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Ltr1-08: SFSF

Letter Head: Jack O'Connell, State Superintendent of Public Instruction, California Department of Education

May 22, 2009

Dear County Superintendents of Schools, Auditors, and Treasurers:

NOTICE OF THE FIRST APPORTIONMENT FOR THE STATE FISCAL STABILIZATION FUND OF THE
AMERICAN RECOVERY AND REINVESTMENT ACT (PL 111-05)
FISCAL YEAR 2008-09

This apportionment in the amount of $1,603,997,114 is made to local educational agencies (LEAs) from federal funds provided to the state under the American Recovery and Reinvestment Act (ARRA) of 2009 (Public Law 111-05). These State Fiscal Stabilization Funds (SFSF) are one-time, with an intended use to avert layoffs of teachers and other personnel and further education reform in the key areas of teacher quality, standards and assessments, using longitudinal data to improve instruction, and supporting struggling schools. The amount of SFSF funds available to support kindergarten through grade twelve in fiscal year 2008-09 is $2.565 billion. The California Department of Education (CDE) currently anticipates a second allocation of SFSF funding to LEAs of approximately $1.11 billion in 2009-10.

LEAs that applied for SFSF funding by May 7, 2009, are included in this apportionment. The amount paid reflects 100 percent of each LEA’s preliminary entitlement for 2008-09 as explained below. The schedule of apportionment is available on CDE’s Categorical Programs Web site at http://www.cde.ca.gov/fg/aa/ca/arra.asp.

Warrants will be mailed to each county treasurer within approximately two weeks from the date of this Notice. For standardized account code structure coding, use Resource Code 3200, ARRA – State Fiscal Stabilization Fund, and Revenue Object Code 8290, All Other Federal Revenue. The California sub-allocation (pass-through) number is Program Cost Account (PCA) 25008. County superintendents of schools are requested to immediately inform LEAs, including direct funded charter schools, of this apportionment.

Preliminary Entitlement Calculations

The basis to distribute the $2.565 billion is: (1) determine each LEA’s share of the approximately $944 million in categorical program reductions per Section 34 of Senate Bill 4 (Chapter 12, Statutes 2009-10, Third Extraordinary Session), and (2) determine an amount by LEA based on the deficit factor applied to general purpose funds (e.g. revenue limits) for the remaining $1.62 billion. Note, reductions in state allocations are simply the basis of determining the distribution. These are federal funds and the federal requirements described below govern their use.

Preliminary entitlements for school districts and county offices of education were calculated by determining the difference between state aid for revenue limits at the 2008-09 Recertified First Principal Apportionment using the deficit factor at that time, and state aid for revenue limits applying a deficit factor of 96.521139 percent. Note actual 2008-09 deficit factors applied at the 2008-09 Recertified First Principal Apportionment will not change. If applicable, a reduction that equals 4.73668 percent of county office fund transfers was applied. Preliminary entitlement amounts may be validated by recalculating the School District and County Office Revenue Limit Principal Apportionment Exhibits available at http://www.cde.ca.gov/fg/aa/pa/pa0809.asp. Final entitlements will be based on the 2008-09 Second Principal Apportionment.

Charter school preliminary entitlements were calculated by multiplying the total general purpose entitlement by 4.73668 percent. Locally funded charter schools applied through their authorizing agency, and funding associated with the charter school is included in the district or county amount. Detailed entitlement data is available at http://www.cde.ca.gov/fg/aa/ca/documents/sfsf08preentgp.xls.

Preliminary entitlements based on state categorical reductions are being calculated by CDE, and we anticipate that payments will be forthcoming by July 2009.

Use of Funds

SFSF funds may be used by LEAs for any activity authorized under the following:
(1) The Elementary and Secondary Education Act of 1965, including Impact Aid, (2) The Individuals with Disabilities Education Act, (3) The Adult Education and Family Literacy Act, or (4) The Carl D. Perkins Career and Technical Education Act of 2006. All LEAs should review the ARRA Web site at http://www.cde.ca.gov/fg/aa/ar/, U.S. Department of Education SFSF Guidance at http://www.ed.gov/programs/statestabilization/applicant.html, and Using ARRA Funds to Drive School Reform and Improvement http://www.ed.gov/policy/gen/leg/recovery/guidance/uses.doc.

Pursuant to SFSF Guidance, all SFSF funds are available for obligation until September 30, 2011.

LEA Reporting

LEAs are required to comply with assurances that were included in the SFSF application. This includes assisting the state in the areas of education reform and meeting annual reporting requirements (ARRA Section 1408).

LEAs must submit quarterly reports no later than ten days after the end of each calendar quarter that cover cumulative activities from the beginning of the grant period. It is anticipated that the first report will cover the quarter ending June 30, 2009. At a minimum, LEAs should anticipate reporting: (1) the total amounts of ARRA funds received; (2) amounts of ARRA grant funds expended on or obligated to projects or activities; (3) the name, description, and evaluation of the project or activity’s completion status; (4) an estimate of the number of jobs that were saved or created with the ARRA funds; and (5) for infrastructure investments, the purpose, total cost, and rationale for funding the investment and the name and contact information of the person to contact regarding the project. Reporting guidelines are forthcoming from the Office of Management and Budget and the U.S. Department of Education (ED). (Section 1512(c) and (f) of the ARRA)

Grant Award

The ED award number for this apportionment is S394A090005. The Catalog of Federal Domestic Assistance subprogram number is 84.394A (State Fiscal Stabilization Fund – Education Grants, Recovery Act).

Federal regulations in 34 CFR 80.21(i) also require that any interest earned by LEAs on federal dollars be returned to the ED if the amount is in excess of $100. LEAs should forward interest payments for remittance to the ED to:

Cashier’s Office
Fiscal and Administrative Services Division
California Department of Education
1430 N Street, Suite 2213
Sacramento, CA 95814-5901

To ensure proper posting of payments, please include the program’s PCA number (PCA 25008) and identify the payment as “Federal Interest Returned.”

Each recipient and subrecipient awarded funds made available under the ARRA must promptly refer to the ED’s Office of Inspector General any credible evidence that a principal officer, employee, agent, contractor, subrecipient, subcontractor, or other person has submitted a false claim under the False Claims Act or has committed a criminal or civil violation of laws pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving those funds. Information about the Office of Inspector General Hotline is available at http://www.ed.gov/about/offices/list/oig/hotline.html.

If you have general questions regarding ARRA please contact the Government Affairs Branch at 916-319-0821 or arra@cde.ca.gov. For questions concerning this apportionment, please contact Elizabeth Dearstyne, Fiscal Consultant, Office of Principal Apportionment and Special Education at 916-327-0398 or edearstyne@cde.ca.gov.

Sincerely,

 

Susan Lange, Deputy Superintendent
Finance, Technology, and Administration Branch

SL:ed

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