California’s new system for funding public education has pumped tens of billions of extra dollars into struggling schools, but there’s little evidence yet that the investment is helping the most disadvantaged students.

A CALmatters analysis of the biggest districts with the greatest clusters of needy children found limited success with the policy’s goal: to close the achievement gap between these students and their more privileged peers. Instead, test scores in most of those districts show the gap is growing.

The test scores echo a broader and growing concern about the Local Control Funding Formula from civil rights groups, researchers and legislators.

That formula sends more money to schools with higher concentrations of foster youth, kids learning English and students from low-income families. But four years after it was adopted, there are few signs the program is working, and questions have arisen about whether the $31 billion invested so far is being spent effectively.

The concern has created a high-stakes confrontation with Gov. Jerry Brown, the formula’s architect, because his goal of shifting more responsibility to the local level means the state does not track basic information, such as how much grant money each district gets for needy students and how they spend it.“The state has spent tens of billions of dollars trying to lift poor kids and not one penny evaluating whether any of it is working,” said Bruce Fuller, an education policy professor at the University of California, Berkeley. “That’s outrageous. We’re heading into year five. It’s time to discern what’s effective and where we’re just wasting money.”

Brown, who once championed the new system as “revolutionary,” declined to grant an interview, and his office did not address many of the questions posed to them about the formula’s performance.

Last month, however, speaking at a Capitol news conference, the governor defended the state’s limited role in monitoring the formula’s impact.

“We want the activists, the parents, the teachers to go to their local boards and put pressure on them,” he said. “They can drive their own cars, park in the local parking lots and argue there.”

“But if there is something that we need to handle, we will,” he added.

Madison Elementary School Principal Lisa Gonzales-Solomon snaps a selfie with her students one morning before class in Santa Ana. The district is one of 15 CALmatters studied to understand how well the state’s new school funding formula is working. Iris Schneider/For CALmatters

Two years after the state adopted the new funding formula, it created new tests for measuring student performance. Experts say it’s too early to draw sweeping conclusions from the new test scores in 2015 and 2016, but they are still troubled that the early results show little improvement for the neediest students and, in many cases, a widening achievement gap.

The CALmatters examination of the 15 largest school systems where nine out of 10 kids qualify for extra funding shows that serious problems remain. Large majorities of students in these districts, which are mostly in Southern California, still fail state tests. And although test scores are improving, the growth lags behind progress made by students not targeted by the new policy.

According to the analysis:

  • Almost all of the districts saw the gap between their low-income students’ proficiency in math and that of others across the state stay the same or grow larger. In reading, more than half the districts failed to nudge the gap.
  • English-learners enrolled in these school systems are even worse off. Gaps between their test scores and those of students who are fluent grew in both subjects. A few districts even saw those students’ passing rates decline.
  • Districts that responded to questions about their academic results touted improvements in raw “scale scores” that haven’t yet translated into higher levels of proficiency. But achievement gaps are growing in most of these places even when growth in scale scores is examined.
  • While the districts’ share of teens enrolled in college-prep classes is creeping up, in most cases, substantial gaps remain between the students’ access to the coursework and the state average, which experts say is already low.

Statewide, children that did not receive extra money saw even greater test score improvement in most cases. Wealthier students increased proficiency in reading and math by an average of 5 percentage points, and fluent English speakers saw average increases of 4 percentage points.

All school budgets have grown in recent years due to a positive state economy. But with additional funding from the new formula, districts reviewed by CALmatters saw an average budget increase of 63 percent over four years. Still, six of them saw their achievement gap widen in reading and math for both low-income and English-learner students. And in all 15 districts, the gap widened in at least two of those four categories.

The results varied with Paramount Unified School District in Los Angeles County and Greenfield Union School District in Bakersfield shrinking the gap in reading and math for low-income students with budget increases of more than 70 percent. On the other hand, funding went up 94 percent for the Santa Maria-Bonita School District in Santa Barbara County, but the gap widened in math and reading for all of its targeted students.

“Do we want to improve?” said Luke Ontiveros, Santa Maria-Bonita’s Superintendent. “Absolutely. Growth is the target for every group.”

In Santa Ana, 95 percent of the students qualify for extra cash and the achievement gap widened in all categories. Deputy Superintendent David Haglund said he’s not satisfied with those results but stressed that any gains should be celebrated given the obstacles the city’s students face.

Many are Central American immigrants who arrive speaking no English, he said. Often they live in single-family bungalows with two or three other families where space is so hard to come by that homework must be done on the floor or in a garage.

“Are we happy with the results? It’s a crazy question,” Haglund said. “No, we always want to do better. We can do better. But we have to be reasonable and rational about our students’ environment.”

