Local Control Funding Formula – Page 2 – Public Policy Institute of California

Video: Californians’ Views of K–12 Education

Despite increases in state spending on K–12 education, most Californians say state funding for their local public schools is inadequate. And most support an extension of the Proposition 30 tax increase on higher incomes, as well as state and local school bonds. These are among the key findings in PPIC’s 12th annual survey on Californians and education that were presented in Sacramento last week by Lunna Lopes, survey research associate.

Lopes said that concerns about the quality of education are at a record-low 40 percent, and less than a third of Californians say that teacher quality is a big problem. Concern about a teacher shortage is higher, with a majority calling it a big problem.

Among the other findings discussed:

There are partisan divisions on Common Core, but public school parents are confident that it will help students be college ready and develop critical thinking skills.
Few Californians have heard about Local Control Funding Formula, but when presented with a short description of the policy, most are supportive.
Californians see preschool as important for K–12 success and most prefer to spend some of the state budget surplus on early childhood education programs.

Good Timing for New Federal Education Law

Since it passed in 2001, many states—including California—have chafed under the requirements that No Child Left Behind (NCLB) attached to billions of dollars in federal K–12 education aid. Congress voted to replace the law this week, reauthorizing those aid programs and loosening those strings—a lot. The president signed the bill yesterday.

This new flexibility comes at a good time for California. The state is in the middle of implementing a new K–12 accountability system and the new federal law, the Every Student Succeeds Act, or ESSA, gives California a chance to prove that its approach to improving schools can work—without running the risk of losing federal money.

NCLB and subsequent Obama administration programs dramatically increased the federal role in K–12 education, particularly when it came to accountability. NCLB required most students to take tests in math and reading every year. The results of those tests were used to determine whether or not a school was successful. Failing schools were required to take certain actions. If a state didn’t follow the rules or couldn’t make progress in improving its failing schools, it risked losing federal funding.

While NCLB provided a one-size-fits-all approach to accountability, the new law lets each state devise its own system, as long as it meets some core criteria:

It took eight years of legislative wrangling to produce ESSA. During that time, the message from state education chiefs was consistent: We believe in accountability, but give us the flexibility to do it our own way. They now have that flexibility, and with it, the responsibility to demonstrate they can hold schools accountable.

Luckily, the new federal law appears to mesh well with California’s plans for its accountability program. The State Board of Education is currently working to align its program with the eight state priorities defined in the Local Control Funding Formula (LCFF), which determines how state money is allocated to schools. The board has suggested that it will discontinue the Academic Performance Index—which ranked schools on a scale from 200 to 1,000, based on student scores on state proficiency tests—and replace it with a “dashboard” of indicators that will provide information on the LCFF priorities.

It would be a welcome development if California could merge its state and federal accountability programs. In our 2014 report, Designing California’s Next School Accountability Program, we found that separate state and federal measures were confusing and sent mixed messages to educators and the public. An approach to accountability that uses multiple measures and incorporates LCFF performance data could fix that problem and generate more accurate and useful accountability information. But there are critical steps for the state to take, including:

Ensuring data are accurate. The law calls for valid and reliable indicators of student or school performance, so that data can be compared across schools and districts. Currently, we do not have definitions of several of the LCFF indicators, including student suspension and graduation rates, that allow good comparisons.
Focusing on what’s most important. There are twenty-two performance measures across the eight state priorities in the LCFF. The state can help schools by including only the most important goals and measures in its new accountability program.
Supporting the local improvement process. More resources and attention should be given to developing a robust program of technical assistance for schools and districts. The state needs to recognize that local educators do not always know how to accomplish state goals. In fact, our report on LCFF implementation finds that the problem of technical know-how includes activities such as planning and budgeting to support school improvement.

While the fit between the new federal law and the Local Control Accountability Plan approach is promising, the new ESSA also raises questions about using a dashboard of indicators to assess school performance. The ESSA requires states to intervene in the lowest performing 5 percent of schools. State board members have been quoted as saying that the new system will not reduce school performance to one number—as the API did. It will be interesting to see how the state identifies schools that need improvement, since a dashboard approach implies using multiple measures of performance.

The passage of ESSA recognizes that using the states as laboratories of democracy is a robust approach to school accountability. California, with LCFF, has already started its experiment. The new federal law requires state accountability plans to be ready by school year 2017–18. The state board will be spending a lot of time in the lab until then.

Video: Governing in a Time of Change

At a time when economic, environmental, and demographic forces are changing California, Governor Jerry Brown’s chief aide, Nancy McFadden, was asked to describe three administration priorities requiring bold leadership.

