Education Funding

Rules Detailed on New Calif. K-12 Funding Formula

By Andrew Ujifusa — January 14, 2014 6 min read
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Includes updates and/or revisions.

New rules governing California’s dramatic overhaul of K-12 finance were approved the state board of education Jan. 16 after officials weighed questions about the appropriate balance of power between Sacramento and local agencies on how the money is spent, as well as transparency and accountability.

The regulations govern the Local Control Funding Formula, which was approved by California lawmakers and signed by Gov. Jerry Brown last year, and will require schools to detail how their increased or improved services are proportionate to their increased funds from the state, for example.

A template for new Local Control and Accountability Plans, which local education agencies will use in conjunction with the new formula and which put a significant emphasis on community engagement in the budget process, was also approved by the board.

“This is not something that’s just stand-alone regulations. I think it’s a much more fundamental change than just a state plan,” said Michael W. Kirst, the chairman of the California school board, before the Jan. 16 vote.

Lingering Questions

The new funding formula eliminates many of the state’s traditional categorical funding programs, while providing additional state aid for districts with certain percentages of students who are English-language learners, from low-income families, or living in foster care. The funding scheme, which the state will gradually phase in until 2020, also gradually increases overall state funding for K-12.

When he signed the legislation, Gov. Brown, a Democrat, said in a statement that the new funding system would direct state money to “where the need and the challenge is greatest.” But the details about how schools can or must use the money remained unclear.

Making the Most of New Cash

Regulations before the California State Board of Education are aimed at governing the state’s Local Control Funding Formula, a significant change to K-12 finance that was approved last year and focuses on “needy” students. The board also sets rules on the template that will govern how local budgets must account for certain state policy goals, known as the Local Control and Accountability Plan, or LCAP. Among the proposals up for approval as early as this week:

• Districts and other local education agencies, in order to meet the new regulations, could “spend more” (demonstrate increased expenditures on needy students) or “provide more” (reduce class sizes or offer expanded-learning-time programs).

• Local education agencies will have to calculate and compare the services that were provided to needy students to those provided to all their enrolled students.

• In their Local Control and Accountability Plans, school districts would have to show how services they are providing meet with up to 10 state policy priorities, including parental involvement and student achievement.

SOURCE: California State Board of Education

Late last year, the state board received preliminary regulations governing the system that were developed in conjunction with WestEd, a San Francisco-based education research and consulting firm. Public testimony before the board in November about this initial effort, and the subsequent revised rules, were published Jan. 3.

“There’s been a significant shift in what’s there, in response to really good comments and public interest,” said Jannelle Kubinec, the director of the comprehensive school assistance program at WestEd.

Under the regulations, local educational agencies will be required to show that their higher funding under the formula is leading to proportionally higher services for needy students, such as low-income children and English-learners.

Under the spending and accountability plan template, districts also will have to link their spending priorities and annual goals to eight state priorities (county education offices will have 10 such priorities). These include parental involvement, appropriate assignment of teachers, and student achievement. Those plans must be passed by local agencies by July 1 and are effective for three years, but include annual updates.

Obligations Vary

Different types of districts have different obligations under the regulations.

Local K-12 agencies whose enrollments consist of at least 55 percent of needy students will have to identify in their plans exactly how additional services are meeting district goals in the eight or 10 “priority” areas. However, the local agencies will be able to expend those funds broadly, such as on a district- or county-wide basis.

At the individual school level, a school that has over 40 percent of its students falling into those demographic categories would be able to expend those targeted funds on a schoolwide basis.

Both sets of agencies will have to identify those services in their spending plans and how they are meeting state goals for needy students through these additional efforts.

Districts below the 55 percent threshold of needy students, and schools below the 40 percent threshold, will have an additional requirement for spending additional dollars system-wide and school-wide. They will have to say why their efforts as laid out in their plans are “the most effective use of the funds” for needy students.

The combination of thresholds and requirements under the plans combine flexibility and accountability in a smart way, said Samantha Tran, the senior director of education policy at Children Now, an Oakland, Calif.-based advocacy group. But critical questions remain regarding just how much districts will be obligated to target toward needy students with the money they say is being directed to them, she said.

“We’re going to be modifying this a lot as we learn more from the field,” Ms. Tran said.

One controversial portion of the previous draft regulations from two months ago—which would have allowed districts to demonstrate “increased or improved services” required under the state funding formula by showing student achievement growth over two years using state or local data—has been removed. Opponents, including the American Civil Liberties Union’s California affiliates and the National Council of La Raza, a Hispanic civil rights group, told Mr. Kirst in a November letter that the option “simply has no connection to any proportionate increase in services for high-need students.”

A ‘Living Document’

Despite some changes clarifying and adding reporting requirements for districts, the California School Boards Association has continued its support for the regulations, said Dennis Meyers, the assistant executive director of governmental relations for the group.

“The differences between November and January really were necessary changes to ensure accountability, to ensure transparency, to define how year-to-year growth in funding should be directed,” Mr. Meyers said.

Both he and Mr. Kirst cited the importance of the local spending and accountability plans in the new K-12 finance environment. Mr. Kirst went so far as to call the template “unprecedented.”

Local agencies developing their plans must rely on community input from several sources, with the template providing examples ranging from county child welfare agencies to local bargaining units and English-learner parents. (Meeting the state priority of “parental involvement” involves separate requirements.)

Detailed Information

The template also states that local agencies must detail what information was made available to these stakeholders about the state priorities and how local schools planned to meet them, as well as any changes that took place as a result of public input.

The plans will also have to include “needs analyses” intended to justify why goals and progress indicators are being used, but will allow goals for schools and student subgroups to be combined.

The plans will be a marked change from the days of relying heavily on checking off dozens of boxes required under state funding categories, Mr. Meyers said: “You’re always looking at it. It’s a living document.”

On the broad question of whether the regulations strike the appropriate balance between state oversight and local control, however, Mr. Kirst demurred from offering a clear opinion until he attends the Jan. 16 meeting: “We’ll have to hear the testimony.”

The state board is required to act again at some point this year to adopt permanent regulations for the funding formula and the local plans.

A version of this article appeared in the January 15, 2014 edition of Education Week as Calif. Rolls Toward Implementation on Overhauled K-12 Funding Formula

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