The findings in the CALmatters analysis of large districts with the highest investment from the new formula are consistent with a recent statewide study from the Public Policy Institute of California, a nonpartisan research organization. It found that “scores have improved for most students, but achievement gaps persist and have widened in some cases.”

Given the state’s added investment in their success, why aren’t disadvantaged students improving more? A new statewide study published by Education Trust-West, a nonprofit civil rights group, found that even under the new formula, these students still have far less access to support staff—including counselors, nurses and psychologists—and to key courses, such as calculus, physics and music.

“However we cut it, the funding higher poverty districts have received hasn’t translated into better opportunities for kids in lower-income schools,” study author Carrie Hahnel said.

Expecting better results by investing in underfunded classrooms without creating incentives to change policies has been a controversial concept. Stanford University’s Eric Hanushek, an economist who writes about education, has reported finding no evidence of a relationship between student achievement and expenditures alone while studying various school systems around the country.

“I was never very optimistic that this would do much to shift student performance,” Hanushek said, speaking about the new funding formula.

Both of California’s top education officials—State Board of Education President Michael Kirst and state Superintendent of Public Instruction Tom Torlakson—declined requests for interviews. But in written statements, they warned against examining the policy’s effectiveness at this time even while describing the state’s achievement gap as “pernicious.”

“Drawing any kind of hard and fast conclusion about the success or failure of California’s massive shifts in the public education landscape based on only two years of test data would be irresponsible,” Kirst said. Still, he added that, “we believe we are on the right track.”

When Brown overhauled school funding four years ago, he washed away decades of restrictive “categorical” programs that prescribed set amounts of money for everything from counselors to libraries. The new formula changed all of that by awarding blocks of money to districts and letting them decide how to spend it.

Here’s how it works: All districts get the same per-pupil base grant, and the ones that enroll disadvantaged students get 20 percent more funding for each of them. These payments are called supplemental grants. Districts where needy students make up a little more than half the student body get another 50 percent per pupil on top of that. Those payments are called concentration grants.

Since 2013, the state has distributed about $31 billion in supplemental and concentration grant funding, according to estimates by the nonpartisan Legislative Analyst’s Office.

Many California advocates welcomed the new funding system, which gives districts complete freedom to decide how to spend the money. With that flexibility, school systems serving disadvantaged kids are supposed to use it on programs and services that boost their academic achievement, which for decades has persistently lagged by about 30 percentage points behind the rest of the state’s public school students.

Once Brown, legislative leaders and key supporters settled on the formula’s framework, they turned their attention to rules for transparency and accountability. But the labor unions, business leaders and equity advocates involved in those talks couldn’t reach agreement. So with a deadline looming to finalize the deal, they punted and left it up to the State Board of Education to craft the rules through regulation.

Democratic Assemblymembers Phil Ting of San Francisco and Shirley Weber of San Diego have been fighting for fiscal transparency alongside advocates for disadvantaged kids ever since.

Assemblywoman Shirley Weber
Democratic Assemblywoman Shirley Weber of San Diego is one of the most powerful members of the Assembly Education Committee. She has been fighting for greater fiscal transparency since California adopted a new school funding system four years ago. Steve Yeater/For CALmatters

In 2014, the two lawmakers asked the State Board of Education to require all districts to provide detailed financial data to the state. They alsoadded a provision to the state budget that would have required each district to release information about how much they received in supplemental and concentration grants separately.

In the end, the Brown administration insisted the paragraph be deleted from the budget before lawmakers had a chance to vote on it. The board also rejected the lawmakers’ request.

The following year, Ting and Weber tried again, and Brown blocked their efforts a second time. He would only agree to impose more stringent fiscal reporting requirements in 2020, two years after he leaves office.

That’s when the governor says the Local Control Funding Formula will be fully phased in. After the program was passed four years ago, the state also created a new “dashboard” of performance metrics for each of the state’s more than 1,000 districts. Topics include suspension rates, graduation rates and parent engagement. The dashboard also displays scoresfrom a new test, known as Smarter Balanced, that the state began in 2015 to evaluate student achievement.

The funding formula policy called on state educators to intervene in any school district that failed to meet expectations in three out of four years. But the clock for possible state interventions wasn’t started until this year.

In the meantime, the State Board of Education requires districts to file annual Local Control and Accountability Plans with their county offices of education, which will begin identifying failing school districts and offering assistance next school year.

But while the plans are required to explain the money districts receive for needy students, the additional funds are not always spent in the same year and the lack of financial detail makes it impossible to track.

“This is a challenge that makes it hard for our people to know if what’s listed in a district’s plan is consistent with the purpose of the funding,” said Dayton Gilleland, chief academic officer for the Los Angeles County Office of Education. Gilleland added that he supports the funding formula because it “helped level the playing field” for disadvantaged students.

In an interview with CALmatters last year, Brown called the new funding formula a good system that “fit in with the idea of trying to return more power to the classroom and to the local district.” But it has become a growing source of tension with legislators.

