Joint Committee to Develop a Master Plan for Education

Affordability of A High-Quality Education System

Recommendation 44

The Legislature should direct a 13-member Quality Education Commission, consisting of business, parent, and education community leaders from throughout the state, to develop a California Quality Education Model (CQEM), to be consistent with the parameters set forth in this Plan, and use that model to determine an adequate level of funding necessary to support a high-quality education for every student enrolled in public schools, PreK-12.

Replacing the existing school finance model, the CQEM would provide the Legislature with the critical education components (see the Access portion of this Plan for a listing of the core quality components), related resources, and corresponding level of funding needed to provide the opportunity for every student to obtain a quality education based upon rigorous state standards. This information would allow the Legislature and the Governor to make more informed annual budgetary decisions about the level of resources available for education, and how those resources can be allocated to foster a world-class education system. It will also provide the beginnings of a meaningful context for shared accountability within a framework of flexible local control over the use of educational resources.

The Commission's work and the California Quality Education Model should reflect the policy goals and structure of this Master Plan. This model should include creating a guaranteed preschool allocation for all three- and four-year olds (and additional funding for 'wraparound' care and flexible support services for three- and four-year olds of low-income families) to provide school readiness services to them and their families through local School Readiness Centers. The Commission should be authorized to convene and consult expert panels for advice relating to research-based best practices that are most closely associated with high student achievement. The Commission should assure that the substance of the model fairly captures the diversity of California. To ensure timely implementation of this action and its future appropriateness for California, we also recommend the following actions:

Recommendation 44.1

Within 12 months of its formation, the commission should submit its final report, encompassing the prototype model and the commission's findings and recommendations, to the Legislature and Governor. The Legislature should adopt the model as the basis for determining PreK-12 education funding for California.

Recommendation 44.2

The Quality Education Commission should continuously monitor, evaluate, and refine the California Quality Education Model, as appropriate, to ensure that its implementation provides adequate funding for high-quality education for all students at all schools.

Recommendation 45

The Legislature should limit adjustments to the adequate base of funding to three types of categorical funding to reflect differences from the prototypes used in the California Quality Education Model.

Categorical programs provide resources to accommodate differences in student needs, for efforts to meet selected state policy goals, and to spur reforms in the delivery of educational services.

The committee supports appropriate categorical programs and the purposes they serve, with the caveat that they should not be used to circumvent the intent embodied in adoption of a quality education model for financing public school operations. California is a very diverse state, and that diversity signals differences that must be addressed by targeting funds to selected districts and students. Further, the courts have affirmed the appropriateness of promulgating differences in funding based on students' needs. To forestall further proliferation of categorical funding, adjustments to base funding should be limited to those which accommodate district characteristics that are not under the districts' control, a limited set of student characteristics, and short-term initiatives. Therefore, we further recommend:

Recommendation 45.1

The State should develop a K-12 school finance system that recognizes a limited set of differential costs, primarily geographic in nature, that are not under the control or influence of school districts, by establishing a District Characteristics adjustment.[68] The additional revenue provided to school districts in recognition of these uncontrollable cost factors would result in similar overall levels of 'real' resources.

Recommendation 45.2

The State should include in the K-12 school financing system block grants for allocation to school districts on the basis of Student Characteristics that mark a need for additional educational resources. Further, we strongly suggest that the adjustments in this category be limited to additional funding for special education, services for English language learners who have been enrolled in California schools for less than five years, and resources provided in recognition of the correlation of family income level with student achievement. (New programs in these areas should be tested and implemented through an initiative process, described in the following recommendation).

Recommendation 45.3

The State should establish a category of grants that would be clearly identified as Initiatives. These initiatives should be limited in duration, and serve one of two purposes:

Recommendation 46

The State should provide local school districts with options for generating revenue locally to supplement their adequate funding base (as outlined in recommendations 44 and 45), and should provide local community college districts the same options for generating revenue locally.

Historically, local communities provided the majority of school funding through locally generated revenue streams. Since the passage of Proposition 13, the State has assumed the role of providing the majority of school funding. Today, nearly 30 percent of public school funding still comes from local sources, and we believe that local communities should still share in this level of revenue generation to support an adequate base of education funding.

School and community college district governing boards could be more responsive to local educational needs, and could be held more accountable by local electorates for programmatic decisions, if they were able to generate revenues locally to supplement their adequate funding base. Districts currently have very limited ability to raise revenues locally. The bulk of 'local' revenue in the current financing system comes from the property tax, and property tax revenues allocated to local school districts are a dollar-for-dollar offset to state aid. Finally, property tax rates are set by constitutional and statutory provisions not subject to local control. Currently, school districts can receive locally raised revenue from a few previously authorized special taxes. School districts can, with approval of the electorate, impose a parcel tax; and they can participate in a local sales tax through a local public finance authority. Schools also raise funds locally through foundations and other parent-centered fundraising efforts. While these sources of revenue may be significant for some school districts and schools, they are limited in their application across the state.

