IUCATION Policy Paper No. PP87-6-9 V” California Public School Finance Programs, 1986-87 Allan R. Odden June 1987 Directors James W. Guthrie University of California Berkeley Michael W. Kirst Stanford University Policy Paper No. PP87-6-9 l/ California Public School Finance Programs, 1986-87 Allan R. Odden June 1987 xii; rig-'1, Allan R. Odden is associate professor of education at the University of Southern California and director of the Southern California PACE Center. This paper was sponsored and published by Policy Analysis for California Education, PACE. PACE is funded by the William and Flora Hewlett Foundation and directed jointly by James W. Guthrie and Michael W. Kirst. The analyses and conclusions in this paper are those of the author and are not necessarily endorsed by the Hewlett Foundation. The author wishes to acknowledge the helpful criticisms and . assistance of Bob Agee, Jim Wilson, Bob Oliphant, Joe Barankm, John Mockler, and Ken Hall. Additional copies of this paper, PP87-6-9, are available by sending $3.00 per copy to: PACE School of Education University of California Berkeley, California 94720 CHECKS PAYABLE TO THE REGENTS OF THE UNIVERSITY OF CALIFORNIA (California residents add appropriate sales tax.,) Policy Paper No. PP87-6-9 Policy Analysis for California Education (PACE) Berkeley, California June 1987 ii Contents Policy Analysis for California Education ................................................. v Selected School Finance Facts ...................................................... 1 Total State Aid ............................................................................ 4 General Aid, Block Grants ........................................................... 4 District Revenue Limits ..................................................................... 4 Instructional Time Incentive ................................................................ 4 Necessary Small Schools ................................................................... 5 Summer School .............................................................................. 6 Revenue Limit Equalization ................................................................. 6 County Office of Education Revenue Limits ................................... 6 Targeted or Categorical Programs ................................................. 7 Special Education ............................................................................ 7 Desegregation, Court Mandated and Voluntary ........................................ 10 Transportation .............................................................................. 10 Child Development: Preschool and Child Care Services ............................. 10 School Improvement ...................................................................... l 1 Adult Education ............................................................................ 1 1 Regional Occupational Centers ........................................................... 12 Economic Impact Aid (Compensatory and Bilingual Education) ..................... 12 Staff Development ......................................................................... 13 Instructional Materials ..................................................................... 14 Urban Impact Aid and Meade Aid ....................................................... 14 Gifted and Talented Education ........................................................... 15 Remedial Reading (Miller-Unruh) ....................................................... 15 Dropout Prevention ........................................................................ 15 Tenth Grade Counseling .................................................................. 16 Year-Round School Incentives/Alternatives to School Construction ................ 16 Capital Outlay Programs ............................................................ 16 Other Programs ......................................................................... l7 .- A 5'.‘ "a. ._ ~ ,3 fif‘fi“ ' Policy Analysis for California Education Policy Analysis for California Education, PACE, is a university-based research center focusing on issues of state educational policy and practice. PACE is located in the Schools of Education at the University of California, Berkeley and Stanford University. It is funded by the William and Flora Hewlett Foundation and directed jointly by James W. Guthrie and Michael W. Kirst. PACE operates satellite centers in Sacramento and Southern California. These are directed by Gerald C. Hayward (Sacramento) and Allan R. Odden (University of Southern California). PACE efforts center on five tasks: (1) collecting and distributing objective information about