A new bill to increase local districts’ financial reporting requirements passed the state Assembly unanimously in May with more than five dozen supporters including Children Now, Ed Voice and Education Trust-West. Assembly Bill 1321 by Weber is a direct challenge to Brown. It would require the state to publish the amount of federal, state and local money given to each of California’s more than 10,000 public schools.

“There’s a lockdown on information,” said Weber, a former school board president. “It’s a major problem. And if the governor doesn’t solve this problem, we may have to dismantle this policy.”

Assemblyman Ting likes the flexibility districts get now and doesn’t want to see California revert to a school funding system built on restrictive categorical aid programs. But he’s also tired of being told by the Brown administration that the Legislature’s investment in disadvantaged students can’t be monitored.

“What we agreed to was more autonomy for school districts. What we didn’t agree to was an absence of information about how they’re doing,” said Ting, who chairs the Assembly Budget Committee. “Are the extra resources reaching the populations we’re trying to help? Right now, we don’t know.”

California Teachers Association President Eric Heins said all the information anyone needs to assess the formula’s performance is available in the state database known as the dashboard. “It seems transparent to me,” Heins said.

But the dashboard doesn’t include information about the money the state has invested in districts since adopting a new way to fund public schools.

It also obscures the achievement gap by making it tough for users to compare student performance across subgroups, such as family income, and gives too much credit to districts with low tests scores and low growth, said Samantha Tran, senior managing director for education policy at Children Now, one of several nonprofits fighting for needy students.

“It’s time to fix the problem,” Tran said, referring to the dashboard’s shortcomings.

Torlakson, however, called the dashboard “valuable,” and Kirst said it will spark “the kinds of difficult conversations at the local level that will spur change over time.”

Recognizing how little useful financial data are currently available in public records, CALmatters approached the largest school systems working with the most disadvantaged students and asked how much of each type of funding they got and what they spent it on.

The effort yielded lackluster results.

More than half of the districts refused to respond to any questions about their finances. A few would only say how much extra money for needy students they had received—not how they had spent it. Others complained about the burden of the inquiry.

“I’m going to see if that’s something we can identify without going through a forensic audit,” said Marlene Dunn, the chief business official for Lynwood Unified School District in Los Angeles County. “It could take a couple hundred hours of staff time to give you that information in that manner,” she added. “You’re asking us to go back in time and find something we didn’t track.”

These districts aren’t hiding information, said Julia Koppich, a San Francisco-based education policy consultant who belongs to a team of researchers studying the new formula. They just don’t have it and lack the staff time to collect it, she said.

“We rarely found evil people in these district offices. There’s usually some explanation,” she added. “One district might not understand the law. Another could be dealing with whatever crisis just landed on its plate.”

That reality underscores how critical it is for the state to step up and start gathering more information, Berkeley’s Bruce Fuller said.

Even sophisticated districts like Los Angeles Unified, the state’s largest, struggle to closely monitor their spending. Fuller studied data collected but never analyzed by the district and was the first to tell top administrators that they hadn’t invested enough in needy elementary schoolers.

“They have no idea what’s working and what’s not working,” he said.

The district declined to comment on Fuller’s findings.

Civil rights advocates, however, fear that a growing number of districts may be taking advantage of the new system’s loose reporting requirements and using accounting tricks to steer money away from the disadvantaged students who generated it.

For example, when Los Angeles Unified improperly counted $450 million in spending on special education services as spending on foster youth, kids learning English and students from low-income families, the American Civil Liberties Union of Southern California and Public Advocates Inc. had to sue to recover the money for those students.

A complaint filed last month by Public Advocates against Long Beach Unified School District makes similar accusations about misspent funds.

Kirst pointed to the complaints as “good examples” of the system working well for underrepresented students. But the advocates who filed them strongly disagree.

“I don’t want to point fingers. This is a good law passed with the best intentions,” said Victor Leung, an ACLU staff attorney who worked on the Los Angeles Unified lawsuit. “But much more must be done to make sure the money is being spent the right way.”

One of the districts that responded to CALmatters’ request for spending information is San Bernardino City Unified. It used its extra cash to hire counselors for each of its elementary schools and shrink class sizes by hiring more teachers. The district also boosted teacher salaries—a move that advocates for needy children have criticized as an inappropriate use of the money.

Assistant Superintendent Kennon Mitchell said those investments were key to restoring teachers’ morale after years of recession-era furloughs and layoffs demoralized the district’s workforce. But so far, the 40 percentage point gap between San Bernardino’s poor students and others across the state has only closed 1 percentage point in reading while growing 1 percentage point wider in math.

“Those outside education are always looking for that return on investment,” said Mitchell, who predicts test score growth of 10 percentage points next year. “But we’re not producing tires. This is a human endeavor.”

