The 2026-27 Budget: K-12 Proposals

analysis full 2026-27 BUDGET The 2026-27 Budget: K-12 Proposals GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2026 SUMMARY This brief provides our assessment and makes recommendations related to nine of the Governor’s K-12 education budget proposals. Below, we provide a summary of our major recommendations. (A figure summarizing our recommendations for all proposals is at the end of this brief.) Community Schools. The Governor’s budget proposes $1 billion ongoing Proposition 98 General Fund to support the community schools model. In addition to providing ongoing funding for about 2,500 schools that have already received one-time community schools funding, about 3,700 new schools would be eligible for funding on an annual basis. Although the community schools model has been shown to have a variety of benefits for students, we have concerns about funding the model at such a large scale and establishing a new ongoing categorical program restricted for specific purposes. For these reasons, we recommend providing one-time funding for additional rounds of community schools implementation grants. If the Legislature is interested in adopting the proposal as ongoing, we recommend several modifications to the Governor’s proposal. Expanded Learning Opportunities Program. The Governor proposes $62.4 million ongoing Proposition 98 General Fund to set a minimum “Tier 2” rate at $1,800 per English learner or low-income student, more than $200 higher than the 2024-25 and 2025-26 rates. If funds within the program are available, the rate could exceed $1,800. Although setting a minimum Tier 2 rate would eliminate much of the uncertainty districts face, allowing the rate to fluctuate above that level would provide increases that are not tied to program costs. In addition, we see no clear rationale for increasing the Tier 2 rate above the current levels. We recommend establishing a fixed Tier 2 rate at current Tier 2 levels. Necessary Small Schools. The Governor’s budget proposes $30.7 million ongoing Proposition 98 General Fund to apply a 20 percent increase for necessary small schools—additional funding provided for geographically isolated schools. The Governor’s proposal has some merit given it would target districts that likely face greater cost pressures from operating very small schools in geographically isolated parts of the state. However, the proposed 20 percent increase is not aligned with any particular assessment of cost and results in a significant difference in per-student funding rates between schools above or below the upper thresholds of eligibility. If the Legislature is interested in adopting the proposal, it could consider providing a different level of funding based on its priorities. We also recommend modifying the proposal to avoid large differences in funding above and below the eligibility thresholds. Differentiated Assistance. Under current law, local education agencies are identified for additional support, known as differentiated assistance, based on certain performance criteria. The Governor proposes an additional $13 million ongoing Proposition 98 General Fund to adopt a new formula for differentiated assistance and expand the intended use of these funds. The Governor also proposes changes to the timing and frequency of differentiated assistance. These changes are premature given they are intended to align with forthcoming updates to the performance criteria that must be adopted by July 15, 2026. We recommend rejecting these proposals, as they need to be evaluated in tandem with the updated performance criteria. www.lao.ca.gov 1 analysis full 2026-27 BUDGET OVERVIEW Budget Contains Nearly $9.7 Billion in possibility by being cautious about new spending New K-12 Education Spending Proposals. commitments; building reserves and other tools to Proposition 98 (1988) establishes a minimum protect existing school programs; and identifying funding requirement for schools and community proposals it would be willing to delay, reduce, or colleges, commonly known as the minimum reject if a decline occurs. We also recommend the guarantee. The administration estimates that the Legislature set aside a significant portion of the new guarantee has increased by nearly $21.7 billion funding available in 2026-27 for one-time activities compared with the June 2025 budget level. About rather than ongoing increases. Taking these steps half of this increase is attributable to 2026-27, would help the Legislature protect its core priorities with smaller portions attributable to 2024-25 and and maintain its chosen spending level over time. 2025-26. The increase is primarily due to the Previous Brief Analyzed a Few Major K-12 administration’s higher General Fund revenue Proposals. In addition to analyzing the broader estimates. As Figure 1 shows, the Governor’s school spending plan, our previous brief also budget allocates $9.7 billion of the increase for new school spending— Figure 1 more than $5.9 billion for one-time Governor’s Budget Has $9.7 Billion in School activities and $3.7 billion for Spending Proposals ongoing augmentations. (The rest of the increase—$12 billion—is (In Millions) unavailable for several reasons, including the Governor’s proposal Ongoing Local Control Funding Formula COLA (2.41 percent) $1,893 to delay some of the associated Community schools 1,000 funding and deposits into the Special Education 509 Proposition 98 Reserve.) COLA for select categorical programs (2.41 percent)a 230 Recommend the Legislature Expanded Learning Opportunities Program 62 Necessary Small Schools 31 Build the School Budget COE funding to support districts and charter schools 13 Cautiously. In an earlier brief, The Charter School Facility Grant Program 7 2026-27 Budget: Proposition 98 FCMAT salary adjustment 1 California School Information Services 1 Guarantee and K-12 Spending Science performance tasks 1b Plan, we analyzed the overall K-12 High Speed Network 1 structure of the Governor’s plan Subtotal ($3,749) and provided our assessment One Time and recommendations. In that Discretionary block grant $2,796 Deferral paydown 1,875 brief, we highlight that the Learning Recovery Emergency Block Grant 757 Governor’s budget is based on Teacher Residency Grant Program 250 revenue estimates that do not Dual enrollment 100 account for the current elevated Kitchen infrastructure and training 100 Reading difficulties screening 40 risk of a stock market downturn. Wildfire-related support for schools 23 A significant downturn could Subtotal ($5,941) reduce state revenues by tens Total Proposals $9,690 of billions of dollars, and the a Applies to Special Education, State Preschool, Child Nutrition, Equity Multiplier, K-12 Mandates Proposition 98 guarantee would Block Grant, Charter School Facility Grant Program, Foster Youth Services Coordinating Program, Adults in Correctional Facilities, American Indian Education Centers, Child and Adult Care Food decline about 40 cents for each $1 Program, and American Indian Early Childhood Education. b Reflects $890,000 ongoing, beginning in 2025-26. of lower revenue. We recommend COLA = cost-of-living adjustment; COE = county office of education; and FCMAT = Fiscal Crisis the Legislature prepare for this Management Assistance Team. 2 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET provided our assessment and recommendations for ($757 million). These proposals are reasonable a few major proposals. We recommend prioritizing approaches to address district costs and ease the proposed statutory cost-of-living adjustment future budget pressures for schools and the state. (COLA) over other ongoing spending and funding Regarding the discretionary block grant, the the statutory COLA rate unless revenue estimates Legislature could provide a different level of funding decline significantly by May, as these funds would based on revised estimates of the guarantee. help districts address the cost increases they face. This Brief Analyzes Other K-12 Proposals. In addition, we recommend the Legislature adopt In this brief, we provide our analysis and the administration’s proposed increase for special recommendations related to nine other K-12 education to address statewide increases in special proposals—five proposals for additional ongoing education costs. (However, we recommend using funding and four one-time proposals. (We a lower estimate of costs.) We also recommend have no major concerns with the remaining the Legislature adopt the Governor’s three major spending proposals.) A figure summarizing our one-time proposals: funding the discretionary block recommendations is at the end of this brief. On the grant ($2.8 billion), eliminating the existing payment “EdBudget” section of our website, we also post deferrals ($1.9 billion), and restoring funding for numerous tables with additional budget information. the Learning Recovery Emergency Block Grant COMMUNITY SCHOOLS BACKGROUND State Has Provided $4.1 Billion in One-Time Funding for Implementation of Community Community Schools Model Is a Strategy Schools Model. Since 2021-22, the state has for Improving Student Outcomes and Well provided $4.1 billion in one-time Proposition 98 Being. The community schools model is intended General Fund for the California Community Schools to improve student outcomes by addressing Partnership Program (CCSPP), a competitive many of the factors outside of the classroom that grant program that supports the establishment can have impacts on student engagement and and expansion of the community schools model. learning. Compared to traditional public schools, Out of the $4.1 billion provided, the state set aside community schools are more likely to proactively $3.9 billion for schools to plan and implement communicate with families and create opportunities the community schools model (Figure 2 on the for feedback, which can help schools better next page). To receive funding, local education understand the academic and socioemotional agencies (LEAs)—school districts, county offices needs of their students. In addition, community of education (COEs), and charter schools—applied schools engage with other community-based for funding on behalf of eligible school sites. organizations and public agencies to identify LEAs are able to retain the lesser of $500,000 or services available to support students. The specific 10 percent of their total allocation to build capacity programs and changes that schools make as a for supporting community schools across the LEA. result of implementing the model vary depending The state also set aside $282 million for support on the needs of students and resources available and technical assistance. This included $140 million in the local community. For example, schools that to provide grants up to $500,000 annually for COEs identify high levels of anxiety among their student to support the coordination of services across population may partner with a county agency or a grantees within their county, as well as $142 million local community organization to provide counseling for a statewide system of technical assistance. services for students at the school site. Schools Under current law, all CCSPP funds are to be often rely on a coordinator that leads the efforts to allocated by 2031-32. implement the community schools model. www.lao.ca.gov 3 analysis full 2026-27 BUDGET Figure 2 Community School Grant Types (In Millions) Total Grant Type Purpose Annual Grant Allocation Planning For schools to develop plans for Up to $200,000 for two years. $83 implementing the community schools model. Implementation For new and existing community schools to Up to $500,000 for five years. 3,299a implement the community schools model. Extension To extend implementation for two years, Up to $100,000 for two years. 485 beginning in 2027-28. Total $3,867 a Includes $204 million initially set aside for planning grants that were used for implementation grants. State’s System of Technical Assistance summer programs. Additionally, the framework Includes Nine COEs. The state’s system of specifies key roles that LEAs and the state have technical assistance is composed of a lead in supporting the community schools model. technical assistance center, known as the State For example, the framework specifies that LEAs Transformational Assistance Center (S-TAC), and have a key role in developing partnerships eight Regional Technical Assistance Centers with external organizations on behalf of their (R-TACs). The S-TAC is currently led by the school sites and building systems to support Sacramento COE, in partnership with the University continuous improvement of the community schools of California, Los Angeles Center for Community model. The framework also includes four best Schooling; Californians for Justice; and the practices associated with successful community National Education Association. The eight R-TACs schools implementation: consist of the COEs from Fresno, Los Angeles, • Community Asset Mapping and Gap Monterey, Sacramento, San Bernardino, San Analysis. Engaging with school and Diego, Santa Clara, and Shasta. R-TACs are tasked community members to identify existing with providing a variety of supports to community gaps in program services and resources, schools, including professional development, and engaging with educational partners models of practice, coaching, and related supports to identify programs, services, or other for implementing the community schools model. resources within the local community that can The S-TAC and R-TAC work closely with the support students. California Department of Education (CDE) for • Community Schools Coordinator. Having implementation and evaluation of the program. a coordinator that is responsible for overall State Adopted a Community Schools implementation of the community schools Framework in 2022. To support implementation, model at the school site. the state adopted a Community Schools • School-Based and LEA-Based Advisory Framework in 2022 that outlines various aspects Councils. Designing shared decision-making of the community schools model. For example, it models at the school site and at the LEA specifies the community schools model has four that engage students, staff, families, and pillars consistent with research: (1) integrated community members. student support, such as on-site mental and • Integrating and Aligning With Other physical health care; (2) family and community Relevant Programs. Ensuring schools engagement; (3) collaborative leadership and provide services that align with and can help practice; and (4) extended learning time and coordinate and extend state, school, and opportunities, such as after school care and district initiatives 