Are education funds well-spent? This question has two meanings:

Fiscal responsibility: Do school systems have adequate processes to ensure that funds are actually used for their intended purpose? California has a number of systems in place to hold school districts accountable on this score.

Productivity: Is the system producing acceptable results relative to the resources it spends?

Fiscal responsibility

In the Ed100 blog:
Schools are like businesses, but not in the way most people think.

There are about 10,000 schools in California. Even a small school is an operation comparable in size to a medium-sized business. Financial mismanagement by a school district is rare, but it happens — and it makes the news when it does. In a system this large, there is always a whiff of scandal to be found someplace. When mismanagement occurs, it tends to sow doubt and inspire vigilance.

California school districts live under scrutiny. They are required to balance their budgets annually and document how they will cover their projected operating expenses. They also have to show how they intend to cover long term obligations, such as the salaries of permanent employees, contractually promised raises, pension contributions, and debt repayment.

School districts and charter schools must use a standardized account code structure (SACS) 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.

School Business Officers

The chief financial gurus for schools and districts are known as School Business Officers. As with every profession, a organization supports them: The California Association of School Business Officers (CASBO, pronounced KAZZ-boe).

In 2018, researchers interviewed a collection of these officers to collect their impressions and opinions about the financial functioning of California districts. The findings were generally very positive, particularly in contrast to a similar study eleven years earlier. Overwhelmingly, the officers indicated that changes to the funding system (LCFF) and the accountability system (LCAP) were having a positive influence on the equitable and effective allocation of resources. The district officers also expressed a positive view of their relationship with County Offices of Education that oversee and support them.

Who reviews school district budgets?

The county sheriffs of California's education system

Since 1991, California has had a system in place to hold districts accountable for their fiscal management. The state requires County Offices of Education to review the annual budgets of each local school district. Districts must certify whether they are able to meet their financial obligations for the coming three years. County offices of education review and validate these self-certifications. If the county office determines that the district may not be able to pay its bills, it can call a state agency for help with a supportive intervention.

This system works quite well. Even in the Great Recession, only two school districts were taken over by the state.

This system demonstrated its effectiveness in the Great Recession. Beginning in 2008, school districts faced dramatic revenue cuts. The system identified more than 100 school districts in financial trouble but only two ended up losing their independence.

What happens if a school district goes bankrupt?

Public education is ultimately the constitutional responsibility of the state. Most of the time, the state's responsibility is delegated to school districts. When a school district is unable to pay its creditors, however, the state takes over.

In exchange for a loan, the local school board cedes its authority. Contracts are voided. The district superintendent is fired, replaced by an administrator appointed by the state Superintendent of Public Instruction.

Productivity in education systems

Money is not magic. States and locales that increase spending don’t automatically improve student outcomes. Money can pay for things that help students learn more, but it can also be used to pay for things that don't.

Will you get better student outcomes if you pay higher teacher salaries? Your district can do that. Maybe higher salaries would help make your district attract extraordinary teaching candidates, right? But higher salaries require trade offs, too — for example less support staff or larger class sizes. Will students do better?

There are some wonderful programs and tools that can help teachers. Should your district set aside funds to invest in them? What would help your district’s lowest-performing students improve? An extended day? Better curricular materials? A new arts program? Counseling? More time devoted to professional development for teachers? These are the hard tradeoffs that school boards must make.

Some school districts call on consulting organizations to help them think through the options. For example, Education Resource Strategies provides playful tools to support community members and district leaders as they consider the tradeoffs.

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

Updated August 2024