Latest News and Comment from Education

Show All

Monday, August 3, 2026

SHOW ME THE MONEY: STATE EDUCATION BUDGETS ARE UP — SO WHY ARE SCHOOLS GOING BROKE?

 

SHOW ME THE MONEY: STATE EDUCATION BUDGETS ARE UP — SO WHY ARE SCHOOLS GOING BROKE?

FY 2026–27 brought a wave of headline-grabbing education spending increases. The fine print tells a different story.

Every budget season follows the same liturgical calendar. Governors stand at podiums and invoke children. Press releases trumpet "record investments." Per-pupil allowances get bumped — 2.5 percent here, 3 percent there — and advocates are expected to nod along, grateful for whatever crumbs survive the appropriations process. This year is no different. Several states have finalized their FY 2026–27 education spending packages, complete with increases to foundation allowances and adjustments to weighted funding formulas for at-risk and English-language learning students. The headlines are warm. The math, less so.

Let's start where the money actually lives.

The Nominal Game

Michigan is perhaps the most instructive case study in how a budget increase can be simultaneously real and illusory. Governor Gretchen Whitmer's FY 2026–27 package, now enacted by the Legislature, raises the foundation allowance by 2.5 percent — from roughly $10,050 to $10,300 per pupil. The conferees also restructured weighted funding for at-risk and bilingual education into a unified weighted foundation allowance, with stated intent to ramp up weights over a 15-year schedule.

On paper: progress. Michigan is spending more on its highest-need students, and it's codifying that commitment in formula rather than leaving it to annual discretion.

In practice: 2.5 percent is also, roughly, the trailing rate of general inflation. Which means the foundation allowance has held steady in real terms — not grown. After years of underfunding that followed the 2011 austerity era, Michigan schools are essentially treading water at a more comfortable depth. The 15-year phase-in schedule for weighted formula increases, meanwhile, is a promissory note signed in disappearing ink. Fifteen years is four to five election cycles. The legislature that enacted the formula will not be the legislature that funds the final ramp.

New York's FY 2026–27 school aid picture is similarly mixed. Formula-based aids grow by roughly 3.56 percent, reaching just over $38.5 billion — a real increase, yes, but one that arrives after years in which Foundation Aid was chronically underfunded and districts ran structural deficits against phantom promised revenue. The state's reorganization of pre-K funding into a unified UPK Aid stream at a minimum of $10,000 per eligible four-year-old is genuinely meaningful. But in a state where New York City teachers' pension obligations and health care costs compound annually at rates that dwarf any COLA adjustment, a 3.5 percent formula bump keeps the treadmill moving, not the runner ahead.

Colorado's framework is worth flagging as a structural outlier — its school finance formula is constitutionally required to increase by at least inflation annually. Which sounds like a floor with teeth. Except that Amendment 23, passed by voters in 2000, spent its first decade being effectively suspended by legislators using creative accounting, and the base per-pupil figure for FY 2025–26 remains at $8,692 — below what it would be had the constitutional mandate been faithfully applied through the recession years. History has a way of compounding.

California: The Inflation-Adjusted Emperor Has No Clothes

Nowhere is the gap between headline and reality starker than in California, where the Newsom administration has spent years touting "all-time high" education spending — and where that claim is technically true in exactly the way a trick question is technically answerable.

The state's own Legislative Analyst Office has noted that the Governor's FY 2026–27 budget would bring Proposition 98 funding to $20,512 per student — an all-time high in unadjusted dollars, yes, but approximately $300 per student below the previous peak once you adjust for inflation. The nominal number goes up every year. The real number has been playing catch-up since the 2008 crash and still hasn't gotten there.

Dan Walters put it bluntly in a February column in CalMatters: Newsom's proposed budget would spend $88.7 billion on K–12 students — a 61 percent increase since he took office. Adjusted for 29 percent inflation over that same period, the real gain is cut roughly in half. Sixty-one percent sounds like a revolution. Thirty-something percent, above a low baseline following years of cuts, sounds more like what it is: maintenance, not investment.

California's Local Control Funding Formula — the equity-focused mechanism enacted in 2013 — was designed to direct higher per-pupil allocations to districts with the greatest concentrations of English learners, low-income students, and foster youth. The supplemental and concentration grants built into the formula were supposed to be transformational. And for some districts, they have been. But a March 2026 commentary in EdSource documented what happens when an equity-focused formula operates inside a structurally underfunded system: the districts with the lowest base grants — often those serving the most affluent families, where local parcel taxes and philanthropy backstop state allocations — are falling further behind the statewide weighted median. Over 215 districts now receive nearly $2,300 less per student in LCFF funding than the statewide weighted median. Equity formulas don't work when the base is too low. You can't redistribute adequacy you don't have.

