Educators Call for Major Overhaul of California’s School Finance System

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New Report Released by Berkeley Law’s Institute on Race, Ethnicity and Diversity

Berkeley , CA —April 2, 2008…A new report calling for a major overhaul of the state’s K-12 school finance system was released today by the Chief Justice Earl Warren Institute on Race, Ethnicity and Diversity (Warren Institute) at the University of California, Berkeley, School of Law (Berkeley Law). The new report, Getting Beyond the Facts: Reforming California School Finance, offers concrete suggestions for improving public education in California through a simplified, equitable, and transparent finance system.

The report, funded by the Bill and Melinda Gates Foundation, builds on studies conducted last year by Stanford University’s Institute for Research on Education Policy and Practice, which found the state’s school finance system “fundamentally unfair.”

Getting Beyond the Facts co-author Goodwin Liu, assistant law professor at Berkeley Law, says the finance system is “flawed” and fails to help students—and schools—reach performance goals set by the state. Low-income students in high-poverty areas don’t get adequate resources, says Liu, and nearly all students “suffer from a system that fails to support academic achievement.”

School districts receive revenues through complex formulas that, as a whole, don’t take into account student needs or the regional differences in the cost of providing education. According to the report, the proliferation of about 80 different student aid programs generates costly compliance burdens, onerous paperwork, and regulatory overload that limit the ability of school officials to meet local needs.

(Goodwin Liu will discuss school finance reform in a live Webcast at 9:00 am Wed., April 2. To watch, go to:

In addition to Liu, Getting Beyond the Facts’ co-authors include Stanford Professor Emeritus Michael Kirst, former president of the California State Board of Education; and Alan Bersin, a former California Secretary of Education. The educators propose a new school funding framework based on four principles.

First, revenue allocations should be guided by student needs. Dollars should be allocated so that all students, including English learners, low-income students, and students with disabilities, can meet state standards for academic achievement.

Second, revenue allocations should be adjusted for regional cost differences. California is a large state with tremendous diversity. Education dollars need to have the same purchasing power from region to region, especially when it comes to hiring and retaining high-quality teachers.

Third, the system as a whole needs to be simple, transparent, and easily understood by legislators, school officials, and the public.

Fourth, reforms should apply to new money going forward, without reducing any district’s current funding level.

“Our plan drastically revises how the state distributes money to local school districts,” says co-author Michael Kirst. “It provides more resources and flexibility for schools to meet the accountability requirements of the No Child Left Behind Act and state laws.”

To implement the core principles, the co-authors propose a reformed finance system with these components:

  • Base Funding: Each school district would receive a set amount of money to buy books, maintain facilities, and hire qualified teachers and staff.
  • Special Education: The plan would seek to equalize special education aid across the state.
  • Targeted Funding: A single funding program would direct greater resources to school districts with higher concentrations of disadvantaged low-income and non-English speaking students.
  • Regional Cost Adjustment: All funds would be adjusted by a regional wage index to make sure that education dollars have the same purchasing power across the state.
  • Hold Harmless Condition: Districts would not lose money under the reformed system; reforms would be phased in gradually as new money became available.

The state faces a 10 percent across-the-board education budget cut this year. But the report cites state projections showing that a decline in enrollment will make more money available per pupil over the next five years. “There will be new money in the system,” says Liu, “so we have to reform the system now if we want that money to make a difference in the future.”

Report co-author Alan Bersin says this proposal provides a timely backdrop for discussion of broader reform issues. “A lean budget gives lawmakers and the education coalition the chance to hammer out a school finance plan that’s ready to go when new money fills the coffers,” says Bersin.

The Assembly Education Committee will hear testimony from Liu and others today on a related school finance reform measure introduced by Assemblyman Joe Coto (D-San Jose).

University of California, Berkeley, School of Law

For over a century, Berkeley Law has prepared lawyers to be skilled and ethical problem-solvers. The law school’s curriculum — one of the most comprehensive and innovative in the nation — offers its J.D. and advanced degree candidates a broad array of nearly 200 courses. Students collaborate with leading scholars and practitioners working on complex issues at more than a dozen interdisciplinary centers, institutes, and clinical programs. For more information about the nation’s premier public university law school, visit

The Warren Institute is a multidisciplinary, collaborative venture that produces research, policy recommendations and innovative curricula on issues of race, diversity and ethnic justice. The Warren Institute’s portfolio of subjects under active study includes K-12 achievement and accountability, college readiness and access, immigration policy reform, and voting rights.

Note: The Webcast on school finance reform will be archived online after 4:00 p.m., April 2, at UC Berkeley’s YouTube site at: