Feeling the Pinch: Navigating Financial Pressures in Pursuit of Educational Quality and Equity

California Fiscal Context

**Krausen, K., & Willis, J. (2018). Silent recession: Why California school districts are underwater despite increases in funding. San Francisco, CA: WestEd. Available at https://www.wested.org/wp-content/uploads/2018/05/resource-silent-recession-2.pdf

This report draws attention to the rising cost of pensions and other fiscal pressures on school districts that can destabilize district budgets and force reductions in services to students. Even though California has increased per-pupil funding for K-12 education since the enactment of the Local Control Funding Formula (LCFF) in 2015, school districts find themselves in what the authors call a “silent recession.” The authors analyzed single year budgets and multiyear projections for 25 school districts in California and found that fiscal pressures due to declining enrollment; costs of upkeep and renovations for aging school facilities; increasing special education program expenses; rising employee health care costs; and resources required for recruiting, retaining, and training teachers are putting additional financial strains on school districts.  They state that by the 2020-21 school year, school district spending on employee pensions is expected to nearly double from 8.3% to 19.1% of a district’s payroll. The authors lay out some of the implications of these financial pressures. They also identify some strategies districts can employ when looking ahead: increase effectiveness, improve efficiency, serve high need students, respond to change, and use data and communication as tools..

Krausen, K., Caparas, R., & Willis, J. (2018). Education budget strategies for challenging times: How California school districts are addressing the silent recession. San Francisco, CA: WestEd. Available at https://www.wested.org/wp-content/uploads/2018/12/Silent-Recession-II-Budget-Strategies-Report.pdf

This report is a follow-up to Krausen and Willis’ report on the state’s “silent recession.” The authors interviewed over 25 business leaders from school districts and county offices of education throughout California to find out more about budget strategies they are employing to address growing financial pressures. These budget strategies fall into four categories: (1) increase effectiveness, (2) improve efficiency, (3) focus on high-leverage budget strategies, and (4) strengthen communication and collaboration with stakeholders. For example, the authors find that district leaders can increase effectiveness by using data to analyze how investments impact student outcomes. Another approach districts can employ to increase efficiency is to compare benefit plans and providers and look for opportunities to increase revenue sources.

Murphy, P., & Paluch, J. (2018). Just the facts: Financing California’s public schools. Public Policy Institute of California. Available at https://www.ppic.org/wp-content/uploads/jtf-financing-californias-public-schools.pdf

This fact sheet outlines how California’s K-12 financing is structured.  It breaks down the percentages of different federal and state sources that fund both public and charter schools, explains how the structure established prior to LCFF created differences among school types in per pupil funding, and summarizes the status of the state’s current K-12 funding formula. Though the funding formula is meant to prioritize high-need students, the document shows how rising district costs outpace funding increases. Additionally, it highlights how the state’s education spending compares to the rest of the nation.

Hill, L., Murphy, P., Gao, N., Warren, P., & Lafortune, J. (2019). K–12 education. In California’s future. San Francisco, CA: Public Policy Institute of California. Available at https://www.ppic.org/wp-content/uploads/californias-future-k-12-education-january-2019.pdf

This brief describes recent changes to California’s education policy and outlines upcoming challenges for policymakers and educators.  Despite increased funding, performance by students in targeted subgroups has been stagnant, and major achievement gaps persist between these students and their more advantaged peers. Graduation rates have been steadily improving, however, with the greatest gains among Latino and African-American students. Funding will remain a challenge for the state. Though LCFF has increased revenues, per-pupil spending levels remain well below the national average. Districts struggle with declining enrollment and increased costs for pensions and special education. The authors predict that the new administration will focus on strengthening early education, building a state-wide student data system, and working with federal regulations to show improvement among the lowest performing 5% of schools.

Newsom, G. (2019). K–12 education. In G. Newsom, Governor’s budget summary 2019–20 [overview document presented to California legislature regular session 2019–20]. (pp. 31–44). Available at http://www.ebudget.ca.gov/2019-20/pdf/BudgetSummary/K-12Education.pdf

This fishbone diagram and case study are excerpts from a report by PACE on building systems knowledge for continuous improvement. The fishbone diagram reflects one of CORE’s improvement communities’ (CIC) initial brainstorming activities and illustrates ideas about causes for the gap in 6th grade African American students’ mathematics achievement. The rectangles at the top and bottom of the diagram identify some of these key contributing factors, and the skeleton connected to each rectangle lists some of the specific details connected to each one.  The case study highlights how the iterative approach to data collection and analysis and using multiple sources of data helped one CIC build system understanding related to their problem of practice.

**This document is considered a priority reading.