You Earned a Ticket!

Which school do you want to support?

Lesson 8.1

Spending:
Does California Spend Enough on Education?

California has underfunded its schools for years. These charts explain.

hero image

Does California skimp on public education? Put another way, is it true that students in California receive less support for their education than students do in other places?

The short answer is yes. As this lesson will explain, California has a long record as a skimpy funder of education, but context matters. California’s education budget is strongly influenced by the stock market. In the post-pandemic boom, wealthy taxpayers became wealthier, tax receipts increased, and education funding increased with it.

(1) California spending per student on education is basically normal.

In 2022, most analysts reckon that California’s education funding, compared to other states, at long last climbed to the level of essentially… ordinary. Not at the top. Somewhere in the middle, if you look at it one way. Or lower than ever, if you look at it another way.

How can funding be both ordinary and skimpy? Well, buckle up. Measuring and comparing is more complicated than it might seem.

The most basic way to compare states’ support for education is to look at the number of dollars spent on K-12 education each year and divide by the number of students enrolled:

The chart above makes it look as if education spending has increased at an ever-accelerating rate. Which it has… but not really. Over time, even low rates of inflation add up. Dollars are only good for what they can buy.

A somewhat fairer way of looking at education funding is to restate the value of expenditures in past years taking inflation into account. There’s more than one way to do it. The most basic, widely-used, general-purpose deflator is the venerable Consumer Price Index (CPI-U), which helps remove some of the distortion:

The upward bias in the chart above reveals a problem of measurement. The CPI describes change in the average cost of stuff-in-general, but the cost drivers for education have risen at much higher rates than the CPI. For example, the cost of earning a college degree (which teachers need) has risen faster than core inflation. So has the cost of health insurance, which school districts provide to teachers as part of their benefits.

In response to this problem, the St. Louis Federal Reserve developed a national alternative to the CPI, which California and other governments have adopted in law. (With all the poetic flair a government statistician could apparently muster, it’s known as the implicit price deflator for state and local government expenses).

What about regional cost differences?

Adjusting for nationwide average inflation helps make resource comparisons more meaningful over time, but it doesn’t address differences in regional costs. It costs more to hire a teacher in New York than in Utah, but it costs a lot more to live in New York than it does in Utah.

To compare the effective purchasing power of education systems, some analysts have attempted to adjust for local and regional differences in purchasing power. EdWeek uses this approach in its widely-quoted, annual Quality Counts scorecard. (Subscription required.) For each state, the EdWeek scorecard restates state-by-state dollars in order make them hypothetically comparable in terms of purchasing power. The numbers are often misunderstood or quoted out of context.

2) Economic effort: California doesn’t try very hard to fund education

A broader way to consider social priorities is to put dollars in context. For example, in 1960, overall spending on health care accounted for about 5% of the US Gross National Product (GDP). As medical progress improved and life expectancy improved with it, health care’s share expanded to about 20% of the economy. Military spending in the same period dropped from about 9% of the US economy to about 4%. Infrastructure spending in the US is about 1.5%.

When comparing the economies of US states, the measure most equivalent to GDP is total personal income.

Economists refer to the relative level of spending on a social priority as economic effort. In 1970, the average US state spent 4.0% of its economy on public K-12 education, a level of economic effort fairly comparable with other developed nations. This level of effort wilted over time — by 2021 the average state’s economic effort to fund education had declined to about 3.44%.

As usual, averages can conceal big differences. Some states (like New York) have invested sustained effort to fund public education. Relative to other states, California has consistently spent less of its total economy on public K-12 education. California has been a low-effort state when it comes to education:

In 2021, California’s economic effort to fund public education dropped to 0.03, its lowest level since 1984. The stock market delivered good news for education funding without really trying.

(3) It costs more to educate students in California than it does in other states

Money is only good for what it can buy. Costs vary from place to place, and California is a high-cost state.