4 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Roughly 2,500 Schools Have Received Grantees Have Several Reporting Funding Across Four Cohorts. To date, the state Requirements. As part of the competitive grant has awarded implementation grants to about process, applicants are required to submit a variety 2,500 schools across roughly 560 school districts, of information, including an implementation plan, a COEs, and charter schools. LEAs were eligible proposed budget for how funds will be used, and to apply for schools that have either (1) a student various supplemental information demonstrating body where 50 percent or more of their enrolled alignment with the community schools model students are English learners, low income, or foster (such as evidence of having conducted a youth (EL/LI), or (2) higher than the state average community asset mapping and needs assessment, rate of any of the following: dropouts, suspensions a shared decision-making council, and having and expulsions, child homelessness, foster youth, agreements with external service providers). or justice-involved youth. Statute gives priority to Additionally, applicants must submit detailed schools with an EL/LI percentage of more than data regarding student outcomes (such as school 80 percent. As Figure 3 shows, the funding was attendance rates, test scores, and suspension awarded across four cohorts of grantees, from rates), disaggregated by student subgroup. As a 2022-23 through 2025-26. Grantees receive funding condition of receiving CCSPP funding, grantees annually for a five-year period. Implementation grant are required to publicly present information on amounts range from $75,000 to $500,000 annually their community school plans at school site and based on school size. Grantees can use funding local governing board meetings, as well as post for a variety of purposes, including for coordination information on their websites. The state requires of services (such as hiring a community schools annual updates as described below. coordinator), providing direct services to students and families, and providing training and support to staff on how to align services with the Figure 3 community schools framework. At the State Has Funded Four Rounds of CCSPP Implementation Grants end of the five-year Implementation Grant Duration by Cohort implementation period, schools could 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 apply to receive Cohort 1 • 76 LEAs extension grants of • 458 Schools Implementation Grant up to $100,000 for • $626 Million Extension Grant an additional two Cohort 2 years. Cohort 1 will • 128 LEAs be in the final year of • 570 Schools Implementation Grant • $751 Million Extension Grant the implementation grant period in Cohort 3 2026-27, and can • 288 LEAs • 998 Schools Implementation Grant apply for extension • $1.3 Billion Extension Grant grants for 2027-28 and 2028-29. CCSPP Cohort 4 • 126 LEAs is set to sunset at • 469 Schools Implementation Grant the end of 2031-32 • $633 Million Extension Grant when Cohort 4 will be at the end of the Note: Several LEAs were awarded grants for their schoolsites in more than one round. CCSPP = California Community Schools Partnership Program and LEA = local education agency. two-year extension grant period. www.lao.ca.gov 5 analysis full 2026-27 BUDGET • Annual Expenditure Reports. School sites To date, CDE has submitted three reports to the are required to develop plans for how they Legislature. These reports provided summaries will spend community schools funding. of CCSPP implementation, including trends in This information is aggregated at the LEA student outcomes and system-level implementation level, and the LEA must also document how patterns based on data submitted in annual it used any community schools funding for progress reports and expenditure plans. administrative costs. • Implementation Plan Updates. As part GOVERNOR’S PROPOSAL of the initial application, each school must Provides $1 Billion Ongoing Funding for have a plan for how they will implement the Community Schools. The Governor’s budget community schools model in alignment with provides $1 billion ongoing Proposition 98 General all of the key aspects of the state’s community Fund for a new program to support the community schools framework. They must include school schools model. To be eligible to receive funding, goals, activities to achieve these goals, and schools must (1) enroll more than ten students, how progress on goals will be measured. (2) have a student body where 65 percent or more The plans also must specify how a community of their enrolled students are EL/LI, and (3) must school coordinator will work on executing the not be a nonclassroom-based charter school. community schools model. Each year, the In addition, current CCSPP grantees that do not implementation plan is updated based on any meet these criteria would be eligible. Annual changes in goals or services provided. grant amounts vary depending on school size • Annual Progress Reports. Grantees are and range from $75,000 to $400,000 (Figure 4). required to submit student outcome data on The administration estimates that, in addition an annual basis for evaluating progress made to schools that have already received one-time toward improving student outcomes and community schools funding, about 3,700 new other goals set in the original implementation schools would be eligible for funding. Initially, plan. These reports provide an opportunity ongoing funding for current community school for the school to assess the effectiveness grantees would be reduced by the amount of of the services and supports that are one-time funding they are currently receiving. being implemented. Beginning in 2027-28, the $1 billion ongoing • Sustainability Plans. Beginning in year two of allocation would receive an annual cost-of-living the implementation grant cycle, grantees are adjustment (COLA). required to submit plans annually on how they Schools Must Opt Into Funding. To receive will sustain the community schools model. funding in 2026-27, LEAs with eligible schools This includes how practices will be sustained are required to notify CDE by November 1, 2026 (such as partnerships and shared leadership that they intend to receive funding. As with the and decision-making structures), how student one-time grants, LEAs would be allowed to keep supports will be sustained, and potential the lesser of $500,000 or 10 percent of the total funding sources that could be leveraged when grant funding expires. Figure 4 At the end of the implementation grant period, Proposed Grant Amounts Vary by grantees are required to provide CDE with a School Size comprehensive report showing expenditure data and progress on meeting specified goals. Enrollment Annual Grant State Requires Annual Formative Evaluations 10–24 $75,000 of CCSPP. Statute requires CDE to submit 25–150 115,000 151–400 190,000 annual formative evaluations of CCSPP beginning 401–1,000 230,000 December 31, 2023, and to submit a final 1,001–2,000 305,000 comprehensive report by December 31, 2031. 2,001 or more 400,000 6 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET allocation for their eligible community schools to Frees Up Current Funding for Extension support coordination activities across school sites. Grants. Trailer legislation proposes to free up the For LEAs with eligible school sites that do not opt $485 million allocated in prior budgets that is set in by November 1, 2026, trailer legislation specifies aside for the two-year extension grants. Current that LEAs will have the opportunity to submit a community schools grantees would no longer be request to be considered for funding during regular required to submit requests for extensions. Instead, intervals. CDE, in collaboration with the S-TAC and they would begin receiving ongoing funding at the R-TACs, would determine the deadlines and timing new proposed rates after their implementation of the intervals for subsequent requests for funding. period is over. Trailer legislation specifies that this Provides $10 Million Annually for Statewide freed up funding could be used to provide grants System of Technical Assistance. The Governor’s to new community schools. The administration proposal would set aside $10 million of the indicates it plans to modify this part of the proposal $1 billion for technical assistance centers, including in the May Revision and may allow funds to be $2 million for the S-TAC. Trailer legislation provides used for a broader set of activities related to CDE discretion to determine contract terms, community schools. including duration, for each technical assistance center, subject to approval by the State Board of ASSESSMENT Education. The administration has indicated their Effects of Community Schools Model intent is that any current S-TAC or R-TAC that applies and receives funding would receive this Research Finds Benefits to Community funding in addition to their contracted amounts from Schools Model. Several formal evaluations of one-time community schools funding. community schools nationally tend to find positive results for student and school outcomes, such as Requirements for New Grantees Begin higher attendance and graduation rates, narrower in 2029-30. LEAs receiving funding would be academic achievement gaps as measured by required to annually report and publicly present standardized tests, and decreases in instances their community school plans. For new community of disciplinary incidents. Consistent with the schools grantees, the administration indicates previous studies, the Learning Policy Institute annual reporting requirements would begin in recently released a report assessing student 2029-30, when they will be required to submit outcomes of Cohort 1 of community schools an implementation plan by December 31, 2029. grantees. The report found that schools in this Current implementation grantees would satisfy their initial cohort showed gains in student outcomes, reporting requirement through their annual progress particularly in reduced chronic absenteeism rates reports under the existing one-time program. In and suspension rates, compared with similar addition, current and future grant recipients would schools that did not receive funding. For example, be required to submit an annual self-certification the evaluation found that Cohort 1 grantees beginning in 2029-30, indicating they are continuing declines in chronic absenteeism rates that were to implement the community schools model in 30 percent (about 1.5 percentage points) greater alignment with the state’s community schools than the declines for similar schools that did not framework. The self-certification is to be developed receive community schools funding. Additionally, by the S-TAC. suspension rates for Cohort 1 grantees declined Establishes an Accreditation Process by 15 percent more (0.52 percentage points) Beginning in 2033-34. Beginning in 2033-34, than similar schools. The improvement in student schools receiving community schools funding must outcomes was reported across student subgroups, successfully complete an accreditation process however, the improvements were shown to be most every seven years. The accreditation process would significant for Black students, English learners, and be managed by the technical assistance centers socioeconomically disadvantaged students. and CDE. www.lao.ca.gov 7 analysis full 2026-27 BUDGET Unclear if Future Cohorts Would Have In addition, grantees have leveraged multiple Similarly Strong Gains. The preliminary results funding sources (such as expanded learning funds, suggest implementation of the model has had federal funding, and Medi-Cal reimbursements) positive outcomes for students. However, it is not to provide more wraparound services, such as clear if the state should expect to see similarly behavioral health and counseling, academic strong gains for subsequent cohorts. Cohort 1 grant supports, and nutritional services. Additional recipients may have been more likely to have services are sometimes supported by district experience with the community schools model general purpose funds or through community than those in subsequent cohorts, and therefore partnerships. Some schools also reported making may have been better positioned to successfully changes in their curriculum so that instruction implement the model. For example, they may have better reflects the culture, experiences, and been using the funds to expand programming in interests of students. an existing community school or part of an LEA Model Can Be Challenging to Initiate and that was expanding the community schools model Sustain. Although adopting a community schools to new school sites. Eligible LEAs that had less model can lead to improved outcomes, particularly experience may have opted to instead to apply for for disadvantaged students with the greatest planning grants, or to apply in subsequent rounds needs, successful adoption requires fundamental of funding. The state will have more information changes that can be complicated for LEAs to available regarding the effects of implementing the implement. School staff often do not have the model as data become available for future cohorts. skills or experience to implement key aspects of Many Schools Report Key Changes in the community schools model, such as improving Practices. Information gathered by CDE from community engagement and building partnerships annual progress reports demonstrate that many with other local organizations. For example, the schools in the first cohort of grantees made key 2025 annual formative evaluation cites the lack of changes through implementing the community staff training as a key challenge to implementing schools model. One key change cited by many the community schools model. It also cited several schools was increased collaborative leadership other challenges, including organizational silos and practices. For example, many schools within the LEA and resistance among staff to reported increased engagement from students, changing long-held processes and procedures. families, and school staff as a result of seeking Another key challenge reported was limited ongoing more feedback from families and community resources. Community schools typically require a partners. Schools reported they made changes variety of longer-term funding streams to expand in their practices to respond to this feedback. the services provided to students and families. Many schools also have reported establishing LEAs can generate additional funding by building shared leadership structures so that decisions the capacity to be reimbursed for certain health can be made with input