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Lesson 8.5

Local Control Funding Formula:
LCFF Dictates How State Funds Flow to School Districts

Here’s how LCFF works. The short version.

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Last Updated April 5, 2017

In politics and government, the golden rule gets a new spin:

“He who has the gold makes the rules.”

In California (as explained in Lesson 8.3) the state provides - or at least controls - most of the money public schools need to hire teachers, buy books, and generally keep classrooms operating. Accordingly, the state makes many important rules about schooling, but one of the most important involves how it distributes funds to school districts. (Technically, the state apportions funds to Local Education Agencies, a term that includes districts, county offices of education and charter schools. Insiders call them LEAs.)

LCFF Provides Funds Based on Student Characteristics

Prior to 2013, California had an almost impossibly complex system for allocating funds to school districts. It had been developed without consistent principles over many years, and it was loaded with inconsistencies and special arrangements. That system was erased when California lawmakers creating the Local Control Funding Formula (LCFF), a much simpler and fairer set of rules.

The big idea of LCFF is that school districts and charter schools with "higher need" students get more money to invest in those students. Here is how it works:

  1. All districts receive a “base grant” for each student. The amount is based on the grade level of the student. The base grant is higher for grades 9-12 than for other grade levels.
  2. 2020-21 2020-21 "Base Rate" targets for funding per student established under the Local Control Funding Formula in 2013.
  3. Districts receive 20% additional “Supplemental Funding” per student for students with higher needs -- children Learning English, in poverty, and/or in foster care.
  4. Districts with large concentrations of needy students get even more money. If more than 55% of children in the district are in poverty, in foster care, or learning English, the district receives an extra 50% of the base grant for each student beyond the 55% threshold. This is called “Concentration Funding”. (For example, a district with 60% high need students receives 150% of base funding for 5% of its students.)

The end result is that districts receive very different levels of funding based on how many English language learners, children in poverty and children in foster care they have. But unlike the old system, in which funds were apportioned with strong restrictions on how they could be used, under LCFF the use of funds is substantially left to school districts, subject to the intent of the LCFF law. This was a big change. Now the districts hold the gold, and make the rules.

There can be a big difference between intent and reality. Are districts actually following through on the intent of LCFF by investing more money in higher-need students? It's hard to know. The districts hold the gold, make the rules, and conduct their own accounting. The Local Control Accountability Plan (LCAP) is intended to provide information about the actual use of LCFF funds, but the accounting detail in the LCAP is minimal. In practice, it is up to community leaders to enforce the intent of the law. Nonprofit law firms and advocacy groups like Public Advocates and the ACLU have begun playing a critical role, supporting litigation against districts that use LCFF targeted funds in ways that aren't targeted. These cases are difficult. Standard public reports don't necessarily show where school district money is spent, and organizations have had to use Freedom of Information Act requests and the threat of litigation to obtain the detailed information required.

The transition to the LCFF system was unexpectedly rapid: originally forecast to take seven years, the job was essentially done in three due to strong growth in California's tax receipts. http://fairshare4kids.org/ is a good site to see if your district is among the rare exceptions.

The first step in filling a district's LCFF bucket is to pour in all the local property taxes. If those taxes fill the bucket halfway, state money is used to fill the other half of the bucket. If property taxes fill the bucket two-thirds of the way, state money fills the other third. The first step in filling a district's LCFF bucket is to pour in all the local property taxes. If those taxes fill the bucket halfway, state money is used to fill the other half of the bucket. If property taxes fill the bucket two-thirds of the way, state money fills the other third.
In perhaps as many as 100 school districts in California, the property taxes fill or overflow the LCFF Funding Bucket. In those cases, the districts keep all their local property taxes and get no LCFF money from the state. These are known as “Basic Aid” or “Excess Tax” districts.In perhaps as many as 100 school districts in California, the property taxes will fill or overflow the LCFF Funding Bucket. In those cases, the districts keep all their property taxes and get no LCFF money from the state. These are known as “Basic Aid” or “Excess Tax” districts.

All LCFF funds are technically “unrestricted,” which means school districts have discretion over how they are used. However, as explained in Lesson 7.8, there are also new accountability rules that apply. An important element of the Local Control Funding Formula is that school districts must engage parents and community to create a Local Control and Accountability Plan (LCAP). See Lesson 7.10 and What's an LCAP? for more information on how spending decisions are made.

Some State Funds Are Outside of LCFF

It’s important to know that LCFF Funding is not the only state money school districts receive. There are several programs for which a given district or charter school might be eligible and together they represent more than 10% of the state funds that go to K-12 education. These funds come with strings attached. If a district does not run a particular program or have eligible students, it generally won’t receive the funds.

Source: LAO CalFacts card 34

The largest of these programs is Special Education, which has its own set of allocation rules and also requires the district to spend funds from its base allocation (see Lesson 8.6). Other programs include the Quality Education Improvement Act, the state’s after school program, home-to-school transportation, and child nutrition (e.g. school lunches).

Lottery funds of about $150 per student are also outside of the LCFF funding formula but are uniformly distributed. In any given year the state may also provide some one-time monies for specific purposes.

State leaders also left intact the funding some districts received from two old categorical programs. Districts that received Targeted Instructional Improvement Grants (TIIG) continue to receive the extra amount they got in 2012-13, with full flexibility in how they spend the money. Similarly, eligible districts will continue to receive their 2012-13 Transportation grant amounts, but they are required to spend those funds on student transportation.

In addition, the federal government largely delegates to the state department of education the task of disbursing federal funding. Most of those funds are for specific programs as largely explained in Lesson 7.2.

Updated April 5, 2017 to include litigation to enforce equity in use of LCFF funds

Review

Which ONE of the following statements about the Local Control Funding Formula (LCFF) is TRUE?

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Questions & Comments

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user avatar
April 16, 2017 at 1:33 pm
A clarification with regard to item #2 above, "Districts receive 20% additional “Supplemental Funding” per student for students with higher needs -- children Learning English, in poverty, and/or in foster care.". Supplemental funding per LCFF uses an "unduplicated" pupil count. Thus, for the purposes of funding, a pupil may be counted in only one category.
user avatar
Sherry Schnell April 6, 2015 at 8:37 pm
I think it's important for parents in our district to understand how money flows to the district, but because of the size of the state, we have limited influence on that. It may be more important for parents to understand how money flows to schools WITHIN the district. Some schools don't have enough to meet basic needs, while others have more.
user avatar
Mary Perry April 7, 2015 at 1:19 pm
Sherry - it's absolutely true that parents ought to understand how districts allocate money to their schools. Since those decisions vary a lot from one school district to another, we'd encourage parents to directly ask school officials that very important question. You might want to start with your school principal, but if you don't learn what you want to know or that raises additional questions, my next stop would be the superintendent's office. Your locally elected school board members should also be helpful. Some districts make school budget decisions very transparent and others do not. In my view, all should be happy to answer these kinds of parent questions.

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