Skip to content
Printer-friendly version

Ltr-11: March 2012 Deferral Exemption

Letter Head: Tom Torlakson, State Superintendent of Public Instruction, California Department of Education

December 1, 2011

Dear County Superintendents of Schools, County Chief Business Officials, District Superintendents, District Chief Business Officials, and Charter School Administrators:

EXEMPTION FROM THE SB 82 APPORTIONMENT DEFERRAL IN MARCH 2012

On March 24, 2011, the Governor signed Senate Bill (SB) 82 (Chapter 12, Statutes of 2011) and SB 70 (Chapter 7, Statutes of 2011) to address the state’s ongoing cash crisis by deferring a variety of kindergarten through grade twelve payments within fiscal year 2011-12, including deferring $2.7 billion from March 2012. SB 82 amended Government Code Section 16326 to defer $1.4 billion from March 2012 to April 2012, and SB 70 amended California Education Code (EC) Section 14041.6 to defer $1.3 billion from March 2012 to August 2012. The purpose of this letter is to provide you with information regarding the opportunity for local educational agencies (LEAs) to apply for an exemption from the SB 82 deferral of $1.4 billion from March 2012 to April 2012. There is no exemption available for the SB 70 deferral of $1.3 billion from March 2012 to August 2012.

Deferral Exemptions

SB 82 provided two opportunities for LEAs to apply for an exemption from the March 2012 to April 2012 deferral. The first applications were due June 1, 2011, and the second applications are due January 5, 2012 (county offices of education applications are due December 20, 2011). LEAs that were previously approved for exemption from the March 2012 to April 2012 deferral during the June application process are already exempt and do not need to re-apply. The list of exempted LEAs can be found on the California Department of Education (CDE) Web page at http://www.cde.ca.gov/fg/fi/ir/julaugoctmardef112.asp.

Process for Requesting Deferral Exemption

Below we describe separately the deferral exemption application processes for county offices of education, school districts, and charter schools because their submission and certification requirements differ. Following that discussion, we provide resources that will help county offices of education, school districts, and charter schools prepare a cash flow projection that is a required part of every application.

School District Applications for Exemption from the March 2012 to April 2012 Deferral

Subject to the approval of the Department of Finance, in order for a school district to be exempt from the March 2012 to April 2012 deferral, its county superintendent of schools must certify to the State Superintendent of Public Instruction (SSPI) and Department of Finance on or before January 5, 2012 that the deferral of payments in March 2012 will result in the school district being unable to meet its expenditure obligations for the time period during which warrants are deferred.

To request an exemption, a school district must complete the form entitled “Application and Certification to Exempt a School District from the March 2012 to April 2012 Apportionment Deferral.” The form can be found by selecting the appropriate link on the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp.

As directed on the application form, school districts must provide narrative and/or documents that demonstrate that the school district has exhausted all internal and external sources of borrowing and will need a state emergency loan in order to meet its financial obligations during the period that warrants are deferred. A school district that is qualified or negative in certification status is not deemed to automatically meet the above criteria. A cash flow projection must be included in that documentation. The cash flow projection must show clearly the months in which the deferrals are assumed to be implemented and repaid. In addition, the cash flow projection must identify and recognize the inflow and repayment of all sources of borrowing.

School districts must submit the completed form and supporting documentation as described above to their county superintendent of schools for review, comments as appropriate, and certification. Applications that are submitted without the county office’s certification will not be accepted. The county superintendents must submit completed, certified application forms and supporting documentation for their school districts to both the Department of Finance and the CDE. Counties may FAX or send via e-mail attachment a scanned copy of the original to the Department of Finance but the FAX/scan must be followed by the submission of the hard copy original. County offices should mail a copy or send via e-mail attachment a scanned copy to the CDE. The contact information is below.

Send copy to:

California Department of Education
School Fiscal Services Division
Attention: Arlene Matsuura
1430 N Street, Suite 3800
Sacramento, CA 95814
Telephone: 916-327-0538
Scan: ab1200@cde.ca.gov

Send Original to:

Department of Finance
Education Systems Unit
Attention: Chris Ferguson
915 L Street, 7th Floor
Sacramento, CA 95814
Telephone: 916-445-0328
Scan: chris.ferguson@dof.ca.gov
FAX:  916-323-9530

If you have any questions regarding the application process for school districts, please call the CDE at 916-327-0538 and ask to be connected to the staff person assigned to the school district’s county.

Charter School Applications for Exemption from the March 2012 to April 2012 Deferral

Subject to the approval of the Department of Finance, in order for a charter school to be exempt from the March 2012 to April 2012 deferral, its authorizer (county office, school district or State Board of Education) must certify, in consultation with the county superintendent of schools, to the SSPI and Department of Finance on or before January 5, 2012, that the deferral of payments from March 2012 to April 2012 will result in the charter school being unable to meet its expenditure obligations for the time period during which warrants are deferred.

To request an exemption, a charter school must complete the form entitled “Application and Certification to Exempt a Charter School from the March 2012 to April 2012 Apportionment Deferral.” This form can be found by selecting the appropriate link on the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp.

As directed on the application form, charter schools must submit narrative and/or documents that demonstrate that the charter school has exhausted all internal and external sources of borrowing and will become insolvent and forced to cease operations given the deferral of payments. A cash flow projection must be included in that documentation. The cash flow projection must show clearly the months in which the deferrals are assumed to be implemented and repaid. In addition, the cash flow projection must identify and recognize the inflow and repayment of all sources of borrowing.

