AB 503 Restores Definition of “Direct Costs” School Districts May Charge for Use of School Facilities and Grounds Under the Civic Center Act

10.06.2025

Governor Gavin Newsom signed AB 503 into law on October 1, 2025. Effective immediately, AB 503 amends the Civic Center Act (Education Code section 38130 et seq.) to restore the definition of “Direct Costs” that expired on January 1, 2025.

Under the Civic Center Act, school districts may charge outside entities an amount not exceeding their direct costs for the use of school facilities and grounds. “Direct Costs” include the expenses for supplies, utilities, janitorial services, services of school district employees, and salaries paid to school district employees necessitated by the entity’s use of the facilities or grounds, commonly referred to as operating costs.

In 2012, SB 1404 expanded “Direct Costs” to also include a proportionate share of maintenance, repair, restoration, and refurbishment costs—commonly known as capital costs—based on the outside entity’s use of the school facilities and grounds. This provision was set to expire on January 1, 2020, but was extended to January 1, 2025, by AB 1303 in 2019.

AB 503 now indefinitely restores this expanded definition, encompassing a share of capital costs. As with SB 1404, these charges apply only to the use of non-classroom spaces and school grounds, which include playing fields, athletic fields, track and field venues, tennis courts, and outdoor basketball courts. The definition does not cover classroom-based after-school programs (such as tutoring or childcare) or organizations retained by the school or school district to provide instruction during school hours.

Additionally, any funds collected for maintenance, repair, restoration, and refurbishment must be deposited into a special fund designated solely for those purposes.

With AB 503, school districts once again have the authority to collect fees from outside entities for maintenance and repair costs associated with the use of school facilities under the Civic Center Act.

Thanks to our FCPPG post-bar law clerk, Benjamin Chen, for his work on this alert.

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