Assembly Bill 97 addressed the State's complex and inequitably distributed school finance system by proposing the Local Control Funding Formula (LCFF). The LCFF applies to K-12 districts (districts), but also has potential impacts on community college districts.

Under the new LCFF, districts receive the bulk of their funding based on average daily attendance for four separate grade spans. The LCFF provides a base grant for all students as well as specified additional, supplemental, and concentration grants. The four grade-span target base grant rates are:

  • K-3: $6,845
  • 4-6: $6,947
  • 7-8: $7,154
  • 9-12: $8,289

The LCFF permits the State to increase target base grant rates as follows:

  • Cost of Living Adjustments – Each year, beginning in 2013-2014, the State will increase the target base rates by the cost-of-living-adjustments. 
  • Class Size Reduction for K-3 – LCFF provides an additional initial adjustment of 10.4% on the base grant amount for grades K-3. As a condition of receiving this adjustment, districts must progress toward an average class enrollment of no more than 24 pupils in K-3 classes, unless a collectively bargained agreement provides an alternative average class enrollment for these grades. 
  • Career Technical Education for 9-12 – LCFF also provides an additional initial adjustment of 2.6% on the base grant amount for grades 9-12. This adjustment is to assist with the costs of providing career technical education to high school students. 
  • Supplemental Grant for Particular Student Groups – District may receive supplement funding of 20% of the adjusted base rate for any student who qualifies as an English learner (EL), a low-income student eligible to receive a free or reduced-price meal (FRPM), or a foster youth (FY). Students who fit into more than one category count only once.
  • Concentration Funding for Particular Student Groups – Districts whose EL/FRPM/FY population exceeds 55% of their enrollment receive concentration-funding equal to 50% of the adjusted base grant for each EL/FRPM/FY student above the 55% threshold. 
  • Economic Recovery Target Add-On – Approximately 20% of districts would have generated greater levels of funding under the previous funding system than under the new LCFF. To address the issue, LCFF provides an Economic Recovery Target (ERT) add-on to those districts. Eligible districts may receive an ERT add-on calculated at the amount a district would have received under the previous system, adjusted for inflation, less the amount a district would receive based on the LCFF in 2020-2021. 
  • Existing Categorical Funding Streams Add-On – Funds from the Targeted Instructional Improvement Block Grant and the Home-to-School Transportation program add-ons to the LCFF. Districts that received funding for these programs in 2012-2013 will continue to receive that same amount of funding on top of their regular LCFF funding.

The LCFF eliminates most of the previous district spending requirements, permitting more flexibility on how to use funds received. The LCFF, however, imposes a specific Maintenance-of-Effort (MOE) requirement during the 2013-2014 and 2014-2015 years. Under this requirement, districts must spend at least the amount they spent in 2012-2013 on Regional Occupational Centers and Programs and Adult Education. The LCFF does not currently require districts to continue this spending after the 2014-2015 year, effectively eliminating categorical funds for adult education after two years. Districts choosing to continue their adult education programs would do so using their base funds.

The LCFF requires K12 districts to develop, adopt, and annually update a Local Control and Accountability Plan (LCAP) every three years, beginning on July 1, 2014. The goal of the LCAP is to increase the district's transparency and accountability. The LCAP must use a template developed by the State Board of Education. The plan must set annual goals in eight areas of specified state priorities needed for high-quality educational programs and the actions districts will take to achieve those goals. Districts must consult their employees, local bargaining units, parents and students in preparing the LCAP.

Districts must present the proposed LCAP to a parent advisory committee for review and comment. A separate EL parent advisory committee must also review the LCAP if at least 15% of the district's enrollment is EL students or at least 50 EL students. Districts must also provide notice to the public that they may submit written comments and recommendations and the District will conduct a public hearing on the proposal before adoption. The District's Board must formally approve the LCAP in a public hearing by July 1 of each year. The District must submit the LCAP to the County Office of Education for approval.

The State Board of Education may update and modify the LCFF and LCAP requirements over the next few years following their initial implementation by districts and as the State Board evaluates its effectiveness as a funding system.