February 13, 2007
Dear County and District Chief Business Officers and Charter School Administrators:
General purpose funding for a charter school sponsored by a unified school district changed significantly as a result of Senate Bill (SB) 319 (Chapter 355, Statutes of 2005), as amended by Assembly Bill 1967 (Chapter 730, Statutes of 2006). This letter provides information about those changes.
Prior to fiscal year 2006-07, revenue limit funding for a unified school district included the average daily attendance (ADA) of all pupils attending a charter school(s) that was sponsored by the district (see Footnote 1). This applied only to the ADA of pupils who resided in the district and were otherwise eligible to attend a noncharter school of the district.
The unified school district, in turn, provided to the charter school the charter school general purpose block grant. Consequently, the district’s net revenue was impacted positively or negatively by each charter school, depending on the difference between the district base revenue limit per ADA and the charter general purpose block grant per ADA. SB 319 more narrowly defined the charter schools that would continue to interact with the unified school district revenue limit, thus reducing the impact of charter schools on a school district’s net revenue.
Specifically, commencing with 2006-07, ADA of pupils residing in a unified school district and attending a charter school that, on or after July 1, 2006, converted from a noncharter school of the district to a charter school, will continue to be funded through the district revenue limit. The only other charter school ADA that will continue to be funded through the district revenue limit is that of charter school pupils who reside in a basic aid unified school district, as described below in the Basic Aid Unified School Districts section.
Another significant SB 319 change is in the amount of general purpose funds provided to these newly operational conversion charter schools. The unified school district will no longer transfer to the charter school the charter school block grant amount. Instead, the charter school will receive the amount of actual unrestricted revenues expended per unit of ADA for that school in the year prior to its conversion to, and operation as, a charter school. The inflation, equalization, deficit factor, and other similar general purpose adjustments that apply to the district also apply to the charter school per ADA rate in the year of conversion and each year thereafter.
Note that the funding amounts and transfer of funds between the district and the charter school is completed by the California Department of Education (CDE) and already reflected in the district and charter school respective apportionment allocations. The state aid amount also reflects adjustment for local property tax contributions.
When a unified school district converts all of its schools to charter status, the district has two choices: 1) fund all of its charter schools according to the traditional revenue limit model, or 2) fund all of its charter schools through the charter school general purpose funding model. Pursuant to that model, schools converting to charter status after July 1, 2006, will receive the amount of actual unrestricted revenues expended per unit of ADA for that school in the year prior to its conversion to, and operation as, a charter school. Those schools converting to charter status prior to July 1, 2006, and all startup charter schools will receive the charter school block grant.
Commencing with 2006-07, the ADA associated with pupils of a charter school, who reside in a unified school district, will continue to be reported as ADA in the district revenue limit calculation, if the district was a basic aid district in the prior year. This applies to all charter schools in the district, regardless of status as a startup (nonconversion) or conversion school.
If the charter school is a conversion school after July 1, 2006, the charter school’s general purpose entitlement, for pupils residing in the district, equals the actual unrestricted revenues expended per unit of ADA for that school in the year prior to its conversion to a charter school. For non-resident pupils and a startup charter school, the general purpose entitlement equals the charter school block grant.
Districts which move in and out of basic aid status may have some startup charter school ADA reported through the district revenue limit, and some charter school ADA reported outside of the district revenue limit, depending on the basic aid status in the year prior to the charter authorization. In both cases, the startup charter school is entitled to the same amount, i.e., the charter school block grant. Note, non-resident charter school ADA are never funded through the revenue limit.
“Basic aid” is defined as a school district that does not receive from the state an apportionment of state funds pursuant to subdivision (h) of California Education Code Section 42238.
The general purpose funding amount for startup charter schools, regardless of the date of authorization and operation, remains unchanged; the school will receive the charter school general purpose block grant rate. However, based on SB 319, the ADA no longer will be reported through the unified school district revenue limit unless the district is basic aid in the prior year.
A unified school district, that is the sponsor of a charter school that converts from noncharter to charter status after 2006-07, must certify to the State Superintendent of Public Instruction (SSPI) the amount of the actual unrestricted revenues expended per unit of ADA for that school in the year prior to its conversion. The certification to the SSPI must take place prior to the approval of the charter petition. The amount may be an estimate and revised once actual data are available.
Since charter schools in operation in 2005-06 had their petitions approved prior to the effective date of the enacting legislation, it is the opinion of the CDE that the change in charter ADA funded through the district revenue limit, the new charter school annual entitlement based on actual expenditures, and the certification requirement, commence with the 2006-07 fiscal year.
Regarding the requirement to determine the amount of actual unrestricted revenues expended per unit of ADA for a charter school in the year prior to its conversion, SB 319 provides that a school district may use cost allocation methods, if appropriate, for an accounting of actual unrestricted revenues expended in support of the school. Currently, however, there are no standardized instructions or guidance to determine expenditures at the school level.
If you have questions about the information in this letter, please contact the School Fiscal Services Division at 916-322-3024
; or Cindy Chan, Administrator, Charter School Fiscal Unit, at 916-324-4541 [Note, the preceding contact is no longer valid and has been replaced by Caryn Moore, Administrator, Office of Charter Apportionments and District Reorganization, at 916-324-4541.]
Scott Hannan, Director
School Fiscal Services Division
Education Code Section 47632(j)
(j) "Sponsoring local educational agency" means the following:
(1) If a charter school is granted by a school district, the sponsoring local educational agency is the school district.
(2) If a charter is granted by a county office of education after having been previously denied by a school district, the sponsoring local educational agency means the school district that initially denied the charter petition.
(3) If a charter is granted by the state board after having been previously denied by a local educational agency, the sponsoring local educational agency means the local educational agency designated by the state board pursuant to paragraph (1) of subdivision (k) of Section 47605 or if a local educational agency is not designated, the local educational agency that initially denied the charter petition.
(4) For pupils attending county-sponsored charter schools who are eligible to attend those schools solely as a result of parental request pursuant to subdivision (b) of Section 1981, the sponsoring local educational agency means the pupils' school district of residence.
(5) For pupils attending countywide charter schools pursuant to Section 47605.6 who reside in a basic aid school district, the sponsoring local educational agency means the school district of residence of the pupil. For purposes of this paragraph, "basic aid school district" means a school district that does not receive an apportionment of state funds pursuant to subdivision (h) of Section 42238.