Most of the costs of education are people costs. It’s expensive to hire college-educated adults such as teachers, counselors, librarians, and administrators. Relative to other states, the cost of living in California is high, and districts must offer competitive salaries in the context of their local labor market. On an inflation-adjusted basis, teacher pay in America has essentially been flat for 50 years. (Ed100 Lesson 3.8 examines teacher pay in depth.)

(4) California has an average number of kids to educate

When it comes to demographics, California is often compared with Florida and Texas. All three states are large and have had rapid population growth, with a high proportion of students learning English. California has America's highest proportion of English Learners.

The age demographics of these states differ significantly, however, which can make comparisons among them a little confusing. Like Hawaii, Massachusetts, and Washington, D.C., Florida enjoys the benefit of an older tax base — it has relatively few children supported by relatively more taxpayers. Texas, by contrast, is more like Utah, a youthful state where funds for education must be spread among more students. California falls in between.

(5) California has very large class sizes and fewer support services

The math is inescapable. A state with average funding per student, an average number of students per taxpayer and higher-than-average pay for teachers must make do with fewer teachers.

Students experience this difference in the form of large class sizes, a topic we take up in detail in Lesson 4.2. Because teachers are crucial to student success, and because they are represented at the negotiating table, when times are tight school districts tend to avoid cutting teacher positions, instead sacrificing everything else they can first, including counselors and administrators. Wherever class sizes are chronically large, as they are in California, students have less of everything.

(6) California has somewhat high taxes overall

Public education relies on a combination of state and local taxes in each state. The mix differs a bit from one state to the next, and as Ed100 Lesson 8.3 will explain, California dramatically shifted away from property taxes after passage of Proposition 13 in 1978. Higher income taxes, particularly on high earners, partially filled the gap. According to research by the Tax Foundation, the total “tax burden” in California is a few percentage points higher than in most other states. WalletHub replicated this finding in 2020 using similar methodology.

California's highest-income earners are taxed at a higher rate than taxpayers in most other states. In total, though, the state's tax system is regressive, meaning that taxpayers with lower incomes carry a higher tax burden than wealthier taxpayers. Want to know even more? California's Legislative Analyst produced a report with a full rundown of California's Tax System in 2018.

A budget is an expression of values

Does California’s long pattern of low effort to fund public education mean that Californians place a relatively low value on it? It might. For example, since 1970 California has significantly increased spending on prisons and incarceration. To be clear, schools are a much bigger piece of the budget pie than prisons, but spending on prisons grew far faster than spending on schools.

Structurally skimpy

Long-time observers of California's education system often attribute the state's habit of weak effort to fund public education to Proposition 13, which flipped the education finance system from stable local funding (through property taxes) to volatile state-sourced funding (through income taxes).

An unintended consequence of Prop. 13 is that it weakened voters' political will to fund schools adequately. In general, voters are most likely to support taxes that help their immediate community. They are apt to doubt that taxes levied on a statewide basis will be spent well. By flipping the basic revenue model from local to statewide, California overturned its political underpinnings. The effort to fund public education in the state has never recovered.

Does funding for education matter?

Why is it important to know whether California skimps on education? Because it turns out that money really does matter. It seems obvious, but for a very long time education outcome data were so low-quality that it was quite difficult to prove a connection between money and learning. The connection was significantly clarified in a pair of 2018 studies titled Money and Freedom, which found that "money targeted to districts with the greatest student need has led to improvements in student outcomes."

Other research has corroborated the connection. For example, How Money Matters, a study by the Learning Policy Institute, concludes that "on average, aggregate per-pupil spending is positively associated with improved student outcomes."

If serious money were added, where would it go, and what might result? These questions are taken up in Ed100 chapter 10.

Clueless

Education is the largest function of government.

It's important to acknowledge that most Californians have no idea at all about their state's level of investment in education, either in absolute terms or relative terms. In a 2015 survey by the Public Policy Institute of California (PPIC), only 15% of Californians could correctly identify the biggest slice of the state's budget. Nearly half thought that the state spends more on prisons than any other function. Not even close.

