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K-12 Revenue 101

Finance Committee

02/22/23

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AVENUES for REVENUE

Local Control Funding Formula (LCFF)

Federal

State

Local

• Unrestricted Revenue Generated through Average Daily Attendance (ADA)

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• Each ADA is valued at ~$14K ADA

• Restricted Grant Funds

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• Must be supplemental use�Federally Funded Employees must complete semiannual Time/Effort Certification

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• Examples: Title I,II, III, IV, ASSETS, Nutritional Services

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• Restricted Grant Funds

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• Must be supplemental use

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• Examples: SB740, ASES, SWF, CTEIG, LERBG, SPED

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• Restricted & Unrestricted Funds

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• Examples: Foundation Funds, Measure G1, Measure N, Local Donations from Fundraising

4 Primary Funding Buckets

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LCPS Revenue

~ $32.7MM

LCFF

Federal

State

Local

$3.1MM

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$7.5MM

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$3MM

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$19MM

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Supplement vs. Supplant

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• What is meant by the SUPPLEMENT not SUPPLANT requirement?*

Restricted grant funds may not be used to supplant non-grant funds that would otherwise be used for activities authorized under the program. Supplanting may occur if restricted grant funds are used to provide services required by other federal, state, or local laws, or were provided with non restricted grant funds in prior year. To determine if the cost is supplanting, ask the following questions:

• Are the restricted grant funds being used to provide services that the LEA was required to make available under other federal, state, or local laws? For example, were the funds used to support English Language Development (ELD) or child-abuse training?
• An example with Title II, Part A funds; were they being used to provide services that the LEA provided with non-federal funds in prior years? For example, was a position or were consultation services paid from another source the previous year?

If the answer to either of these questions is yes, then the use of funds is not supplementary to core services required by other federal, state, or local laws. (20 USC Section 6691)

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• Another example is that restricted grant funds like Title I cannot be used to pay for a core 3rd grade teacher because the 3rd grade teacher is a required position to operate whether or not restricted grant funds are available.

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• Rule of Thumb is that when the grant funds go away, so do the expenditures unless alternative compliant funding sources are identified

*Note-Definition sources were from the California Department of Education website

Challenges of Budgeting with Restricted Funding

• What is a budget?
• A budget is a plan meant to help guide the financial operations of an organization throughout the year
• A budget is a key indicator of what operations an organization can afford financially
• Budgets are meant to change and fluctuate throughout a budget year. Change and fluctuations are more common with restricted grants because they are based on program and earnings schedules where as unrestricted funds are more predictable because they are directly tied to enrollment/average daily attendance (ADA)

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• Examples of Restricted Funds alignment with programming/earnings schedule

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• 21s Century ASSETS - FEDERAL RESTRICTED FUNDS
• ASSETS grant has a shortened time period to be expended and is only an 18 month window. If funds are not used within the 18 month window, we lose the remaining unspent balance of funds. LCPS does not have any problems with meeting this shortened time frame.

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• California Community Schools Partnership Program (CCSPP) - STATE RESTRICTED FUNDS
• $4MM grant over 5 years (we budget approx. 800k/year but if for example we only use $600k in year one, the remaining $200k can be deferred into year 2.

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• Strong Workforce Program (SWP) - STATE RESTRICTED FUNDS
• Awarded $375k in FY22. Because implementation of programming was delayed and the grant allowed for the unused funds to be expended in FY23, we budgeted for use of funds in FY23.

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• Measure G1, Measure N - LOCAL RESTRICTED FUNDS
• Unlike CCSPP and SWP, unspent funds are not automatically carried over. Our authorizing agency requires an application/approval process before carryover funds can be used in the following fiscal year.

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Potential Revenue Driver - The Governor’s Proposed “Equity Multiplier”

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• What is the equity multiplier?
• Purpose is to accelerate learning gains and close opportunity gaps and will target highest need schools
• The Governor’s Proposed Budget includes $300 million ongoing Proposition 98 General Fund to establish an equity multiplier as an add-on to the LCFF
• More details are forthcoming at the State level

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• Impact?
• Increase to LCFF funding
• As Rich shared, our unduplicated count went from pre pandemic levels of ~80% to 96% today
• More details are forthcoming at the State level

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Appendix:

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From Compensation Analysis (Unrestricted and Restricted funded headcount

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Compensation Projections for 2024, 25, and 26

• Assumes 6.9% and 6.5% increase for 2024; 3% COLA in 2025 and 2026

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LCFF/Unrestricted Funded Compensation Analysis

• 136 of our projected 242 headcount are what we call “core” positions.
• These roles are funded by LCFF, as this is consistent revenue based on our student enrollment and ADA.

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Restricted/Grant Funded Compensation

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• 106 of our projected 242 headcount are grant funded positions, and are contingent on the grant funding.
• These roles are “restricted,” which means that they must fulfill a role aligned to the source of the funding or grant. Such examples include our Title funded roles (I and III), Special Education funding, CCSPP grant, Measure N/H and G1, and Strong Workforce, Expanded Learning, and After-School program grants (ASES and ASSETs)

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