A decade
How the Local Control Funding Formula changed school funding in California
Is an “F” an acceptable grade?
Because that is the current grade given to the effort California makes in funding its public schools, according to the nonprofit Education Law Center’s 2022 Making the Grade annual report, which analyzed data from the 2019–20 school year.

Only slightly better — and miles from passing — is the “D” grade the state receives for funding adequacy, citing that California spent about $1,760 less than the national average per pupil and ranks 33rd among the 50 states and the District of Columbia. And the state is not trending in the right direction for education — California actually spent a smaller percentage of its gross domestic product on education in 2020 than in 2008 — 2.98 percent versus 3.39 percent, respectively.

By Kimberly Sellery
digital art of sky scraper shaped rectangles with muted yellow, rust, peach, and blue shapes in the background as well as mathematical signs

he one area where the state is making headway? How equitably these funds are distributed, ranking ninth, and given a “B,” as measured by the funding allocated to high-poverty districts relative to low-poverty ones. The rising grade — California received a “C” in the first report in 2010 — can be attributed to the adoption of the Local Control Funding Formula (LCFF) in 2013.

Prior to the implementation of LCFF, adjusting for cost of living, California ranked 46th in education spending in 2010 following the Great Recession, according to a report from the California Budget Project. It also ranked 50th in student–teacher ratios and 49th in student–counselor ratios that year. In addition to the underfunding of education in the state, the way in which funding was distributed was deeply problematic, allocated through a web of categorical programs approved by the Legislature to address what state officials viewed as the most urgent issues.

“While California continued its inadequate investment in public education, it also provided funding in an overly prescriptive manner through categorical programs coming from Sacramento,” CSBA CEO & Executive Director Vernon M. Billy said. “So many factors contribute to how our students do in school. Whether it’s homelessness, violence in homes, food insecurity, discrimination/hate or the impact of drugs in communities and families, different issues affect our children’s academic and social-emotional outcomes. To address this reality, it’s important to recognize that local conditions weigh heavily in deciding what strategies, programs and interventions will be effective. These were important points CSBA emphasized heading into discussions with then-Gov. Jerry Brown about a new funding distribution system.”

The adoption of the Local Control Funding Formula in 2013 drastically changed the way education funding was distributed in California, making it more equitable through the allocation of additional funds to local educational agencies with higher percentages of underserved populations. What did not change was the amount of money in the system — a lingering problem that is still reflected in data today. And while student outcomes continue to improve, longstanding achievement gaps remain.

In 2012, LCFF did not yet exist, but the idea for a more equitable way to distribute education funding was being workshopped in the Legislature and Governor’s Office through consideration of a weighted student formula (WSF).

San Francisco Unified School District was one of the pioneers of a WSF, adopted by the board of education in 2002. Guided by new Superintendent Arlene Ackerman, who had helped to implement a WSF in Seattle, the board conducted study sessions in which finance experts shared their perspectives and research. Districtwide committees were formed to discuss not only how funding percentages should be shifted, but how many financial decisions would no longer be originating in the central office — but would be given to principals themselves in a move to site-based funding.

“Replacing the traditional budgeting process that uses standardized staffing ratios to allocate resources to schools, a weighted student formula allocates resources based on differentiated student needs,” wrote researchers from WestEd when evaluating the implementation of the WSF. “In addition to receiving resources based on the composition of the school student populations, schools gain budgetary and curricular autonomy.”

Through committees involving administrators, teachers, principals and community members, bands of base funding (from unrestricted and categorical programs) were created for the different grade spans, with more base funding for high schools. Weighted percentages were decided upon for low-income students, English learners and special education students, according to then-SFUSD trustee and former CSBA President Jill Wynns. What they also needed to prepare principals for was a mindset shift — thinking about school site-based budgeting as opposed to direction from the central office.

The Local Control Funding Formula
Base funding: All districts receive a base grant for each student. The base grant is larger for grades 9-12 than for other grade levels.

Supplemental funding: Districts receive 20 percent additional funding per student for students with high needs — specifically defined as students learning English, in poverty and/or in foster care. This count is unduplicated, meaning a student only gets additional funding for one category, regardless of if they are in several.

Concentration funding: Districts get additional money if more than 55 percent of children in the district qualify as having high needs. Specifically, the district receives an extra 65 percent (as of 2022–23; prior to that it was 50 percent) of the base grant for each high-need unduplicated student beyond the 55 percent threshold.
Accountability is provided through the Local Control and Accountability Plan (LCAP), a three-year plan that defines the district’s goals and priorities.
“What we did was build the capacity of all the schools in the district,” Wynns said. “We involved all of the principals and took them from these top-down organizations to what a school should be, in my opinion, where things are better when everybody’s involved.”

