SONOMA COUNTY OFFICE OF EDUCATION
SCOE BIZ
Business Services
_____________________________________________________________________________________
Bulletin No. 15-17
May 29, 2015
To:
Adopted Budget Guidance
District Superintendents & Chief Business Officials
Charter School Officials
From:
Judy Thomson, Director Fiscal Services
Subject:
May Revision 2015-16 Budget Proposal
The purpose of this letter is to provide 2015-16 Adopted Budget guidance, along with the release of The Common
Message.
With State revenues markedly greater than amounts estimated in January, the May Revision provides $6.1 billion
to further the implementation of the Local Control Funding Formula (LCFF), up an additional $2.1 billion from
January. In addition, there are significant one-time revenues; such as $900 million to eliminate of cash deferrals
and $3.5 billion in one-time discretionary funds.
LEAs must continue to adopt a three-year LCAP with an annual update and demonstrate in their LCAP they have
increased or improved services for unduplicated count pupils in proportion to the increase in the funds
apportioned to supplemental and concentration grant funding.
Under LCFF, each LEA’s situation is unique; having its own particular set of educational and financial challenges.
However, the County does recommend LEAs maintain adequate reserves to allow for unanticipated
circumstances and preserve fiscal flexibility. Fiscal flexibility is supported by limiting commitments to future
increased expenditures based on projections of future revenue growth and/or establishing contingency plans to
allow for intended expenditures to be modified, if need be.
2015-16 Adopted Budget and Multi-Year Projections (MYP)
The following should be considered when preparing the 2015-16 Adopted Budget which is due to SCOE within 5
days of adoption or by no later than July 1, 2015 (whichever is sooner):
Common Message
Please read the County Office The Common Message – May Revision 2015 (attached).
Dartboard
Use the SSC School District and Charter School Financial Projection Dartboard 2015-16 May Revision
(attached) for economic planning factors.
Reserves ~ Transparency requirements
Education Code 42127(a)(2)(B)&(C) requires that beginning with 2015-16 adopted budgets, school
districts must provide additional disclosures on the combined assigned and unassigned fund balance in
excess of the minimum recommended reserve for economic uncertainty, as defined by State regulations.
At the public hearing on the proposed 2015-16 budget, prescribed information must be provided for
public review and comment.
LCFF Calculator and Gap Funding Percentages
LEAs should use FCMAT’s LCFF Calculator to determine LCFF funding, which includes the Department of
Finance (DOF) annual gap funding percentages. LEAs with minimal reserves, significant gap funding
amounts or LCFF funding calculations based on uncertain variables, have a lower risk tolerance. LEAs
should be cognizant that Proposition 30 revenues are temporary. The additional ¼ cent sales tax
(estimated to generate approximately 20% of Proposition 30’s temporary taxes) will expire in 2016 and
the increase in personal income tax on high wage earners (estimated to generate approximately 80% of
Proposition 30’s temporary taxes) will expire in 2018. For LEAs with a low risk tolerance, a portion of gap
funding should be reserved in the LEA’s unrestricted fund balance for years 2016-17 and beyond.
The gap funding percentage included in the LCFF calculators/simulators are as follows:
2014-15
2015-16
2016-17
2017-18
29.97%
53.08%
37.40%
36.74%
29.97%
53.08%
12.62%
18.24%
GAP funding percentage
FCMAT’s LCFF Calculator ~ default %s are based on
DOF estimates **
LCFF Simulator by School Services of California
** Please note that the gap funding % of the LCFF Calculator is easily modified on the Assumptions tab.
One Time Discretionary Funds ~ an offset to Mandate Costs Debt
The Governor’s Budget Proposal includes approximately $3.5 billion in one-time funds (an increase of
$2.4 billion from January) to offset state obligations for outstanding mandate debt. The funds will go to
all LEAs and will not depend on whether the LEA participated in the mandate program in the past. The
allocation represents approximately $601 per ADA. The Governor suggests these one-time funds be used
for professional development, new teacher induction, instructional materials and technology expansions.
Such funding may be included in an LEA’s budgets. Those districts with a low risk tolerance should
consider reserving some or all of these funds.
Transportation:
Maintenance of Effort (MOE) ~ Of the funds received for home-to-school transportation, a school district
is required to expend no less than the amount of funds it expended for home-to-school transportation in
the 2012-13 fiscal year or the amount of revenue received in 2013-14, whichever is less. The MOE
requirement only applies to spending up to the amount of the transportation entitlement received in
2012-13; contributions to transportation programs above the amount of the entitlement are not subject
to MOE. This requirement is on-going, unlike ROC/P and Adult Education MOE provisions that sunset at
the end of this year. MOE compliance will be audited for the 2014-15 fiscal year.
