First pass at finance reform

AB 18 to simplify categorical spending
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Assembly Education Committee Chairwoman Julia Brownley has fleshed out the bill that she hopes will be the vehicle to overhaul the state’s school finance system, beginning in 2015-16. AB 18 will get its first public hearing in her committee on Wednesday.

The bill’s goals are to simplify convoluted funding formulas and to target more money to poor students and English learners. The bill clearly would do the former, by consolidating base-level funding and funding for dozens of specified programs known as categoricals into four basic areas. The bill would not explicitly increase spending for needy kids, but it would make a “Targeted Equity Pupil Grant” one of the four new categories with the intent that lawmakers give it proportionally more money than districts receive now through existing categorical programs. Click AB 18 Fact Sheet 4-27-revised, which Brownley expects will go through multiple revisions.

There is near universal agreement that school funding should be comprehensible, not just for legislators, but for parents and teachers, too. There’s also a consensus that giving districts more control over spending decisions is a good idea. But that won’t make the challenge of creating a new system any easier; defenders of categorical programs – including two of  the more popular ones, class size reduction and adult education – will argue that  districts shouldn’t have the flexibility to spend those dollars on other priorities. And Brownley proposes to hold districts harmless, guaranteeing that their funding won’t be cut initially; that also means that existing quirks in base revenue allocations and categorical funding will persist. The intent of the bill is to equalize funding to eliminate inequities within the four categories, but the bill at this point is silent on how.

Among those supportive of the bill is Jon Sonstelie, an economics professor at UC Santa Barbara, who has written extensively on reforming California’s school funding. “Overall, I think the bill is a huge step in the right direction,” he wrote in an e-mail. “Obviously, this is a work in progress, but I do like what I see so far.” He did express disappointment that the bill does not include a factor for cost differences among regions, out of recognition that it costs teachers more to live in the Bay Area and Los Angeles.

The four  categories in AB 18 would be:

  • The current revenue limit (base funding per student) plus about two dozen categoricals, such as instructional materials and adult ed; this would be the largest, about two-thirds of spending. Districts would control how this money would be spent.
  • Quality Instruction Grant:  This money, by combining a dozen categorical programs, could be used to reduce class sizes or for teacher and administrator training, mentoring, teacher recruitment programs, evaluation programs such as Peer Assistance and Review, or help for beginning teachers. There would be far more flexibility than now.
  • Targeted Pupil Equity Grant: This would include Economic Impact Aid, the largest source of money for poor children, plus other categorical spending aimed at low-income students and English learners. It would make up between 15 and 20 percent of funds initially, according to staff members.
  • Spending areas not covered by the other three categories, including career and technical education, special education, and county offices of education.

Others advocating finance reform, including State Board President Michael Kirst, have proposed a weighted student formula, giving poor students and English learners anywhere from 20 to 30 percent more per student. A weighted system is implied in the Target Pupil Equity Grant, but AB 18 is insisting that districts also spend money on professional development. Brownley’s bill takes more of a block grant approach to spending.

Brownley would also require districts to start to track spending by school – a significant step toward making spending more transparent. This feature would also reveal inequities in spending between low-income schools, where many novice teachers end up, and wealthier schools with a more veteran teaching force.

3 Comments

  1. While this bill is a good first step in addressing issues of K-12  school finances, I also believe it does not address the more fundamental question of how big the pie should be before you start cutting it into four pieces. With every economic cycle in the past 20 years , K-12 school finances experiences a roller coaster of highs and lows.  Fundamentally, the trajectory needs to smoothed out so local school boards can focus on improving instructional practice rather than deciding how to comply with ever changing rules of fund allocation.

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  2. School finance systems are generally based on one of two diametrically opposed theories on how best to improve academic success.   The first is “command and control”; the second is “outcomes-based.” Although AB 18 makes laudable progress toward the latter, further amendments will be needed to make it truly outcomes-based.
                                                                  
    The “command and control” approach assumes that the state knows best how to improve academic success and this knowledge is reflected in the extensive array of programs, regulations, and funding formulas. The role of the state is to ensure that districts comply with all of these.
     
    The “outcomes-based” approach assumes that school districts – not the state — know best how to improve their students’ academic success. In this approach, the state has five roles:
     
    1.      Distribute funds equitably to ensure equal educational opportunity among all students as well as specific sub-groups.
     
    2.      Specify a limited number of goals or outcomes against which school districts’ success will be measured.
     
    3.      Define consequences (positive and negative) based on the degree to which districts succeed in achieving the goals or outcomes.
     
    4.      Measure districts’ success in achieving these goals or outcomes
                        
    5.      Impose consequences based on performance.
                             
    In its current form, AB 18 addresses only the first point – the allocation of funds among school districts. This funding mechanism, however, is a major improvement relative to the status quo. Consolidating base revenue limits and broad-based categorical programs into a single per-pupil, general-purpose amount is consistent with the first principle noted above, as is the Targeted Pupil Equity Grant.
     
    Unfortunately, with the Quality Instruction Grant, the Legislature slips back into its old ways. Although funding is provided on a per-ADA basis, it can only be spent on class-size reduction or programs relating to the support and development of teachers and other employees. Why do these programs merit their own grant? CSR is the most costly – and one of the least-effective — state-funded categorical programs ever. And what evidence is there to establish that teacher staff development is an extraordinarily successful means to increase student success? The only thing these programs have in common is that they are strongly supported by CTA and CFT.
     
    In sum, AB 18’s method of allocating funds is a major improvement over the status quo. It remains to be seen whether the Legislature will take the final steps to enact outcome-based accountability.
     
    Grade:  B-

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