from administrators, staff, and behavioral health services (funded by Medi-Cal students, parents, and community partners. These or private insurance), or by seeking philanthropic changes helped inform the community schools funds. These funds, however, typically are not implementation plan. Another key change was sufficient to sustain all of the LEA’s community better integration of supports and services through schools activities. LEAs also may need to redirect various funding streams and programs. Having existing funding, such as Local Control Funding more frequent communication among school staff Formula (LCFF) or expanded learning funds, for and with community partners can help schools activities that can be integrated with community to more effectively use their existing resources. schools grants. For example, improved coordination between State Has Robust System of Technical instruction during the school day and after school Assistance. Given that implementing the programs can help schools more effectively community schools model can be challenging, support student academic success and well-being. the state set aside a substantial portion of 8 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET funding for technical assistance. The state has a districts have constrained budgets and need comprehensive approach to monitoring progress to reduce programs, this may result in LEAs and support schools statewide. At the state-level, prioritizing community schools spending the S-TAC and CDE develop frameworks and and making reductions in other areas (such implementation rubrics to support implementation as math tutoring), even if they believe these and capacity building. Additionally, the S-TAC and other activities would be more beneficial CDE help construct data systems to help LEAs with for students. the collection and analysis of data for monitoring • Presumes Best Practices Can Be Scaled. progress and continuous improvement. The R-TACs Many categorical programs were created have provided a wide range of technical assistance to encourage statewide adoption of best to schools, including assisting in conducting asset practices found to be effective. However, mapping and community needs assessments and implementing best practices does not offering communities of practice, where groups necessarily result in the same type of strong of schools implementing the model can share improvements when scaled at a state best practices. R-TACs also support LEAs in level. In some cases, LEAs do not have the building capacity in a variety of areas that support expertise to effectively implement these best implementation of the community schools model, practices, and the state does not have the such as making governance changes, developing capacity or expertise to support schools to external partnerships, collaborating with other ensure effective implementation. In addition, public agencies, and identifying ongoing funding state-required activities may be seen with streams to sustain the model. skepticism and may not have sufficient local buy-in for the practices to be implemented Establishing a New effectively. In the case of the Governor’s Ongoing Categorial Program proposal, many of the 3,700 newly eligible Disadvantages to Creating a New Ongoing schools may not have the expertise or local Categorical Program. In 2013, the state created buy-in to effectively implement the community LCFF and eliminated dozens of programs that schools model and, as we discuss later, the provided funding for restricted or targeted state may not have the capacity to provide purposes, also known as categorical programs. support to such a large number of schools. These changes were made with the goal of Despite these challenges, however, many streamlining state funding and providing funding schools are likely to opt into the program to more equitably across LEAs. In addition, these maximize the amount of funding they receive changes were intended to give LEAs more from the state, particularly since schools have discretion over spending decisions, recognizing no requirements as a condition of receiving that local decision makers are better positioned to the funding until 2029-30. understand the specific needs of their students. • More Administratively Burdensome. Although categorical programs are typically created Categorical programs typically have greater to support activities that the state determines to be administrative burden because school a high priority, they have some key drawbacks in staff must comply with additional reporting comparison to LCFF: requirements and become familiar with the • Less Flexibility. Categorical programs program rules. In the case of this proposal, typically come with new spending LEAs would be required to comply with requirements that limit an LEA’s flexibility annual reporting requirements and meet the in deciding how to best use its funding. necessary requirements for accreditation. In the case of this proposal, school districts • Can Result in Similar LEAs Being Treated must implement the community schools Differently. Prior to LCFF, the allocation framework and maintain accreditation or risk formulas for numerous programs were based losing funding. During times when school on historical factors that no longer had www.lao.ca.gov 9 analysis full 2026-27 BUDGET relevance. Over time, this led to variation in support other key efforts, such as identifying other funding across districts with no underlying sources of funding that can sustain the model. rationale. The Governor’s proposal uses Providing ongoing funding may dampen efforts for clear objective criteria to determine eligibility LEAs to build this strong local buy-in. In addition, (a school’s EL/LI percentage). However, the some schools that would receive funding under the Governor’s proposal allows recipients of Governor’s proposal may have been able to sustain one-time community schools funding to be their programs without new ongoing funding. eligible for ongoing funding, even if they do not Design and Scope of meet the other eligibility criteria. This element of the proposal would result in similar schools Proposed New Program being treated differently by the program. New Grantees Would Have Few Requirements Until 2029-30. Under the state’s one-time In our view, unless the state has a compelling community schools grants, applicants were reason to the contrary, the state should allocate required to submit implementation plans and ongoing funding through LCFF so that LEAs have provide supporting materials demonstrating a greater flexibility to allocate their funding to address commitment to the community schools framework. their student needs. Those that received grants are required to comply Additional Ongoing Spending Can Create with a variety of annual reporting requirements. In Fiscal Pressure for State. As we discuss in the contrast, under the Governor’s proposal for ongoing “Overview” section of this report, we recommend funding, new recipients would have no substantive the Legislature be cautious about new spending requirements until 2029-30—three years after commitments in order to provide a cushion in case initially receiving funding. (The only requirement the state faces a decline in revenues. By creating a would be to notify CDE by November 1, 2026 new $1 billion ongoing program that would increase that they intend to receive funding.) Based on annually by the COLA, the Governor’s proposal our conversations with individuals involved with would somewhat increase the likelihood that the implementing the community schools model, the state may not be able to fund its K-12 commitments requirements for one-time grantees helped LEAs if the state were to experience a revenue downturn. begin to identify their community needs, identify Community Schools Funding Was Expected key challenges, and access support from COEs to Be Temporary. The state provided CCSPP and R-TACs when needed. Without any specific grants with the expectation that the grants planning expectations for the first three years of would serve as start-up funding to implement funding, new grantees may not be as successful in the community schools model. Grantees were establishing their programs as prior recipients. expected to identify ongoing funding streams— Unclear How Frequently Schools Would either existing school funds, such as LCFF, or new Be Able to Opt Into Program in Future. Under revenue streams—that could be used to sustain the Governor’s proposal, LEAs must decide by the community schools model after one-time November 1, 2026 if they want to participate in the grant funds expire. Additionally, each cohort program for 2026-27. Those that choose not to receives a lower grant amount in their fifth year of participate could opt into the program in the future, implementation to encourage grantees to begin at “regular intervals” determined by CDE and the relying on other funding sources to sustain their technical assistance centers. This lack of detail programs. The phasing out of targeted funding creates significant uncertainty for LEAs, particularly also provides LEAs with an opportunity to build for those that may want to stagger implementation strong local buy-in to help ensure their community of the community schools model at their eligible will support the model over the long run. (In some school sites. The lack of clarity could encourage cases, LEAs may decide the model was not a LEAs to opt into the program right away, even if good fit for their specific schools.) Building this they are not prepared to begin implementing the local buy-in is important for the long-term success model. Moreover, if the state does not allow LEAs to of the community schools model and can help 10 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET opt in for many years, some eligible schools may be less than $1 billion because many of the current locked out of the program for a long period of time. grantees still have one-time implementation Significant Influx of New Grantees Raises funds available from prior-year allocations. Trailer Concerns With Capacity for Support. Through legislation allows any unallocated funding to be CCSPP, the state’s system of technical assistance rolled over across fiscal years, which will likely has provided support to about 2,500 schools result in hundreds of millions of dollars of surplus over four cohorts. The Governor’s proposal would funding being available for the program in the initial essentially create a fifth cohort of grantees that years. In addition, the $485 million freed up from could be as large as 3,700 schools in 2026-27. This the set-aside for extension grants will result in would be more than triple the number of grantees additional funding that could be used for a one-time than in any of the previous cohorts. Many of these purpose. However, as current community schools grantees also would be less familiar with the grantees exhaust their available one-time funds, community models model and may not have begun ongoing costs would begin to increase. By 2030-31, the planning process. With such a large increase when all current grantees would have exhausted in new grantees, we think it is unlikely the state’s their one-time funding, assuming community school system of technical assistance would have the grant rates receive COLA, we estimate ongoing capacity to fully support the new grantees. costs for funding all eligible schools would be a few hundred million dollars higher than the funding Proposed Accreditation Process Lacks provided under the proposal. Detail. Under the Governor’s proposal, the state’s main tool for ensuring community school funds RECOMMENDATIONS are spent effectively is through an accreditation process. This approach could have some benefits. Recommend Continuing With One-Time An accreditation process could be designed to Funding Approach. Although the community focus on implementation practices, rather than schools model has been shown to have a variety more bureaucratic compliance reporting. Making of benefits for students, we have concerns about funding contingent on accreditation also could funding the model at such a large scale. The model create a strong incentive for schools to effectively can be challenging to implement and requires implement the community schools model. strong local support to be successful. In addition, The administration’s proposed trailer legislation, we have broader concerns about establishing a new however, has little detail regarding the accreditation ongoing categorical program restricted for specific process or how the process will be determined. purposes. For these reasons, we recommend the Broad discretion is given to the S-TAC, R-TACs, Legislature continue funding community schools and CDE to develop the accreditation process, implementation with one-time grants. This would with no time line for when the process must be allow additional schools to receive start-up funding adopted and shared with LEAs. The proposal also from the state to implement the community schools does not specify how costs for accreditation would model, while leaving the decisions about whether be covered. Without such detail, it is not possible to provide ongoing financial support for sustaining to determine whether this would be an effective the model to LEAs if they find there are adequate approach for ensuring accountability or whether benefits for their students. The Legislature could the funding available is sufficient to cover the provide the $1 billion in 2026-27 as one-time associated costs. funding for additional rounds of community schools $1 Billion Is More Than Necessary Initially, implementation grants under the current CCSPP but May Not Be Sufficient Over Long Term. application and reporting requirements. Based The administration estimates the cost of providing on the awards granted to date through CCSPP, grants to new community schools would be we estimate the state could support roughly $800 million initially, assuming every eligible school 700 additional schools with this amount. The state receives funding in the budget year. During the first likely would see demand from schools for additional few years of implementation, the cost would be one-time funding. According to CDE, 238 LEAs www.lao.ca.gov 11 analysis full 2026-27 BUDGET applied for funding from Cohort 4 and passed earlier in the process. After implementation the initial application screening, but were not of the accreditation process, some CCSPP awarded grants due to limited funds. Continuing requirements—such as expenditure reports with the state’s one-time funding approach would and sustainability plans—may become give the state more control over the number