School District Revenue and Student Poverty in California: A Decade through the Great Recession and School Finance Reform

California state-level policies are responsible for allocating nearly 80 percent of the revenue received by its K-12 school districts. In 2013–14, the state implemented the Local Control Funding Formula (LCFF), which changed the allocation formula from one based primarily on equal revenue per pupil to an equity-focused allocation based primarily on a district’s share of students in poverty. This paper analyzes the relationship between revenue and poverty before and after the LCFF, focusing separately on state general purpose, state restricted, local, and federal funding. Although some special state revenue programs under the prior system led to an implicit positive relationship between revenue and poverty, the LCFF increased and strengthened that dramatically. Local revenue sources dampen this relationship, whereas federal sources augment it. Regression analyses suggest that prior to LCFF in 2007–08, districts with all students in poverty received $2,622 more per pupil in total than did districts with no students in poverty; after LCFF in 2017–18, high-poverty districts received $3,855 per pupil more in total. This paper also analyzes how high- and low-poverty districts changed their spending patterns over the decade punctuated by LCFF. Although revenue in both types of districts grew, and more so in high-poverty districts, low-poverty districts spent all additional revenue on staff compensation, but high-poverty districts allocated some to non-compensation areas. The more remarkable trend over this decade is the increase in spending on retirement and health benefits, which has the potential to curtail the potential effects of the LCFF.