Page 85 - Yucaipa Valley Water District

Workshop Memorandum No. 17-075 Page 6 of 18

fiscal year that had been financed by the proceeds of taxes were the starting point. Appropriations
not subject to limitation were subtracted from that figure and this became the "base year" level of
appropriations for computing all subsequent years' limits. Proposition 111 updated the base year
for calculating the limit for each government entity to FY 1986-87. For fiscal years beginning with
FY 1990-91, the limit for each entity is the FY 1986-87 limit adjusted annually as specified by
Article XIII B as amended by Proposition 111.

Annual Adjustments to the Limit.

The appropriations limit for each year since FY 1980-81 is calculated by adjusting the base year
limit for changes in the cost-of-living and population. Proposition 111, passed by the voters in
June 1990, and revised each of the adjustment factors. Specifically, annual adjustments to limits,
either upward or downward, are made as follows:
 Cost-of-Living.
o State and schools are adjusted by the change in California per capita personal
income.
o Local agencies are adjusted by the change in California per capita personal
income or the change in the local property tax roll due to the addition of new
nonresidential construction.
 Population.
o The State uses a population factor calculated by adding: (a) the change in the
state's total population weighted by the percent of the budget spent on non-
educational programs, and (b) the change in average daily attendance (ADA) for
K-14 education weighted by the percentage of the budget spent on K-14 education.
o Local agencies use a population factor that is the percentage change in the
jurisdiction or in the county in which the jurisdiction is located. Special districts
located in two or more counties may use the change in the county in which the
district has the highest assessed valuation.
o Counties. The population change for counties can be calculated by using one of
three methods: (a) the percentage change in population within the county; (b) the
percentage change in population for both the county itself and contiguous counties;
or (c) the percentage change in population within the incorporated portion of the
county.
o K-14 Schools use the change in population is the percentage change in average
daily attendance.
 Program Transfers. Limits of governmental entities are modified to reflect transfers of
financial responsibility from one level of government to another. The limit of the new
service provider is increased by the amount the former service provider's limit is reduced.
 Funding Transfers. Adjustments either upward or downward are made to account for
transfers of program funding sources, for example from tax revenues (subject to limit) to
fees (not subject to limit).

The level of appropriations actually made by a government entity in any year does not have any
bearing on the calculation of the appropriations limit for the subsequent years. Each year's limit
is computed based on the prior year's limit, not the prior year's appropriations.

If the governing body actually appropriates less money than what would be permitted by the limit,
it has "room" under its limit, and the limit will be further adjusted the following year for cost-of-
living and population changes. A government entity does not "lose" room under its limit for the
future by appropriating less than the maximum permitted in any year.

Yucaipa Valley Water District - May 30, 2017 - Page 85 of 138