Members of a JPA ~ Beginning in 2015-16, the May Revise proposes to shift transportation funding from
the JPA to the member districts. The proposal allows JPAs to determine the amount each member
district will receive. Each member district receiving funds must continue to spend the funding on
transportation, including, but not limited to, the JPA. The funding allocated to the district would be
counted as an add-on the district’s base grant. However, due to the uncertainty of passage and funding
amounts, we are suggesting districts budget conservatively and plan for the possibility that additional
transportation funding does NOT come to fruition. We are requesting the narrative discuss the district's
transportation revenues/costs. Districts that do not belong to JPAs include transportation funding as a
permanent add-on to their Target LCFF entitlement.
Special Education
The May Revision provides for 1.02% COLA (0.56% decrease from the January Budget Proposal) for
special education in 2015-16, which represents an increase of approximately $5.38 per ADA.
Mandate Block Grant
For 2014-15 through 2017-18, the mandate block grant rates are estimated to be:
~ School districts will receive approximately $56 per ADA for grades 9-12; $28 per ADA for grades K-8.
~ Charter schools will receive approximately $42 per ADA for grades 9-12; $14 per ADA for grades K-8.
Basic Aid/ Excess Tax School Districts
Under LCFF, basic aid districts will receive minimum state aid (hold harmless funding) of no less than the
amount received in 2012-13, which represents their categorical allocation net of 8.92% fair share
reduction.
All districts are guaranteed a minimum of $200 per ADA of Education Protection Account (EPA) funding
through 2018-19.
The County is recommending Basic Aid/Excess Tax school districts budget not more than 50% of their
prior full year RDA Residual (8047 – RDAX) tax revenues.
The County continues to recommend RDA asset liquidation (8047-LQID) tax revenues only be budgeted
upon receipt.
District of Choice funding currently sunsets at the end of 2015-16 (inoperative on July 1, 2016). Do not
budget district of choice revenue in 2016-17.
Basic aid districts are subject to the Local Control and Accountability Plan (LCAP) and Supplemental and
Concentration Grant regulations under LCFF.
Basic Aid Supplemental Funding (BAS)
Due to volatility in property taxes to school districts and continued controversy over this funding, the
County recommends basic aid supplemental funding only be used for one time purposes. It is
recommended that districts consider using this revenue to fund OPEB liabilities and pay the actuarially
determined annual required contribution (ARC) amount rather than the pay-as-you go amount. ARC
payments reduce the cost of OPEB liabilities in the out-years when financial circumstances are unknown.
Please feel to call your SCOE accountant or myself to discuss.
Adult Education
The Governor’s Budget proposal includes a $500 million block grant for Adult Education in 2015-16.
STRS and PERS contribution rates:
2014-15
2015-16
2016-17
2017-18
8.88%
11.771%
10.73%
11.847%
12.58%
13.05%
14.43%
16.60%
Employer Contribution Rates
STRS – Per Ed Code Sections 22901.7 & 22950.5
PERS – Actual and projected rates
K-3 Grade Span Adjustment (GSA)
In 2014-15, as a condition of receiving the K-3 GSA (10.4% of K-3 base grant), school districts must
maintain or make progress towards an average K-3 class size of 24 by school site in both 2013-14 and
2014-15 unless a collectively bargained alternative to the statutory requirements have been agreed upon.
If an annual audit of a school district finds the district out of compliance, the CDE will retroactively reduce
the district’s funding. There is no waiver process.
With the 2015-16 estimated gap percentage increasing to 53.08% at the May Revision (32.19% at
Governor’s January Budget Proposal), it is recommended that LEAs reassess their annual progress to
reach 24:1 class size ratio in 2015-16 to assure current proposed staffing meets the revised ratio. Should
staffing needs increase, please consider facility needs as well.
Temporary Flexibility that expires June 30, 2015:
o Routine Restricted Maintenance (RRM) – Set aside of 1% of total General Fund expenditures
returns to a 3% set aside.
o Instructional days/minutes ~ Reduction of school year by up to five days and/or equivalent in
instructional minutes expires at the end of this fiscal year. District must return to 180 days of
instruction in 2015-16.
o The suspension of instructional materials adoption requirements expires at the end of 2014-15.
For greater detail, please go to: http://www.cde.ca.gov/ci/cr/cf/
Charter Schools
A charter school’s LCFF concentration grant percentage will be limited to the percentage associated with
the school district where the charter school resides. If the charter school is physically located in more
than one school district, then the charter’s percentage cannot exceed that of the school district with the
highest percentage. Charter schools do not have declining enrollment protection. All charter schools are
required to prepare a LCAP.
LCAP Public Hearing reminder
The LCAP public hearing must be on the same day as the budget public hearing and requires the agenda
to be posted at least 72 hours prior to public hearing. The public meeting for the LCAP adoption and
budget adoption may be no sooner than the subsequent day. LCAPs must be adopted by June 30 prior to
the fiscal year for which it is created. LEAs may want to consider scheduling additional board meetings in
June to accommodate this approval process.
Greater detail regarding LCFF funding can be found in the state-wide County Office The Common Message
– May Revision 2015-16, as well as located at dp.scoe.org website under the Workshops tab, Next Fiscal
Year Workshop.
Please call if you have questions, need assistance or advice. We are here to assist districts however
possible.