School Funding Cases in California

in California Litigation

Historical Background

Serrano v. Priest

In 1971, the California Supreme Court ruled education a fundamental constitutional right and remanded Serrano v. Priest, 487 P.2d 1241, for trial in what is generally regarded as the first of the modern-era education finance litigation decisions. In 1976, in Serrano v. Priest (Serrano II ), 557 P.2d 929, the same court affirmed the lower court’s finding that the wealth-related disparities in per-pupil spending generated by the state’s education finance system violated the equal protection clause of the California constitution. The court distinguished the U.S. Supreme Court’s 1973 Rodriguez decision, which applied only to the federal constitution.

When the subsequent Serrano remedy was challenged in 1986, 93% of California students were in school districts whose per-pupil spending was within $100 of each other. The court held, in Serrano v. Priest, 226 Cal. Rptr. 584 (Court of Appeal, 2d District 1986), that this level of disparity satisfied California’s equal protection requirements.

Hartzell v. Connell

In Hartzell v. Connell, 679 P.2d 35 (Cal. 1984), a group of taxpayer-parents, community organizations, and the Coalition Opposing Student Fees, filed suit against the Santa Barbara School District, its school officials and its board, alleging that a new policy requiring high schoolers to pay fees to participate in certain extracurricular activities violated the California Constitution’s “free school” clause (Art. IX, Sec. 5) and equal protection clause (Art. IV, Sec. 16).

The plaintiffs lost at trial and the question presented to the California Supreme Court was whether public schools could charge fees for high school students to participate in educational programs simply because they were deemed “extracurricular.” It was a question of first impression for the court, and thus required the court to inquire into the nature of the free school concept in California.  The court cited extensively to the writings of Thomas Jefferson, Ralph Waldo Emerson, and John Swett, a prominent member of the free school movement when Art. IX, Sec. 5 was adopted as part of the California Constitution.  The court laid out three essential dimensions of public education: (i) political, (ii) economic, and (iii) social.  Elaborating further on the essential dimensions of public education, the court wrote:

Education stimulates an interest in the political process and provides the intellectual and practical tools necessary for political action. Indeed, education may well be the dominant factor in influencing political participation and awareness. With the rise of the electronic media and the development of sophisticated techniques of political propaganda and mass marketing, education plays an increasingly critical role in fostering those habits of open-mindedness and critical inquiry which alone make for responsible citizens, who, in turn, make possible an enlightened and effective public opinion Without high quality education, the populace will lack the knowledge, self-confidence, and critical skills to evaluate independently the pronouncements of pundits and political leaders …. Finally, education serves as a unifying social force among our varied population, promoting social cohesion based upon democratic values.

(internal citations and quotations omitted).

Given that “extracurricular activities constitute an integral component of public education” and promote civic engagement and responsibility amongst students, the court ultimately held that California’s “free school” clause forbid schools from charging fees for students to participate in extracurricular activities, regardless of whether waivers were provided to students with financial hardship or whether school districts themselves were facing financial hardship.  The court did not reach the issue of whether the fee system violated the state’s equal protection clause.

Williams v. State

In 1999, several California organizations filed a school funding case, Williams v. State, in state superior court on behalf of a class of students attending substandard schools. Represented by a team of organizations, led by Public Advocates, Inc., the ACLUs of Northern and Southern California, Morrison & Foerster, LLP, and the Mexican American Legal Defense and Educational Fund (MALDEF), the plaintiffs’complaint cited inadequate, unsafe, and unhealthy facilities, a shortage of qualified teachers, missing libraries, a lack of instructional materials, and overcrowded schools that resulted in a staggered and shortened school year (together known as Concept 6). The state filed cross-claims against 18 school districts, but in 2000 plaintiffs won a motion to sever and stay proceedings on the cross-claims.

