Money matters in education. Prior lessons in this chapter explained how schools are funded in California, how the money is used, and why California schools struggle to provide the resources kids need.

What can be done about it? The focus of this lesson is to explore the options for increasing state and local funding for education in California.

A quick review of education funding in California

But first a recap: In the 1970s, in response to a court ruling, California voters amended the state constitution (Prop. 13), reducing and freezing local property taxes as a revenue source. The state legislature raised income tax rates to compensate, mostly, but overall funding for education withered. In the 1980s, California voters amended the constitution again (Prop. 98) to guarantee a level of protected funding for education in the state budget. It definitely helped, but California still commits relatively little of its economic wealth toward education compared to other states and nations.

Adding to the challenge, California's high cost of living makes the cost of providing education here very high. As a result, student-teacher ratios in California are unusually high. This makes it even harder to address the needs of California's students, which are considerable: More children in California live in poverty than in most states; many are learning English; and many have special education needs.

Because education funding depends heavily on income taxes paid by the wealthiest taxpayers, it tends to boom and bust with the stock market. Property taxes are less volatile, and even in the Pandemic, solid majorities of Californians said they would support taxes for schools in their own community. But under the rules created by voters in California's Proposition 13, a majority is not enough to authorize a local tax. It is very difficult to pass local taxes in this state.

Where to find funds for education

These systemic challenges are not new, and there have been many attempts to address them. They fall into four categories:

• A Bigger Slice. Commit more of the existing state budget to education, cutting elswhere.
• A Bigger Pie. Raise more taxes at the state level to provide more money for education.
• A Different Pie. Allow local taxes to provide new money for education.
• Actual Pie. Hold bake sales and other local fundraisers.

Solutions have to start with an understanding of the problem, and a succession of California leaders have been important to making that happen. In about 2005, a coalition of education funders pooled their efforts to sponsor Getting Down to Facts, an ambitious research effort about education policy options. The purpose of the research was to give clear advice to the Education Excellence Committee, an expert panel appointed by then-governor Arnold Schwarzenegger. The committee was charged with recommending policy changes based on the research. (Disclosure: Ed100 founder Jeff Camp served on this committee.)

Among its main recommendations, released in January 2008, the committee called for a thorough reinvention of California’s education funding system, which most everyone agreed was bananas. The committee proposed a weighted funding model in which money would go to school districts (and ultimately to schools) on the basis of the needs of students. Fast-forward a few years (and one Great Recession): this recommendation was adopted in 2013 as the Local Control Funding Formula (LCFF), the basic structure California's education funding system serving 97% of students. (A different system serves the 3% of students in Basic Aid districts.)

Defending the education share of the budget

The state budget process is zero-sum: there are winners and losers. Local property taxes are shared between education and local government, for example, and counties play a key role in divvying up the money. Schools have not always received their due slice. It’s a weedy issue, but if you feel like following it look for news about Educational Revenue Augmentation Funds (ERAF, pronounced EH-raff, not EE-raff).

At budget time, advocates for other worthy causes (like social services or the environment) can be excused for regarding the education budget with a degree of envy. Proposition 98 has often served as a powerful advantage for education advocates; if a draft budget fails to meet the minimum Prop 98 guarantee, lawmakers can expect at least the threat of a lawsuit. The budget for 2024-25 is a great example of this power.

Litigation (or the threat of it) over education budgets is not unique to California. Because education is an essential function of government, it tends to be mentioned in state constitutions. In some states, education advocates have successfully prompted increased spending through judicial pressure. Efforts to spur increased education spending through litigation have been pursued in many states. In some places, notably New York, lawsuits spurred major increases in funding for education. Related cases have not been particularly fruitful in California, but the idea is not dead. (See our blog for more.)

Lawsuits about the condition of education have worked sometimes as a way to divert education funds from one place to another. For example, in 2004, then-Governor Schwarzenegger settled a class action case usually known as the Williams Case. The settlement established some fairly obvious minimum requirements and services that schools must provide, including up-to-date textbooks, qualified teachers, enough seats for students, and classrooms free of vermin. Follow-up research by the ACLU nine years later found that many of the problems were substantially resolved.

In 2018, the influential Getting Down to Facts project was extended and updated, in part to develop a research-based meaning for an adequate education. A team of researchers led by Jennifer Imazeki concluded that in the 2016-17 school year "providing an adequate education would have required California to spend… almost a third more than that year’s spending levels."

Public opinion matters

Of course, education advocates cannot just rely on initiatives and litigation to make the case that public education deserves its share of the budget pie. After all, other functions of government need funding, too.

The California Budget Challenge is an informative, playful, nonpartisan, nonprofit website that helps to concretely explain budget tradeoffs for voters in California. It feels a bit like a game, and works well as a group activity.

Increasing taxes to fund schools

A Bigger Pie?

The solution is not always zero-sum.

