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RAND Study: New Rules for School Money Lead to Balanced Budgets and Program Cuts



By Gene Williams
Lookout Staff

June 3, 2011 -- California school administrators are using greater fiscal flexibility granted by Sacramento to balance their districts’ budgets. But in doing so, they are cutting deeply into a number of popular programs, say analysts at the RAND Corporation, a Santa Monica-based research organization.

A preliminary study involving ten diverse school districts across the state show reductions in adult education, programs for gifted students, new text books and other areas that were once guaranteed funding, researchers said.

The shift occurred in 2009, when local administrators were given control of $4.5 billion that had been previously earmarked for specific uses. At the same time, state lawmakers cut overall spending on education by almost one-fifth.

“District actions were driven mostly by the need to plug deficits in their budgets, rather than from careful evaluation of programs and priorities,” said study co-author Brian Stecher, a senior social scientist at RAND.

“How this continues to evolve will have important impacts on K-12 students across California,” Stecher said.

Researchers at RAND and the University of California are studying how school districts are using the deregulated dollars.

Previously the funds had to be spent on 40 popular categorical-aid programs – including school safety, vocational training and libraries. Much of the money had been used to help low-performing students and advance basic literacy among young adults.

Faced with budget challenges, school districts shifted the money to beef up their general funds. Some districts cut adult education by as much as 60 percent, but programs for gifted and talented students were often cut as well, researchers said.

Poor communication from state lawmakers and the Department of Education – as well as uncertainty whether the policy change will last longer than the four years initially authorized by the legislature – have made local decisions over how to apply the new rules more complicated, researchers said.

“The signals from lawmakers to school districts were not clear,” said study co-author Bruce Fuller, a professor of education and public policy at UC Berkeley.

“Despite possible advantages of granting local school boards and principals greater control over dollars, Sacramento has yet to articulate a clear plan for how this can work over time,” Fuller said.

School administrators have varying interpretations for how to apply the new rules, researchers say.

Although state law and court decisions require funding for some of these so-called Tier 3 programs – such as helping students pass the high school exit exam – the money is no longer earmarked to meet the legal mandate.

All ten districts in the study shifted at least some of the money to their general fund; some districts selectively cut Tier 3 programs based on local priorities, and a few leveraged Tier 3 funds with other resources to pay for new programs, according to the study.

Administrators in all of the districts wanted to avoid teacher layoffs, the study found.

Research is continuing with a survey of all California school districts.

The preliminary study, “How Local Educators Allocate Flexible Tier 3 Categorical Funds: Findings from 10 School Districts in the First Implementation Year, 2009 – 2010,” is published jointly by the RAND Corporation and the Policy Analysis for California Education (PACE) based at UC Berkeley.

The study can be found at and at


“District actions were driven mostly by the need to plug deficits in their budgets, rather than from careful evaluation of programs and priorities.” Brian Stecher, senior social scientist at RAND

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