Funk: Our broken public education state funding model

All the reports I have read since the release of Gov. Gavin Newsom’s proposed budget point to his education budget as being good for public education.

There is some truth to that statement. His proposed budget is great for early learning education and for increasing funding in special education in grades K-3. He also proposes increasing education funding overall to K-14, which makes up approximately 40% of the overall state budget.

Proposition 98, an amendment to the California Constitution passed by voters in 1998, sets a minimum funding guarantee for public schools and community colleges that keeps pace with student enrollment, personal income tax, corporate tax and sales tax. Current funding under Proposition 98 puts California’s per-pupil spending at 41st or 44th in the nation, depending on which criteria is used to justify the ranking.

Based on the method used by the state to fund public education, there are many undisclosed facts about how the process negatively impacts schools. The governor’s current proposed budget is harmful to high school districts, such as East Side Union High School District.

Each year, school districts are required to build their budget based on assumptions and projections provided by the governor and stipulated in the state budget. For school districts to maintain solvency, we are required to build three-year budgets that have a minimum of a 3% reserve in each of the three years.

The challenge in building a three-year budget using certain assumptions (COLA, pension rates, salaries and benefits, etc.) are that those assumptions change several times throughout the fiscal year.

Last year, the governor proposed that our COLA for the next three years would be 3% in 2020-21, 2.8% in 2021-22 and 3.16% in 2022-23. In his most recent proposed budget, he reduced the COLA in each of the next three years to 2.29%, 2.72% and 2.82%, which is $8.8 million less in funding to East Side. I understand the concept that if our revenue decreases, then our expenses need to decrease. What is concerning is when we did nothing to increase our expenses and are faced with a reduction of $8.8 million. How are school districts to budget appropriately?

School districts throughout California, including ESUHSD, are struggling with declining enrollment. COLA is critical to covering our expenses. When COLA does not cover salary increases, pension costs and utilities and insurance,  including the increase in costs of transportation, providing school lunches and for special education services, districts must cut programs that benefit our students in order to not deficit spend.

Both the K-12 and community college system are funded from Proposition 98. However, community colleges receive funding based on enrollment, but K-12 receives funding based on enrollment and average daily attendance (ADA).

In ESUHSD, our ADA is 94.6%. As a result, we only receive 95% of the funds appropriated from the state. There is not a single school district in California that has perfect attendance. Therefore, the Legislature is aware there will be money remaining in the state budget because what is budgeted for public education and  the actual allocation is to school districts is in the hundreds of millions.

Former Gov. Brown and current Gov. Newsom prefer to provide school districts with one-time money. Two things happen when the state allocates one-time money. First, school districts usually receive the money late in the year when it’s too late to use and the one-time money is placed in the reserve fund. The reserve fund is often used to support negotiated agreements with bargaining units; thus, taking the one-time money and using it for ongoing expenses.

Second, both governors have the bad habit of using one-time money, which is distributed to all school districts, and count that money as “offsets” to school districts that are owed mandated money from the state (not all districts track mandated costs). California owes ESUHSD approximately $50 million over the past 15 years.

The accounting practice of using the same money to count twice against school districts must stop. The state needs to take this liability off its books and pay school districts what is constitutionally owed to us.

California continues to have a two-tiered funding model for K-12. There are 966 school districts and another 1,100 charter schools. There are approximately 125 school districts that qualify as “basic aid” or “community funded” district. Many of these basic aid/community funded districts are in the San Francisco Bay Area with at least six in Santa Clara County.

Basic aid districts fund their revenue limit based on property taxes generated within their school district. If the property tax is greater than the funding provided under Proposition 98, then a district is considered a basic aid district.

The benefit of being a basic aid district is that your per-pupil funding can be as much as $9,000 more than a district that falls under Proposition 98. It is not surprising that basic aid districts fall in more affluent areas such as Los Gatos, Los Altos, Palo Alto and Hillsborough.

Why should these districts have a greater funding model than districts who fall under Proposition 98?  We need increased funding to all public schools that puts California in the top ten of per-pupil funding nationally.

California needs equitable education communities where all students are welcomed as they are, strengths and areas of growth for all students are known and supported, and adults positively respond to the social-emotional, wellness and academic needs of each child.

We know what it takes to educate every child in the public school system. We simply need the funding, time and space to do the work. There is no question that we have the will — we just need fair, transparent and appropriate funding.

San José Spotlight columnist Chris Funk is the superintendent of the East Side Union High School District. His columns appear every third Monday of the month. Contact Chris at [email protected] or follow @chrisfunksupt on Twitter.