The first priority is keeping the state on a fiscally stable road, she told PPIC president and CEO Mark Baldassare before a Sacramento audience last week. This requires tough choices, she said, as the governor demonstrated when he vetoed bills that were worthy ideas but had budget implications for the state General Fund.

“Sometimes bold leadership means saying no,” she said.

Second, the administration will continue to implement the far-reaching changes adopted in past years, such as corrections realignment and the Local Control Funding Formula for schools, which targets money to the state’s neediest students and shifts funding control to the local level.

McFadden said the third priority is the “whole panoply of climate change and environment issues facing not only our state but our world.” Extreme weather events—drought, wildfires, and flooding—pose immediate challenges that have to be managed.

McFadden’s conversation with Baldassare was followed by a panel discussion about leadership—what it takes and when elected officials have demonstrated it. The panelists were Jim Brulte, chair of the California Republican Party and former state senate Republican leader; state senators Loni Hancock and Carol Liu; and Darrell Steinberg, chair of the California Government Law and Policy Practice at Greenberg Traurig and former senate president pro tem. The moderator was John Myers, Sacramento bureau chief of the Los Angeles Times.

Students Struggle on Test of New Standards

California gave its first statewide tests aligned with the Common Core standards last spring. The scores have just come out, with 40% of fourth-graders scoring proficient or better on the English Language Arts (ELA) test and 35% doing so in math. Scores for 8th and 11th grade are somewhat higher in ELA and lower in math. This new test is called the Smarter Balanced Assessment.

The share scoring proficient or higher on the new test is lower than on the old test, the California Standards Test (CST). In the final year that students were tested using CST—and on the old state standards—67% of fourth-graders scored proficient or higher. Most public school parents (71%) expected students to score at least as well on the new tests as on the old ones, according to a recent PPIC Statewide Survey. But most educators did not. Here’s why: the Common Core standards are more demanding than California’s old ones, students and teachers are in the early years of transitioning to these standards, and what it means to be proficient on the new test is different than on the old one. California is not the only state finding that the first year of Common Core testing reset perceptions of student performance.

To the right we present results for the CST and the Smarter Balanced tests, alongside California students’ scores on the National Assessment of Educational Progress (NAEP), a national ongoing assessment of what children know in a variety of subject areas. While these three test results are not directly comparable because each measures competence relative to different standards and each has its own definition of what it takes for a student to score “proficient,” it is important to have a clear sense of how our students are faring on each. The Smarter Balanced test results for each student group are higher than the NAEP, but low relative to the most recent CST.

We find gaps in proficiency for economically disadvantaged students and English Learners (ELs). Each group is specifically targeted for higher funding levels by the Local Control Funding Formula (LCFF). The CST gaps between EL and white students (61%) and between economically disadvantaged and white students (31%) are both smaller than those for the Smarter Balanced test (79% and 54%, respectively). Gaps for the NAEP are somewhat larger than in the Smarter Balanced tests. Educators will not be surprised by these findings.

California’s public school system has seen dramatic changes in recent years, and the 2014–15 Smarter Balanced test results are an important baseline to measure how these changes are affecting students. In the past, California students’ test results improved almost every year that the CST was administered. Today, both the Common Core State Standards and the LCFF aim to improve outcomes for all students and close achievement gaps. Multiple years of Smarter Balanced test results will be needed to monitor progress. These new higher standards are meant to improve outcomes well beyond secondary schooling, and the least advantaged students have the farthest to go. The new curriculum and new funding should help get them there.

Note (TOP CHART): NAEP is given to a representative sample of California students. FRPL refers to students who qualify for free or reduced price meals. Source: 2012-2013 California Standards Test, 2012-13 National Assessment of Educational Progress, and 2014-15 Smarter Balanced Assessments.

Note (BOTTOM CHART): We calculate the percentage gap by subtracting EL and economically disadvantaged students scores from white student scores and dividing by white students’ scores. Source: Authors’ calculations from the SBAC, NAEP, and CST.

More Money, More Challenges for K-12 Schools

The 2015-16 budget agreement between the legislative leadership and governor provides substantial additional funding for the new Local Control Funding Formula (LCFF). The money allows the state to implement the formula more quickly, and some districts will experience very large funding increases. While LCFF significantly expanded district financial flexibility, it also calls for districts to use the new funding to improve local performance. Districts may find meeting various state and local expectations a complex task.

