EdTec Connect Update: Advance Apportionment Certification Brings Good News
The certification of the Advance Apportionment on July 19 brought good news as the funding landscape for charter schools in California continues to improve.
- 4.62% increase in general purpose funding
- No fall deferrals
- EPA funding to be paid in equal quarterly installments
- Simplified accounting
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 2013-14 California State Budget created the Local Control Funding Formula, an overhaul of the existing funding formula that will make funding more equitable for all schools and direct additional funds to schools serving high need populations. As many charters were previously locked out of some funding streams available to districts, the charter community stands to greatly benefit from the new system. The intent to implement LCFF still remains in place with the Advance Apportionment, but specific calculations have not yet been made and the CDE is only stating at this point that those calculations will be made at the 2013-14 P2 certification next July.
The good news is that the CDE recognizes the budget's intent to distribute an additional $2.1 billion dollars under the LCFF by increasing the total funding in the Advance Apportionment by $1.5 billion. These funds are being distributed on an equal basis, which amounts to a 4.62% increase in general purpose funding for all schools. That 4.62% equates to an increase in general purpose funding rates of $236-$286, depending on grade span, from 2012-13, as shown in the table below.
Please note that these rates will change when the CDE makes the LCFF calculations and starts to implement the school specific funding amounts. However, these calculations for the Advance Apportionment will drive the monthly payments that charters receive until LCFF is calculated and implemented.
Also included in the Advance Apportionment are all of the categorical programs that will be consolidated into LCFF. These funding amounts are based on 2012-13 and are added to the state aid funding to make up the Advance Apportionment amount. This includes all categorical payments such as old flexed programs like Supplemental Hourly Instruction and Arts and Music Grant and newer programs like the New Charter School Categorical Grant and Class Size Reduction. The win here for charters is that programs with historically unfavorable funding schedules like Class Size Reduction are now consolidated into the more favorable 5-5-9 schedule. For a full list of all 56 categorical programs that the state is consolidating into the Advance Apportionment with the school specific amounts, click here: 2012-13 Adjusted Local Control Funding Formula Categorical State Aid.
Possibly the best news to come out of the Advance Apportionment certification is the confirmation from the CDE that there will be no deferrals in the fall. EdTec and organizations that watch the state closely have widely believed this to be the case for some time, however there was confusion in the charter movement as some organizations had told schools otherwise. It is now confirmed that the CDE will be following the 5-5-9 schedule through January with no funds scheduled to be deferred. This is a very welcome change after several years of fall funding deferrals. 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, which was created as a result of Proposition 30 last November, continues to provide funding to charter schools. This year's projection from the state is that 17.92% of General Purpose funding will come from the EPA, with those amounts currently based off the P2 certified General Purpose funding totals from 2012-13. This is a slight decrease from the 2012-13 percentage of 21.4%. The huge improvement in EPA funding this year is that apportionments will be paid in equal quarterly installments, unlike last year when schools waited until the end of the year to receive any funding. The state will release the first quarterly payment on September 24 and the second payment on December 23.
With the simplified funding formula also comes simplified accounting. Per the CDE:
The CDE is currently working to determine the appropriate SACS coding for the LCFF. In the meantime, pending accounting guidance from the CDE, for SACS coding purposes the funds received in Line A-15 should be recorded to Charter Schools General Purpose Entitlement-State Aid (Resource 0000, Object 8015). Note that some reclassification entries may be necessary once CDE completes its research and issues accounting guidance.
Line 15-A from the Advance Apportionment Summary refers to the total of the LCFF categorical programs. These funds, arriving with state aid payments, will not need to be separated for accounting purposes. The entirety of a school's monthly payment can be coded to 8015. There is no longer a need to separate out funds that are attributed to the Categorical Block, Economic Impact Aid, Class Size Reduction or any other programs that had separate codes under the old funding system. As the CDE notes above, additional direction will be coming in the future about potential SACS coding changes under the LCFF.
Stay Tuned For More Timely Analyses From EdTec
As always, charter school funding amounts and timing have the potential to change quickly. What we do know is that the state will be moving to the new Local Control Funding Formula, but what we don't know is when it will start implementing the funding. It's possible that the CDE could recertify the Advance Apportionment sometime this fall or it could wait until P1 or even P2 to make actual LCFF calculations. We are pleased to see additional funding through the Advance Apportionment and that for the first time in several years none of the fall funding is deferred.
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, please email us at firstname.lastname@example.org or call 510-663-3500 ext. 329.