Meanwhile, the LCFF's statutory COLA for FY 2026–27 is estimated at 2.41 percent — less than inflation in the preceding year, applied to a base that already lags its peak in real-dollar terms.

The LAUSD Object Lesson

You want to know what "record education funding" looks like on the ground? Drive around Los Angeles Unified.

LAUSD is staring down a projected deficit of $877 million for FY 2026–27 — and an accelerating structural shortfall that one forecast has reaching $3.6 billion by 2028–29. The district's board voted earlier this year to issue potential layoff notices to 3,200 employees, with roughly 650 expected to materialize in the near term. More cuts are coming: school consolidations, the elimination of funding through the Student Equity Needs Index, gutting of the Black Student Achievement Plan, an estimated 6,000 eventual layoffs that would represent more than 10 percent of the total workforce.

This is happening while California is, officially, spending more on education than ever before in history.

LAUSD's CFO has traced the crisis to two structural dynamics: decades of enrollment decline (enrollment has dropped from a peak of 746,831 in 2002 to roughly 389,000 this year), and the expiration of one-time federal pandemic relief funds that temporarily papered over the underlying math. Both explanations are accurate. Neither is complete. The third leg of this stool is that California funds schools primarily through average daily attendance — meaning every student who leaves the district (to a charter, to a private school, to another district, to another state) takes their funding allocation with them. In a declining-enrollment environment, that mechanism functions as a revenue doom loop: fewer students means less money, but the fixed costs of maintaining a large urban district — facilities, pensions, special education mandates, transportation — don't decline at the same rate.

Eight California district superintendents, including LAUSD's Alberto Carvalho, signed an open letter this year calling the state's funding model structurally unsustainable. "When nearly every school system in California is facing the same challenges," the letter read, "it is clear that the issue is not isolated decision-making, but the sustainability of the funding model itself."

That's not an accusation of bad governance. It's a structural indictment.

The Weighted Formula Sleight of Hand

One more thing deserves scrutiny: the celebration of adjusted weighted funding formulas for at-risk and ELL students, which features prominently in the FY 2026–27 press releases of multiple states.

Weighted formulas are not bad policy. Correctly designed and faithfully funded, they are among the most defensible mechanisms for directing resources toward students with documented additional needs. California's LCFF supplemental grants, Michigan's new weighted foundation allowance, and comparable provisions elsewhere are, in principle, the right approach.

But there are two ways a weighted formula can fail. The first is when the weights are too small — when an ELL student generates a 10 percent add-on rather than the 35 to 75 percent that Michigan's own legislation identifies as an eventual target (via a 15-year phase-in). The second is when the base to which the weight is applied is itself inadequate. Multiply an insufficient base by a modest weight and you have redistributed the problem, not solved it.

In California's case, a 2026 PPIC analysis found that shifting to enrollment-based funding (rather than attendance-based) would deliver the districts with the highest concentrations of at-risk students about $100 more per pupil — a less-than-one-percent improvement. All that structural debate, all that modeling, for a margin of rounding error.

What "Record Funding" Actually Requires

None of this is an argument for pessimism about public education finance. It is an argument for precision — for demanding that "record investment" claims come with an inflation-adjusted footnote, a structural-cost analysis, and an honest reckoning with the gap between formula enactment and classroom reality.

The baseline lesson of every budget season since at least the Reagan era is this: when a politician tells you education funding has never been higher, check the deflator. When they tell you weighted formula adjustments will close equity gaps, ask about the phase-in schedule and who gets to enforce it in year twelve. When they announce record per-pupil spending, ask what's happening to the second-largest school district in the country while those records are being set.

The children in LAUSD classrooms are not abstract budget line items. The 3,200 layoff notices sent out in February are not accounting footnotes. They are the consequence of treating nominal increases as real ones, of celebrating the headline and ignoring the math beneath it.

Show them the money. Adjusted for inflation. Fully funded. On time.

Big Education Ape covers LAUSD politics, California education policy, and national education reform. Sources: Michigan Senate Fiscal Agency (FY 2026–27 School Aid), Michigan Education Association budget overview, California LAO Publications 5110 and 5178, CalMatters/Dan Walters commentary (Feb. 2026), EdSource "raise the base" commentary (March 2026), PPIC school funding analysis (May 2026), LAist/EdSource/The 74 LAUSD budget coverage (2025–2026).


Sources & Links

"Show Me the Money: State Education Budgets Are Up — So Why Are Schools Going Broke?"

