SONOMA COUNTY OFFICE OF EDUCATION
SCOE BIZ
Business Services
__________________________________________________________________________________________
Bulletin No. 14-12
Second
Interim
Guidance
February 18, 2014
To:
District Superintendents
District Chief Business Officials
Charter School Officials
From:
Judy Thomson, Director Fiscal Services
Subject:
2013-14 Second Interim guidance and the Governor’s 2014-15 Budget Proposal
The purpose of this letter is to provide 2013-14 Second Interim guidance along with the release of the Common
Message. With LEAs having unique Local Control Funding Formula (LCFF) funding and Local Control and Accountability
Plans (LCAP), our guidance is based less on universal mandates and more on risk assessment related to the specific
circumstance of each LEA. In addition, some unknowns remain, such as the basic aid supplemental funding calculation.
As always, decisions made with patience and based upon fact, rather than anticipation and conjecture, promote
financial stability.
The Governor’s 2014-15 Proposed State Budget continues to provide increased funding for schools, including
approximately $4.5 billion for continued LCFF implementation and the retirement of all outstanding K-12 deferrals.
Under LCFF, funding varies greatly depending on the LEA’s gap between current and the LCFF full implementation
target which is affected by the composition of its student population. The Governor’ Budget continues to require that
LEAs adopt a three-year LCAP with annual updates beginning July 1, 2014. LEAs must demonstrate in their LCAP that
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. How each LEA accommodates their LCAP within their
budget is an opportunity which embodies local control.
2013-14 Second Interim Current Year Budget and Multi-Year Projections (MYP)
The following should be considered when preparing the Second Interim Report which is due to SCOE no later than
March 15, 2014:
Please see the County Office Common Message – Second Interim 2013-14
Under LCFF, COLA is not the key determinant of increases in funding. The 2013-14 COLA of 1.565% is applied
to the entitlement LCFF TARGET which is estimated to be reached by 2020-21. In 2013-14, LEAs will be funded at
11.78% of the ‘gap’ funding which is essentially the difference between 2012-13 revenues and the LCFF TARGET
amount. Grade K-3 and Grade 9-12 add-on components of LCFF as well as transportation and the Targeted
Instructional Improvement Grant augmentations are treated similarly to COLA, as they are added to the LCFF
TARGET amount. For example, only 11.78% of each add-on or augmentation will be received in 2013-14.
With the implementation of LCFF, there are now four driving factors: ADA by grade span, annual COLA which is
applied to the LCFF TARGET entitlement, unduplicated pupil count, and the gap funding percentage. It is
proposed that categorical programs that remain outside LCFF, such as Special Education and Child Nutrition
funding, will receive COLA in 2014-15. Please note that COLA has decreased since First Interim guidance. The
most current SSC School District and Charter School Financial Projection Dartboard is attached.
The annual gap funding percentages to be used in the LCFF calculation are 11.78% for 2013-14 and 28.05% for
2014-15. Gap funding in the out-years can vary dramatically based on a LEA’s risk tolerance. The more
uncertain a LEA is of the variables used in calculating LCFF, such as the stability of its unduplicated pupil count
or grade span ADA estimations, the lower the risk tolerance. LEAs with low risk tolerance, minimal reserves,
or significant gap funding amounts should use more conservative gap funding percentages in the outyears. Those LEAs with small gap funding amounts may use gap funding percentages up to the Department of
Finance (DOF) estimates for 2014-15 and 2015-16. LEAs that do not have reserves which exceed the minimum
reserve level by at least one year of growth in LCFF funding should not use gap percentages in 15-16 and 16-17
that exceed the SSC Simulator gap percentages. However, in 2016-17 it is recommended that all LEAs use no
greater than the 8.4% gap funding percentage without providing for contingencies in expenditure plans or a
corresponding increase in reserves.
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.
The gap funding percentage included in the LCFF calculators/simulators are as follows:
2013-14
2014-15
2015-16
2016-17
11.78%
28.05%
7.8%
8.4%
GAP funding percentage
LCFF Simulator on School Service of California website ~
Percentages in 2015-16 and 2016-17 reflect the amount of
funding necessary to simply provide an LCFF adjustment equal
to COLA and its impact on closing the LCFF funding gap.
LCFF Calculator on FCMAT website ~ default %s are based
11.78%
28.05%
33.95%
21.67%
on DOF estimates **
** Please note that the gap funding % of the LCFF Calculator is easily modified on the Assumptions tab. Also note that
each fiscal year’s gap funding percentages cannot be added together to calculate a total percentage of LCFF gap that has
been funded. The percentage of gap that is funded in a given year must be calculated as a percentage of that specific
year’s revised and remaining LCFF gap.
Expenditures that are should be considered in the MYP:
o
Routine Restricted Maintenance expenditure requirements return to the 3% minimum level in 2015-16.
o
PERS contribution rate ~ The PERS employer contribution rate is 11.442% for 2013-14 as approved on
June 18, 2013 and are expected to increase. PERS has estimated a contribution rate of 13.3% in 2015-16.
Additional employer contributions should be anticipated in creating the MYP.
o
STRS contribution rate ~ The Governor has called for action to address the STRS unfunded liability in
2015-16. It is recommended to increase STRS contribution rate in 2015-16.
o
Costs associated with meeting adequate progress towards class size requirements for LCFF k-3 grade
span adjustment.
Under the LCFF, basic aid districts will receive minimum state funding of no less than the amount received in
2012-13. The hold harmless amount will be calculated based on the categorical allocation net of 8.92% fair
share reduction. One-time redevelopment agency (RDA) asset liquidation revenue will removed from the fair
share calculation in 2014-15. Basic aid districts will be subject to the Local Control and Accountability Plan
(LCAP) and Supplemental and Concentration Grant regulations under LCFF.
See attached 2013-14 County Program Reporting Matrix for ADA and CALPADS reporting of district served
students in County programs.
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 that than the subsequent day. LCAPs must be adopted by June 30 prior to the fiscal
year for which it is created, starting with 2014-15.
Charter school funding under the LCFF will be largely identical to district funding, except that in certain
circumstances charter funding will be constrained by factors related to the district in which the charter is
physically located. A charter school’s 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 an LCAP.
The Education Protection Account (EPA) amount is an offset to state aid. All districts are guaranteed a
minimum of $200 per ADA beginning in 2012-13 and each year thereafter through 2018-19.
The five day reduction of instructional days in the school year will end in 2014-15.
Districts who received district of choice and basic aid supplemental funding in 2012-13 should be conservative
with 2013-14 and out-year estimates as State exhibits clarifying the specific calculation are not yet available.
By the end of fiscal year 2013-14, school districts must meet compliance and fully restore the Reserve for
Economic Uncertainties to the reserve percentages established in the Criteria and Standards.
Summary Statement
It is recommended that LEAs proactively involve stakeholders in a transparent and inclusive LCAP and budgeting
process to obtain the consensus needed in creating programs which meet educational goals and maintain fiscal
solvency.
Greater detail regarding LCFF funding will be found in the state-wide County Office Common Message – Second
Interim 2013-14 located at dp.scoe.org website under the Workshops tab.
Please call if you have questions, need assistance or advice. We are here to assist districts however possible.