PPIC-DataSource: PPIC

California could do a lot more to fund public for K-12 education, but it is still the largest function of state and local government.

Updated August 2017
April 2018
October 2018
January 2021
September 2022

Quiz

Which of the following represents the largest amount of spending in the state budget?

Answer the question correctly and earn a ticket.
Learn More

Questions & Comments

To comment or reply, please sign in .

user avatar
Carol Kocivar July 23, 2022 at 6:01 pm

Education Budget 2022-23
The Budget includes total funding of $128.6 billion for K-12 education, reflecting $22,893 per pupil ($16,993 K-12 Proposition 98 General Fund). In addition to this funding, the Budget includes $5.1 billion General Fund for K-12 school facilities, including new preschool and transitional kindergarten facilities.
user avatar
Carol Kocivar June 14, 2022 at 6:29 pm
A surging California economy has dramatically changed California school funding levels. The state is no longer at the bottom but has moved to close the national average after adjusting for regional cost differences. Is it enough? Nope. Is it better. Yes! This PPIC report gives you the details.
https://www.ppic.org/publication/financing-californias-public-schools/
user avatar
Carol Kocivar June 5, 2022 at 4:41 pm
Public Policy Institute of California
For the first time since the turn of the millennium, California’s K–12 public system enrolls fewer than 6 million students. Recently released statewide numbers show that enrollment fell by 110,000 students, or 1.8%, between 2020–21 and 2021–22. Enrollment has now declined for five straight years, with a decline of 270,761 students over the past two years, compared to 65,234 from 2016–17 to 2019–20. Moreover, recent declines have outstripped state projections
https://www.ppic.org/blog/california-k-12-enrollment-declines-continue-to-exceed-expectations/?utm_source=rss&utm_medium=rss&utm_campaign=california-k-12-enrollment-declines-continue-to-exceed-expectations?utm_source=ppic&utm_medium=email&utm_campaign=blog_subscriber
user avatar
Carol Kocivar June 5, 2022 at 3:19 pm
The Public policy Institute of California announces::
Fueled by growing state revenues and billions in one-time federal aid, California public schools have seen record-high funding in recent years. The state has caught up and surpassed the national average in school spending, after lagging behind the nation for decades. “
View their video: Understanding the effects of school funding.
https://www.ppic.org/blog/video-understanding-the-effects-of-school-funding/
user avatar
sarah Ruiz January 20, 2022 at 3:17 am
If I understand correctly, until we get rid of Prop 98, not much in the way of funding can change.
user avatar
Carol Kocivar January 20, 2022 at 5:56 pm
If the state receives additional tax revenue, that can increase the Prop. 98 portion of the budget.
user avatar
Nicole Blaylock March 5, 2022 at 11:03 am
Carol - do you have any additional report links like the 'The Silent Recession' you posted in 2018 but are more in line with funding now?
user avatar
Carol Kocivar March 11, 2022 at 3:30 pm
I haven't seen any but individual reports show the concerns outlined still apply. For example, pension costs, teacher salaries and health costs continue to rise. The LAO 2022-23 out look says: Pension Costs Increasing for School and Community College Districts.
user avatar
Jamie Kiffel-Alcheh November 28, 2019 at 8:33 pm
This article confused me a bit. It provocatively states, “lower income taxpayers carry a higher overall tax burden than wealthier taxpayers.” Yet later on, it states, “In the years following the Great Recession, Californians passed two ballot measures, Propositions 30 (2012) and 55 (2016), to raise revenue (mainly) through an income tax on California's highest earners.”
Does this mean that in spite of these increases on this wealthiest earners, the lowest earners are still paying more?