It is critical to recognize that a meaningful local revenue option must link local revenues to those purposes that are best developed and resourced locally. In particular, we would caution that local revenues raised from an optional tax must not become a means of supplanting adequate basic educational funding that is a statewide responsibility. Consequently, local revenue options should not be available until the State has met its obligation to provide adequate funding to support high-quality education in every public school. Revenues raised from a local option tax must be available wholly at local discretion, to augment all other funds received for the educational program. With this caveat, we recommend the following additional options be provided to local school districts:

Recommendation 46.1

The State should authorize school districts in counties where a majority of school districts wish to join together to propose to the electorate a sales and use tax increase, within the local option sales and use tax levy limitation, to take effect with the approval of the voters in a countywide election. Revenue would be divided among the schools on a population (per-pupil) basis, or as delineated in the tax measure. The State should provide for an equalization mechanism to enable a state-guaranteed taxyield, to ensure that each county voting to do so could raise the statewide average per-pupil amount that would be realized through the imposition of a given tax rate.[69]

Recommendation 46.2

The Legislature should approve a ballot initiative to amend the constitutional provisions governing the property tax, to authorize school districts that have voted for and been granted 'home rule' authority (see Recommendation 31), and all community college districts, to propose to the electorate a property tax override for the exclusive use of the public schools or community colleges. The State should assure a minimum, state-guaranteed yield per pupil through a statewide equalization mechanism to provide state financial assistance to communities where a self-imposed tax rate would not yield the minimum state-determined per-pupil amount for that rate.[70]

Recommendation 47

The Legislature should direct an analysis of the feasibility of replacing the current funding model for school facilities with annual state per-pupil allocations restricted to assisting school districts in meeting their capital and major maintenance needs according to a long-term Facilities Master Plan adopted by each school district. State and local funding for capital outlay and major maintenance should be protected to prevent redirection of capital resources when other cost pressures arise and to protect the public's investment in major capital projects.

School facilities are an integral part of the package of resources necessary to provide a high-quality education for students. The first step in ensuring their adequacy is to determine the level of resources necessary to provide each student with an educational facility that supports a high-quality education. While specific criteria must be developed to determine and ensure adequacy for school facilities, there is no doubt that the current model of funding for public school facilities in California is unresponsive to the planning and funding needs of school districts, and, therefore, results in the inefficient use of resources for facilities. In particular, reliance on state General Obligation bonds and the current method of allocating bond proceeds has created a system that has not been conducive to long-term planning for school facility needs at the local level, and that fails to 'leverage' or encourage the development of local sources of funding for school capital outlay needs. County offices of education, which provide essential services to special education and community school students, do not usually have access to local funding sources available to local school districts. Consequently, county offices of education should continue to receive allocations of state funding in amounts necessary to fully meet the needs of specific facility projects to support these programs.

Should this analysis suggest that changing California's approach to funding school facility needs to a per-pupil annual allocation is feasible, we are concerned that the transition to such a system not perpetuate existing inequities among schools. Students and teachers throughout the state should learn and work in facilities that will promote and support a high-quality education. We would therefore recommend that any transition incorporate the following actions:

Recommendation 47.1

The State should require that first priority for capital funding allocations be given to meeting projected needs, taking into consideration historical patterns of student migration/mobility. After all school districts have achieved state standards of adequacy[71] for their facilities and the State has transitioned into a base per-pupil allocation mechanism, the commitment to equity should change focus from 'leveling up' to accommodation of special circumstances.

Recommendation 48

The State should create a statewide school facilities inventory system to assist state and local decision makers in determining short- and long-term school facilities needs.

It is not possible to do a credible job of estimating and developing plans to meet the costs of providing adequate educational facilities for all public education institutions, without having an accurate understanding of the age and condition of existing facilities. Under the current configuration of state entities, the State Allocation Board is the appropriate body to develop and maintain such an inventory on behalf of the State and to coordinate allocation of facility funds to public schools. Within the governance structure described in the Accountability section of this report, however, the California Education Commission, which would be responsible for planning and coordination, might ultimately evolve as the appropriate body to maintain such an inventory for all public schools, colleges, and universities. Based on testimony and recommendations received by the committee, we believe that a tiered approach to developing and maintaining needed facilities data is appropriate. Local districts and postsecondary education campuses have a responsibility to manage and maintain public education facilities in satisfactory condition, and should routinely gather, maintain, and update data that enable proper exercise of this responsibility. Regional education entities and systemwide offices of the public postsecondary education sectors have a responsibility to monitor district and campus compliance with state facility standards, and should inspect facilities and request data from local districts and campuses that would enable them to certify the condition of education facilities to the State on a regular schedule. The State should specify standards for education facilities that must be met or exceeded by all public education institutions. To facilitate diligent exercise of these complementary responsibilities, the State should determine the basic data needed to make necessary management, budget, and policy decisions, incorporating information contained in existing data collection reports maintained byschool districts.