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Lesson 8.8

Is Education Money Well Spent?

Do schools waste money?

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When people talk about whether education funds are used effectively, they can be using two different definitions of “well spent.”

One definition is that a district or charter school is fiscally responsible, a conscientious steward of the public trust who acts with integrity and manages its operations within the letter of the law and using good financial practices. California has a number of systems in place to hold districts accountable on this score.

The second definition is that the system is getting an acceptable level of educational productivity - student achievement, in other words - out of the resources it spends. This kind of evaluation of education spending is challenging, but will likely be of increasing interest in California as districts take greater ownership of their budgets under the Local Control Funding Formula system. Clear thinking about educational effectiveness is central to the new Local Control Accountability Plans (LCAPs) that districts must develop.

Well Spent = Fiscal Responsibility

Financial mismanagement by a school district usually makes the news when it occurs, perhaps because it is relatively rare. Such stories do raise skepticism among the public and policymakers about how well the public interest is being protected. A number of regulations and state laws address these worries.

For example, California school districts are required to balance their budgets annually, showing how they will cover their projected expenses. They also have to show how they intend to cover long term obligations, such as employee contracts and raises. They must use a standardized account code structure to track their revenues and expenditures, report to the state about their past and current budgets, pay for annual independent audits, and operate within a variety of other legal constraints.

Since 1991, California has had a system in place to hold districts accountable for their fiscal management. First with the passage of AB 1200 and then with revisions made in 2004, the state requires County Offices of Education to review the annual budgets of each local school district. Districts must certify if they are able to meet their financial obligations for the coming three years. County offices of education validate those self-certifications. Interventions occur when districts or county offices find that a district is not going to be able to pay its bills.

In the Great Recession, only two school districts were taken over by the state.

Faced with the dramatic revenue cuts that began in 2008, over 100 of California’s school districts found themselves in financial trouble but only two ended up with the state stepping in to provide a loan and take over their financial affairs. Given the extent of the cuts, one could argue that the state’s safeguards proved fairly effective.

Well-Spent = Educational Productivity

The correlation between education results and education spending is complicated. States and locales that have increased spending don’t automatically see dramatic return for the money invested. At the margin, it is often unclear how to turn additional money into student learning results.

Are you going to get better student outcomes if you pay higher teacher salaries to get the best teachers? Your district can do that, but it may mean each teacher will be responsible for more students. Or will students do better if class sizes are smaller, which you can accomplish by paying lower teacher salaries so that you have more of them?

There are wonderful programs and tools for learning. Should your district invest in those? What extra supports will work best to improve the achievement of your district’s lowest-performing students? Absent additional funding, what has to be sacrificed to bring in a new program? When funding does increase, what will improve student learning more - an extended day and a new arts program or more time devoted to professional development for teachers?

A fun tool for evaluating school expenditures. A fun tool for evaluating school expenditures.

Which expenditure choices will yield the best results? Answering that question is far from an exact science, but there are an increasing number of researchers and organizations taking on the challenge. Education Resource Strategies provides tools like this one to support community members and district leaders in this effort.

All of these questions feel particularly difficult to answer in California. As described in Lesson 8.1, the state’s investment in public education is so low that it almost certainly is part of the reason for California’s weak test results. As discussed in Lesson 1.2, weak test results are bad news partly because they predict a society's future economic health.

The next lesson explores the options Californians have for raising the level of education funding.


In the Great Recession, decreased funding put enormous pressure on school systems. How many of California's ~1,000 school districts were taken over by the state during this period for fiscal insolvency?

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Questions & Comments

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user avatar
g4joer6 April 22, 2015 at 10:11 pm
I say yes to the excerpt from above: " When funding does increase, what will improve student learning more – an extended day and a new arts program or more time devoted to professional development for teachers?
user avatar
Steven N October 1, 2015 at 12:48 pm
But as a Board member, it is often a Zero-Sum-Game. So the question is 'what does the community want more'? A new arts program may have no measurable effect on academic measures - but be very valued by the parents. An extendeed day, if well implemented in K-3 for Economically Disadvantaged, should have statistically significant standardized test score results - which are very valued by the residential property owners! (who then vote for more Parcel Taxes). A poorly done PD program for teachers - will have no gain. Productivity is not equal to Expendatures.
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