If California has record revenue, why do school districts say they need more money?<\/p>\n
California revenue is higher than expected, but falling enrollment and rising costs are putting pressure on local districts\u2019 budgets.<\/p>\n
Gov. Gavin Newsom has proposed record levels of public funding for K-12 schools<\/a>, but in several Southern California school districts declining enrollment and rising costs may still lead to cuts next school year.<\/p>\n The budget proposal allocates $125.5 billion, the highest-ever level, according to Newsom. That\u2019s $20,427 per student.<\/p>\n \u201cThere’s an increase in per pupil funding, but I wouldn’t be fooled into thinking that those numbers indicate that schools really have more money to work with than in previous years,\u201d said California School Boards Association spokesperson Troy Flint. The organization represents almost 1,000 districts and county offices of education statewide.<\/p>\n That\u2019s because declining enrollment combined with rising teacher salaries<\/a>, un-funded state mandates<\/a> and other increased costs<\/a> are squeezing local school districts.<\/p>\n Keep up with LAist.<\/p>\n If you’re enjoying this article, you’ll love our daily newsletter, The LA Report. Each weekday, catch up on the 5 most pressing stories to start your morning in 3 minutes or less. <\/p>\n LAist spoke to Flint and several other school finance experts to understand the financial challenges California districts face as they create their spending plans for next school year.<\/p>\n How California stacks up, nationwide<\/p>\n California ranks 16th in per pupil spending when compared to other states as of the 2022-2023 school year, but when the difference in labor costs are factored in, we drop to 31st, according to an analysis of state and federal data from the Public Policy Institute of California<\/a>.<\/p>\n \u201cIn the broader context, yes, we’ve seen funding nearly double in California over the last decade or so,\u201d said Iwunze Ugo, a \u200aresearch fellow at the Public Policy Institute of California. \u201cBut it’s\u2026 arguably one of the lower funded states around the country.\u201d<\/p>\n How does the state fund school districts?<\/p>\n The majority of the state\u2019s general fund<\/a> comes from personal income, sales tax and corporation tax revenue.<\/p>\n \u201cThat’s great when the economy is good and state revenues are growing, and it’s trickier when the economy is bad and state revenues are small,\u201d said USC education professor Lawrence Picus.<\/p>\n California law guarantees TK-12 schools and community colleges a minimum level of funding each year<\/a>, usually about 40% of the state\u2019s general fund. (Property tax is a local revenue source, and considered to be less volatile<\/a> but with limited growth.)<\/p>\n The state provides a base amount of money multiplied by each student and there is additional funding for every low-income, English-language learner, unhoused or foster youth student in the district. This system is called the Local Control Funding Formula<\/a>.<\/p>\n How does enrollment affect school funding?<\/p>\n Since California sets funding rates per student, it needs a way to count those students. This is average daily attendance<\/a> \u2014 how many students show up for class each day.<\/p>\n Currently, fewer students are enrolling at schools throughout the state<\/a>, particularly in areas with high costs of living like Los Angeles<\/a>. Students who are enrolled are also missing more school<\/a> compared to before the pandemic.<\/p>\n \u201cThe intuitive response is, \u2018well, if you have declining enrollment, you have fewer students, you should need less money,\u2019\u201d Flint said. \u201cBut in practice it doesn’t really work that way.\u201d<\/p>\n That\u2019s because a district may lose a few students from each class across several schools each year, which may not justify laying off staff or closing a campus.<\/p>\n California education law<\/a> blunts the immediate impact of declining enrollment by calculating funding based on the highest of three attendance counts: current year, prior year, or the average of the three most recent years, but over time fewer students means a smaller multiplier for state funding.<\/p>\n Increasing costs<\/p>\n Michael Fine is CEO of Fiscal Crisis and Management Assistance Team (FCMAT), the California agency that supports public schools’ financial and business practices. He estimated schools are experiencing an estimated 5-6% cost increase every year.<\/p>\n The sources of that increase can include an increase in sexual assault claims (and the ensuing legal costs<\/a>), utilities<\/a> and insurance costs<\/a>.<\/p>\n California provides money toward these increased costs through the Cost of Living Adjustment (COLA). This year\u2019s proposed COLA is a 2.41% increase, less than half the estimated increase districts are experiencing, Fine said.<\/p>\n \u201cAt the state, they can say we are fully funding our commitment to TK through 12 education,\u201d Fine said. \u201cBut at the local level, it feels like things are constrained. It feels like a pinch or actually a reduction.\u201d<\/p>\n Another factor is the push to increase educators\u2019 salaries in light of California\u2019s high cost of living.<\/p>\n This year unions representing teachers at 32 school districts, including Los Angeles Unified, are negotiating contracts under a unified platform called \u201cWe Can\u2019t Wait.\u201d<\/a> The campaign has already led to one strike<\/a> and negotiations have stalled in more than a dozen districts<\/a>, including LAUSD.<\/p>\n Federal, state budget uncertainty<\/p>\n This year\u2019s state revenue projection is higher than expected, in part because of high salaries tied to artificial intelligence<\/a>, but there\u2019s no guarantee the funding will last<\/a>.<\/p>\n Alix Gallagher studies school finance at Policy Analysis for California (PACE) and said that because revenue is unpredictable, lawmakers often opt to fund short-term initiatives rather than make long-term commitments.<\/p>\n \u201cWhatever positive effects we’re seeing [from short-term funding] are not the types of positive effects we might see if our funding was more stable,\u201d Gallagher said.<\/p>\n For example, this year there is $1 billion<\/a> for community schools<\/a>, $757 million<\/a> to support learning recovery related to the COVID-19 pandemic and $22.9 million<\/a> for schools damaged by the January 2025 wildfires in L.A. County.<\/p>\n The budget also includes a one-time $2.8 billion grant<\/a> that can be used for a variety of purposes from filling in the funding gap left by declining enrollment to supporting teacher training.<\/p>\n \u201cMany districts will use that to mitigate some of their struggles,\u201d Fine said. \u201cAll it does is buy time.\u201d<\/p>\n The federal government also provides some money for education, but it\u2019s also unclear how that funding will change in the second year of the Trump Administration\u2019s second term<\/a>.<\/p>\n In 2025, there were cuts to migrant education<\/a>, mental health<\/a>, and some internet access programs<\/a>, although the courts ordered the administration to restore funding to several programs including teacher-training and afterschool programs<\/a>.<\/p>\n What\u2019s next for California school funding?<\/p>\n Newsom will present a revised spending plan in May and California lawmakers have until June 15 to pass the state\u2019s budget.<\/p>\n In the meantime, local school districts will begin crafting their own budgets based on the governor\u2019s proposal.<\/p>\n Fine said district administrators and elected school boards will have to manage the financial consequences of declines in enrollment over time.<\/p>\n \u201cThey make the hard decisions, their boards make the difficult, hard decisions to make, cuts to services and programs,\u201d Fine said.<\/p>\n How can I monitor my school district\u2019s financial health?<\/p>\n School budget proposals should be presented at public meetings, often the school board, where elected leaders can ask questions and the public can weigh in.<\/p>\n Districts may also create a working group, often called a budget advisory committee, of staff, families, community members and students to come up with a plan to address the district’s financial challenges.<\/p>\n