What Does the LCFF Compromise Mean for Disadvantaged Students and School Finance?

Earlier this week, Governor Brown and legislative leaders announced a compromise plan regarding the Local Control Funding Formula (LCFF), the Governor’s proposal to fundamentally restructure how California funds its K-12 public schools. The now-imminent enactment of the LCFF is an important step forward and will make the state’s education finance system more transparent, rational, and equitable than it is today. The LCFF compromise accepts a key premise of the Governor’s proposal: that it takes additional resources to educate disadvantaged students — in particular, English learners and students from low-income families. However, compared to the Governor’s original proposal, the LCFF compromise provides fewer resources specifically for these students. The compromise boosts the base level of funding for school districts, but appears to do so primarily by reducing the total dollars allocated for disadvantaged students and also by increasing the amount of time it would take to fully implement the LCFF. Moreover, key decisions regarding accountability — specifically, how to ensure that school districts spend these allocated dollars to provide additional services for disadvantaged students — were deferred to the State Board of Education.

Released as part of the Governor’s proposed 2013-14 budget in January, the original LCFF proposal established equity in school funding as a key principle. It created three funding grants weighted to reflect the costs of educating different students: a base grant per student for all school districts, adjusted to reflect students’ grade levels; a supplemental grant per student based on a district’s unduplicated number of English learners and students from low-income families; and a concentration grant per student for districts based on the share of disadvantaged students above a specific threshold (set at 50 percent in the original proposal).

The LCFF compromise announced earlier this week maintains this basic structure, but changes the formulas used to calculate the three grants. The LCFF compromise:

  • Increases the average target base grant by more than $500 per student (this refers to the statewide average of the target LCFF base grant for each school district);
  • Reduces the supplemental grant from 35 percent of the base grant to 20 percent;
  • Increases the concentration grant from 35 percent of the base grant to 50 percent; and
  • Increases the threshold at which school districts qualify for the concentration grant, with disadvantaged students having to account for at least 55 percent of district enrollment — up from the original threshold of 50 percent.

The compromise also changes the share of total LCFF dollars allocated to each grant. Under the original LCFF plan, 80 percent of LCFF dollars would have gone toward base grants, 16 percent to supplemental grants, and 4 percent to concentration grants. Under the compromise version, 84 percent of LCFF dollars will be allocated to base grants, 10 percent to supplemental grants, and 6 percent to concentration grants. Widely circulated estimates indicate that the LCFF compromise would increase the total dollars provided to fund base grants for all school districts by approximately $3 billion, a 6 percent increase compared to the original plan.

Where do these dollars come from? It’s conceivable that they come entirely from the dollars allocated for supplemental and concentration grants in the Governor’s original proposal. But because little information exists about the total amount of funding provided for these grants, it is impossible to know. Rough calculations based on the available estimates suggest that the compromise could reduce funding specifically allocated for disadvantaged students in the neighborhood of $2.4 billion (19 percent) compared to the Governor’s original proposal. In other words, the compromise may redirect one in five dollars that the Governor had proposed to provide for students with the greatest need to fund an increase in the base grant for all students statewide.

Several questions remain as to whether the LCFF will fulfill its promise of helping both to address inequities in school finance and to ensure all students have the opportunity to achieve the state’s high academic standards. The most important is whether it will require school districts to spend supplemental and concentration grants to benefit the disadvantaged students for whom these funds will be allocated. The details of how funding accountability would work in the LCFF have been the subject of intense negotiation. But no matter the outcome, local school boards will clearly have greater authority to spend school dollars than under the current system, and education stakeholders will need to hold them accountable if equity is to be achieved.

Another key issue, which has received little attention, is the length of time it will take to fully implement the LCFF. Because the compromise boosted funding for the base grant, and increased the LCFF’s price tag, estimates indicate that full implementation of the LCFF will take eight years, rather than seven as in the original proposal. However, implementing the LCFF could take longer, as the timeframe depends on the amount of funding state policymakers provide — and each year that implementation is delayed could mean perpetuating current inequities.

Fundamentally restructuring California’s education finance system is a major undertaking, and the LCFF is an important step forward. The LCFF provides school districts with more control over how resources are allocated, which will ideally increase public awareness of, and interest in, how local officials spend dollars provided by the state. Moreover, by simplifying the way the state provides dollars to school districts, allocating those dollars based more closely on student needs, and making state education funding more rational, the LCFF has the potential to increase public confidence in the state’s stewardship of our shared investment in K-12 education. That confidence will be necessary for Californians to support providing the increased resources that all schools need.

— Jonathan Kaplan