March 14, 2005
Dear County and District Superintendents, County and District Chief Business Officials, and Charter School Administrators :
GUIDANCE TO IMPLEMENT THE ASSEMBLY BILL
825
CATEGORICAL EDUCATION BLOCK GRANT
The letter is to advise you as to the California Department of
Education's (CDE) implementation of state funding and program requirements
for the Categorical Education Block Grants (Block Grants) established
by Assembly Bill 825 (Chapter 871, Statutes of 2004). In addition,
this letter provides guidance on how to account for and report transactions
for the Block Grants. For your convenience and future reference,
a copy of this letter, a copy of AB 825, and the Education Code
sections that it repeals will be posted to the CDE Web site
at http://www.cde.ca.gov/fg/aa/ce/ [Note, the preceding Web address is no longer valid].
The CDE anticipates issuing additional guidance that answers
many other questions raised by this new legislation.
GENERAL BLOCK GRANT INFORMATION
Background. AB 825 places 26 categorical programs into six Block Grants including one competitive grant program as follows:
- Pupil Retention Block Grant
- School Safety Consolidated Competitive Grant
- Teacher Credentialing Block Grant
- Professional Development Block Grant
- Targeted Instructional Improvement Block Grant
- School and Library Improvement Block Grant
Prior to being included in one of the Block Grants, the 26 programs were governed by their own unique provisions of law. AB 825, however, repealed almost all of these laws and instead specified that Block Grant funds can be used for "any purpose authorized by the programs" as the statutes governing them read on January 1, 2004, thereby providing increased flexibility to local educational agencies (LEAs) as well as consolidating funding sources.
Transfer Provisions. Education Code Section 41500, added by AB 825, provides for the transfer of funds out of the following four (of the six) Block Grants: the School Safety Consolidated Competitive Grant, the Professional Development Block Grant, the Targeted Instructional Improvement Block Grant, and the School and Library Improvement Block Grant with certain limitations.
- Up to 15 percent of the amount allocated during any fiscal year can be transferred to any other program for which LEAs are eligible for funding, including programs whose funding is not part of a Block Grant.
- The total funding expended for a program to which funds are transferred may not exceed 120 percent of the amount of state funding allocated for that program or Block Grant in the fiscal year.
- Prior to expenditure of transferred funds, the governing boards of LEAs are required to hold a public meeting to discuss the expenditure.
- LEAs must track transfers using Object Code 8998, Categorical Flexibility Transfers. This is the same Object Code used for mega-item transfers authorized annually by Control Section 12.40 in the Budget Act.
The Pupil Retention Block Grant and the Teacher Credentialing Block Grant do not allow for the transfer of funds out of the Block Grants. However, funds may be transferred to these two Block Grants.
Growth and COLA. With the exception of the School Safety Consolidated Competitive Grant, AB 825 requires that each Block Grant receives annual statewide growth and inflation based on the cost-of-living adjustment (COLA) for district base revenue limits. Hence, AB 825 provides that each LEA eligible to receive Block Grant funds also receives annual adjustments for statewide growth and COLA. The 2005-06 Governor's Budget proposes such growth and COLA for each of the Block Grants, including the School Safety Consolidated Competitive Grant.
Basic Aid Districts. Section 38 of Chapter 227, Statutes of 2003, required reductions to categorical program funding for basic aid districts in the 2003-04 fiscal year, which is also the base year for establishing LEA eligibility and funding entitlements for most of the Block Grants. For the purpose of establishing Block Grant funding for basic aid districts, AB 825 (Education Code Section 41501(a)) holds basic aid districts harmless by not including the reductions made pursuant to Section 38 of Chapter 227, Statutes of 2003, thereby making the base year whole for each basic aid district.
