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| California's School Finance System: The Basics
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The first reality of school finance in California is the sheer size and diversity of the state. The school finance system pays for the education of more than 6 million students in kindergarten through 12th grade. It also supports the salaries of thousands of employees and the construction and maintenance of more than 9,000 public schools.
Some of those schools have thousands of students and are in large urban areas like Los Angeles and San Jose. Some have fewer than 20 students and are in remote mountain, coastal, and desert communities. State leaders largely control how much money each of California’s nearly 1,000 local school districts receives. Each year the California Legislature and governor determine the amount of state and property tax funding that will go to public education. They do so within the provisions of a 1988 voter-approved constitutional amendment, Proposition 98, which sets a minimum funding level. State leaders are free to spend above this amount if they choose.
Some of the funds go to districts as general purpose revenues based on a set formula. State leaders allocate other funds in ways that influence educational change and provide some schools and districts with extra funds. They do this by creating categorical programs such as Special Education and class size reduction. Federal funds for schools also are provided as categorical dollars. Both the state and federal governments use these programs to earmark a large portion of school funding for specific purposes or to serve specific groups of students. Categorical funds represent a sizable part of the budget for most school districts and can have a major effect on local expenditure decisions.
School districts are responsible for managing the money they receive within both state and federal guidelines. In turn, the policies, employee union agreements, and practices of the local school district determine the amount of financial and operating discretion an individual school has. However, charter schools are an exception to this model. For the most part, they operate independently of school districts, and their funding differs from the regular system in a variety of ways.
See Charter Schools 
Although the core of every school district's work is providing instruction, they have substantial responsibilities related to the facilities they occupy. Funding for building new schools and repairing existing ones is provided outside of the regular school finance system. But any consideration of school finance needs to also include mention of this important part of school operations.
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