Term Paper on "Fixing California School Finance"

Term Paper 10 pages (3370 words) Sources: 1+

[EXCERPT] . . . .

Fixing California School Finance

The residents of California managed to spend more money for welfare than for education in 1994, according to the latest available statistics and are almost last on a nation level when it comes to per-capita spending on highways construction and repairing. This information is based upon the research contained in an American City Business Journals report, which has compiled data from the U.S. Census Bureau. This report put public state expenditure in five categories: public welfare, education, corrections, highways and governmental administration. Its findings are quite surprising.

For instance, California was once a state which boasted with one of the best interstate highway systems and with a very effective public education system. Still the numbers indicate that reputation is the only thing that has left from the state's former glory. California managed in 1994 to spend more than $28.5 billion (about $908 per person) for welfare. Sen. Alfred Alquist, D-San Jose said that "It's a shameful situation, but it's the same old problem: People want to have the best school systems and roads to drive, but they don't want to pay for them."

Sen. Alquist, who has served 34 years in the Legislature and is retiring at the end of this term, thinks that the causes of the practical impossibility to raise funds for education are a constitutional amendment (Proposition 13) and the reluctance of legislators to increase taxes. The senator stated that "After Proposition 13 was enacted, the state had to pick up the lost {property tax} revenues that would have gone to education." In the same context, it's worth mentioning that Bay Area freeways represent another very annoying problem and that it would seem that Alaskans spend six times more money collected from taxes, per-capita, on highways than do the Californians.

The sources of revenue for schools in California. There are five places wherefrom cash flows into California's school finance system. About 12% of the K-12 budget is the contribution of the federal government, which has raised from 8% in the 1996-1997 period. The state pays for about 55% of the expenses, with revenue generated by business and personal income taxes, sales taxes, and some special taxes. A quota of 25% is constituted by local property taxes. Less than 2% of the total amount (about $130 per student) comes from California Lottery. 7% of the total are miscellaneous local revenues.

The sources from which these proceeds are collected vary: special elections for parcel taxes (needs a two-thirds vote for approval); contributions from businesses, and individuals; foundations, food service sales, and interest on investments. These are the only sources with which the California K-12 public school system survives. All school expenses, ranging teacher salaries to energy costs are paid from each school's budget.

Distribution of funds to local school districts. At the beginning of the first decade of the 21st century, almost 2/3 of the money were directed toward general purposes, and another 30% went to special purposes or relevant categories of students. Each district exercised the liberty to set whatever combination of local, state and federal sources it desired.

The total amount depends on several factors, such as: average daily attendance or ADA, which is the average number of students attending school over the school year, the revenue limit, which is the general purpose money the district receives for each student and the categorical aid, i.e. The support for specific programs for which it qualifies. Less than 10% of funding statewide represents discretionary funds, because, with few exceptions, there are on restrictions on how this sum should be used.

The specific amount received by each school district. The criterion used by the Legislature to distribute funds to each school district is to relate to the total expenditure each district made in 1972 regarding general education programs; the amounts were correlated with inflation afterwards. An equalization of general purpose money spent by districts, per-pupil, in each type of district (i.e. elementary, unified, high school) was done by the Serrano v. Priest court case (1976).

At the end of the 90's, a $350 revenue limit was applicable to districts in which 97% of Calidornia's students went to class. However, there are still inequalities, so legislators of 2001-2002 voted for a multiyear plan which should equalize revenue limits. It has provided that a district's revenue limit may be increased only by law, and the influence of school boards, superintendents or local voters was eliminated. New construction or sales of houses bring important revenues to the state budget, by way of property taxes.

Still, there is no improvement to be felt by most schools. This additional tax pushes up the revenue limit and helps the state reduce its burden proportionately. 60 of the sun-state's 986 school districts complete their school funds by property taxes proceeds, and therefore manage to exceed the revenue limit. The amount over that limit may be kept by the districts, but that doesn't mean that the state's contribution disappears, as the Californian constitution guarantees "basic aid" from the state, in amount of at least $120 per pupil.

Categorical aid. The criterion for distributing this kind of aid is represented by the specific needs of the children in one district and the special programs for which that particular district meets the required conditions. The aid comes from the state and the federal government and is more than a third of the income in some districts.

Beginning form 40 years ago, there have been more than 80 categorical programs, created by court decisions, legislative priorities, and pressure from interest groups. The targets of these aids are very diverse: they may be directed to provision of specific services (e.g. school lunches), or to the needs of traditionally underserved students. The most important categorical program is Special Education, which has the purpose of providing extra services that will improve the education of students with disabilities. The final purpose of these programs may be statutory or not.

Although there are some completely voluntary programs, most of them support districts when it comes to providing for services required by law. Others act as an incentive, such as the K-3 Class Size Reduction, and encourage the districts to implement a program or a reform. Legislators are currently debating the possibility of simplifying categorical aids provided by the state, in order to give more flexibility to school districts.

The problem of sufficient funding of California's school system. The issue of funding adequacy is often discussed in California in relation to improving the financial situation of public schools. The main argument whereon the critiques are founded is that other states, who rely on local property taxes in order to finance school funds, manage to provide a much better funding, which lead to the conclusion that what California is doing for schools is insufficient. The cause of this apparent problem is that Proposition 13, passed in 1978, placed a cap on property tax increases, applicable on a state level, which lead to a lower funds available to schools. The shortfall was made up by the state, who took control of K-12 funding.

The education expenses were tied to the state budget in 1988, when Proposition 98 was passed. The minimum annual level of state and local property tax support for K-12 schools and community colleges is calculated by using a set of formulas, provided by the law and based on the economy's health.

Starting with the 1970's, per-pupil expenditures in California become lower and lower, compared to the national average. Due the fact that between 1998 and 2001, the state spent heavily on education, that situation has changed. The National Education Association indicated that the national average for 2001-2002 is at $8,087 and that California has spen t$7,324 per pupil. However, 2001 was the year when the state budget crisis began, so further increases in the education funding are improbable. Proper determination of the adequate level of funding for provision of education needs, so that all students meet the academic standards, and a new model of categorical funding, which should provide greater flexibility, are necessary.

From the 1970s to the mid-1990s, per-pupil expenditures in California lost ground compared to the national average. However, that trend reversed somewhat between 1998 and 2001 as the state invested more in K-12 education. National Education Association (NEA) data for 2001-02 indicate that at $7,324 per pupil, California spent about $760 less per pupil than the national average of $8,087. The state's budget crisis, which began in 2001, is expected to prevent substantial increases in education spending for several years. Meanwhile, in 2003 state leaders are expected to appoint a commission to work on creating a Quality Education Model. The commission's goal will be to help the state determine what level of funding would be adequate to provide the education services schools need to help all students meet the state's academic standards. The model is also expected to include a re-thinking of categorical funding that provides greater flexibility but includes processes for holding local school districts more accountable for… READ MORE

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