LtrQ3-14: EPA Payment letter, FY 14–15 Q3

March 12, 2015

Dear County Superintendents of Schools:

Notice of the Third Quarterly Apportionment for the
Education Protection Account
Fiscal Year 2014–15

This apportionment, in the amount of $1,672,754,502, is made from the Education Protection Account (EPA), in accordance with Proposition 30, The Schools and Local Public Safety Protection Act of 2012, as enacted by Section 36 of Article XIII, of the Constitution of the State of California. This apportionment is made for the support of county offices of education, school districts, and charter schools as directed by law.

Using the 2014–15 EPA revenue estimate of approximately $6.6 billion, the California Department of Education (CDE) recalculated estimated EPA entitlements using a factor of  22.23537438 percent based on the statewide total of adjusted revenue limits and charter school block grant funding as of the 2014–15 First Principal (P-1) Apportionment. 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 Proposition 30. These funding amounts continue as components of the LCFF Floor calculation.

Each local educational agency’s (LEA) 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 at a rate of $200 per unit of average daily attendance (ADA). Additionally, charter schools newly operational in the 2013–14 fiscal year and after, received the minimum funding of $200 per ADA. Except for LEAs fully funded through local revenue, EPA funding offsets LCFF state aid allocated through the Principal Apportionment.

Fiscal year 2013–14 EPA entitlements were also recalculated using the 2013–14 EPA revenue estimate of approximately $6.3 billion and a factor of 21.12293943 percent based on the statewide total of adjusted revenue limits and charter school general purpose funding as of the 2013–14 Annual Apportionment; however, 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 2013–14 fourth quarter, were held constant as of the 2013–14 P-2 Apportionment. LEAs fully funded through local revenue and in-lieu of property taxes received $200 per ADA. Except for excess tax LEAs, the amount of 2013–14 EPA funding each LEA received resulted in a corresponding reduction to the LEA’s 2013–14 Annual LCFF state aid funding. Any adjustment (positive or negative) in 2013–14 EPA entitlements calculated between 2013–14 P-2 and 2013–14 Annual, has been applied against an LEA’s 2014–15 current year apportionment. 

The CDE will allocate EPA revenues on a quarterly basis through the 2018–19 fiscal year. This quarterly apportionment equals 75 percent of each LEA’s 2014–15 EPA entitlement, net of 2013–14 adjustments, less any amounts previously apportioned from September 2014 through December 2014. Future payments may be adjusted for ADA changes, local property taxes, and previous over- or under- payments of EPA funds.

County treasurers will receive warrants for this apportionment on March 24, 2015, and should advise school districts and charter schools 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 2013–14 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.

LEAs should be aware that Proposition 30 requires an LEA’s governing board to make spending determinations for EPA funds at an open public meeting and that LEAs report on their Web sites an accounting of how much money was received from the EPA and how that money was spent. For additional information on EPA calculations, letters of apportionment, payment schedules, spending restrictions, frequently asked questions, SACS financial reporting and more, please refer to the CDE Web page at http://www.cde.ca.gov/fg/aa/pa/epa.asp.

If you have questions regarding the EPA entitlement calculation, please contact the Office of Principal Apportionment and Special Education 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 sacsinfo@cde.ca.gov.

Sincerely,

Caryn Moore, Associate Director
Local Control Funding Formula Section