Public school finance systems are in flux across the United States. In many states, tight budgets have put pressure on education budgets. Several states are involved in lawsuits over the "adequate" financing of public schools. In addition, accountability requirements of the federal No Child Left Behind Act are pressuring states to link their school finance systems to student performance.
Yet in most states, education spending is not tied to student outcomes. The national trend is toward larger education budgets with little regard for student outcomes.
California is no exception.
In 1988 Californians voted for Prop. 98, a constitutional amendment that guarantees that education spending will always go up by at least a small amount, even during economic downturns. California schools always receive at least 40 percent of state revenue or at a minimum the same amount they received the prior year adjusted for inflation and enrollment growth.
In his 2005-06 budget proposal, Gov. Schwarzenegger allocated K-12 education significantly less than it is due under Prop. 98.
He also proposed significant reforms to Prop. 98, arguing that the Legislature needs more control over education spending and that state revenues have not kept pace with the demands of Prop. 98.
The upcoming budget fight over education funding promises to be explosive. However, Prop. 98 reform alone will have little impact on student outcomes in California.
The larger question for California is how to distribute education resources in a way that helps school districts control spending and improve student outcomes.
A number of school districts across the country and abroad have adopted a funding mechanism for schools that gives local schools more control over resources and leads to increases in student achievement. Pioneered in Canada's Edmonton school district in Alberta in the 1980s, "weighted student formula" has been imported to Seattle, Cincinnati, San Francisco and Houston.
The funding structure allows individual schools to compete for students and allows principals to control their budgets and tailor their schools to the needs of their specific school populations.
School districts use student characteristics to determine per pupil funding levels and better match costs with actual student needs. In each case, schools are given responsibility for managing their own budgets in key areas such as personnel, school maintenance and learning materials.
San Francisco, with 116 schools and 60,000 students, is in its fourth year of using a weighted student formula for funding and giving more decision-making power to principals and their school site councils, made up of parents and school staff.
Since implementing the weighted student formula, San Francisco's test scores have improved every year, and it is now the highest-performing urban school district in California.
Several states, including California, Colorado and Hawaii, are looking at implementing the weighted student formula statewide. In his latest budget proposal, Schwarzenegger called for creating a pilot program that would place school resources under the control of each individual school site.
Even if one concedes the questionable fiscal premise of Prop. 98 — that schools should always get more money when state revenues climb (over and above cost of living and enrollment growth) — the current structure of California's funding distribution system ensures that those ever-increasing resources are not targeted toward classroom-level spending.
California should follow San Francisco's lead and create one funding mechanism based on a weighted student formula that would include one base allocation equalized across the state, and additional weighted funds for students with additional needs.
This process would make school finance in California simpler, more equitable and bring significant cost savings by reducing administration costs and central office costs and redirecting some of this savings to increase classroom-level spending.
Lisa Snell is director of education and child welfare at Reason Foundation. She formerly taught speech courses at California State University, Fullerton.