AB 368

This bill makes changes to the school district revenue limit adjustment for

declining enrollment and terminates an adjustment establishing a minimum initial

revenue limit, commonly known as the prior year base revenue hold harmless

adjustment.

Current law generally limits the total amount of revenue per pupil a school

district may receive from general school aids and property taxes in a school year to

the amount of revenue received per pupil in the previous school year. Per pupil

revenue is calculated using a three-year rolling average of pupil enrollment,

comparing the average number of pupils enrolled in the three previous school years

and the average of the number of pupils enrolled in the current and two preceding

school years. There are several exceptions to the revenue limit, including a revenue

limit adjustment for a school district with declining enrollment. If a school district's

enrollment declines, its revenue limit is increased in the year of the decline by the

amount of additional revenue that would have been allowed had there been no

decline in enrollment.

This bill modifies the revenue limit adjustment for declining enrollment in two

ways. First, a decline in enrollment is measured by comparing the three-year rolling

average of pupil enrollment ending with the current school year against the

three-year average of pupil enrollment for the 2016-17, 2017-18, and 2018-19

school years. Second, if a school district's enrollment declines, the school district

receives an adjustment to its revenue limit equal to the allowable revenues that 90

percent of the decline in enrollment would have generated. However, there is a limit

to this adjustment, as for purposes of the adjustment calculation a maximum 10

percent decline in enrollment is used.

Current law also provides that if a school district's initial revenue limit for the

current school year, after consideration of certain factors, is less than the district's

base revenue from the previous school year, the district's initial revenue limit is set

equal to the prior year's base revenue. The bill terminates this adjustment, for the

2019-20 school year and each school year thereafter.