Michigan

  1. FY 2026–27 School Aid Budget — Michigan Senate Fiscal Agency (Conference Report) https://sfa.senate.michigan.gov/departments/highlightsheet/hik12_web.pdf
  2. Overview of FY27 Whitmer Budget Recommendations — Michigan Education Association https://mea.org/overview-of-fy27-whitmer-budget-recommendations/
  3. FY 2026–27 School Aid Summary: As Passed by the House — Michigan House Fiscal Agency https://www.house.mi.gov/hfa/PDF/Summaries/26h5630h1_SchAid_Summary_Hse_Passed.pdf
  4. FY 2026–27 School Aid: As Reported by House Subcommittee — Michigan House Fiscal Agency https://www.house.mi.gov/hfa/PDF/Summaries/26h5628h1_SchAid_Summary_As_Reported_by_Hse_Subcmte.pdf

New York

  1. Description of FY 2026–27 New York State Executive Budget Recommendations for School Aid — NYS Division of the Budget https://www.budget.ny.gov/pubs/archive/fy27/ex/local/school/2627schoolaid.pdf

Colorado

  1. Staff Budget Briefing FY 2026–27: Education — Colorado General Assembly https://content.leg.colorado.gov/sites/default/files/fy2026-27_edubrf2.pdf

California — State Budget & Formula

  1. The 2026–27 Budget: Proposition 98 Guarantee and K–12 Spending Plan — California LAO https://lao.ca.gov/Publications/Report/5110
  2. The 2026–27 Budget: Update on Local Control Funding Formula Costs — California LAO https://lao.ca.gov/Publications/Report/5178
  3. The 2026–27 Budget: Fiscal Outlook for Schools and Community Colleges — California LAO https://lao.ca.gov/Publications/Report/5093
  4. Assessing a Shift to Enrollment-Based School Funding — California LAO https://lao.ca.gov/Publications/Report/5100
  5. The 2026–27 Education Budget, Explained — ED100 https://ed100.org/blog/budget-26-27
  6. Financing California's Public Schools — PPIC https://www.ppic.org/publication/financing-californias-public-schools/
  7. Updating California's School Funding Formula: Assessing Alternatives and Trade-Offs — PPIC https://www.ppic.org/publication/updating-californias-school-funding-formula-assessing-alternatives-and-trade-offs/
  8. California's Education Funding Level Rises Compared to Other States — EdSource https://edsource.org/2026/california-education-funding-rise/757381
  9. It's Time to Raise Base Funding for California Schools (commentary) — EdSource https://edsource.org/2026/raise-base-funding-california/752243
  10. California School Systems Face Red Ink Despite Boosts in Education Spending (Dan Walters) — CalMatters https://calmatters.org/commentary/2026/02/california-school-systems-education-spending/

LAUSD

  1. LAUSD Will Vote on Layoffs Amid Budget Challenges, Declining Enrollment — EdSource https://edsource.org/2026/lausd-budget-deficit-layoffs/751079
  2. LAUSD Approves Reduction in Force That Could Affect 3,200 Employees — EdSource https://edsource.org/2026/los-angeles-unified-votes-to-lay-off-3200-employees-due-to-budget-deficit/751490
  3. LAUSD Could Face Layoffs, Furloughs and School Consolidation Amid Projected Shortfall — EdSource https://edsource.org/2026/lausd-financial-crisis-looms/763170
  4. Inside LAUSD's Budget Crisis: Why Thousands Could Face Layoff Notices — LA Magazine https://lamag.com/education/inside-lausds-budget-crisis-why-thousands-could-face-layoff-notices/
  5. LAUSD to Send 3,200 Layoff Notices as District Faces $877M Budget Deficit — FOX 11 Los Angeles https://www.foxla.com/news/lausd-layoffs-2026
  6. Why LAUSD Says Layoffs May Be Coming Even With a Large Reserve https://wheninyourstate.com/california/why-lausd-says-layoffs-may-be-coming-even-with-a-large-reserve/
  7. Layoffs, Cuts and Closures Are Coming to LAUSD Schools — The 74 https://www.the74million.org/article/layoffs-cuts-and-closures-are-coming-to-lausd-schools-as-district-confronts-budget-shortfalls/
  8. LAUSD Board Finalizes Hundreds of Job Cuts, Previews Future Reductions — LAist https://laist.com/news/education/lausd-reduction-in-force-vote-may-2026-budget-preview
  9. LAUSD Layoffs 2026: 657 Jobs Cut — LayoffHedge https://layoffhedge.com/company/lausd



Posted by at