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Principal Apportionment Accounting Guidance

Letter Head: Jack O'Connell, State Superintendent of Public Instruction, Phone number 916-319-0800

February 16, 2007

Dear County and District Chief Business Officials, Charter School Administrators:


The purpose of this letter is to inform you of several changes to the California Department of Education's (CDE) accounting guidance for amounts provided to local educational agencies (LEAs) through the principal apportionment process.

Revenue Limit

Certain programs funded through the principal apportionment – specifically adult education, apprenticeship, community day school funding beyond the base revenue limit, and supplemental hourly programs – were previously treated as state aid revenue limit on the school district and county office of education revenue limit reports, Form K–12 and Form O, respectively. For consistency, they were also recorded in LEA accounting systems using Object 8011, Revenue Limit State Aid.

The treatment of these programs as state aid revenue limit was recently reevaluated. It was determined that the programs are more appropriately categorical programs (funded through the principal apportionment). For consistency, effective 2007–08, LEAs should begin recording these revenues using Object 8311, Other State Apportionments. See Attachment A for a detailed listing of the affected programs.

Payments to Charter Schools in Lieu of Property Taxes

A sponsoring LEA, pursuant to Education Code sections 47632 and 47635, is required to transfer funding “in lieu of property taxes” to the associated charter school(s). Currently, the California School Accounting Manual directs the sponsoring LEA to record the payment using Object 7280, Transfers to Charter Schools in Lieu of Property Taxes, and directs the charter school to use Object 8780, Transfers from Sponsoring LEAs to Charter Schools in Lieu of Property Taxes.

At the time this guidance was developed, the CDE had determined that this transaction most closely fit the criteria for recognition of pass-through grants for agencies with administrative involvement established by Governmental Accounting Standards Board Statement 24, Accounting and Financial Reporting for Certain Grants and Other Financial Assistance. Since that time, the CDE has revisited this issue and has determined that the transfer in lieu of property taxes is most appropriately recorded as a revenue limit transfer, using the newly established Object 8096, Transfers to Charter Schools in Lieu of Property Taxes. LEAs should begin using Object 8096 effective 2007–08. Illustrative accounting entries are provided in Attachment A.

If you have any questions or concerns, please contact the Office of Financial Accountability and Information Services at 916-322-1770 or by e-mail at


Scott Hannan, Director
School Fiscal Services Division

Last Reviewed: Wednesday, July 26, 2017

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