California’s education funding level rises compared to other states

Top Takeaways

• Amid a surging state economy and higher income taxes on the wealthy, California’s funding per student has risen from the bottom to 13th-highest in the nation.
• The Education Law Center also said that California’s funding distribution to districts is now the nation’s second-most equitable.
• And yet, while California’s average cost-adjusted teacher pay is near the top, its average class size is near the bottom of the nation.

It may come as a surprise to Californians who know the state has consistently ranked low in how much it spends on students compared to other states: California’s ranking has soared to the 13th-highest in the nation for how much it funds education per student. 

That’s not all. California’s equity ranking — comparing how fairly it distributes money to districts in high-poverty communities — rose to the second-highest in the nation, capturing the impact of the state’s equity-focused funding formula for schools, known statewide as the Local Control Funding Formula. 

These are just some of the findings of Making the Grade, a report from the Education Law Center, a national education advocacy organization that has been ranking states since 2019. 

Many Californians have long complained about the state’s dismal ranking in public education funding. But it turns out that some of what is repeated is outdated. The report’s findings led EdSource to take a closer look at its data and what they can tell us about whether decisions California voters and policymakers have made are leading to better outcomes for all students.

California’s rise in student funding

California’s average per-student funding is $19,894, as of 2022-23. That California rose from 28th in per-student funding in 2021-22 to 13th in 2022-23, the latest year for which comparisons are available, reflects a unique set of circumstances: California rebounded quickly from a short Covid-19 recession, producing higher revenues led by high-tech stocks, while education spending in many states, still mired in the recession, declined. 

Other factors helped boost California’s ranking. The state responded to the Covid-19 pandemic with about $30 billion in one-time funding over four years. That included billions of dollars for summer school, learning-loss recovery, the phase-in of transitional kindergarten, as well as money to hold districts financially harmless from chronic absences.

Yes, California is the most populous state and has vast riches. Still, no other state provided funding on this scale in the aftermath of Covid-19; it roughly matched California’s share of record-level federal funding under the Elementary and Secondary School Emergency Relief aid. 

Even before the Covid-19 education funding bump, California’s per-student funding had been steadily increasing over the past dozen years, from when its ranking was near the bottom of states amid the Great Recession.

DIFFERENT METHODOLOGIES, DIFFERENT RESULTS

It’s important to note that there are various ways to measure how states prioritize public education, and different criteria can yield small or occasionally substantial differences that affect state rankings.

Some analyses, such as those by the Public Policy Institute of California, examine school spending and include federal contributions, while the Education Law Center compares school funding and includes only state and local funding sources.

Some analyses use estimates for up-to-date comparisons, but the most reliable data gathered by the U.S. Census Bureau , which ELC uses, takes several years to collect and validate. Some studies, like ELC’s, adjust for inflation in current dollars.

Because the costs of living varies widely across the nation, many studies use formulas that adjust for regional costs; ELC uses a prevalent one, called the Comparable Wage Index for Teachers (CWIFT), produced by the National Center for Education Statistics.

Notwithstanding their differences, all recent studies have shown California’s ranking rising significantly during the past two decades. 

How bad was it then? In 2010-11, the Golden State ranked 50th, behind only Utah in spending, according to Education Week’s Quality Counts, which preceded the law center’s reporting using similar metrics.

Then, in 2012, threatened with further cuts to education, state voters approved a temporary income tax increase on the wealthiest Californians and renewed it in 2016. (In November, state voters will be asked to make the tax permanent.) California began to climb the per-student funding ranking: By 2017, it rose to 37th, just behind Kentucky, putting it close to Texas and Mississippi and lagging far behind Northeastern states, according to ELC’s first report in 2019.

Study shows California distributes its funding equitably 

Comparing public school funding among states is complex. States’ tax structures, per-capita economic output and poverty rates differ, as do their funding formulas for assisting higher-poverty school districts.

A state’s average per-pupil funding tells only part of the story, particularly in California, where a district’s funding is tied, through the Local Control Funding Formula, to the proportion of low-income students, English learners and foster and homeless children. Districts in the bottom quintile receive nearly $6,000 less per enrolled student than the highest-funded districts in California in 2024-25.

In its report, in addition to looking at funding levels per student across states, the law center has looked at two other factors: 

• Equity: how well funding is redistributed to low-income and high-needs districts
• Effort: how much a state makes education funding a priority relative to its capacity, measured by the percentage of state gross domestic product (GDP) spent on public education

Benefiting from rising overall per-pupil funding, California has moved to the forefront in efforts to distribute funds to districts where they are most needed. On the law center’s measurement of funding equity, California rose from 6th place to 2nd, behind only Utah. In 2017, it ranked 9th. 

