Brown seeks radical change to categorical funding, but challenges formidable

Gov. Jerry Brown wants to radically transform a big part of California's education finance system, but it will require new money and stakeholder buy in - two things in short supply in Sacramento.

At issue is the state's current list of categorical programs that up until the current fiscal crisis constituted about two-fifths of K-12 spending.

Brown has said the current system is overly bureaucratic and cumbersome and he wants to replace it with a weighted per-pupil system that provides a base grant for all students and additional money for special education, English learners, and children from low-income families.

The new system would cost several billion dollars above what schools are currently receiving each year, but navigating the politics around the issue might be just as challenging.

The politics are really unknown and difficult," said Michael Kirst, the newly-elected president to the California State Board of Education who is also a chief education advisor to the governor.

"Each categorical program creates a lobby that wants its maintenance," he explained. "You have to say that it's time for a new and better idea, otherwise if you satisfy them you're right back where you started."

But as the state budget debate heats up, momentum is building around a fundamental change to the current categorical funding system.

A university-led research team has also launched their own review of the Legislature's decision two years ago to give districts flexibility over 39 categorical programs. Expectations are that the findings from the study would help direct lawmakers as they consider further decentralization of school finance.

Brown has already said that the current categorical system is a "report driven process - which has 62 different categories for funding." He has suggested cutting that number down to less than 20 and implementing "a simple pupil weighted formula based on specific needs of the students in the school district."

Kirst has been interested in a similar approach for some time and even helped write a paper in 2008 that outlined some of the funding ideas, the logistics of which continue to be clarified by the Public Policy Institute of California.

As proposed by Kirst - who cautioned that while his ideas were congruent with the governor's plan but hadn't been specifically embraced by Brown - the system would provide grants to special needs students, low income children, and English Language Learners about 30 percent to 40 percent above base-level. To keep schools from over-identifying their students and bringing in extra cash, targeted students could not be double counted.

To balance regional cost differences, the funding would also need to be adjusted for areas with high concentrations of targeted students and for regional wage differences, said the report.

In an interview, Kirst also emphasized that districts would be "held harmless" of funding reductions during the expected multi-year phase in, meaning that the plan would require new money.

The exact cost is debatable but estimated to be somewhere in the billions. That said, if new revenues should flow back to Sacramento, this plan represents Brown's "higher priority," said Kirst.

But even if the funding were available, the proposal would certainly draw controversy and it's unclear how the Legislature would react. It's worth noting that similar legislation failed last year.

SB 1396 from Sen. Alan Lowenthal, D-Long Beach, would have dropped the spending requirements on every categorical program for three school districts for three years.

Although the bill at one point enjoyed bipartisan support, it ran into opposition - some said - because of advocates of Class Size Reduction and Economic Impact Aid, which are two current categorical programs.

"Some powerful interests were afraid that the funding targeting specific students and programs would be diluted," explained Liz Guillen, an advocate with Public Advocates, an advocacy group for the poor.

Public Advocates also opposed the bill because it did not require districts to disclose their spending plan before they implemented it, she said.

But the fact that the Lowenthal bill failed, would not necessarily mean a similar plan couldn't succeed. "If you're asking me if that is politically possible in Sacramento, I don't know that," she said. "I think it could be possible, especially with the change in administration and leadership in education."

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