In August 2004, before the case went to trial, the parties announced a settlement – later approved by the court – to: (1) provide $800 million over the next several years for school repairs; (2) create a School Facilities Needs Assessment program; (3) create standards for instructional materials and facilities; (4) require a complaint process for inadequate instructional materials, teacher vacancies, and emergency facilities problems; (5) intervene in schools ranked in the bottom 30% under the 2003 Academic Performance Index if instructional materials and facilities standards are not met; (6) streamline California credentialing for out-of-state credentialed teachers; (7) allocate about $140 million for instructional materials in 2004-2005; and several other provisions.

While the parties were optimistic about the settlement, leaders of some education organizations were concerned that it might focus too much on monitoring and compliance and not enough on educating every child, and that the amount of the settlement may be insufficient to repair every school and provide books to all children.  Those concerns were not unfounded.  Eight years after the settlement agreement, California had failed to pay even half of the Emergency Funds that it promised, leaving more than 700 schools still waiting for funds to fix broken toilets, infestation, battered walls, and clogged sewer lines.

Renee v. Duncan

In Renee v. Duncan, a coalition of parents, students, community groups, and legal advocates sued the United States Department of Education in federal district court in San Francisco in August 2007 because it allows novice teachers in training to be considered “highly qualified,” the central teacher qualification requirement under NCLB.. The plaintiffs claimed that classification of intern teachers as highly qualified harms students, especially the “large numbers of poor and minority students” served by these “intern teachers.” “A primary purpose of NCLB was to address this problem,” said one plaintiff.

In July 2009, the U.S. Court of Appeals for the Ninth Circuit ruled that the plaintiffs lacked standing to challenge the regulation. While trial court had upheld the Department’s interpretation of the statute, the appeals court did not even reach the substantive issues, since they held that plaintiffs had not shown sufficient legal injury to qualify them to bring the case. The reasoning was based on the fact that under the amorphous NCLB definition of “highly qualified,” which leaves it to the states to define the requirements for “full State certification,” the State, even in the absence of the challenged federal regulation, could hold that teachers participating in alternative internship programs were credentialed.

In an unusual reversal, the Ninth Circuit Court of Appeals revoked its earlier decision and accepted jurisdiction for the Renee case. In October 2010 the court ruled that intern teachers cannot be labeled “highly qualified” under NCLB standards. Subsequently, however, the U.S. Department of Education modified its regulations and, in essence, reversed the Ninth Circuit’s ruling, which was based on statutory and regulatory interpretation.

Reed v. State of California

In February 2010, families of three Los Angeles Unified School District (LAUSD) filed suit against the State and district over the State’s decision to reduce education funding levels in response to the fiscal crisis and LAUSD’s subsequent choice to layoff thousands of teachers. The plaintiffs’ schools, which primarily serve students of color, children from poverty backgrounds and English Language Learners, suffered greater reductions in staff than many of their affluent counterparts due to seniority rules.

Due to the layoffs, the plaintiffs’ schools lost teachers whose efforts had resulted in significant increases in student performance, as well as entire departments in core subject areas. According to the complaint, vacancies were filled by long-term substitutes and permanent teachers from the rehire pool, including many without credentials to teach in their assigned subject areas and grade levels. Since the case was filed well over 20,000 teachers have received pink slips.

Plaintiffs charged the State with violating the equal protection, education and privileges and immunities clauses of California’s constitution. In addition to declaratory relief, the plaintiffs requested that the Court prohibit defendants from laying off teachers at Gompers, Liechty and Markham in the 2010-2011 year, laying off a greater percentage of teachers at these schools than at the average LAUSD school, contributing to a higher rate of turnover at these schools than in the average LAUSD school, and inflicting any “further educational harm.”

On May 13, 2010 the Court issued an order granting a preliminary injunction. The Court accepted many of plaintiffs’ allegations and held that the school system “could not bargain away students’ constitutional rights.” The order enjoined the school district from implementing any budget-based layoffs of classroom teachers at the three schools that were the subject of the litigation during the pendency of the case.

