School Finance Training -

State Funding and EGUSD Budget Info

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Presented by EGEA

• Questions? Email James Sutter at james@elkgroveeducators.org
• Link to handout

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School Finance Training

• How School Districts are Funded
• ADA (Average Daily Attendance)
• Budgetary Timelines and Requirements
• EGUSD Revenue and Expenditures
• What does this all mean for EGEA and its members?
• EGUSD Funding vs. Other Districts

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How School Districts are Funded

Prop 98

1988 Voter Initiative

• Guarantees a minimum level of funding for K-12 education
• Prop 98 dollars come from income, sales, corporate, and capital gains taxes

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• K-12 student attendance, per capita personal income, and per capita General Fund revenues determine the annual change in Prop 98 funding

What is the LCFF?

(Local Control Funding Formula) (2013)

• Local Control Funding Formula (LCFF) is how California decides how much money each K–12 public school districts receives

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• Under LCFF, the state gives the money to the district and says, "You know your students best—you decide how to spend it."

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• School districts get extra funding for students who need more support to succeed.

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Only Districts that have a UPP above 55% get this money. Districts with a Higher UPP get more money. EGUSD’s UPP is currently at 60.78% for 25-26 and was 55.98% in 24-25.

All Districts get this money.

All Districts get this money, but Districts with higher UPP get more

Cost of Living Adjustment (COLA)

Computed using eight data points using federally aggregated metrics

If funded added to LCFF funding and perhaps to restricted revenue as well

State Legislature and Governor determine if there is sufficient money available to fund the COLA

% increase to COLA does not automatically equate to the same increase in salary

Why doesn’t the state's COLA (Cost-of-Living Adjustment) automatically result in a salary increase for school staff?

• A "Cost-of-Living Adjustment" (COLA) sounds like a salary increase. However, in the world of California school finance, a 3% COLA does not necessarily mean a 3% raise for staff.

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• The misunderstanding stems from the fact that the state's COLA is applied to the revenue the district receives. The district’s expenses often rise much faster than increases in revenue.

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Things that consume COLA in school budgets before it can be used for salaries

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• Step and Column increases (can be about 1.5% additional cost annually)
• Healthcare Costs - Health insurance premiums for employees typically rise at a rate far higher than the statutory COLA.
• Unfunded Mandates
• Every year, the state and federal government may pass new laws—such as requiring later start times, new ethnic studies curriculum, or updated air filtration systems—without providing separate "new" money to pay for them. Districts must use their COLA to fund these unfunded or underfunded mandates.

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Base Grant Amounts by Grade Span (2026-27 School Year)

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*Grade Span Adjustment

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Based on Governor’s January Budget Proposal

Concentration Grants (2025-26)

Funding based on UPP percentage above 55%

*Through first half of 2025-26

ADA

(Average Daily Attendance)

• In its simplest form, ADA is the total number of days students were physically present in school, divided by the total number of days the school was in session.

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• If a student is in their seat, the district gets paid. If the seat is empty, the district gets $0 for that day—even if the absence is excused.

What is Average Daily Attendance (ADA)?

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• Most of a school district's budget comes from the Local Control Funding Formula (LCFF). The state calculates how much money to send a district based on its ADA.

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• The Impact: If a district has 10,000 students enrolled but only 9,000 show up on average, they are only funded for those 9,000 students. The costs of the building, the teachers' salaries, and the electricity remain the same, but the revenue drops significantly.

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Why is ADA a Big Deal?

Why is ADA a Big Deal ? (cont.)

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• It doesn't matter if the student has the flu, a funeral, or is purposefully absent. If the student is not there, the district loses money.

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• Since the pandemic, California has seen a dip in regular attendance. Because districts rely so heavily on these numbers, even a 1% or 2% drop in ADA can result in millions of dollars in budget cuts.

Budget Timelines and Requirements

We are Here

The Governor’s May Revise will provide a clearer picture of the 2026–2027 school budget.

Budgetary Requirements

• Financial Reports must be submitted to and approved by the County Office of Education (COE; SCOE for Sacramento County)
• Must include multi year projections (MYP), which contain the current year and the following 2 years

Positive - A school district or COE that will meet its financial obligations for the current fiscal year and subsequent two fiscal years.

Qualified- A school district or COE that may not meet its financial obligations for the current fiscal year or subsequent two fiscal years.

Negative- A school district or COE that will not be able to meet its financial obligations for the current fiscal year or subsequent fiscal year.

EGUSD Revenue and Expenditures

2025-26 EGUSD First Interim Report

2025-26 EGUSD Second Interim Report

2nd Interim 2025-2026

2nd Interim

2025-26 EGUSD First Interim Report

2025-26 EGUSD Second Interim Report

2nd Interim

2nd Interim 2025-2026

2025-26 EGUSD Second Interim Report

2nd Interim

2nd Interim 2025-2026

What does this all mean for EGEA and its members?

Impacts of Budget on Potential Salary Increases

• Increase in unrestricted-ongoing funds
• Additional ongoing increases and expenditures
• • Step and column
• • Health benefit caps
• • Utilities
• • Insurance premiums
• • Contracted services (SPED)
• District’s and EGEA’s budget priorities
• Looking ahead to future years’ budgets

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These categories consume increases in ongoing LCFF dollars as there are usually no dedicated, restricted funding sources to cover these cost

increases

Sample Ongoing Increases

Example:

LCFF increases by $29 million from a 3.5% COLA

$29m - $21m = $8m

Additional

Revenue

Total Ongoing Increases

Remaining

Revenue

1% salary increase ≈ $8 million

EGUSD Funding vs. Other Districts

EGUSD is 4th Largest district based on number of students. Where is all the money ?

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• Even though we are the 4th largest District based on the number of enrolled students, our district does not receive the 4th most funding per student.

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• Many other districts receive more dollars per student than EGUSD

LCFF Comparisons Page

UPP Comparisons Page

LCFF Comparisons Page continued

For 2024-25 if we had received the same per pupil spending as San Juan

• the additional 37 Million in revenue could have been used for an additional 4-5% pay increase

Unrestricted Reserves Vs. Expenditures (Total outgo)

This percentage includes the State required reserve of 2-3%

• EGUS D’s Reserves are low due to EGEA’s previous tentative agreements that spent down the Reserves.
• Recent T.A.s by Natomas and Twin Rivers were financially possible due to their higher reserves and higher per pupil LCFF funding because of a higher UPP.

Questions?

Thanks!