Reformers Contest Call for More School Spending in California

Published December 10, 2010

California’s school finance formula needs a long-term, top-to-bottom overhaul, concludes a report by the nonpartisan Public Policy Institute of California (PPIC). The report identifies several strategic changes California lawmakers could enact to create a more equitable and adequate funding formula in a state beset with multibillion-dollar budget deficits.

While reformers lauded the PPIC report’s diagnosis and recommendations for balancing state and local authority, they disagreed with the organization’s prescription of more spending.

The report builds on an earlier PPIC study which recommended using expected per-pupil funding increases to strengthen the three core elements of California’s school finance system: The base program (for all students); special education; and Economic Impact Aid, a program that targets English learners and socio-economically disadvantaged students.

School Spending Increased
Margaret Weston, the PPIC researcher who wrote the report, said California’s 1,000 districts are allocated funds through an extremely complicated series of formulas dictated by the state constitution and a 4,000-page education code.

“We have very few formulas based on a [realistic] cost that someone has estimated [scientifically]. So most of the formulas are derived from whatever a district was spending in a particular area prior to Prop. 13.”

Prop. 13, which California voters passed in 1978, restricted local governments’ ability to raise property taxes, which fund public schools. Unlike many states, California allocates local school funding through the state legislature.

Steve Frates, director of research at the Pepperdine University School of Public Policy’s Davenport Institute, says Prop. 13 is often targeted by interest groups “for a constellation of reasons,” but it is a “sideshow issue” when it comes to school spending.

“The data clearly show growth in spending,” Frates said. Frates, along with Michael A. Shires and Ian S. Rudge, published a 231-page analysis in December showing California’s K-12 spending increased substantially between 2003-04 and 2008-09.

“One should be circumspect about generalizations,” Frates said, “but even with variations among school districts, administrative expenditures have increased much more rapidly than teacher and classroom expenditures.”

‘Unlikely to Help Achievement’
Eric Hanushek, a senior fellow at the Hoover Institution at Stanford University, says PPIC’s report left him with “mixed emotions.” 

“As a set of suggestions on rationalizing the finance system, it is not too bad. The system has historical idiosyncrasies that could be fixed,” Hanushek explains. “On the other hand, one always must ask, ‘Why are we doing this?’ 

“The California education system as a whole is broken. There is no reason to believe that fixing the finance system as suggested would do anything for student achievement,” he continued. “Therefore, it may be fairer for taxpayers or more aesthetically pleasing to researchers, but it is unlikely to do anything to help student achievement.”

Prescription ‘Too Conventional’
Lance Izumi, director of Education Studies at the Pacific Research Institute in Sacramento, agrees PPIC’s prescriptions are inadequate.

“Its recommendations for reform are too conventional and fail to consider out-of-the-box alternatives,” Izumi said.

“The PPIC paper supports the recommendation of Gov. Schwarzenegger’s Committee on Education Excellence that the funding formula be made more equitable by distributing funds based on grade levels served by a district rather than by district type and size,” he explains. “PPIC also wants future increases in funding to be allocated in ways to make revenue-limit distribution more equal.”?

All About Money
The problem with such “smoothing out” suggestions, Izumi says, is their strict focus on the school district as recipient of government funds.

“Some school districts may end up getting more taxpayer dollars under these recommendations, but there is no guarantee that any extra dollars will actually improve the performance of those districts in raising student achievement,” Izumi explained.

Another problem with the PPIC report, Izumi says, is the emphasis on increasing revenue-limit funds, which is the amount of general purpose funding a school district receives per student.

“Because revenue-limit funds have no strings attached to them, increases in revenue-limit funding will often end up simply being placed on the collective bargaining table in order to raise teacher salaries, which are almost never tied to increasing student achievement,” he said. “PPIC’s ‘smoothing-out’ recommendations fail to address this major issue.”

Swedish Model Offered

Izumi suggests California and other states look to the example of Sweden as an alternative funding model.

“Sweden attaches per-pupil funding to each individual child, who can then take that funding to any public or private school of his or her choosing,” he explained. “The amount of this portable per-pupil funding is the same for every child, regardless of whether the child chooses a public or private school.”

“As opposed to the government-centric, non-achievement-oriented, revenue-limit formula, the dynamic Swedish formula fosters competition between public and private schools that, according to British and Swedish researchers, has increased student achievement in both sectors,” Izumi added.

Although the PPIC report says the revenue-limit formula has been helpful for small rural schools, the Swedish formula allows for different types of schools to start in rural areas, increasing the choices for rural parents and their children, Izumi notes.

Sarah McIntosh ([email protected]) is a constitutional scholar writing from Lawrence, Kansas.

Internet Info:
Margaret Weston: “At Issue: School Finance Reform”  (Public Policy Institute of California, Nov. 2010):

Steven B. Frates, Michael A. Shires, and Ian S. Rudge, “An Analysis of K-12 Education Expenditures in California: FY 2003-04 to FY 2008-09” (Pepperdine University School of Public Policy/Davenport Institute, Dec. 2010):