Flexibility. AB 825 repeals all but the Continuation High School and Beginning Teacher Support and Assessment Program statutes associated with the programs in the Block Grants. In addition, the Education Code sections governing each Block Grant specify that LEAs may use Block Grant funds for any purpose authorized by the programs included in the Block Grants. For programs where the associated statutes have been repealed, it is the CDE's interpretation that funds may be spent on the purpose of a program, but recipients are not required to adhere to past program requirements for each individual program, such as reporting or specific program delivery models. For example, an LEA receiving funds for one of the Block Grants may choose to establish a hybrid program to combine purposes of more than one program within a Block Grant. Alternatively, there is nothing to prevent an LEA from operating a program that closely resembles the program as it existed prior to the enactment of AB 825. Please note that there are a few limitations to the level of flexibility AB 825 provides for certain Block Grants. The limitations are discussed in greater detail below.
Charter Schools. The impact of AB 825 on charter schools is not entirely clear. Currently, charter schools receive categorical funding through the Charter School Categorical Block Grant for most of the programs included in the Block Grant. Charter schools will not receive duplicative funding for these programs. Beyond that, the impact of the Block Grant on charter schools requires further review. Additional guidance will be forthcoming.
Accounting. Resource Codes. The CDE has established new Standardized Account Code Structure (SACS) resource codes to account for each Block Grant as follows:
- 7390 Pupil Retention Block Grant
- 7391 School Safety Consolidated Competitive Grant
- 7392 Teacher Credentialing Block Grant
- 7393 Professional Development Block Grant
- 7394 Targeted Instructional Improvement Block Grant
- 7395 School and Library Improvement Block Grant
Revenue Object Code. All six Block Grants should use Revenue Object Code 8590.
Indirect Cost Rate. Consistent with the CDE's existing indirect cost rate guidance, the Block Grants may be charged for indirect costs, provided the amount charged does not exceed the LEA's approved indirect cost rate. Further information on indirect costs can be found on the CDE Indirect Cost Rates Web site at http://www.cde.ca.gov/fg/ac/ic/.
Carryover. Carryover funds for programs included in the Block Grants from fiscal years prior to 2005-06 must be used according to the laws governing the original appropriation of such funds.
SPECIFIC CATEGORICAL BLOCK GRANT INFORMATION
Pupil Retention Block Grant. The Pupil Retention Block Grant combines funding for the following programs into a single Block Grant:
- Remedial Supplemental Instruction grades two through six
- Core Supplemental Instruction kindergarten and grades one through twelve
- Elementary School Intensive Reading Program
- Intensive Algebra Instruction Academies Program
- Continuation High School Foundation Program
- High-Risk Youth Education and Public Safety Program
- Tenth Grade Counseling
- Opportunity Classes and Programs (districts only)
- Dropout Prevention and Recovery Programs (four programs)
- Early Intervention for School Success
- At-Risk Youth for the Los Angeles Unified School District
With the Continuation High School Foundation program as an exception, AB 825 repealed the Education Code sections governing the programs included in the Pupil Retention Block Grant. AB 825 provides that LEAs may spend Pupil Retention Block Grant funds for any purpose authorized by the statutes governing the programs listed above as they read on January 1, 2004, (Education Code Section 41505(b)). The Pupil Retention Block Grant has statutory limitations on the flexibility of funds as follows:
- Funding attributable to supplemental instruction programs included in the Pupil Retention Block Grant must be adjusted annually based on actual participation (Education Code Section 41506(a)). Detailed information regarding how actual participation data will be collected, measured, and applied is under development and will be forthcoming.
- Funding attributable to dropout prevention and recovery programs must be used to maintain the same level of outreach consultants that were utilized in the 2004-05 fiscal year (Education Code Section 41506(f)).
- Outreach consultants utilized for dropout prevention and recovery programs must continue to meet all of the requirements specified in Education Code Section 52890 as it read on January 1, 2004.
- Priority for placement of outreach consultants must go to schools with the highest percentage of pupils eligible for free and reduced-price lunches (Education Code Section 41506(f)).
- Current law governing continuation education was not repealed by AB 825. Thus, the minimum attendance requirement for continuation education for unemployed minors remains 15 hours per week and may be satisfied by any combination of attending continuation classes and regional occupational centers or programs.
- New continuation high schools will generate additional dollars. However, current law governing continuation education was not repealed. Consequently, foundation funding will be rescinded for continuation high schools that close subsequent to receiving the Pupil Retention Block Grant funds.
