School districts are authorized to impose a fee against certain residential and commercial/industrial construction within the boundaries of the district, for the purpose of funding the construction or reconstruction of school facilities necessitated by that development. (Ed. Code, §17620(a)(1).) Statutory school impact fees, commonly known as “Level 1” fees, are adjusted for inflation every two years by the State Allocation Board (SAB). The SAB has increased Level 1 fee rates for 2026.

On January 28, 2026, the SAB authorized an increase in the maximum Level 1 fee rate per square foot of construction as follows:

• Residential Construction: School districts may now charge up to $5.38 per square foot of assessable space of residential construction.
• Commercial/Industrial Construction: School districts may now charge up to $0.87 per square foot of chargeable covered and enclosed commercial/industrial space.

The new amounts reflect a 4.06% increase over the former rates of $5.17 and $0.84 per square foot that were authorized by the SAB in 2024.

All school districts may adopt up to the maximum authorized Level 1 fee rates if justified. Unified school districts may collect the full Level 1 fee amounts, while non-unified school districts share the total maximum amount of justified Level 1 fees pursuant to a fee-sharing agreement.

School districts must take specific action to make this recent fee rate increase applicable within their district. To take advantage of the increase, each school district should act now and follow the statutory process to adopt the increased Level 1 fee rates.  This requires a school district to prepare or update its fee justification study to establish that a nexus exists between the amount and types of development in a school district and the need for additional school facilities to house students generated by development. A fee justification study must:

• Identify the purpose of the fees;
• Identify the use(s) to which the fees will be put;
• Determine whether a reasonable relationship exists between the fee’s use and the type of development project on which the fee is imposed; and
• Determine whether a reasonable relationship exists between the need for school facilities and student growth resulting from the forms of development on which the fee is imposed.

Once a justification study is prepared, the school district must comply with the statutory public review and notice requirements and hold a public hearing at a regularly scheduled board meeting at which the board considers the adoption of the justification study and fee rate increases. Level 1 fee rate increases generally become effective sixty (60) days after the governing board’s adoption of the resolution approving the fee rate increases, unless the increase is adopted on an urgency basis within limited circumstances.

Note that the SAB fee rate increases apply only to Level 1 fees that are authorized by Education Code section 17620, et seq., and Government Code section 65995, et seq. The increase does not affect Level 2/Level 3 fees authorized by Government Code section 65995.5, et seq., which are alternative fees specifically calculated by each school district to yield a per- square-foot fee in excess of the Level 1 fee amount. Level 2/Level 3 fees, which are beyond the scope of this bulletin, may be adopted by a school district if certain statutory conditions are met. They must be recalculated annually and may only be imposed on residential construction.

Coming Soon! DWK will be releasing our updated 2026 edition of the DWK Developer Fee Digest, a comprehensive guide to school impact fees.  When available, the Digest can be purchased in the DWK Marketplace.  Contact a DWK attorney in our Business, Property and Construction Practice Group if you have questions about adopting Level 1 fee rate increases.