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Mini Tutorial: School Funding

The Las Lomitas Elementary School District (and many of our neighbors) are fortunate to be community-funded. Below, I explain a little about what this means, why it's unique, and some of the benefits and challenges of being funded primarily by local property taxes.

Did you know that only about 13% of California’s 1,000 school districts are funded primarily through local property taxes, as is LLESD? In fact, the vast majority of schools are located in districts with property tax revenues that are inadequate to cover the minimum state-required funding amount. In these cases, the state kicks in additional funds using the allocation method below.

The State Funding Formula

Each year, the California Department of Education determines the minimum level of funding each district will receive based on its particular mix of students. The state formula uses a per-student “base grant” and adds funding according to the district’s number of high-need students (e.g. those who are learning English as a second language, living in poverty, experiencing homelessness, or in foster care).


As many education advocates will tell you, the state formula has historically fallen short. During the 2020-2021 school year, California's per-student spending ranked somewhere around 35th in the country after adjusting for our significantly higher cost of living. Community-Funded Districts

In “community-funded” districts like LLESD, the district's share of local property tax revenues exceeds the state-calculated minimum funding amount. Instead of sending those excess property taxes back to the state for redistribution (like schools in Texas must do), community-funded districts get to keep the extra money under current California law. In addition, these districts often have education foundations that raise additional funds from their typically higher-than-average-income residents.

As a result, community-funded districts can receive two or three times as much funding per student as other districts. About half of San Mateo County's elementary school districts are currently community-funded; they tend to have much higher per-student funding than districts that rely primarily on state funding. Below are the data from the 2020-2021 school year. (Note: funding includes all sources of revenue, including foundation grants.)


Flip-Flopping Districts Because local property tax revenues and enrollments fluctuate from year to year, some districts flip-flop into/out of community-funded status. For example, this year Ravenswood City School District flipped to being community-funded, but its status may change next year. Belmont-Redwood Shores also recently flipped to a community-funded model. The Challenges of Being Community-Funded While being community-funded has a lot of upsides, it also presents some challenges.

Limited cash flow: Community-funded districts only receive tax revenues twice a year as property tax bills come due. As a result, districts like LLESD must keep extra cash in the bank (“reserves”) in order to have sufficient funds to pay staff and other expenses until revenues come in. At LLESD, the Foundation’s annual grant (which it presents in October) is also very helpful for cash-flow purposes. (Thank you, LLEF!)


Budget uncertainty: Most school districts know how much state funding will arrive each month. But community-funded districts must make an educated guess about property tax revenues when adopting the annual budget and forecasting for the future (which affects contract negotiations with our employee associations). Keeping healthy reserves is critical to offset any lower-than-projected tax revenues so staffing and programs remain uninterrupted.


Enrollment growth without corresponding funding increases: Unlike most districts, which receive additional funds for additional students, LLESD's funding is based on property tax revenue, not enrollment. As a result, when enrollment increases as the result of state-mandated programs (such as Transitional Kindergarten), or due to population growth, the state does not provide additional funding (and does not plan to do so in future years, either).


State budget surpluses usually don't trickle down: For example, most districts in California received a substantial funding increase this school year due to a state budget surplus and the corresponding addition of a cost of living adjustment, or “COLA” to the state-funding formula. However, community-funded districts did not benefit from this additional state funding.


Here's a snapshot of projected revenues for LLESD this school year.

Note: LLESD does receive some federal and state funding (e.g. from the state lottery, for Special Ed programs, and for the Expanded Learning Opportunities Program).


To learn more about school funding in California

Check out Ed100's great resources at https://ed100.org/lessons/lcff.

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