the conditions of education in California, (2) analyzing state educational policy issues and the policy environment, (3) evaluating school reforms and state educational practices, (4) providing technical support to policy makers, and (5) facilitating discussion of educational issues. The PACE research agenda is developed in consultation with public officials and staff. In this way, PACE endeavors to address policy issues of immediate concern and to fill the short- term needs of decision makers for information and analysis. PACE publications include Policy Papers, which report research findings; the Policy Forum, which presents views of notable individuals; and Update, an annotated list of all PACE papers completed and in progress. Advisory Board Mario Camara A. Alan Post Partner California Legislative Analyst, Cox, Castle & Nicholson Retired Constance Carroll Sharon Schuster President, Saddleback Executive Vice President Community College American Association of University Women Gerald Foster Eugene Webb Region Vice President Professor, Graduate School of Business Pacific Bell Stanford University Robert Maynard Aaron Wildavsky Editor and President Professor of Political Science The Oakland Tribune University of California, Berkeley 15>“; ,1 . [d ffiw mmi . ifii’isi T: ‘M ‘ California Public School Finance Programs, 1986-87 This paper provides an overview of California's school finance system, including selected school finance facts, descriptions of the general revenue limit and categorical programs funding formulas, and, for each program, the amount appropriated for 1986-87, number of districts participating, and number of students served. Selected School Finance Facts 1. For the 1986-87 school year, there are 1028 local school districts, including 271 unified, 645 elementary, and 112 high school districts. More than 50 percent of California's school districts have less than 500 students. For 1985-86, there were 7362 schools, including 4533 elementary, 693 intermediate, 258 junior high, 821 high, 419 continuation, 329 special education, and 309 county-run schools. 2. Average K-12 student daily attendance for 1986-87 is estimated to be 4,296,000. Enrollments are predicted to rise by about 100,000 students for each of the next 10 years. 3. Property taxes are levied on a county-wide basis at one percent of assessed valuation. Debt service obligations at the time of Proposition 13 are excluded from the one percent limit until the debt is eliminated. For property that has not been sold since Proposition 13 (June 1978), assessed value is 1976 market value with up to two percent annual inflation; for property that has been sold, assessed value is market value at time of sale plus up to two percent inflation in subsequent years. Property tax revenues in each county are apportioned to local governments, including school districts and the 58 county offices of education, and special districts on the basis of the proportion of total county tax receipts as of Proposition 13. 4. Beginning in FY1987, school districts were given access to two new revenue sources, both for capital construction: a bonded indebtedness property tax levy if approved by two-thirds of the voters and a fee on newly developed property (up to $1.50 per square foot for residential and up to $0.25 per square foot for commerical property) that can be levied by local school boards without voter approval. 5. California's school finance system, called a revenue limit program, is virtually a full state funding system. The state determines the allowable revenue limit for each district; state aid is the difference between that limit and the district's proportional share of the county's local property tax revenue receipts. Local districts have virtually no ability to raise additional tax revenues. V" a: "8.1—: . grid, gt 7.3; Ham/4.. ,..W.~m~”~ 6. Revenue limits vary by type and size of district. For elementary districts in 1986-87, the average revenue limits are $3084 for districts with less than 101 students and $2423 for districts with more than 100 students. For high school districts, the average revenue limits are $3422 for districts with less than 301 students, and $3011 for districts with greater than 300 students. For unified districts, the average revenue limits are $2776 for districts with less than 1501 students and $2578 for districts with greater than 1500 students. Revenue limits were increased by an average of 5.49 percent from 1985-86 averages, or about $125 for elementary, $154 for high school and $132 for unified districts. Districts are entitled to a constitutional minimum of $120 per pupil, or a total of $2400, of general state aid. 7. Base revenue limits are adjusted for several factors including size (in terms of numbers of students), degree to which below state average revenue limits (called the equalization adjustment), necessary small schools and student enrollment growth. In addition, two programs of California's 1983 education reform, SB 813, have been included as an adjustment in the revenue limit: higher beginning teacher salaries and longer school days and years. 