I would also argue that the story buries its lead. The lead seems to be: California’s state budget gives more to education then to any other service, yet it still lags behind other states.
user avatar
amosmickey March 5, 2019 at 9:55 am
What would be also interesting after reading how much the State of California spends on education is to see how much each county/cities spends on Education and compare that with the costs of living (I've just started this lesson so don't know if it is done in later chapters). San Francisco has a higher costs of living compared to other cities so to see a comparison might be enlightening.
user avatar
francisco molina February 17, 2019 at 7:15 pm
Por lo visto, nunca se ha facilitado la ayuda de la comunidad hacia las escuelas, como el voluntariado en diferentes areas que requieren financiamiento o por otro lado se gasta en cosas que no estan completamente preparadas para el correcto empleo. o no ayudan necesariamente a mejorrar la calidad y el progreso de vla educacion.
user avatar
Carol Kocivar June 18, 2018 at 6:25 am
A report worth reading: The Silent Recession: Why California School Districts Are Underwater Despite Increases in Funding

Here is the link.
user avatar
Carol Kocivar January 14, 2018 at 9:48 am
The Learning Policy Institute:
How Money Matters
"Recent studies have invariably found a positive, statistically significant relationship between student achievement gains and financial inputs."

Read the Report:
How Money Matters
user avatar
November 22, 2017 at 10:58 am
DC and Massachusetts are only two examples and it would be necessary to do a correlation between $ and outcomes with all 50 states to see if there is a statistical correlation. I actually did that. The correlation coefficient is very weak - around 0.2 which is to say almost no correlation. You need a correlation coefficient above 07. to be taken seriously. You should do that too (find the correlation coefficient between $ and outcomes) and present your results along with the spending. Otherwise,...

You can reasonably argue DC or MA are special cases but in a sense every state is a special case. CA gets a lot of less educated immigrants and that might tend to skew outcomes as it takes a while to raise the educational standard of a community.

C.f., "lurking variable"
http://www.virmanimath.com/start-page-2012-2013/ap-stats-2012-2013/chapter-2/apstatonlineclass/confounding-and-lurking-variables
user avatar
November 22, 2017 at 10:55 am
The focus here is on spending. The only important thing is outcomes. If you look at the first chart here you see District of Columbia at the top in spending. Yet by the National Assessment of Educational Progress (NAEP) assessments ("The Nation's Report Card") DC is at the bottom of all measured areas in all assessed age groups. C.f.,
https://www.nationsreportcard.gov/profiles/stateprofile?chort=2&sub=MAT&sj=AL&sfj=NP&st=MN&year=2015R3

Money does not correlate with outcomes in at least that assessment.

Massachusetts is usually at the top of the list and they are famous for the rigor of their statewide tests. Maybe that has more to do with it?
user avatar
November 22, 2017 at 10:50 am
If you don't attempt to correlate outcomes by state with money by state then you are just complaining other states get more money. Yet as you point out, CA is a high tax state, so where is the legislature in all this? You can't complain about prop 13 when CA is one of the top 10 states in taxes.

The courts ruled (rightly, IMHO) that it was unfair that rich areas spent more on education than poor areas because education was funded by property taxes. Poor kids need at least as much money per pupil. This means it has to be state money. The voters also passed prop 98 to guarantee the legislature spends at least 40% on education. That was to set the minimum and in fact that turns out to be the maximum they will spend. So talk to the legislature.
user avatar
Caryn-C September 11, 2017 at 11:09 am
I'm learning that Massachusetts is where you want your child to be educated!