of duplicative or unnecessary. new grantees, which would help ensure sufficient • Phase in Eligibility Over Time. To ensure capacity exists to support schools implementing the state has capacity to support new the model. This approach would also avoid some of community schools, we recommend initially the pitfalls of creating a new ongoing program. targeting a narrower scope of schools and Consider Funding Technical Assistance then expanding eligibility over multiple years. Over Longer Period. Under the state’s one-time For example, the state could begin by only funding approach, technical assistance funding allowing schools with an EL/LI percentage is available over the same period that schools that is 85 percent or greater to be eligible receive grants for implementation. Given the in 2026-27, then expand to all schools with importance of technical assistance in implementing 65 percent EL/LI or higher over multiple years. the community schools model, the Legislature This would allow for smaller cohorts and may want to consider funding technical assistance more time for the state to absorb the influx of over a longer period of time, so that LEAs have new grantees. access to support in future years. For example, the • Set Clear Guidelines for When Eligible state could set aside additional funding to support Schools Can Opt in Moving Forward. For schools beyond the initial implementation period. schools that choose not to initially opt into Moving forward, the state could consider whether it the program, we recommend specifying the may be reasonable to provide ongoing funding for interval in which they could begin participating this purpose and integrate these activities into the in the program (currently not defined in the broader state system of support that funds regional Governor’s proposal). We think allowing support through COEs and establishes leads for schools to opt in on an annual basis is certain issues, such as addressing achievement reasonable, as it would ensure that schools gaps and improving literacy instruction. This would do not opt in just to avoid potentially being provide a baseline level of support for community locked out of the program for a long period schools implementation in the longer term, even if of time. In addition, clear expectations the state does not provide funding for community would help LEAs develop multiyear plans to schools annually. expand the community schools model in their If Providing Ongoing Funding, Recommend eligible schools. Several Modifications to Proposal. If the • Begin Accreditation Process Earlier for Legislature is interested in providing ongoing Current Grantees. To make implementation funding for community schools, we recommend of accreditation more manageable for the Legislature make several modifications to the the state, we recommend staggering the Governor’s proposal. accreditation process based on when • Prior to Accreditation Process, Align schools initially received community schools Requirements for New Grantees With funding. For example, the Legislature could Current CCSPP Guidelines. While the state begin the accreditation process for the is developing the accreditation process for first cohort of grantees in 2029-30—seven community schools, we recommend setting years after receiving their initial CCSPP annual planning and reporting requirements grants. This would provide all schools with for LEAs, consistent with the current the same amount of time to establish their requirements for CCSPP Cohort 4. This would programs before having to meet accreditation encourage schools receiving funding to begin requirements. Starting the process earlier with planning and accessing technical support more experienced schools also would give the 12 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET state time to apply the accreditation standards understanding of what they must do to meet to a smaller cohort of schools and determine if accreditation standards. changes are needed. • Assess Funding Level for Technical • Set More Specific Time Lines Around Assistance Centers. The Legislature may Accreditation Process. In addition to want to assess whether the proposed funding setting an earlier date for when accreditation level for technical assistance is sufficient given would begin, we recommend establishing the increased number of schools that will be time lines for key milestones associated supported on an ongoing basis. The specific with the development of the accreditation level of funding would depend on several process. We recommend the Legislature factors, including the number of new schools require CDE and the S-TAC to submit a expected to receive funding annually and the status update on the accreditation process amount of support R-TACs and the S-TAC are that includes draft guidelines and estimated expected to provide to new grantees. costs. We also recommend the Legislature • Require Unspent Funding to Revert Back require adoption of the accreditation process to the State. We recommend requiring several months before schools begin going unallocated funding from community schools through accreditation. For example, the grants to revert back to the state at the end Legislature could require a status update of each fiscal year. We also recommend by January 2028 and adoption of the reverting the $485 million currently set aside process by January 2029, with the goal of for extension grants. This would provide the beginning accreditation activities in 2029-30. Legislature an opportunity to determine— Receiving a status update would give the through the annual budget process—how Legislature an opportunity to determine these excess funds can be allocated to best whether the proposed guidelines provide achieve the state’s educational goals. If the sufficient accountability for schools and Legislature finds that additional one-time whether existing funding is sufficient to funding to support community schools is a support accreditation costs. This also high priority at that time, it could provide a would allow schools to develop a better specific appropriation accordingly. EXPANDED LEARNING OPPORTUNITIES PROGRAM Background through 2025-26. This program now represents the vast majority of funding schools receive for State Has Three Expanded Learning expanded learning (Figure 5 on the next page). Programs. The state has three expanded learning programs that provide students with academic ELOP Funds Allocated Through a Two-Tiered and enrichment activities outside of normal Funding Structure. As Figure 6 on the next school hours. Two of these programs, the After page shows, the ELOP implementing legislation School Education and Safety (ASES) program established two funding rates that account for TK-6 and 21st Century Community Learning Centers attendance and vary based on the proportion of a (21st Century program), are longstanding. In 2002, school district or charter school’s students who are voters approved Proposition 49, which requires English learners or from low-income families (EL/LI). the state to provide at least $550 million annually (Throughout this section, we use the term “districts” to the ASES program. The 21st Century program to refer to school districts and charter schools.) is primarily federally funded. In 2021-22, the state Beginning in 2025-26, districts with a student body created the Expanded Learning Opportunities that is 55 percent or more EL/LI receive a rate per Program (ELOP) with plans to ramp up funding EL/LI student ($2,750) that is set in statute. www.lao.ca.gov 13 analysis full 2026-27 BUDGET ELOP Tiers Have Different Figure 5 Programmatic Requirements. Under ELOP, all programs are Funding for California’s Expanded Learning Programs required to provide at least nine (In Millions) hours per day of combined in-person instructional time and expanded $5,000 learning opportunities during 4,000 the school year and for 30 days during the summer. Tier 1 districts, 3,000 however, are subject to higher requirements. Specifically, these 2,000 programs must offer the program 1,000 to all TK through grade 6 students in classroom-based settings and provide access to all students whose 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 parent or guardian requests their 21st Century Program ASES ELOP placement in a program. By contrast, Tier 2 districts are only required to ASES = After School Education and Safety (ASES) Program and ELOP = Expanded Learning Opportunities Program. provide access to EL/LI students who are interested in the program. Tier 2 districts can opt to serve Figure 6 non-EL/LI students and may choose ELOP Funding Tiers and Rates Over Time to cover the additional costs above their apportionment by assessing Tier 1 EL/LI Tier 1 Rate Per Tier 2 Rate Per Threshold EL/LI Student EL/LI Student family fees. 2021-22 80% $1,170 $672 State to Begin Collecting 2022-23 75 2,500 2,054 Expanded Learning Participation 2023-24 75 2,750 1,803 Data This Year. Historically, the 2024-25 75 2,750 1,579 state generally has not collected 2025-26 55 2,750 1,579 participation data for ELOP. ELOP = Expanded Learning Opportunities Program and EL/LI = English learner or low income. Chapter 1003 of 2024 (AB 1113, McCarthy) requires districts to We refer to these as the Tier 1 rates. For other collect enrollment data for their expanded learning districts, statute specifies the rate will vary programs through the state’s longitudinal data based on the amount of funding remaining after system, starting with the 2025-26 school year. accounting for Tier 1 allotments. (These are known This will provide the state with information on as Tier 2 rates.) From 2022-23 through 2024-25, the participation by district, as well as the demographics state appropriation remained at $4 billion annually, of participating students. while the Tier 1 rate and overall Tier 1 TK-6 attendance increased. As a result, funding available Governor’s Proposal for Tier 2 rates decreased. In 2025-26, the state Sets Minimum Tier 2 Rate of $1,800 per EL/LI increased funding to $4.6 billion and made several Student. The Governor proposes to set a minimum programmatic changes. One goal of the funding Tier 2 rate of $1,800 per EL/LI student, while the Tier 1 increase was to ensure that 2025-26 Tier 2 rates rate would remain at $2,750 per EL/LI student. The would be no less than $1,579 per EL/LI student. budget includes an associated ongoing $62.4 million (The funding increases also covered the costs Proposition 98 General Fund increase to fund the of lowering the Tier 1 threshold and increasing higher Tier 2 rates. If additional funding is available minimum grant amounts.) within the ELOP appropriation, the funding would be allocated to increase Tier 2 rates above $1,800. 14 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Assessment No Clear Rationale for Allowing Rate to Exceed Proposed Minimum. In our view, the Proposed $62.4 Million Is a Reasonable administration has not presented a compelling Estimate of Cost to Implement the Proposal. case for allowing the Tier 2 rate to exceed the Based on 2024-25 attendance—the data used minimum amount proposed. First, this approach to calculate 2025-26 allocations—the proposed would create funding uncertainty for the districts—a $62.4 million in additional funding would allow for problem that the administration is trying to address increasing the Tier 2 rates. By the spring, the state with this proposal. Notably, the Department will have preliminary 2025-26 attendance data that of Finance projects the state will experience a it can use to update this estimate. 2.8 percent decline in public school enrollment Providing Greater Certainty for Tier 2 Rate between 2026-27 and 2029-30. This decrease Would Be Beneficial for Districts. The current in enrollment likely will free up funding within the Tier 2 ELOP rate is effectively determined by ELOP appropriation over the next several years to whatever ELOP funding is left over after Tier 1 increase the Tier 2 rate. These rate increases would districts have been funded. This has resulted in solely be based on available program funds, and as significant variability of rates. Between 2022-23 such would create instability for districts. Second, and 2024-25, the Tier 2 rate decreased 23 percent as discussed above, these increases also would not (from $2,054 to $1,579). This variability makes it be tied to the costs required to operate expanded difficult for districts to make long-term decisions learning programs. about staffing levels and programming. By setting a minimum rate amount, the Governor’s proposal Recommendation would provide more predictable funding that would Establish Fixed Tier 2 Rate. To provide greater make planning easier for Tier 2 districts. predictability for districts, we recommend setting Proposed Rate Increase Not Tied to Program a specific rate for Tier 2 districts in statute. This Costs. The proposed Tier 2 rate of $1,800 would certainty would help districts make longer term be more than $200 higher than the rate provided program decisions. We think the current Tier 2 in 2024-25 and 2025-26. Given the state funded rate of $1,579 is likely sufficient to meet current at the lower rate the past two years, we see no ELOP program requirements, but the Legislature clear rationale for providing a rate increase. The could provide a higher rate if it would like to fund state has added no new program requirements in additional programs and services. Rather than 2026-27 that would require higher levels of funding. automatically allocating excess funding within Moreover, as we discuss in a previous report, ELOP to Tier 2 districts, we recommend the excess existing ELOP rates are likely providing districts funds revert back to the state. If the Legislature with more funding per participating student than is interested in increasing Tier 1 or Tier 2 rates required to meet program requirements. The state in the future, we recommend those increases will be in a better position to assess the level of be based on an analysis of program costs that funding provided for ELOP by next year, when take into consideration the number of students expanded learning participation data for 2025-26 participating in expanded learning programs and becomes publicly available. the programmatic requirements set in statute. www.lao.ca.gov 15 analysis full 2026-27 BUDGET NECESSARY SMALL SCHOOLS Background Necessary Small School Funding Is Based on ADA and Staffing Levels. The Necessary Small Most School District Funding Is Allocated Schools allocation uses funding bands based Through the Local Control Funding Formula on either a school’s ADA or its staffing levels, (LCFF). The LCFF is the primary source of funding whichever