Study assails school funding

Complex 'categoricals' don't put state money where it's needed most, a new report says

By Deb Kollars -- Sacramento Bee Staff Writer Thursday, July 15, 2004

A chunk of state money that ought to be going to the neediest students in the state is instead being channeled into schools serving more well-off and high-scoring children, according to a new study released Wednesday. The report, published by a respected education think tank, was highly critical of a massive and tangled area of California school finance known as "categoricals."

The strongly worded paper not only echoed other recent reports of deep inequities, outdated formulas and an absence of state oversight, but also found that in at least two prominent programs well-off schools with high-scoring students are getting more categorical money than those with poor children and low test results.

"The money doesn't necessarily follow the kids who need it most," said Thomas Timar, a faculty affiliate with Policy Analysis for California Education, a think tank based at Stanford University and the University of California's Berkeley and Davis campuses. Timar, who wrote the report, is an associate professor in the school of education at the University of California, Davis.

Timar's study tackled one of California's most problematic and entrenched areas of school financing.

Categoricals are special pots of money designated for specific purposes, such as Gifted and Talented Education and helping Eng lish learners. The money goes out on top of basic per-student allocations that cover general education expenses.

According to the new study, the categorical system has grown dramatically. In 1980, the state had just 17 special categories of school funding; by 2002 there were 124, totaling nearly $13 billion.

The system was built through years of politicking at the Capitol. Usually, the intentions were noble, such as helping poor children or training teachers. But the system has become mired in so much red tape and unevenness that it is now the most complex and bureaucratic in the nation.

Wednesday's report pointed out that California has been churning out categorical money for years, often without checking to see whether programs are working or whether enrollments or demographics in the targeted schools have changed. Once schools and districts become dependent on a category of funding, it becomes politically impossible to take it away or redirect it to a more appropriate use, the report stated.

Timar found the distribution of categoricals to be highly inequitable among the state's 1,000 districts, and in some cases likely out of compliance with state court rulings involving school finance equity.

In a striking finding, he reported that two large and prominent categorical programs are sending more money to schools with well-off populations and high-achieving children than to schools with poor and low-achieving youngsters.

The School Improvement Program, for example, provides $390 million a year to schools, which spend the cash under the direction of local "school site councils." When the program first began, it was designed to help schools in low-income areas, said Bruce Fuller, co-director of the Policy Analysis think tank and a professor of education and public policy at UC Berkeley. But over the years, other schools also clamored for the money.

Timar found that schools with more well-off and higher-achieving children receive an average of $86 per student through the School Improvement Program, while schools serving poor communities with lower test scores receive $48 per student.

The $230 million Supplemental Grant Program showed an even greater disparity: $77 per student in the more well-off communities and $15 per student in lower-income areas.

"Not only does the distribution evidence a certain randomness, but an element of irrationality," Timar wrote.

Rick Simpson, deputy chief of staff to the Assembly speaker's office, pointed out that not all categoricals were designed exclusively for helping needy children. Categoricals also address other universal needs in schools, such as teacher training and bus transportation.

General Davie Jr., superintendent of the San Juan Unified School District, agreed. The Supplemental Grant Program, he noted, was designed to help suburban schools that felt they weren't getting their fair share of categorical aid.

"Every school has needs in terms of improving programs and achievement," Davie said.

Both Simpson and Davie, however, agreed that the state should conduct a thorough review of the many categorical programs to make sure they are current and effective. Trying to take money away from anyone, however, would be a painful process, they said.

Paul Warren is a senior policy analyst for the Legislative Analyst's Office, which is among several agencies that have reviewed categoricals and found them in need of reform. Regardless of how difficult it is, he said, the state needs to do a better job of assessing how money is spent and "trying to connect funding with what needs to happen for kids."

