On January 28, 2026, the State Allocation Board (“SAB”) increased the maximum Level 1 school impact fees that school districts can assess on new development. The SAB also adopted the annual adjustment to School Facility Program (“SFP”) grant amounts for new construction and modernization projects.
Increase to Maximum Level 1 School Impact Fees
The SAB adjusts the maximum Level 1 school impact fees every two years based on changes in construction costs as measured by the Class B Construction Cost Index published by RS Means (The Gordian Group, Inc.). Based on a 4.06 percent increase in construction costs between January 2024 and January 2026, the SAB approved the following maximum Level 1 fee increases effective January 2026:
| Type of Construction | Prior Maximum Fee (2024) | New Maximum Fee (2026) |
| Residential | $5.17 per sq. ft. | $5.38 per sq. ft. |
| Commercial / Industrial | $0.84 per sq. ft. | $0.87 per sq. ft. |
Annual Adjustment to School Facility Program Grants
The SAB adjusts SFP per pupil grant amounts every year to reflect changes in construction costs. For 2026, the SAB adopted a 3.56 percent increase to SFP grants based on the RS Means Class B Construction Cost Index.
The updated grant amounts apply to both new construction and modernization projects and increase per pupil funding across grade levels, special day class programs, and various supplemental grant categories.
Selected updated base grant amounts are shown below:
New Construction Base Grants
| Grade Level | Regulation Section | Current Adjusted Grant Per Pupil Effective 1-1-25 | Grant Per Pupil Effective 1-1-26 |
| Elementary | 1859.71 | $15,847 | $16,422 |
| Middle School | 1859.71 | $16,761 | $17,358 |
| High School | 1859.71 | $21,327 | $22,086 |
| Special Day Class – Severe | 1859.71.1 | $44,531 | $46,116 |
| Special Day Class – Non-Severe | 1859.71.1 | $29,782 | $30,842 |
Modernization Base Grants
| Grade Level | Regulation Section | Current Adjusted Grant Per Pupil Effective 1-1-25 | Grant Per Pupil Effective 1-1-26 |
| Elementary | 1859.78 | $6,034 | $6,249 |
| Middle School | 1859.78 | $6,381 | $6,608 |
| High School | 1859.78 | $8,356 | $8,653 |
| Special Day Class – Severe | 1859.78.3 | $19,232 | $19,917 |
| Special Day Class – Non-Severe | 1859.78.3 | $12,867 | $13,325 |
Implications for School Districts
School Impact Fees
Given ongoing facilities needs, many school districts may consider increasing their assessed Level 1 school impact fees to the newly authorized maximums. 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 within the district’s boundaries of the fee increase to facilitate the collection of the updated fees.
Beyond Level 1 fees, California law authorizes higher levels of school impact fees under certain circumstances. Districts meeting the criteria set forth in Government Code section 65995.5 may assess Level 2 school impact fees intended to recover 50 percent of eligible facility costs attributable to new development. When state new construction funding is unavailable, eligible districts may instead assess Level 3 school impact fees, which are intended to recover up to 100 percent of those costs.
SFP Funding
Districts with school construction projects receiving SFP funding in the coming year will receive increased apportionments.
Conclusion
The SAB’s January 2026 actions reflect continued reliance on inflationary indexing to address rising school construction costs. For assistance with increasing school impact fees or advice regarding SFP funding, please contact us.
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