provides the lesser amount. The number for school districts. The formula provides a base of full-time teachers is used for elementary schools amount for each student in four grade spans that serve students in grades K-8, while the number (transitional kindergarten through grade 3, and of full-time equivalent certificated employees is grades 4-6, 7-8, and 9-12), plus additional funding used for high schools. (See Figure 7 and Figure 8, for low-income students and English learners. For respectively.) Districts receive funding for their funding purposes, the state credits school districts necessary small schools in place of LCFF base with the greater of their average daily attendance (ADA) in the current year, prior year, or rolling average from the three prior years. Schools pay for Figure 7 most of their general operating expenses (including Funding Bands for Necessary Small employee salaries and benefits, supplies, and Elementary Schools student services) using these funds. In 2024-25, the state spent more than $54 billion on LCFF base 2025-26 Rates funding for school districts—an average of about Number of Average Daily $11,200 per student. Teacher(s) Attendance Funding State Has Alternative Base LCFF Calculation 1 1 to 24 $277,457 for Necessary Small Schools. The Necessary 2 25 to 48 549,072 Small Schools program provides an alternative 3 49 to 72 820,926 LCFF base grant for the ADA in small schools 4 73 to 96 1,092,539 (96 or less ADA for an elementary school and 286 or less ADA for a Figure 8 high school) within small school Funding Bands for Necessary Small High Schools districts (generally districts with less than 2,500 ADA). To be 2025-26 Rates classified as a necessary small Number of Certificated Average Daily school, schools also must Employee(s) Attendance Funding demonstrate that (1) students who 1-3 1 to 19 Up to $740,514a attend the school would otherwise 4 20 to 38 907,196 be required to travel relatively 5 39 to 57 1,073,880 long distances from their home to 6 58 to 71 1,240,562 attend school, or (2) geographic or 7 72 to 86 1,407,246 8 87 to 100 1,573,928 other conditions (such as annual 9 101 to 114 1,740,612 snowfall) make busing students 10 115 to 129 1,907,294 an unusual hardship. In 2024-25, 11 130 to 143 2,073,978 the state provided $147 million for 12 144 to 171 2,240,662 13 172 to 210 2,682,875 this purpose—an average of about 14 211 to 248 3,167,262 $16,800 per student for the roughly 15 249 to 286 3,651,657 8,700 students attending necessary a Funding for schools between 1-19 ADA depends entirely on their number of certificated staff. small schools. Specifically, schools receive $233,818 if they have one certificated employee, $333,366 for two, and $740,514 for three. ADA = average daily attendance. 16 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET grants, but they receive LCFF base grant funding for all other schools in the district. As with the LCFF Figure 9 base grant, each necessary small Necessary Small Schools Concentrated in Northern Region school is credited with the greater of their ADA in the current year, prior year, or rolling average of their three prior years. Necessary 13 4 0 Small School funding levels are also annually adjusted by the 16 8 8 6 1-3 statutory cost-of-living adjustment 4-6 6 (COLA). School districts receive 3 supplemental and concentration 4 4 3 7-10 9 grant funding for necessary small 2 1 1 11+ schools in the same way as the 2 1 1 1 rest of their ADA. 6 Necessary Small Schools 5 Are Concentrated in Northern 1 1 3 Region of the State. In 2024-25, the state provided additional 4 6 funding for 144 necessary small 4 3 schools across 108 districts, including 79 elementary schools 3 4 and 65 high schools. Of the 5 1 108 districts with a necessary small school, 38 districts (35 percent) are comprised entirely of necessary small schools (including 35 districts 2 3 comprised of a single necessary small school). For districts that receive Necessary Small Schools funding, the combined ADA from their necessary small schools represents roughly 20 percent of Figure 10 their total ADA. As Figure 9 shows, One-Fifth of Small School Districts Have a necessary small schools are primarily located in more rural counties, Necessary Small School particularly in the northern part of 2024-25 the state. Average Daily Districts with Necessary Total School Percentage One-Fifth of Districts Below Attendance Small Schools Districts of Districts 2,500 ADA Have a Necessary Small Less than 500 83 316 26% School. Of the state’s 937 school 501-1,000 12 86 14 districts, 551 (59 percent) have less 1,001-1,500 6 58 10 than 2,500 ADA. Roughly one-fifth 1,501-2,000 6 48 13 of these districts had at least one 2,001-2,500 — 43 — Totals 107a 551 19% necessary small school (Figure 10). a Does not include one district that has more than 2,500 units of average daily attendance and Furthermore, Figure 10 shows that receives necessary small schools funding for one of their school sites due to extreme geographic the vast majority of districts with isolation. necessary small schools have less than 500 ADA (77 percent). www.lao.ca.gov 17 analysis full 2026-27 BUDGET Governor’s Proposal increasing cost pressures in many parts of their budgets, such as special education, employee Provides a 20 Percent Increase to Necessary benefits, and utilities. Additionally, the majority Small Schools Funding. The Governor’s budget of districts in the state have been experiencing proposes $30.7 million ongoing Proposition 98 declines in student enrollment, with statewide General Fund to apply a 20 percent increase to enrollment declining by roughly 7.3 percent from each necessary small school funding band. This 2019-20 through 2024-25. The decreased funding is in addition to a 2.41 percent COLA for the rates, levels due to declining enrollment place additional equaling roughly $3.6 million. The administration fiscal pressure on school districts, often resulting has indicated that this proposal is intended to help in districts needing to downsize programs or close necessary small schools maintain instructional school sites. Some of these cost pressures may programming amidst various fiscal challenges. be more acute for small school districts in rural The administration cites several fiscal challenges, areas. Although small and very small districts including cost increases that have outpaced have experienced smaller enrollment declines inflation, higher per-student costs, less flexibility to than the state average—4.5 percent for small distribute fixed expenses across their student body districts and 3.8 percent for very small districts— compared to larger districts, and less flexibility accommodating declining enrollment may be more to absorb declines in enrollment compared to challenging for some of these districts. For example, larger districts. in our conversations with small school districts, Assessment school leaders indicated that closing school sites Small School Districts Have Different in response to declining enrollment wasn’t always a Spending Patterns. As Figure 11 shows, viable solution due to the geographical isolation of preliminary 2024-25 budget data show that very some schools. Additionally, very small districts may small (less than 500 ADA) and small (between 501 have acute challenges reducing programs as they and 2,500 ADA) school districts dedicated a lower share of spending on staffing and a higher Figure 11 proportion on other costs, such Smaller School Districts Dedicate as utilities, contracts for services, Lower Share of Spending on Staff insurance, rent, and consulting Share of Spending by Category, 2024-25 Projections fees. In particular, very small school districts were projecting to spend 100% 25 percent of their budget on these other costs, significantly higher than the statewide average of 18 percent. Due to the lower share of spending on staffing overall, 50 small school districts tend to have more limited educational options for students. A small high school, for example, typically offers a more limited number of course options than a larger comprehensive Statewide Very Small Small Midsize Large Total 1-500 501-2,500 2,501-10,000 10,001+ high school. ADA ADA ADA ADA Small School Districts May Salaries and Benefits Books and Supplies Otherª Be More Affected by Recent Cost Pressures. School districts ª Includes costs such as utilities, contracts for services, insurance, rent, and consulting fees. across the state have reported ADA = average daily attendance. 18 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET already dedicate a larger share of their spending highest funding bands. Figure 12 on the next on fixed costs compared to larger districts. One page shows the fiscal effects for necessary small indicator of a school district’s fiscal health is the high schools. Under the Governor’s proposal, a change in its reserve levels over time, with larger necessary small high school with 286 ADA would increases suggesting stronger fiscal health. While generate roughly $2,637 more per student than statewide school district reserve levels as a share a school with 287 ADA. (Under current law, the of expenditures have increased by 8 percentage difference would be $22 per student.) This would points since 2019-20, reserves for very small create a significant fluctuation in funding if schools districts have remained flat over the same period. have ADA that is at or near the threshold of the (Statewide district reserve levels have increased highest funding band. in part due to one-time funding the state has Issues for Consideration provided that is to be spent over a multiyear period.) This suggests very small school districts may be Proposal Is a Simple Way to Target Some experiencing greater fiscal pressures than school Small Districts Within Existing Funding districts statewide. Reserves for small districts Structure. The Governor’s proposal has some increased somewhat, but at a lower rate than the merit given it would target districts that likely face state average. greater cost pressures from operating very small schools in geographically isolated parts of the Governor’s Proposal Increases Funding state. If the Legislature is interested in increasing for Only a Portion of Small and Very Small funding for small school districts, increasing Districts. Although recent cost pressures may Necessary Small School funding is a simple way to be more acute for small and very small school do so under the current LCFF structure. Given the districts, the Governor’s proposal would provide proposed 20 percent increase is not aligned with funding to only a subset of these schools (about any particular assessment of costs, the Legislature one-quarter of school districts under 500 ADA). could consider providing a different level of Districts with necessary small schools have similar funding based on its priorities. The Legislature cost structures to that of very small districts overall. may also wish to weigh this proposal against They have a similar share of their budget that is its other education priorities, such as providing dedicated to other costs (24 percent) and also funding increases that more broadly benefit have had little growth in their reserve levels since schools statewide or proposals that help build 2019-20 (growth of 1 percentage point, compared budget resiliency. with no growth for very small districts). Legislature Could Consider Alternative No Specific Rationale for Level of Proposed Increase. Although the administration cited a Approaches That Target Small School Districts. As mentioned above, one-fifth of the smallest variety of cost pressures as the reason for providing school districts in the state have a necessary small an increase in Necessary Small Schools funding, school and would receive additional funding under the proposed 20 percent increase is not tied to any this proposal. If the Legislature is interested in particular assessment of higher cost pressures. providing funding in a way that benefits small school Augmentation Results in “Fiscal Cliff” at End districts more broadly, it could consider exploring of Funding Bands. The existing funding bands for other options. For example, the Legislature could necessary small schools provide greater per-pupil explore options for modifying LCFF or creating funding for the smallest schools, with per-pupil an LCFF add-on that accounts for the density funding decreasing in each subsequent funding of districts’ student populations. These options, band. This means that per-pupil funding for schools however, could be more complex to design and right above or below the existing thresholds (96 would require additional analysis to ensure they are ADA for elementary schools and 286 ADA for high aligned with a district’s cost structure. In addition, schools) do not result in substantially different rates. these options likely would result in significantly However, the Governor’s proposed 20 percent higher costs compared to the Governor’s proposal. augmentation results in a large difference between schools above or below the threshold for the www.lao.ca.gov 19 analysis full 2026-27 BUDGET Figure 12 Governor’s Proposal Results in “Fiscal Cliff" NSS High School Funding Per Student Compared to Base LCFF, 2026-27 $60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 Governor's Proposal 20,000 Current Law $2,637 15,000 (17 Percent) LCFF Base Rate 10,000 20 45 70 95 120 145 170 195 220 245 270 295 320 Note: Excludes the funding bands for necessary small high schools that have between 1-3 certificated staff and 1-19 average daily attendance. NSS = necessary small school and LCFF = Local Control Funding Formula. If Adopting, Legislature May Want to base rates. By increasing the ADA threshold, Consider Addressing “Fiscal Cliff” Issue. If the however, this approach would have higher state Legislature is interested in adopting the Governor’s costs than the Governor’s proposal. Alternatively, proposal, we recommend it modify the proposal the Legislature could modify rates in a way that to avoid large differences in funding above and minimizes the fiscal cliff and has similar costs to below the ADA thresholds. One option is to add the Governor’s proposal. Implementing this option a new funding band or extend the range of the would require larger increases to the lower funding final funding band to increase the ADA threshold. bands (for schools with lower ADA) and smaller This would allow for a more gradual reduction in increases to the highest funding bands, with per-pupil funding until, as ADA approaches the minimal increases for those closest to the threshold. new threshold, schools shift to the regular LCFF 20 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET