AB 1391 amends Section 42238.03 to codify the Local Control Funding Formula (LCFF) transition calculations that use 2012–13 revenue limits and allocations as the baseline, multiplies those per-unit amounts by current average daily attendance (ADA), and then computes a transition adjustment to move districts and charter schools toward their LCFF targets. The statute lists specific 2012–13 Budget Act items to carry forward, prescribes multiple offsets (property tax and redevelopment-related receipts among them), and preserves certain one-time protections for regional occupational centers, joint powers transportation agencies, and necessary small schools in the early LCFF years.
The bill also adds two provisions aimed at basic aid districts beginning in 2025–26: an add-on to recognize transitional kindergarten (TK) ADA—specified as "____ dollars ($____) multiplied by the then current fiscal year’s second principal apportionment period ADA in TK"—and a requirement to include TK ADA in the basic aid ADA calculation. Those changes create a targeted funding stream for basic aid districts’ TK programs but leave the per-ADA dollar amount blank in the text, producing a material budgetary uncertainty.
At a Glance
What It Does
The bill fixes LCFF transition base entitlements to 2012–13 revenue limits and charter general-purpose funding, scales those per-unit amounts by current ADA, computes a statewide transition need, and allocates any transition appropriation proportionally by each district’s share of need. It subtracts a specified set of local revenues before apportioning state aid, guarantees minimum funding floors tied to historic amounts, and creates a TK add-on for basic aid districts beginning 2025–26 (dollar amount left blank).
Who It Affects
Basic aid school districts and their TK programs are the primary beneficiaries; charter schools (including restructured and newly operational charters) face detailed baseline and restructuring rules; districts with necessary small schools and JPAs for ROC and transportation have protected funding conditions; the Superintendent and state fiscal offices must implement the detailed apportionment mechanics.
Why It Matters
By anchoring transition funding to 2012–13 baselines and carving out a TK add-on for basic aid districts, the bill preserves legacy funding patterns while expanding TK recognition—raising questions about equity, state budget exposure, and administrative complexity for apportionment and reporting.
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What This Bill Actually Does
Section 42238.03 sets the LCFF transition floor by reconstructing each district’s and charter school’s prior funding as a per-ADA amount based on 2012–13 law. For school districts that means taking 2012–13 revenue limits (with certain exclusions) and dividing by that year’s ADA to get a per-ADA figure, then multiplying that figure by current ADA.
For charter schools the statute uses 2012–13 general-purpose funding and in-lieu property tax treated the same way. The provision explicitly preserves necessary small school allowances and enumerates a long list of 2012–13 entitlements (Budget Act items and program monies) that are considered final and carried forward into the transition calculation.
After establishing those base entitlements, the statute requires the Superintendent to compute a transition adjustment: subtract the reconstructed base from the LCFF entitlement calculated under Section 42238.02 to find each district’s or charter’s ‘‘need.’’ The statewide sum of those needs determines each entity’s share; available appropriations for the transition are then distributed proportionally to those shares and added to the base entitlements. Importantly, the share of need funded from a given year’s appropriation is fixed as of the second principal apportionment for that fiscal year, and certain subsequent adjustments are continuously appropriated under Section 14002.Before state aid is paid, the statute directs the Superintendent to subtract several local and dedicated revenue sources (property tax receipts under specified Revenue and Taxation Code chapters, redevelopment-related receipts, prior-year taxes, certain revenue-sharing streams, and specified community redevelopment and constitutional local revenues).
The law also includes procedural rules for JPAs, historical protections preventing redirecting 2012–13-funded ROC and transportation dollars in the early LCFF years, and apportionment mechanics for restructured, transferred, or divided charter schools (with some clauses time-limited or inoperative after July 1, 2026).Two provisions targeted at basic aid districts appear with prospective effective years. Commencing with the 2025–26 fiscal year the Superintendent must compute an add-on for basic aid districts equal to "____ dollars ($____) multiplied by the then current fiscal year’s second principal apportionment period average daily attendance in transitional kindergarten." The statute also directs that TK ADA be included in the basic aid ADA computation for purposes of basic aid district funding.
