Assemblywoman Shirley Weber advocated for the Local Control Funding Formula in 2013, and now wants to close a loophole in the system. (Photo by Anne Wernikoff for CalMatters)

State lawmakers are one step closer to plugging a technical loophole that has allowed California school districts to divert funds intended for needy kids to other purposes.

A legislative panel unanimously advanced a proposal that would strengthen oversight of how the state’s school districts spend money designated for needy students, making it one of the few surviving bills as the coronavirus pandemic has upended the state’s education agenda.

Assembly Bill 1835 by Democratic Assemblywoman Shirley Weber of San Diego stems from a yearslong effort to bolster transparency of the state’s landmark 2013 school finance law, the Local Control Funding Formula.

Advocates of the proposal have long argued that the law, intended to close gaps in student achievement, has lacked the necessary teeth to ensure districts appropriately spend additional funding meant for disadvantaged students.

But the proposal encountered new opposition from a group of school officials who argued that school districts need as much flexibility as possible to navigate looming steep budget cuts induced by the coronavirus pandemic. Experts and state lawmakers have warned schools of potential cuts in state funding greater than those during the Great Recession that resulted in mass teacher layoffs and years of painful cuts for schools.

Weber and supporters of AB 1835 said at a Wednesday morning hearing at the Capitol that the budgetary landscape only adds urgency for passing the proposal. Schools with high percentages of disadvantaged students, they said, experienced the brunt of last decade’s cuts, and they stand to be in a similarly vulnerable position without the legislation.

Weber, who lobbied legislators to pass the Local Control Funding Formula seven years ago, said she empathized with schools’ financial concerns, but said that the proposed changes remain long overdue.

“Even in good times for the last seven years, these kids have not benefited from these dollars because we have not held the districts accountable for using the money as it should have been spent,” Weber said. “We could not afford to once again fail these kids. Even in this pandemic, they are suffering the most.”

Signed into law by Gov. Jerry Brown in 2013, the formula overhauled how school districts in California receive funding. It replaced a system that was criticized for being inflexible and imposing strings for how schools could spend money.

The Local Control Funding Formula, which remains popular among school officials and education advocates, gave districts greater control in determining school spending while giving extra funding to districts with higher concentrations of students who are English learners, economically disadvantaged or foster youth.

Under the new formula, each school district receives a flat, per-student base grant. Districts with higher proportions of needy students receive additional funds with the expectation that schools direct those dollars toward disadvantaged students.

But the November state audit found that the law hasn’t done enough to ensure that districts are appropriately spending that money. The state audit, which renewed the effort to boost the law’s transparency, highlighted that unspent supplemental and concentration funds lose their designation after one year, essentially allowing districts to use those rollover funds for across-the-board expenses, such as teacher pay.

Wednesday marked the first time the Assembly Education Committee gathered since Gov. Gavin Newsom issued statewide stay-at-home orders on March 19. The legislative panel took up only a fraction of the bills it had been slated to consider this session as legislators shift their focus toward a budgetary landscape significantly different than the one the governor presented earlier in the year.

Prior to the pandemic, the state was on rosy economic footing, boasting a $21 billion surplus with plans to invest a record $84 billion for K-12 schools and community colleges. A revised budget later this month is expected to show a completely different picture, and school officials have warned that programs and services across the board will likely be affected by cuts.

Jeff Vaca, chief governmental relations officer for the Riverside County Office of Education, told lawmakers Wednesday that the county’s districts were not planning to oppose the bill. But, with tough financial decisions on the horizon, “we regretfully must oppose the bill because we believe it will make it more difficult to achieve our pledge and mission.”

“We will do everything humanly possible to prioritize and preserve programs for disadvantaged and at-risk students, and to mitigate the loss of learning that the crisis has already caused,” Vaca said before lawmakers advanced the bill. “But it is a certainty that all programs and services will be significantly impacted by the forthcoming recession.”

AB 1835 is among a handful of education proposals that will advance this session. The Assembly Education Committee had been scheduled to hear more than 140 proposals this session, though the panel took up only 14 bills in its sole scheduled hearing, as of Wednesday, before a June 19 deadline. is a nonprofit, nonpartisan media venture explaining California policies and politics.