Charter schools must submit the completed form and supporting documentation as described above to their charter school authorizer. The authorizer must review and certify the information, in consultation with the county superintendent of schools. Charter school authorizers must submit completed, certified application forms, and supporting documentation on behalf of charter schools to both the Department of Finance and the CDE. Applications that are submitted without the charter school authorizer’s certification will not be accepted. Authorizers may FAX or send via e-mail attachment a scanned copy of the original to the Department of Finance but the FAX/scan must be followed by the submission of a hard copy original. Authorizers should mail or send via e-mail attachment a scanned copy of the original to the CDE. The contact information is below.

Send copy to:

California Department of Education
School Fiscal Services Division
Attention: Arlene Matsuura
1430 N Street, Suite 3800
Sacramento, CA 95814
Telephone: 916-327-0538
Scan: ab1200@cde.ca.gov

Send Original to:

Department of Finance
Education Systems Unit
Attention: Chris Ferguson
915 L Street, 7th Floor
Sacramento, CA 95814
Telephone: 916-445-0328
Scan: chris.ferguson@dof.ca.gov
FAX:  916-323-9530

If you have any questions regarding the application process for charter schools, please call the CDE at 916-327-0538 and ask to be connected to the staff person assigned to the charter school’s county.

County Office Applications for Exemption from the March 2012 to April 2012 Deferral

Subject to the approval of the Department of Finance, in order for a county office or school district governed by a county board of education to be exempt from the March 2012 to April 2012 deferral, its county superintendent of schools must apply to the SSPI by December 20, 2011. In turn, the SSPI must certify to the Department of Finance on or before January 5, 2012, that the deferrals will result in the county office being unable to meet its expenditure obligations for the time period during which warrants are deferred.

To request an exemption, the county superintendent of schools should complete and sign the form entitled “Application and Certification to Exempt a County Office of Education from the March 2012 to April 2012 Apportionment Deferral.” The form can be found by selecting the appropriate link on the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp.

As directed on the application form, county superintendents must submit narrative and/or documents that demonstrate that the county office has exhausted all internal and external sources of borrowing and will need a state emergency loan if the payments are deferred. A county office that is qualified or negative in certification status should not be deemed to automatically meet the above criteria. A cash flow projection should be included in that documentation. The cash flow projection must show clearly the months in which the deferrals are assumed to be implemented and repaid. In addition, the cash flow projection must identify and recognize the inflow and repayment of all sources of borrowing.

County offices must submit their completed and signed application forms and supporting documentation to the CDE at the address below by December 20, 2011. Applications and documents may be scanned and sent via e-mail attachment to the CDE on or before the deadline but the scan must be followed by the submission of a hard copy original to:

Peggy O’Guin
School Fiscal Services Division
California Department of Education
1430 N Street, Suite 3800
Sacramento, CA 95814
E-mail: poguin@cde.ca.gov

If you have any questions regarding the application process for county offices, please contact Peggy O’Guin, Administrator, School Fiscal Services Division, by phone at 916-322-1770 or by e-mail at poguin@cde.ca.gov.

All LEAs’ Applications for Exemption
Cash Flow Projections

All applications must be accompanied by a fiscal year 2011-12 cash flow projection. The cash flow projection should assume all enacted deferrals, unless previously exempted. To assist in the preparation of the projections, the CDE has posted a cash flow schedule on the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp. The schedule shows statewide cash flow projections and assumptions that may be used in developing LEA-level projections. In preparing the cash flow projections, LEAs should use their own estimates based on their First and Second Principal Apportionments and should assume that 100 percent of the March 2012 Principal Apportionment payment is deferred, with 39 percent deferred to April 2012 and 61 percent deferred to August 2012. In addition, the cash flow projection should assume that 100 percent of the March 2012 payment for the 5-5-9 consolidated categorical programs, Instructional Materials Funding Realignment program, Pupil Transportation program, and Economic Impact Aid program is deferred from March 2012 to April 2012. The projection should also assume that 94 percent of the February Principal Apportionment payment, 88 percent of the April Principal Apportionment payment, 84 percent of the May Principal Apportionment payment, and 100 percent of the June Principal Apportionment payment are deferred to fiscal year 2012-13. For further information on fiscal year 2011-12 deferrals, please see the Deferral Chart on the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp.

A copy of this letter, the certification forms, all legal references related to internal and external borrowing and the SB 82 deferrals, and links to the cash flow schedule can be found by visiting the CDE Web page at http://www.cde.ca.gov/fg/fi/ir/mardef112.asp. After the Department of Finance approves the LEAs for exemption, the CDE will post the lists of exempted agencies on this site as well.

If you have further questions regarding the topics listed below, please contact the staff person listed for that topic:

  • Regarding a charter school or school district deferral exemption, please contact the staff person assigned to the charter school or school district’s county by calling the CDE at 916-327-0538.
  • Regarding a county office deferral exemption, please contact Peggy O’Guin, Administrator, School Fiscal Services Division, by phone at 916-322-1770 or by e-mail at poguin@cde.ca.gov.
  • Regarding cash flow planning for the principal apportionment, please contact Elizabeth Dearstyne, Fiscal Consultant, School Fiscal Services Division, by phone at 916-327-0398 or by e-mail at edearstyne@cde.ca.gov.
  • Regarding cash flow planning for categorical funds allocated by CDE outside the principal apportionment, please contact Nancy Cook, Manager, by phone at 916-323-1314 or by e-mail at ncook@cde.ca.gov [Note, the preceding contact information is no longer valid and has been replaced by Julie Klein Briggs, Fiscal Consultant, School Fiscal Services Division, by phone at 916-323-6191 or by e-mail at jbriggs@cde.ca.gov.].

For general questions regarding this letter, please contact Arlene Matsuura, Administrator, School Fiscal Services Division, by phone at 916-322-1471 or by e-mail at amatsuur@cde.ca.gov.

Sincerely,

Scott Hannan, Director
School Fiscal Services Division

Download Free Readers