Deregulating School Aid in California

California's system of school finance is highly regulated and prescriptive. A large share of state funding is allocated through categorical programs, that is, programs whose funding is contingent upon districts using the money in a particular way or for a particular purpose. In 2008-09, the strings were taken off 40 of those programs, collectively known as the Tier 3 programs, as part of a budget deal that also reduced the funding for those programs. The authors conducted a survey of 350 California school district chief financial officers (CFOs) between April and August of 2011 to see how district leaders responded to this sudden, limited fiscal flexibility and the conditions that shaped their decisions.