School Funding Effectiveness: Evidence From California’s Local Control Funding Formula

In 2013, California implemented an ambitious school funding reform, the Local Control Funding Formula (LCFF), which allocates state funding by the proportion of unduplicated “high-need” students in the district (students from low-income families, English learners, and youth in foster care). The goal of LCFF was to reduce academic achievement gaps between socioeconomically disadvantaged children and their more advantaged counterparts by committing $18 billion in increased state support, allocated based on pupil needs, to be incrementally distributed over 8 years. This reform was distinctive in two ways. First, its multiyear design pre-committed funds, so districts were assured this would not be a temporary, reversible change. This commitment enabled districts to plan long-term, transformative initiatives rather than one-off expenditures. Second, the funding came with minimal restrictions on how schools could use it, giving fiscal sovereignty to districts.

This study investigates the impacts of LCFF-induced increases in per-pupil spending on student achievement and behavioral and attainment outcomes. To examine the impact of increased funding on student outcomes, this study links district- and school-level information on school resources and per-pupil spending with longitudinal student data for the full universe of public school students in California who were first observed in kindergarten and followed as they progressed through the K–12 school system. This student-level data included 6.2 million K–12 students in each year studied. Analyses span the school years 1995–96 through 2018–19 across the 10,000 schools and 1,000 districts in the state but focus particular attention on the rollout period of LCFF implementation from 2013 through 2019.

This is the first comprehensive study of LCFF impacts on student outcomes across all grades. Results include impacts on math and reading achievement on standardized tests in grades 3–8 and 11, grade repetition, high school graduation rates, college readiness, and suspensions and expulsions. It also investigates which uses of funding are most strongly associated with improved student outcomes.

This analysis resulted in the following five key findings:

1. LCFF improved students’ math and reading achievement. Analyses find positive and significant effects of LCFF-induced increases in per-pupil spending on academic achievement in math and reading in every grade assessed (3rd–8th and 11th) and for every school that experienced this new infusion of state funds, which targeted lower-income districts and students from low-income families. The positive impacts on student achievement increased with school-age years of exposure to the greater funding and with the amount of increased funding that occurred due to LCFF. The results indicate that a $1,000 increase in per-pupil spending experienced for 3 consecutive years led to a full grade-level improvement in both math and reading achievement, relative to what the average student achieved prior to the funding increases.

2. LCFF reduced the probability of grade repetition. LCFF-induced increases in school spending also led to significant reductions in the probability that a student would need to repeat a grade, particularly during elementary school. The results indicate a $1,000 increase in per-pupil spending experienced for 3 consecutive years resulted in a 5 percentage-point reduction in the probability of students experiencing grade repetition by 3rd grade, a corresponding 5.1 percentage-point reduction by 4th grade, and a 5.3 percentage-point reduction in the likelihood of grade repetition by the end of elementary school (5th grade). These grade progression effects were likely enhanced by the coincident introduction of transitional kindergarten over this period.

3. LCFF increased the likelihood of high school graduation and college readiness. Analyses find the increase in school spending subsequently increased the likelihood of graduating from high school and college readiness. Students exposed to LCFF concentration funding displayed an increased likelihood of graduating from high school. For all student groups, a $1,000 increase in the average per-pupil spending experienced throughout one’s high school years (grades 9–12) increased the likelihood of graduating from high school by 8.2 percentage points, on average. The estimated effect is strongest for Black students but is not statistically distinguishable from the large significant effects found for other subgroups.

   In particular, the results indicate that a $1,000 increase in per-pupil spending experienced in 3 consecutive years of high school (grades 9–11) led to a 9.8 percentage-point increase in the likelihood of meeting college readiness standards in math and a 14.7 percentage-point increase in the likelihood of meeting college readiness standards in reading.

4. LCFF decreased suspensions and expulsions. LCFF-induced increases in school spending led to significant reductions in the annual incidence of suspensions and expulsions across all grades (3rd–10th), with effects greater for boys than girls and with larger effects in high school relative to elementary and middle school. In particular, the results indicate, on average, that a $1,000 increase in per-pupil spending experienced for 3 consecutive years was associated with a 5 to 6 percentage-point reduction in the likelihood of being suspended or expelled in a given year of high school for boys and a 3 percentage-point reduction for girls. The impacts for Black students are striking and are the most pronounced. The evidence reveals that, among Black boys, a $1,000 increase in per-pupil spending experienced for 3 consecutive years (grades 8–10) was associated with an 8 percentage-point reduction in the likelihood of suspension or expulsion in high school (10th grade) and a 5 percentage-point reduction in the probability of suspension or expulsion for Black girls.

5. LCFF-induced investments in instructional inputs were associated with improved student achievement. Analyses find that increases in instructional expenditures appear to be the input associated with the largest consistent boost in student performance. The results reveal that roughly 84% of the variation in school spending effectiveness can be explained by the combined funding impacts of class size reductions, teacher salary increases, and reductions in teacher turnover.

The results garnered through this study show meaningful outcomes when sustained, multiyear funding reaches the classroom, particularly in high-need communities. The robustness of the significant positive effects of multiyear per-pupil spending on all student outcomes measured for each grade and subject across different models and subgroups provides compelling causal evidence that the estimated impacts are not driven by any single group of students or districts, nor confined to a single outcome, but rather reflect a general pattern that school spending matters. For student success, instructionally focused dollars matter more than others, and systematic spending practices of school districts can shape student achievement trajectories.

These findings from one of the nation’s largest and most diverse state public education systems may be instructive for other states looking to improve education outcomes. They show that long-term, increased funding matters and can improve student achievement and attainment and increase the benefits of providing additional resources to districts and schools serving high-need students.

School Funding Effectiveness: Evidence From California’s Local Control Funding Formula by Rucker Johnson is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

This research was supported by the William T. Grant Foundation; PACE; and a University of California, Berkeley (UC Berkeley) Population Center pilot grant. Core operating support for LPI is provided by the Heising-Simons Foundation, William and Flora Hewlett Foundation, Raikes Foundation, Sandler 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 our funders.