K–12 | Spotlight

Why do some low-income school districts spend more than others?

There are numerous, and often complex, reasons why some school districts spend more than others. In general, it costs more to educate low-income students in urban areas than higher income students in suburban areas. One reason is that typically more low-income students are placed in "special education" programs to combat developmental and learning disabilities, emotional difficulties and other problems that require more expensive services. In addition, urban schools – especially if they are housed in older buildings in unsafe neighborhoods – have extra costs for security, building maintenance and other expenses. They also offer extra, and expensive, programs including drop-out intervention, remedial classes, preparation for the high school exit exam as well as instruction for English learners. 

To cover these costs, many school districts qualify for a range of state and federal programs, which boosts their spending above state averages. Voters in a small number of lower income districts, like Oakland Unified School District and Ravenswood City School District in East Palo Alto, have approved a parcel tax on real estate (see below), which also raises their per-pupil spending.

At the same time, other school districts with-low income students may spend far less than others with similar student bodies. The reason: the funds they receive from the state are based on outdated formulas, they may not have applied for certain state or federal programs, or they may not have been eligible to apply for them. 

How do some school districts spend so much more than the state average?

Almost all districts in the state get their basic funding from property taxes plus additional support from the state, typically around $5,000 per student. This amount is known as “revenue limit” funding. However, 120 “basic aid” districts, usually in communities with high-value property, generate more of their basic funding from property taxes than they would get normally from the state. Under regulations established decades ago, they are allowed to spend these “excess” property tax funds on their students, without being bound by state revenue limits. 

Among them is the Carmel Unified School District, which last year spent $17,451 per student in attendance, according to the state’s current expense of education calculation. Almost all those funds came from the $38 million the district was able to raise in property taxes. 

However, not all basic aid districts serve an affluent student population. As a result of the state’s budget crisis, the number of basic aid school districts has grown in recent years, as the amount they receive from a combination of property taxes and state support has dropped below the amount they are able to generate entirely from their property taxes. But in general, the existence of basic aid districts has helped sustain the disparities in funding among California school districts. 

Why is educating students in remote areas of the state so expensive?

There are 203 very small schools (in 144 school districts) designated as “necessary small schools” in remote areas of the state, with an average size of 56 students per school. These schools receive a substantial subsidy from the state – including a “necessary small school supplement” – in recognition of the fact that the smaller a school and the more remote its location, the more expensive it is to educate its students. 

Thus, in 2009-10, the tiny Pacific Unified School District, on a remote section of Highway 1 between Big Sur and Cambria, spent $59,638 per student, more than any other district in the state. However, with a total budget of $642,300, the school district is struggling to stay solvent. 

But not all necessary small schools are in such remote locations that warrant subsidies from the state, according to a recent Legislative Analyst’s Office report. “The geographic proximity of many of these schools calls into question whether all of them truly are ‘necessary’ and deserving of additional funding allowances.” It also noted that because of formulas established decades ago, some high schools, notably in Tuolumne County, receive state support amounting to about $200,000 per student. 

For more on the costs of small school districts, check out the LAO report [PDF]. 

Why can’t school districts raise more money to catch up with spending in neighboring districts?

One of the few ways a district is allowed to raise money is by imposing local parcel taxes on real estate. But a parcel tax requires voter approval by a two-thirds majority – which has proven to be impossible to get in all but a fraction of the state’s districts. Of about $53 billion spent on schools in California annually, only $250 million comes from parcel taxes. Over the past decade, fewer than 100 school districts in the state have approved parcel taxes, mostly in wealthier communities. As a result, parcel taxes can reinforce disparities in spending rather than reduce them. 

In about two-thirds of California school districts, parents and community supporters have established nonprofit foundations to raise money through fundraising events and private donations. But except for the wealthiest school districts, these foundations typically do not raise sufficient funds to be able to eliminate, or even substantially reduce, differences in funding among districts.