Most public school funding comes from the state government, which makes California unusual compared to other states. The Serrano court decisions in 1971, 1976, and 1977 required equalizing funding across rich and poor school districts, which previously had experienced markedly different funding levels since local property taxes were the main funding source for public schools.
Then Proposition 13 (1978, see FAQ 6) substantially cut property tax rates and limited subsequent increases, which led to a funding crisis for public schools. The legislature provided bailout funding and effectively took over school finances.
Controversy over state funding amounts led to the razor-thin passage of Proposition 98 (1988), which constitutionally requires that a minimum amount of California’s General Fund revenue, approximately 40 percent, be distributed to support K–12 education and community colleges.
Supplementing public school funding are local parcel taxes, which require two-thirds voter approval, and facility bonds, which were implemented by Prop 39 in 2000. Facility bonds require a lower approval threshold of 55 percent but can only be used on fixed assets to support education rather than staff compensation or operational costs.
In sum, the legislature provides approximately 55–60 percent of public school funding, with local sources providing another 30–35 percent, while the federal government provides around 5–10 percent.
How is the money divided among districts?
Since 2013, the state has used the Local Control Funding Formula (LCFF) to determine state funding for public schools. Every district receives a base grant per student, plus a supplemental grant equal to 20 percent of the base grant for each student in a higher-need demographic.
This includes students from low-income families, English learners, and foster youth. In addition, there is a concentration grant provided for districts where students eligible for the supplemental grant exceed 55 percent of enrollment.
Starting in the 2023–2024 school year, the equity multiplier provided additional grants to specific schools where more than 70 percent of students are classified as socioeconomically disadvantaged or have a high “nonstability rate,” which refers to students who aren’t enrolled in the same school for an entire academic year.
The LCFF was designed to provide progressive funding in a simple way. The intention is to send state-provided public education funding toward areas of greater need. School districts decide how to spend the funds via local accountability plans.
Many analysts believe this structure is an improvement over the pre-2013 funding formula, but debates remain whether the funding is properly targeted to reach students in need.
Is California school funding excessive or insufficient?
California’s school funding, as an average spent per pupil, has varied tremendously. Before the Serrano court cases and the passage of Prop 13, California ranked in the top five to ten states in per-pupil education spending.
But enrollment grew quickly during the 1980s, and the reductions in local revenue caused by Prop 13 caused per-pupil spending to decline sharply, with California ranking in the bottom ten states by the 1990s.
The Prop 98 guarantee, combined with California’s long-running tech-fueled economic boom that swelled General Fund tax revenue, pushed education spending upward. Education expenditures per pupil shifted sharply upward in 2013, and as of 2023–2024, the state now spends around $23,000 per student.
This amount is markedly higher than the national average in nominal terms, although cost-adjusted comparisons are difficult and continue to be debated.
However, despite increased spending, California’s educational outcomes, as measured by the National Assessment of Educational Progress (NAEP), have remained mediocre.
This illustrates that “how much” education spending is sufficient is a separate question from “how well” educational spending is being put to use. This highlights why such questions cannot be settled by budget numbers alone.
While California still trails the national average on NAEP outcomes, it has been closing the gap. Researchers disagree sharply about how much the added educational expenditures materially affected the change. However, some studies credit targeted funding for producing meaningful gains among low-income students.
Why does California’s declining school enrollment matter so much?
Current education funding formulas use average daily attendance to determine funding amounts.
California enrollment has fallen for years due to fewer births, out-of-state migration, and increased private and home schooling, and the decline is expected to continue.
Meanwhile, absenteeism further reduces attendance, and schools built for more students will face the difficult arithmetic of fewer funded seats combined with fixed building and contract costs.
Painful adjustments are likely if school districts elect to pursue school consolidations and closures to make the best use of available funding.