8. Because each district's base revenue limit for 1986—87 essentially is determined by the revenue limit for 1985-86 plus a statutory inflation factor, increases in local property taxes only serve to reduce the level of state aid needed. Put differently, unexpectedly large rises in property tax receipts function only to reduce the amount of state general aid; they do not produce larger increases in local expenditures. 9. For 1986-87, total operating revenues are estimated to be $17.4 billion including $12.45 billion of state funds, $3.29 billion of local funds and $1.26 billion of federal aid. State funds constitute 71.7 percent of total operating revenues. These funds include child care, adult education and cafeteria program dollars. Source Amount (millions) Percent of Total Federal $ 1,256,134 7.2 State 12,497,743 71.8 Local 3,293,506 18.9 Other 364,302 2.1 Total Operating: $ 17,411,681 10. For 1986-87, total funding for capital outlay is estimated to be $694,149,000, with $600,000,000 deriving from two school building bond acts. For education and most other state functions, California increasingly is using state bonds to finance capital construction. 11. According to the Legislative Analyst, total school funding, which includes the total in item nine above plus capital outlay funds and miscellaneous revenues, has increased significantly in California since 1983. Total funding rose from $12.9 billion in 1982-83 to $19.3 billion in 198687, a four-year rise of $6.4 billion or nearly 50 percent. awvmdwflww fiMMMMM... M. . MM MMMMM MM: $9M...» x .. 1..» M M . MM MM 4 z .w 1 .M», i . K A.) «w w» , M: 4 M. ' M MM . .5... M 2 .. M M... . , . . 1» M y M \ SM. » .3 M .n. I . .u xcy M y M \ 2M x M v {,7 M x. la? ”NM Ev.» NM , HM... . .. M {1.9. ... HM . MM , M , . . .. . . z imM? .MMMM My.» MMMMMMM M 32...... MM r .MMMMMMMM . MMM. .. .MMMM 12. For 1986-87, the state also will provide $497.4 million for the state teachers retirement system; these funds mainly cover unfunded liability from previous decades and purchasing power protection of current retirees. This amount is included in the above state totals. In addition, local educators contribute about 8.33 percent of their salary to the state retirement system, and local districts contribute an additional 8.4 percent 13. The major school finance court case continues to be Serrano v. Priest. The state's supreme court found the California system unconstitutional in its December 1976 decision. In 1985, on a new court challenge, the Los Angeles County Superior Court ruled that the system had been brought into sufficient compliance with the Serrano mandate of reducing expenditure disparities to within $100 of the state average, so as not to find the system unconstitutional. In reaching this decision, the court allowed an inflation adjusted expenditure band of about $200 from the state average. This decision is now on appeal to the state Supreme Court. 14. In addition to the revenue limit—blockgrants to local districts—California has about 70 additional categorical programs. State categorical funding totaled $3,186,141 ,000 in 1986—87. Since there is virtually no local property tax leeway, most of the programs do not require a local match. 15. California's education reform, SB 813, created several new incentive and categorical programs, some of the largest and most significant being: 0 minimum teacher salaries - longer day and longer year 0 mentor teachers 0 teacher instructional improvement grants (mini—grants) . administrator training centers 0 a tenth grade counseling program. After SB 813, the state developed a dropout prevention program. 