Teacher Dennise Carter works with a small group of students at Kendrick Elementary School in Bakersfield’s Greenfield Union School District. The district used some of the money it received for needy students under the state’s new school funding system to hire veteran teachers like Carter as academic coaches. Henry Barrios/The Californian

Bakersfield’s Greenfield Union School District already does much of what Weber’s transparency bill would require: It publishes a detailed list of its investments in poor kids, foster youth and English learners each year.

One recent morning at Kendrick Elementary School, located on the city’s dilapidated southeast side, a small group of eager second-graders seated around a U-shaped desk waited for teacher Dennise Carter to call on them to read that day’s batch of words.

“Letters, mother, answer, found, study, skill, learn, should, America, world,” the five students shouted, one after another.

The district selected these children to work with Carter for one hour every morning because she’s one of the best, most experienced teachers on staff—and because none of them are reading at grade level.

Almost all of Greenfield’s 9,000 students get several thousand extra dollars from the state under California’s new funding formula, so its budget has swelled by more than 70 percent in the last four years. According to a set of district memos, it has used a substantial portion of that cash to hire a team of academic coaches like Carter, a 17-year veteran.

“These students are all behind. They’re all strugglers,” Carter told a reporter after asking her group to search an illustration for clues about the words they might find in their story. “But when you build their confidence through instruction like this, they soar.”

School districts had so little discretion under California’s old school funding regime that they were forbidden from squeezing one part of the budget to free-up funding for something like extra academic coaches.

Previously, Greenfield Union’s finance and teaching teams hardly spoke and almost never collaborated, said Lori Aragon, the assistant superintendent of curriculum. “The budget used to determine our needs,” she said. “Now, our needs determine the budget.” And for the first time, parents are helping the district identify those needs by sharing feedback at popular community meetings.

“You asked for it” posters highlighting key investments, including smaller class sizes, new technology and more school psychologists, appear on windows and walls throughout the district and reflect a commitment to fiscal transparency not evident in many other places serving as many disadvantaged kids. Full details on the district’s spending decisions are available to the public in memos attached to its school budget.

The strategy seems to be working.

The number of English learners it reclassifies each year as proficient in the language far exceeds the state average, and in one year, the share of low-income students passing standardized reading and math tests grew by 9 and 7 percentage points, respectively—among the biggest gains of any district CALmatters analyzed and well above the increase in the state average.

“We weren’t sure at first how to track all this new money,” Aragon said. “When the state wouldn’t give us guidance, we started tagging expenditures anyway, figuring that the rules would come later.”

As the Assembly’s vote last month demonstrated, most legislators do not want to wait until later for the state to provide more accountability and assistance. “As most of you know, we still don’t know whether that funding is actually reaching the students it’s been designed for,” Weber said just before last month’s vote on the Assembly floor.

But the issue is creating a sharp divide with Brown, a former mayor who worries about micro-management from Sacramento and wants to give local officials maximum flexibility. The governor has counseled patience on the Local Control Funding Formula.

“Remember, things don’t get done in a year,” he told the California Chamber of Commerce a year after the formula was adopted. “The real work comes when a bill becomes a law and then you have to operate under it for years and years. And it always looks a little different than what you thought at the time.”


“It’s never a good sign when public officials refuse to answer questions. That’s what happened when CALmatters reporter Jessica Calefati visited two Los Angeles County school districts in January and asked to review their budgets as part of an investigation into educational outcomes under the state’s Local Control Funding Formula. Her requests were denied and she was turned away. Calefati wrote in March that the experience was “emblematic of an access problem” with the school funding system that the state adopted in 2013.”

Editorial Board, The Orange County Register

“CALmatters reporter Jessica Calefati relies on faulty research, narrow metrics and insufficient data to make sweeping generalizations and unsubstantiated conclusions about the effectiveness of California’s landmark Local Control Funding Formula. Calefati’s story ignores or glosses over evidence in pursuit of a flawed narrative based on a handful of California’s 1,000-plus school districts. The fact is test scores are rising for all California student groups — including low-income students, English learners and foster youth. Plus, the state’s suspension rate is at an historic low and the graduation rate is the highest it’s ever been.”

Michael W. Kirst, President of the California Board of Education

“Jessica Calefati’s comprehensive new investigation for CALmatters — a Sacramento-based, nonpartisan, nonprofit journalism group — details how a much-ballyhooed 2013 education reform measure hasn’t panned out. The state Department of Education said that the piece “makes sweeping generalizations based on narrow metrics.” But it actually makes a powerful case that the Local Control Funding Formula — which has funneled $31 billion to schools with relatively more English-language learners, students from poor families and foster children — has failed to close the academic gap between these students and others with more advantageous backgrounds.”

Editorial Board, San Diego Union-Tribune

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