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California unfairly channels much of nearly $13 billion in education aid -- often to wealthy school districts -- through a disparate array of 124 programs with unknown benefits for students, according to a study released today by Policy Analysis for California Education (PACE).

The findings come two weeks after Gov. Arnold Schwarzenegger, hoping to reach a settlement in the Williams lawsuit by committing the state to more equal school spending statewide, agreed to provide $188 million for new instructional materials.

The array of so-called categorical aid programs -- originally aimed at closing achievement gaps in the 1970s -- has grown dramatically and now comprises almost a third of all state spending on public schools. The new study by education finance expert Thomas Timar reveals for the first time that billions of dollars now go to higher-wealth school districts, actually exacerbating inequities in how the state funds schools.

"The goals of categorical finance reform should be to create a system that targets funds where they are needed and does so equitably and efficiently," said Timar. A faculty affiliate of the PACE independent research center, he is an associate professor in the at the University of California, Davis, and associate director of the school's Institute for Education Policy, Law and Government.

"Sadly, these well-intentioned programs were originally targeted at kids who need extra resources," Timar said. "Now this $13 billion quiver of arrows is shot in various directions, rarely hitting the bull's-eye and spent with no apparent effect. These programs may be widening achievement gaps," he added.

Discovering sharp disparities

Timar's two-year study of the arcane world of school finance uncovered what some had suspected but never detailed: The state's 30-year effort to equalize funding, by sending new dollars to programs for low-performing students, is often co-opted by a variety of interest groups.

This $13 billion chunk of school funding is "most likely out of compliance with the California Supreme Court's 1974 decision that requires the legislature and governor to equalize funding across districts," Timar said.

The study found that allocations from major programs are rarely correlated to any measure of local need. In some instances, better-off schools and their students receive the highest levels of funding.

Under one program -- the Targeted Instructional Improvement initiative -- average per-pupil funding was $136 in 2001-02. The Sausalito/Marin City Unified School District received $1,893 per pupil. This wealthy district had $18,245 in total revenues per pupil that year, more than $11,000 over the statewide average for elementary school districts.

In contrast, Kern County's Semitropic Elementary District, with much higher percentages of minority students and free-lunch recipients, received only $6,596 in total revenues per pupil and no funds from the Targeted Instructional Improvement program, despite having greater need, according to the study.

The number of categorical programs has ballooned over a 20-year period, from 17 in 1980 to 124 in 2001-02. From 13 percent of per-pupil funding for K-12 education in 1980, they grew to account for nearly $13 billion, or 30 percent, in 2001-02. And their purposes now range widely from school improvement and school safety to staff development and technology. Most programs are rarely evaluated to see whether they help close achievement gaps locally.

As local schools struggle to balance their budgets, the growth in categorical programs means they have less discretionary monies available than they did a generation ago. The PACE study discovered that today schools have $355 less per pupil in general purpose funds than they did in 1980.

Context -- The Williams school-finance suit

Schwarzenegger, the American Civil Liberties Union and plaintiffs in the Williams suit -- filed four years ago and claiming that many low-income areas have deteriorating campuses, inadequate teachers and insufficient instructional materials -- are reportedly close to a settlement. According to Timar, the governor's agreement to provide $188 million for instructional materials may smooth the way for a settlement but does not address underlying problems.

Timar's study shows that almost one-third of education funding -- controlled by the governor and the legislature -- reinforces disparities in how schools are currently financed.

Legislative opportunities for reform

The governor and leading legislators have proposed ways of simplifying the administration of the 124 categorical aid programs. But Timar said this falls short of making the allocations more equitable to local districts. "The whole logic has to be reevaluated," he said. "Marginal changes around the edges are not going to fix the problems. What's needed is a complete overhaul."

Proposals by state Sen. Dede Alpert (D-San Diego) and Assembly education chair Jackie Goldberg (D-Los Angeles) are winding their way through the legislature. While both measures would simplify existing categorical funding to schools by consolidating them into block grants, they do not address inequities in current allocation formulas, Timar said.

He proposes funding reform that would provide local schools and districts a greater proportion of discretionary dollars in return for stronger accountability. One strategy, Timar wrote, would have schools submit plans for the use of categorical funds, including a statement of real need and a method for evaluating results. Districts would develop plans to show how they would provide support to help schools achieve their objectives.

The complete study can be found on the ºÙºÙÊÓƵ School of Education's Web site at .

A cooperative venture of UC Berkeley, ºÙºÙÊÓƵ and Stanford University, is an independent policy research center whose primary aim is to enrich policy debates with sound analysis and hard evidence.