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.

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.

California's system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs; that is, 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 those programs, collectively known as the "Tier 3" programs, as part of a budget deal that also reduced the funding for those programs. The author gathers evidence about how districts have responded to this fiscal freedom, particularly how resource allocations are made at the district level and what specific changes districts have made in their allocations. Although concerns have been raised that those districts with relatively more Tier 3 funding have been disproportionately affected by the state's budget crisis, the data show that districts with more Tier 3 funding lost a similar share of their budget as other districts (although that represents larger per-pupil dollar amounts). Furthermore, so far and on average, districts do not appear to be making large-scale changes in how they are spending their money. Individual chapters contain footnotes. (Contains 1 figure and 24 tables.).

"California's system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs, that is, programs whose funding is contingent upon districts using the money in a particular way or for a particular purpose. In 2008-09, the strings were taken off 40 of those programs, collectively known as the "Tier 3" programs, as part of a budget deal that also reduced the funding for those programs. The authors conducted a survey of 350 California school district chief financial officers (CFOs) between April and August of 2011 to see how district leaders responded to this sudden, limited fiscal flexibility and the conditions that shaped their decisions."--Publisher's website.