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Request Repayment Plan

Local Educational Agencies (LEAs) may request a repayment plan from the California Department of Education (CDE) for any amount owed to the State as the result of an audit finding.

LEAs may request a repayment plan from the CDE for any amount owed to the State as the result of an audit finding. Procedures for addressing apportionment significant audit exceptions reported in audits are established in the Education Code (EC) 41344 External link opens in new window or tab.. This process provides for repayment, at the next Principal Apportionment, of any amount owed to the State as the result of an audit finding. In addition, the State Superintendent of Public Instruction and the Director of Finance may establish a repayment plan if they concur that payment of the full liability in the current fiscal year would constitute a severe financial hardship for the LEA.

Repayment plans are to be of equal annual payments over a period of up to eight years and shall include interest on each year’s outstanding balance at the rate earned on the state’s short-term pooled money investment fund.

The repayment plan timeline is as follows:

Repayment Plan Timeline

  • Step 1: LEA receives State Controller’s Office (SCO) Certification Letter for the final audit report.
  • Step 2: LEA requests repayment plan from CDE. See Repayment Plan Options section for applicable timelines.
  • Step 3: CDE and Department of Finance (DOF) jointly review repayment plan request.
  • Step 4: CDE notifies LEA on repayment plan decision. State Controller’s Office (SCO) is also notified for approved repayment plans.

LEAs submitting requests shall request a repayment plan within 90 days of receiving the final audit report or review, within 30 days of withdrawing or receiving a final determination regarding an appeal pursuant EC Section 41344(d) External link opens in new window or tab., or in the absence of an appeal pursuant to EC Section 41344(d) External link opens in new window or tab., within 30 days of withdrawing or receiving a determination of a summary review pursuant to EC Section 41344.1(d) External link opens in new window or tab.. If an LEA appeals an audit finding, a repayment schedule will not commence until the Education Audit Appeal Panel reaches a determination.

Repayment Plan Options

Repayment Plan Option 1 Repayment Plan Option 2
  • Repayment plans are automatically approved if an audit finding is greater than 1% of the LEA's total General Fund expenditures, transfers out, and uses. See the table in Repayment Option 1 Process section below for repayment periods.
  • This option is dependent on the amount of the audit finding in relation to the size of the LEA's budget.
  • Minimal paperwork necessary.
  • Repayment Plan Option 2 is available if Option 1 is not viable.
  • For those LEAs that believe the "formula driven" Option 1 will result in a fiscal hardship, Option 2 provides the flexibility to establish a unique repayment plan to address the LEA's particular needs.
  • Supporting documentation required.
Repayment Plan Option 1 Timeline Repayment Plan Option 2 Timeline
  • Recommended that requests be submitted within 60 days of the final audit, to allow time to process the requests.
  • Recommended that such requests be submitted within 30 days of the final audit. This will give CDE time to review the requests, and should additional information be needed, allow the LEAs to provide that additional data in time to meet the next Principal Apportionment certification.

Repayment Option 1 Process

If the amount owed to the State due to any audit finding is greater than 1% of the LEA's total General Fund expenditures, transfers out, and uses, as reflected in the most recent annual audit report, then the LEA automatically qualifies for an Option 1 repayment plan, as follows:

Audit Finding as a Percent of Total General Fund Expenditures Number of Years for Repayment
Between 1% and 2% 2
Between 2% and 3% 3
Between 3% and 4% 4
Between 4% and 5% 5
Between 5% and 6% 6
Between 6% and 7% 7
Greater than 7% 8


If an LEA is interested in taking advantage of this automatic repayment plan, a letter detailing your request should be submitted to the CDE. Districts should provide a copy of this request to their county office of education (COE). Charter schools should provide a copy of the request to their authorizing LEA.

Repayment Option 2

If Repayment Plan Option 2 is requested, the LEA will need to provide supporting documentation as follows:

  1. The number of years (not to exceed eight) for repayment that the LEA is requesting.
  2. A narrative explaining the financial need for the extended repayment period, including the impact to the LEA if the extended repayment period is not established.
  3. The most recently adopted budget or approved interim report, whichever is most current, and the corresponding multiyear projections. Any budget, report or projections should have been reviewed and approved by the COE for school districts, or approved by the CDE for county offices.
  4. Financial projections illustrating the mitigated impact of payments spread over the requested repayment period.
  5. For districts, a letter from their COE indicating that without such a repayment plan the district would face severe financial hardship. For charters, a letter from the authorizing LEA indicating that without such a repayment plan the charter would face severe financial hardship.

All projections should include:

  • expenditures and revenues by major object group and components of ending fund balance;
  • funding obligations, such as significant long-term debt; and
  • all assumptions, such as average daily attendance, cost of living adjustments, and negotiated or possible salary increases.

Repayment Plan Request Submission

Submit EC Section 41344 audit repayment requests to LEAAudits@cde.ca.gov or to the following address:

California Department of Education
School Fiscal Services Division
Categorical Allocations & Audit Resolution Office
1430 N Street, Suite 3800
Sacramento, CA 95814

If you have any questions, or if we can be of further assistance, please contact the School Fiscal Services Division, Categorical Allocations & Audit Resolution Office by phone at 916-327-0538, or by email at LEAAudits@cde.ca.gov.

Questions:   Audit Resolution Office | LEAAudits@cde.ca.gov
Last Reviewed: Monday, February 26, 2024
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