Understanding the California School Funding Model

The funding for our schools is controlled by complex laws and restrictions at the state level.  There is a large gap between the schools we want for our children and what state funding covers.  Private donations to our Manhattan Beach Education Foundation are the way we can work to fill that gap and gain some local control over the quality of our schools.

The Laws that Control State Funding

California property taxes are all pooled by Sacramento and from here funds are allocated to school districts across the state. There are several laws that principally shape this system today.

1. In 1971 the California Supreme Court ruled in Serrano v. Priest that California’s system of school finance based on locally controlled property taxes was unconstitutional. The legislature developed a new system making revenue per pupil across districts more equitable regardless of differences in property tax wealth of each district.
2. Proposition 13 (passed in 1978) took away the ability to have property taxes set locally and limits the sum of all property taxes in any particular locale to one percent of assessed property value. Property tax revenue plummeted.
3. In 1998 voters approved Proposition 98, a state constitutional amendment, which sets the minimum level of state and property tax revenue guaranteed to K–12 schools. In stable economic years, education is entitled to the same allocation of funds as the previous year; however, in difficult economic years the state is allowed to allocate a lesser amount (and should restore the shortfall in the year that revenues grow sufficiently).
4. The state lottery accounts for only 1.3% of total K–12 revenues or about $900 million. Although every bit of funding is valuable, the lottery is not making a significant impact on public education funding in California.

The state contributes about $6 out of every $10 that goes to public education. State leaders largely control how much funding each school district in California receives. www.edsource.org

Proposition 98 funding (i.e. annual school funding) comes to school districts in the form of either categorical aid (such as special education or instructional materials), or general purpose funds, which can be spent at a district’s discretion. Currently, about one-third of school funding is earmarked by the state for about 70 specific (categorical) programs. The courts do not require categorical aid to be evenly distributed, which gives the state latitude in allocating resources to school districts as they see fit. Our district gets relatively less than other districts.

Only 15% of MBUSD funding comes from state and federal categorical aid.

In 2009-10 MBUSD will receive only $5156 per pupil in general purpose funding (or “unrestricted revenue limit”). This is based on the school district’s average daily attendance (ADA). The school does not get paid when students are absent from school. Our revenue limit is thousands of dollars less than per pupil funding in states like Connecticut or New York and well below the national average. Depending on the source, California ranks anywhere from 24^th to near last in per pupil funding.

MBUSD’s per-puil funding is now much lower than it was five years ago.

Standing up for our Schools

In light of the constitutionally controlled school funding situation how can school districts fund a quality educational program – especially in tough economic times? The answer lies in bringing some funding and control back to the local level. That is why many school districts in California have a local parcel tax and/or an education foundation similar to our own Manhattan Beach Education Foundation (MBEF).

Parcel Tax

Parcel taxes are being used more and more by school districts to supplement state funding. Parcel taxes are generally a flat rate assessed per parcel, regardless of its size or value. These revenues may be used for ongoing expenses, programs, or buildings at the local agency’s discretion. From 1983 through 2008, 468 (school related) parcel tax elections were held in California. Of these, 250 (53%) passed by the super majority required (2/3 voter approval), and another 180 (38%) achieved a majority vote but did not pass. In 2008, 73% of parcel taxes for education succeeded, demonstrating the desire of California citizens to provide a first-rate public education.

Many of the top ranked school districts in California receive parcel tax funds. Of the top five districts (Palo Alto, San Marino, La Canada-Flintridge, Piedmont and Manhattan Beach) Manhattan Beach is the only one that does not support its schools with a parcel tax. Examples of districts receiving parcel tax funds include:

San Marino ($795), La Canada-Flintridge ($150), Palos Verdes ($274), Palos Verdes Peninsula ($165), Piedmont ($250+), Palo Alto ($493), Cupertino ($125), South Pasadena ($288); La Honda-Pescadero ($100), Oakland Unified ($195), San Francisco Unified ($198) www.edsource.org

Education Foundations and Private Contributions

Many districts receive significant income from contributions or grants from individuals and local businesses. Based on reports to the California Consortium of Education Foundations (CCEF), there are more than 600 education foundations supporting local schools in California. In 2007, educational foundations served about 4.5 million students and raised more than $150 million, according to the CCEF. Our Manhattan Beach Education Foundation is one of the shining examples of the success that can be achieved when a community believes in and supports public education.

MBEF is providing 8% of MBUSDs overall funding for the 2009-10 school year. From 2003-2009, before the state budget shortfall, MBEF provided 3.5% – 5% of MBUSD funding.

There is no doubt that local and private funding for public education is not a luxury but a necessity. When you contribute to MBEF you play a significant role in providing an educational system that is of the highest quality.