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Report of the Working Group on Finance and Facilities - K-12 Education


Executive Summary


A World Class Finance System for a World Class Education

Part 1. Adequacy in School Finance

Distributing Resources Equitably

Part 2. Categorical Program Adjustments

Linking the Community and the School: Raising Revenues Locally

Part 3. Exploring Local Revenue Options

Program Effectiveness and Accountability

Part 4. Allocating Revenues to Support the Effective Delivery of Services

A Place to Learn and to Work

Part 5. Developing and Maintaining Adequate and Appropriate Educational Facilities


Appendix A: Price Differences
Appendix B: The Personal Income Tax
Appendix C: Responsibility of State Agencies in Education Facility Delivery
Appendix D: Funding Contribution Models Considered by the Facilities Work Team


The Joint Committee to Develop a Master Plan for Education set before the Finance and Facilities Working Group specific goals and objectives to address in its report to the committee. These are shown in the description of our charge from the committee, following this summary. In brief, we were asked to make recommendations to simplify the system of school finance, to foster and support local flexibility in the use of resources, and to support adequate funding for the educational program and facilities.

We make recommendations in each of five major policy areas: (1) what funds are needed for a high quality education; (2) other funding provided in recognition of special district and student circumstances; (3) meaningful options for local communities to get money to their schools; (4) balancing flexibility in spending funds with strong accountability for how funds are spent; and (5) resources to assure that education facilities meet high standards.

Our recommendations are grouped according to these five major policy areas. They do not, however, each stand alone, and it is vitally important to understand that we are recommending a fundamental shift in the way we finance schools in California. Central to this change is our recommendation that California develop and implement a Quality Education Model. Such a model will do two things of importance: It will act as a benchmark for knowing how much we should expect to spend if we are serious about achieving the world class educational standards to which we aspire. In many ways, this will be the first time we will draw a direct, explicit link between our expectations and the resources needed to achieve them. Second, although not prescriptive in its application, a Quality Education Model will nonetheless serve as an example of research-based best practices in education, updated over time to reflect what we learn.

A Quality Education Model that leads to adequate funding for a high quality education also can promote local flexibility and autonomy for schools to respond to the unique needs of their local community. It establishes a basis for a rational accountability system because the model is built on the performance standards California has set for its schools. Local revenue options balance the statewide emphasis on meeting uniform standards by providing communities with the ability to supplement and enrich a quality education in response to their own priorities. Finally, school facilities are integrated into the characteristics of a quality education because the link between facilities, teaching and student achievement can be made explicit in the model.

The following section summarizes the recommendations contained in our report.

1. Assuring Adequate Funding

Recommendation 1.1:

Develop a California Quality Education Model, and use that model to determine an adequate level of funding necessary to support a high quality education for every student. In furtherance of this recommendation, we urge the Legislature to establish a 13 member Quality Education Commission, representative of business, parent and education community leaders from throughout the state.

2. Distributing Resources Equitably

Recommendation 2.1:

Authorize a limited set of differential cost adjustments, primarily geographic in nature, that are not under the control or influence of the school district, by establishing a District Characteristic adjustment. The additional revenue provided to school districts in recognition of these uncontrollable cost factors would result in similar levels of real resources available to all school districts in the state.

Recommendation 2.2:

Establish block grants for allocation to school districts on the basis of student characteristics that mark the need for additional educational resources. Further, we strongly suggest that the adjustments in this category be limited to additional funding for (1) special education, (2) services for English language learners, and (3) resources provided in recognition of the correlation of family income level with student achievement.

Recommendation 2.3:

Establish a category of K-12 grants that will be clearly identified as initiatives. These initiatives will be limited in duration and will serve one of two purposes:

  • Pilot and evaluate proposed new programs before they are implemented statewide. Once implemented statewide, the funding for such a program would be consolidated into the base funding for schools, or one of the two major categories of adjustments – student characteristic and district characteristic.
  • Meet immediate, but temporary, needs for additional funding targeted to specific districts to mitigate the effects of transitory, but possibly unforeseen, shocks to the instructional program.