The budget includes $53.1 billion for LCFF, or $6 billion more than appropriated in the 2014-15 budget. To put this into perspective, this represents an increase of more than $1,000 per pupil on average, or 14% more than schools received this year.

When LCFF was enacted in 2013-14, the administration estimated that the transition from old to new formula would take eight years. But funding increases were larger than forecasts in 2014–15 and 2015–16. Since 2013-14, almost $11 billion has been added to LCFF, leaving a gap of only $5.5 billion to fully fund the formula. Depending on the health of the economy, this gap could disappear completely in the next few years—and far earlier than originally forecast.

The LCFF simplified school funding by consolidating several dozen funding streams into a formula that distributes funds based on the number of students in each grade and the proportion of low-income, English-learner, and foster students in each district. The formula also sets district funding targets to equalize per-pupil funding levels across districts. In addition, funding levels for kindergarten and grades 1–3 were enhanced to give districts the incentive to reduce class sizes in the early grades. Similarly, high school funding levels were increased to support vocational classes and other courses to prepare students for college and careers.

Districts must balance how new funds are spent with the various requirements of LCFF and local expectations for spending increases. They must make progress in shrinking class sizes (despite the shortage of available teachers in some areas). They also must pay for improvement plans that are required under LCFF. The law requires districts to assess student and school outcomes in eight state priority areas and develop improvement plans and budgets that address local priorities for improving student performance.

Districts must also accommodate the typical financial pressures of any large organization, such as physical plant maintenance and employee salary and benefit increases. LCFF generally requires that districts use money targeted for high-needs students only for educational services for those students. However, in a recent letter sent to school superintendents, State Superintendent of Public Instruction Tom Torlakson advised that extra funding for high-needs students may be spent on across-the-board salary increases if the expenditure will improve services for those students. This interpretation may allow districts more discretion and increase pressure for larger employee raises.

The coming fiscal year promises significant new funding for schools—and significant demands for those funds. It is important these funds are well spent, in part because districts are unlikely to see increases of this magnitude in the near future. Forecasts from both the Department of Finance and the Legislative Analyst’s Office suggest that school budgets in 2016–17 and 2017–18 are likely to grow at a rate of about 3%. This year’s 14% increase in LCFF funding may represent the largest chunk of new discretionary funding that most districts will see for several years.

Video: Californians and K-12 Education

The annual PPIC Statewide Survey: Californians and Education comes at a time when there are major policy changes underway in the state’s K–12 system. They include implementation of the Local Control Funding Formula, Common Core standards, and the Smarter Balanced standardized tests. The survey was released last week and presented at a briefing in Sacramento by research associate Lunna Lopes.

The survey offers a good look at public reaction to the changes and attitudes toward education more broadly. About three-quarters of adults said they knew nothing about the Local Control Funding Formula, which gives districts more flexibility in spending state funds and gives additional money to districts with more English language learners and lower-income students. When survey respondents were read a description of the funding formula, most favored the idea.

About 58% said they had heard about Common Core, the new set of English and math standards. But only 47% favored the idea and 31% opposed it. The poll also found a high level concern more generally about the quality of K–12 education and funding.

Video: Implementing California’s School Funding Formula

The success of California’s new funding formula hinges on whether school districts can improve achievement for students, especially those who are high need. New PPIC research focuses on the issues raised so far by implementation of the new formula—a process that will take eight years.

Last week, Laura Hill, PPIC senior fellow and one of the reports’ co-authors, provided an overview of PPIC’s findings in Sacramento. Her presentation was followed by a panel discussion that looked at the challenges and opportunities presented by the new funding formula. Panelists were Carolyn Chu of the Legislative Analyst’s Office; Jonathan Raymond, president of the Stuart Foundation and former superintendent of the Sacramento City Unified School District; PPIC research associate Paul Warren; and Riverside County school superintendent Kenneth Young. Patrick Murphy, PPIC research director moderated.

The PPIC reports are listed below:

Implementing California’s School Funding Formula: Will High-Need Students Benefit?

Implementing Local Accountability in California’s Schools: The First Year of Planning

Low-Income Students and School Meal Programs in California

Local Decisionmaking in California’s Schools

California schools and districts are in the early stages of implementing the state’s new school finance system, the Local Control Funding Formula (LCFF). The new system involves much more than a new way of allocating state money to schools. At the heart of LCFF is the handing over of decisionmaking power to local districts—as well as responsibility for meeting the state’s educational goals. Results from the California sample of the national Schools and Staffing Survey (1999‒2011) point to some of the challenges the state will have in implementing the new system.

