Kids wearing masks run to recess from inside their school.
(Jason Armond / Los Angeles Times)
K-12 Education

Many small districts complain California shorted their funding during the pandemic

Legislators “express sympathy and agree it is not fair, but all I get is platitudes,” one Santa Cruz County educator said of the predicament that has befallen districts that have served students from urban areas who unexpectedly showed up in their schools.

A year ago, the California Legislature and Gov. Gavin Newsom promised school districts they would be held harmless financially for the 2020-21 school year for a drop in student attendance. Lawmakers recognized the havoc that the COVID-19 pandemic would create in tracking student daily attendance, the basis for their funding, as schools went in and out of distance learning.

As it turned out, though, the state’s hold-harmless policy has ended up harming many primarily small districts that saw unpredictable increases in enrollment last year. The numbers for each district were relatively small — in the dozens in most cases — but the financial impact on them was disproportionately large.

“While the hold harmless (provision) that was enacted was sound policy and protected the vast majority of districts, those that grew were harmed unnecessarily. The state has the resources to rectify this issue, and we ask that you do so,” Tim Taylor, executive director of the Small School Districts Association, wrote in a May 25 letter to Senate and Assembly budget committee leaders. So far, there has been no response and no action, and time could be running out. The Legislature ends its work for the year on Sept. 10.

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The Legislature thought it had solved the problem in June 2020 when, in adopting the 2020-21 state budget, it told districts that if they could prove that they budgeted for growth in enrollment, the state will fund beyond the previous year’s enrollment. And that solved the problem for most growing districts, which could point to building permits and demographic trends.

But that didn’t help small districts like Lucerne Valley Unified, a district with about 890 students in San Bernardino County. It has always budgeted conservatively, as have other small districts, said Superintendent Peter Livingston, and didn’t anticipate what would happen when COVID surged over the summer, and nearly all districts started last fall in distance learning.

“People fled from cities to rural areas when distance work was allowed by their employers. We served these families,” he said. Enrollment grew by 7%, with the equivalent funding for about 50 students, last year. Lucerne was either in hybrid learning or fully open for in-person instruction for most of the year. New families enrolled their children. Over the course of the year, the district hired seven teachers. It lost about $500,000 in uncompensated funding for students — about 3% of its budget, Livingston said.

“I would like to think the Legislature didn’t realize this and would fix it for us with school reopening again,” he said.

In other years, the state would subsequently factor in actual enrollment and attendance at several points during the school year when calculating how much funding is owed. But for 2020-21, for the first time, the state funded the lower of the budgeted enrollment and the actual enrollment.

Asked whether small districts might receive the funding they are asking for, state finance department spokesman H.D. Palmer was not encouraging. He simply repeated existing law: The state budget for 2020-21 does not fund growth “beyond what was anticipated in local budgets adopted by school boards,” he wrote in an email.

But Livingston and other superintendents are frustrated that the state is paying districts for students they didn’t serve while not reimbursing districts for many of those students who showed up in their districts.

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In the case of the 150-student Pacific Elementary School District in Davenport, those extra 20 students came from adjoining Santa Cruz and Bonny Doon school districts. They were drawn to a new, innovative hybrid independent study program that combined three days of in-person learning and two days of remote learning, said superintendent/principal Eric Gross.

The district spent $125,000 adding teachers and paying for materials — all out of reserves, he said.

Legislators he has spoken to “express sympathy and agree it is not fair, but all I get is platitudes,” Gross said.

Jon Ray, superintendent of Weed Union Elementary School District, in Siskiyou County, saw his 270-student district grow by 65 students, which translated to about $625,000 in lost revenue. The district added 3½ teaching positions, six teacher assistants and three custodial positions to make it possible to reopen in a pandemic. Other districts with uncompensated growth include 33 students in Lassen Union High School District and 34 students in Wheatland Union High School District.

Taylor said a rough statewide estimate is that districts were shorted by $225 million. “It could be less than that because some of the districts that experienced growth might have already been approved by the state for additional funding,” he said. Additionally, the enrollment numbers include non-classroom-based charters, which the Legislature excluded from growth funding. The charter schools sued, but a California Superior Court judge recently upheld the Legislature’s decision.

The $216 million reimbursement would amount to less than a third of 1% of the $93 billion that the state will fund schools this year.

For the current 2021-22 school year, the Legislature has again assured school districts that they would not be penalized for a decline in attendance for the third consecutive year. However, districts will resume taking daily attendance as they have for all years but 2020-21. As a result, growing districts should be fully funded on actual numbers.