Profile of a Key State Market: California’s K-12 Districts Brace for Tough Times Ahead

After three pretty sunny fiscal years, the forecast for California Okay-12 funding exhibits clouds shifting in.

Districts that relied on thousands and thousands in federal stimulus funding and elevated state income to buoy operations are beginning to really feel monetary pressure. Some are actually grappling with funds deficits as they alter to the top of ESSER funding, minimal will increase in state funding, falling scholar enrollment, and rising prices.

Whereas California’s 2023-24 funds did embody a slight improve in districts’ principal supply of state funding – made doable by means of a now-depleted rainy-day fund — many districts are nonetheless experiencing painful funds shortfalls, exacerbated by bigger payments for prices like personnel and insurance coverage.

The circumstances aren’t dismal now, district leaders and observers say, however they’re pointing to potential hassle forward, particularly if the county’s economic system sinks right into a recession within the coming years.

“The times of the actually sturdy progress we noticed the earlier couple years are behind us, and districts must plan for a tighter fiscal surroundings — not simply this coming yr, however the subsequent a number of years,” stated Kenneth Kapphahn, principal fiscal and coverage analyst on the California Legislative Analysts Workplace, a nonpartisan company that advises the state legislature.

“It appears fairly clear at this level that enrollment will not be going to come back again to the place it was pre-pandemic. Meaning most districts must adapt to working an operation that serves a smaller variety of college students.”

The state authorities and college districts throughout California are, nonetheless, persevering with to spend money on a variety of priorities. These embody applications in prolonged studying time, skilled growth to assist educators undertake new state requirements in math, assist for transitional kindergarten, new arts applications, and transportation.

College techniques are on the lookout for methods to pay for these applications, whereas additionally chopping again on and shifting different buying priorities, leading to a fancy balancing act.

However as the biggest Okay-12 market within the nation, with 1,019 districts serving 5.8 million college students, California has at all times drawn specific consideration from the nation’s schooling firms, significantly when modifications in coverage, budgets, and classroom observe take maintain.

One District Eyes Modifications to SEL and Curriculum Adoption

Within the Sweetwater Union Excessive College District, which serves greater than 34,000 college students in grades 7-12, the structural deficit is ready to hit between $35 million to $45 million, out of a basic fund funds of about $480 million, within the subsequent two years if the district doesn’t take any motion.

Superintendent Moisés Aguirre stated the district, positioned south of San Diego on the Mexico-United States border, is looking for methods to convey that determine down drastically by rethinking its monetary choices and carefully reviewing purchases.

Whereas California allotted a comparatively flat 1.07 p.c value of dwelling adjustment to its Proposition 98 funding – the principle supply of Okay-12 state support – Sweetwater is among the many districts within the state which have seen a continued lower in enrollment and a ensuing blow to its funds. The state calculates district funding ranges based mostly on common each day attendance and declines within the scholar rely have monetary penalties.

“At our excessive level, we had about 40,000 college students, and proper now we’re only a smidge over 34,000,” he stated. That loss, he stated, is the equal to the enrollment of two of its excessive colleges.

The district has not but needed to shut a college, he stated, partly due to the increase from federal stimulus funding. Now that ESSER cash is expiring, with all allocations required to be made by late September, district leaders are contemplating consolidating applications.

Aguirre stated the district can be all vacant positions to judge whether or not or not they need to be stuffed, and lengthening curriculum adoption cycles.

The toughest choices contain scaling again applications funded by way of federal stimulus support. These embody a summer time academy for incoming college students, and social-emotional and mental-health applications — which have been useful.

“We’re going to have to return to extra of the fundamentals, like credit score restoration,” Aguirre stated. That’s troublesome as a result of the Sweetwater system has seen how manyprograms “can actually assist our college students.”

About 30 to 40 p.c of the district’s whole ESSER funding went to buy units, he stated. Now the system has to seek out the cash to refresh and exchange these units. One possibility is working it right into a proposed bond, he stated, because the district included language in its most up-to-date proposal to permit for expertise purchases.