16. In November 1984, voters approved a statewide lottery, designating the proceeds for education, primarily elementary and secondary education. For 1985-86, school districts received a total of $689 million in lottery aid; for 1986-87, lottery funds are estimated to total $499.4 million (included above as state funds). The decrease is due in part to expenses in developing a computer based lotto system and declines from initial lottery sales—actual, initial sales were higher than any initial projections. Total State Aid Name of Program 0 Legal Citation - Amount Appropriated for 1986-87 . Percent of State Funds Appropriated - Program Description $12,497,743,000 (100%) 1. General Aid, Block Grants a. District Revenue Limits Education Code (EC) 42238 $7,864,684,000 (62.9%) District revenue limits are based, in part, on historic expenditure patterns. The revenue limit represents the level of expenditure per ADA for which districts are funded through a combination of local property taxes and state General Fund aid. The state provides enough funds to make up the difference between each district's revenue limit per ADA and property taxes per ADA. Revenue limits vary by district type (elementary, secondary, and unified) and district size (in terms of ADA). Each year the revenue limit is increased by a fixed-dollar figure which equals the average statewide revenue limit for the appropriate district type and size times a cost of living adjustment (COLA); the COLA is the national state and local government deflator. More than 95percent of the state's ADA attend schools in districts in which the base revenue limit is within $200 of the statewide average revenue limit for that type and size of - district. b. Instructional Time Incentive EC 46200 $107,868,000 (0.86%) California's 1983 education reform, SB 813, provided fiscal incentives for districts to meet minimum conditions for length of school year and day. Schools receive an extra $35 per student if they have at least a ISO-day 4 Calculation of State and local Shares of Program Cost - Extent of District/S chool Participation Since local school districts cannot raise additional local property taxes, there is no local share for any program, except where noted. , Number of districts: 1028 Number of students: 4,296,000 Local Share: $ 3,186,984 Number of districts: 1028 Number of students: 4,296,000 Number of districts: 1000 Number of students: nearly all school year. To qualify for extra funds for a longer school day, districts need to provide a minimum of 36,000 minutes of instruction per year (200 mimites per day for 180 days) for kindergarten, a minimum of 50,400 minutes of instruction per year (280 minutes per day for 180 days) for grades 1 to 3, 54,000 minutes per year (300 minutes per day for 180 days) for grades 4 to 8, and 64,800 minutes per year (360 minutes per day for 180 days) for grades 8 to 12. Qualifying districts received an additional $20 per elementary pupil and $40 per secondary pupil for each of three years and reached full funding in 1986. For participating districts, the funds are included as an adjustment to the base revenue limit c. Necessary Small Schools EC 42238 [f] $17,778,000 (0.14%) California provides a higher revenue limit for districts that contain necessary but small elementary and secondary schools, in addition to the general revenue limit adjustments for small district size. To qualify, districts must have less than 2501 ADA. For necessary, small elementary schools, the following table shows the relationship between the school's ADA, number of FTE teacher positions allowed, and the total dollar allowance: ADA Teacher FTE Dollar Amount 1 - 25 1 $ 62,875 26 - 50 2 125,750 51 - 75 3 188,625 76 - 100 4 251,500 For necessary, small secondary schools, the figures are as follows: ADA Teacher FI'E Dollar Amount 1 - 20 1, 2 or 3 $51,050 per FI'E, but $227,200 if 3 FI‘E . 21 - 40 4 $227,200 + $51,050 or $278,250 41 - 60 5 329,300 61 - 75 6 380,350 76 - 90 7 431,400 91 - 105 8 482,450 106 - 120 9 533,500 121 — 135 10 584,550 “HEM. Mfg mm‘m . Mm Eur» $.me aw.“ a «Mm». w. 2 $5 PK {5:5, .,.a fix : 136 - 150 11 635,600 151 - 180 12 686,650 181 - 220 13 737,700 221 - 260 14 788,750 261 - 300 15 839,800 (1. Summer School EC 42239 $ 69,898,000 (0.56%) School districts can receive state support for summer school instruction offered to students in mathematics, science, and "other core academic areas designated by the Superintendent of Public Instruction," for local proficiency test review, and courses needed for graduating seniors. The law limits funded summer enrollments to five percent of a district's prior year total enrollment for all grades. Schools are reimbursed at an hourly rate, for up to 120 hours of instruction per pupil, at the rate of $1.78 per pupil-hour. e. Revenue Limit Equalization . EC 42238.1 $ 21,600.000 (0.17%) This adjustment increases a district's base revenue limit by 0.20 of the difference between the acutal base revenue limit and the statewide average revenue limit for the district of appropriate type and size. The purpose is to bring all districts to within $200 of the statewide average revenue limit for its comparative class of district. 