- LEAs receiving funds for the Pupil Retention Block Grant must have a school-level advisory committee and a single school plan that incorporates the requirements of Education Code sections 52014 and 52015 as those sections read on January 1, 2004 (Education Code Section 41507).
For Opportunity Classes and Programs, CDE's annual letter regarding program guidelines stated that supplemental funding for opportunity education for county offices of education would be included in the Pupil Retention Block Grant. As a point of clarification, after further review, funding for opportunity education for county offices of education is not included in the Categorical Education Block Grant.
Regarding High-Risk Youth Education and Public Safety, with increased flexibility in the use of funds, LEAs awarded funds for only the First Time Offender or Transitioning High-Risk Youth programs may now run both programs and serve both youth populations. In addition, LEAs operating High-Risk Youth Education and Public Safety programs will no longer be required to provide evaluation data, but are encouraged to collect the State Mandated Outcome Reporting Form data. The CDE suggests that program operators should consider their obligation to local probation offices in running their programs since this was a collaborative grant.
LEAs receiving funding for any of the programs listed above in the 2003-04 fiscal year are eligible for Pupil Retention Block Grant funding. Beginning with the 2005-06 fiscal year, funding allocations for the Pupil Retention Block Grant will be determined based on the relative statewide proportion that each LEA received for the 2003-04 fiscal year for the programs listed above, thereby establishing a base level of funding (Education Code Section 41505(b)). Pupil Retention Block Grant funding will then be adjusted annually for statewide growth in average daily attendance and inflation as measured by a COLA. Pursuant to provisions of the bill, the CDE will apportion 75 percent of the funds appropriated for the Pupil Retention Block Grant, and after determining that Supplemental Instruction for Remediation for grades seven through twelve program and the Pupil Retention and Recommended for Retention grades two through nine supplemental programs are fully funded, will allocate any remaining funds as part of the Block Grant.
The Governor's Budget proposes $172.9 million in funding for the 2005-06 fiscal year for the Pupil Retention Block Grant. This reflects the base level of funding adjusted for statewide growth in average daily attendance and COLA.
School Safety Consolidated Competitive Grant. The School Safety Consolidated Competitive Grant consolidates funding for the following programs into one competitive grant jointly administered by the State Superintendent of Public Instruction and the Attorney General's Office:
- Safe School Planning and Partnership Minigrants
- School Community Policing
- Gang-Risk Intervention Program
- Safety Plans for New Schools
- School Community Violence Prevention
- Conflict Resolution
Like most of the other Block Grants, AB 825 repealed the Education Code sections governing the programs included in the School Safety Consolidated Competitive Grant. AB 825 also repealed the Education Code sections governing the Carl Washington School Safety and Violence Prevention Act, but it is not included in the new competitive Block Grant. It is the CDE's understanding that the repeal was inadvertent and the CDE is proposing legislation to restore the sections of law.
As the title of the program implies, this program is a competitive grant program for school violence prevention. Early in the 2005-06 fiscal year, a request for applications will be released that specifically describes the program. Successful competitors will receive grants of approximately $100,000 per year for three to five years, and there will be 30 to 40 grant awards each year. All LEAs will be eligible to compete for the grants. In the grant application, the applicants will be required to:
- Demonstrate the existence of a broad school violence prevention collaborative including school staff, parents, and law enforcement.
- Conduct a needs analysis identifying specific school violence problems.
- Describe a specific plan addressing the identified needs.
The Governor's Budget proposes $16.3 million in funding for the 2005-06 fiscal year for the School Safety Consolidated Competitive Grant. This reflects the funding appropriated for the aforementioned school safety programs in the 2004-05 fiscal year, adjusted for statewide growth in average daily attendance and COLA.
