Most California school districts, given greater freedom about how to spend $4.5 billion in state-allocated funds, moved most of the money to balance budgets and avoid teacher layoffs, a report from RAND Corporation and the University of California concludes.

"Most local districts did not use the funds for new initiatives," says Brian Stecher, a RAND senior social scientist and a co-author of the study. "In an era of repeated budget cuts, most districts’ top priorities were preserving fiscal solvency, retaining staff and maintaining existing instructional programs."

In 2007, about 40 percent of California’s state funds for K-12 education were allocated through "categorical aid" programs that restricted how the money could be spent. The following year, the state removed most restrictions from 40 of the categorical aid programs.

The report, "Deregulating School Aid in California: How Districts Responded to Flexibility in Tier 3 Categorical Funds in 2010–2011," recommends that the state should require districts to evaluate the flexibility provisions to determine which students, schools and programs benefit, and which do not.

These evaluations should examine the future of programs most likely to lose funding, such as art and music.

"This study suggests that districts used flexibility in different ways depending on their local circumstances," says Thomas Timar, director of the University of California Davis Center for Applied Policy in Education. "If the legislature decides to experiment with additional flexibility, [it] should require monitoring or evaluation so we can learn how that flexibility is used and why."