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How California's system for funding public schools enables economic segregation

Robert Niles
By Robert Niles
Published: May 20, 2013 at 6:36 PM (MST)
As some of you might know, both of our children went through appendectomies this school year. At the beginning of the fall semester, appendicitis struck our 15-year-old daughter, who ended up missing more than two weeks of school following her operation and a post-surgery infection. Less than five months later, at the beginning of the spring semester, our 12-year-old son fell sick. The local urgent care misdiagnosed him with rotovirus, so his appendix had been burst for more than four days before the local emergency room correctly diagnosed him and admitted him for surgery. Thanks to a brilliant surgeon, he came through, but not after having to spend an extra week in the hospital on antibiotics following the operation. As a result, he also missed more than two weeks of school.

Even though our children missed so much class time, they weren't excused from their work. They still were required to complete their missed homework assignments, quizzes, projects and tests. And their teachers still had to grade them.

Yet, because we live in California and attend California public schools, their schools weren't paid by the state for any of that work.

Economic segregationYou see, California funds its public schools using a formula based on what's called "Average Daily Attendance." What that means, in short, is that if a kid doesn't attend school for a day, that child's school loses a bit of its funding from the state. No matter that absences actually create extra expenses for a school district and its employees, whether it's a teacher meeting after hours with a student and her or his parents to go over missed assignments, or staff members tracking down truants.

In the 1970s, when California courts ruled that funding schools based on property taxes was unfair to kids who lived in poorer communities, the state stepped in to take over the bulk of school funding. It came up with the Average Daily Attendance system, which on first glance seems fair -- schools get funding based on the number of kids they teach. [Here's a PDF that describes California's school funding system in exhaustive detail.]

But paying for education this way creates a couple of devastating consequences for the state's public schools. First, as I illustrated above, funding schools based on attendance rather than enrollment penalizes districts when kids miss school. It's not like a district can send a teacher home without pay for every 20-30 kids who call in sick on a given day. Of course, teachers get sick, too, but when teachers miss a day, they still get sick pay, and the school has to pay for their substitutes.

Economists have a term called "elasticity" to describe how easily an expense or price can adjust in response to another change. In the case of schools, public education funding is highly elastic -- moving up or down based on the number of kids who show up on any given day. However, a school district's costs are highly "inelastic" -- they're fixed based on the number of buildings the district has, and the number of teachers, counselors, and staff members it employs. Districts simply can't open and close schools, and hire and fire teachers on a daily basis in response to student attendance. Businesses hate being in that kind of situation -- it's the roadmap to bankruptcy. So it shouldn't surprise anyone why California schools always seem to be struggling with inadequate funding.

But there's a second devastating consequence to California's way of paying for schools. And it undermines the very reason for why the state took over school funding in the first place.

When students withdraw from a school district in favor of moving elsewhere or going to private schools, the district they leave loses money. But the district still needs to pay for a superintendent, school board, and all of its buildings. If enough students leave, the district can lay off teachers and even close schools, but that process costs money, too -- allocating staff time to decide whom to fire and what to close, and dealing with the inevitable community opposition. If staff reductions involve teachers taking early retirement, they don't come completely off the books, either, as the district's still on the hook for pension and health care expenses. Closed schools stay on the budget, too, as the district still must pay for maintaining those buildings. If a district decides raise money by selling some of its buildings, that decision leaves the district vulnerable to needing to come up with much, much more money at some point in the future to buy land and build new facilities if attendance ever were to rise again, which is why districts are very, very reluctant to sell excess property.

When students leave a district, the district simply can't cut expenses as quickly as it loses Average Daily Attendance income from the state. And when that happens, it leaves a funding deficit for the students who remain behind -- leading to increased class sizes and cutbacks in programs that might prompt more district families to decide to leave for private schools or other districts. Which further reduces school funding.

And as more and more middle class families leave a district, the percentage of students who are poor rises. Their families can't afford private schools or to move elsewhere. Since students from poor families need more school support to succeed -- their parents or guardians can't afford or aren't educated enough themselves to provide homework help, extra books to read, summer camps to attend, or even three good meals a day to eat, the district's costs keep going up as its Average Daily Attendance funding crashes. Title I funding from the federal government for poor students helps close the gap, but lagging test scores by poor students show that even that money can't make up the difference that a lack of support at home creates. Teachers are left to do what they can with their time and limited remaining resources, to try to help.

This is how California's school funding system absolutely devastates districts that are the victim of "white flight." It not only financially punishes districts where students flee to private schools, it encourages the flight of wealthy and middle-class families of all races by leaving those districts with proportionally less funding for wealthy and middle-class students who remain behind. California's current system of school funding effectively subsidizes economic segregation by creating a "death spiral" of ever-decreasing general funding to districts when wealthy and middle-class residents start choosing to send their children to private schools.

If California chose instead to fund districts based on population -- the number of children between the ages of 5-18 who live in that district -- schools wouldn't be financially punished when residents opt for private schools. Instead, district funding would remain much more stable from year to year. If a "white flight" situation emerged again, such as happened here in Pasadena, where 10,000 students fled the district in five years following court-ordered desegregation in the 1970s, that district wouldn't lose income. In fact, with fewer students to service, the district could respond by adding programs and academic support for their remaining students -- features that might encourage some middle-class families to stick with the district, or even to come back.

Of course, one person's design flaw is another person's design feature. I'm not naive. I know that there are people in California who don't support public education and who are happy to continue under a system that dries up its funding and public support. But I'm not one of those people, and I hope you aren't, either. If we want to help California's public schools, we need to fight for a more just way of paying for them. We need to start a movement to end the system of funding schools based on Average Daily Attendance and change state law to pay for schools based on district childhood population, instead.

Robert Niles also can be found at

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