Total Spending

State spending on K-12 education is guided by the requirements of Proposition 98, the 1988 voter-approved state constitutional amendment that established a minimum funding level for K-12 schools and community colleges. Prop. 98 K-12 education funding is calculated as the sum of State General Fund dollars allocated by state government to K-12 public schools plus local property tax revenues devoted to schools. In 1999-00, the Prop. 98 education funding total is estimated to be $33.6 billion.

Although the Prop. 98 spending total is commonly used to describe California education spending, there are many other sources of education funding that do not make it into the Prop. 98 calculation. For example, the federal government’s 1999-00 contribution of nearly $4.4 billion to education spending in California isn’t counted, even though it accounts for 10 percent of total K-12 revenues. Big-ticket items included in this federal contribution: approximately $1 billion in Title I money for poor and disadvantaged students, $513 million for special education, and $129 million for class size reduction.

Also omitted are hundreds of millions of dollars in state and local funds allocated annually to pay for school capital costs, i.e. debt service on state and local school construction bonds. This omission is curious given that every time a state or local school construction bond makes the ballot, supportive politicians and education officials always claim that a vote for the bond is a vote for children’s education. How, they ask, can Johnny or Jenny learn if he or she is sitting in a run-down overcrowded classroom? Yet, once those bonds are approved, the annual cost of those bonds is not included in how much California spends to educate Johnny or Jenny.

In addition, $786 million in State Lottery money, $2.6 billion from various local fund sources, and $65 million from various other state fund sources are not counted in calculating 1999-00 Prop. 98 K-12 funding.

All these uncounted education revenue sources add up to about $10.7 billion. Add this amount to the $33.6 billion in Prop. 98 K-12 funding and one gets a total of $44.3 billion in total K-12 revenues in California. This amounts to more than a 10-percent increase over the $40.1 billion of total revenues devoted to K-12 in 1998-99.

State Per-Pupil Spending

When Governor Gray Davis signed the state budget, the San Francisco Chronicle reported that, "Although the amount spent per pupil will rise by $274 to $6,025, state spending remains far lower than the national average of $7,583 in the 1999-2000 school year."1 The state’s per-pupil spending figure, however, is misleading.

The official per-pupil spending rate of $6,025 cited by the Chronicle is derived by dividing Prop. 98 K-12 revenues (i.e., the sum of state General Fund dollars for K-12 education plus local property tax contributions) by the average daily number of students attending school in California (otherwise known as average daily attendance or ADA). As noted above, however, Prop. 98 revenues ($33.6 billion) grossly understate the true amount of K-12 funding.

If one were instead to divide total 1999-00 K-12 revenues (which includes federal money, lottery money, and other funds) of $44.3 billion by the state’s average daily attendance of just under 5.6 million students, one would get a per-pupil funding figure of $7,937, nearly $2,000 higher than the CDE estimate.

To be fair, not all money for education is actually designated for K-12 students. Some of these funds are used for adult education, adult vocational education, and pre-kindergarten child-development programs. At the time of the preparation of this paper, the figures available for these spending categories were contained only in the 1999-00 requested budget not in the eventually approved final budget. The requested budget had somewhat lower figures than what was eventually approved by the Governor and the Legislature. Thus, the total revenues in the requested budget for 1999-00 was estimated to be $42.8 billion rather than the eventual $44.3 billion. Subtracting the known adult education, adult vocational education and child development dollars from the $42.8 billion figure gives a total K-12 spending figure of $40.6 billion. Divide $40.6 billion by the average daily attendance of 5.6 million students and one gets a state per-pupil funding figure of $7,272.2 (See Figure 1). That’s approximately 20 percent higher than the per-pupil funding figure of $6,025 which is given out by state officials and used by the media.3

It should also be noted that, contrary to the popular belief that per-pupil funding has decreased since Prop. 13 (the 1978 property-tax-limitation initiative), per-pupil funding in California has actually increased over time. For example, an American Legislative Exchange Council study calculates that between 1976-77 and 1996-97 per-pupil funding in California in inflation-adjusted dollars rose 27 percent.

California, thus, is not penny-pinching education as much as some officials would have the public believe. Caution should therefore be exercised in blaming the poor performance of schools and students in the state entirely on the all too common complaint that not enough money is being spent on public education. Indeed, many studies show that there is little correlation between education spending and student achievement.

After examining decades of academic research, University of Rochester Prof. Eric Hanushek, the nation’s leading education economist, found that, "there is little systematic relationship between school resources and student performance."4 The point, says Hanushek, is that "how money is spent is much more important than how much is spent."5

In other words, no matter how much is spent on education, unless those funds are channeled into programs that work (e.g., teacher training emphasizing subject-matter competence, implementation of the state’s rigorous academic content standards, and introducing competition into the system through school choice), don’t expect any change or improvement in California public education.

District Per-Pupil Spending

Conclusion

Several things are clear. First, California as a whole, and many of its largest districts in particular, are spending more money on education than the public has been led to believe. Yet, despite this spending, student achievement still lags behind most of the nation. Finally, it is impossible to hope for any real accountability when the financial data of the public schools are so inaccessible, inaccurate, and incomprehensible. A better system is needed.

Instead of today’s complex funding system which involves a myriad of funding sources funneled through various layers of bureaucracy, a school-choice opportunity scholarship/voucher program offers taxpayers a much simpler and clearer approach to funding education. Under most voucher proposals, revenues to cover the tuition at voucher-redeeming schools would normally come from only one or two sources—the state and/or possibly the parent—and only one thin layer of bureaucracy at the state level would be needed to administer the program.

So far, school-choice proponents have based much of their case on the improved student achievement of those students participating in the limited school-choice programs in Milwaukee and Cleveland. Competition, however, also fosters accountability. As the lack of public-school accountability revealed in this report underscores, public education is in dire need of competition. Only through competition will the public regain control over the public schools.

End Notes

About the Authors

Modified Tuesday, November 02, 2010