Dear County Superintendents of Schools:
Fourth Quarter Apportionment for the Education Protection Account, Fiscal Year 2021–22
This apportionment, in the amount of $8,072,775,714, 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. The California Department of Education (CDE) will allocate EPA revenues on a quarterly basis through the 2030–31 fiscal year.
EPA entitlements are calculated based on adjusted revenue limits, including the allowance for necessary small schools, and charter school block grant funding. 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 website an accounting of how much money was received from the EPA and how that money was spent.
2021–22 Fourth Quarter Entitlement Calculation
Using a 2021–22 EPA revenue amount of approximately $15.8 billion, the CDE calculated estimated EPA entitlements using a factor of 73.31789035 percent based on the statewide total of adjusted revenue limits and charter school block grant funding as of the 2021–22 Second Principal Apportionment (P-2). 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.
The final EPA revenue amount for 2021–22 increased by 53 percent over the estimated revenue used for the previous quarterly apportionments of 2021–22, and as a result the EPA entitlement for many LEAs has increased significantly. For LEAs that receive Local Control Funding Formula (LCFF) state aid, EPA funding offsets LCFF state aid allocated through Principal Apportionment. As a result, most LEAs can expect to see a commensurate reduction in their 2021–22 LCFF state aid.
The significant increase in EPA revenue resulted in the need to adjust the EPA allocation formula. In order to fully apportion the total amount of 2021–22 EPA revenues to LEAs, revenue limit rates for school districts and charters were adjusted by the statutory COLA rates from 2013–14 through 2021–22 for the fourth quarter 2021–22 EPA calculations. This adjustment will not be applied to the revenue limit rates used for any purpose other than the EPA entitlement calculation. For EPA, the 2012–13 revenue limit rates for school districts and charter schools will continue to be adjusted by the statutory COLA in 2022–23 and future years.
EPA entitlements will be recalculated at the 2021–22 Annual Principal Apportionment and will be based on both Annual Apportionment data and the final EPA revenue amount noted above. EPA entitlements for 2021–22 will become final as of the 2021–22 Annual Certification.
2020–21 P-2 to Annual Adjustment
Fiscal year 2020–21 EPA entitlements became final as of the 2020–21 Annual Certification and have not changed from the 2021–22 Third Quarter Apportionment for the EPA. Any adjustment (positive or negative) in 2020–21 EPA entitlements calculated between 2020–21 P-2 and 2020–21 Annual for an LEA has been applied against its 2021–22 current year EPA apportionment and is shown on the Education Protection Account Fourth Quarter Apportionment – Payment Schedule by Local Educational Agency, which can be found at https://www.cde.ca.gov/fg/aa/pa/documents/epapayschedlea21q4.xlsx.
This apportionment equals 100 percent of each LEA’s 2021–22 EPA entitlement, net of 2020–21 adjustments, less any amounts apportioned in September 2021, December 2021, and March 2022. Future payments may be adjusted for ADA changes, local property taxes, and previous over or underpayments of EPA funds.
As explained above, EPA revenue for the 2021–22 P-2 recalculation was significantly higher than prior certifications for the fiscal year. Many LEAs will have increased EPA entitlement, and a large fourth quarter payment, which may cause the LEA to have a reduced or negative P-2 payment.
The State Controller’s Office estimates that payments for this apportionment will be issued to county treasurers on June 24, 2022, 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 2020–21 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.
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 email at PASE@cde.ca.gov. For questions related to SACS financial reporting, please contact the Office of Financial Accountability and Information Services by email at firstname.lastname@example.org.
Elizabeth Dearstyne, Director
School Fiscal Services Division