CAARO Update Issue #2026-01

The purpose of the California Department of Education (CDE) Categorical Allocations and Audit Resolution Office (CAARO) updates is to provide local educational agencies (LEAs) and other interested parties with timely information, such as notifications regarding key reporting deadlines, applications for funding, annual audits, and any other topics related to programs administered by CAARO.

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Key Dates

• Estimated Cash Flow for State and Federal Programs
  

Federal Categorical Programs

Categorical Programs

ESSA Title I, Part A; Title I, Part D, Subpart 2; Title II, Part A; Title III, English Learner (EL); Title III, Immigrant Students (IMM); and Title IV, Part A

• FY 2024-25 and FY 2025-26
  • LEA apportionment amounts will be calculated based on the cash balances reported in CMDC by January 31, 2026.
  • Payments will be released in March 2026.
• FY 2025-26
  • LEAs must have an approved LCAP Federal Addendum and complete a Consolidated Application for funding in the Consolidated Application and Reporting System (CARS) by March 31, 2026, to receive a Final Allocation.
  • LEAs that have an approved LCAP Federal Addendum and Consolidated Application by January 23 may be included in the third quarter apportionments.
    

SSA Comprehensive Support and Improvement (CSI)

• FY 2025-26
  • LEAs that have an approved AFF Status by January 31 will be included in the 1st apportionment.
• FY 2024-25
  • As a condition of funding, LEA apportionment amounts will be calculated based on expenditures reported in GMART by February 28, 2026.

State Program Updates

Categorical Programs

Prop 39 California Clean Energy Jobs Act

• The CDE is coordinating with the California Energy Commission (CEC) on the recovery of unspent Prop 39 funds as identified in the final project completion reports districts submitted to the CEC.
• The CDE is preparing a final recovery of unspent Prop 39 CA Clean Energy Jobs Act funds. The schedule of the proposed recovery is posted CDE’s Prop 39 web page.
• LEAs will have approximately six weeks to review the proposed recovery amounts prior to the recovery action that will be completed by April 2026.
• LEAs that would like to dispute the proposed recovery amount may contact Christopher Meyer, California Energy Commission, by email at Christopher.meyer@energy.ca.gov.
• Other questions about Prop 39 can be sent to CDE at prop39fiscal@cde.ca.gov.

Classified School Employee Summer Assistance Program (CSESAP)

• The CDE has posted the funding letter and updated web pages for the CSESAP for fiscal year 2025–26 (for the 2026–27 School Year) on the CSESAP web page.
• Beginning in 2026–27, joint powers authorities (JPAs) made up of school districts or county offices of education will be eligible to participate, as authorized by Education Code (EC) 45500q(1). JPAs that elect to participate in the CSESAP during the 2026-27 school year must notify their classified employees by January 1, 2026, or as soon as possible, and meet the application deadlines listed below. For questions about CSESAP email csesap@cde.ca.gov.
• Application Deadlines for participation in the 2026-27 school year.
  • By March 1, 2026, classified employees must notify LEAs of their election to participate during the 2026–27 school year, EC 45500(d)(1).
  • By April 1, 2026, LEAs must report the number of participating employees and estimated withholdings for the 2026–27 school year, EC 45500(e).

Student Support & Professional Development Discretionary Block Grant (SSPDBG)

• The first apportionment reflecting 75% of each LEA’s allocation was released in October 2025, and the remaining balance will be released in February 2026. The first apportionment letter and schedule are available on the SSPDBG funding results web page.
• The CDE hosted a technical assistance webinar on SSPDBG on October 20, 2025. The presentation slides are available on the SSPDBG program web page.

Literacy Screenings Professional Development

• The allocations are available on the Literacy Screening Professional Development web page.
• Funds will be released to eligible LEAs in February 2026.

Lottery

• The First Quarter apportionment for 2025–26 was released by the State Controller’s Office (SCO) on December 30, 2025.
• Quarterly funding rates are available on CDE’s lottery web page.

Audit Resolution Updates

LEA Annual Audits

Key Dates for 2024-25 K-12 Annual Audit

• 12/15/2025 – Submit Audit Report to CDE, SCO, and the County Superintendent of Schools.
• 1/31/2026 – School board review of audit report and corrective actions.
• 3/15/2026 – LEA corrective actions for audit findings due to COE.
• 5/15/2026 – COE certifications of annual audits due to CDE and SCO.

Key Dates for 2025-26 K-12 Annual Audit

• 4/1/2026 – LEA deadline to contract with independent auditor.

Audit Guide

• The Audit Guide Workgroup, made up of representatives from The State Controller’s Office, The California Department of Education, The California Department of Finance, California School Boards Associate, California Association of School Business Officials, California County Superintendents Educational Service Associates, California Teachers Associates, California Society of Certified Public Accountants, and the Fiscal Crisis and Management Assistance Team, met throughout the fall to propose amendments to the K-12 Annual Audit Guide. The final meeting was on December 18, 2025.
  • The FY 2025-26 Supplemental Audit Guide will be available by March 1, 2026.
  • The FY 2026-27 Audit Guide will be available on July 1, 2026.
• The SCO releases an annual audit advisory, which includes an overview of the changes proposed for the annual audit guide. The advisory for the 2024-25 fiscal year can be found on the SCO website at 2024-2025 Audit Advisory (PDF)

K-12 Annual Audit Late Submission

• Due to the late adoption of the Federal Compliance Supplement, many LEAs requested extensions for the submission of their annual audit report, due December 15, 2025.
• Extensions may allow the submission of the annual audit report beyond January 31, 2026, which puts LEAs out of compliance with the requirement to present their annual audit before their board by January 31^st.
  • If your LEA received an extension for the submission of the annual audit report, we recommend presenting the audit report to your board within 45 days of date the K-12 annual audit report was submitted.