California Code, Education Code - EDC § 12001

The state board shall adopt rules and regulations for the allocation of federal funds to school districts entitled to receive federal funds for the support of schools.  In determining the rules and regulations by which those allocations are to be made, the state board shall consider all factors of local effort and all educational programs maintained by those school districts.  The rules and regulations adopted pursuant to this section shall be based upon need, and the state board shall carefully scrutinize the abilities and efforts of the affected school districts.