Carmel Unified School District is a Basic Aid District
What is a Basic Aid District?
Carmel Unified School District is a basic aid (sometimes called Community Funded) school district. The defining characteristic of CUSD finances is its basic aid status. The local property taxes of most school districts are not sufficient to fund the State “revenue limit” and so the state provides the balance or the revenue limit amount. These “revenue limit” districts have little concern about property tax levels since the revenue limit is back-filled by the state.
On the other hand, a small portion of the 1,000+ school districts in the state have local property tax revenues which, given their enrollment levels, result in dollars per Average Daily Attendance (ADA) which exceed the revenue limit. These districts under current state law are allowed to keep all of their property tax revenue. They receive from the state the statutory minimum aid, called “basic aid,” of $120 per ADA - this provision was eliminated in 2003-2004. This results in an extremely high degree of dependence on local property taxes. With the elimination of the $120 stipend, they receive no unrestricted general fund dollars from the state, only certain state categorical programs dollars.
Basic Aid Related Issues
- Higher revenue. The additional revenue has enabled CUSD to provide its community with a higher level of educational programs, and to pay salaries at a very competitive level.
- Uncertainty. Property tax revenue is very uncertain and subject to dramatic changes. This is due to the cyclic nature of property values as well as to limitations on the county information systems. Thus, while the additional revenue that a basic aid district receives is extremely helpful, the district’s financial picture must be watched very carefully for signs of change. The district must do long term financial planning and carry significant reserves so that changes in property tax revenue can be accommodated without major impact on programs.
- Delayed revenue information. Revenue limit districts know their Cost of Living Adjustment (COLA) by May and their enrollments in September. CUSD receives preliminary property tax projections in August. The first county Tax Assessor’s projection is in August, and the final information is received in July of the following year (after the fiscal year is over).
- Enrollment growth is not funded. As opposed to the state “revenue limit” funding mechanism which pays an amount per student and therefore automatically funds growth, a basic aid district must pay for any growth from its fixed pool of property tax funds. Therefore, CUSD's enrollment growth adversely affects its finances and the level of program it is able to offer.