In 2013, California enacted an ambitious school funding reform—the Local Control Funding Formula (LCFF). The LCFF fundamentally overhauled the state’s prior K–12 education finance system, which studies found to be inequitable, irrational, and highly centralized. The formula distributes state grants to K–12 school districts, county offices of education, and charter schools based on student characteristics, including both grade level and whether they belong to groups identified for additional support: those from low-income families, English learners, or foster youth.
More than a decade after its enactment, a growing body of research indicates the LCFF has helped to improve student outcomes, especially in K–12 school districts that enroll large shares of students with greater educational needs. However, as might be expected with a policy reform as ambitious as the LCFF, research also points to challenges in its fiscal design and opportunities to strengthen it. This report intends to establish a conceptual framework that California policymakers and education stakeholders may consider for potential adjustments to build on the solid foundation the LCFF created and continue to improve outcomes for students throughout the state.
Key Features of California’s LCFF
The LCFF distributes roughly $4 out of every $5 that K–12 schools receive from the state budget and local property tax revenue. The remaining 20% of these funds supports special education, before- and after-school care, summer programming, state preschool, and other programs such as child nutrition. The LCFF reaches all K–12 school districts except approximately 130 districts that are designated as “basic aid” because their level of local property tax revenue is high enough to exceed their LCFF target allotment without state aid. Basic aid districts serve approximately 5% of the state’s students.
Nearly all LCFF dollars are allocated through three per-pupil grants: the base, supplemental, and concentration grants that are calculated based on student characteristics.
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The base grant portion of the LCFF provides K–12 school districts grants per the average daily attendance of their students, adjusted to reflect the number of students at various grade levels. The base grant accounts for approximately 80% of LCFF dollars and is the main source of funding for California schools.
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The LCFF supplemental grant targets additional funding to school districts that enroll students from low-income families, English learners, or foster youth. K–12 school districts receive a supplemental grant equal to 20% of the base grant for each student who falls into at least one of these three categories; students cannot be counted multiple times.
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In recognition that students face greater educational challenges when they attend schools with high concentrations of students with greater needs, the LCFF’s concentration grant targets additional funding to school districts that enroll large shares of students from low-income families, English learners, or foster youth. The LCFF concentration grant initially provided 50% of the base grant for school districts that enrolled more than 55% of students from these categories. This value was increased to 65% of the base grant as part of 2021–22 state budget legislation.
LCFF Successes
Over the past decade, a growing body of rigorous research has shown an association of higher spending with better student outcomes—especially for students from low-income families—in many states. Analyses in California have found that LCFF-induced increases in per-pupil spending have:
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improved students’ math and reading achievement;
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reduced the probability of grade repetition;
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increased the likelihood of high school graduation and college readiness; and
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decreased suspensions and expulsions.
Moreover, improvements in student outcomes have been more pronounced for cohorts exposed to funding increases for more of their school-age years.
The LCFF: Challenges Persist
The LCFF has been successful, but it was not designed to solve all the challenges that face the state’s schools and students, and its goals for equitable opportunity and outcomes remain unmet. A 2023 Learning Policy Institute report found that improvements in math and reading achievement for school districts just below the concentration grant’s 55% high-need student enrollment threshold lag districts above the threshold. This is especially true of districts that enroll between 40% and 55% of their students who are identified for additional support. One in five California students eligible for the supplemental grant is enrolled in a school district ineligible for the concentration grants.
The supplemental grant centered equity in the state’s K–12 education finance system and helps support students in school districts ineligible for concentration grants. However, the supplemental grant weight of 20% was not designed to provide the level of funding required to support students with greater needs. Moreover, because the LCFF only identifies students from low-income families, English learners, and foster youth as belonging to categories targeted for additional funding, the supplemental grant does not provide resources to support other students who likely require greater support.
Even if the LCFF identified additional groups of students for support, students categorized in more than one group targeted for supplemental grants generate the same amount of funding as students who belong to only one group. The use of unduplicated counts to calculate supplemental grants means students with multiple needs may not receive the support they require to achieve desired outcomes.
Adequacy of the LCFF: How Does California Compare?
Another question is how adequate and equitable California’s school funding system is, now that the LCFF has been in effect for a decade.
Since the LCFF’s enactment, the state has increased funding significantly. As of 2021–22, the most recent school year of cross-state data available, California per-pupil spending ranked 18th in the nation, up from 36th in 2012–13. However, California’s high cost of living affects what these dollars can buy. Taking into account cost-of-living differences, the Education Law Center’s 2024 Making the Grade report ranked California K–12 per-pupil spending 28th in the nation in 2021–22, up from 46th in 2012–13, the year prior to LCFF’s enactment.