2. County Office of Education Revenue Limits EC 1909, 2553.5, 2558 $102,276,000 (0.82%) County offices of education are service agencies for all districts and provide instruction. supervision, health, pupil personnel, curriculum, special education, fiscal services, etc. Number of districts: 656 Number of students: 26,156 Number of county districts: 58 Number of pupils: 19,800 “he; 0 : fiat“ . '33 V. V 5.9 ‘9 gi- f ; ,, C. ,g .a y” :‘ , ‘1 u- . V 3 .A . ‘ « u I x h ; x. ~ .442 ff~ : ‘f ‘é‘ f: . ,v, ‘ ’- j, ' 4 mm ..~ “ _ . H ‘ .,. v 1 I ~ , ‘ 1 $ | I y "L ‘t’ , «a. \ A , _ , w ' v w ‘ . c v 7'4 ,3 ' x x. N A - no. . , 4 "- , , ~ . 1‘ r , \ :0 A _ ‘ ~, "V, ‘ "A . , ; ~> V {m 4,, . A _ , , . ‘ ‘, ‘ ¢ ‘ _ \ _ ‘ ,; . . - ,, k * I :4 H 4 ‘ , . ‘ . u )> 4 . ‘TT‘ . m 3 ‘ .1 o. Tenth Grade Counseling EC 48431.6 $7,603,000 (0.06%) Number of districts: 1000 Number of students: 380,000 California's 1983 education reform authorized $20 per pupil in grade 10 for extra counseling in an academic program that would lead to high school graduation. Schools implement the program in a variety of ways, but must provide additional counseling to every tenth grade student. p. Year Round School Incentives/Altematives to School Construction EC 17717.7 and 17857 $3,639,000 (0.03%) Number of districts: NA ‘ Number of students: NA California's 1983 education reform authorized an incentive of $25 per pupil for every pupil attending a school operating on a year-round school basis because of overcrowding. In 1986, an additional incentive up to $125 per pupil was authorized for the same purpose. Funding for these programs is estimated to rise to $15,000,000 for 1987-88. 4. Capital Outlay Programs $694,159,000 Local match: for construction, the yield from levying a developer's fee on newly constructed property at the rate of $1.50 per square foot for residential property and $0.25 per square foot for commerical pr0perty California funds nearly all school building construction and rehabilitation from state funds. The two major programs, in addition to the year-round school incentives and Number of districts: all potentially eligible asbestos abatement, are construction, reconstruction, modernization and deferred maintenance, and emergency portable classrooms. For construction, the state provides the funding less the yield from a locally levied developers fee. The state specifies the size of a lot for elementary, middle, and high schools, and allowable square footage for which reimbursement will be provided. The state also pays for deferred maintenance on a dollar-for-dollar matching basis; the maximum amount of this entitlement is limited to one percent of a district's total local general fund budget (excluding capital outlay). In addition, the state purchases and then leases relocatable classrooms with furnishings to local districts at the rate of $2,000 per year; the state now has about 2000 such classrooms, and purchases more each year.In 1986-87, the total cost of such a classroom is $38,000. There currently is a backlog of 460 needed relocatable classrooms, and an even larger backlog for the construction of new schools. 16 .. s .w ‘ . ., , “ agnuwp/ ‘ . ‘ V , ., 3 rm, a y r Afr ; z _ { Y . w, w A a it . M x . u a m, .4 y w o, my my $3“ 4% y yummy yin. ( ”m ms? 3 . , . in: F7 . a .. L r u y y - 1m 4 .u . . M M, ,_c .. , y . ‘ . . y. A.» v. > . r i. ‘3 .e v m \ A ‘ .. . y 1 Z w 9 ¢. )_ A. I « _ h ,k. kw. a. x , y y Eryn gm,” .. :2: . . w, , . y ,, l . . . my 4 k y... \ £0 ,. ‘ . . m. C2 , a I x, m.“ V. a . M . xx , may A ._ 3.1,:ij ? my “Pal? .‘ , may may myflmyw aw“, . _, a .y ,, me 5. Other Programs 0 Meals for Needy Students - Apprentice Programs - Adults in Correctional Facilities 0 Foster Youth Services - Specialized Secondary Programs 0 Youth Suicide Prevention 0 Agricultural Vocational Education 0 Native American Indian Education 0 American Indian Education 0 Reading/Math Demonstration 0 Education Technology - Child Nutrition . Small District Bus Replacement 0 Health Education 0 Intergenerational Programs 0 Alternatives to Special Education - School Law Enforcement 0 GAIN EC 49550 EC 8153 EC 41841.5 EC 42920 BC 58800 BC 10200 BC 52460 BC 52063 BC 33380 BC 58600 BC 51870 BC 49530 EC 42290 BC 51880 BC 32260 BC 33117.5 $25,888,000 $ 2,721,000 $ 1,885,000 $ 821,000 $ 2,101,000 $ 315,000 $ 3,000,000 $ 365,000 $ 861,000 $ 4,367,000 $26,155,000 $37,360,000 $ 3,120,000 $ 677,000 $ 165,000 $ 210,000 $ 150,000 $ 2,000,000 u up 43 3 . 3; > .3 . Peninsula Academies (Voc Ed) - Asbestos Abatement - Driver Training . Environmental Education 0 Drug and Alcohol Abuse Prevention EC 54690 EC 41304 EC 8700 EC 51202 18 $ 600,000 $ 9,850,000 $19,000,000 $ $ 604,000 250,000 . , 398w N. .. Swagm N . ,. . F gag. mm». a .. . . . . , a «t» _ . . ,KKK _ K . , _ . K w- ., K; K {KKK T K K KHZ «(Krwnmelm (WmKKKm MN». I. a“ x K k K . K. K L ,a M K. :31 K» EEEEEEEEEEEEEEEEE l\|||||\l‘|\H||\\\|\|\IN“I“||”!llll\||l\\\|||\\|l|ll|\ CLIENDDE