1. ERAF and Basic Aid
February 7, 2006

2. ERAF Steps: Step 1 Pre-Triple Flip and VLF
Cities and special districts pay into ERAF. These are property taxes that the cities receive that get moved into the ERAF pot.

3. Step 2 Determine Basic Aid status of schools.
Total Base Revenue as determined by the state
ERAF
Student fees
Regular property taxes

4. Regular property taxes
Step 2
Determine Basic Aid status of schools.
ERAF
Student fees
Regular property taxes

5. Regular property taxes
Step 2
Determine Basic Aid status of schools.
ERAF
Student fees
Regular property taxes

6. Regular property taxes
Step 2
Determine Basic Aid status of schools.
ERAF
Student fees
Regular property taxes

7. Regular property taxes
Step 2
Determine Basic Aid status of schools.
Student fees
Regular property taxes

8. Step 2
San Mateo County has 23 school districts, 1 community college district and the County Office of Education.
8 of those school districts are Basic Aid.
Basic Aid districts receive no ERAF and no state funds in their base revenue.

9. Step 3 Determine need for ERAF funds. Only non-Basic Aid districts.
For San Mateo County, total need is less than total paid in by cities and special districts.

10. Step 4 Determine Excess ERAF. Total Paid In - Need Excess ERAF
Excess ERAF goes back to the cities and special districts that paid it in.

11. Step 5 Post Triple Flip
Determine calls on ERAF post Triple Flip and VLF legislation.
School Districts (non-Basic Aid)
Special Education
Backfill to cities for lost sales taxes due to state deficit bond (triple flip)
Backfill to cities for lost vehicle license fees (VLF)

12. Step 6 Total ERAF paid in in Step 1 exceeds total need in Step 5.
San Mateo County has a shortfall of ERAF funds available.
Two groups are held harmless from the shortfall:
Cities and special districts
Basic aid school districts

13. Step 6
ERAF shortfall is taken from the property taxes of the remaining non-Basic Aid school districts – and SMCCCD.
Shortfall should be made up by state revenue paid to schools.
State revenue is subject to deficit factors if there isn’t enough state revenue to go around.

14. Step 6
SMCCCD is entitled to about $6M in ERAF in Step 2. That means we are not a Basic Aid District.
SMCCCD lost the $6M and an additional $16M in property taxes as our share of the ERAF shortfall.

15. ERAF and Basic Aid Basic Aid status is re-determined every year.
SMCCCD could move to Basic Aid status if countywide property tax growth exceeds base revenue increases.
San Mateo County assessed valuation is growing at an average of above 7% per year.

16. ERAF and Basic Aid
In 05/06, the state rolled PFE and equalization into our base revenue.
This increased our base without increasing any funds.
This lengthened the time until we might become Basic Aid.
Eventually we will get there, but probably not for a few years.

17. ERAF and Basic Aid
When we do become Basic Aid, we will shift from getting $20-$30M in state aid to receiving it all in property taxes.
We will join the ranks of those who are being held harmless.
SMCCCD’s draw on property taxes then will have to come from the few remaining non-Basic Aid school districts in the county.

18. ERAF and Basic Aid
In the long run, this model will not work as there will not be enough property taxes from the non-Basic Aid districts to fund those that are being held harmless.
New legislation will be needed.
Currently only Marin and San Mateo counties are in this situation of having excess ERAF funds.