To clarify, ERAF stands for Educational Revenue Augmentation Fund — and the stated intent of the 1992-94 legislation was to provide funding for local education, namely school and community college districts.
- Immediately after Proposition 13 reduced the combined property tax levy across the state to a maximum of 1%, the Legislature voted to allocate property tax revenues based on the proportion represented by each underlying taxing agency’s prior receipts (SB 154 (1978)).
- A year later, the Legislature redirected a large chunk of the resultant school/community college shares of property tax to cities and counties (the AB-8 Split of 1979). (This represented about a further 30% reduction on top of the depredations of Prop 13.)
- Shifting the primary responsibility for school funding onto the cyclical General Fund hastened the “First to Worst” decline in education, which led to Prop 98 (1988).
- A few years later, the Legislature realized that it couldn’t fund schools without a reasonable share of (stable, reliable) property tax. So, starting in 1992, it legislated a shift of property taxes from counties, cities and special districts into a county-wide fund that the state could call upon to fund schools within that county (ERAF = Educational Revenue Augmentation Fund).
- In every county, the ERAF fund is the first — and automatic — source of revenue for LCFF (or, prior to LCFF, revenue-limit funding) after a district’s local property tax revenues have been counted against its LCFF target.
In many counties, ERAF provides substantial funding to school districts. Theoretically, it does so in all counties, however, as a result of a backroom legislative deal in 2004 known as the VLF Swap (AB 1096 (2004)), but that’s a different story and not relevant to the issue at hand.