The complete report can be viewed at UC Davis Site

UPDATE

Paring back the foliage in the school-finance mess

By Daniel Weintraub, Sacramento Bee, Thursday, September 2, 2004

In what passes for major reform in Sacramento, the Legislature last week agreed, finally, to loosen a few of the strings that bind local school districts to the Capitol's priorities. It was a testament to one senator's dogged determination and the effect of a change in the guard at the top of the political food chain.

Most people don't know this, but about one-third of the money the state sends to public schools is controlled - remote-controlled - by the Legislature and the governor. If a school district wants to buy new textbooks rather than hire another cop, too bad. Money in the school safety pot can't be spent on instructional materials.

The dozens of "categorical programs" that litter the education code are the result of decades of brilliant ideas by individual lawmakers, governors and interest groups who succeeded in imposing their narrow vision on the entire state.

Every time a big new problem gets the spotlight in an audit, special study or media report, the Legislature jumps to respond, even if the issue needn't require a statewide solution.

So when the Los Angeles Unified School District was exposed for failing to provide textbooks to all its students, the state earmarked more money for textbooks, in every district, even those that already had enough. When some high school misfits in Colorado killed their classmates in an ambush, California lawmakers, to show their concern, directed more money into school safety. And so on.

Noble as these gestures might appear, though, the dirty little secret is that the size of the entire pot of money the schools get from the state is generally set by the constitution. So in most cases, Sacramento was simply moving money around, setting priorities from afar without actually giving the schools more to spend overall.

Further, as reporting by The Sacramento Bee's Deb Kollars made clear in a blockbuster series published last year, many of these programs are funded with no rhyme or reason, and no one is checking to see that the purposes behind the mandates are being fulfilled. A problem some legislator thought was huge in 1983 might have been solved, or not, but the money just keeps flowing.

Gov. Arnold Schwarzenegger campaigned on this issue last year, vowing to give local school boards and administrators more control over their budgets. He followed up in January with a proposal that would have killed off 22 of the special programs and folded the money into general purpose budgets, where locals could spend it on their own highest priorities.

Schwarzenegger's prodding gave new life to an idea that has been kicking around for years, but his particular proposal went nowhere. Legislators simply weren't comfortable letting go of the money entirely, as he suggested. And frankly, many school officials say privately - and disingenuously - that they don't want all that money going into their general fund, because the teachers unions will demand that the funds, once freed, be dedicated to higher salaries.

But state Sen. Dede Alpert of San Diego County, an education expert and one of the more reasonable Democrats in the Legislature, kept pushing. Alpert, who is leaving the Legislature this year due to term limits, has long wanted to reform the categorical mess and desperately wanted to get the job done before she retired.

The result is a bipartisan compromise that does more than anything in at least a decade to loosen Sacramento's grip on the money.

Alpert's bill would collapse 26 special programs and more than $2 billion annually into six block grants organized according to broad goals instead of narrow programs. Schools would be free to spend the money within each grant on any of the old programs or on new priorities consistent with that grant's purpose.

The new School Safety block grant, for instance, would combine the existing programs for safe school planning, school community policing, gang-risk intervention, safety plans for new schools, school community violence prevention and conflict resolution. The list is so obviously filled with redundancy that one wonders how this change could possibly be so controversial.

Other grants would focus on pupil retention, teacher credentialing, professional development, instructional improvement and libraries.

In addition to moving the money around within the block grants, schools under this proposal also could move up to 15 percent of their money out of any one block grant and transfer it to another, or to any other existing categorical program. This is important because some categoricals, such as the massive, state-imposed initiative to reduce class size in the lower grades, cost local districts more than the state gives them. By moving money from the block grants to these special programs that encroach on general fund revenues, the schools will be able to free up more dollars to spend in any way they choose.

While Alpert's bill is considered a monumental reform in the school community, it's just common sense, and falls well short of what really needs to be done. It also doesn't go nearly as far as Schwarzenegger would like.

But the governor should accept this partial loaf, chalk up a modest victory and keep pushing for more.

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Last modified: September 2, 2004

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