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must be used for one-time expenditures, and may not be used for ongoing expenditures,
such as general operating expenses. (Ed. Code, § 17462(a).)

With concurrence of the State Allocation Board that the district has no anticipated need for
additional sites or construction in the next ten years or major deferred maintenance
requirements, the district may surrender its state facility funding eligibility for those 10 years
and place the proceeds into its general fund, again for one-time expenditures. (Ed. Code, §
17462(a).)

Subject to certain conditions and State Allocation Board concurrence, a school district having
an average daily attendance of less than 10,001 in any fiscal year may deposit interest
earned on the funds from a sale of surplus property in that fiscal year into the general fund
for any general fund purpose, while surrendering state facilities funding for ten years. (Ed.
Code, § 17463.)

Under Senate Bill 98, effective on June 29, 2020, the Legislature revived Education Code
section 17463.7, which authorizes school districts to deposit the proceeds of the sale of
surplus property that was purchased entirely with local funds into the general fund for one-
time expenditures if certain conditions are met. This legislation expired on July 1, 2024, but
for any transaction for the sale or lease with option to purchase that a school district
initiated between June 29, 2020, and July 1, 2024, and for sale or lease proceeds that are
received from such a transaction after June 30, 2024, the proceeds can be deposited in
accordance with this section. (Ed. Code, § 17463.7(g).)

Effective as of October 2, 2013, the Legislature authorized the State Allocation Board (SAB)
to establish a program requiring school districts to return state school facilities funding to the
State if the school district sells surplus property that was purchased, modernized, or
improved using that funding, and the following conditions are met:

o The property is not being sold to a charter school, another school district, COE, or any
agency that will use the property exclusively for the delivery of childcare and
development services.

o The proceeds from the sale will not be used for capital outlay.

o The property was purchased, or the improvements were constructed or modernized,
within 10 years before the property is sold. (Ed. Code, §17462.3.)

The SAB has since established such a program by adopting sections 1700-1702 of title 2 of
the California Code of Regulations.

XI. Use of Proceeds of Lease with No Option to Purchase
There are no statutory limitations on the use of proceeds from a lease of surplus property if
the lease does not include an option to purchase.

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