I wonder if the California education system is weakened by educating millions of children of unauthorized immigrants or if that is just a myth. I know that some undocumented immigrants do pay taxes. Is the additional tax base that would support these students just not there?
Imo, comparing California to other states is often unhelpful because frankly, there IS no other state like California, population and demographic-wise.
user avatar
Carol Kocivar December 29, 2016 at 4:05 pm
"It Turns Out Spending More Probably Does Improve Education." This article from the New York Times summarizes a new report that finds that money matters. It looks at the benefits of greater investment in lowest income school districts.

http://www.nytimes.com/2016/12/12/nyregion/it-turns-out-spending-more-probably-does-improve-education.html?rref=collection%2Ftimestopic%2FNational%20Bureau%20of%20Economic%20Research&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection
user avatar
Carol Kocivar October 27, 2016 at 3:30 pm
Education Spending Update from The California Budget and Policy Center:

"California spent an estimated $2,000 more per K-12 student in 2015-16 than in 2012-13, inflation-adjusted. Largely as a result, the gap in spending per student between California and the rest of the US narrowed from more than $2,600 in 2012-13 to roughly $1,000 in 2015-16.

http://calbudgetcenter.org/resources/californias-spending-per-student-increased-due-proposition-30-still-trails-rest-us/
user avatar
germanb May 25, 2016 at 1:30 pm
what amazes me that is never talked about (unless quickly dismissed) is why it is that California has been near the bottom for "per-student funding" but consistently one of the top 5 states in "average teacher salaries"....
http://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp
The system seems to be more in place to employ teachers than educate kids. I hope the millennials start taking notice and force the change that is needed to save the public educational system. It's going to take more than just MORE MONEY.
user avatar
Lynette Garcia March 4, 2017 at 2:44 pm
Take it easy. If you lower my income, I will not be able to teach here. I can barely afford a condo now. It isn't as simple as you may think. Plus, I pay for a lot of the supplies that I need in the classroom. Do you pay for your supplies at work? The school pays for the bare bones. I pay or make what goes on my walls. I pay for what makes learning fun or interesting. They provide books, some of those are outdated.
user avatar
Jeff Camp - Founder March 8, 2016 at 12:18 pm
The ever-scrupulous California Budget and Policy Center summarizes various measurements used to compare California's investment in public education with that in other states and the nation as a whole. Any way you look at it, California skimps on education. December 2015 analysis: http://calbudgetcenter.org/wp-content/uploads/Californias-Support-for-K12-Education-Ranks-Low-by-Almost-Any-Measure_FactSheet_11.17.2015.pdf
My criticism of the analysis: it would be even more meaningful to compare California to the rest of the US *excluding California. This state is so large that it influences the average, making California seem more normal than it actually is.
user avatar
Jeff Camp - Founder February 12, 2016 at 2:02 pm
Is education spending going up or down, and by how much? It's appallingly difficult to know. National information about expenditures for education are compiled several YEARS after the fact. (A pace of delivery established well before the internet, when scribes on horseback delivered data via papyrus sheets.) The latest official information is frequently an economic cycle out of date, reporting on a boom year when as the current budget goes bust, or vise-versa. Calbudgetcenter.org is one of the few organizations that sticks its neck out, a little, to offer an informed guess before the officially blessed numbers are in: after all, education is a big component of state budgets, and budgets are public. http://www.cbpp.org/sites/default/files/atoms/files/12-10-15sfp.pdf
user avatar
Carol Kocivar November 23, 2015 at 3:00 pm
There are several resources that compare education spending state by state.
A big item in the comparisons is whether they adjust for differences in state costs of living.
Hint: California has a high cost of living.
A report from the California Budget and Policy Center, "Key Considerations When Comparing California K-12 School Spending to Other States" provides a good overview.
http://calbudgetcenter.org/resources/key-considerations-when-comparing-california-k-12-school-spending-to-other-states/
user avatar
Brandi Galasso September 30, 2015 at 7:37 pm