DIFFERENTIATED ASSISTANCE Background implementation. Under current law, a school district or COE enters differentiated assistance based on State Uses Various Indicators to Understand low performance of a student subgroup in two or Student Outcomes. The state uses multiple more areas. SBE determines the performance level indicators and a variety of data sources to threshold that determines eligibility for differentiated assess the student outcomes of local education assistance. This is similar for charter schools, agencies (LEAs)—school districts, county offices except they must meet the performance criteria of education (COEs), and charter schools— for two consecutive years to enter differentiated as well as individual schools. For example, to assistance. In 2025, 553 LEAs were eligible for understand student achievement, the state uses differentiated assistance. When a school district or standardized test results in English, math, and—for charter school is identified, it receives assistance English learners—progress in developing English from its COE for two years. (Identified COEs receive proficiency. In addition to tracking outcomes related assistance from a state agency or another COE.) to standardized tests, the state also uses indicators As part of differentiated assistance, the COE is to in other areas, such as student engagement and support the district or charter school to build their school climate. For example, to understand student capacity to implement actions that address student engagement, the state uses high school graduation needs. The specific support may vary, but actions and chronic absenteeism rates. can include helping a district identify the primary State Displays School Performance Through causes of its performance issues or securing an California School Dashboard. The state publicly expert to assist in a specific area. displays achievement on these indicators on a State Provides Ongoing Funding to website known as the California School Dashboard. Support Differentiated Assistance. The state Performance is shown for the state, each LEA, provides COEs with additional funding to cover and each school. In addition, performance the costs associated with their differentiated for the state, each LEA, and each school is assistance activities. This funding is provided disaggregated by up to 14 student subgroups through a formula that consists of a base amount (Figure 13). The dashboard was first made available in fall 2017 and is updated annually. (The state suspended annual updates in 2020 and 2021 given Figure 13 some of this data was not collected during the Student Subgroups for Which COVID-19 pandemic.) Outcome Data Is Reported Dashboard Uses Five Performance Levels. For each performance indicator shown by LEA, Racial Subgroups American Indian or Alaska Native school, or subgroup, the state assigns one of five Asian performance levels. Performance levels are based Black on a combination of overall status and change in Filipino the measure over the past year. Hispanic or Latino Native Hawaiian or Pacific Islander Dashboard Used to Identify LEAs in Need of Two or more races “Differentiated Assistance.” LEAs are identified White for differentiated assistance annually based on Other Subgroups the performance of their student subgroups— English learners also known as the performance criteria. Certain Foster youth Homeless youth requirements of the performance criteria are set in Long-term English learners statute, with the State Board of Education (SBE) Socioeconomically disadvantaged responsible for deciding the specific details for Students with disabilities www.lao.ca.gov 21 analysis full 2026-27 BUDGET of $300,000 for each COE, plus additional funding school districts, and COEs. Currently, the statutory based on the number of districts and charters in the performance criteria are the same for all LEAs, with county in need of differentiated assistance. (The the exception that charters schools need to meet amount per district varies based on the district’s the criteria for two consecutive years. size.) The 2025-26 Budget Act provided COEs Assessment $119 million for this purpose. Making Changes to Formula and SBE Required to Make Changes to Performance Criteria. Trailer legislation included Differentiated Assistance Is Premature. As mentioned above, recently enacted state law in the 2025-26 budget package requires SBE to directs SBE to update the performance criteria used update the performance criteria by July 15, 2026. to identify schools for differentiated assistance. This update will change how LEAs are identified for These updates have not been made yet and, as a differentiated assistance. result, the Legislature has no sense of how many Governor’s Proposal LEAs will be identified for assistance in the future. Changes Differentiated Assistance Funding The number of LEAs identified for assistance is a Formula. The Governor’s budget provides an key driver of the costs COEs will incur to provide additional $13 million ongoing Proposition 98 differentiated assistance. Without this information, General Fund to adopt a new formula for the Legislature is unable to assess whether the differentiated assistance. This would bring total Governor’s proposed funding changes align with differentiated assistance funding to $132 million. the associated costs in future years. Similarly, The new formula would increase the base amount although the proposed changes to the timing and for each COE from $300,000 to $500,000. frequency of differentiated assistance could be The remainder of funds would be based on the reasonable, these also need to be evaluated in number of students within the county rather tandem with the updated performance criteria. than the number of districts and size of districts For example, analyzing the merits of providing identified. The Governor’s budget also proposes differentiated assistance for a longer period of to expand the intended use of these funds. The time would depend upon the selectivity of the new funding is intended to fund targeted assistance to criteria. This way decisions can be made with a those LEAs identified for differentiated assistance, full understanding of who is and is not receiving as well as universal support to all LEAs for differentiated assistance. improving student outcomes. Removing Performance Criteria From State Changes Frequency of LEA Identification for Law Limits Input From Legislature. The proposed Differentiated Assistance. Trailer bill language changes to state law give SBE significantly more accompanying the proposal specifies that LEAs autonomy to determine performance criteria in will be identified for differentiated assistance once the future. Currently, state law specifies certain every three years. Once identified, the LEA would requirements of the performance criteria, while receive assistance from their COE for a minimum of giving SBE flexibility in the implementation three years. Currently, LEAs are identified annually details. The proposed trailer bill removes these and receive assistance for a minimum of two years. requirements from statute, giving SBE authority to change its approach over time without Removes Statute for Existing Performance legislative input. Criteria. The proposed trailer bill language removes statute that requires LEAs to be identified for Recommendation differentiated assistance based on the performance Revisit Funding Formula and Changes to of their student subgroups. This would provide SBE Differentiated Assistance When Administration with broad flexibility to establish new performance Can Provide More Information About criteria for differentiated assistance. In addition, the Performance Criteria. Given the new SBE proposed trailer bill language allows SBE to adopt performance criteria have yet to be developed, unique performance criteria for charter schools, 22 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET we recommend rejecting the proposed funding proposed changes to statute that give SBE more and programmatic changes to differentiated autonomy to determine the performance criteria. assistance. The Legislature could revisit these Although changes to state law may ultimately issues as part of the 2027-28 budget process, be necessary to align with the new performance after the performance criteria have been adopted criteria, these changes can be adopted after by SBE. If the performance criteria are finalized SBE has adopted new criteria in July. Furthermore, early and the administration can provide additional we recommend the Legislature continue to include details this spring on how the changes would affect language in state law that sets key requirements for COE workload, the Legislature could consider this the performance criteria. This would ensure that proposal in May. major changes to the performance criteria cannot Maintain Legislative Role in System of be implemented in the future without input from Support Criteria. We recommend rejecting the the Legislature. SCIENCE PERFORMANCE TASKS Background contract with at least one nonprofit organization to develop a statewide repository of science State Assesses Students in Science. In performance tasks science teachers could use in 2013, California adopted the nationally developed their classroom instruction. Performance tasks are Next Generation Science Standards as the student activities intended to measure capabilities foundation for what students should know and be and depth of conceptual understanding in the able to do in science. As a condition of receiving science standards. These funds created the federal education funding, states are required Authentic Tasks for Learning and Assessment to assess students in science at least once in in Science (ATLAS) website, which was made elementary, middle, and high school. In California, public January 1, 2026. The website provides students take the California Science Test to fulfill free and searchable access to performance this requirement in fifth grade, eighth grade, and tasks for kindergarten through 12th grade. These once in high school. The state contracts with performance tasks are intended to be used by an external entity to develop assessments and teachers throughout the year to understand how necessary materials. well students are meeting content standards. School Districts Determine How Schools Will In its first month, the website had 4,200 active Teach Standards. To support school districts in users and 480 registered users. (An active user is teaching the content standards, the state adopts defined as someone that visited at least two pages curriculum frameworks that provide specific of the website or stayed on the site longer than guidance on how to teach each content standard ten seconds.) in a given subject and grade. The state also adopts instructional materials for kindergarten through Governor’s Proposal eighth grade and provides a list of the adopted Funds Science Performance Tasks on an programs. However, the specific curricula and daily Ongoing Basis. The Governor’s budget provides lesson planning is determined by school district $890,000 ongoing starting in 2025-26 to maintain administrators and teachers. science performance task efforts. These funds State Provided One-Time Funding to Create are intended to support maintenance activities a Science Performance Task Resource for including creating new performance tasks, Teachers. The 2024-25 budget package included engaging teachers, and providing professional $7 million one-time Proposition 98 General Fund development for teachers. for the Los Angeles County Office of Education to www.lao.ca.gov 23 analysis full 2026-27 BUDGET Assessment Recommendation Too Early to Assess Demand for Initiative. Recommend Rejecting Ongoing Funding. Given Given the resources on the ATLAS website have the limited information about the usefulness of the only been publicly available since the beginning of ATLAS website, we recommend rejecting ongoing the calendar year, it is too early to know if they are funding for the proposal this year. The Legislature helpful for science teachers and provide significant could consider ongoing funding needs for this program statewide benefit. Since the specific instructional in a future year after it has a better sense of the overall programs used in the classroom are primarily demand. If the Legislature is interested in continuing determined by school districts, the usefulness of to fund the development and dissemination of science the performance tasks will depend upon how well resources in this budget, we recommend funds be they can be integrated into district-established provided on a limited-term basis. For example, the curricula. In its first month of availability, the ATLAS state could provide $890,000 annually for the next website had 480 registered users. We anticipate three years. This would give the Legislature more time the number of registered users will grow as to determine whether funding the activities of this outreach activities and professional development initiative serves a compelling statewide interest. If the is conducted. However, assuming the website state provides any funding, we recommend requiring continues to see a similar increase in users in future the Los Angeles County Office of Education to report months, only a small proportion of science teachers to the state key information about ATLAS usage, such would be registered users by the end of 2027. as how many of the state’s educators are using the website, and feedback from educators regarding the usefulness of the website’s resources. TEACHER RESIDENCY GRANT PROGRAM Background and low-income (EL/LI) students. For example, according to the Learning Policy Institute, schools California Has Long-Standing Teacher with the highest share of EL/LI students had twice Shortages in Certain Subjects and Schools. as many math teachers on waivers or emergency Historically, many schools have had challenges in permits (23 percent) than schools with the lowest filling their teaching positions with appropriately EL/LI shares (11 percent) in 2022-23. credentialed teachers, particularly in special education, math, and science. When schools State Has Provided $655 Million Over Last are unable to hire fully credentialed teachers, Eight Years for Teacher Residency Grants. Over they hire teachers on waivers or emergency the last decade, the state has provided $2.1 billion permits who do not have the required teaching in one-time funding to address teacher shortages. credential and subject matter expertise. Despite One of the largest programs is the Teacher some recent increases in the number of newly Residency Grant Program, which provides grants to awarded