RDA Pass-Throughs: How to Comply with AB 1389 Without Giving Away the Store (Or Losing Your Mind!) Presented by: Dante Gumucio Public Economics, Inc

AB 1389 Creates HSC Sets forth new process for RDAs, counties, and the State to report and document AB 1290 payments made to all affected taxing entities in general, and to local educational agencies (LEAs) in particular  Retrospectively for FYs through  Prospectively for FY Any unmade AB 1290 payments still owed for FYs through will be monitored by annual reports by County A-C through Dec. 15, 2014

AB 1389 Non-LEA Reporting Components  RDAs submit AB 1389 reports to County A-C  County A-C concurs or not with RDAs, and may require RDAs to revise AB 1389 reports over RDA statements of dispute  County A-C submits revised AB 1389 reports to State Controllers Office (SCO)  SCO works with non-concurrent RDAs to try to obtain concurrence  SCO submits SCO Report to Legislative Analyst’s Office, Department of Finance, California Department of Education (CDE), and California Community Colleges Chancellor’s Office (CCCCO)

AB 1389 Impacts on CCDs Based on SCO report, CCCCO calculates what each CCD:  Should have reported for RL offset per SCO  Actually reported for RL offset  Still owes for RL offset CCCCO shall notify each CCD regarding (i) any shortfalls in RL offset portion of AB 1290 payments received for FYs through and , and (ii) the “resulting impact on apportionments.” CCDs may submit documentation to the [CCCCO] showing that all or part of the [apparent shortfall for revenue level offset] was previously reported to the [CCCCO]. Upon acceptance of the documentation, the [CCCCO] shall adjust the [revenue level shortfall] amounts previously calculated.

AB 1389 Impacts on CCDs RDAs making “late” payments  After November 1, 2008 for FYs through  After October 1, 2009 for FY Shall pay to LEAs only facilities share of AB 1290 payments for that (those) year(s):  52.5% for CCDs  56.7% for K-12 Districts  81.0% for COEs Shall pay to ERAF what would otherwise be RL offset share, meaning RL offset has already been taken and 100 percent of what LEA actually receives is available for facilities

AB 1389 Supplemental RL Offset Process for CCDs  AB 1389 doesn’t create new AB 1290 reporting process for CCDs  AB 1389 DOES create supplemental RL offset process, in addition to CCFS-311 process, for AB 1290 payments for FYs and , involving previously unmade AB 1290 payments for FYs through and , respectively  This supplemental RL offset process creates potential for double counting RL offset portion of AB 1290 payments on Form CCFS-311  To avoid double counting, RL offset portion of AB 1290 payments received IN FYs or FOR FYs through should NOT be reported on Form CCFS-311 in FYs or , respectively

AB 1389 Supplemental RL Offset Process for CCDs  CCCCO will presumably correct apportionments to take any RL offset owed for: FYs through at P1 in FY (Jan. 15, 2010)* FY at P1 in FY (Jan. 15, 2011)*  Final RL adjustments per CCFS-311 process will be made at same time as supplemental AB 1389 RL adjustments, i.e., at P1 in FY for FY , and P1 in FY for FY *CCCCO “may make the corrections [take any RL offset] over a period of time, not to exceed five years”

Role of CCDs in the Process CCDs should identify:  Amount of AB 1290 pass-throughs they actually RECEIVED, and corresponding RL offset portion of such payments they SHOULD have reported to CCCCO  Amount of AB 1290 pass-throughs RDAs reportedly PAID per SCO, and corresponding RL offset portion of such payments  RL offset portion of AB 1290 pass-throughs they ACTUALLY reported to CCCCO CCDs should be prepared to:  DISPUTE any overstatement of RL offset amounts based on overstatement of AB 1290 payments by SCO, and/or understatement of actual prior year RL offsets by CCCCO  DOCUMENT any such dispute based on CCD’s own General Ledger, previous RL reporting forms, etc.

