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Ltr2-10: State Fiscal Stabilization Fund

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

July 20, 2011

Dear County Superintendents of Schools:

NOTICE OF THE SECOND APPORTIONMENT FOR THE
STATE FISCAL STABILIZATION FUND OF THE
AMERICAN RECOVERY AND REINVESTMENT ACT (PL 111-05)
FISCAL YEAR 2010–11

This apportionment, in the amount of $23,298,461, 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, longitudinal data to improve instruction, and support struggling schools. The total amount of SFSF funds available to support kindergarten through grade twelve is $3.19 billion and is made available for appropriation over three state fiscal year (FY) budget authorities; $271 million is available for appropriation in FY 2010–11.

Only those LEAs that applied for SFSF funding, completed the ARRA Section 1512 quarterly report for the period ended June 30, 2011, and met federal cash management requirements are apportioned funds. Federal cash management procedures were implemented in order to reduce the time elapsing between the receipt and disbursement of federal funds, as required by federal statute and regulations. The amount paid to each LEA in this quarter (from FY 2009–10 and 2010–11 funds) is equal to 25 percent of the LEA’s total SFSF entitlement, less any unexpended funds as of June 30,2011, based on the Section 1512 quarterly report. Any remaining amount payable this quarter after funds paid in the SFSF sixth apportionment of FY 2009–10 funds, is being paid in this apportionment.

Beginning in FY 2010–11 letters of apportionment from the California Department of Education’s (CDE) School Fiscal Services Division are no longer mailed to the county superintendents of schools. Instead, county superintendents will be notified of each apportionment by e-mail. Accordingly, the CDE has sent an e-mail to each county superintendent, addressed to the county’s CDEfisc e-mail address, to inform him or her of this apportionment. The e-mail contains a link to the CDE Categorical Programs, SFSF Web page at http://www.cde.ca.gov/fg/aa/ca/arra.asp where the letter and schedule for this apportionment is posted. The CDE requests that the e-mail be forwarded to all LEAs in the county, including direct funded charter schools, to immediately inform them of this apportionment.

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.

Entitlement Calculations

SFSF funding is provided to offset FY 2008–09 state general purpose (e.g. revenue limits) and categorical program funding reductions pursuant to Section 34 of Senate Bill 4 (Chapter 12, Statutes of 2009, Third Extraordinary Session, SBX3 4), Assembly Bill 3 (Chapter 3, Statutes of 2009, Fourth Extraordinary Session), 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. Please note that reductions in state allocations are simply the basis of determining the distribution of SFSF funds. These are federal funds and the federal requirements described below govern their use.

An LEA's total SFSF entitlement is comprised of the state general purpose and categorical program reductions as described below:

Categorical Program Reductions – SBX3 4

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.

State General Purpose Reductions – SBX3 4

Entitlements for school districts and county offices of education are calculated by determining the difference between the State Aid for Revenue Limits using the statutory deficit factor and what the Revenue Limit would have been with a deficit factor of 0.974987 as of the 2008–09 second principal apportionment (P-2). School District Revenue Limit State Aid was adjusted for a 5.7975 percent county office funds transfers increase to account for the deficit factor change. Charter School Block Grant Rates were recalculated by applying this same deficit factor; the revised rates are $5,772 for kindergarten through grade three, $5,860 for grades four through six, $6,030 for grades seven through eight, and $6,996 for grades nine through twelve. Charter school entitlements are the difference between the General Purpose Entitlements using these rates and the 2008–09 P-2 General Purpose Entitlement amount. Locally funded charter schools applied through their authorizing agency, and funding associated with the charter school is included in the authorizing district or county amount.

The general purpose entitlement amounts described above may differ from those posted for prior apportionments (released June 2010). General purpose entitlements were recalculated in February 2011 to allocate to LEAs the final 10 percent of California’s grant award (known as Phase II) and to reallocate SFSF entitlements for LEAs that did not apply for SFSF funding.

Categorical Program Reductions – ABX3 56

Entitlements were calculated based on each LEA’s share of funding reductions made to seven categorical programs for FY 2008–09, totaling $355 million, pursuant to ABX3 56 and Control Section 28.

Detailed spreadsheets showing the funding reduction in each of the categorical and general purpose programs are available at http://www.cde.ca.gov/fg/aa/ca/arra.asp.

For apportionment purposes, entitlements related to general purpose and categorical program reductions pursuant to SBX3 4 are paid from FY 2008–09 and 2010–11 funding. Categorical program reductions pursuant to ABX3 56 are paid from FY 2009–10 funding, in a separate apportionment.

Use of Funds

SFSF funds may be used by LEAs for any activity authorized under the following:
(1) Elementary and Secondary Education Act of 1965, including Impact Aid, (2) Individuals with Disabilities Education Act, (3) Adult Education and Family Literacy Act, or (4) 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 (ED) SFSF Guidance at http://www.ed.gov/programs/statestabilization/applicant.html, and Using ARRA Funds to Drive School Reform and Improvement at 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. The next report will cover the quarter ending September 30, 2011. At a minimum, LEAs should anticipate reporting: (1) the total amounts of ARRA funds received; (2) the total amount 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 issued by the Office of Management and Budget and the 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).

Title 34 of the Code of Federal Regulations Section 80.21(i), requires that any interest earned by LEAs on federal dollars be returned to the ED promptly, but at least quarterly. LEAs may keep interest amounts up to $100 per year for administrative expenses. 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 and Charter Development Branch by e-mail at arra@cde.ca.gov. For questions related to this apportionment, or fiscal questions related to the reduction in categorical programs, please contact 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, by phone at 916-327-0398 or by e-mail at edearstyne@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 schedule.

Sincerely,




Jeannie Oropeza, Deputy Superintendent
Finance, Technology, and Administration Branch

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