Wide school disparities persist 54 years after California’s landmark funding decision

In 1971 California’s Supreme Court issued one of its most important and far-reaching decisions, declaring that the state’s system of financing public schools — primarily via locally levied property taxes — was unconstitutionally unfair.

It ruled that because there were huge disparities in the amount of taxable property per-student, there were also “substantial disparities in expenditures per pupil among school districts,” which “perpetuate substantial disparities in the quality and extent of availability of educational opportunities. For this reason the school financing system before the court fails to provide equality of treatment to all the pupils in the state.”

The decision ignited decades of political debate, particularly in the Legislature, over “equalization” — bringing per pupil spending into rough equity. Four years after that decision Republican legislators even held up passage of the state budget, demanding more school money for their suburban districts, which relied on taxing houses, to offset the greater ability of urban schools to raise money because they could tax commercial and industrial property.

The equalization conflict has been punctuated by two landmark ballot measures. In 1978 Proposition 13, which sharply limited property taxes, had the indirect effect of shifting the basic financing of schools to the state. Proposition 98, enacted a decade later, aimed at guaranteeing schools a permanent share, roughly 40%, of the state’s general fund revenues.

Another milestone occurred in 2013, when then-Gov. Jerry Brown persuaded the Legislature to enact the Local Control Funding Formula, which re-interpreted equalization to give schools with large numbers of poor and English-learner students additional funds to close what was called the “achievement gap.”

A new wrinkle in the perpetual equalization debate popped up this year. Senate Bill 743, carried by state Sen. Dave Cortese, a San Jose Democrat, is aimed at offsetting the ability of school districts in high-wealth communities to generate so much property tax money that they qualify for only token amounts of state aid.

These 139 “basic aid districts” can raise large amounts of property taxes because the Legislature decided, after the passage of Proposition 13, to freeze existing shares of each county’s property tax pool.

Cortese deems that an “antiquated 1978 funding formula that has created winners and losers in the public education system for the last 45 years” and says his measure is “about equalization and reversing the consequences of past mistakes.”

His bill would create an state education endowment fund that would provide extra money to non-basic aid districts. It cleared the Senate Education Committee this week.

While Cortese’s measure could narrow remaining gaps in per-pupil spending, there still would be wide disparities simply because property taxes remain a major factor in school financing, despite the overall limits imposed by Proposition 13. And communities vary widely in their taxable property values.

In other words, what the state Supreme Court declared to be constitutionally unacceptable in 1971 still exists in 2025.

Complete equalization would probably require eliminating property tax allocations to schools, substituting 100% financing from the state budget, or, as the court hinted, the state levying property taxes for schools and then allocating those proceeds equally.

Either would be a major political undertaking, because changes in school finance inevitably create winners and losers. Meanwhile equalizing per-pupil financing has undergone revision because the needs of students vary so widely.

Brown’s Local Control Funding Formula is one expression of that revision, declaring that some kids need more educational attention than others if the achievement gap is to be closed, and that means more financial support as well.

However, over the past 12 years, Brown’s step away from strict equalization has not, at least so far, appreciably narrowed the stubborn gap.