California State Education Funding

In California, school districts are funded by a combination of local property taxes and state aid under a calculation process known as Local Control Funding Formula (LCFF) that was created with the 2013-14 State Budget Act. The LCFF guarantees a base level of funding differentiated by grade and additional supplemental and concentration grants based on the number of low-income and English learner students in each district. This funding method is intended to correct historical funding inequities, increase flexibility and transparency, and simplify education funding. The LCFF process also introduced the annual Local Control Accountability Plan (LCAP) which emphasizes community engagement and student achievement goals when districts plan their budgets.  The District Advisory Committee is a team of staff and parents that works on the LCAP every year.
California has two types of districts as described by their funding: community-funded (also known as Basic Aid) and state funded (formerly known as Revenue Limit).
About 10% of California districts are community-funded, including PVSD. A community-funded district receives the majority of its funding from local property taxes because local property taxes exceed the state’s guaranteed per-student funding amount (equal to a district’s funding amount in 2012-13 when LCFF was initiated). LCFF calculation and community-funded districts are allowed to retain all their allotted property tax revenue. State contributions to a community-funded district’s budget are minimal. Community-funded districts receive the same level of overall funding regardless of their school district enrollment since their funding is not tied to average daily attendance at their schools.
Community-funded districts face a unique challenge because funding is unrelated to enrollment. While community-funded districts typically have relatively higher property tax bases, districts do not know what their estimated property tax revenue will be until well into the fiscal year, and future year projections are subject to volatility. This is the main reason why community-funded districts usually maintain a reserve level higher than the state required minimum of 3% (4% for small districts such as PVSD) of expenditures (generally equivalent to less than 2 weeks of payroll).  PVSD has a board policy to maintain reserves of at least 12% of annual expenditures.
Community-funded districts often rely on parcel taxes to supplement their budgets, since they cannot rely on state funding and cannot predict property tax revenues. 

In November 2012, California voters approved state Proposition 30, Temporary Taxes to Fund Education. Drafted as a means of guaranteed benefit to all schools, Proposition 30’s Education Protection Act (EPA) provided that no school district shall receive less than $200 per Average Daily Attendance (ADA). This was a direct benefit for community-funded districts, but Proposition 30’s EPA dollars were set to expire in December 2016. They were extended on high income earners with Proposition 55, passed by California voters in 2016. Now, districts will receive no less than $200 per Average Daily Attendance through the end of 2030.  For PVSD, that equals about $100,000 out of the district’s $15M budget.
State funded districts make up about 90% of California’s districts. In state funded districts, local property taxes are less than the state’s per-student funding obligation and the state makes up the difference (state aid). State-funded districts have little concern about local property tax levels because the state back-fills their funding up to the LCFF amount. State funded districts receive money based on enrollment, or average daily attendance, in their schools; for state funded districts, the more students they have, the more funding they receive.