Abe Hajela from Capitol Advisors traced the history of of K-12 education funding from local property taxes to Serrano v. Priest to Prop 13 to Revenue Limits to Prop 98 to the current Local Control Funding Formula (LCFF). In the process, he demonstrated how Sacramento went from having little impact on K-12 education funding to being the major source of funding and concluded with that "compared to their peers, California students are at a competitive disadvantage.”
Overview of Funding for K-12 Education in California
Abe Hajela, Capitol Advisors, provided both a historical overview of K-12 education funding in California as well as an update on current funding. He started by reviewing funding prior to the Serrano-Priest case when funding was based on local property taxes and Sacramento had little control over K-12 funding.
In 1971 in Serrano v. Priest, the court ruled that under the California Constitution, public education is a “fundamental interest” that cannot be conditioned on wealth and that under such a finance system denies students equal educational opportunities and is therefore unconstitutional.
In 1978, the voters passed Proposition 13, which limited the property taxes and reduced funding for K-12 education by 60%. As a result of Serrano and Prop 13, the Legislature created a new funding formula, Revenue Limit, based multiple factors (e.g., type of district, historical spending, enrollment).
The decline in funding during the 1980’s led to Proposition 98 which guaranteed education 40% of the state budget and had a goal for raising funding into the top 10% in the country. That goal has never been reached as California continues to rank 40th in the country. Funding under Prop 98 is very dependent on the economy. In January 2020 in the Governor’s Proposed Budget, the funding was $84 billion, but due to the impact of the pandemic, the final budget is $71billion, $13 billion less. Additionally, the funds will be deferred forcing school district to borrow money to operate.
Under Governor Brown, the State implemented the Local Control Funding Formula (LCFF) that uses a weighted student formula approach, replacing the Revenue Limit with equal base funding per student plus adjustments for poverty, English Language Learners, and foster youth.
Abe summarize the main sources of funding for K-12 school districts as
- Proposition 98 = State General Fund and local property tax support
- State Debt Service & State Operations
- Federal Funds (about 10% of total)
- Lottery (about 1%)
- Other local funding:
- Parcel Taxes
- Bonds
- Developer Fees
- Donations
In conclusion, Abe asked “How well does this work?” with the following facts:
- California is the 5th largest economy in the world, but spends only 3% of taxable income on its schools, which ranks 40th among states in the portion of resources devoted to education (Ed Week 2019)
- Personal income percentage spent on education is now 3.2%, down from about 4% in the 1960s
- Returning to 4% would increase school spending by more than $16 billion
- Reaching the national average (3.7%) would add $11 billion
- Per-pupil spending is low –California ranks 38th in the nation when adjusted for cost (Ed Week 2019)
- Student-teacher ratio is nearly the worst (49th) in the nation
Abe concluded that “compared to their peers, California students are at a competitive disadvantage.”