Management Bulletin 26-09
This Management Bulletin notifies California State Preschool Program contractors of the elimination of Intra-Agency Transfers and provides guidance on transferring funds through the Voluntary Temporary Transfer process.Early Education Division
Subject: California State Preschool Program (CSPP) Funding Opportunities: Voluntary Temporary Transfers (VTT)
Number: 26-09
Date: September 2026
Expires: Until rescinded or superseded by regulations
Authority: California Education Code (EC) Section 8216; EC Section 8256; Assembly Bill (AB) 109 (Chapter 19, Statutes of 2026)
Purpose
This Management Bulletin notifies California State Preschool Program (CSPP) contractors of the elimination of Intra-Agency Transfers and provides guidance on transferring funds through the Voluntary Temporary Transfer (VTT) process.
Policy
Pursuant to the Budget Act of 2026 (AB 109), all CSPP contracts are funded solely with Proposition 98 funds. As a result of this funding change, in no instance are CSPP and General Child Care (CCTR) contracts funded with the same funding allocation.
Therefore, as of July 1, 2026, intra-agency transfers between CSPP and CCTR contracts are no longer permitted. All transfers of CSPP funds will be through the VTT process
Directives for Implementation
All CSPP contractors are encouraged to participate in the VTT process, which is a process intended to match available unused funds with identified service needs in a given year. Contractors may self-identify as an over- or under-earner and submit a transfer request that includes an amount of contract funding they expect to be able to temporarily release or accept. Contractors who are projected to under earn their CSPP contract are encouraged to temporarily offer unused funding to support other CSPP contractors who are projected to over earn.
VTT Requirements
CSPP contractors participating in the VTT process must be in full compliance with the Contract Terms and Conditions (CT&C), fiscal reporting requirements, regulatory requirements, and statutory requirements. Additionally, the contractor must justify that funding would be utilized to immediately cover contract over earnings (i.e. service earnings and reimbursable expenses are projected to exceed the contract maximum reimbursable amount [MRA]).
To participate in a VTT, contractors will fill out letters of request found on the VTT resource web page at https://www.cde.ca.gov/fg/aa/cd/vttresources.asp and submit to their Local Planning Council (LPC) Coordinator or assigned fiscal analyst during the VTT periods, as stated under the Guidance Regarding the Voluntary, Temporary Direct Service Contract Transfer Request link on the VTT Resources web page.
VTT Approval and Denial Process
The Early Education Nutrition and Fiscal Services (EENFS) unit will review all VTT requests submitted and will determine whether the amount of the transfer corresponds with the contract’s projected earnings for all contractors involved in the transfer. If the request is not supported by the contract's projected earnings, EENFS may request additional justification.
VTT approvals or denials will be made exclusively by CDE, and all parties will be notified of the outcome. All contractors who submitted requests during the VTT period will receive an approval or denial letter from their EENFS fiscal analyst via email. This email notification serves as confirmation of the CDE’s decision and the reason for determination, if applicable. Contractors who receive an approval letter will also receive a contract amendment, via Allocation Letter, that temporarily increases or decreases their contract MRA for the fiscal year.
Unearned VTT
Funds received though the VTT process must be fully expended by June 30 of the fiscal year. If the contractor did not fully earn the amount of funds received through a VTT, a contract amendment will be issued to reduce the contract MRA by the amount of the unearned VTT.
Unused funds cannot be transferred into a Preschool Reserve Account or earned through an Exceptional Needs/Severely Disabled (EN/SD) Service Level Exemption Credit, which would then become deferred revenue to be used in a future fiscal year.
For contractors who received additional funding through the VTT process but did not fully earn the VTT, warning letters will be sent upon processing preliminary June year-end contract earnings calculation indicating a transfer to the reserve or an EN/SD credit. Once the contract is considered closed (i.e. after the February 13 revision deadline for local educational agencies (LEAs), March 1 revision deadline for Community College Districts, or after the processed audit for non-LEAs), final letters will be sent to notify the contractor of the upcoming amendment. After the contract amendment is issued and fully executed, an invoice to recoup the unearned VTT amount will be sent to the contractor.
Background and Authority
Pursuant to EC Section 8256, CDE shall promote full utilization of CSPP funds and match available unused funds with identified service needs and shall arrange interagency adjustments between different contractors with the same type of contract when both agencies mutually agree to a temporary transfer of funds for the balance of the fiscal year. The VTT is the process of temporarily releasing or receiving CSPP funds from one contractor to another. During stated timeframes, contractors can temporarily request additional funding or temporarily relinquish unearned funds during the fiscal year if they are projected to over- or under-earn their contract MRA.
EC Section 8216 also required CDE to attempt to arrange intra-agency transfers between CSPP contracts and General Child Care (CCTR) contracts for the same agency and funding allocation. Prior to FY 2026-27, CSPP contracts for non-LEAs were funded with state general funds, the same fund source as CCTR contracts. A FY 2026-27 budget action removed state general funds from CSPP contracts, and effective FY 2026-27 all CSPP contracts are funded with Proposition 98 funds. As a result, CSPP and CCTR contracts are no longer funded with the same funding allocation, and intra-agency transfers have been suspended.
Resources
More information regarding the VTT process, LPC contact information, and applicable VTT forms can be found at https://www.cde.ca.gov/fg/aa/cd/vttresources.asp.
If you have programmatic questions related to this MB, please contact your assigned Early Education Division (EED), Program Quality Implementation (PQI) office regional consultant. The EED, PQI regional consultant directory web page can be accessed at https://www.cde.ca.gov/sp/cd/ci/assignments.asp.
If you have fiscal questions about the information in this email, please contact your assigned CDE Early Education Nutrition and Fiscal Services (EENFS) fiscal analyst. The fiscal analyst directory can be accessed at the following link: https://www.cde.ca.gov/fg/aa/cd/faad.asp.
Pursuant to authority provided in EC Section 8256(b), this Management Bulletin constitutes official guidance notwithstanding the Administrative Procedures Act, and thus the directives in this Management Bulletin are mandatory.