Following the money: The interrelationship of revenue, expenditures, equity, and student achievement in California public school districts

The system used to fund California's public schools is deeply flawed. The state revenue limit imposed on school districts, for example, is set much too low to enable them to meet rising world class California Department of Education (CDE) standards for student achievement. National data shows that California is well below the national average in spending per pupil and far below the national average in student academic performance. Some school districts have successfully overcome these revenue restrictions by generating income from local unrestricted sources, including parcel taxes, local community foundations, and lease income from unused property. These local strategies, along with the 6% of school districts that are exempt from the state revenue limit (e.g. basic aid), have created an unequal statewide finance system of "have" and "have not" school districts.;The problem is further compounded by the fact that state imposed revenue limits dating originally from 1972 are not consistent district by district and, thus, are highly unfair. While legislation has gradually narrowed the range of differences in the revenue limits, the remaining gaps still enable many school districts competitive advantages over others even if local sources of revenue are discounted. All of these state and local funding disparities, coupled with the overall low level of funding for all California school districts, raises serious questions regarding the fundamental fairness and adequacy of the California school funding system.;This study examines unrestricted revenue per student across school districts and examines the relationship between these disparities and student academic achievement. The study further investigates how districts budget resources and finds a significant and consistent relationship between unrestricted expenditures for classroom instruction and student achievement.;The investigation was supported by a specially created database, consisting of detailed information on school district revenue and expenditure patterns for 179 elementary and 204 unified school districts that together educate 58.4% of California's K-12 students. The database also included detailed information on the student demographics, teacher preparation, and academic achievement in these districts. Using standard exploratory data analysis methods (i. e. multiple regression analysis, t-tests, outlier analysis, etc.), the study examined the relationship between revenue amounts and sources, resource allocation practices, demographic equity, and student achievement.;The findings supported a positive relationship between the level of unrestricted funding per student and student academic achievement, while finding no relationship when restricted sources of revenue were included. An even stronger statistical relationship was found between the level of unrestricted funding allocated to classroom instruction and student achievement, which was consistent across the various methods of analysis employed. The study also found that there were significant inequalities in the distribution of unrestricted revenue by ethnic group using statewide averages.