In October 2010, the Plaintiffs reached a tentative agreement with Los Angeles Unified School District and the State of California to settle the Reed case, which would, among other things, prevented budget-based layoffs from up to 45 schools in LAUSD. On March 7, 2011 an intermediate appellate court refused to stay implementation of the Reed settlement.  The state appellate court decision could have had an immediate impact – planned budget cuts threatened to lead to as many as several thousand layoffs in the nation’s second-largest district, LAUSD. The Los Angeles teachers union which was opposing the settlement entered into between the plaintiffs, the state and the LA school district, said the decision means other, more affluent, schools will feel more impact from the next round of layoffs.

On August 12, 2012, the  Court of Appeals held that the city and the plaintiffs could not enter into a consent judgment that extended their settlement to 45 schools without allowing the union, whose members’ seniority rights were at issue, to have a full trial on the issues. The case was sent back to the trial court for further proceedings.

In April 2014, the LAUSD had reached a settlement with the plaintiffs, the United Teachers Los Angeles, and the Partnership for Los Angeles Schools.  The settlement provides $60 million in teacher and principal pay increases, services and staff development and support in high need schools.

The new three-year agreement, to which the union is now a party, seeks to improve teacher quality at high need schools, but does not address the seniority layoff issues. The settlement will provide thirty seven schools with more counselors, administrators and greater teacher training. Additionally, principals will receive hiring bonuses and increased salaries after their first and second years. The agreement also calls for increased compensation for mentor teachers who train less experienced colleagues.  The intent of the agreement is to attract more senior teachers to these schools, to improve the quality of less experienced teachers and to reduce teacher turnover at these schools.

The settlement is awaiting court approval.

Recent Events

Three Cases Challenge Inadequacy to State Finance System

In May 2010, the plaintiffs in Robles-Wong, et al. v. State of California, filed a complaint arguing that the State’s funding scheme is entirely divorced from educational realities and actual costs, and the State’s continued reliance upon it constitutes a violation of the state constitution. Among other things,  the plaintiffs contend that the State’s failure to align funding with its academic requirements and expectations amounts to a failure to provide a functioning “system” of schools as required by Article IX of the state Constitution. In addition, they assert that Art. XVI, which states that “from all state revenues there shall first be set apart the monies to be applied by the state for the support of the public school system” means that the State must treat financial support for schools differently from other spending decisions and “intentionally and rationally” determine and provide for the actual costs of its comprehensive education program.

The complaint provided a very detailed and dismal overview of the state of public education, which continues to persist in spite of California’s aspirational “comprehensive educational program.” In 1995, the legislature outlined the specific content and skills that public schools must impart to all students so that they can “succeed in the information-based, global economy of the 21st century.” The legislature also mandated a range of programs, including targeted services for at-risk groups, which schools must provide in order to ensure that all students are able to meet state standards. However, only 50% of all students—and 37% of African American and Hispanic students—demonstrated proficiency in English Language Arts in 2008-2009, and the graduation rate hovers below 70%. These disappointing outcomes, plaintiffs contend, are directly related to the failure of the State’s finance system to provide school districts the funds to ensure that students have access to, among other inputs, quality teachers, small class-sizes, and supplemental or remedial services if needed. (For example, the complaint asserts that California ranks 49th both in providing computer access and in its teacher-student ratio.)

A coalition of advocacy groups, parents and students filed a second education adequacy case against the State of California and then-Governor Arnold Schwarzenegger in June 2010, seeking to counter the impact of a state fiscal crisis that had resulted in over 16,000 teacher layoffs and cuts to core academic programs at the time. The four grassroots organizations—the Alliance for Californians for Community Empowerment (ACCE), Californians for Justice (CFJ), San Francisco Organizing Project (SFOP) and the Campaign for Quality Education (CQE)—represent thousands of students of color and children from poverty backgrounds. The case, Campaign for Quality Education, et al. v. State of California, relied on the same constitutional clauses, and many of the same basic facts and statistics in their complaints as the plaintiffs in Robles-Wong. This case, however, differs in its focus on the unique needs of students from disadvantaged backgrounds, and its emphasis on pre-school services and on the creation of data systems to ensure the most effective use of funds.