The same analysis examines the equity of states’ K–12 education funding allocations. Based on the distribution of funding among its high- and low-poverty school districts, California has improved significantly since the enactment of the LCFF, jumping from 22nd in the nation in 2012–13 to 6th in 2021–22. However, California ranks 34th in the nation when comparing the effort it makes relative to each state’s capacity to support its schools. While California’s rank for effort improved from 43rd in the nation in 2012–13, the Making the Grade report gave the state a grade of D, reflecting the state’s low level of K–12 education funding relative to the size of its economy.
Based on five adequacy studies conducted in other states, California’s LCFF supplemental grant weight of 20% is at the lower end of the recommended range for English learners (from 15% to 40%) and below the recommended range for at-risk students (from 30% to 81%). These studies’ recommended weights translated into nearly $6,500 in additional funds per pupil in the District of Columbia and more than $9,900 per pupil in Delaware and Maryland for students who are both English learners and at-risk. California’s 20% supplemental grant weight translated into additional funding of about $2,100 per student, substantially below the level of recommended additional funding in these other states.
Similarly, LCFF’s 20% supplemental grant weight is at the lower end of the range of the other 20 states that provided a flat weight to support English learners and the 19 that do so for at-risk students. In addition, most of these states allow weighted funding based on the duplicated counts of students categorized as both at-risk and English learners.
California’s supplemental grant funding falls well below both adequate funding recommendations and actual grants in other states not only because of its relatively low weight but also because California provides supplemental grants to school districts based on their unduplicated enrollment of students in categories that generate the grants. In 2023–24, 37 of 42 states that provided funding to support students categorized as English learners and being at-risk allowed the funding to be duplicated for students who met both criteria. California is one of only five states that provides funding based on the unduplicated number of students in these groups.
Strategies to Strengthen the LCFF
Support Students Who Are Not Currently Targeted by the LCFF
While the LCFF’s supplemental and concentration grants target funding for students from low-income families, English learners, or foster youth, there are other groups of students who require additional resources. To strengthen the LCFF, California policymakers could consider whether the formula is providing the investments required to help districts meet a range of student needs, which may include students experiencing homelessness, newcomer and migrant students, and students with special education needs.
Increase Supplemental Grant Funding
Recent adequacy studies conducted by other states suggest that California’s supplemental grant weight of 20% is not sufficient to support English learners or students considered “at-risk.” Policymakers could consider increasing the supplemental grant weight. That alone, however, would not recognize the needs of students who are categorized within more than one group identified for additional support and the compounded challenges they face. California could use duplicated student counts to determine school districts’ supplemental grants, which would target increases in supplemental grant funding to school districts that enroll students who face multiple challenges and better align California with the majority of states that provide this type of additive funding to address the distinct needs of different student groups.
Increase Funding to School Districts Not Currently Eligible for Concentration Grants
Policymakers could consider different options for increasing funding to support students with additional needs in school districts not eligible for concentration grants by:
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Strengthening the Supplemental Grant. This could be done by increasing the weight of the LCFF supplemental grant or by allowing duplicated counts for students who are categorized within multiple student groups eligible for the supplemental grant, or both.
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Lowering the Eligibility Threshold for School Districts Receiving Concentration Grants. For example, concentration grants could be allocated to school districts that enroll more than 45% of their students with greater needs, or another enrollment threshold could be considered. One method to address the funding cliff that results from concentration grant funding as currently designed would be to progressively increase concentration grants so that they gradually ratchet up for these newly eligible districts to reach the funding level currently allocated to K–12 school districts with enrollment of more than 55% of their students with greater needs.
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Increasing the Base Grant. Boosting support for students with greater needs enrolled in school districts ineligible for concentration grants can also be achieved by increasing the LCFF base grant. This approach would not improve LCFF equity as much as funding targeted through the supplemental or concentration grants. However, increasing the LCFF base grant would mean school districts that do not receive concentration grants would receive additional funding that could be used to support students with greater needs.
Strategies for strengthening the LCFF base grant could also include addressing the wide variation in costs across California and, while we do not treat this in detail in this report, policymakers could also consider whether special education students would be better supported by integrating this funding within the LCFF. Whatever strategies policymakers may consider will likely depend on the availability of state and local tax revenue to ensure all school districts receive additional funding to help provide equitable opportunities for their students.
California’s Local Control Funding Formula: Next Steps Toward Equity by Jonathan Kaplan is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
This research was supported by the Stuart Foundation, with additional funding provided by the W. K. Kellogg Foundation, Raikes Foundation, and Skyline Foundation. Core operating support for LPI is provided by the Carnegie Corporation of New York, Heising-Simons Foundation, William and Flora Hewlett Foundation, Raikes Foundation, Sandler Foundation, Skyline Foundation, and MacKenzie Scott. LPI is grateful to them for their generous support. The ideas voiced here are those of the author and not those of funders.