When the state began to look at alternate ways to distribute funding to schools based on a more equitable system that eliminated categorical programs and placed decision making into the hands of local districts, officials looked to San Francisco — and CSBA — for input, recalled Billy.

“CSBA was involved in the discussions around LCFF from the very beginning, which actually began through Gov. Brown’s first proposal as a weighted student formula,” Billy said. “I remember being asked to meet with Gov. Brown’s staff and was very interested to hear about how they were thinking about changing our outdated revenue limit and categorical funding scheme. What few knew at the time was that I had experience with a WSF during my tenure working at San Francisco USD under Arlene Ackerman. The Governor’s initial WSF proposal was the launchpad for CSBA’s engagement in the discussions and advocacy that ensued in the months leading up to the ultimate enactment of the LCFF.”

Over the ensuing year of research and negotiation, the WSF became the basis for the Local Control Funding Formula. “Here’s why LCFF isn’t a weighted student formula,” said Wynns. “It is merely a way to identify high-needs students. That’s all. And here’s why — when you have weights, by definition, they pile up on each other. The state decided that it couldn’t afford to have weights when they looked at how they’re going to redistribute money.”

Billy emphasized that CSBA advocated to increase base funding from day one. “CSBA didn’t support the initial proposal to just reshuffle existing funding to create a new allocation methodology,” he said. “Such a reshuffling of dollars created winners and losers and we believed that the state should invest in this new allocation approach with new dollars to ensure everyone remained whole, at a minimum, and that the idea of providing LEAs with additional dollars for disadvantaged students was accompanied with a real commitment in new dollars. Ultimately, the state established funding targets for LCFF that would be achieved over several years. Given that California ranked at the bottom for education funding compared to other states at the time, we believed that instead of creating a long road to achieving funding target rates, the state should have provided a significant infusion of dollars into the system in a shorter period of time.”

2013 CSBA President Jo Lucey was also at the negotiating table during this time, and held the line that there must be enough base funding to create buy-in from all LEAs. “We had just gone through a lot of cuts to public education in general. So, while a lot of people were really focusing on unrepresented groups of students that really needed support, I felt it was really important that, in order to get everybody on board, the base amount had to be the right number. That base amount helps everybody, so if you got the base amount right, then people would be willing to let go of those supplemental pieces that they wouldn’t necessarily get.”

Then-Assistant Executive Director of Governmental Relations Dennis Meyers emphasized that CSBA continually advocated for more base funding. “Overall, we thought, this is a good program, redistributing the money based on equity, holding districts accountable, local decision-making authority, the thought about putting it into an annual a plan,” he said. “What we saw right away was what the state was doing is cramming the existing underfunded system into this new redistribution system. It didn’t come with any new money and it came on the heels of massive reductions because of the Great Recession.”

CSBA remained active up to and after the adoption of LCFF in 2013, participating in State Board of Education meetings around the development of LCFF’s accountability tool, the Local Control and Accountability Plan (LCAP), and beginning the association’s first roadshows, where senior leadership met board members around the state to prepare them for this new funding reality.

10 years of LCFF — what does the research say?
Researchers have tracked the effectiveness of LCFF from its implementation through its full funding in the 2019–20 school year. Two recent studies from 2023 provide the most comprehensive look at LCFF data and student outcomes thus far.

School Funding Effectiveness: Evidence From California’s Local Control Funding Formula, released by the Learning Policy Institute in August 2023, found that LCFF funding positively and significantly increases academic outcomes for every grade and subject assessed, and for every school that received these state funds.

Rucker Johnson, author of the study and Chancellor’s Professor of Public Policy at University of California, Berkeley, said at a December event assessing LCFF that one key component that contributed to raising outcomes is the stability of funding. “How money is spent matters, but the funding itself has to be adequate, equitable and stable from year to year to enable districts to spend strategically, so that when they’re targeting one resource, they don’t have to cut another,” he said.

His study found that the impacts on students’ outcomes grew with years of exposure to increased funding and with the amount of the increase of targeted funds that occurred due to LCFF, which increased state support by $18 billion over eight years. Increases in per-pupil spending led to substantial improvements in reading and math achievement and narrowing of achievement gaps, resulting in reductions in grade repetition and the probability of suspensions and expulsions, and increased the likelihood of students graduating from high school and being college-ready, according to the study. In a test of these conclusions, the study found that districts not receiving LCFF funding did not experience similar gains.