credentials, overall shortages persist. local education agencies (LEAs) to support teacher In particular, the state has persistent shortages residents as they earn their teaching credential and in special education. From 2019-20 through work in the LEA. (Residents are teacher credential 2023-24, the state authorized more waivers and candidates who teach with a mentor teacher emergency permits for individuals to fill special while completing the required coursework and education teacher roles (24,565) than new special teaching assessments.) The program has received education teacher credentials (17,963). In addition, $655 million one-time Proposition 98 General Fund the state historically has had higher proportions since 2018-19, most recently receiving $70 million of teachers on waivers and emergency permits in in the 2025-26 budget. The Commission on schools with higher proportions of English learners Teacher Credentialing (CTC) provides LEAs with 24 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET $40,000 per resident to partner with institutions of funding. This includes the $70 million authorized higher education, provide mentorship, and award in the 2025-26 budget, as well as $7.7 million stipends to support residents in obtaining their remaining from the 2021-22 appropriation. Based teaching credentials. Of the $40,000, a minimum on the amount of funding CTC has awarded in of $20,000 must be provided to the resident as recent years, most of the funding currently available a stipend. Operating LEAs can use some or all likely will be awarded in 2025-26. The funding of the remaining funds to cover the costs of the proposed in the 2026-27 budget likely would be residency or to provide higher stipend amounts. sufficient to fund grantees over the next three years. (We discuss other state teacher recruitment and Residency Programs Have Several Benefits… retention spending, such as the Golden State Residency programs have three distinct benefits. Teacher Grant Program, in The 2025-26 Budget: First, research evaluating teacher residency Educator Workforce.) programs notes that teachers who complete a Teacher Residency Grant Program Has residency feel more prepared to be teachers and Expanded Over Time. The Teacher Residency are more likely to stay in the teaching profession Grant Program originally provided support to for a longer period of time. Second, residency prospective teachers seeking credentials in special programs offer the LEAs operating them flexibility education and science, technology, engineering, to address their specific teacher shortages. LEAs and math. The 2022-23 budget package expanded can admit teacher candidates into their program the program to support all teacher credential that match their specific staffing needs. (Other types as well as individuals seeking a credential in state teacher recruitment and retention programs school counseling. The state also has increased address broader statewide needs, but do not the per-resident grant amount from $20,000 to provide as much flexibility to focus on an LEA’s $40,000. The most recent data available shows specific needs.) Third, residency programs offer 1,178 residents completed the program between stipends that supplement a teacher candidate’s 2019-20 and 2022-23, with another 1,150 enrolled financial aid package, which could attract teacher in the 2023-24 cohort. Of the completers, candidates who might not otherwise enroll in approximately 80 percent were hired as teachers a teacher preparation program due to the cost in the LEA where they completed their residency. and difficulty earning income while securing State law requires CTC to commission a report a credential. evaluating the effectiveness of the residency …But Can Be Challenging to Establish. program in recruiting, developing support systems Residency programs can be difficult to launch as for, and retaining teachers. The report is due to the they require establishing a partnership with an Legislature by December 1, 2029. institution of higher education and an available pool of bachelor’s degree holders interested in being Governor’s Proposal teachers. Due to this challenge, residency programs Provides $250 Million One-Time are disproportionally found in larger urban areas Proposition 98 General Fund for Teacher of the state. For example, as of 2022-23, only Residency Grant Program. The Governor’s one program (Humboldt County) exists in the budget provides additional one-time funding for the northern, rural part of the state. Larger districts Teacher Residency Grant Program. The funding and charter schools have more teachers who can must be committed by June 30, 2030. No changes serve as mentors as well as higher volumes of staff to the program structure are proposed. openings. Larger cohorts of residents also mean that any costs associated with running the program Assessment can be spread across a greater number of grants. Proposed Funding Level Likely Would Last More Information on Program Effectiveness Through 2029-30. Based on the most recent Available in Coming Years. Early reporting information available, $78 million is currently on the effectiveness of the Teacher Residency available from previous rounds of residency grant Grant Program has focused on the number of www.lao.ca.gov 25 analysis full 2026-27 BUDGET programs and teacher candidates that have 2026-27 budget, we recommend adopting this participated in these programs. The CTC report proposal. Funding the program has the potential due December 1, 2029 may provide additional to increase teacher retention and reduce teacher insights into other aspects of the program. The shortages for LEAs that receive grant funds report may include information regarding resident (primarily larger urban districts). Alternatively, persistence in the teaching profession relative to the Legislature could reject the proposal if it other teachers and the degree to which residency was interested in funding other priorities or programs reduce teacher shortages in the districts is concerned that the program is not likely to operating them. address shortages in smaller, rural districts. In this case, the Legislature also could wait for the Recommendations forthcoming evaluation of program effectiveness to Fund Proposal if Aligned With Legislative determine whether to provide additional funding in Priorities. If the Legislature would like to provide future years. funding to address teacher shortages in the DUAL ENROLLMENT Background for school districts to generate attendance-based funding. Chapter 618 prohibits students in a CCAP Dual Enrollment Allows High School Students program from being charged enrollment fees or to Take College Level Courses. Credit from fees for textbooks and other instructional materials. these college-level classes may count toward To form a CCAP program, school and community both a high school diploma and a college degree. college districts must agree to a memorandum By graduating high school having already earned of understanding (MOU). These MOUs contain college credits, students can save money and information such as the courses to be offered; accelerate progress toward a postsecondary the number of students to be enrolled; and which degree or certificate. Dual enrollment has various partner (the school or community college district, or models. California’s two most widely used models both) is to cover program costs, including the cost are traditional dual enrollment and College and of providing instructional materials. Career Access Pathways (CCAP). Traditional dual enrollment typically consists of individual high Middle College and Early College (MCEC) school students taking college-level courses on a High Schools Also Focus on Dual Enrollment. community college campus. CCAP, on the other In addition to traditional dual enrollment and CCAP, hand, allows cohorts of high school students to the state authorizes “middle college high schools” take college-level classes on a high school campus. and “early college high schools” (MCEC high Under both dual enrollment models, the school schools) to serve as specialized programs focused district the student attends and the community on dual enrollment. Middle college high schools college are typically able to claim apportionment are a partnership between a school district or funding for the time that students are taking the charter school and a community college to operate community college courses. a high school on a community college campus. The state provides $1.8 million in ongoing funding to Legislature Authorized CCAP in 2015. support these programs. Early college high schools Chapter 618 of 2015 (AB 288, Holden) created are partnerships between public schools and a CCAP. Unlike traditional dual enrollment, CCAP community college, California State University, or allows cohorts of high school students to take University of California campus that allow students college-level classes on a high school campus. to earn a diploma and up to two years of college Community colleges may still claim apportionment credit in four years or less. Both programs are funding for such instruction. Unlike traditional dual targeted to students who are at risk of dropping out enrollment, CCAP students only need to attend their of high school. high school classes for 180 minutes (three hours) 26 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET In 2022-23, State Provided $200 Million one-time funding for dual enrollment, however, One-Time Funding for Certain Dual Enrollment the administration fails to identify how additional Programs. The 2022-23 budget package provided funding might help remove barriers to implementing $200 million for dual enrollment programs through dual enrollment programs. In the case of CCAP, a competitive grant process administered by it is not clear that funding barriers exist at all. the California Department of Education (CDE). From 2020-21 through 2023-24, full-time equivalent Statute requires half of the funding to be provided enrollment in CCAP programs has grown from in $100,000 grants per school site to establish or about 13,100 to over 24,000 (82 percent). Moreover, expand CCAP programs, while the other half of the rather than posing fiscal barriers, funding policies funding was to be used to provide $250,000 grants for CCAP and MCEC high schools can work to per school site to start up or expand MCEC high the benefit of schools and colleges. When dually schools. Statute also specifies that priority is to enrolled students take college courses in place of be given to local education agencies (LEAs) where their regular high school coursework, schools can at least half of their student population consists receive attendance-based funding even though of English learners or low-income students, as they may only be providing three hours (rather well as LEAs that have a higher than the state than the standard six hours) of instruction per day. average rate of high school dropouts, suspensions The state has also made legislative changes over or expulsions, child homelessness, foster youth, the years to support expansion of CCAP. Most or justice-involved youth. CDE has made funding recently, Chapter 789 of 2024 (SB 1244, Newman) available through three application rounds, allowed community college districts to establish beginning in 2023-24. To date, CDE has fully partnerships with school districts outside their allocated the funding set aside for CCAP grants, service area. while $33 million remains from funds set aside for LEAs Can Use Proposed Discretionary Block MCEC high schools. CDE has indicated it will be Grant Funding for Same Purposes. As described opening another round of funding for MCEC high in our recent publication The 2026-27 Budget: schools in 2026-27. Any uncommitted funding after Proposition 98 Guarantee and K-12 Spending this fourth round of applications will revert back to Plan, the Governor’s budget provides $2.8 billion the state after June 30, 2027. in one-time funding for a discretionary block grant that would be allocated based on average daily Governor’s Proposal attendance. The grant would not have specific Provides $100 Million One-Time Funding for spending requirements, but trailer legislation Dual Enrollment. The Governor’s budget proposes suggests several potential uses, including dual $100 million one-time Proposition 98 General enrollment programs. To the extent that one-time Fund to provide additional grants for expansion of funding would help support the expansion of CCAP or MCEC high schools. Unlike the funding dual enrollment programs, LEAs could use the provided in 2022-23, there is no specific funding funding from the discretionary block grant to amount required to be set aside for CCAP or MCEC cover these costs. high schools. When LEAs apply for funding, they will indicate for which program they are seeking Recommendation additional grant funding. This funding must be Recommend Rejecting Proposal. Given the committed by June 30, 2029. proposed funding would provide one-time funding for ongoing activities and would not address Assessment any barriers to expanding dual enrollment, we No Clear Fiscal Barriers to Implementing recommend the Legislature reject the proposal. Dual Enrollment. Research suggests that dual LEAs interested in using one-time funding to enrollment can be an effective model for improving expand dual enrollment programs could use college preparation. Moreover, the state supports funding from the proposed discretionary block an extensive amount of dual enrollment through grant for the same activities. several program models. In proposing additional www.lao.ca.gov 27 analysis full 2026-27 BUDGET KITCHEN INFRASTRUCTURE AND TRAINING Background meals. The allowable uses would be similar to previous rounds of funding, but LEAs could also State Created Grant Program to Support use funds to implement strategies to provide food Universal School Meals in California. Trailer assistance to students who may be experiencing legislation related to the 2021-22 budget food insecurity. Funds would be distributed package required that, beginning in 2022-23, all competitively using criteria to be developed by public schools provide one free breakfast and the California Department of Education (CDE). one free lunch per school day to any student In awarding funds, CDE is to prioritize LEAs that requesting a meal. To support schools in meeting participate in certain provisions of the federal the universal school meals requirements, the nutrition programs (generally available to LEAs with 2021-22 budget package provided $150 million relatively high shares of students eligible for free one-time Proposition 98 General Fund to create and