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Community Funded Status Transition

California State Education Funding

In California, school districts are funded by a combination of local property taxes and state aid under a calculation process known as Local Control Funding Formula (LCFF) that was created with the 2013-14 State Budget Act. The LCFF guarantees a base level of funding differentiated by grade and additional supplemental and concentration grants based on the number of low-income and English learner students in each district. This funding method is intended to correct historical funding inequities, increase flexibility and transparency, and simplify education funding. The LCFF process also introduced the annual Local Control Accountability Plan (LCAP) which emphasizes community engagement and student achievement goals when districts plan their budgets. 

California has two types of districts as described by their funding: Community-Funded (also known as Basic Aid) and State-Funded (formerly known as Revenue Limit).

State-Funded - The majority of districts in California are state-funded. In State-Funded districts, local property taxes are less than the state’s per-student funding obligation and the state makes up the difference (state aid). State-Funded districts have little concern about local property tax levels because the state back-fills their funding up to the LCFF amount. State-Funded districts receive money based on enrollment, or average daily attendance, in their schools; for state funded districts, the more students they have, the more funding they receive.

Community-Funded There are fewer than 100 Community-Funded school districts statewide comprising less than 4% of the state's average daily attendance (ADA) . A Community-Funded district receives the majority of its funding from local property taxes because local property taxes exceed the state’s guaranteed per-student funding amount (equal to a district’s funding amount in 2012-13 when LCFF was initiated). LCFF calculation and Community-Funded districts are allowed to retain all their allotted property tax revenue. State contributions to a Community-Funded district’s budget are minimal. Community-Funded districts receive the same level of overall funding regardless of their school district enrollment since their funding is not tied to average daily attendance at their schools.

Community-Funded districts face a unique challenge because funding is unrelated to enrollment. While community-Funded districts typically have relatively higher property tax bases, districts do not know what their estimated property tax revenue will be until well into the fiscal year, and future year projections are subject to volatility. This is the main reason why Community-Funded districts usually maintain a reserve level higher than the state required minimum of 3%. HBCSD has a board policy to maintain reserves of at least 5% of annual expenditures.