Responding to a court order that had dismissed their adequacy claims but allowed their equal protection claims to proceed to trial, plaintiffs in both cases amended their complaints in March, 2011 and asserted that thousands of children in California are being denied “an equal opportunity …to succeed in learning the content of the educational standards established by the state.” These equal protection claims  went beyond traditional pleadings in fiscal equity cases by relating equal protection to an opportunity to learn in accordance with the state’s academic content standards. Arguably, this approach to equal protection  went even further than traditional adequacy claims because it was not tied to any base foundation level and relating opportunity to the state’s outcome standards implies that the state has an obligation to provide the full range of supportive services (such as early childhood services, extra time on task, health and family support services) that students from poverty backgrounds generally need in order to meet the state’s academic standards.

On July 1, 2011, Judge Steven A. Brick of Alameda County Superior Court dismissed for the second time, the complaints in both Robles Wong v. State of California and Campaign for Quality Education v. State of California. In doing so, the court rejected plaintiffs’ new equal protection approach, holding that it would entertain only traditional equal protection claims that simply alleged that students in poorer school districts were “receiving fewer educational resources compared to most other students in most other districts.” The judge did allow the plaintiffs leave to amend their complaints to allege further facts that would support an equal protection claim as the court has now defined it.

In 2012, plaintiffs filed an appeal on the adequacy claims in the First Appellate District Court.. Plaintiffs in the two cases filed a joint  appellant brief. Their main claim was that the district court erred in holding that the California constitution lacks a qualitative, enforceable right to an education, even though the state Supreme Court long ago held in Serrano v. Priest that education is a “fundamental interest” under the state constitution. The Campaign for Educational Equity at Teachers College, Columbia University and the Education Law Center filed a joint brief as amici curiae in support of Plaintiffs.

In February, 2016, more than three and a half years after the briefs were filed, the California Court of Appeals for the First Appellate District finally heard oral argument in the two related adequacy cases. In a decision issued in April, 2016, the intermediate appeals court upheld the trial court’s dismissal of the case. It found no support for an implied constitutional right to an education of “some quality” in Article IX of the State Constitution Campaign for Quality Education et al. v. State of California.  Plaintiffs, relying on the California Supreme Justice Jenkins, writing for the majority, held that although he agreed that “the fundamental right to a public school education is firmly rooted in California law, “ there was “no explicit textual basis from which a constitutional right to a public school education of a particular quality may be discerned. “ He also relied strongly on “persuasive decisions” of other states that have similar constitutional language, i.e. Indiana and Missouri, which had also ruled against plaintiffs in adequacy litigations.

Justice Siggins concurred. He suggested that if large numbers of students are not meeting the levels of achievement established in the state’s standards, a statutory action might lie to ensure that students are afforded “the opportunity to obtain a meaningful education.”  Such a statutory basis for an action “would be in accord with the general principle of judicial restraint that courts should not decide constitutional questions where other grounds are available…”

In a lengthy dissenting opinion, Acting Presiding Justice Pollack stated that” if the constitutional provision is to have meaning, it must imply that the system…must provide some minimum qualitative level of education.”  He also wrote that many other states had found meaningful judicial standards for articulating educational quality and he quoted extensively relevant language from these decisions.

In August, 2016, California’s highest court declined to review the decisions of two lower courts.The California Supreme Court did not rule on the merits of the plaintiffs’ claims. By a close 4-3 vote, they merely exercised their discretion not to accept an appeal of the ruling of the State Court of Appeal. Although the majority did not provide any reasons for their decision not to hear the case, two of the dissenting judges wrote strong opinions that criticized the majority for not allowing plaintiffs their day in court. Justice Liu stated that “We should not leave the schoolchildren of California to wonder whether their fundamental right to education under our state Constitution has real content or is simply hortatory.” Justice Cuellar opined that that “[T]he question whether our state Constitution demands some minimum level of educational quality, as opposed to resolving precisely how schools should be administered, lies at the core of what this institution is empowered to adjudicate.” Justice Liu also added that “[I]t is possible that the complexion of the issue and, in turn, this court’s posture may change if our education system further stagnates or worsens.”

