Publications

Fall 2001 Newsletter

California Budget Project Asks The $ Billion Question: Where Has All The State Prop. 1A Money Gone?

The last California statewide school bond meansure, Prop. 1A, was supposed to aid in the development of new schools in our state's most impacted districts. However, with the June 2002 deadline for projects quickly approaching, did the bond really help the needy districts that are most deserving or did it merely provide money to district's located where pristine land is abundant and facilities departments don't have to worry about brownfields, overly impacted schools, etc. The California Budget Project recently evaluated that bond's dispersal in the follow article "Where Has All The Prop. 1A Money Gone?"

When the Legislature convenes in January, one of the first items of business will likely be a measure placing a state general obligation bond for school facilities on the November 2002 ballot. While there is general agreement on the need for a bond to finance school facilities, the issue of how to allocate the proceeds among districts is contentious. Under the current system, the State Allocation Board (SAB) allocates funds on a "first come, first served basis" until fund levels drop to a specified level or more districts apply for funding than there are funds available. Proponents of alternative approaches argue that the current system favors districts that are able to secure the required land and plan approvals quickly, rather than those with the greatest need.

In an effort to inform the upcoming debate, the California Budget Project (CBP) examined the allocation of funds raised by Proposition 1A of 1998 for K-12 new construction in an effort to identify any relationships between funding and district characteristics such as district size, student demographics, and rankings on the 2000 Academic Performance Index (API). During the period examined by this analysis, 211 districts that include 37.1 percent of the state's schools and 46.2 percent of total state enrollment were apportioned new construction funds. In brief, the CBP found that:

• School districts that received state school construction funds were larger, served greater shares of low income and non-white students, and had a greater share of low-performing schools than districts that did not receive funds.
• School districts that received a disproportionately greater share of state school construction funds were smaller, served smaller shares of low income and non-white students, and had a smaller share of low-performing schools than districts that received a smaller share of state funds relative to their need.
• School districts where at least 50 percent of the schools scored in the bottom five deciles of the 2000 API served 49 percent of the state's students, but received only 36.8 percent of total state new construction apportionments.

Districts Eligible For New Construction Funds Face Multiple Challenges

Districts can be divided into those eligible for new construction funds and those not eligible. Under current law, a district is eligible for state new construction funds if it demonstrates that its projected enrollment five years into the future will exceed its current classroom capacity. While it is likely that many non-eligible districts have not applied for state funding eligibility because they do not have a projected need for new facilities, some may not have applied because they could not raise the required local funding match of 50 percent for new construction projects. Compared to non-eligible districts, the CBP analysis found that eligible districts, on average, had more schools, had a greater share of schools scoring in the bottom five and bottom two deciles of the 2000 API, and served greater shares of low income, non-white students.

Of Eligible Districts, Those That Received New Construction Funds Demonstrated Greater Need Than Unfunded Districts

The current system for apportioning school facilities funds also requires eligible districts to have site and plan approval for new construction projects before applying to the SAB for funds from the School Facilities Program. Not all eligible districts have been apportioned funds.

This could be either because not all eligible districts have applied for new construction funds, or because districts have applied and received approval, but have not received an apportionment due to a lack of available funds. The CBP analysis found that the differences between funded and unfunded districts are similar to those between eligible and non-eligible districts:

• Funded districts were larger (199 schools) than unfunded districts (30 schools).
• Funded districts had a greater share of schools scoring in the bottom five deciles (49.3 percent) and in the bottom two deciles (25.1 percent) than unfunded districts (45.2 percent and 16.6 percent, respectively).
• Funded districts had a larger percentage of non-white students (69.9 percent) than unfunded districts (64.3 percent).
• Funded districts had a larger share of students enrolled in free or reduced priced lunch programs (53.9 percent) than unfunded districts (45.8 percent).

Among Funded Districts, Those That Were Smaller And Had Fewer Obstacles Fared Better

Funded districts can be further categorized into those whose share of total state apportionments is greater than their share of total state "unhoused" pupils (high-funded), and those whose share of total state apportionments is equal to or less than their share of total state "unhoused" pupils (low-funded). This permits an examination of the differences between districts receiving either more or less funding for new construction relative to their need. The CBP found that, on average:

• High-funded districts were smaller (20 schools) than low-funded districts (163 schools).
• High-funded districts had a smaller share of schools scoring in the bottom five deciles (37.4 percent) and in the bottom two deciles (13.7 percent) than low-funded districts (50.5 percent and 24.0 percent, respectively).
• High-funded districts had a smaller percent-age of non-white students (59.3 percent) than low-funded districts (70.0 percent).
• High-funded districts had a smaller share of students enrolled in free or reduced priced lunch programs (38.6 percent) than low-funded districts (54.1 percent).
• Low-Performing Districts Served More Of The State's Students But Received Less Of State New Construction Funds

The CBP also examined the distribution of state new school construction funds across districts that have a large share of schools that scored either in the top or bottom deciles of the 2000 API. The CBP found that districts in which at least 50 percent of the schools scored in the top five deciles of the API received more funds relative to their share of total state "unhoused" pupils. These high-performing districts' percent- age share of total state funding was 19.6 percent greater than their percentage share of the state's "unhoused" pupils. Districts in which at least 50 percent of the schools scored in the bottom five deciles had a share of total state apportionments representing only 71.5 percent of their share of total state "unhoused" pupils. In other words, low-performing districts' percentage share of state funding is 28.5 percent lower than their percentage share of state "unhoused" pupils.

Very low-performing districts, those in which two-thirds or more of the schools scored in the bottom five deciles on the 2000 API, served 33.9 percent of the state's students and received 23.6 percent of total new construction funds. These districts also received fewer funds relative to their share of total state "unhoused" pupils, with a share of total state apportionments representing 62.6 percent of their share of total state "unhoused" pupils. In other words, very low-performing districts' percentage share of state funding is 37.4 percent lower than their percentage share of state "unhoused" pupils.

Other Proposition 1A Funding Was Better Aligned With District Needs

While the CBP analysis focused on new construction apportionments, an analysis of the apportionment of Proposition 1A's modernization, financial hardship, and class size reduction funds suggests that the distribution of these funds was better aligned with district needs. Specifically:

• Modernization Funding: On average, districts with modernization funding were larger, had a greater share of schools in the bottom five deciles and the bottom two deciles, and had a greater share of non-white students and students enrolled in free or reduced priced lunch programs than those without funding.
• Class Size Reduction Funding: On average, districts with class size reduction funding were larger, had a greater share of schools in the bottom five deciles and the bottom two deciles, and had a greater share of non-white students and students enrolled in free or reduced priced lunch programs than those without funding.
• Financial Hardship Funding: On average, districts with new construction and modern- ization financial hardship funding were smaller, had a greater share of schools in the bottom five deciles and the bottom two deciles, and had a greater share of non-white students and students enrolled in free or reduced priced lunch programs than those without funding.

This analysis examined the differences between districts with demonstrated facilities needs that have received state school facilities funds and those that have not. Identifying these differences does not explain why some districts apply for funding and some do not, or why some districts are able to secure land and construction plan approval faster, or at all, and others are not. It does, however, indicate that the current "first come, first served" system for distributing state school facilities funds may unintentionally favor one type of district over another, and so should be carefully considered when crafting the next state bond bill. This is especially true with regard to new construction funds appropriations, where districts with greater need and that serve greater shares of low income and non-white children have received a smaller share of state funds.