Can I ask a true honest question? How do you know if its mis-spending but with good intention and meaning? And how much could it truly be administrators with deeper pockets and at end of day a little left over to stretch between all their schools. Because at what point do people stop reading and accepting budgets that are not true? Going out and asking "is this correct?" Because I did this the last 2 years and it's unbelievable what goes on with school funding. If you don't know enough you don't see it -- but if you do it's unbelievable. I read that we should be no worse then 2012/13, but we received as a school this year title 1 $44,000 and LCFF base $20,000 and supplement $20,000. That's only $84,000 compared to $222,000 in 12/13. And we are 90% EL but the services above and beyond are services we already had nothing new. Where can we get the real truth?
user avatar
Meghan B August 18, 2014 at 9:49 pm
How is it that such a large portion of the state's general fund (I believe 40%) is spent on education, and yet the percentage spend per total income is lower than for most states?
Also, I think it would be clearer to say, "3.3% of total income" rather than "3.3% of its economy," if that's what you mean. The phrase "its economy" isn't exactly clear to me.
user avatar
Jeff Camp - Founder August 29, 2014 at 10:01 pm
Getting education spending statistics right is an endless challenge. In this context, the "right" way to look at it is to include elements beyond the state general fund, such as "local" expenditures and federal expenditures. Regarding the 3.3% statistic, this is education expenditures as a percentage of total personal income, which is usually reckoned to be the right denominator for describing the big, big picture of an economy. I became interested in this approach when debates started about our health care system. When analysts began describing the economic weight of the American health care system over time and relative to other countries, I wondered whether a similar approach could help us understand the big picture of our investment in education. As far as I have been able to determine, this is the most robust way to get the "real" big picture. I used "of its economy" rather than the more technical definition because this seems to make sense to more people.
user avatar
Jennifer B June 12, 2014 at 1:31 pm
Do Californian's place an unusually low value on public education? No. Polls and voting patterns often suggest that, in fact, public education is one of the few areas that voters are willing to fund.
However, this reality creates a significant moral hazard for California public education. Taxes that are portrayed as "funding education" often go elsewhere -- or back fill diversions of base taxes that we all thought were funding education.
The majority of counties, for example, do not accurately represent where our property tax dollars actually go. Unless your county shows 10-30% of total property tax dollars diverted to "in-lieu taxes to cities and counties for VLF reduction and Economic Recovery Bonds," it is significantly overstating property taxes to education.
The state, meanwhile, shows the $6+ billion of General Fund monies it spends to backfill these transfers as General Fund expenditures on K-14 education. (When it is able to backfill these transfers. It has not done so fully in seven of the ten years since they were instituted.)
And the premise of Proposition 30 (2012) was not to increase education funding, but simply to forestall cuts.
California voters are told that the lion's share of property and income taxes go to education ... yet little seems to trickle through.
user avatar
Paul Muench October 31, 2014 at 9:22 pm
By looking at the States In Motion data from EdSource it seems that 1978 was a critical year in education funding. Before that CA was consistently in the top half of education spending for states. After that CA has steadily declined to our current position as one of the states at the bottom of the funding spectrum. Of course that was the year of Prop 13. But that year also seems to have other important milestones for CA. Of the 40 odd years of data represented on EdSource it's the nadir of students per capita. Maybe that's part of why Prop 13 passed. And according to Pew Research it's also the time when Hispanic student enrollment started to increase rapidly in the United States. From 7% in 1978 to about 24% today. Then came Proposition 1 in 1979 which was upheld by the Supreme Court in 1982 which helped re-segregate schools in CA. And then Prop 187 that passed with broad support in 1994 but was ruled unconstitutional by the federal courts. Perhaps Prop 30 marks an end of an era of continuous decreases in school funding largely based on race and class. Redefining hope and optimism is never easy, but let's hope 2012 is another landmark year for CA.
©2003-2022 Jeff Camp
Design by SimpleSend

Sharing is caring!

Password Reset

Change your mind? Sign In.

Search all lesson and blog content here.

Welcome Back!

Login with Email

We will send your Login Link to your email
address. Click on the link and you will be
logged into Ed100. No more passwords to
remember!

Share via Email

Get on Board!
Learn how California's School System works so you can make a difference.
Our free lessons are short, easy to read, and up to date. Each lesson you complete earns a ticket for your school. You could win $1,000 for your PTA.

Join Ed100

Already a member? Login

Or Create Account