Doe v. the State of California

In September 2010 the ACLU filed a class action lawsuit in the county of Los Angeles against the State of California, charging that school districts across the state were charging illegal fees for educational programs. The case relied on an initial investigation by the ACLU that found at least 40 schools charging fees for course workbooks, laboratory expenses, Advanced Placement exams and courses, physical education uniforms, fine arts classes, and a variety of other programs. The ACLU described specifically two plaintiffs, Jane Doe and Jason Roe, whose families fought against school fees and had been told by school administrators in Orange County that such fees are illegal. The complaint sought declaratory and injunctive relief against the Governor and other state officials, asking them to enforce the constitution and laws that prohibit charging student fees.

A settlement was reached in December 2010. The settlement did not, however, establish any new legal ground, since it was clear under California law that school fees do violate the right to a free public education.  Nevertheless, it provided a framework for “informing students and parents of their rights, enforcing the rules and penalizing transgressors.”

Specifically, the state agreed to promptly send a letter and guidance document to all school superintendents informing them that “whenever a public school offers a curricular or extracurricular program to students, the California Constitution requires that the school provide all materials, supplies and equipment–whether they are necessary or supplementary to the program–to students free of charge.” The State also agreed to seek legislative and regulatory revisions that would spell out these legal requirements and would provide a complaint process for parents who believed that a school district is violating the constitutional prohibitions.

In October, Governor Jerry Brown vetoed the legislature’s enactment of the statutory provisions agreed to in the settlement. Although acknowledging that imposing school fees was illegal, the governor said that the settlement agreement “goes too far. The California Association of School Administrators claimed that the audit procedures required by the settlement agreement would have added significant mandated costs to school districts.” The ACLU promptly reinstated the litigation, as permitted under the settlement agreement, and the state then moved to dismiss their suit.

The state superior court, Los Angeles County, largely denied the state’s claims and permitted the case to proceed to trial. Doe v. The State of California.  In January of 2012, the Court ruled that the plaintiffs could compel the state education department to enforce the free school guarantee of the California constitution, could assert equal protection and wealth discrimination claims against them, and that the issues were justiciable.

In October 2012, the ACLU announced that it would dismiss the lawsuit as a result of the passage of Assembly Bill 1575, which established a statewide accountability system to ensure that schools do not charge schoolchildren illegal fees in violation of their rights to a free public education.

D.J. v. State of California

The American Civil Liberties Union of California (ACLU) and the Asian Pacific American Legal Center (APALC) filed a lawsuit on April 24, 2013, in the state Superior Court, Los Angeles County. The complaint charged the state with failing to provide more than 20,000 English learners appropriate instruction and adequate educational assistance, alleging violations of both the California constitution and the federal Equal Education Opportunities Act of 1974.

One out of every four students in the state has been identified as an English Language Learner (“EL”) student who requires specialized language instructional services to effectively learn and participate in the state’s K-12 public school system. Although the defendants have claimed that 98% of English language learners in the state are receiving language instructional services, the state’s own documents conceded that 20,000 students are not receiving such services, according to the complaint. The plaintiffs claimed that the 20,000 unserved students are, in many cases, concentrated in a few school districts in which large numbers of students are being denied their educational rights. In the Los Angeles Unified School District, 4,000 students are unserved.

On August 12, 2014, a California state judge ruled in favor of the plaintiffs, finding that “credible evidence” had been presented establishing that ELL students were being denied appropriate instruction and educational assistance, and that the State had a duty under both state and federal law to ensure that these students were being provided an equal educational opportunity.

Vergara v. State of California

A Superior Court Judge in Los Angeles ruled in June 2014 that the state’s tenure, teacher dismissal and seniority-order layoff statutes are unconstitutional under the state’s equal protection clause. Vergara v. State of California. This decision could have had significant implications in setting a precedent for courts to reach beyond issues of intentional racial discrimination and adequate funding and to review a broad range of state educational policy decisions that arguably may impede students’ opportunities for a sound basic education.

