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EdTec Connect Update: 07-24-14: Advance Apportionment Certification Brings Good News

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The certification of the Advance Apportionment on July 17 brought good news as the funding landscape for charter schools in California continues to improve.

Highlights include:

  • Implementation of an additional 29% of the Local Control Funding Formula
  • No fall deferrals
  • Continued EPA funding to be paid in equal quarterly installments

The following is a detailed update on the latest funding rates, cash flow schedule, Local Control Funding Formula (LCFF), and the Education Protection Account (EPA) based on the CDE's Advance Apportionment certification.

LOCAL CONTROL FUNDING FORMULA AND FUNDING RATES

The 2014-15 Advance Apportionment certification is another huge step forward in California’s implementation of the Local Control Funding Formula. After providing LCFF specific funding to schools for the first time just less than a month ago with the 2013-14 P2 certification, the state has certified an additional 29% implementation of the LCFF. This 29% is in addition to the 12% implementation that was made in June with the 2013-14 P2 certification. The state also included a .85% increase to all school’s target LCFF rates. With these increases certified for the Advance Apportionment, schools will receive a significant amount of additional funding over the first seven months of the year.

The full LCFF amount, also known as General Purpose Entitlement, is comprised of three sources: Charter School LCFF State Aid, Property Taxes, and Education Protection Account (EPA). As Property Taxes are assumed to stay consistent with the 2013-14 P2 certification and EPA is only increasing slightly, most schools will see a large increase in the Charter School LCFF State Aid. The amounts for Charter School LCFF State Aid (Column J) and EPA (Column W) can be found in the Advance Apportionment Summary.

As always, the Advance Apportionment is based off of your 2013-14 P2 Average Daily Attendance (ADA). If your school is growing, you might notice that the Advance Apportionment certification is less than your budget projections. When the state recognizes your additional ADA depends on whether the growth is due to adding grade levels:

  • Growth that is a result of a new grade level at the school can be reported through the recently released PENSEC Survey with special apportionments being released in October and January. It is especially important that new charters complete this survey as all new school funding until February is delivered through the special apportionment payments.
  • Growth that is not related to adding an additional grade will not be recognized until P1 is certified in February.

Please note that the funding calculations could change with each funding certification and will not be finalized until P2 is certified. In addition to changes that occur based on ADA, the state could adjust LCFF implementation percentages based on the total revenues that are available in the state budget. There could also be shifts in the sources that make up the total LCFF funding amounts as EPA funding amounts could change at the state level, as could any individual school’s local property tax funding amount.

CASH FLOW

As was the case last year, the state has no planned deferrals for the Advance Apportionment. With the schedule now published, we can confirm that the CDE will be following the 5-5-9 schedule through January with no funds scheduled to be deferred. In addition, schools will receive more money during the Advance Apportionment period, because the state has made the certification with LCFF implementation for 2014-15 already included.

The state is also planning a large reduction in spring deferrals with only a portion of the June payment being deferred until July. There will likely be more information about the spring deferral schedule when P1 is certified in February.To see your school’s apportionment schedule, use the following link to the CDE’s schedule: Payment Schedule Summary - LEA detail.

EDUCATION PROTECTION ACCOUNT (EPA)

The Education Protection Account, created as a result of Proposition 30 in November 2012, continues to provide funding to charter schools. EPA entitlements are increasing by 4.42% from P2 in 2013-14. The certification letter for the Advance Apportionment references EPA as 21.96% of 2013-14 total revenue limit funding, but that is from Pre-LCFF calculations that were made at the 2013-14 Q4 EPA certification.  Total EPA funding for the state is estimated at $6.6 billion and will likely fall between 18% and 20% of total revenue limit funding.

PRIOR YEAR CHARTER OVERPAYMENTS

About 20% of charters will also see an overpayment from 2013-14 that is included in the Advance Apportionment Summary (Column S). Overpayments can result from declining ADA, receipt of a deferral exemption, or an increase in the property taxes at the P2 certification. The overpayment amount included in the Advance Apportionment certification should match the difference between the LCFF State Aid that was certified at the 2013-14 P2 and the actual amount of cash that a school received from LCFF State Aid during 2013-14. The overpayment will be netted out against state aid and collected by the state on the same 5-5-9 schedule that the state disburses LCFF State Aid.

STAY TUNED FOR MORE TIMELY ANAYLSES FROM EDTEC

As always, charter school funding amounts and timing have the potential to change quickly. We are pleased to see LCFF funding being allocated at the Advance Apportionment for the first time and that the state is continuing to reduce the deferrals that have plagued charters for many years.

Being at the forefront of charter school financial management has meant that EdTec is unfortunately often the bearers of bad news to the charter school community. We're excited that this report offers some positive financial news and we hope it is the beginning of a new trend.

Whenever charter financial news hits, good or bad, we'll get you the analysis of how it will affect your school as soon as possible.


EdTec clients, please contact your Client Manager if you have any questions.

If you’re not an EdTec client and would like to discuss our high quality charter school support services, or for an analysis of your budget or cash flow situation, contact us: askus@edtec.com

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