The California legislature has the power to pass taxes by a majority vote, but it rarely uses this power. Instead, it places tax measures on the state ballot, where (after a costly campaign) they can be passed by a majority vote. In 2012, California voters rescued schools from big cuts by passing Proposition 30, which raised taxes on the state's wealthiest earners. In 2016, voters overwhelmingly extended the tax to 2030 (Prop 55).

At the time, 2030 seemed far off. If the legislature fails to renew these funds, California's schools will face massive, unavoidable cuts.

A different pie: Local taxes and changes to Proposition 13

Surveys consistently show that Californians value education in the abstract, but they aren't always willing to pay for it. When it comes to opening their wallets, the public is more inclined to support local schools than the school system in general.

A Different Pie?

Local political will is not enough. When California voters amended the state constitution by passing Proposition 13, they made it very difficult to pass local taxes. A majority isn't enough. The theory is that voters should have the power to disempower themselves, like Odysseus tying himself to the mast to resist temptation. Unlike the heirs of Odysseus, though, California’s voters remain tied to the mast. Proposition 13 was a one-time vote that has affected generations of Californians.

Prop. 13 requires that local governments, including school districts, must get 2/3 voter approval to pass special taxes. Prop 13 also prohibited school districts from levying ad valorem taxes (property taxes based on the value of property), except to pay for general obligation bonds for facilities.

The workaround: Parcel taxes

For California school districts, there is one main workaround: pass a parcel tax. Parcel taxes are based on the existence of a parcel of property rather than on its value, which gets around the Prop 13 prohibition of ad valorem taxes. The catch? Parcel taxes generally cannot be approved by a majority vote — they usually require 2/3 of votes cast to pass. Effectively, it's like a regular majority vote— except every "no" vote counts twice!

It is very difficult to get 2/3 of voters to agree to anything, but some districts manage it. Lesson 8.10 goes into more detail about parcel taxes.

In any major conversation about education funding, the elephant in the room is Proposition 13, which we discuss in another lesson. Multiple efforts to amend this crucial measure have gone nowhere. It remains popular, especially among Californians who have owned property long enough for it to have gained in value. (The findings in the chart below were confirmed again in 2024.)

The stubborn popularity of Prop 13 flummoxes advocates for reform. The Silicon Valley Community Foundation commissioned a major review of Prop 13 in 2013 to explain the issues and challenges. In 2022, the Opportunity Institute documented the measure’s unequal impact on California communities in a study titled Unjust Legacy.

Any time there is even a tiny hint of a shred of a possibility of change in the 2/3 rule for local taxes, it is a big deal. As of 2024, the most interesting development is a series of hotly-contested court rulings that seem to have established that a majority is sufficient to pass a measure, if it originates as a citizen initiative rather than being referred to voters by a school board. The voters of San Francisco Unified pioneered this approach to funding their schools in 2018. Other communities have held back from following San Francisco's lead as litigation clarifies the risks.

Other possible ways to fund schools

California's funding for education is dramatically low relative to the state's economic capacity, as described in Lessons 8.1 and 8.2. Big gaps require big solutions, but how big is big? For example, suppose a measure would raise $1 billion for California's public K-12 schools. Sounds like a lot of money, right?

$1 billion is equivalent to about $170 per student

In a system with a bit less than six million K-12 public school students, $1 billion is equivalent to about $170 per student. This rule of thumb can help put things in perspective.

In a 2018 op-ed contribution to EdSource, John Affeldt of Public Advocates, an advocacy organization, summarized the policy options in circulation to increase funding for education:

Local Fundraising for Schools: Bake Sales

When all else fails, school communities scramble to get what they need.

Actual pie??

Let's start with the obvious. When times are tough and school funding suffers, some people will do what they can. This happens all over California, but unequally. Some wealthier communities can raise hundreds of dollars per student through voluntary giving. Some schools hold elaborate auctions. Some cut to the chase with "check writing campaigns."

How much is a "normal" amount of fundraising for a PTA or other school support organization? No one really knows.

Information about local donations to school-related nonprofit organizations and education foundations is not easy to tally. In 2000, the Public Policy Institute of California (PPIC) made a heroic estimate that the average of such donations amounts to less than $100 per student, with huge variation. More recent data about the scope of education foundations is available for some schools, but to our knowledge has not been usefully summarized, in part because K-12 foundations are not listed separately from college foundations. In 2022 it appears that the largest single K-12 education foundation in California was the Manhattan Beach Education Foundation, which according to its tax filings contributed an amount equivalent to about $1,300 per student in the district.

To be clear, few school communities can pull together funding at that level. Most can't raise any donations at all.

Schools depend on taxes.

The vast majority of public schools are funded by taxes. Period. The California public could afford to commit more of its wealth to public schools, but not through bake sales and lottery tickets. Voluntary donations cannot match the funding power of a tax.

Under current California law, communities have few options for taxing themselves to support their schools. The primary option is to pass a parcel tax, which the next lesson will explain in a bit more depth.

Updated August 2024.