For decades, policymakers and researchers have been debating the effectiveness of California’s highly regulated and prescriptive system of school finance. For much of that time, a chief target of critics has been the large share of funding that is allocated through categorical programs; that is, programs whose funding is contingent on districts using the money in a particular way or for a particular purpose. In 2007–08, roughly two-fifths of the state’s school spending¹ on K–12 education was allocated via more than 60 separate programs, each with its own set of restrictions on how the funds from that program...

California school districts receive the largest share of their funding (roughly 80 percent) from the state. This state funding is allocated either through revenue limits, which are unrestricted general funds, or categorical programs, which require that the funds be spent for the specific purpose designated by the program. Most districts also receive funding from the federal government, most of which is restricted similarly to state categorical funds; the largest federal programs include Title I, for students in poverty, and the Individuals with Disability Education Act (IDEA) for students with disabilities. Local funds make up a very small share (about 6.5...

All the financial data for this analysis come from the California Department of Education’s SACS files. The SACS system uses different types of codes to provide extremely detailed information on the source and use of district monies. The four code types used to categorize the data in this report are Resource, Function, Object, and Goal. Resource codes are used primarily with revenues and identify the source of dollars when there are restrictions on how the funds are spent. For example, resource code 3010 identifies funds from Title I, Part A, Basic Grants, and code 3012 is for funds from Title...

Chapter Two detailed the level and changes in total revenue for all districts in the state. This chapter describes how Tier 3¹ and total district revenue per pupil are distributed across districts. Although districts with more Tier 3 revenue per pupil presumably benefit more from gaining additional flexibility, those programs also experienced deeper funding cuts, so it is worth investigating which districts were most affected.

Specifically, the key questions of interest are as follows:

Which districts have received the most Tier 3 and stimulus dollars per pupil? Are there identifiable patterns based on district characteristics (district type, fiscal health, Basic...

One of the big questions about increased local control in general is what sort of changes districts will make when given the opportunity—in particular, whether they will continue to meet the needs of the students whom categorical programs were originally intended to serve. As discussed in Chapter Three, although it is difficult with statewide data to identify district spending on specific programs, we can examine broad priorities by looking at what items districts are buying and how they distribute spending across various types of educational goals, as well as whether there have been changes in those spending patterns since...

This report set out to address several questions related to the level and distribution of Tier 3 revenues per pupil and the level and distribution of district spending across various components of their budgets. The data show that districts serving larger proportions of high-need students (i.e., low-performing, in poverty, English learners) tend to have higher levels and shares of Tier 3 funding, leading to questions about whether those districts have suffered relatively more from the accompanying funding cuts. Some critics of categorical flexibility have also raised concerns that without the specific program requirements, districts will shift funds away from the...