The case was brought by Students Matter, a conservative legal advocacy group that opposes teacher tenure and seniority lay off issues. Defendants included the State of California, and the governor, the state teacher’s union and teachers association were permitted to intervene. The court took no position on what alternative statutory procedures might pass constitutional muster, and it did not hold that tenure per se is unconstitutional. It left these remedial decisions to be determined by the legislature and the state authorities. Recognizing the far-reaching implications of its decision, the court also stayed the effect of its order, pending appellate review.

In April, 2016, a three-judge intermediate appeals court unanimously overruled the trial court’s l decision. The appeals’ court reversed because the plaintiffs failed to show that the challenged statutes inevitably cause a certain group of students to receive an education inferior to the education received by other students. They emphasized that these statutes do not address the assignment of teachers, and that the critical decisions about which students are actually assigned to particular teachers are made at the local level by district administrators and principals. The Court also held that the subcategory of “unlucky” students was not a clearly identifiable group for equal protection purposes.

In August, 2016, the California Supreme Court declined to review the intermediate appeals court’s decision, This means that the trial court’s decision has now been permanently overruled. Justices Liu and Cuellar  wrote dissenting opinions. They both indicated that they would have sided with the plaintiffs and they were both especially critical of the Court of Appeal’s holding that plaintiffs asserting an equal protection claim involving a fundamental right needed to constitute an identifiable group for reasons other than the fact that they were all victims of the statutory scheme.

Cruz v. State of California

Two weeks before the Vergara decision was issued, a case that challenged from a different angle state policies regarding the quality of education for low income students was filed in the Superior Court, Alameda County. In Cruz v. State of California, poor students of color from seven public schools claim that they are being denied an equal educational opportunity because they receive far less meaningful learning time than their peers who attend school in more affluent areas. The case was brought by the ACLU Foundation of Southern California and a group of co-operating attorneys.

Plaintiffs alleged that several interrelated factors divert substantial classroom time away from instruction. Plaintiffs also alleged that the state’s failure to prohibit these activities and to monitor the mount of instructional time that is being provided to students in their schools denies them equal protection under both the state and federal constitutions and constitutes racial discrimination under California law.

In October 2014, a California Superior Court judge ruled that the plaintiffs from one of the schools, Jefferson High School in the Los Angeles Unified School District (“LAUSD”), would suffer irreparable harm if the State of California did not immediately meet with the LAUSD superintendent to devise a plan to address the school’s “shocking, unprecedented, and unacceptable” deprivations of educational opportunity.

In support of their motion for a temporary restraining order, the plaintiff-students from Jefferson Senior High School had presented evidence that the school failed to assign scores of students to classes, sometimes for as long as six to eight weeks.  As a result, these students were either warehoused in the school auditorium, left to roam the school hallways unsupervised, or sent home.  Many of the students were assigned to courses they had already taken and passed or to “classes” with no content or instructional time. In addition, plaintiffs also presented evidence that even those students who were properly assigned to classes were detrimentally impacted by the school’s widespread and unabated scheduling failures.  Specifically, the Superior court judge described evidence of “chaotic classrooms with constantly changing students,” teachers’ inability to progress in teaching course materials at an appropriate pace, and low student morale resulting from the school’s systematic and unredressed scheduling failures,

To restore some semblance of order to the chaotic learning environment created at Jefferson High School, the court ordered the state, the state board of education, and the state superintendent of public instruction to step in and immediately meet with the LAUSD superintendent to devise a plan to remedy Jefferson High School’s scheduling failures.  In particular, the court required the LAUSD and state defendants to devise a plan, among other things: immediately giving students the option to enroll in appropriate courses with substantive, instructional content; immediately establishing a program offering remedial instruction to students who were previously unassigned or mis-assigned; and that provided for all necessary teaching staff, teaching materials, classrooms, desks and any other resources needed to implement the plan by no later than November 3, 2014.