Aguirre stated the system can be actively pursuing state grant alternatives to fund a variety of applications, together with assist for group colleges, which supply wraparound well being and social providers; and for the creation of an early-middle faculty — a second college positioned on a university campus the place college students can take each highschool and faculty programs for minimal value.

Alternatives in Prolonged Studying, the Arts

Within the 2024-25 funds, California’s Okay-12 districts acquired $101.1 billion in funding, a 6.9 p.c improve from the $94.6 billion colleges acquired within the prior fiscal yr, though the majority of that acquire is because of accounting shifts throughout fiscal years.

The state’s funding components for colleges noticed a 1 p.c cost-of-living adjustment, the determine that’s most frequently cited in reference to state Okay-12 funding.

Whereas programmatic spending, which funds particular state Okay-12 initiatives, noticed comparatively minor will increase, California state officers have continued to spend money on Okay-12 applications by way of one-time and ongoing funding.

The state’s Prolonged Studying Alternatives Program, which affords out-of-class enrichment to college students at Title I colleges, acquired flat funding at $4 billion on this yr’s funds, stated Patti Herrera, vice chairman of College Providers of California, which advises native schooling companies within the state on monetary and coverage points.

One problem for college districts with ELOP funding, she stated, is that its distribution mechanism means some Okay-12 techniques see wildly various funding quantities from year-to-year, making it troublesome to maintain this system.

College techniques that serve the best concentrations of low-income college students within the state, or Charge 1 colleges, are assured to obtain a particular stage of ELOP funding yearly, Herrera stated. However the remainder of the districts, known as Charge 2, are allotted funds based mostly on the cash that’s out there after funding the ensures to Charge 1 districts. Charge 2 techniques might have $2 billion to separate, or they might have $1.5 billion.

“That’s a giant distinction,” she stated, including these districts might must dig into their very own reserves to maintain offering the identical providers.

Districts and colleges are additionally now receiving funds from Prop 28, the legislation that voters accredited in 2022 that directs 1 p.c of the state’s Okay-12 funding towards arts schooling. The funding is designed to develop mechanically over time alongside basic financial progress, stated Kapphahn.

Within the Clovis Unified College District, an almost 43,000 scholar district within the Fresno space, Prop 28 introduced in about $6 million for the district, stated Michael Johnston, affiliate superintendent of administrative providers. The district has been sluggish to spend the {dollars} because it waited for added steerage from the state on the way it may very well be allotted.

The legislation required the funds to be spent solely on new arts expenditures and that 80 p.c needed to be directed towards salaries and advantages. Because the district didn’t make giant cuts to arts schooling previous to Prop 28, it’s nonetheless assessing one of the simplest ways to spend these funds whereas assembly state guidelines.

The query is “how can we ensure that we take advantage of these {dollars}, understanding what we’ve in place already?” stated Johnston.

Whereas the time period “arts” might counsel the funds are restricted to visible or performing arts, Johnston stated the language is broad sufficient to cowl issues like pc coding courses, and the district is contemplating these choices.

Herrera anticipates that after salaries and advantages, the best proportion of Prop 28 {dollars} will probably go to educational supplies to assist new and expanded applications.

New Math Framework in Focus

Because the state just lately adopted a brand new framework for math instruction and assets – after prolonged, heated, years-long debates over it – it’s now gearing up for a statewide adoption of assets that align to the framework in 2025.

Districts are getting ready by investing in skilled growth for math educators, Kapphahn stated.

The state put aside $20 million in one-time funds for the state’s 58 county workplaces of schooling to coach educators in delivering math instruction that’s in line with the brand new framework.

The state has additionally put aside $25 million in ongoing funding to assist a brand new literacy screening initiative geared toward catching college students’ studying difficulties as early as doable.

That funding might be offered on to districts, Kapphahn stated, however will signify a “small bump” in funding.

Pupil Counts and State Support

The biggest drawback going through Okay-12 funding on the entire comes right down to simple arithmetic: There are far fewer college students attending public colleges now than earlier than the pandemic.

