California’s Local Control Funding Formula Fails Moderate-Need Districts

The Public Policy Institute of California (PPIC) has just issued a report on how (or if) the Local Control Funding Formula (LCFF) has changed school funding in California (“School Resources and the Local Control Funding Formula”).  The report asks, “Is increased spending reaching high-need students?  The answer is:  somewhat.

The report finds that spending per student increased by an average of $500 in high-need districts as compared to low-need districts, but that, on average, funding for the typical high-need student increased by only by $350 relative to non-high-need students.  (A high-need district is defined as one with more than 55% high-need—or “unduplicated count”—students.  A low-need district has fewer than 30% high need students.  And a moderate need district has 30 to 55% high-need students.  I know, 30% and 55% fall into two different categories, but this is probably an inconsequential oversight.)

The disparity between the $500 increase for high-need districts and the $350 increase for high-need students is explained by two factors. One, the LCFF provides less additional funding for high-need students in low- and moderate-need districts (due to the concentration factor that is provided only to high-need districts); and two, districts may not necessarily spend all of their incremental LCFF dollars on the students who generate them.

This second explanation is troubling, because, if true, it would mean that districts are not complying with the spirit of the LCFF. It is also troubling, because school-level spending data are not available, so we don’t really know.  As the author acknowledges, “Because it is drawn from district-level spending data, the average difference in spending between high- and low-need schools, and high- and low-need students is based on the spending levels in the district in which that school or student is located [italics in the original].”  Furthermore, the analysis “is predicated on the assumption that districts spend a roughly equal amount on each student.” Accordingly, I believe the conclusion about per-student spending needs to be tempered with a great deal of caution.  

My own takeaway from this report is that the impact of the LCFF is a mixed bag.  The primary purpose of the new formula is to improve funding equity by allocating more dollars to districts with high-need students.  However, the report shows that high-need districts were already receiving a higher level of funding than other districts under the old revenue limit system—a trend that may have continued, or even increased, depending on funding for categorical programs like Economic Impact Aid.

Specifically, the report shows that, in 2003 high-need districts received 9% more revenue than low-need districts and 11% more than moderate-need districts, while in 2017 they received 12% more than low-need districts and 16% more than moderate-need districts.  So, high-need districts gained relative to both of the other types of districts.

Meanwhile, as compared to low-need districts, moderate-need districts received 2% less in 2003 and nearly 4% less in 2017. In other words, high-need districts gained relative to low- and moderate-need districts, while moderate-need districts lost relative to high-need and low-need districts.  In fact, between 2003 and 2107, funding for moderate-need districts (12%) grew at a lower rate than funding for, both, high-need districts (17%) and low-need districts (14%). This finding is counter-intuitive, given that low-need districts receive only the base grant and moderate-need districts receive the base grant plus supplemental grants. This finding may have something to do with the fact that the LCFF was not fully funded in 2017 and the inclusion in the formula of the economic recovery target, which ensures that nearly all districts will have the funding restored to pre-recession levels after accounting for inflation. Still, it’s not what was expected.

(Note:  These calculations are done based on a line graph in the report.  Neither the report nor the technical appendix provides data points for the graph, so the percentages may not be exact.  However, the direction of the changes is accurate.)

For moderate-need districts, the impact of the LCFF has been the opposite of its intent, at least so far.  This is a serious issue that must be addressed. This concern is not mentioned in the PPIC report, which instead focuses on the school- and student-level distribution of LCFF dollars.  But fixing this problem would be a big step toward achieving the improved school- and student-level equity that the PPIC favors.

One solution would be to reduce or even eliminate funding for the concentration factor and use it to increase funding for the supplemental grants.  I know this would be politically difficult (to put it mildly), but so was the shift to the LCFF.  I remember having reams of computer printouts on my desk comparing the district-by-district impact of different versions of the LCFF with each other and the revenue limit system.  Any potential changes to the current LCFF formula will necessarily involve a similar exercise in balancing good policy with political realities.

Leave a Reply