
As leaders from government, business, and philanthropy gathered last week to discuss California’s future, we were reminded once again that these are exciting times in our state. The discussions were part of PPIC’s full-day conference, California—State of Change, and they highlighted both the advantages our state enjoys and the major challenges ahead.
Speakers noted that the recovering state economy, newly elected state leaders, a richly diverse population, and a history of innovation provide much to build on—as well as a lot of building to do. For example, California has recently enacted sweeping changes in corrections and education finance. But, as the governor’s chief aide, Nancy McFadden, emphasized in her keynote address, most of the hard work of implementing these policies lies ahead.
Among other challenges noted in the subsequent panel discussions: a state tax structure that leads to extreme revenue volatility, a need for public employee pension reform, an uneven economic recovery that has left many Californians behind, government institutions that do not provide the tools for managing in the 21st century, and an electorate that is disengaged from the political process.
But, as other speakers reminded us, Californians are living in a time of reform. A change in term limits may lead to more stability in the legislature and result in more long-term policymaking. Recent initiatives to shift many school decisions from the state to the district level and to move state corrections responsibilities to the counties could make local governments labs for innovation—but only if we have the will and the data to evaluate the results.
Our final panel demonstrated that California still knows how to dream big. The discussion focused on three projects: a historic effort to combat climate change, the construction of high-speed rail, and the advancement of stem cell research. All have been controversial, but they show that California voters and elected officials embrace innovation, as they have throughout the state’s history.
We invite you to watch the videos of each session. We hope you find the conversations as thought-provoking as we did.

Despite these gains, recent research suggests that exit examinations do little to boost student achievement but create costs in the form of lower graduation rates. In total, 95.5 percent of 12th graders in California passed both the English and math sections of the test, meaning that 4.5 percent of students did not graduate on time at least in part because they did not pass the test. This has a bigger impact on black and Latino students, whose 12th grade pass rates remain about 5 percent below those of white and Asian students. Moreover, because these rates do not include students who dropped out of school, they may understate the impact of the CAHSEE requirement on lower-performing students.
Most of the new funding in 2014–15 goes to pay for the new Local Control Funding Formula. As in the January budget proposal, the budget includes $4.5 billion, or about $750 per student, for the new funding formula. The three-part formula distributes funding using a base grant (that differs by grade span), a supplemental grant for disadvantaged students (low-income, English Learner, and foster care students), and a concentration grant for districts that serve above-average proportions of disadvantaged students.

Many districts have already held meetings and forums to seek parent input, but according to our survey, 45 percent of public school parents say they have not received information from their child’s school or school district about how to become involved (52% say they have received information). This is despite nearly all saying they are at least somewhat interested in becoming involved (53% very interested, 38% somewhat interested).
An overwhelming majority of parents would like their youngest child to earn a college degree or graduate degree, including at least seven in 10 Latinos (70%), immigrants (77%), and parents earning less than $80,000 annually (75% under $40,000, 82% $40,000 to under $80,000). These parent groups are also among the most likely to believe the Local Control Funding Formula will improve the academic achievement of English Learners and lower-income students. Engaging these key groups in designing ways to meet the central goal of the Local Control Funding Formula (namely, to close the achievement gap between disadvantaged students and others) is critical—especially given the educational hopes they express for their children.