Budget Update 7/24/2018

For 2018-19, there are a number of important considerations relative to cost-of-living adjustments (COLA):

 

  • The way the COLAs were written into the 2018-19 Budget Act may have important implications for LEAs
  • The LCFF statutory COLA for school districts and charter schools in 2018-19 is 3.7% (also known as the “Super COLA”)
  • County Offices of Education receive a COLA on their LCFF funding portion at 2.71%
  • The COLA is 2.71% for categorical programs that receive a statutory COLA
  • We recommend checking collective bargaining agreements for any COLA contingency language that may exist, and consulting legal counsel if you have questions

As many of you have already heard, there are some interesting dynamics surrounding the cost-of-living adjustments (COLA) in this year’s budget. As a result of budget negotiations between legislative leadership and the Administration, there are two COLAs relevant to K-12 education for the 2018-19 fiscal year: The COLA for district and charter school LCFF apportionments is 3.7%; the COLA for all other purposes is 2.71%. 

Under ordinary circumstances, the Education Code ties the statutory COLA for districts and charter school LCFF calculations to the Implicit Price Deflator for State and Local Government Purchases; that index is produced by the U.S Department of Commerce. However, this year, the Legislature amended the law to notwithstand (override) the connection between the COLA for LCFF and the Implicit Price Deflator. In this year’s Education Omnibus Trailer Bill, AB 1808, Section 145 states, “The statutory cost of living adjustment for the 2018-19 fiscal year… shall be 3.7 percent only for the purposes of calculating the local control funding formula targets for school districts and charter schools.” It’s important to remember that this 3.7% “Super COLA” does not apply to anything else; categoricals outside of the LCFF that get COLA and COE LCFF entitlement targets will receive the 2.71% COLA this year.

The 3.7% COLA is, in part, a result of the significant support in the Legislature to infuse the LCFF base funding with additional dollars above and beyond what was needed to “fully fund” the formula. The 2018-19 Budget Act included the money necessary to close all LCFF gaps (the delta between the 2018-19 entitlement target and actual funding), plus an additional $537 million. Rather than branding it directly as a base funding increase, the Legislature and administration treated this as a higher COLA. The end result is the same, however, designating this increase as a higher COLA could have significant impacts at the bargaining table.