Finally, the statute contains a trigger mechanism: once fewer than 10 percent of districts are apportioned less than their LCFF calculations (as measured at second principal apportionment), the Superintendent shall apportion funding equal to the LCFF amount and thereafter apportion full LCFF amounts.
The Five Things You Need to Know
The statute reconstructs base entitlement per unit of ADA using 2012–13 revenue limits and charter general-purpose funding as the baseline, then multiplies those per-unit amounts by current-year ADA.
Transition funding is allocated by dividing each district’s or charter’s computed need by the statewide total need and distributing any appropriations proportionally; the funded proportion is fixed as of the second principal apportionment.
Before determining state apportionments, the Superintendent subtracts a defined set of local and dedicated revenues (including specified property tax streams, redevelopment receipts, prior-year taxes, and 50% of Section 41603 receipts).
For basic aid districts starting 2025–26 the Superintendent must compute an add-on equal to ____ dollars ($____) times the second principal apportionment TK ADA, and include TK ADA in the basic aid ADA calculation (the bill leaves the dollar amount blank).
The bill preserves short-term protections and transfer rules for regional occupational centers/programs and home-to-school transportation JPAs for the 2013–14 and 2014–15 years and includes detailed formulas for restructured, transferred, and divided charter schools (with some time-limited clauses).
Section-by-Section Breakdown
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Base entitlement built from 2012–13 baselines and historic program carry-forwards
Subdivision (a) directs the Superintendent to compute each district’s and charter’s base entitlement by taking specified 2012–13 funding sources (revenue limits for districts; general-purpose funding and in-lieu tax for charters), dividing those totals by 2012–13 ADA to get unit values, and applying those unit values to current ADA. The provision expressly excludes certain program funds from the per-unit calculation and reimplements the 2012–13 necessary small school allowances. Practically, this preserves a snapshot of pre-LCFF funding as the starting point for transition rather than recalibrating entirely to current formulas.
Transition adjustment and proportional allocation of any transition appropriations
Subdivision (b) computes each local education agency’s ‘‘need’’ by subtracting the reconstructed base (from (a)) from the LCFF entitlement under Section 42238.02, then divides an agency’s need by the statewide total need to determine its share. Any appropriation specifically made for the transition is multiplied by those shares and added to the base entitlements. The statute fixes the share of need funded for a fiscal year as of the second principal apportionment, which limits midyear reallocation and shapes cash-flow expectations for districts and charters.
Offsets: specified local revenue deductions before state aid
Subdivision (c) requires the Superintendent to subtract a detailed list of locally generated revenues and special receipts from the computed state entitlement before apportionment. This list includes property tax collections under particular Revenue and Taxation Code chapters, redevelopment pass-throughs and successor-agency receipts, prior years’ taxes, and a 50% share of monies under Section 41603. The practical effect is to fold local resource recognition into the final state apportionment so that state aid compensates net of these local receipts.
Basic aid TK add-on and TK ADA inclusion (effective 2025–26)
Subdivision (e) establishes a minimum-state-aid floor and then adds two targeted provisions for basic aid districts beginning with the 2025–26 fiscal year. First, the Superintendent must compute an add-on equal to a per-TK-ADA dollar amount expressed in the bill as "____ dollars ($____) multiplied by the then current fiscal year’s second principal apportionment period average daily attendance in transitional kindergarten." Second, it directs that transitional kindergarten ADA be included when calculating basic aid district ADA under Section 42238.05. Both mechanics raise fiscal implications for basic aid entitlements, but the bill leaves the per-ADA figure blank, creating uncertainty about aggregate costs.
Rules for newly operational and restructured charter schools
Subdivision (f) sets special treatment for newly operational charter schools during the LCFF transition: they may be assigned prior-year funding per ADA equal to the host district’s per-ADA entitlement or their computed LCFF rate, whichever is less, and become eligible for growth funding toward their target. It also prescribes formulas for transferred, acquiring, and divided charter schools—using quotients or median quotients from original charters to allocate entitlements—and includes an inoperative sunset for one acquiring-school clause on July 1, 2026. These rules aim to limit abrupt funding shifts when charters reorganize but add calculation complexity and potential edge cases.