Teacher Credentialing Block Grant. The Teacher Credentialing Block Grant includes funding for the Beginning Teacher Support and Assessment program (BTSA). The purpose of the Teacher Credentialing Block Grant is to provide funding for the BTSA as defined in the Education Code, commencing with Section 44279.1. Contrary to most of the programs in the other Block Grants, AB 825 did not repeal the Education Code sections governing the BTSA program and the base year for program funding for LEAs is 2005-06. The CDE and the California Commission on Teaching Credentialing (CCTC) will jointly approve new programs. Existing programs will continue to receive growth and COLA funding. The current method used for local programs to report beginning teachers will remain the same, and the CCTC will continue to inform the CDE of the number of eligible beginning teachers.
Statewide program support and accountability will continue to be provided by cluster region directors in the six cluster areas as defined in Education Code Section 44279.7. The CDE and the CCTC will jointly approve the competitive grant applications and the CDE will administer the grant funds.
The 2005-06 Governor's Budget proposes $83.9 million in funding for the Teacher Credentialing Block Grant. This reflects the funding appropriated for the BTSA program in the 2004-05 fiscal year, increased by a COLA. Commencing with the 2006-07 fiscal year, the Teacher Credentialing Block Grant will be adjusted for statewide growth in average daily attendance and a COLA.
Professional Development Block Grant. The Professional Development Block Grant combines funding for the following programs into a single Block Grant:
- Instructional Time and Staff Development Reform
- Teaching as a Priority
- Intersegmental Programs
Professional Development Block Grant funding may be expended for any of the above purposes or for a combination of the general purposes of the programs. Instructional Time and Staff Development Reform funding supports certificated classroom teachers who provide direct classroom instruction, certificated teaching assistants, and classified classroom instructional aides. Allowable staff development instructional activities include: teaching strategies; classroom management and other training designed to improve pupil performance; conflict resolution; intolerance and hatred prevention; and academic content in the core curriculum areas that are provided by the school district or county office of education.
Teaching as a Priority funding is allowed for credentialed teachers in high-priority schools with an Academic Performance Index of one through five. Teacher recruitment and retention incentives may include signing bonuses, improved work conditions, teacher compensation, and housing subsidies.
Intersegmental program funding, while not legislatively mandated, includes activities that were previously granted for the College Readiness program and the Comprehensive Teacher Education Institutes.
Prior to being incorporated into the Professional Development Block Grant, the Instructional Time and Staff Development Reform program was funded on a reimbursement basis. Beginning in 2005-06, the CDE will apportion funding for the Professional Development Block Grant to LEAs based on prior-year annual California Basic Education Data System (CBEDS) certificated teacher counts. After 2004-05 LEAs will no longer be required to report participation of teachers in staff development programs.
The 2005-06 Governor's Budget proposes $248.6 million in funding for the Professional Development Block Grant. This reflects the funding appropriated for the aforementioned professional development programs in the 2004-05 fiscal year, adjusted for statewide growth in average daily attendance and COLA, which is consistent with the statutory requirement that this Block Grant receive these annual adjustments.
Targeted Instructional Improvement Block Grant. The Targeted Instructional Improvement Block Grant combines funding for the Targeted Instructional Improvement Grants and Supplemental Grants into one Block Grant. AB 825 repealed the Education Code sections governing these two grant programs and provides that after satisfying any court-ordered desegregation funding requirements, LEAs may spend Targeted Instructional Improvement Block Grant funds for any purpose authorized by the statutes governing the Targeted Instructional Improvement Grants and Supplemental Grant programs as they read on January 1, 2004. LEAs are no longer held to the previous designations of Supplemental Grant funds.
Eligibility for funding for the Targeted Instructional Improvement Block Grant is limited to the relative statewide proportion that each LEA received in the 2003-04 fiscal year for Targeted Instructional Improvement Grants and Supplemental Grants. This Block Grant will also receive an annual statewide growth in average daily attendance and a COLA.
The Governor's Budget proposes $874.5 million in funding for the 2005-06 fiscal year for the Targeted Instructional Improvement Grant. This reflects the funding appropriated for the Targeted Instructional Improvement and Supplemental Grant programs in the 2004-05 fiscal year, adjusted for statewide growth in average daily attendance and COLA increases.
School and Library Improvement Block Grant. The School and Library Improvement Block Grant combines funding for School Library Materials and the School Improvement Programs (SIP) into a single Block Grant.