Recommendation 2.4:

Adopt specific guidelines and criteria for the Legislature to use in evaluating proposed initiative programs.

Recommendation 2.5:

Provide funding for state agencies, or other appropriate entities, to develop material describing best practices for the administration and delivery of categorical programs. This includes the development of standardized cost models that local agencies can use to assess program implementation.

Recommendation 2.6:

Every new initiative program be required to have a comment period on all administrative and supervisory controls proposed by the administering agency. Alternatively, an advisory committee representative of those agencies that must administer the program may be used to develop administrative guidelines.

3. Exploring Local Revenue Options

Recommendation 3.1:

Approve a ballot initiative to reduce the voter approval threshold for parcel taxes from two-thirds to 55 percent.

Recommendation 3.2:

Authorize school districts in counties where a majority of school districts wish to join together, to propose to the electorate a sales tax increase, within the local option SUT levy limitation, to take effect with the approval of 55 percent of the voters in a countywide election. Revenue would be divided among the schools on a population (per pupil) basis, or as delineated in the tax measure. Establish a mechanism to equalize tax yield to assure each county can raise the statewide average per-pupil amount corresponding to the imposition of similar tax rates.

Recommendation 3.3:

Approve a ballot initiative to amend the Constitutional provisions governing the property tax to authorize school districts and other local public educational agencies to propose for approval by the electorate, with 55 percent of the voters concurring, a property tax override for the exclusive use of the public schools in the community. Assure a minimum, state-guaranteed yield per pupil through state financial assistance to communities where a self-imposed tax rate does not yield the minimum state-determined per-pupil amount for that rate.

4. Allocating Revenues to Support the Effective Delivery of Services

Recommendation 4.1:

Continue to emphasize the development of performance standards, and that those standards be based both on key inputs to the educational system, as well as outcome measures, and that the input standards are aligned with the California Quality Education Model.

Recommendation 4.2:

Establish a consistent and straightforward way for local schools to describe their expenditure and programmatic decisions, to compare them with the state’s guidelines, minimum standards, and outcome goals, and to clarify the trade-offs implicit in budget decisions.

Recommendation 4.3:

To support local accountability, confirm a procedure for complaint appeal and resolution, where citizen groups may establish their case for a school failing to meet state standards, with the county office authorized to investigate the complaint. This provides a mechanism for public scrutiny and pressure to correct actions of schools and districts in the event they are unable to resolve problems on their own.

5. Developing and Maintaining Adequate and Appropriate Educational Facilities

Recommendation 5.1:

Replace the current school facilities financing system with stable and reliable annual state per-pupil allocations that are restricted to assisting school districts in meeting their capital and major maintenance needs.

Recommendation 5.2:

Adopt a ten-year transition plan during which the reliance on state General Obligation bond proceeds allocated on a project basis to fund facilities will be phased out and funding through annual per-pupil allocations from the state General Fund will be phased in.

Recommendation 5.3:

Consider authorizing a limited number of adjustments to supplement the state base facilities per-pupil allocation. As with our recommendations for adjustments to school operating fund allocations (see the Part 2: Categorical Program Adjustments), we believe special circumstances related to geographic, land use and unique school district factors may warrant consideration for additional funding beyond the annual per-pupil grant.

Recommendation 5.4:

Establish clear, concise and workable state facility standards that are characteristic of facilities providing a high quality/high performance teaching and learning environment.

Recommendation 5.5:

Require each school district to prepare and, with appropriate public review, adopt a five-year Facilities Master Plan to meet or exceed state facilities standards.

Recommendation 5.6:

Adopt necessary policy and statutory changes so that the annual budget for each school district will include a capital spending component that is reviewed and assessed as part of the AB 1200 financial and management accountability process. Technical assistance, which may be warranted based on such a review, shall be made available to school districts through regional and state agencies.

