California School Districts Reduce Popular Programs to Help Balance Budgets

For Release

May 26, 2011

California school districts — wielding new fiscal flexibility granted by state lawmakers — cut deeply into several popular programs to balance local budgets, according to a study of 10 diverse districts released today.

Local educators in 2009 were granted total control over $4.5 billion that previously funded 40 regulated programs, a change made as Sacramento lawmakers cut educational spending by almost one-fifth. The new study begins to illuminate how local school boards changed spending on adult education, special programs for gifted students, new textbooks and other programs.

"District actions were driven mostly by the need to plug deficits in their budgets, rather than from careful evaluation of programs and priorities," said Brian Stecher, a study co-author and senior social scientist at the RAND Corporation, a nonprofit research organization. "How this continues to evolve will have important impacts on K-12 students across California."

Researchers from RAND and the University of California are exploring how California K-12 schools are applying less-restrictive rules for funds that previously had to be spent on 40 popular categorical-aid programs, such as school safety, vocational training and sustaining campus libraries.

Much of this deregulated aid had been focused on lifting low-performing students or advancing basic literacy skills of young adults. Researchers said that these funds were often reallocated to the general fund and some districts cut adult education programming by 60 percent.

"But programs that serve gifted and talented students were also frequently reduced or eliminated," Stecher said.

Researchers found that local deliberations over how to use the newly flexible revenue were complicated by poor communications from lawmakers and the state Department of Education, as well as by uncertainty about whether the changes will last beyond the four years initially authorized by the California Legislature.

"The signals from lawmakers to school districts were not clear," said study co-author Bruce Fuller, a professor of education and public policy at UC Berkeley's Graduate School of Education. "Despite possible advantages of granting local school boards and principals greater control over dollars, Sacramento has yet to articulate a clear plan for how this can work over time."

Researchers conducted more than 90 in-depth interviews with school leaders and other stakeholders, and spoke with a dozen policy leaders in Sacramento. The school districts studied were split evenly between north and south, and varied in enrollment size, fiscal health and the share of their budgets devoted to administration.

The study found that district administrators have different interpretations of the new regulations for the use and reporting of funds for these so-called Tier 3 programs. In some cases, court decisions and state law require program support, such as helping students pass the high school exit exam. But monies are no longer earmarked to meet legal requirements.

Other study findings include:

  • School leaders in all 10 districts used at least some of the now-flexible funds to help balance their general fund, resulting in small to severe reductions in the Tier 3 programs.
  • Some districts selectively cut Tier 3 programs based largely on local priorities, rarely on hard evidence about program effectiveness.
  • A few district superintendents reported leveraging Tier 3 program dollars with other resources to create or sustain teaching improvement efforts or other new programs.
  • Administrators in all the districts aimed to minimize teacher layoffs.

The preliminary study, "Deregulating School Aid in California — How Local Educators Allocate Flexible Tier 3 Categorical Funds: Findings from 10 School Districts in the First Implementation Year, 2009-2010," can be found at and

The research is continuing with a survey of all California school districts to learn more about how they are applying the funding flexibility extended in 2009. The project is supported by the William and Flora Hewlett Foundation, the Dirk and Charlene Kabcenell Foundation, and the Stuart Foundation.

The project is a joint effort of RAND Education, UC Berkeley, UC Davis and San Diego State University, and it is being published jointly by RAND and Policy Analysis for California Education (PACE), a research center based at UC Berkeley, the University of Southern California and Stanford University.

RAND Education is a leader in providing objective, high-quality research and analysis on educational challenges that is used to improve educational access, quality and outcomes in the United States and throughout the world.

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