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Early Childhood Education: School Funding Investigation In California

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School Funding Investigation

The state of California has the world’s sixth-largest economy. It like other states has their own formula to determine how to fund various initiatives such as education, social services, road construction, and etc. California legislators are responsible for funding and educating 6.2 million students in California across grades K-12 in a variety of programs. The state of California has been documented to have the largest number of children facing scarceness and has the largest percentage of ELL students across all states.

In California, the majority of students attend one of the 8,000 public schools in the state that span across 963 school districts. About 5 % of students attend one of the 800 charter schools, which are publicly funded, though are not held to the same state regulations as public schools. The state has three special schools that collectively have 900 blind and deaf students and the county office provides instruction for some of the special education and high-risk students.  In 2013-2014, the state voted to replace the old system school funding formula with a new one, called Local Control Funding Formula. The goal of the new formula would be “establishes base, supplemental, and concentration grants in place of the myriad of previously existing K–12 funding streams, including revenue limits, general purpose block grants, and most of the 50-plus state categorical programs that existed at the time” (California Department of Education, 2017).

In Illinois however, there are roughly 2 million students enrolled across 4,266 schools, within approximately 1,000 school districts. Chicago Public Schools is one of the many districts within Illinois, however, they are the fourth largest district in the country.

How Schools are Funded/ Percentages of Local, State and Federal Aid

California’s public schools are funded through three different sources. The majority of their funding, specifically 60% is from the state, 25 % is from local sources and local property taxes, the federal government contributes 9% of the overall budget, and the reminding 6% is composed of income comes from the lottery and local miscellaneous funds.  Public school funding is the biggest portion of the state budget and over 40 percent is allocated towards K-12 education. In 2014-2015, this equated to over 45 billion dollars, it is estimated that about 76.6 billion dollars are spent in total to fund all of the California public schools. The amount that is allocated from each of these sources fluctuates amongst the school districts. In California, about 70% of the money is unhindered general-purpose funding. The other 30 percent is for special programs that are required by the state and federal regulations such as National School and Lunch programs, special education and etc.

The annual state budget is governed by the legislature and governor. Typically, the Governor releases a budget in January, which it is reviewed by the Legislature and they are allowed to make changes. After revisions are made, the Governor will propose a budget in May and in June, the Legislature will vote on the budget. Once it is passed, the Governor is able to make amendments and sign the final document. It is this state budget that governs how the education funds should be spent. One provision that was put in place by the voters in the 1980s, called Proposition 98, set minimum funding levels for K-12 schools and community colleges (California Department of Education, 2017).

In Illinois on the other hand, 66.8 % of the funding is generated through local sources, in comparison to only 25% in California, and respectively 24.9 % is provided by the state, while in California the state is responsible for 60% and a mere 8.3% is provided by the federal government.

In August 2017, Illinois revamped their funding formula and created a new “evidence-based model”. The formula was created with the intention of giving more state funding to low-income school districts. Illinois school districts rely on their local property taxes to fund a vast majority of their districts, which is in sharp contrast to California public schools. In fact, Illinois is one of the worst states in regards to how much of the overall state funding they contribute towards education.

The new formula is intended to help support districts who don’t have a strong income stream from property taxes. Though the governor originally vetoed this proposal to alter funding, it was ultimately pushed through after the bill was amended to include a 75-million scholarship, that would allow for people and companies to earn tax credit for donating to this fund that would go towards families who send their children to private schools (Korecki, Shafer, Lewis, Paul, & Epstein, 2017).

Challenges to the State’s Funding Formula

It is considered by some that with the current funding formula that each district has little opportunity to shape how much revenue they are receiving. Also, California, unlike other states, has a slight opportunity to generate money from their local communities. Furthermore, though the funding formula is intended to differentiate how much money is given per a pupil, each district has different additional sources of revenue that can boost one district’s spending (Camp, 2018).

In Illinois, teachers and unions felt that by including the private scholarship as part of the formula, they were encouraging families to send their children to private schools and were taking “potential tax dollars out of public classrooms” (Korecki, et al, 2017). Another challenge with the Local Control Funding Formula was that early childhood education was not in the forefront and it is not on the top of the districts’ lists. Records have shown that a few districts have added either new early childhood education programs or money. Under the new formula, each district is able to decide how to distribute the resources they are given and whether they feel the need to create or expand pre-school programs. “ECE is one of California’s few remaining categorical programs. The state allocates targeted dollars to fund pre-school for low-income children who qualify, and LCFF regulations neither preclude nor require districts to expend added dollars on ECE” (Sri International, 2015).  There is also, some discussion of whether early childhood education programs are truly part of the K-12 which adds to the complexity (Sri International, 2015).

The flexibility with the way the new formula is written, that was once a positive, also provides some challenges, as school districts are able to interpret the laws to meet their needs, rather than necessarily spending it on at-risk youth, as it was prescribed. Moreover, “an Education Trust-West study of 40 district spending plans found that many districts aren’t accounting for all of the money they’ve been allocated or annually improving services for vulnerable youth, as required. Several districts lump expenditures together or spend the money they didn’t use for high-needs students during a school year on other services” (Nittle, 2016).

Illinois system is also not perfect, though it was recently revamped. One of the biggest challenges to the new formula is that it has a long list of goals and is set to be very expensive ranging from an additional 3.5 billion to 7.5 billion and it is predicted that this amount would continue to increase. There is much discussion on whether the public or government will be willing to put in the extra money to make the formula work. There is a big reliance on new state money, however, it is yet to be determined how that money will be generated and at how long it will take to help districts reach the adequacy point (Rado, 2017).

