- State vs. local funding: Redwood City’s top funding sources for schools are actually local property taxes, which account for about 43 percent of funding. About 41 percent of the district’s funding comes from the state. The remaining funding comes from a diverse stream which includes federal dollars, personal grants/donations and a local parcel tax. In comparison, Menlo Park schools receive about 60 percent and Palo Alto 70 percent from local property taxes. The state only provides Menlo Park with about 12 percent of its funding and Palo Alto about 8 percent.
- Local Control Funding Formula (LCFF): In 2013, California lawmakers passed LCFF, creating a formula for state funding on a per student basis and giving more control to the local districts to make spending decisions. The state gives a base grant for each student determined by average daily attendance. The grant increases for students with special needs. You can see a breakdown of the base grants for the past school year here. The state budget for this school year fully reflects LCFF for the first time, two years ahead of the projected eight-year timeline expected to phase it in. Critics of this model say the freedom that districts receive and the lack of transparency in where the funds are going is actually creating more inequality in schools rather than making up for it as the law intended.
- High property tax districts: In places like Palo Alto and Menlo Park, state funds are used only to make up for what local property taxes don’t cover. A district’s funding is determined by the number of students divided by the local property tax revenue. If the basic funding per student isn’t met, the state makes up for it. While property values have more than doubled in Redwood City, as they have in Menlo Park and Palo Alto, a state law limiting property tax (discussed below) may be part of the reason for lower local contributions to schools, despite rising property values.
- The history of CA school funding and the property tax dilemma: Given the variation in funding based on property taxes, the California Supreme Court ruled in 1971 that the state must equalize school funding across districts. That was followed by the passage in 1978 of Prop. 13, which caps property taxes. This may be one of the biggest limiting factors in school revenue, as property taxes are only paid on the value of the own at the time of purchase. Prop. 98, which barely passed in 1988, guarantees a minimum level of funding for K-12 and community colleges based on the state general fund and local property tax revenue. This law has a reputation for complicating the funding process for schools across the state.
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