Role of CCDs in the Process CCDs should identify amount of RDA pass- throughs they actually RECEIVED  By source of payment (RDA vs. County A-C)  By RDA  By Project area or annex/added area  By entitlement, including: AB 1290 payments Agreement payments 2 percent payments

Role of CCDs in the Process CCDs should identify amount of RDA pass- throughs they actually RECEIVED  By “In” year (year IN which payment is received)  By “For” year (year FOR which payment is made)  Corresponding RL offset obligation by “in” year and “for” year Zero if for agreement or 2 percent payment 47.5%, etc. for AB 1290 payments received BY Nov. 1, 2008 and Oct. 1, 2009, respectively Zero for AB 1290 payments received AFTER November 1, 2008 and Oct. 1, 2009, respectively, IF RDA makes RL offset portion of payment directly to ERAF as required by HSC 33684(j)  SUM of AB 1290 payments and corresponding RL offset obligation by “for” year and by RDA

CCDs should identify amount of AB 1290 payments RDAs reportedly PAID per SCO  SCO Report for prior years titled “Report on Property Tax Pass- Through Payments for Fiscal Years through ”  Two SCO Reports dated April 2009 and June 2009  PEI has found numerous inconsistencies between SCO Reports, AB 1389 Reports, and SCO’s own AB 1389 database  SCO Reports appear to be subject to ongoing revision process  SCO Reports show AB 1290 payments by “for” year and by “RDA,” NOT by “in” year or individual Project  For FYs through , CCCCO apparently using SCO Report dated June 2009, though that may change as SCO Report is revised, making apparent RL shortfalls a “moving target” Role of CCDs in the Process

CCDs should identify amount of AB 1290 payments RDAs reportedly PAID per SCO  SCO Report for FY will be due by April 2010, for FY (and for any AB 1290 payments still unmade for FYs for through )  For FY , CCCCO will presumably use SCO Report due by April 2010 (or a later revision) Role of CCDs in the Process

CCDs should identify RL offset portion of AB 1290 payments they ACTUALLY reported to CCCCO  Through FY , Form CCFS-311 did NOT include a data field for reporting RL offset portion of AB 1290 payments, causing: CCDs to under or over report RL offset portion of AB 1290 payments (e.g., report NO RL offset or 100 percent RL offset) CCDs to correctly report RL offset of AB 1290 payments (e.g., 47.5 percent RL offset) by:  Burying offset portion in another revenue (property tax) category  Reporting more property tax revenues on Form CCFS-311 than shown by County A-C on Form CCFS-329 (by amount of RL offset portion of AB 1290 payments)  In FY CCCCO expected to revise Form CCFS-311 to include new data field for reporting RL offset portion of AB 1290 payments Role of CCDs in the Process

CCDs should be prepared to:  DISPUTE any overstatement of RL offset amounts based on overstatement of AB 1290 payments by SCO, and/or understatement of actual prior year RL offsets by CCCCO  DOCUMENT any such dispute based on CCD’s own General Ledger, previous RL reporting forms, etc. Other LEAs may:  File appeal with Education Audit Appeals Panel pursuant to Education Code Section or Section (see  Request repayment plan (e.g., within 30 days of receiving final determination on appeal) (see ) Role of CCDs in the Process

What’s at Stake Per June SCO Report for FYs through  $ M total AB 1290 payments paid directly to LEAs, including $40.40 M for CCDs  $ M facilities portion of total AB 1290 payments paid directly to LEAs, including $21.21 M for CCDs  $ M RL offset portion of total AB 1290 payments paid directly to LEAs, including $19.19 M for CCDs

What’s at Stake NOT shown in June SCO Report for FYs through  ADDITIONAL facilities portion of AB 1290 payments to LEAs paid after Nov. 1, 2008, for which RL offsets have already been paid to ERAF as property taxes  ADDITIONAL AB 1290 payments RDAs paid to LEAs through ERAF, which SHOULD have been (and in Contra Costa, Ventura, San Joaquin and other counties, actually were) reallocated only to LEAs that are “affected taxing entities,” NOT as property taxes but as AB 1290 payments  ADDITIONAL AB 1290 payments RDAs SHOULD have paid to LEAs through ERAF or by other means, but did NOT (due to misinterpretation of redevelopment law), which additional payments were misallocated instead to cities, counties, and special districts or retained by RDAs