On January 24, 2024, the State Allocation Board (“SAB”) increased the maximum Level 1 school impact fees districts can assess on construction by almost eight percent. The maximum Level 1 school impact fees for residential construction were increased from $4.79 to $5.17, and for commercial/industrial construction, maximum school impact fees were increased from $0.78 to $0.84. However, the SAB also reduced School Facility Program (“SFP”) per pupil grant amounts by 1.33 percent.
The SAB adjusts the maximum Level 1 school impact fees every two years and SFP per pupil grant amounts are adjusted annually. The adjustments are based on changes in construction costs as measured by the Construction Cost Index published by RS Means. In 2022, construction cost inflation was very high. It was slightly negative in 2023. Level 1 school impact fees rose because the SAB’s adjustment reflected inflation over the last two years, while SFP grants fell because the SAB’s adjustment reflected only deflation over the last year. The last time SFP grants were reduced was in 2010, during the Great Recession, when the per pupil grants were reduced by 6.74 percent.
The updated grant amounts for new construction and modernization projects are below.
New Construction Base Grants
| Grade Level | Regulation Section | Current Adjusted Grant Per Pupil Effective 1-1-23 | Potential Grant Per Pupil Effective 1-1-24 |
| Elementary | 1859.71 | $15,983 | $15,770 |
| Middle | 1859.71 | $16,904 | $16,679 |
| High | 1859.71 | $21,509 | $21,223 |
| Special Day Class – Severe | 1859.71.1 | $44,911 | $44,314 |
| Special Day Class – Non-Severe | 1859.71.1 | $30,036 | $29,637 |
Modernization Base Grants
| Grade Level | Regulation Section | Current Adjusted Grant Per Pupil Effective 1-1-23 | Potential Grant Per Pupil Effective 1-1-24 |
| Elementary | 1859.78 | $6,086 | $6,005 |
| Middle | 1859.78 | $6,436 | $6,350 |
| High | 1859.78 | $8,427 | $8,315 |
| Special Day Class – Severe | 1859.78.3 | $19,396 | $19,138 |
| Special Day Class – Non-Severe | 1859.78.3 | $12,977 | $12,804 |
Given their facilities needs, many districts will be eager to increase their Level I school impact fees, especially since SFP grants have been reduced. Raising school impact fees requires the following steps:
- Preparing a fee justification study that justifies assessment of the maximum school impact fee rates by establishing a nexus between additional students generated by construction and the subsequent demand for school facilities
- Complying with notice, publication, and hearing requirements
- Notifying cities and counties with the district’s boundaries of the fee increase to facilitate collection of the updated fees
Beyond Level 1, California law recognizes two higher levels of school impact fees. Districts meeting the criteria set forth in Government Code section 65995.5 can assess Level 2 school impact fees that are supposed to represent 50 percent of the costs associated with housing students generated by new construction. When SFP funding is unavailable, districts eligible to assess Level 2 school impact fees can assess Level 3 school impact fees instead. Level 3 school impact fees are double the Level 2 school impact fees and are meant to constitute 100 percent of the costs associated with housing newly-generated students. As of this writing, SFP funding is available so Districts cannot assess Level 3 school impact fees.
For assistance with increasing school impact fees or other school impact fee questions, please contact one of the attorneys listed below.
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