Goals. LCFF prioritizes student achievement, as measured by scores on standardized tests, performance in Advanced Placement exams, and college and career readiness. However, the Schools and Staffing Survey indicates that principals put more weight on basic literacy than on advanced skills such as academic excellence and college readiness. In other words, principals seem to be setting a lower bar, and aligning their goals with the state’s priority areas is going to be a challenge.

More than half (54%) of principals see building basic literacy skills (reading, math, writing, speaking) as their most important goal. This view is slightly more prevalent among principals of elementary schools, schools with high percentage of minority students, and urban schools.
College and career readiness—one of the eight LCFF priority areas—is not a big priority for principals, even in middle and high schools. Just 2 percent of principals consider college preparedness to be their most important goal and just 4 percent prioritize occupational or vocational skills.

Parental involvement. The law requires that parents be involved in LCFF planning and implementation. However, very few schools involve parents in their decisionmaking processes. A real cultural shift will be required to engage parents in a meaningful way.

Most schools rely on open houses, parent-teacher conferences, and special subject-area events to communicate and interact with parents.
Very few schools involve parents in school instructional planning—for example, developing learning activities or soliciting feedback on curriculum. And few schools involve parents in governance—through PTA or PTO meetings or parent booster club—or budget decisions. Urban schools are the most likely to engage with parents, but parental engagement is going to be a significant challenge, particularly in large and rural schools.
Only half of schools have staff assigned to work on parental involvement—this is more common in schools with high percentages of minority students and schools in urban areas.

LCFF is an ambitious overhaul of California’s school finance system, designed to help districts meet clear educational goals. As the results of the Schools and Staffing Survey show, successful implementation is going to require major cultural changes in schools throughout the state.

TOP CHART SOURCE AND NOTE: Schools and Staffing Surveys (1999‒2011).”Secondary” includes both middle schools and high schools. High minority schools have student populations that are more than 75 percent minority; in high-poverty schools, more than 75 percent of students are eligible for free or reduced-price meals. Bottom chart source: Schools and Staffing Survey (2011).
BOTTOM CHART SOURCE AND NOTE: Percentages reflect principals’ responses to the following question: “What percentages of students had at least one parent or guardian participating in the following events?”

California–State of Change

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.

The Road Ahead for Superintendent Torlakson

In what was thought to be one of the most closely contested statewide races, incumbent Tom Torlakson defeated challenger Marshall Tuck to retain the job of state schools chief. In the post mortems, much will be made of the money that was spent on perhaps the most expensive race in this cycle. The conversation, undoubtedly, will focus in part on the significance that national groups attached to this race, which pitted the powerful teachers’ union against the “reformers.” Though there is some value to attempting to unpack the past, it is more important to look forward to the impact Torlakson could have on education in California in his second term.

Leading up to election day, commentators routinely described the state superintendent position as “powerless” or even “obscure.” And it is true that when it comes to making policy the state education chief plays a limited role. A great deal of policy has already been made, and what lies ahead is the difficult job of implementation. The superintendent could play a major part in deciding how these policies roll out. The California Department of Education (CDE) that Torlakson heads has more than 1,500 employees and a budget of $250 million dollars. How he chooses to allocate those resources could make a real contribution to supporting schools and districts as they grapple with major changes.

California has made more significant changes to K–12 education policy in the past four years than it made in the previous two decades:

In 2010, the state adopted the Common Core State Standards, a decision that affects nearly every element of what happens in the classroom.

In 2013, California scrapped its old system of distributing funds to schools and opted for a formula that directs additional dollars to districts with higher numbers of needy students. One consequence of this change was to put much more power in the hands of local decisionmakers.

Accompanying the new funding strategy is a new approach to holding districts accountable for the performance of their schools.

And if that isn’t enough, California has begun a new statewide testing regime that has, as yet, only been piloted. The first real round of tests will begin this spring, with results due out in the summer.

As my colleague Paul Warren and I recently observed, CDE has played a minimal role in guiding implementation of the new standards but there are several things it could do to ease the transition. There are also challenges ahead for the state when it comes to the new accountability requirements. Because the new rules were written broadly, they have probably raised more questions than they answered about what accountability looks like going forward. Finally, somebody needs to help students and parents prepare for the new test results. On average, scores are likely to be lower. That doesn’t mean that California’s children somehow became less smart over the past two years; it means that the tests are harder. This is an important distinction that will need to be communicated.

Policy implementation isn’t sexy. It is hard, roll up-your-sleeves work. If the superintendent embraces his role, he could have an impact on California education that goes far beyond symbolism.