What is Equalization

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What is Equalization

What is a "low wealth" district?
A low wealth school district traditionally has been a district that receives less money than the statewide average revenue limit.

How did I become a "low wealth" district?
More than 30 years ago, funding of education in California changed dramatically. Before 1972, schools were funded primarily through local property taxes. The amount was determined by a community's assessed valuation. Because of the differences in the property wealth of communities, substantial inequities developed between school districts (the wealthier the community, the more money available for schools). The Serrano v. Priest lawsuit was filed in 1968 by a parent, John Serrano, against the State (Ivy Baker Priest was the State Treasurer), claiming that this local tax-based funding of schools was unfair.

In 1972, in response to the lawsuit, the State Legislature established the funding formula that exists today. The dollar amount per child, called the "base revenue limit," was based on what schools were spending at the time, which, in turn, was based on the local property tax yield. Except for annual inflation adjustments, schools were essentially frozen at the 1972 level of spending. Thus, the equalization of funds was not achieved. Districts that had a wealth advantage then, still have the highest revenue limits today. The passage of Proposition 13 in 1978 added further complexity to the equalization issue.

In addition, legislation signed into law in 1997 (SB 727-Rosenthal), repealed laws that allowed the accounting of excused absences as part of the school district's average daily attendance (ADA). SB 727 provided for the increase of each district's per pupil revenue limit to compensate for the district?s unique (1996-97) percentage of excused absences. Districts are now credited with less ADA, but receive more for each remaining unit of ADA, thereby suffering no fiscal loss. The process, however, has left every district with a different per pupil revenue limit, due to differences in excused absence rates. Consequently, some school districts benefit more from old funding formulas prior to the enactment of SB 727 (pre-SB 727) and some school districts find themselves newly categorized as "low wealth" in the wake of SB 727's passage (post-SB 727).

What does it mean in terms of funding for my school district if I am "low wealth?"
While great strides have been made over the years by the Association of Low Wealth Schools and key legislators to equalize revenue limits, the situation still exists where some school districts receive $300, $500, or even $1000 more per ADA than their neighboring district.

ALWS would contend that inequitable funding leads to inequities in resources of all kinds to school districts. The differences in funding between neighboring school districts is often seen in fewer educational opportunities per student, such as higher class sizes, lower salary schedules, fewer books and materials, etc. As the legislature and the Administration are requiring more and more from school districts in terms of service delivery and performance standards, ALWS would argue that the measurement for these new mandates can not be equal if the resources and funding are not equal.




What is SB 727-Rosenthal and "Pre" vs. "Post"?

In 1997, the legislature passed, and the Governor signed into law SB 727 by Senator Rosenthal. The law changed the way in which revenue limits were calculated by transitioning from the use of actual average daily attendance (ADA) figures, to actual attendance. SB 727 required that "school districts and county offices of education, report the portion of their 1996-97 attendance that is attributable to excused absence. Requires that the Superintendent of Public Instruction (SPI) re-calculate the per-pupil revenue limits of school districts and county offices of education for the 1996-97 year so that the revised revenue limit, when multiplied by actual attendance, yields the same total revenue as was actually earned by the district or county using its un-revised revenue limit and attendance including excused absence." (Senate Floor Analysis, 1997)

However, what was perceived by many in education circles as being a bill to merely encourage school districts to be more aggressive in obtaining excused absences, had other unintended consequences.

Up until the enactment of SB 727-Rosenthal, wealth related disparities between low wealth schools were easily revealed on computer runs. The passage of SB 727 has since complicated the equalization picture. SB 727 provided for the increase of each district's per pupil revenue limit to compensate for the district's unique (1996-97) percentage of excused absences. Consequently, districts are now credited with less ADA, but receive more for each remaining unit of ADA, thereby suffering no fiscal loss. The process, however, has left every district with a different per pupil revenue limit, due to differences in excused absence rates. Consequently, school district revenue limits are no longer entirely property tax wealth related. Rather, in many cases, they are due to the absence rate of a district, and how good the district was (or was not) at getting excused absences. The example below illustrates the SB 727 "rebenching" impact, using a hypothetical $4,000 average revenue limit.

Revenue
Limit
Attendance
Rate
New Revenue
Limit
a) $4,000 x
97% = 100/97
1.03 x $4,000 = $4,120
b) $4,000 x
92% = 100/92
1.08 x $4,000 = $4,320

Assuming both districts before SB 727 were $40 below the average, district a) is now $80 below the new $4,200 revenue limit average, and district b) is $120 above the average.

Except for new ADA, both districts still get the same total dollars as before (no one lost dollars), but the revenue limits have changed relative to the average. Reason: attendance rates were different.

Impacts vary greatly among districts. Some, but not all, large urban districts prefer the numbers under a "pre SB 727" calculation. Conversely, other districts that had high attendance rates, and/or did a particularly good job of improving excused absence rates, benefit more under a "post SB 727" calculation.