Pursuant to approval by voters on November 6, 2012, Proposition 30 added to Article XIII, Section 36 to the California Constitution effective November 7, 2012. The provisions of the above article create in the state General Fund an Education Protection Account to receive revenues derived from the incremental increases in taxes imposed by Article XIII, Section 36(f). Voters also approved Proposition 55 on November 8, 2016 which allowed the sales tax increase to expire in 2016 while extending the increased income tax rates through 2030
The creation of the EPA by Proposition 30 not only impacts cash flow patterns but also has an accountability component. Proposition 30 provides that all K-14 local agencies have the sole authority to determine how the funds received from the EPA are spent, but with these provisos:
- The spending plan must be approved by the Governing Board during a public meeting
- EPA funds cannot be used for the salaries or benefits of administrators or any other administrative costs (as determined through the account code structure)
- Each year, the local agency must publish on its website an accounting of how much money was received from the EPA and how the funds were expended.
In addition, there is now a requirement for the annual financial audit to include verification that the EPA funds were used as specified by Proposition 30, and the additional cost of the audit would be an allowable expense from the EPA. If EPA funds are not expended in accordance with the requirements of Proposition 30, civil or criminal penalties could be incurred.