Dear County Superintendents of Schools:
THIRD QUARTER APPORTIONMENT FOR THE
EDUCATION PROTECTION ACCOUNT
FISCAL YEAR 2017–18
This apportionment, in the amount of $1,642,856,805, is made from the Education Protection Account (EPA) in accordance with Section 36 of Article XIII of the Constitution of the State of California in support of county offices of education, school districts, and charter schools as directed by law.
With the implementation of the Local Control Funding Formula (LCFF) in fiscal year 2013–14, EPA entitlements will continue to be calculated based on adjusted revenue limits, including the allowance for necessary small schools, and charter school block grant funding. In accordance with Section 36 of Article XIII of the Constitution of the State of California, these funding amounts continue as components of the LCFF. The California Department of Education (CDE) will allocate EPA revenues on a quarterly basis through the 2030–31 fiscal year. Charter schools newly operational in the 2013–14 fiscal year and after receive the EPA minimum funding level of $200 per unit of average daily attendance (ADA).
A local educational agency’s (LEA) governing board is required to make spending determinations for EPA funds at an open public meeting and post on the LEA’s Web site an accounting of how much money was received from the EPA and how that money was spent.
2017–18 Third Quarter Entitlement Calculation
Using a 2017–18 EPA revenue estimate of approximately $6.5 billion, the CDE calculated estimated EPA entitlements using a factor of 24.21346376 percent based on the statewide total of revenue limits and charter school block grant funding as of the 2017–18 First Principal Apportionment. Each LEA’s EPA entitlement was then reduced so that funding from local property taxes and the EPA combined did not exceed the LEA’s adjusted revenue limit or charter school general purpose funding, provided that each LEA received the minimum EPA funding of $200 per unit of ADA. For most LEAs, EPA funding offsets LCFF state aid allocated through the Principal Apportionment. EPA entitlements will be recalculated at the 2017–18 Second Principal (P-2) Apportionment and will be based on both P-2 data and a revised EPA revenue estimate to be provided by Department of Finance in June 2018. EPA entitlements for 2017–18 will become final as of the 2017–18 Annual Certification.
2016–17 P-2 to Annual Adjustment
Fiscal year 2016–17 EPA entitlements were also recalculated using the 2016–17 EPA revenue amount of approximately $6.9 billion and a factor of 24.89424756 percent based on the statewide total of adjusted revenue limits and charter school general purpose funding as of the 2016–17 Annual Apportionment. Entitlements for charter schools that closed and entitlements for those LEAs that had overpayments that could not be recovered through the EPA apportionment process in the 2016–17 fourth quarter were held constant as of the 2016–17 P-2 Apportionment. For most LEAs, the amount of the 2016–17 Annual EPA entitlement resulted in a corresponding reduction to the LEA’s 2016–17 Annual LCFF state aid funding. Any adjustment (positive or negative) in 2016–17 EPA entitlements calculated between 2016–17 P-2 and 2016–17 Annual for an LEA is applied against its 2017–18 current year EPA apportionments.
This quarterly apportionment equals approximately 75 percent of each LEA’s 2017–18 EPA entitlement, net of 2016–17 adjustments, less amounts apportioned in September 2017 and December 2017. Future payments may be adjusted for ADA changes, local property taxes, and previous over- or underpayments of EPA funds.
The State Controller’s Office estimates that payments for this apportionment will be issued to county treasurers on March 22, 2018, and school districts and charter schools should be advised immediately of this apportionment. For standardized account code structure (SACS) coding for current year funds, use Resource 1400, Education Protection Account, and Revenue Object 8012, Education Protection Account Entitlement. The 2016–17 EPA Entitlement adjustment from P-2 to Annual that was not accrued in the prior year should be recorded to Resource 1400 using Object 8019, Revenue Limit State Aid – Prior Years.
A Principal Apportionment funding exhibit for the Education Protection Account calculation has been created. Beginning with 2016–17 Annual, the new Education Protection Account Calculation exhibit will be published along with all Principal Apportionment exhibits at https://www.cde.ca.gov/fg/aa/pa/pa1718.asp. The Education Protection Account Calculation exhibit uses the same data sources as in previous fiscal years. The exhibit takes the place of the Excel EPA entitlement worksheet previously published with the third and fourth quarter certifications. The payment schedules by LEA and by county will continue to be posted by fiscal year on the EPA Web page at https://www.cde.ca.gov/fg/aa/pa/epa.asp. For further explanation of the new Education Protection Account Calculation exhibit see the 2017–18 Principal Apportionment Exhibit Reference Guide at https://www.cde.ca.gov/fg/aa/pa/exhibitguides.asp. Note: the 2017–18 Principal Apportionment Exhibit Reference Guides will be published in the coming weeks.
For additional information on EPA calculations, letters of apportionment, payment schedules, spending restrictions, frequently asked questions, SACS financial reporting and more, please refer to CDE’s EPA Web page at https://www.cde.ca.gov/fg/aa/pa/epa.asp.
If you have questions regarding the EPA entitlement calculation, please contact the Principal Apportionment Section by phone at 916-324-4541 or by e-mail at PASE@cde.ca.gov. For questions related to SACS financial reporting, please contact the Office of Financial Accountability and Information Services by phone at 916-322-1770 or by e-mail at email@example.com.
Caryn Moore, Director
School Fiscal Services Division