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Five Bay Area Counties May Owe Millions to State Education Fund

Alexander Schimmeck
San Francisco is one of five Bay Area counties that could be forced to repay what was thought to be a fiscal windfall.


Five Bay Area counties should be forced to repay millions to a state education fund, according to the California Department of Finance. What was once a windfall for several Bay Area counties may now be a curse as California seeks to reclaim the millions in the midst of a COVID-19 induced fiscal nightmare.

San Francisco officials estimate the city could be liable for a $180 million repayment this year. And it doesn't stop there. San Francisco and four other counties, stand to lose hundreds of millions of dollars every year going forward. This comes on top of local budgets that have been decimated by the coronavirus. 


The finance department alleges that San Francisco, San Mateo, Napa, Marin and Santa Clara counties took money meant for schools and treated it as a budget windfall. The department argues that the counties misinterpreted a formula that determines whether they’ve put enough tax money into the Education Revenue Augmentation Fund, also known as the ERAF.


Much of the money at issue has already been spent to address a range of local concerns such as homelessness, housing, teacher salaries and energy independence. The counties argue that the funds were properly distributed.


In a letter to state legislators, county board presidents noted that, "the proposal is unfairly punitive and improper, especially given the significant fiscal challenges facing our counties." They described it as premature and harmful and urged legislators to reject it. 


This matter is likely to end up in court unless the parties can reach a compromise.