provided by the Evelyn and Walter Haas, Jr. Fund.].

A large share of California's school funding is allocated through categorical programs whose funding is contingent on districts using the money in a particular way or for a particular purpose. In 2008-09, the strings were taken off 40 of these programs as part of a budget deal that also reduced the funding for those programs. This report describes statewide patterns in district revenues and expenditures in light of this new state policy.

Much of California's school funding is allocated through programs whose funding comes with requirements that districts use the money to support specific programs. In 2008-09, the strings were taken off 40 of these programs as part of a deal that also reduced their funding. This report presents the results of a survey of California's district chief financial officers (CFOs), describing how they made decisions in light of this new state policy.

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. (See box below.) 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 that are examined in this report: (1) 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?; (2) 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?; and (3) What changes in how state policymakers allocate funds to local education agencies would most effectively further their aspirational goals for schools?

California ended 40 years of reliance on categorical funding for schools when Governor Jerry Brown signed the Local Control Funding Formula (LCFF) into law on July 1, 2013. LCFF intends to enhance services for high-needs students through new flexibility, targeted student funding, and local accountability. Two years into LCFF implementation, research in 18 districts and more than half of the state's County Offices of Education (COEs) uncovers both reasons for optimism and a few concerns. The LCFF represents an ambitious effort in the nation's largest state to fundamentally change the way education decisions are made, engage local stakeholders in these important decisions, and target additional resources to traditionally underserved students. Now is the time for mid-course corrections that will ensure the state is able to realize the "Grand Vision" that the LCFF is intended to be. Data Collection Methods are presented in the appendix. ["Two Years of California's Local Control Funding Formula: Time to Reaffirm the Grand Vision" was written with the assistance of Jarah Blum, Ashley Campbell, Camille Esch, Laila Fahimuddin, Michelle Hall, Jennifer O'Day, Katherine Ramage, Laura Stokes, and Laura Tobben.].

California public school finance started a new era with the introduction of the Local Control Funding Formula for the 2013-14 fiscal year, and everything we thought we knew about our old revenue limit and program-based funding model started to fade into obsolescence. The unfolding story of this transition is newly told in the new 2019 edition of the new book, School Funding and Accountability in California--A Guide to School Finance.For more than 30 years, School Services of California, Inc., (SSC) has published the definitive guide to California school finance, Revenues and Revenue Limits, and in that tradition SSC now offers a totally revised text incorporating complete information about California's new, ground-breaking funding formula and its companion accountability plan. The 2019 edition of School Funding and Accountability in California--A Guide to School Finance will be an indispensable for anyone needing to understand the way public schools receive their resources, how state support for schools is determined and the linage of that funding with accountability for new and improved services.Since 1981, SSC's books on school finance have helped tens of thousands of people understand everything from the basics to the intricacies of California's unique school finance system. Detailed enough to be of use to the most experienced readers, yet clear enough for the newcomers to the field, the 2019 edition of School Funding and Accountability in California--A Guide to School Finance will be invaluable to everyone interested in California school finance.