Trigger to apportion full LCFF amounts and phase-out of transition
Subdivision (g) creates a backstop: if less than 10 percent of school districts are receiving apportionments below their LCFF-calculated amount (measured at the second principal apportionment), then the Superintendent shall apportion funding equal to the LCFF calculation to all districts and charters for that fiscal year. For each fiscal year thereafter, apportionment equals the LCFF amount. This clause defines a clear endpoint trigger for the transition mechanism and shifts fiscal responsibility fully to LCFF apportionments once the threshold is met.
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Who Benefits
- Basic aid school districts — The bill directs a new, explicit TK add-on and requires TK ADA to be counted in basic aid ADA, which increases the funding base for TK in districts that rely heavily on local property tax rather than state aid.
- Transitional kindergarten programs and students in basic aid districts — By creating a per‑TK‑ADA add-on (once the per‑unit amount is set), TK programs in basic aid districts should see dedicated funding recognition and potentially more resources for TK seats and services.
- Districts with necessary small schools — The statute preserves 2012–13 necessary small high school and elementary allowances in the baseline calculation, maintaining funding protections for small, high‑cost campuses.
- Regional occupational centers/programs and home‑to‑school transportation JPAs — The bill locks short‑term protections (2013–14 and 2014–15) preventing districts from redirecting funds that were used for these JPAs in 2012–13 and creates a transfer/assignment process for JPA entitlements.
Who Bears the Cost
- California General Fund — The TK add-on for basic aid districts and the continued transition allocations are state costs; because the per‑TK‑ADA dollar amount is blank, the fiscal exposure is currently unspecified and could be material.
- State Superintendent’s Office and fiscal staff — Implementation demands complex year‑over‑year computations, apportionment adjustments fixed at principal apportionments, management of continuous appropriations, and oversight of transfers and JPA reporting.
- Local education agencies and district fiscal officers — Districts must track 2012–13 baselines, report ADA accurately (including TK ADA under the new rule), and comply with historic expenditure floors and transfer restrictions for JPAs and ROC programs.
- Newly operational and restructured charter schools — The special rules produce variable funding outcomes depending on location, prior entitlements, and timing; some restructured charters face interim formulas that can suppress or complicate funding streams.
Key Issues
The Core Tension
The central dilemma is whether to preserve legacy funding protections for districts that historically received high per‑pupil funding (and now are classified as basic aid or small necessary schools) while expanding TK recognition, or to prioritize LCFF’s equalization goals and fiscal predictability. Protecting historical entitlements stabilizes local budgets and local services but risks perpetuating inequities and increasing state costs as new programs like TK are layered on without a clear budgetary offset.
Two features of this statute produce the most friction. First, anchoring transition entitlements to 2012–13 baselines preserves historical funding patterns—some of which predated LCFF’s goal of redistributing dollars toward higher‑need students.
That approach protects legacy recipients (basic aid and necessary small schools) but locks in a baseline that may not reflect current demographic or programmatic realities.
Second, the bill’s targeted relief for basic aid districts—an add-on computed as "____ dollars ($____) times TK ADA"—is functionally incomplete in the text because the per‑ADA dollar amount is blank. That omission prevents reliable fiscal forecasting and complicates legislative or administrative budgeting.
It also raises an equity question: providing a per‑ADA top‑up to basic aid districts could widen gaps between districts that already have high per‑pupil local revenue and those that do not, unless the per‑unit amount is calibrated with equalization goals in mind.
Operationally, the statute fixes the funded proportion of transition need as of the second principal apportionment each year. That design reduces midyear reallocations but creates timing lags that can leave later ADA changes or audit adjustments out of sync with available funding.
The long list of revenue subtractions and the interaction with redevelopment successor‑agency receipts also create bookkeeping complexity and potential disputes about what receipts qualify. Finally, several provisions are time‑limited or reference historical apportionment deadlines (e.g., 2014–15 protections and a July 1, 2026 inoperative clause), which can produce legal and administrative clutter when implementing staff reconcile legacy and prospective rules.
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