Types of Taxes

Due to conditions in California law, the state distributes the general amount from the state, as well as the money from local property taxes. It is estimated that about 25% of the total amount that funds California’s public schools is from property taxes. There are approximately only 5% of the total funds that are generated and controlled by the local school districts.  This money is generated through “interest on income, leases on unused properties, parcel tax proceeds, donations, and a host of other miscellaneous” (Camp, 2018).

In Illinois, school districts heavily rely on their areas property taxes. In fact, 62.8 % of total revenue comes from local property taxes, amount to $28.7 billion in property taxes were levied statewide in 2015. This is a biggest difference from California’s system. Illinois gives general state aid which is approximately 16.3 of the total budget and there is an additionally state funding of 8.6 %. Federal money contributes to approximately 8. 6 percent of the budget and school are able to receive 4.6 % through local funding (The Civic Federation).

State Aid Formula

The Local Control Funding Formula (LCFF) was legislated in 2013–14, and it replaced the previous kindergarten through a twelfth-grade financial system, that was previously in place for roughly 40 years. For school districts and charter schools, the LCFF establishes a base, supplemental, and concentration grants in place of the myriad of previously existing K–12 funding streams, including revenue limits, general purpose block grants, and most of the 50-plus state categorical programs that existed at the time. For county offices of education (COEs), the LCFF establishes separate funding streams for oversight activities and instructional programs. This new formula has been estimated to cost California approximately 18 billion dollars. Furthermore, it is predicted that it would take eight years to implement the new formula, as well as two years for the implementation of the new system for the County Offices of Education.

The funding model consists of a base for each school that is based on the average daily attendance, based on the grade levels. With the model, there is a modification of 10.4% on the base grant for students in grades K-3. This was created with the intention of having school district move towards a maximum class of 24 students, however, this applies solely to public schools. For high school students, there is an adjustment of 2.6 and there are no conditions attached. Furthermore, a “supplemental grant equal to 20 percent of the adjusted base grant multiplied by ADA and the unduplicated percentage of targeted disadvantaged pupils. Targeted pupils are those classified as English learners (EL), meet income requirements to receive a free or reduced-price meal (FRPM), foster youth, or any combination of these factors (unduplicated count)” and “a concentration grant equal to 50 percent of the adjusted base grant multiplied by ADA and the percentage of targeted pupils exceeding 55 percent of a local educational agency’s (LEA) enrollment” (California Department of Education, 2017).  The formulae also indicated an “economic recovery target” that was added to affirm that districts were at the minimum their pre-recession budgets.  Additionally, Home-to-School Transportation and Targeted Instructional Improvement Block Grant were added (California Department of Education, 2017).

This funding model at the time was unique since it gave districts the control to decide which programs and services they wanted to spend the state money on. When it was initially created the goal was to create equity amongst districts and give more money to districts “based on their numbers of high-needs students—English learners, low-income children, and foster youth”(Nittle, 2016).

In the first year of the new formula (2013-2014), it was estimated that roughly $8, 694 per a student, which is less than the national average of $12,156. The economy has since improved and so has the state’s spending on education. In 2014-2015 per student spending increased to $11,145, what was only $564 dollars less than the national average. This was not only due to an improvement in the economy, but the passage of Proposition 30, which boosted sales and incomes taxes (Fensterwald, 2017).

In Illinois, the goal of the new evidence-based model was to create to understand the student’s needs, take into considering the different sources of revenue coming in, closing funding gaps and provide an adequate education system for all students. The formula is connected to an evidence-based model and each district is considered unique and is treated in such a way. The model is intended that all new dollars would go to the districts with the most need and furthest away from reaching their adequacy target (Rado, 2017).

Equity/Equality Issues

There have been many studies that have examined California’s finance system. The studies discovered that there a lot of inequities and that there is a large disparity. Furthermore, it has been stated that the “system is governed by such a complex array of laws and formulas that only a few experts understand how it works” (Welston, 2011). Though the funding system was changed in 2014, an article written by Emma Brown showcased that in California, the student’s in the state’s poorest school districts get 3.5% more funding than students in the state’s most affluent district.   Though the percentage is low, it is actually higher than many other states. Specifically, in Illinois students in the poorer district school receive 16.7 percent less, then the student’s in the state’s most affluent districts. In another article, written by John Fensterwald in 2017, highlighted that it is difficult to compare states per- pupil spending since there have been varied ways that spending has been calculated and the data isn’t always updated.

In Illinois, the goal of their formula is to create an adequate education system for all students, rather than an equitable one. There have also been a lot of discussions that low-income districts need much more than what the adequacy model would provide them.  Though the intention of both California’s and Illinois’s new funding formula was to level the playing field amongst districts it seems that the poorest district is still losing out. Furthermore, at-risk students are at greater risk and though the formulas take that into account there is still a need for additional resources to ensure students’ success.


The public education formulas are different for the State of California and Illinois, but the goal is to provide the same standard of education to all students no matter of demographics. In California, the majority of the funding is provided by the State, while in Illinois the local taxpayers are responsible. The changes to the formula have added additional expenses and one that is going to require additional capital. There is also no way to determine funding per pupil since the formulas are not standardized and the gap between low-income students still remains. The formulas are very complicated and few truly understand the funding sources, so it is still up to interpretation and the flexibly to decide how to allocate resources has not yielded the desired impact. Even though the states have different funding formulas and sources, they seem to still be faced with similar problems and working on how to address them.

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