Revenue Limit vs. Basic Aid School District Funding
March 2003

What are revenue limits?

Public school districts receive funding from a variety of local, state, and federal sources. Some of the funds are earmarked for specific purposes, such as special education and class size reduction, while the rest are for general purposes.

The amount of general purpose funding a school district receives per student (using ADA—Average Daily Attendance) is called its "revenue limit." It is a combination of local property taxes and state taxes. Each of the nearly 1,000 school districts in California has its own revenue limit, based on its type (elementary, high, or unified), size (small or large), historical spending patterns, and a multitude of other variables which, together, make for a complicated and lengthy formula.

The bucket analogy

State and local funds are combined to make up a district’s revenue limit funding. A simple analogy can help illustrate this.

Imagine a bucket.

Each district has a different-sized bucket, representing its individualized revenue limit. Revenues raised through local property taxes are dumped into the district’s bucket, and if the bucket is not filled all the way, the state comes by and tops it off with state tax revenues.

Revenue Limit District Funding:

Money from local taxes	Money from the state

If the bucket is completely filled by local property tax revenues, the state has no need to "top off" the bucket but does contribute an additional $120 per ADA (or $2,400 per district—whichever is greater) to fulfill its constitutional guarantee to provide all public schools with "basic aid." If the bucket overflows with local property taxes, the district gets to keep the overage and receives the $120 per ADA constitutionally-guaranteed funding.

Districts whose buckets are filled by local property taxes are called "basic aid districts", and the $120 per ADA/$2,400 per district guaranteed funding from the state is called "basic aid." Each year, roughly 60 districts are categorized as basic aid. Because local property tax revenues fluctuate from year to year, some districts are basic aid one year but not the next.

Basic Aid District Funding

Money from local taxes	Money from the state

To learn more about basic aid districts, see our special page on basic aid.