“Funding that is both predictable and flexible allows districts to focus the spending on the needs of the local community,” Rucker said. “The improvement in academic outcomes is most pronounced at the 55 percent threshold where concentration grants are targeted. The evidence demonstrates that a $1,000 increase in per-pupil spending, experienced for three consecutive years, led to a full grade improvement in math.”

Rucker’s study found that the most impactful ways to use funding to improve student outcomes are class size reductions and teacher salary increases and support, which typically lead to less teacher turnover.

In another comprehensive study from the Public Policy Institute of California, Examining the Reach of Targeted School Funding, released in September 2023, researchers arrived at similar findings that the targeted LCFF funding, especially concentration grants, has led to improved outcomes for high-need students with higher test scores, higher graduation rates and higher rates of college-course readiness.

However, this study found that these targeted funds are not always reaching their intended recipients, and therefore, not working to narrow achievement gaps. “A majority of districts spent their funds across all schools as opposed to targeting funds to high-need schools at the level of funding those schools generated. Furthermore, nearly 80 percent of concentration districts — or the highest-need districts — distributed funds in this more even way. The concern is that while 81 percent of high-need students are in concentration districts, 43 percent of non-high-need students are also in these districts — meaning that incomplete targeting of funding dilutes the impact of the formula on high-need students.”

Looking forward
While student achievement has risen overall and some narrowing of gaps has occurred, there is still quite a trench to bridge when it comes to improving academic outcomes for underserved student groups, like those identified in LCFF. One place to look to for an additional equitable funding model is Los Angeles USD.

“One of the shortcomings that we did see in LCFF was that we had advocated for a duplicated allocation for students that were not only low income, but a significant portion of our students that are low income are English learners,” said Pedro Salcido, LAUSD deputy superintendent of Business Services and Operations. “When you look at our foster youth students, they aren’t solely foster youth students in the foster youth system, but they also tend to find themselves in a condition of poverty and LCFF did not recognize that.”

The district worked with Catalyst California and the Equity Alliance for LA’s Kids to create the Student Equity Need Index (SENI). What began with a $25 million investment has grown to an ongoing $700 million a year program, funded with supplemental and concentration grants. SENI is a research-based equity index, which uses comprehensive academic- and community-based indicators, such as asthma rates and exposure to gun violence, to rank schools from highest to lowest according to student need. With these rankings, LAUSD can more accurately understand the needs of its schools to equitably distribute funds to address the achievement gap.

“The SENI offers an index that accounts for the effects of systemic and environmental factors that have an impact on schools and students,” said Jessenia Reyes, Catalyst California director of educational equity. “These indicators were chosen and developed through engagement with the community, students, parents and district leaders.”

Salcido said SENI is also used in other ways, like placing staff, making facilities upgrade decisions and allocating services and programs. For example, the index was used during school closures due to COVID to decide where best to place grab-and-go meal centers.

“While LCFF was a great move for equitable funding across the state of California, LA Unified needed to move further, given how large and diverse our district is,” LAUSD board member Tanya Ortiz Franklin said. “On top of the LCFF target student groups, of which 86 percent of our students qualify, SENI also considers academic needs such as incoming student achievement scores and community factors that contribute to absenteeism. These considerations allow us to distribute more dollars to the schools with greater needs in order to invest in additional staff and resources to truly close opportunity gaps.”

Will the new LCFF Equity Multiplier contribute to further closing opportunity and achievement gaps? Only time will tell. The additional funding is specifically granted to LEAs for allocation to schoolsites with prior year nonstability rates greater than 25 percent and prior year socioeconomically disadvantaged pupil rates greater than 70 percent. For each eligible schoolsite, a calculated statewide Equity Multiplier rate will be multiplied by each site’s adjusted cumulative enrollment for the prior year, as identified in the Stability Rate Data file. The schoolsite will receive the product of this calculation or $50,000, whichever is greater.

“LCFF has provided us with a solid foundation to improve upon and to continue to explore better and more efficient ways to fund schools and support locally elected school leaders and their administrators that oversee the daily operations of our schools,” CSBA’s Billy said. “I think LEAs need to continue to invest in elevating and supporting the academic needs of their most disadvantaged and needy students whether they fall within the rubric of LCFF or not, and then make sure that the dollars designed for high-need students are appropriately allocated to programs that support these students, consistent with the law.”

Kimberly Sellery is the managing editor for California Schools.