As Gov. Jerry Brown settles into office, he does so against the backdrop of severe budgetary pressures that require California to make do with less. When it comes to education, that realization is usually met with great fear and uncertainty. How can we deny our children funding if it will negatively impact who they become as adults?

We do not have to settle for this tradeoff. It is possible to use the fewer resources available to provide the great education our children deserve.

Just as California’s state higher education system is embracing online learning to cope with the budget shortfall and serve more students with high-quality programs, so too must California’s K-12 education system harness the potential of digital learning to deliver better results at less cost.

This is not a pipe dream. Studies have shown that, on average, online learning already delivers results that are as good as if not better than those of the traditional system. And studies have shown that it can do so at a lower cost.

Why hasn’t it done so in California? Despite the natural advantages California enjoys in technology, the state lags in online learning because of policies that prevent students from accessing the best learning experience regardless of where they live or their socioeconomic status.

Some are geography-based policy barriers inappropriate for a medium that knows no geographic bounds. For example, California students currently cannot participate in online learning unless it is offered through their district or a contiguous district. This creates a shortage of opportunities for students, as well as duplicative programs and wasteful spending.

A series of other barriers stem from categorizing online learning as a non-classroom-based — or independent study — program, which leaves online learning programs confronting a series of antiquated regulations and bureaucracy around accounting for student participation, barring the use of electronic data capture and so forth. This results in more wasted funds. It also has left blended learning — online learning in a school setting, which will very likely be the future of education for most students across the nation — with no natural home under California’s current regulations.

California must also address how online learning is funded. State Treasurer Bill Lockyer has expressed frustration with proposals to increase funding for online learning. He is right in this respect: Online learning must not absorb extra resources that California does not possess, so there should not be a new and separate revenue stream for digital learning. If online learning programs do not both save California money and get better results, they are not worth the expense.

The state, however, is missing an opportunity to leverage online learning to do both of these things. As Brown tackles the state’s education and fiscal woes, he should seize the opportunity to create a funding system that allows students to take the best courses for their needs and lets the state capture real savings.

California should adopt a system whereby fractional funding follows the student to the course level, such that a student could take the best course for his or her needs, be it face-to-face or online. And the state shouldn’t stop there.

Results are far more important than the number of student enrollments, so the fractional funding should be performance-based. Receiving a portion of the funds should be contingent upon individual student mastery, similar in some respects to how Florida funds the Florida Virtual School, with bonuses for achieving the biggest individual learning gains and for students achieving at an advanced level.

In exchange for this move to competency-based learning, online learning and blended-learning providers must be freed from policies that dictate inputs such as those around seat time and the traditional academic calendar, student-teacher ratios, staffing arrangements, and antiquated certification rules.

With these reforms, California and its students should capture real savings. The state should give programs that achieve student mastery at a lower cost than what the funding provides the following option: to invest some of the difference in education savings accounts for the students. Students and their families could in turn spend the funds on education-related goods and services from college tuition to tutoring, which would give them an incentive to choose low-cost quality providers that over time would save the state money. This is not a radical idea for California, as the city of San Francisco recently created college accounts for kindergartners.

California’s current condition demands boldness. Digital learning offers the opportunity for better results at lower cost, but only if the right policies are in place. Brown and California must make this opportunity a reality. Its students deserve nothing less.

Michael B. Horn is the executive director of education for Innosight Institute, a California-based think tank, and the coauthor of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns.