State budget helps schools recover

There is an old saying that “budgets are a reflection of values.”

This is particularly true for the record-breaking 2022-23 California state budget, which helps schools and students recover from the pandemic. This budget demonstrates that California values the well-being of children, including their education.

The top-line takeaways of this budget are all good for kids:

• School districts get significantly more money to work with.
• Students most in need get extra support.
• Counseling and mental health services are prioritized.
• More learning time is supported in the summer and before and after-school.
• Preschool programs and transitional kindergarten are expanded.
• All students can get free meals.

The chart below shows how core funding per attending pupil has grown significantly over the last few years.

California education budget basics

Funding for public K-12 education in California comes from three main sources: state income taxes, local property taxes, and the federal budget, in that order.

Property taxes that go toward education were more or less set in stone by the terms of Proposition 13. State income taxes that go toward education are strongly influenced by the economy, the stock market, and the terms of Proposition 98. Prop. 98 defines in law a minimum level of spending that the state is obligated to allocate to public education. The combination of expected property tax receipts for education and state funds for education are known as the Prop. 98 miminum funding guarantee.

Fueled especially by the taxes paid by wealthy taxpayers who sold investments and pocketed a capital gain, the Prop. 98 budget for 2022-23 is $35.8 billion larger than last year.

In addition to the Prop. 98 sources, which are state and local, the federal government has also poured one-time money into education to address the challenges of the pandemic. According to the Governor’s summary of the enacted budget, total educational funding per student in attendance in 2022-23 will reach $22,893, of which $17,011 per student will come from the K-12 Proposition 98 General Fund.

At about $17,000 per student, California funding no longer lurks in the national basement

Beyond this funding, the General Fund budget also includes $5.1 billion for K-12 school facilities, including new facilities for preschool and transitional kindergarten.

California no longer lurks in the basement of national school funding. The state is now probably in the middle of the pack, but no one really knows. Compararable data will take years to compile.

Local Control Funding Formula

Most Prop. 98 funding is distributed on the basis of student attendance, with adjustments based on need according to the Local Control Funding Formula (LCFF). School districts, charter schools and county offices of education get additional funding to the extent they have relatively higher numbers of low income students, English learners, homeless and foster youth. (Jargon tip: school districts, charter schools and county offices of education are called LEAs. The acronym, which stands for local education agency, is pronounced as letters, not like the name of a Jedi princess.)

Every district (technically, every LEA) receives a base funding amount per student in attendance. The base varies a little by grade level. Added to that is supplemental funding based on the number of students with higher needs. Districts with a very high percentage of needy students get even more support through a concentration grant.

Below are the LCFF funding rates in the 2022-23 budget.

More than the cost of living adjustment (COLA)

In response to rising costs, the 2022-23 budget includes a 6.56% cost-of-living adjustment (COLA) that boosts LCFF funding. It’s the largest adjustment in the history of LCFF. Additionally, to help school districts and charter schools address ongoing fiscal pressures, staffing shortages, and other operational needs, the budget includes $4.32 billion of ongoing Proposition 98 money to increase the LCFF base funding by an additional 6.28 percent.

Yes, 6.56% plus 6.28% equals an increase in LCFF funding of almost 13%.

LCFF funding increase: nearly 13%

New this year, districts (LEAs) with very high concentrations of students with higher needs — above 55% — also receive an additional 65% of the base grant for those students. In prior years, it was 50% of the base grant.

Top ten education budget allocations

The table below shows the 10 largest education-related budget allocations, grouped by ongoing funding and one-time funding. Additional detail about them can be found in the following section. Because these are big numbers, it helps to think of the numbers in per-student terms. A billion-dollar budget item evenly spread across six million students is about $166 per student.

Ongoing funding typically is money from secure ongoing revenue. One-time funding, in comparison, is from revenue sources that are not stable, like unexpected increased tax revenue. The prudent rule is that one-time money should not be used in a way that creates obligations for ongoing expenses, such as hiring new teachers or bargaining salary increases.

More about these investments

Budgets involve choices. The budget includes many specific investments based on strategies to help children and schools recover from the pandemic:

Expanded Learning. A multi-year plan provides for expanded-day, full-year instruction and enrichment for elementary school students, including before-school, after-school, and summer school programs. Beginning in 2023-24, local educational agencies will be required to offer expanded learning opportunities to all low-income students, English language learners, and youth in foster care. Local educational agencies with the highest concentrations of these students will be required to offer expanded learning opportunities to all elementary students.

The Learning Recovery Emergency Block Grant. This limited-time funding supports increased instructional learning time, closing learning gaps, health, counseling and mental health services, instruction for credit-deficient pupils, and academic services through the 2027-28 school year.

Financial help to address attendance and declining enrollment. In most states, funding for schools is based on the number of students enrolled in school. In California, funding for school districts and charter schools has been based on how many students attend. During the pandemic, attendance declined significantly, but unevenly. To soften the financial blow for school systems (LEAs), this budget allows them to claim funding on the basis of several years of average attendance data. They can choose which of several years attendance data provides the highest funding. There are also provisions to protect funding for classroom-based schools that provide documentation of independent study in 2021-22.

The Arts, Music, and Instructional Materials Discretionary Block Grant. This large one-time allocation can fund a variety of education needs, including arts and music programs, standards-aligned professional development, instructional materials, diverse book collections, operational costs, and expenses related to the COVID-19 pandemic.

Community schools. Schools can do a lot more in partnership with their community than just teach. Community schools collaborate with other organizations to integrate health, mental health, and social services alongside high-quality, supportive instruction, with a strong focus on community, family, and student engagement. This funding targets schools serving children with the highest needs.

School meals. Regardless of income, school meals are now available for all students.

Early education. To include more students, transitional kindergarten (TK) eligibility is expanded by two months to include all children turning five between September 2 and February 2. TKs will add one additional staff person to every class, reducing student-to-adult ratios to more closely align with the State Preschool Program.

State Preschool Program. Funding is increased for state preschool programs to support students with disabilities, dual language learners, and childhood mental health challenges.

Special education. Funding for special education is increased and allocations are now based on needs at the school district level rather than at the regional level. Also, the budget provides funding to create resources on inclusionary practices for families and communities.

Career education. The Golden State Pathways Program supports programs focused on technology (including computer science, green technology, and engineering), health care, education (including early education), and climate-related fields.

Early literacy. Grants are available to high-need schools to train and hire Early Literacy coaches and reading specialists. There is also funding for a Books for Children Program.

We are in the process of updating the lessons in Ed100 to reflect these changes and others. The comment sections of many Ed100 lessons now contain updated 2022-23 budget data related to that lesson. For example, the comments in the special education lesson contain many details about 2022-23 funding.

Will funding for education fall?

As summarized above, many of the increases in the education budget have been crafted as “one-time” investments. Why? Because what goes up might come down. When the stock market falls, as it has in 2022, tax-generating capital gains reverse into tax-deductible capital losses. Many school boards are scrambling to load up their reserve funds to the extent allowed by law.