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Ltr1-09: State Fiscal Stabilization Fund

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

April 23, 2010

Dear County Superintendents of Schools 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 2009-10

This apportionment, in the amount of $121,506,147, 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, and in 2009‑10, $354 million, for a total of $2.919 billion.

LEAs that applied for SFSF funding and completed the ARRA Section 1512 third quarter reporting requirements covering the period through March 31, 2010, are included in this apportionment. The amount paid reflects 25 percent of each LEA’s total SFSF entitlement out of $2.919 billion, less any unexpended award balances previously apportioned. Cash management procedures were implemented in order to reduce the time elapsing between the receipt and disbursement of federal funds, pursuant to the cash management requirements under federal statute and regulations.

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) 24997. County superintendents of schools are requested to immediately inform LEAs, including direct funded charter schools, of this apportionment.

Entitlements were calculated based on each LEA’s share of funding reductions made to seven categorical programs for 2008-09, totaling $355 million, pursuant to Assembly Bill 3 (Chapter 3, Statutes of 2009, Fourth Extraordinary Session, ABX4 3), as amended by Assembly Bill 56 (Chapter 31, Statutes of 2009, Third Extraordinary Session, ABX3 56), and a California Department of Finance letter issued under Control Section 28 of the Budget Act of 2009. Note that reductions in state allocations are simply the basis of determining the distribution of SFSF. These are federal funds and the federal requirements described below govern their use.

A detailed spreadsheet showing the funding reductions in the seven categorical programs included in the entitlement calculation are posted at http://www.cde.ca.gov/fg/aa/ca/arra.asp.

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:

California Department of Education
Cashier’s Office
P.O. Box 515006
Sacramento, CA 95851

To ensure proper posting of payments, please include the program’s PCA number (PCA 24997) 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 Thi Huynh, Fiscal Consultant, Categorical Allocations and Audit Resolution Office, at 916-324-4555 or thuynh@cde.ca.gov. For questions on the calculation of individual amounts shown in the State Fiscal Stabilization Fund Entitlements, please contact the person identified on the entitlement schedules at http://www.cde.ca.gov/fg/aa/ca/arra.asp.

Sincerely,

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

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