Equitable State Funding for School Facilities

California’s school buildings require continued investments to meet current and projected need arising from aging school facilities, changes in educational programs, and compliance with federal and state regulations. Evidence suggests that many students in California attend schools that are in substandard condition. In 2018–19, 38 percent of students attended schools that did not meet minimum facility standards, with 15 percent in schools with at least one extreme deficiency such as a gas leak or structural damage. Between 2015–16 and 2018–19, 108 schools across 60 districts had to close temporarily due to poor facility conditions (Gao and Lafortune 2020). About 30 percent of schools were built more than 50 years ago and roughly 10 percent were built more than 70 years ago (Vincent 2012).

Estimates suggest California needs to spend $3.1 to $4.1 billion annually at both state and local levels to maintain school facilities—and more than $100 billion in the coming decade after including modernization and new construction costs (Brunner and Vincent 2018). A recent report by the state auditor estimates that the state will need to provide $7.4 billion in funding to meet existing and anticipated needs over the next five years (California State Auditor 2022).

The COVID-19 pandemic brought additional facility costs: schools need additional resources for construction and renovation projects to improve ventilation and maintain safe operations (Centers for Disease Control and Prevention 2020; California Department of Public Health 2021). So, too, has the implementation of California’s latest initiatives, including expanding transitional kindergarten, community schools, and continued use of technology to support teaching and learning.

The Local Control Funding Formula (LCFF) funds most operational spending, and it is keyed to the shares of low-income students, English Learners, and foster/homeless youth in each district. The majority of capital funding however, comes from local tax revenues, which vary considerably across districts. This raises concerns that differences in local property wealth drive inequities in capital funding across districts. State funding for capital projects has the potential to address disparities in wealth. However, the School Facility Program (SFP)—California’s primary vehicle for funding school facility projects—allocates funds on a first-come, first-served basis. Moreover, SFP funding is generated from general obligation bonds, which must be approved by voters. California voters have approved five bonds to fund the program: Proposition 1A ($6.7 billion) in 1998, Proposition 47 ($11.4 billion) in 2002, Proposition 55 ($10 billion) in 2004, Proposition 1D ($7.3 billion) in 2006, and Proposition 51 ($7 billion) in 2016. In 2020, voters rejected Proposition 13, which would have provided $15 billion funding to the SFP. Two new bonds (Assembly Bill 75 and Senate Bill 22) are now pending in the legislature.

The SFP was established by the Leroy F. Greene School Facilities Act of 1998 to provide matching grants for school districts to acquire school sites, construct new facilities, and modernize existing facilities. New construction grants provide funding on a 50/50 state and local match basis; and modernization grants provide funding on a 60/40 basis. Districts fund their shares primarily through local general obligation bonds and developer fees (levied by school districts on most forms of new development). Districts that cannot cover all or part of their share of costs for an SFP project may also receive financial hardship assistance. Under limited circumstances (such as natural disasters or severe health and safety threats), school districts can get additional state funding through facility hardship grants.

Previous studies of school facility funding have found wide disparities across California districts between 2007 and 2015 (Vincent and Jain 2015; Brunner and Vincent 2018; Brunner, Schwegman, and Vincent 2021). Little is known about how funding is distributed within districts or the extent to which these investments have addressed substandard conditions in many of the state’s K–12 public schools. The differences across districts suggest that distributions under the SFP for the last quarter-century have been regressive with respect to student need, which runs counter to the LCFF’s rationale and approach.