Rising costs threaten reforms

Despite years of economic growth in California and record spending toward public education, study after recent study has warned that school districts are heading for long-term financial problems. The Local Control Funding Funding formula has increased spending by about $24 billion since 2013, but student enrollment has declined in California, and fixed costs such as healthcare, special education programs and employee pension obligations have dramatically risen. 

Gov. Gavin Newsom included $3 billion in pension relief for districts in 2019 in his inaugural budget. In 2020, the state provided an additional $1.6 billion for relief. However, districts’ contribution rates toward the California State Teachers’ Retirement System (CalSTRS) have increased from 8% of their payroll in 2013 to 16% in 2021. These cost pressures compete with achievement gap initiatives on district balance sheets.