In November, 2015, the California’s State Board of Education entered into a settlement with the plaintiffs under which the California Department of Education, the State Board of Education and State Superintendent of Public Instruction Tom Torlakson will provide immediate assistance to six schools in Compton, Los Angeles and Oakland in compliance with AB 1012, a new state law that limits the scheduling and course assignment practices that led to students losing learning time.

Additional Cases

A lawsuit filed in July 2015 filed by the American Civil Liberties Union, Public Advocates and Covington & Burling LLP claimed that the Los Angeles Unified School District (LAUSD) used improper financial practices in implementing the state’s new Local Control Funding formula. Community Coalition of South Los Angeles and Reyna Frias v. LAUSD, et al. [Link] According to the plaintiffs, the LAUSD failed to utilize funds that should have been directed to low-income youth, foster children and English Language learners (ELLs). Furthermore, the plaintiffs claimed that the LAUSD misallocated about $400 million from 2013-2015.

The Local Control Funding Formula requires school districts to increase services for particular groups of students in proportion to the increase in funds apportioned under the formula on the basis of the number and concentration of that group of pupils in the school district.  The lawsuit alleges that by counting prior spending for “special education” as spending on services for low-income students, English language learners and foster youth, it deprives many students in the latter categories of funding because not every special education students falls into those categories. The plaintiffs claim that LAUSD has already misallocated about $400 million over the past two years, and unless enjoined by the Court, is likely to deprive groups of high needs students of over $2 billion  over the next few years.

The finance reform law, known as the Local Control Funding Formula was implemented in 2013 by California Governor Jerry Brown. It provides an increase in funding for public schools over an eight year period, and, in particular it drives money toward students with high needs and to districts with large concentrations of such students.

The California School Boards Association filed a law suit in the State Superior Court, Sacramento County in September 2015, claiming that the state manipulated the formula used to determine the minimum constitutionally-mandated funding levels for public schools. California Sch. Bds Association v. Cohen. At issue in this case is Art. XVI, § 8 of the California Constitution, popularly known as Proposition 98, approved in 1988, which requires the state to spend a minimum share of its budget on public schools and community colleges.

In 2011, the state legislature decided to move funding for most child-care programs, totaling about $1.1 billion, out of the portion of the budget covered by the Proposition 98 guarantee for fiscal 2012. This action lowered the minimum guarantee for that year by re-calculating the base amount in the Proposition 98 formula going back to 1986-87, and allowed the state to reduce education spending by more than $1 billion. When it approved a fiscal 2016 budget this year, the legislature moved $145 million allocated for those programs back into the Proposition 98 budget, but in doing so, it failed to “rebench” the original base amount. If it had done so, according to the plaintiffs, the minimum guarantee this year would have been $150-180 million higher.

The plaintiffs make clear that they do not object to child care funding or to including these funds in Proposition 8 calculations. Their concern is that if the state is allowed to selectively rebench the calculations that are used to determine the minimum funding guarantee, it will manipulate and reduce the minimum spending guarantee whenever it chooses and thus render the “guarantee” of Proposition 98 essentially meaningless . They state that such a result would  “inject the kind of politically-created instability into state education spending that Proposition 98 was intended to eliminate.”

Costing-Out

In 2002, the State passed a law establishing the California Quality Education Commissionto develop a Quality Education Model (QEM) for pre-K through grade 12, in the image of a similar commission in Oregon. The Commission was to be appointed by the governor, legislative leaders, and the Superintendent of Public Instruction, and was charged with determining the “educational components, educational resources, and corresponding costs” necessary “so that the vast majority of pupils can meet [state] academic performance standards.” The law required the Commission to involve parents, educators, school board members, and the public in the design of the QEM, and to issue a report in July 2004.

However, soon after he took office, Gov. Schwarzenegger withdrew the appointments made and has chosen not to appoint members to the commission.

