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Ltr3-08: SFSF

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

March 26, 2010

Dear Monterey and Stanislaus County Superintendents and Treasurers:

NOTICE OF THE THIRD 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 $804,398, 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.

This apportionment pays two direct funded charter schools 100 percent of their preliminary SFSF entitlement based on general purpose and categorical program funding reductions 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 the Monterey and Stanislaus county treasurers 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. The Monterey and Stanislaus county superintendents are requested to immediately inform these 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, SBX3 4), 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.

Categorical Program Reductions

Preliminary entitlements were calculated by determining the total reduction in each LEA’s funding under the various categorical programs for which 2008-09 appropriations were reduced by Section 34 of SBX3 4. A detailed spreadsheet showing the funding reduction in each of the categorical programs included in the preliminary entitlement calculation is posted at http://www.cde.ca.gov/fg/aa/ca/arra.asp. The reduction amounts by LEA were not available for certain programs; these will be included in the final entitlement calculation.

Revenue Limit Reductions

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.

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/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 that cover cumulative activities from the beginning of the grant period. It is anticipated that the next report will cover the quarter ending June 30, 2010. 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. We recommend LEAs review reporting guidelines recently issued by 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 SFSF fiscal questions related to the reduction in categorical programs, please contact Ross Valentine, Fiscal Consultant, Categorical Allocations and Audit Resolution Office, at 916-327-4405 or rvalenti@cde.ca.gov [Note, the preceding contact information is no longer valid and has been replace by Thi Huynh, Fiscal Consultant, Office of Charter Apportionments and District Reorganization, by phone at 916-324-4555 or by e-mail at thuynh@cde.ca.gov]. For SFSF fiscal questions related to the reduction in revenue limits, please contact Elizabeth Dearstyne, Fiscal Consultant, Office of Principal Apportionment and Special Education, at 916-327-0398 or edearstyne@cde.ca.gov. For questions on the calculation of individual amounts shown in the schedule Preliminary State Fiscal Stabilization Fund Entitlements (Categorical Program Reductions Only), please contact the person identified on the schedule, available at http://www.cde.ca.gov/fg/aa/ca/documents/sfsf08preentcat.xls.

Sincerely,

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

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