California schools today receive the large majority of their funding from the state, primarily from income and sales tax revenues, but also from local property taxes that are collected at the local level and distributed by the state. By their nature, income and sales taxes are more volatile revenue sources than property taxes. California school districts therefore face dramatic cyclical funding variations as the economy rises and falls. Further, California's governor and state Legislature, whose vote on the State Budget Act determines how state funds may be spent, have enormous control over the ability of local school districts to utilize funding to meet the specific needs of their students.

History

Prior to the 1970s, California’s schools were financed largely with property tax revenues imposed for the benefit of local school districts. This led to dramatic differences in school district funding. A school district with very high property values could raise more revenue per pupil with a low property tax rate, while a district with low property values could raise less with a much higher property tax rate. The state attempted to reduce these differences by providing more state aid to low-property wealth districts. Despite this effort, per pupil revenues varied considerably between districts. In fiscal year 1968-69, for example, per pupil expenditures ranged from $577 in Baldwin Park to $1,232 in Beverly Hills. This disparity led to the important Serrano v. Priest (1976) equal protection litigation, which was resolved through statutory enactments that called for a general equalization of state apportionment revenue to school districts.