Monthly Archives: June 2012


Deregulating School Aid in California: Revenues and Expenditures in the Second Year of Categorical Flexibility

By Jennifer Imazeki

California’s system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs; that is, programs whose funding is contingent on districts using the money in a particular way or for a particular purpose. In 2008–09, the strings were taken off 40 of those programs, collectively known as the “Tier 3″ programs, as part of a budget deal that also reduced the funding for those programs. The author gathers evidence about how districts have responded to this fiscal freedom, particularly how resource allocations are made at the district level and what specific changes districts have made in their allocations. Although concerns have been raised that those districts with relatively more Tier 3 funding have been disproportionately affected by the state’s budget crisis, the data show that districts with more Tier 3 funding lost a similar share of their budget as other districts (although that represents larger per-pupil dollar amounts). Furthermore, so far and on average, districts do not appear to be making large-scale changes in how they are spending their money.

Key Findings
Almost All Districts Have Lost Revenue over the Past Few Years; Districts with More Tier 3 Funding Lost a Similar Share of Their Total Budget as Other Districts

  • All districts have protected instructional personnel, special education, and pre-kindergarten.
  • Variation in how districts have responded to the budget cuts and the Tier 3 flexibility does not seem to be strongly correlated with any observable district characteristics.
  • The majority of Tier 3 funds are spent on direct instruction, with a slight shift toward personnel over other items.
  • Districts do not appear to be making large-scale changes in how they are spending their funds.

Districts with More Tier 3 Revenue per Pupil Spent Relatively More of That Revenue on Alternative Education, Adult Education, and Other Noninstructional Goals

  • They spent relatively less of their overall budgets on instructional personnel but relatively more of their total budget on pupil services and “all other” functions, possibly because they tend to have more students with higher needs (e.g., lower-performing, higher-poverty students), and they must devote more of their budgets to such pupil services such as counseling, health, and food.
  • They also seem to be somewhat more aggressive about maintaining special education.

Click HERE for full report

Deregulating School Aid in California: How Districts Responded to Flexibility in Tier 3 Categorical Funds in 2010–2011

By Brian M. Stecher, Bruce Fuller, Tom Timar. Julie A. Marsh, with Mary Briggs, Bing Han, Beth Katz, Angeline Spain, Anisah Waite

California’s system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs, that is, programs whose funding is contingent upon districts using the money in a particular way or for a particular purpose. In 2008–09, the strings were taken off 40 of those programs, collectively known as the “Tier 3″ programs, as part of a budget deal that also reduced the funding for those programs. The authors conducted a survey of 350 California school district chief financial officers (CFOs) between April and August of 2011 to see how district leaders responded to this sudden, limited fiscal flexibility and the conditions that shaped their decisions.

Key Findings

School District Leaders Had Limited Understanding of the Legislature’s Intent and Regulations Governing Tier 3 Funds

  • A year after implementation, uncertainty still persisted over the purposes of Tier 3 flexibility and the rules governing it.
  • Chief financial officers (CFOs) relied heavily on School Services of California and their county offices of education to make sense of the rules and regulations related to Tier 3 flexibility.

Decisions Were Made by District Central Office Staff

  • CFOs and superintendents had the greatest say in how Tier 3 funds were used.

The Bulk of Tier 3 Program Funds Were Reallocated, That Is, “Swept” into District General Funds to Help Meet Districts’ Most Pressing Needs

  • CFOs reported three top priorities: preserving fiscal solvency, retaining staff, and protecting current instructional programs.
  • There was nearly unanimous agreement that flexibility helped districts avoid layoffs and salary reductions.
  • Some programs took heavier hits than others, such as programs linked to teacher quality.
  • CFOs expect to reduce classified and certificated staff and increase class size in 2012 but were less likely to anticipate changes that require renegotiating contract provisions.

Recommendations

  • The legislature and governor should articulate clearly the purposes of fiscal flexibility in order to reduce confusion at the local level.
  • If the legislature and governor hold particular priorities with regard to improving the performance of low-achieving students or advancing certain reform models, those priorities should be made explicit to local educators.
  • Educators should have much clearer information and guidance to deal with multiple, interrelated policy changes.
  • The California Department of Education should require districts to use a common system for reporting on revenues and expenditures.
  • Policymakers should require an evaluation of the impact of flexibility to determine which students, schools, and programs benefit from fiscal flexibility, and which do not.

Click HERE for full report.