Pursuant to Education Code Section 41572, school districts receiving these funds must have school-level advisory committees and single school plans that incorporate the requirements in Education Code sections 18181 (library), 52014, and 52015. This Block Grant can be used for any purpose of either or both programs, as determined by the school advisory committee, if the district participated in SIP prior to January 1, 2004. If the school district did not participate in SIP prior to January 1, 2004, the funds received for this Block Grant are to be used only for school library materials as defined in Education Code Section 18183. Districts can allocate funds to a previously non-SIP school and can allocate funds at the district level, as well as to schools within the district.
Eligibility for funding for the School and Library Improvement Block Grant is limited to the relative statewide proportion that each LEA received in the 2003-04 fiscal year for School Library Materials and SIP, thereby establishing a base level of funding, which is then provided an annual growth adjustment and a COLA. Unlike other Block Grants, growth is measured by statewide growth in CBEDS enrollment rather than average daily attendance.
The Governor's Budget proposes $421.6 million in funding for the 2005-06 fiscal year for the School and Library Improvement Block Grant. While AB 825 specifies that the growth adjustment for the School and Library Improvement Block Grant be based on CBEDS enrollment, the proposed funding in the Governor's Budget for the 2005-06 fiscal year reflects the funding appropriated for the School Library Materials and the School Improvement Programs in the 2004-05 fiscal year, adjusted for statewide growth in average daily attendance and COLA.
If you have any questions regarding this letter, please contact Ross Valentine, Consultant, Categorical Programs Unit, at (916) 327-4405 or by e-mail at rvalenti@cde.ca.gov, or Wendi McCaskill, Consultant, Categorical Programs Unit, at (916) 323-6191 or by e-mail at wmccaskill@cde.ca.gov.
Notice: To the extent that this letter contains guidelines in addition to recitation of the law, those guidelines are exemplary only and compliance with them is not mandatory.
Sincerely,
JACK O'CONNELL
Attachment
Categorical Education Block Grant Resource Codes
The resource codes for each program prior to being included in the Block Grants are in parentheses after the program title.
- Pupil Retention Block Grant (7390)
- Supplemental Instruction (0000)
- Intensive Supplemental Instruction grades two through six (0000)
- Core Supplemental Instruction kindergarten and grades one through twelve (0000)
- Elementary School Intensive Reading Program (0000)
- Intensive Algebra Instruction Academies Program (0000)
- Continuation High School (0000 & 2200)
- High-Risk Youth Education and Public Safety (6575)
- Tenth Grade Counseling (7375)
- Opportunity Schools, Classes, and Programs (0000)
- Dropout Prevention and Recovery
- Educational Clinics (7060)
- Implementation Model (7065)
- Alternative Work Centers (7070)
- Motivation/Maintenance (7075)
- Early Intervention for School Success (7130)
- Los Angeles USD At-Risk Youth (7810)
- Supplemental Instruction (0000)
- School Safety Consolidated Competitive Grant (7391)
- Safe School Plan Implementation Grants (6310)
- School Community Policing Partnerships (6330)
- School Community Violence Prevention (6330)
- Gang Risk Intervention Program (6215)
- Conflict Resolution (6315)
- Safety Plan Grants for New Schools (6310)
- Teacher Credentialing Block Grant ((7392)
- Beginning Teacher Support and Assessment (7280)
- Beginning Teacher Support and Assessment (7280)
- Professional Development Block Grant (7393)
- Instructional Time and Staff Development Reform Program (0000)
- Teaching as a Priority Block Grant (6265)
- Intersegmental Programs
- Intersegmental College Readiness (7335)
- Intersegmental Teacher Education Institutes (7336)
- Targeted Instructional Improvement Block Grant (7394)
- Targeted Instructional Improvement Grant (7045)
- Supplemental Grants (various, depending on program designation)
- School and Library Improvement Block Grant (7395)
- School Library Materials (6296)
- School Improvement Programs
- School Improvement Program (7260)
- School Improvement grades seven through twelve (7265)
1430 N Street
Sacramento, CA 95814