The Local Control Funding Formula (LCFF) was signed into law July 1, 2013. It is the largest change to California’s school finance model in almost 40 years and went into effect immediately. More than $42 billion from state revenues and local property tax revenues will be applied to the LCFF in 2013–14. Of that amount, $2.1 billion has been appropriated by the Legislature to begin a planned eight-year transition to the new formula, whereby local educational agencies (LEAs), including county offices of education (COEs), school districts, and charter schools, will be brought towards full LCFF funding.
The formulas to calculate LEA entitlements are extraordinarily complex during the transition period with a number of changes to be implemented in the 2013–14 and subsequent fiscal years. This fact sheet is focused on how the California Department of Education’s (CDE) School Fiscal Services Division will transition the flow of funds to LEAs from the old structure (revenue limits, general purpose entitlements and categorical programs) to the new (LCFF grade span base grants, supplemental and concentration grants).
LCFF Funds Will Flow through the Principal Apportionment
While the specific entitlement calculations will change as part of the new LCFF, the LCFF funds will be allocated as part of the existing Principal Apportionment process. The funds will continue to flow through a combination of local property taxes and state funds and the state funds will continue to be a mix of funds from the state General Fund and Proposition 30 Education Protection Account (EPA) funds.
The Principal Apportionment is a series of apportionment calculations that adjust the flow of state funds throughout the year as information becomes known.
- The Advance Principal Apportionment, certified on July 20, is based primarily on prior fiscal year funding and establishes each LEA’s monthly state-aid payment amount for July through January.
- The First Principal Apportionment (P-1), certified on February 20, is based on the first period data that LEAs report to CDE in November through January and establishes each LEA’s monthly state-aid payment for February through May.
- The Second Principal Apportionment (P-2), certified on July 2 of the following year, is based on the second period data that LEAs report to CDE in April and May and is the final state-aid payment for the fiscal year ending in June (cash is paid to LEAs in July).
Local property tax revenues flow to LEAs at different times of the year based on statutory timelines and formulas that are, for the most part, unrelated to the LCFF. The processes and timelines for allocating property tax revenues, and in-lieu of property taxes for charter schools, are unchanged by LCFF. The EPA payments will be made quarterly at the end of September, December, March, and June. (More information about EPA is available on the EPA Web page [http://www.cde.ca.gov/fg/aa/pa/epa.asp]). The remaining state funds for LCFF will be paid through the Principal Apportionment timelines already established in statute (Information about the Principal Apportionment payment schedule is available on the Principal Apportionment Web page [http://www.cde.ca.gov/fg/aa/pa/papayschedule.asp]).
How the LCFF State Share Will be Updated Throughout the 2013–14 Fiscal Year
The CDE cannot immediately determine how much an LEA is entitled to receive during the transition period under LCFF, including the components of LCFF such as an LEA’s supplemental or concentration grant, for three reasons:
- An LEA’s funding is based on current year data that will not be known until the end of the fiscal year, such as the LEA’s average daily attendance.
- The CDE must reprogram its apportionment system to reflect the new formula calculations and its apportionment data collection software in order to collect data in the format required for LCFF.
- Technical problems with the LCFF laws must be fixed.
Nevertheless, state aid for LCFF is currently flowing to LEAs. Because the greater part of funding that LEAs will receive for LCFF ($40 billion) is based on what they received in 2012–13, CDE can reasonably estimate the amount of state funds that an LEA will receive for LCFF. Consequently, consistent with past practice the prior-year funding level served as a basis to provide operating funds to LEAs beginning July in the Advance Principal Apportionment. State funds for LCFF will flow in 2013–14 as follows:
2013–14 Principal Apportionment Process for LCFF
- The Advance Principal Apportionment was based on prior year funding plus adjustments to reflect an increase in available funds. The Advance was certified on July 19, 2013.
- P-1 will be based on prior year funding adjusted for changes to reflect current year average daily attendance and local property tax receipts, which will be collected through a scaled down version of the existing apportionment data collection software. Expected Certification- February 20, 2014.
- P-2 will be based on the LCFF funding model and actual attendance, tax and other data collected through an apportionment data collection software that reflects LCFF. Expected Certification- July 2, 2014.
Critical Milestones to Implement the LCFF Entitlement Calculations and Apportionments
- Identify any formula issues that would prevent 2013–14 implementation, and propose statutory amendments as necessary. Expected completion-September 2013.
- Release scaled-down version of Principal Apportionment Data Collection Software for P-1. Expected completion- November 2013.
- Develop and design an automated apportionment system for the LCFF calculations. This entails identifying new data collection elements and software modifications to collect the data, creating new funding calculation exhibits, and designing the structure to ensure the various calculations are performed in the appropriate order to ensure the appropriate allocation of LCFF funds. Expected completion- December 2013.
- Release the complete and updated Principal Apportionment Data Collection Software for P-2. Expected completion- March 2014.
- Collect LCFF data from LEAs. Expected completion- May 2014.
- Calculate LEA LCFF entitlements, state aid, and P-2 payment amounts. Expected completion- July 2, 2014.
- LCFF Web page [http://www.cde.ca.gov/fg/aa/lc/index.asp]
- Letter on the 2013–14 Budget Act [http://www.cde.ca.gov/nr/el/le/yr13ltr0724.asp]
- Principal Apportionment Web page [http://www.cde.ca.gov/fg/aa/pa/index.asp]
- Listserv for updates related to the Principal Apportionment, including LCFF, send a "blank" message to email@example.com
LCFF Funding and Apportionment
LCFF Accounting in the Standardized Account Code Structure (SACS)
LCFF Local Control Accountability Plan
Proposition 30 Education Protection Account Funds