Newly Operational Charter Schools, FY 2013–14

September 4, 2013

Dear County Superintendents of Schools, Chief Business Officials, and Directors of Newly Operational Charter Schools:

NOTICE OF SPECIAL APPORTIONMENT FOR NEWLY OPERATIONAL
CHARTER SCHOOLS, FISCAL YEAR 2013–14

This special apportionment in the amount of $63,785,331 is made in accordance with California Education Code (EC) Section 47652 for fiscal year 2013–14. The purpose of this advance apportionment (Advance) is to fund charter schools that are newly operational this fall.

This Advance is for the months of July 2013 through November 2013 and equals 37 percent of the charter school’s estimated funding for the 2013–14 fiscal year, calculated pursuant to Sections 47633 and 47634.1, as they existed prior to enactment of Assembly Bill (AB) 97 (Chapter 47, Statutes of 2013).

New Local Control Funding Formula

AB 97, as amended by Senate Bill 91 (Chapter 49, Statutes of 2013), established the Local Control Funding Formula (LCFF), which represents a significant change in how California’s kindergarten through grade twelve (K–12) local educational agencies (LEAs) are funded, including county offices of education, school districts, and charter schools. While the new LCFF is effective beginning July 1, 2013, the California Department of Education (CDE) has not yet incorporated many of the LCFF provisions into its apportionment systems. The CDE intends to begin calculating LEA funding in accordance with the new LCFF in the 2013–14 Second Principal (P-2) Apportionment, which will be certified on or before July 2, 2014. For more information on LCFF implementation, see the Fact Sheet posted on the CDE Web site at http://www.cde.ca.gov/fg/aa/pa/lcff13factsheet.asp [Note, the preceding web page is no longer available].

The LCFF is expected to be phased in over an eight year transition period. In accordance with EC Section 42238.03 (f), funding for new charter schools during the LCFF transition period will be based on the prior year per-pupil funding rate of the district in which the charter school is physically located. Because we do not know the physical location of each new charter school, nor have we yet calculated the per-pupil rates of all school districts for purposes of this calculation, we cannot reasonably estimate at this time the actual funding rate that will be applied to each new charter school under the LCFF. Consequently, this apportionment has been calculated based on the statutes and funding rates that were in place prior to enactment of AB 97, including general purpose entitlement and categorical block grant funding.

Because this apportionment is merely a means to begin allocating funds in accordance with EC Section 41330, it should not be used for budget purposes. Actual final funding under the new LCFF formulas will differ from this Advance. For more information on the assumptions used for this apportionment, we encourage you to read the 2013–14 Advance Principal Apportionment letter and the Calculations to Determine the 2013–14 Advance, which are posted on the CDE Web site listed at http://www.cde.ca.gov/fg/aa/pa/calc1314adv.asp.

While this apportionment was not calculated using the new LCFF statutes, an increase of 4.62 percent was made to allocate a portion of the $2.1 billion that was appropriated by AB 97 to begin the transition to LCFF funding for school districts and charter schools. This increase is allocated in an equal percentage to all charter schools. Actual LCFF entitlements for individual charter schools will differ, so again, caution should be used in building these funds into budgets and spending plans.

Education Protection Account

Entitlements calculated in this apportionment were reduced by $200 per unit of estimated average daily attendance (ADA) to reflect the 2013–14 Education Protection Account (EPA) revenues as established by Proposition 30, The Schools and Local Public Safety Protection Act of 2012. The CDE will allocate EPA revenues on a quarterly basis, meaning LEAs will receive separate quarterly payments equal to 25 percent of their annual EPA entitlement (for new charter schools this means quarterly payments of $50 for each unit of funded ADA). The first payment will be made in September 2013. Note that future payments may be adjusted for ADA changes and previous over- or under- payments of EPA funds. For more information on EPA, go to http://www.cde.ca.gov/fg/aa/pa/epa.asp.

Funding In-Lieu of Property Taxes

Also included in this special apportionment is funding to sponsoring school districts to backfill their transfer to charter schools of funding in-lieu of property taxes, for the months of August 2013 through November 2013, which equals 28 percent of the charter school’s projected total in-lieu of property taxes funding for the 2013–14 fiscal year. For most charter schools, EC Section 47632 defines the sponsoring LEA as the district that granted the charter, or in the case of a charter that was denied by a district and subsequently approved by a county office, the district that initially denied the charter.

For a county office of education approved charter school whose students are referred by parental request pursuant to subdivision (b) of EC Section 1981 or for a county-wide charter whose students reside in a basic aid district, the sponsoring LEA is the district of residence for those pupils. That means some county-approved charter schools will have multiple sponsoring districts if the school has students who reside in different districts. For a charter that was denied by an LEA and subsequently approved by the State Board of Education, the sponsoring LEA is the LEA that initially denied the charter or the LEA designated by the State Board of Education pursuant to paragraph (1) of subdivision (k) of EC Section 47605.

Method for Receipt of State Aid

Pursuant to EC Section 47651, for charter schools that elect to receive funding directly, the warrant will be drawn in favor of the superintendent of schools of the county in which the LEA that approved the charter is located, for deposit to the appropriate funds or accounts of the charter school in the county treasury. For all other charter schools, the funds shall be deposited in the appropriate funds or accounts of the LEA that approved the charter.

What’s Next

Apportionments for new charter schools for the months of December 2013 and January 2014 will be revised based on the actual first twenty (20) school days of attendance as reported by the charter school; the payment for December and January should occur in late December. The actual ADA counts for the December payment must be reported to the CDE no later than five business days immediately following the 20th school day. The CDE will provide notification for this attendance reporting process within the next few weeks. The 20 day apportionment will also be calculated using the statutes that were in place prior to enactment of the LCFF.

The CDE is currently working to determine the appropriate standardized account code structure (SACS) coding for the LCFF. In the meantime, pending accounting guidance from the CDE, for charter schools planning to use SACS, we suggest you use Resource Code 0000 and Revenue Object Code 8015 to account for the General Purpose Entitlement, and use Resource Code 0000 and Revenue Object Code 8011 for charter school sponsoring LEAs for the funds in lieu of property taxes transfer. Note that some reclassification may be necessary once CDE completes its research and issues SACS accounting guidance later this fiscal year.

The amount apportioned to each participating charter school and charter school sponsoring LEA is available on the CDE’s Web site under Special Apportionments for Charter Schools at http://www.cde.ca.gov/fg/aa/pa/pa1314.asp. Additional information about charter schools is available on that same Web site.

All communication related to the Principal Apportionment and LCFF funding will be available on the CDE’s Web site, and funding specific information will also be sent electronically via the CDE’s PASE listserv. The listserv provides LEAs and other interested parties important information, such as notifications regarding LCFF updates, software releases, key deadlines, reminders of due dates for submission of data, and any other pertinent topics related to the Office of Principal Apportionment and Special Education (PASE) and the Office of Charter Apportionments and District Reorganization. If you do not already belong to the PASE listserv and would like to subscribe, send a "blank" message to: join-pase-contacts@mlist.cde.ca.gov.

If you have any questions regarding this apportionment or about funding for charter schools, please contact the Office of Charter Apportionments and District Reorganization by phone at 916-324-4541 or by e-mail at PASE@cde.ca.gov.

Sincerely,

Jeannie Oropeza, Deputy Superintendent
Services for Administration, Finance, Technology, and Infrastructure Branch

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Enclosure