Recommendation 5.7:

Create a statewide school facilities inventory system that will assist decision makers to determine state and local short and long term school facilities needs; collect only the most critical, basic information needed to make necessary management decisions; utilize information contained in existing data collection reports before requiring school districts to report additional information needed for the school facilities inventory system.

Recommendation 5.8:

Give local districts autonomy to expend state and local funds as appropriate insofar as such expenditures of funds enable the district to meet or exceed statewide standards for adequate facilities. Local districts would conduct required self-assessments against their Facilities Master Plans, and be required to publicly share the results of those assessments with members of their communities – students, parents, and community leaders – annually.

Recommendation 5.9:

Provide financial incentives to school districts to promote joint or shared use of facilities. We also recommend that the state develop a technology infrastructure among, between and within educational entities that would promote improved education delivery and access to a wider range of education resources.

Recommendation 5.10:

Ensure timely adoption and implementation of OEHHA’s guidance document by DTSC and other state and local agencies for assessing exposures and health risks at existing and proposed school sites.


The Joint Committee to Develop a Master Plan for Education established goals and objectives for the Finance and Facilities Working Group in its August 2000 publication, Framework to Develop a Master Plan for Education. The overarching theme governing the work of the Finance & Facilities Working Group is to simplify the system of school finance. Two key features characterize simplification: First, the school finance system must be understandable by educators, policymakers, families and the general public. Second, the system must be rational, meaning it is aligned with the instructional, governance, and accountability structures of the public school system. Put simply, the system must make sense.

The goals for our working group fall into five major policy areas:

1. Assure Adequate Funding

Determine an adequate level of resources necessary to provide each student with a high quality education. Characteristics of a system that provides adequate funding include:

  • All educational agencies receive funds necessary to provide students with similar needs the services essential to meet those needs.
  • Differing levels of resources are provided when needed to attain an equitable education for students with differing circumstances.

2. Distribute Resources Equitably

Assure that resources are equitably distributed among educational agencies, so that students with similar needs are provided comparable levels of resources to meet those needs.

  • Funds set aside for K-12 education are distributed equitably among local agencies.
  • School districts distribute resources among schools in ways that assure individual student needs are equitably met.

3. Explore Local Revenue Options

  • Local revenues are raised to meet local priorities.
  • Local revenues are generated in ways that preclude the development of wealth-based inequities in educational offerings.

4. Allocate Revenues to Support the Effective Delivery of Services

Establish appropriate methods of allocating funds to support the effective delivery of educational services. The Master Plan framework includes the following objectives in support of this goal:

  • Provide incentives for the efficient and effective use of resources.
  • Reduce state restrictions so as to support local flexibility.
  • Foster a culture of assuring sufficient resources are provided to meet new expectations established by the state.
  • Provide state support for school districts to operate with sound financial and management practices, and impose interventions when sound practices are not maintained. Accountability measures should apply to all participants in the process of budget development and management.

5. Develop and Maintain Adequate and Appropriate Educational Facilities

The Master Plan framework sets the following objectives in the area of school facilities:

  • Establish high statewide standards for facilities to ensure that they are safe, clean, modern and conducive to learning.
  • Share fiscal responsibility for new facilities and modernization among the state, local districts, and communities.
  • Promote shared / joint use of facilities by schools, colleges and universities.
  • Contain costs through measures that promote efficiency.
  • Develop a plan to reduce and eliminate the maintenance backlog.
  • Recognize ongoing maintenance as a local responsibility.
  • Develop a system of accountability so the state can assure that standards are met. The system should include support, inspection and intervention when needed.
  • Develop a statewide technology infrastructure to link educational entities.

Table of Contents
Summary 1. Finance 2. Equity 3. Community
4. Accountability 5. Facilities Appendices Members