A number of cost studies, utilizing differing methodologies were undertaken as part of“Getting Down to Facts,” an extensive collection of studies of California’s education system released in March 2007. Two of the main studies were performed by Jay Chambers, Jesse Levin, and Danielle DeLancey of the American Institutes for Research (AIR) and by Jon Sonstelie of the Public Policy Institute of California (PPIC).

Jennifer Imazeki of San Diego State University also produced a cost function study to determine how levels of spending should vary amongst districts depending on their student populations. Her study takes an econometric approach by looking at spending as a function of outcomes, and outcomes as a function of spending. It uses data on per-pupil school expenditures, student performance, and various characteristics of students and school districts. These methods result in a very broad range of possible results, largely because of inefficiencies in the present California education system.

In addition, the AIR study, a professional judgment study, asked panels of superintendents, principals, teachers, and business officials from “beating-the-odds” schools to outline the resources necessary for providing children an adequate education, in accordance with the state’s performance standards. California, the researchers found, had incredible resource gaps, ranking 25th among all the states in regard to total per pupil expenditures, but falling to 44th when expenditures were adjusted for geographic cost differences. In addition, 42 percent of all students came from language minority backgrounds and 25 percent of students were classified as English learners. The state spent $45 billion annually on education, and the study concluded that $24 to $32 billion more – a 53 to 71 percent increase – was needed for all schools to reach adequacy. Most of the increased costs came from extending the school day and/or year, hiring more teachers to reduce class sizes, hiring more specialists to work with special-needs students, and more high-quality professional development time for educators.

The spending increase recommended by the PPIC study was slightly lower, coming in at $17 billion, or 40 percent, but the authors noted that this amount was not the full amount required to meet the state’s education goals, which California calculates as an Academic Performance Index (API).

The PPIC study utilized a new costing-out methodology. Instead of asking panelists to design schools, researchers gave electronic surveys to almost 600 educators. Each educator, working independently, was given a hypothetical school and a maximum budget, and was asked to allocate resources and estimate the API for that school. The authors then extrapolated the costs necessary for each of California’s schools to reach the state goal of an API of 800.

The authors found, however, that to reach an API of 800 many schools would have to exceed the highest maximum budget provided to participants in the study. Not wanting to extrapolate the cost-achievement relationship outside the bounds they studied, they truncated estimated costs, resulting in a maximum per pupil cost for any school of about $11,500. This truncation, the authors noted, left fully half of schools below an API of 797. The $17 billion increase, therefore, was not the full cost of adequacy, but only an estimate of what was needed to start California’s climb towards adequacy.

“Getting Down to Facts” also included studies looking specifically at the resource needs of special education students and English learners. Both of these studies concluded that conventional “costing out” techniques shed little light on the true costs of educating these groups of students. The special education study, for example, found that the actual per pupil expenditures for students receiving special education services was greater than estimates derived through various costing-out methodologies. In addition, while current levels of spending may be enough for students to meet the goals outlined in Individualized Education Programs, they may be insufficient for reaching federal targets under the No Child Left Behind Act.

“Getting Down to Facts”

“Getting Down to Facts,” the unprecedented education finance study in California that brought together researchers from 32 institutions was released in March 2007, after 18 months of planning and preparation. The final 1700-page report encompassed 20 separate studies that touched on virtually every aspect of the education finance and governance structures in California.

The California project, overseen by Dr. Susanna Loeb and others at Stanford University, was exceptionally broad in scope, including studies of the state’s school finance systems, education governance, personnel issues, and data systems, as well as more traditional “adequacy” cost studies. The over-all conclusion of the studies was that California’s education system is substantially under-funded, but that funding increases must be accompanied by major governance reforms and elimination of regulatory and contractual impediments to efficient functioning and the implementation of meaningful reforms, if the extra funds are to really matter. Yet, despite strong recommendations, the study has received little attention.

Useful Resources

EdSource Online is a comprehensive source of information on California’s education system. Their overview of the state’s very complicated finance system is especially useful.

Last updated: September 2016

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