Examining the Reach of Targeted School Funding

In 2013–14, California implemented the Local Control Funding Formula (LCFF)—the state’s school funding formula for transitional kindergarten through 12th grade (TK–12)—greatly changing the level, distribution, and mechanism of funding across school districts. LCFF consolidated dozens of “categorical” funding streams, a change that allowed districts more flexibility and required less accountability around spending. The LCFF introduced a weighted funding formula, giving districts with higher shares of high-need (English Learner, low-income, and/or foster youth) students additional funding—known as supplemental and concentration grants.

The state’s financial system does not explicitly track the use of these additional funds, nor the students or school sites on which the funding is spent. Rather, districts must provide plans that document how they use these funds to proportionally increase or improve services for high-need students, via Local Control and Accountability Plans (LCAPs) that involve local stakeholder input and county office of education or state review.

Roughly $600 billion of state K–12 education funding has been distributed through LCFF, reaching a high in 2022–23 of nearly $75 billion. Of that $75 billion, $12.7 billion (17%) was for supplemental and concentration grants meant to improve services for high-need children. School spending per pupil is now roughly 65 percent higher than a decade ago when LCFF was passed—nearly $22,684 per student in 2021–22 compared to about $14,245 in 2012–13.

Progress on standardized test scores suggests this additional funding is improving student outcomes across grade levels and student groups. Indeed, research into pre-pandemic cohorts finds evidence that test scores, graduation rates, and college readiness have improved due to the formula (Johnson and Tanner 2018; Lafortune 2021; Johnson 2023).

At the same time, California’s academic achievement remains an area of policy concern: before the pandemic, 51 percent of students scored at grade level in English Language Arts (ELA), 40 percent did so in math. After the pandemic, students across the state suffered severe learning losses, with test scores in many grades dropping to 2015 and 2016 levels: statewide proficiency rates in 2021–22 fell to 47 percent in ELA and 33 percent in math.

California is below the national average in math on national exams, and at the national average in reading among eighth graders, as of 2022. Progress on narrowing achievement gaps has also been slow: for example, while the proficiency gap in math between low- and non-low-income students has fallen 2 percentage points since LCFF, it remains high at 30 percent (21% proficient among low-income students vs. 51% proficient among non-low-income students).

In this report, we closely examine two aspects of LCFF. First, we examine the impact of weighted funding on student outcomes, providing new estimates of the impact of additional funding on test scores, both pre- and post-pandemic through 2022. Second, we consider how funding is distributed, compiling new data from LCAPs and from school spending reports to estimate how much LCFF supplemental and concentration funding is reaching the high-need students for whom it is intended. Our LCAP analyses represent the first near-comprehensive statewide examination of spending on LCAPs, to our knowledge. We collected roughly 99 percent of district LCAPs in 2021–22, and, with our final analysis set we can examine planned spending for nearly 700 districts, representing about 81 percent of the state’s K–12 enrollment.

Understanding the Funding Formula

Before LCFF, school districts relied on a combination of state aid and local revenues (mainly property taxes) to fund day-to-day school operations. This system resulted in mostly equal base funding for school districts, with state-funded “categorical” programs to earmark funds for specific purposes. At their peak, roughly 20 percent of total state funding for K–12 public schools came through categorical programs.

While some categorical programs were intended for high-need student populations, LCFF distributes additional funding in districts with more high-need students. In the decade from 2012–13 to 2021–22, districts with the most high-need students—80 percent or more—saw revenues increase by over $8,000 per student; for those with the fewest high-need students—less than 30 percent—revenues increased by around $4,000 per pupil (Technical Appendix Figure E3).

With the LCFF, districts receive a base grant per unit of average daily attendance (ADA), which varies depending on the grade level. Districts then receive additional funding on top of the base grant based on the proportion of high-need students they serve—often referred to as the unduplicated pupil percentage, or UPP.

For every additional high-need student, the district receives 20 percent of the base grant in supplemental grant funding. In districts with a share of high-need above 55 percent—or concentration districts—each additional high-need student generates additional funding beyond the 55 percent threshold at 65 percent above the base grant—referred to as the concentration grant.

Thus, a district that is 40 percent high-need gets 8 percent additional funding on top of their base grant, per student; a 60 percent high-need district (roughly the median statewide) gets 15 percent more; and an 80 percent high-need district receives 32 percent more (Figure 1). In 2021–22, the state increased the concentration grant from 50 percent to 65 percent of the base grant, providing even greater funding increases for very high-need districts. For an 80 percent high-need district with the same shares of students across grades as the statewide average, this amounts to roughly $385 more per student than under the old concentration grant (Technical Appendix Figure E1)