In the first major study on basic aid since California’s Local Control Funding Formula (LCFF) was enacted in 2013, researchers determined that 139 districts, which serve 5.5 percent of the state’s TK-12 students, benefit from growing funding advantages.
The principle behind LCFF is that all students deserve to have a high-quality education regardless of their ZIP code. It is intended to provide more resources for students who have the greatest need. “However, some districts — known as basic aid districts — generate more funding from local property taxes than the state calculates they need under LCFF,” according to an October report by Policy Analysis for California Education and Bellwether. “Basic aid districts keep their extra property tax revenues, often generating thousands of dollars more per student than other districts”
Excess Revenue, Unequal Opportunity Revisiting Basic Aid in the LCFF Era found that “excess local revenue in basic aid districts has risen 41 percent (17 percent when adjusted for inflation) over five years — outpacing LCFF growth and widening the gap between property-rich districts and those that rely on state aid.”
Looking at disparities between basic aid and LCFF-funded districts, the report focused on a subset of 50 “well-resourced” districts (those with high excess revenue and low percentages of high-need students) that capture most of the funding advantages. Nestled in property-rich communities in 19 counties, the excess advantage districts “collectively generated $1.15 billion in excess revenue, representing 87 percent of the statewide basic aid total in school year 2023–24,” according to the report.
Sizeable gaps in per-pupil funding between excess advantage and other local educational agencies cause disparities in resources impacting campuses, the report states, as excess advantage districts can provide perks like higher salaries and smaller class sizes.
The report notes that not all basic aid districts see such “outsized benefits” financially. “Many are in modest- to low-income communities that generate high property taxes from agricultural, industrial, or commercial parcels,” it explains. “Many of these basic aid districts barely exceed the qualification threshold, and their per-pupil funding is more comparable to LCFF-funded districts.”
Recommendations
A handful of policy considerations and solutions aimed at achieving further funding fairness are included in the report.
They include:
- Requiring some districts to consolidate or share services regionally
- Expanding interdistrict transfer and related choice policies
- Implementing regional cost adjustments
- Providing additional state aid to lower-wealth districts
- Capturing and redistributing some or all excess property taxes
“California’s school finance system has been designed with equity in mind, but the resource disparities created by excess advantage districts risk undermining that principle,” the report asserts. “Policymakers now face important choices about whether and how to address these excess resources so that all students benefit, regardless of where they live.”
Learn more about key findings and recommendations in the report.
