June 19, 2024

Dear County Superintendents of Schools:

Fourth Quarter Apportionment for the Education Protection Account, Fiscal Year 2023–24

This apportionment, in the amount of $146,988,511, 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 will 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.

2023–24 Fourth Quarter Entitlement Calculation

Using a 2023–24 EPA revenue amount of approximately $7 billion, the CDE calculated estimated EPA entitlements using a factor of 21.98880689% percent based on the statewide total of revenue limits and charter school block grant funding as of the 2023–24 Second Principal (P-2) Apportionment, adjusted for the 2023–24 cost-of-living adjustment of 8.22 percent. 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.

EPA entitlements will be recalculated at the 2023–24 Annual Principal Apportionment and will be based on both Annual Apportionment data and the final EPA revenue amount noted above. EPA entitlements for 2023–24 will become final as of the 2023–24 Annual Certification.

2022–23 P-2 to Annual Adjustment

Fiscal year 2022–23 EPA entitlements became final as of the 2022–23 Annual Certification and have not changed from the 2023–24 Third Quarter Apportionment for the EPA. Any adjustment (positive or negative) in 2022–23 EPA entitlements calculated between 2022–23 P-2 and 2022–23 Annual for an LEA has been applied against its 2023–24 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/epapayschedlea23q4.xlsx (XLSX).

Payment Information

This apportionment equals 100 percent of each LEA’s 2023–24 EPA entitlement, net of 2022–23 adjustments, less any amounts apportioned in September 2023, December 2023, and March 2024. Future payments may be adjusted for ADA changes, local property taxes, and previous over or underpayments of EPA funds.

The 2023–24 EPA revenue amount used for the P-2 calculation of EPA entitlements is significantly lower than the estimated EPA revenue amount used to determine payments made through the Third Quarter. As a result, many LEAs have been overpaid and will see a significant reduction in their Fourth Quarter EPA entitlement. An LEA’s total amount overpaid in EPA funding, as of the 2023–24 P-2 Apportionment, is shown on Line E-6 of the Education Protection Account Calculation exhibit for this period, which is available on the Principal Apportionment Funding Exhibits web page at https://ias.cde.ca.gov/apportionment/ias.aspx?schoolyearid=2023&RptType=P2&CertType=Non.

Overpaid EPA funds will be recovered from an offset of the 2023–24 P-2 Apportionment payment and by invoice if Principal Apportionment funds are insufficient. Offset information has been included for informational purposes on the P-2 Apportionment Payment Schedule, which is available on the CDE 2023–24 Principal Apportionment web page at https://www.cde.ca.gov/fg/aa/pa/pa2324.asp.

LEAs that are due a Fourth Quarter EPA payment will not receive a payment in June. Once the offset of Principal Apportionment funds has been completed, the funds will be deposited into the EPA Fund and payments can be made to LEAs that are still owed a Fourth Quarter payment. For LEAs that are due Fourth Quarter EPA funds, payments will likely be deferred to no later than August 2024. However, this is contingent on forthcoming statute.

For most LEAs, EPA funding offsets local control funding formula (LCFF) state aid allocated through the Principal Apportionment. While this fluctuation in EPA revenue will affect the distribution of state aid needed to fulfill the LCFF entitlement, LEAs will receive the same amount of total LCFF resources, all else being equal. As EPA revenue decreases, LCFF state aid increases to compensate.

County superintendents of schools 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 2021–22 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.

Resources

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 SACSINFO@cde.ca.gov.

Sincerely,

Dean Patterson, Administrator
Principal Apportionment Section

Kiyomi Meeker, Administrator
Principal Apportionment Section

DP/KM:lk