California’s school funding formula for K-12 schools is designed to direct more resources to students with greater need. However, some districts — known as basic aid districts (also called “community-funded” or “excess-tax” districts) — generate more funding from local property taxes than the state calculates they need under the Local Control Funding Formula (LCFF). Basic aid districts keep their property tax revenues, often ending up with thousands of dollars more per student than other districts.
“Excess Revenue, Unequal Opportunity,” the first major study on basic aid since the enactment of the LCFF, finds:
- 139 districts, serving just 5.5% of California’s students, benefit from growing funding advantages.
- Excess local property tax revenue in these districts has grown 41% over five years, far outpacing LCFF growth.
- A subset of 50 districts concentrated in property-rich counties like San Mateo, Santa Clara, Santa Barbara, San Diego, and Marin capture the lion’s share — $1.15 billion, or 87% — of the statewide basic aid total.
- Many of these districts serve relatively few high-need students, offer far higher salaries, and have smaller class sizes than surrounding districts, widening funding inequities within regions and across the state.
California’s school finance system has been designed with equity in mind, but the resource disparities created by excess advantage districts risk undermining that principle. Policymakers face important choices about whether and how to address the disparities resulting from excess resources so that all students benefit, regardless of where they live. The policy options outlined in this report provide potential pathways to move the system closer to funding fairness.