reduced-price meals). CDE is also to prioritize the Kitchen Infrastructure and Training (KIT) grant. LEAs that were not awarded the third round of In subsequent state budget packages, two more KIT funds and LEAs that have committed at least rounds of KIT funding were provided, for a total of 65 percent of their second round of KIT funds. $905 million (Figure 14). Funds would be available until June 30, 2029. Allowable Uses of Grant Have Changed With Each Round of Funding. In the first round of KIT Assessment funding, local education agencies (LEAs) could School Nutrition Programs Are Still Spending use $120 million for kitchen infrastructure and Previous Rounds of KIT Funds. The KIT grants equipment such as cooking equipment, service provide a wide range of allowable uses. Based equipment, and refrigeration. This first round also on our conversations with CDE, the first round set aside $30 million for training food service of KIT funds supported a variety of project staff. For the second round of grants, LEAs could types, including large kitchen remodels. Funds use $350 million of these funds for all the same also supported equipment purchases such as purposes as the first round (including training). refrigerators, freezers, ovens and stoves. The state, In addition, funds could be used for staff costs however, has no information for the second and associated with certain activities such as procuring third rounds of KIT funds. For the second round of locally and sustainably grown food. The remaining funding, LEAs must commit funds and report on $250 million from round 2 can be used for the how they were used by June 30, 2026. The third same activities, but funds must be used to increase round of funding will likely be disbursed this spring capacity for freshly prepared on-site meals, and must be committed by June 30, 2028. rather than more broadly to implement universal Limited Information About the Impact of school meals. The third round allows for all the Earlier Funding. Given the wide array of allowable same allowable uses as the first two rounds, but uses and limited information on how funds have also allows funds to be used to purchase certain been spent, it is difficult to know the degree to ingredients, such as California-grown produce. which KIT funds have helped LEAs make progress The third round also sets aside $10 million for in accomplishing key nutrition priorities, such as recruitment and retention activities such as supporting the implementation of universal school one-time bonuses. meals. Furthermore, aside from requiring funds to Governor’s Proposal be spent in the broad categories of allowable uses, these funds were largely provided without specific Funds Fourth Round of KIT Funds. The outcome expectations. The Legislature will have Governor’s budget provides $100 million one-time additional information on the second and third Proposition 98 General Fund for grants to support rounds after funds are committed and LEAs report kitchen equipment, infrastructure, training, and how funds were used. the continued implementation of universal school 28 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Figure 14 State Has Funded Three Rounds of Kitchen Infrastructure and Training Grants Amount Distribution Deadline for (In Millions) Method Status Committing Funds Round 1: 2021-22 $150 Formula Distributed to 941 local education June 30, 2025 agencies (LEAs) that opted in. Round 2: 2022-23 600 Formula Distributed to 1,010 LEAs that opted into June 30, 2026 program. Round 3: 2025-26 155 Competitive LEAs submitted applications for funds June 30, 2028 January 2026. Total $905 Recommendation could consider providing additional funding in the future, when it has additional information on how Recommend Rejecting Fourth Round of KIT the second and third round of funds were spent. Funds. Given that the second round of funds are If the Legislature provides funding in the future, we still being spent and the third round of funds are recommend funds be restricted for specific goals still being awarded, we recommend the Legislature set by the Legislature, and that data is collected to reject the fourth round of KIT funds. The Legislature measure progress toward achieving these goals. READING DIFFICULTIES SCREENING Background State Has Provided $65 Million Over Last Two Years to Support Screener Administration. State Law Requires Screening for Reading The 2024-25 budget provided $25 million in Difficulties in Grades K-2. Chapter 48 of one-time Proposition 98 General Fund to support 2023 (SB 114, Committee on Budget and training for educators to administer screenings to Fiscal Review) requires that schools administer students. The 2025-26 budget provided $40 million screenings for reading difficulties to students in in one-time Proposition 98 General Fund to cover kindergarten through second grade starting in costs associated with the first year of administering 2025-26. (Transitional kindergarten students are the screener. This includes the costs of providing not required to be screened.) These screenings targeted supports to students identified through the must be completed using a state-approved screener. Funding was allocated to LEAs based on instrument. The 2023-24 budget set aside their share of statewide enrollment in kindergarten $1 million one-time Proposition 98 General Fund through second grade. to fund a panel of experts that would select appropriate screening tools. In December 2024, Governor’s Proposal the panel ultimately approved four screening Provides $40 Million One-Time Funding for instruments that local education agencies (LEAs) Reading Difficulties Screening. The Governor are authorized to use. In addition to requiring proposes $40 million one-time Proposition 98 annual screenings, Chapter 48 requires schools General Fund to cover costs associated with to provide students identified as being at risk of administering the screener in 2026-27, similar to having reading difficulties with targeted supports the funds provided last year. As with the amount and services, such as one-on-one or small-group provided in 2025-26, funding would be allocated to tutoring, early reading interventions, or further LEAs based on their share of statewide enrollment diagnostic assessments. in kindergarten through second grade. www.lao.ca.gov 29 analysis full 2026-27 BUDGET Assessment Recommendations Cost of Administering Screenings Likely Lower Reject Funding for Reading Difficulties in Second Year. The administration’s proposal to Screener. Given the costs associated with provide $40 million for this purpose in 2025-26 was administering the screener in 2026-27 will likely based on its estimate that costs would be about be lower than in prior years, and the costs $825 per classroom for training, materials, and other associated with providing targeted support to costs. We thought this was a reasonable estimate students identified as having reading difficulties of the average costs to implement the screening are unknown, we recommend the Legislature requirements in the first year. In the second year of reject the proposal to provide specific funding for implementation, however, administrative costs are this purpose. As we discuss in our recent report, likely lower. In particular, LEAs will have lower training The 2026-27 Budget: Proposition 98 Guarantee costs after already providing training to staff members and K-12 Spending Plan, the Governor’s budget in the previous year. Additionally, the actual costs of proposes $2.8 billion in one-time funding for a obtaining and administering the screener will vary discretionary block grant. If the Legislature is based on key decisions LEAs make. For example, interested in providing additional funding to cover LEAs could reduce their costs by choosing to use one some of the costs associated with the reading of the two approved screening instruments that are difficulties screening, it could redirect the funds in available free of charge. this proposal to the discretionary block grant. This Cost of Targeted Support Is Unknown. would give LEAs the flexibility to use the funds for In addition to the costs of administering the screener, reading difficulties screening or any other priority. LEAs must provide targeted support to students identified by the screener as having reading difficulties. The costs for LEAs will depend on the specific services provided and are currently unknown. 30 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET SUMMARY OF LAO RECOMMENDATIONS Figure 15 Summary of LAO Recommendations Issue Governor’s Proposal LAO Recommendation Community $1 billion ongoing for a new program to support Although the community schools model has been shown Schools the community schools model. In addition to to have a variety of benefits for students, we have providing ongoing funding for about 2,500 concerns about funding the model at such a large scale schools that have already received one-time and establishing a new ongoing categorical program community schools funding, about 3,700 new restricted for specific purposes. We recommend providing schools would be eligible for funding on an annual one-time funding for additional rounds of community basis. Sets aside $10 million for a statewide schools implementation grants. We also recommend the system of technical assistance and includes a Legislature consider funding technical assistance over a variety of reporting requirements for schools longer period. If the Legislature is interested in adopting receiving funding, including an accreditation the proposal as ongoing, we recommend several process that would begin in 2033-34 and every modifications to the Governor’s proposal. seven years thereafter. Expanded $62.4 million ongoing to set the minimum Tier 2 Although setting a minimum Tier 2 rate would eliminate Learning rate to $1,800 per English learner or low-income much of the uncertainty districts face, allowing the rate Opportunities student. The Tier 2 rate could increase up to a to fluctuate above that level creates instability and would Program maximum of $2,750 based on available program provide increases that are not tied to program costs. We funds. recommend establishing a fixed Tier 2 rate at current Tier 2 levels. Additionally, we recommend that any future rate increases take into consideration program participation rates and requirements set in law. Necessary Small $30.7 million ongoing to apply a 20 percent Proposal has some merit given it would target districts that Schools increase for necessary small school funding. likely face greater cost pressures from operating very small schools in geographically isolated parts of the state. If the Legislature is interested in adopting the proposal, it could consider providing a different level of funding based on its priorities. Additionally, if adopting proposal, we recommend modifying to avoid large differences in funding above and below the thresholds for necessary small school eligibility. Differentiated $13 million ongoing to adopt a new formula for Changes are premature given the forthcoming updates Assistance differentiated assistance. The Governor also to the criteria for receiving differentiated assistance. We proposes to identify local education agencies recommend rejecting these proposals given they need for differentiated assistance once every three to be evaluated in tandem with the updated performance years, rather than once a year, and to extend the criteria. The Legislature could revisit these issues after the time they receive differentiated assistance to a performance criteria is adopted. minimum of three years. Science $890,000 ongoing starting in 2025-26 to conduct It is too early to know if the new resources are helpful and Performance maintenance activities for the newly created provide significant statewide benefit given they have Tasks statewide performance task repository science only been publicly available since January 2026. We teachers could use in their classroom instruction. recommend rejecting ongoing funding for the proposal Funds are intended to create new performance this year and assessing funding needs for this program in tasks, engage teachers, and provide professional a future year. development for teachers. Teacher $250 million one-time funding for the Teacher We recommend adopting this proposal if the Legislature Residency Residency Grant Program. would like to provide funding to address teacher Grant Program shortages in 2026-27. Funding the program has the potential to increase teacher retention and reduce teacher shortages for districts that receive grant funds. (Primarily larger urban districts.) www.lao.ca.gov 31 analysis full 2026-27 BUDGET Issue Governor’s Proposal LAO Recommendation Dual Enrollment $100 million one-time funding to provide additional Reject one-time funding given the proposal would not grants for expansion of dual enrollment models. address any barriers to expanding dual enrollment Funding is available to be allocated until June 30, programs. Local education agencies interested in using 2029. one-time funding to expand dual enrollment programs could use funding from the proposed discretionary block grant for the same activities. Kitchen $100 million one-time funding for grants to support Given that the second round of funds ($600 million) are still Infrastructure kitchen equipment, infrastructure, training, and being spent and the third round of funds ($155 million) and Training the continued implementation of universal school are still being awarded, we recommend rejecting the meals. proposal. Reading $40 million one-time funding to cover costs Recommend rejecting proposed increase. The costs Difficulties associated with administering the screener in associated with administering the screener in 2026-27 Screening 2026-27. will likely be lower than in prior years, and the costs associated with providing targeted support to students identified as having reading difficulties are unknown. The Legislature could redirect the funds in this proposal to the discretionary block grant. CONTACTS Edgar Cabral Deputy Legislative Analyst: K-12 Education Edgar.Cabral@lao.ca.gov (916) 319-8343 Michael Alferes Community Schools, Necessary Small Schools, Dual Enrollment Michael.Alferes@lao.ca.gov (916) 319-8338 Sara Cortez Differentiated Assistance, Science Performance Tasks, Sara.Cortez@lao.ca.gov Kitchen Infrastructure (916) 319-8348 Dylan Hawksworth-Lutzow Expanded Learning Opportunities Program, Dylan.Hawksworth-Lutzow@lao.ca.gov Teacher Residency, Reading Difficulties Screening (916) 319-8308 LAO PUBLICATIONS This report was reviewed by Edgar Cabral and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 32 LEGISLATIVE ANALYST’S OFFICE