Association for Public Policy Analysis & Management

In the 2013-2014 school year the state of California implemented a new statewide funding system, the Local Control Funding Formula (LCFF). LCFF dramatically altered the process of funding school districts in two distinct ways. First, LCFF increased school districts’ minimum per-pupil funding levels for students considered educationally disadvantaged (i.e., for students who are English learners, foster youth, or eligible for free or reduced-price lunch). Second, LCFF provided districts with greater autonomy in allocating resources by removing many categorical fund restrictions. Instead, districts are required to convene with parents, teachers, students, and community members to develop a local control and accountability plan (LCAP), which specifies how the resources will be allocated to achieve district goals, in particular improved academic achievement for educationally disadvantaged students. The policy is intended to increase equity in school funding and focus attention on educationally disadvantaged students.

The implications of these changes may vary across California’s nearly 1,000 school districts, which differ substantially in the populations they serve, their cost structures, and their historical spending patterns. Nearly a third of districts in California are rural, with many serving high numbers of English language learners and students eligible for free or reduced-price lunch (National Center for Education Statistics, 2016). Educating students in rural areas is thought to come with distinct challenges from a school finance perspective given the higher per pupil costs in small districts (Odden & Picus, 2000; Sipple & Brent, 2014). For example, expenditures on transportation, services for students (e.g., SPED, ELL, vocational programs, and extracurricular), and teachers/administrators tend to be higher due to rural district’s geographic isolation and small size (Killeen & Sipple, 2000; Sipple & Brent, 2014; Tompkins, 1977). Yet despite their prevalence and distinctive challenges, rural districts are understudied and the few existing empirical analyses of rural school finance are dated. The implementation of LCFF provides an opportunity to enrich our understanding of rural school finance and the implications of school finance reform by comparing the policy’s effects on rural and non-rural districts.

In this paper we compare rural and non-rural districts by examining three research questions relevant to school finance equity in California: First, since the implementation of LCFF, how do expenditure levels and the distribution of expenditures differ between rural and non-rural districts? Second, under LCFF have school funding gaps changed between rural and non-rural districts? And third, are rural and non-rural districts spending new LCFF-funds differently? To answer these questions, we use descriptive data techniques and thirteen years of detailed financial data for the universe of California school districts. Our preliminary results are somewhat surprising given prior literature and prevailing conventional wisdom. We find few differences in resource levels between rural and non-rural districts, and only small differences in the manner in which those resources are allocated. These patterns are consistent since at least the 2003-4 school year, and rural districts appear to have allocated new LCFF money in ways similar to their non-rural counterparts.