November 5, 2019

2019-101

The Governor of California

President pro Tempore of the Senate

Speaker of the Assembly

State Capitol

Sacramento, California 95814



Dear Governor and Legislative Leaders:

As directed by the Joint Legislative Audit Committee, my office conducted an audit of the funding that the State provides to school districts under the Local Control Funding Formula (LCFF). Our assessment focused on state and district efforts to implement LCFF, and the following report details the audit’s findings and conclusions. In general, we determined that the State’s approach to LCFF has not ensured that funding is benefiting students as intended.

The State intended for LCFF to provide more local control over the spending of state K–12 funds and to improve educational outcomes among certain student groups. Specifically, in addition to base funding that districts can use for any local educational purpose, LCFF would also provide districts with supplemental and concentration funds based on the proportions of students they serve who are English learners, youth in foster care, and those from households with low incomes (intended student groups).

We are concerned that the State does not explicitly require districts to spend their supplemental and concentration funds on the intended student groups or to track how they spend those funds; therefore, neither state nor local stakeholders have adequate information to assess the impact of those funds on intended student groups. Further compounding the problem, the State adopted regulations that deferred full implementation of the supplemental and concentration funding formulas as part of the transition from the previous funding model to LCFF. Since fiscal year 2013–14, this deferral of full formula implementation has caused the three districts we reviewed to identify approximately $320.6 million as being part of its base funds rather than supplemental and concentration funds. We also had difficulty determining the extent to which the districts used those funds to increase or improve services for intended student groups because of unclear descriptions in their local control and accountability plans.

The State has an opportunity to take steps toward learning more about the effectiveness of billions of dollars that it allocates for K–12 education. By collecting additional information about districts’ uses of supplemental and concentration funds, the State could begin to determine how districts’ spending of those funds affects educational outcomes of intended student groups and whether it needs to take further action to ensure that these students receive the services they need.

Respectfully submitted,



ELAINE M. HOWLE, CPA

California State Auditor

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