The funding distribution measure, said Education Law Center researcher Danielle Farrie, “is meant to show … if states provide greater funding in higher-poverty districts versus lower-poverty ones.” 

California’s equity ranking increased steadily as it phased in the Local Control Funding Formula, enacted in 2013.

A greater funding advantage for lower-income districts yields a greater score. The law center’s report shows high-poverty school districts in California receiving 42% more funding than districts with the least poverty received an A ranking. In contrast, its neighbor to the north, Oregon, earned an F: its higher-poverty districts received 18% less funding than higher-income ones. 

Some states have comparatively high funding, but are rated poorly on funding distribution. Illinois, for example, gets an “A” on per-pupil funding, ranking 8th among states, but a “D” on distribution, ranking 35th. Connecticut is the sharpest example of this pattern, near the top in per-pupil funding — but at the very bottom in funding equity, because districts’ funding relies on local property taxes, favoring high-property-value suburbs over poorer urban districts.

“Two things can be true: You can have an equitable funding formula on the books, but have inequitable funding,” said Farrie. Having a big investment in education “doesn’t mean that it’s distributed equally.”

Not a top state priority by ‘effort’ metric

Let’s look at “effort.”

California’s rise in the ranks for funding effort (the percentage of the state’s GDP going toward public school spending) is partly attributable to other states’ decline. Many states, according to Farrie, have “decided to cut income taxes and corporate taxes,” so that “effort is down because they’re not capitalizing on new economic activity.”

As California’s rank rose in “effort” from 35th nationally in 2016-17 to 20th in 2022-23, the percentage of GDP spent on public education in the state only increased from 3.08% to 3.23% during that time.

And unlike most states, California’s tax receipts soared from the boom in high-tech profits following the pandemic, and K-12 benefited. 

Nonetheless, in the latest report, California ranks lower in per-student funding than some other states viewed as its peers, including those with large urban areas and a high cost of living. New York, for example, spent 4.4%, and Illinois spent 4.3% of their GDP on education. The Golden State did not rank as low as states toward the bottom, however, such as Texas with 2.6% and Florida with 2.1%, both getting an “F” grade, compared with California’s “C.” 

As a relatively high-cost, high-tax state, California’s 20th-place ranking in effort indicates a capacity to increase funding for K-12 education either by raising revenue or shifting spending priorities. Two key contrasting measures of education funding — teacher pay and the average number of students per teacher — underscore the limits of California’s funding. 

Tops in teacher pay, but also tops in cost of living

During the past decade, as its per-student funding rose, California surpassed New York in paying teachers the highest salary: $101,084 in 2023-24 compared with New York’s $95,615 (unadjusted for inflation). California’s average starting teacher pay of $58,409 was the second-highest, according to the National Education Association. The numbers exclude benefits, including state and local contributions to retirement and medical coverage, which add about a third to the average salary.

But higher educator salaries have been undermined by a spiraling cost of living in California that erodes the value of those pay increases. Adjusting teacher pay for the state’s cost of living, using a formula that factors in housing costs, shows an erosion of more than $10,000, larger than any other state, including New York. 

Class sizes in California remain among the largest

Class sizes historically have been large in California. Although the ratio has improved in the past five years, California’s class size remains among the highest in the nation. Its teacher-student ratio is similar to states with much lower education spending — only Nevada, Utah and Arizona have a higher ratio — and California’s 2025 rate of 21 students per teacher is almost double New York’s teacher-student ratio of 11.

Paying teachers well to attract and retain them is a challenge in a high-cost state. Reducing class sizes to the national average in California would require a substantial increase in funding. New York manages to do both by spending $29,440 per student in 2022-23, the most in the nation and $10,000 more per student than California. 

CALIFORNIA SCHOOL FUNDING QUESTIONS

Any discussion about funding raises questions that rankings alone cannot answer: 

• Many districts argue that their base funding, which is supposed to cover yearly operations, including staff pay raises, is too low to meet rising expenses. What funding level would it take to be both adequate and equitable for all students, with smaller class sizes, pay levels that would better attract and retain teachers and enough extra resources to raise achievement levels for high-needs children?
• Is California spending education funding effectively and efficiently, and evaluating its programs to give us the answer?
• What level of funding would be adequate in California, a state with enormous income inequality, a high cost of living and child poverty rates that are among the highest in the nation? 

EdSource data journalist Daniel Willis contributed to this article.