Copyright© 2007 by School Services of California, Inc.

                                      Volume 20                   For Publication Date: August 3, 2007             No. 17

Focus on Redevelopment Agency Payments 

Because property taxes reported by school agencies in 2005-06 did not increase nearly as much as those reported by cities, counties, and special districts, the State Controller’s Office (SCO) has been directed to investigate further. One of the factors that the SCO will be reviewing is payments that school agencies received from redevelopment agencies. 

Prior to the enactment of SB 617 (Chapter 699/1992) and AB 1290 (Chapter 942/1993), school agencies were allowed to negotiate with redevelopment agencies on the use of these funds. In addition, the state did recognize redevelopment agency funds as an offset to revenue limit apportionments. Once these bills became law, however, school agencies lost the ability to negotiate the redevelopment agency funds, and a portion of these funds must now be used to offset state aid, as follows: 

 School agencies should review their redevelopment agency agreements and make a determination as to when the agreement was enacted or last amended. This may require contacting the governing body of the redevelopment agency—a city council or county board of supervisors—to get a copy of the agreement.  

For agreements established or amended after January 1, 1994, the funds received must be accounted for in accordance with SB 617 and AB 1290. The portion of the funds that is considered property taxes would offset state aid and should be recorded in the financial system and reported as such. The balance of the funds should be recorded separately as local revenue available for the school agency to use for facilities.  

                                                                                                                             —Sheila G. Vickers