The “overwhelming majority” of the state’s college districts are coping with declining enrollment and, by extension, decrease whole each day attendance, stated Herrera.

Statewide, the variety of transitional kindergarten by way of grade 12students enrolled in California public colleges dropped 5 p.c from 2019 to 2022, representing a lack of 310,000 college students, stated Kapphahn, of the state’s legislative analysts workplace. It’s the fifth-largest proportion drop within the nation throughout that point interval.

The enrollment decline started in 2014, pushed by a decline in births throughout California, and has accelerated lately as college students left the state through the pandemic. There was a small bump within the variety of college students selecting private choices like non-public colleges and homeschooling, he stated.

One other compounding issue is that districts have additionally had some leeway from the state in terms of cushioning the blow of decrease enrollments and attendance charges — flexibility that’s set to finish.

Through the pandemic, the state funded most districts based mostly on their pre-pandemic attendance ranges — even when their precise attendance dropped — as a part of a “maintain innocent” provision.

The state started phasing that provision out within the 2023-24 college yr through the use of three-year averages of attendance.

Even a 1 p.c drop in attendance charges can translate to a lack of thousands and thousands in funding, stated Johnston, of Clovis Unified.

The district was at a 96 p.c attendance ranges, pre-Covid, and is again at almost 95 p.c.

“That’s clearly a priority, as a result of if you’re trying on the {dollars} we get from the state, about $500 million, a 1 p.c hit on that may be a $5 million discount,” he stated.

Whereas many elements undermining scholar enrollment are exterior of the Clovis Unified’s management, the district has ramped up efforts to enhance attendance, and finally scale back the monetary affect.

The state’s latest, slight improve to district cost-of-living changes was doable solely as a result of it tapped right into a wet day fund that was established within the wake of the Nice Recession to shore up Okay-12 budgets.

The state constructed up the wet day fund to greater than $8.5 billion with sturdy tax revenues. . California officers had been legally required to faucet into the fund this yr once they confronted a funds deficit, and the state largely drained the cash because of this.

“We gained’t have that very same software out there the following time we undergo an financial downturn,” stated Kapphahn.

Native Reserves Working Dry

As Okay-12 districts within the state come up towards rising monetary pressures, some are protected by their very own reserves they constructed up through the pandemic. Throughout that interval, many districts spent their federal stimulus support on time-restricted purchases, which helped them put apart native funding.

“We at all times advise college districts to spend probably the most restrictive {dollars} first,” Herrera stated.

Whereas many districts are tapping into these reserves this yr, that cash isn’t more likely to final lengthy.

“Similar to the state’s utilizing wet day funds, we’re utilizing reserve {dollars} to handle our scenario going ahead,” stated Johnston. “What we need to do is have a really stage funds that’s not reacting continuously to the modifications from the state funds.”

In the meanwhile, California’s Okay-12 system total is in a “state of stasis,” Herrera stated, sustaining program and buying energy at present ranges, however on the native stage, “districts are feeling like they’re in a recession already,” she stated.

“We’re telling [districts] that they should begin right-sizing,” Herrera stated. Meaning on the lookout for cuts throughout their budgets, she stated, and the most important space of district spending is personnel.

Staffing Cuts an Choice?

The monetary stress on Okay-12 districts in California might depart college techniques no alternative however to impose staffing cuts.

The California Lecturers Affiliation, which represents greater than 310,000 educators within the state, fought again this yr when districts despatched out 2,000 notices in Might of potential layoffs.

The union pointed to giant basic fund reserves districts constructed up within the final three years as causes they need to not impose staffing reductions. Many districts finally backed away from these plans, stated David Goldberg, CTA president.

Among the positions included within the Los Angeles Unified’s Might notices included campus aides, class measurement discount academics, library aides, artwork and music academics, and nurses, based on a CTA publication.

One other wave of layoffs notices may have come final month however the CTA, the governor, and legislature got here to a deal that suspended districts’ means to make these reductions.

“It’s a vital victory for stability for colleges,” Goldberg stated. “These youngsters have a finite quantity of years in colleges, and it impacts them when their courses balloon to large numbers.”